Press Release

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Diamond Offshore Announces Fourth Quarter 2014 Results
- Confirms Delivery of Drillships--Ocean BlackHornet and Ocean BlackRhino
- Confirms Delivery of Semisubmersible Rig--Ocean Apex
- Declares Regular Cash Dividend of $0.125 per Share; Does Not Declare Special Dividend

HOUSTON, Feb. 9, 2015 /PRNewswire/ -- Diamond Offshore Drilling, Inc. (NYSE: DO) today reported fourth quarter 2014 net income of $99 million, or $0.72 per diluted share, compared to net income of $93 million, or $0.67 per diluted share, in the fourth quarter of 2013. Revenues in the fourth quarter of 2014 were $675 million, compared to revenues of $726 million in the fourth quarter of 2013.

For full year 2014, Diamond Offshore reported net income of $387 million, or $2.81 per diluted share, compared to net income of $549 million, or $3.95 per diluted share, in 2013.  Full year 2014 results included a $0.95 per share non-cash impairment charge related to the retirement and scrapping of six mid-water semisubmersible rigs.  Results for the fourth quarter of 2013 and full year 2013 were negatively impacted by $0.41 per share to reserve for an uncertain tax position, partially offset by a gain of $0.12 per share related to a settlement agreement with a customer.  Revenues for full year 2014 were $2.815 billion, compared to $2.920 billion in 2013.

Diamond Offshore also announced today that the Company has declared a regular quarterly dividend of $0.125 per share, payable March 2, 2015 to shareholders of record on February 20, 2015.  Additionally, the Board of Directors of the Company, after careful consideration, has chosen not to declare a special dividend.

"Since Diamond Offshore began paying a special dividend to shareholders in January of 2006, we have paid total dividends of over $41 per share, or approximately $5.7 billion," said Marc Edwards, President and Chief Executive Officer.  "Paying substantial dividends while simultaneously adding new-build capacity to our fleet have been key aspects of our capital allocation strategy.  We have achieved these aims while maintaining a strong balance sheet and the highest credit rating among our industry peers."

"Given the significant downturn in industry fundamentals, we believe it is prudent to retain cash so that the Company is in a stronger position to take advantage of opportunities that may materialize in a distressed market," added Mr. Edwards.

"In 2014, we took delivery of three new-build drillships and two deepwater semis, and in the first quarters of 2015 and 2016, respectively, we expect to take delivery of our fourth new-build drillship and a new-build harsh environment semisubmersible.  All of our new-build units have attractive term contracts in place."

CONFERENCE CALL

A conference call to discuss Diamond Offshore's earnings results has been scheduled for 7:30 a.m. CST today.   A live webcast of the call will be available online on the Company's website, www.diamondoffshore.com.  Those interested in participating in the question and answer session should dial 800-247-9979 or 973-321-1100, for international callers. The conference ID number is 65678867.  An online replay will also be available on www.diamondoffshore.com following the call.

ABOUT DIAMOND OFFSHORE

Diamond Offshore is a leader in offshore drilling, providing contract drilling services to the energy industry around the globe with a total fleet of 38 offshore drilling rigs, including two rigs under construction.  Diamond Offshore's fleet consists of 27 semisubmersibles, one of which is under construction, five dynamically positioned drillships, one of which is under construction, and six jack-ups. Additional information about the Company and access to the Company's SEC filings are available at www.diamondoffshore.com.  Diamond Offshore is owned 52% by Loews Corporation (NYSE: L).

FORWARD-LOOKING STATEMENTS

Statements contained in this press release or made during the above conference call that are not historical facts are "forward-looking statements" within the meaning of the federal securities laws.  Such statements include, but are not limited to, statements concerning drilling rig deliveries, operations and timing; contract effectiveness and effective dates; plans regarding retirement and scrapping of drilling rigs; expectations of future backlog, revenue, operating costs and performance; future liquidity, financial condition, market conditions and strategic opportunities; revenue expected to result from backlog; declaration and payment of dividends; future credit ratings; and other statements that are not of historical fact.  Forward-looking statements are inherently uncertain and subject to a variety of assumptions, risks and uncertainties that could cause actual results to differ materially from those anticipated or expected by management of the Company.  A discussion of the important risk factors and other considerations that could materially impact these matters as well as the Company's overall business and financial performance can be found in the Company's reports filed with the Securities and Exchange Commission, and readers of this press release are urged to review those reports carefully when considering these forward-looking statements.  Copies of these reports are available through the Company's website at www.diamondoffshore.com.  These risk factors include, among others, risks associated with general economic and business conditions, contract cancellations, customer or vendor bankruptcy, operations, litigation, casualty losses, industry fleet capacity, changes in foreign and domestic oil and gas exploration and production activity, competition, changes in foreign, political, social and economic conditions, regulatory and sanction initiatives and compliance with governmental regulations, customer preferences, obtaining necessary partner and third party approvals, timing of construction of new builds, collection of receivables, and various other matters, many of which are beyond the Company's control.  Given these risk factors, investors and analysts should not place undue reliance on forward-looking statements.  Each forward-looking statement speaks only as of the date of this press release.  The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any forward-looking statement is based.




DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF OPERATIONS


(Unaudited)


(In thousands, except per share data)






Three Months Ended


Twelve Months Ended




December 31,


 December 31,




2014


2013


2014


2013












Revenues:










         Contract drilling

$

674,376

$

707,972

$

2,737,126

$

2,843,584


          Revenues related to reimbursable expenses


945


18,525


77,545


76,837


                Total revenues


675,321


726,497


2,814,671


2,920,421












Operating expenses:










         Contract drilling, excluding depreciation


358,655


408,907


1,523,623


1,572,525


         Reimbursable expenses


698


17,969


76,091


74,967


         Depreciation


131,712


96,985


456,483


388,092


         General and administrative


19,923


16,298


81,832


64,788


         Bad debt  (recovery) expense


--


(50)


--


22,513


         Loss (gain) on disposition of assets


2,230


(1,281)


(5,382)


(4,070)


         Impairment of assets


--


--


109,462


--


                Total operating expenses


513,218


538,828


2,242,109


2,118,815












Operating income


162,103


187,669


572,562


801,606












Other income (expense):










         Interest income


157


(323)


801


701


         Interest expense


(15,997)


(7,130)


(62,053)


(24,843)


Foreign currency transaction gain (loss)


6,923


(966)


3,199


(4,915)


         Other, net


84


945


682


1,691












Income before income tax expense


153,270


180,195


515,191


774,240












Income tax expense


(54,427)


(87,580)


(128,180)


(225,554)












Net Income

$

98,843

$

92,615

$

387,011

$

548,686












Income per share:










Basic

$

0.72

$

0.67

$

2.82

$

3.95


Diluted

$

0.72

$

0.67

$

2.81

$

3.95












Weighted average shares outstanding:










 Shares of common stock


137,148


139,035


137,473


139,035


 Dilutive potential shares of common stock


59


12


50


29


       Total weighted average shares outstanding


137,207


139,047


137,523


139,064



 


DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES


RESULTS OF OPERATIONS


(Unaudited)


(In thousands)






Three Months Ended




Dec 31,


Sep 30,


Dec 31,




2014


2014


2013










REVENUES








 Floaters:








   Ultra-Deepwater

$

285,991

$

313,124

$

236,842


    Deepwater


115,777


111,372


121,222


    Mid-water


231,933


258,028


306,485


      Total Floaters


633,701


682,524


664,549


  Jack-ups


40,675


45,364


43,423


Total Contract Drilling Revenue

$

674,376

$

727,888

$

707,972










Revenues Related to Reimbursable Expenses

 

$

 

945

 

$

 

9,794

 

$

 

18,525










CONTRACT DRILLING EXPENSE








 Floaters:








   Ultra-Deepwater

$

133,103

$

157,655

$

135,153


    Deepwater


66,093


72,367


76,649


    Mid-water


119,763


132,340


156,075


      Total Floaters


318,959


362,362


367,877


  Jack-ups


25,268


28,056


29,349


  Other


14,428


9,384


11,681


Total Contract Drilling Expense

$

358,655

$

399,802

$

408,907










Reimbursable Expenses

$

698

$

9,437

$

17,969










OPERATING INCOME








 Floaters:








   Ultra-Deepwater

$

152,888

$

155,469

$

101,689


    Deepwater


49,684


39,005


44,573


    Mid-water


112,170


125,688


150,410


      Total Floaters


314,742


320,162


296,672


  Jack-ups


15,407


17,308


14,074


  Other


(14,428)


(9,384)


(11,681)


  Reimbursable expenses, net


247


357


556


  Depreciation


(131,712)


(108,854)


(96,985)


  General and administrative expense


(19,923)


(18,604)


(16,298)


  Bad debt recovery


--


--


50


  Gain (loss) on disposition of assets


(2,230)


(1,107)


1,281


  Impairment of assets


--


(109,462)


--


          Total Operating Income

$

162,103

$

90,416

$

187,669













 


DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands)












December 31,

December 31,





2014


2013






ASSETS










Current assets:






Cash and cash equivalents

$

233,623

$

347,011








Marketable securities


16,033


1,750,053








Accounts receivable, net of allowance for bad debts  


463,862


469,355








Prepaid expenses and other current assets  


185,541


143,997








Asset held for sale


--


7,694





899,059


2,718,110






Drilling and other property and equipment, net of





     accumulated depreciation


6,945,953


5,467,227







Other assets


176,277


206,097



Total assets  

$

8,021,289

$

8,391,434








LIABILITIES AND STOCKHOLDERS' EQUITY










Current portion of long-term debt

$

249,962

$

249,954






Other current liabilities


606,684


495,628






Long-term debt


1,994,526


2,244,189






Deferred tax liability


530,394


525,541






Other liabilities


188,160


238,864








Stockholders' equity


4,451,563


4,637,258










Total liabilities and stockholders' equity

$

8,021,289

$

8,391,434


















 

 

DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES

AVERAGE DAYRATES AND UTILIZATION

(Dayrate in thousands)



Fourth Quarter

2014

Third Quarter

2014

Fourth Quarter

2013


Average

Dayrate (1)

Utilization (2)

Operational Efficiency

(3)

Revised

Average

Dayrate (4)

Utilization (2)

Operational Efficiency

(3)

Revised

Average

Dayrate (4)

Utilization (2)

Operational Efficiency

(3)































Ultra-Deepwater Floaters

$493

66%

90.2%

$491

77%

92.2%

$403

80%

91.0%











Deepwater Floaters

$431

48%

97.3%

$356

57%

95.5%

$404

65%

97.4%











Mid-Water floaters

$270

55%

96.8%

$265

59%

94.1%

$292

63%

97.6%











Jack-ups

$96

77%

99.5%

$99

83%

99.3%

$89

76%

97.7%











Fleet Total



95.5%



94.7%



95.9%





(1)

Average dayrate is defined as contract drilling revenue for all of the specified rigs in our fleet per revenue earning day.  A revenue earning day is defined as a 24-hour period during which a rig earns a dayrate after commencement of operations and excludes mobilization, demobilization and contract preparation days.



(2)

Utilization is calculated as the ratio of total revenue-earning days divided by the total calendar days in the period for all specified rigs in our fleet (including cold-stacked rigs, but excluding rigs under construction).  As of December 31, 2014, three of our mid-water semisubmersible drilling rigs (Ocean General, Ocean Saratoga, and Ocean Vanguard) were cold-stacked. 



(3)

Operational efficiency is calculated as the ratio of total revenue-earning days divided by the sum of total revenue-earning days plus the number of days (or portions thereof) associated with unanticipated equipment downtime.



(4)

Average dayrate reported in prior periods has been revised to conform to fourth quarter of 2014 presentation.

 

Contact:
Darren Daugherty
Director, Investor Relations
(281) 492-5370

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SOURCE Diamond Offshore Drilling, Inc.