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Diamond Offshore Announces Third Quarter 2016 Results
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- Net income of $14.0 million, or $0.10 per diluted share

HOUSTON, Oct. 31, 2016 /PRNewswire/ -- Diamond Offshore Drilling, Inc. (NYSE: DO) today reported results for the third quarter of 2016.


Three Months Ended


Thousands of dollars, except per share data

September 30, 2016

June 30, 2016

Change

Total revenues

$           349,178

$           388,747

(10)%

Operating income (loss)

54,071

(626,669)

--

Adjusted operating income

54,071

51,476

5%

Net income (loss)

13,927

(589,937)

--

Adjusted net income

13,927

22,295

(38)%

Earnings (loss) per diluted share

$                  0.10

$              (4.30)

--

Adjusted earnings per diluted share

$                  0.10

$                0.16

(38)%

 

"Despite continued market headwinds, Diamond Offshore achieved earnings per share of $0.10," said Marc Edwards, President and Chief Executive Officer. "Overall, I am pleased with our third quarter results and our ability to manage costs, while remaining focused on maintaining our backlog position."

During the quarter, the Company announced new contracts for the Ocean Valiant and Ocean Scepter with Maersk in the UK and Fieldwood in Mexico, respectively. The addition of these two contracts adds 20 months of backlog.

As of September 30, 2016, the Company's total contracted backlog was $4.1 billion, which represents 27 rig years of work. Approximately 96% of the Company's available ultra-deepwater rig days for the remainder of 2016 are contracted with top tier customers. 

CONFERENCE CALL

A conference call to discuss Diamond Offshore's earnings results has been scheduled for 7:30 a.m. CDT 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 89455433. 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. Additional information and access to the Company's SEC filings are available at www.diamondoffshore.com. Diamond Offshore is owned 53% 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.  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 worldwide demand for drilling services, level of activity in the oil and gas industry, renewing or replacing expired or terminated contracts, contract cancellations and terminations, maintenance and realization of backlog, competition and industry fleet capacity, impairments and retirements, operating risks, changes in tax laws and rates, regulatory initiatives and compliance with governmental regulations, construction of new builds, casualty losses, and various other factors, 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
September 30,


Nine Months Ended
September 30,


2016


2015


2016


2015









Revenues:








    Contract drilling

$     339,636


$    599,036


$ 1,140,568


$   1,816,055

   Revenues related to reimbursable expenses

9,542


10,706


67,900


47,775

            Total revenues

349,178


609,742


1,208,468


1,863,830









Operating expenses:








        Contract drilling, excluding depreciation

186,654


277,944


597,831


971,471

        Reimbursable expenses

7,965


10,476


51,283


46,904

        Depreciation

86,473


118,086


295,729


378,714

        General and administrative

15,237


16,888


48,774


50,888

        Impairment of assets

--


2,546


678,145


361,074

        Restructuring and separation costs

--


1,574


--


8,735

        (Gain) loss on disposition of assets

(1,222)


794


(2,265)


19

            Total operating expenses

295,107


428,308


1,669,497


1,817,805









Operating income (loss)

54,071


181,434


(461,029)


46,025









Other income (expense):








        Interest income

150


629


592


1,796

        Interest expense

(19,032)


(21,350)


(68,704)


(70,800)

        Foreign currency transaction (loss) gain

(712)


(1,163)


(7,833)


954

        Other, net

269


217


(11,199)


702









Income (loss) before income tax (expense) 
     benefit

34,746


159,767


(548,173)


(21,323)









Income tax (expense) benefit

(20,819)


(23,345)


59,588


(7,578)









Net income (loss)

$         13,927


$      136,422


$   (488,585)


$      (28,901)









Income (loss) per share

$            0.10


$            0.99


$         (3.56)


$          (0.21)









Weighted-average shares outstanding:








    Shares of common stock

137,170


137,159


137,167


137,156

    Dilutive potential shares of common stock

84


44


--


--

        Total weighted-average shares outstanding

137,254


137,203


137,167


137,156










 

 

DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS
(Unaudited)
(In thousands)



Three Months Ended


September 30,


June 30,


September 30,


2016


2016


2015







REVENUES






   Floaters:






      Ultra-Deepwater

$    217,275


$    214,102


$      376,195

      Deepwater

66,011


67,191


136,668

     Mid-water

56,350


56,694


69,500

            Total Floaters

339,636


337,987


582,363

   Jack-ups

--


19,422


16,673

Total Contract Drilling Revenue

339,636


$    357,409


$      599,036







Revenues Related to Reimbursable Expenses

$        9,542


$      31,338


$        10,706







CONTRACT DRILLING EXPENSE






   Floaters:






      Ultra-Deepwater

$    124,099


$    127,185


$      156,107

      Deepwater

36,226


34,776


67,630

      Mid-water

17,634


25,862


35,784

         Total Floaters

177,959


187,823


259,521

   Jack-ups

1,833


6,876


12,507

   Other

6,862


3,637


5,916

Total Contract Drilling Expense

$    186,654


$    198,336


$      277,944







Reimbursable Expenses

$        7,965


$      16,527


$        10,476







OPERATING INCOME (LOSS)






   Floaters:






      Ultra-Deepwater

$     93,176


$      86,917


$      220,088

      Deepwater

29,785


32,415


69,038

      Mid-water

38,716


30,832


33,716

         Total Floaters

161,677


150,164


322,842

   Jack-ups

(1,833)


12,546


4,166

   Other

(6,862)


(3,637)


(5,916)

   Reimbursable expenses, net

1,577


14,811


230

   Depreciation

(86,473)


(105,016)


(118,086)

   General and administrative expense

(15,237)


(18,139)


(16,888)

   Impairment of assets

--


(678,145)


(2,546)

   Restructuring and separation costs

--


--


(1,574)

   Gain (loss) on disposition of assets

1,222


747


(794)

         Total Operating  Income (Loss)

$      54,071


$   (626,669)


$      181,434








                      

 

DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands)






September 30,


December 31,


2016


2015

ASSETS




Current assets:




      Cash and cash equivalents

$        81,329


$        119,028

      Marketable securities

46


11,518

      Accounts receivable, net of allowance for bad debts

273,982


405,370

      Prepaid expenses and other current assets

114,166


119,479

      Assets held for sale

7,600


14,200

            Total current assets

477,123


669,595





Drilling and other property and equipment, net of accumulated 
     depreciation

5,819,309


6,378,814

Other assets

112,743


101,485

            Total assets

$    6,409,175


$     7,149,894





LIABILITIES AND STOCKHOLDERS' EQUITY




Short-term borrowings

$      182,100


$        286,589

Other current liabilities

297,781


339,134

Long-term debt

1,980,602


1,979,778

Deferred tax liability

164,389


276,529

Other liabilities

151,375


155,094

Stockholders' equity

3,632,928


4,112,770

            Total liabilities and stockholders' equity

$    6,409,175


$     7,149,894

 

 

DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES
AVERAGE DAYRATE, UTILIZATION AND OPERATIONAL EFFICIENCY
(Dayrate in thousands)




Third Quarter

2016

Second Quarter

2016

Third Quarter

2015


 

Average

Dayrate (1)

 

 

Utilization (2)

 

Operational Efficiency

(3)

 

Average

Dayrate (1)

 

 

Utilization (2)

 

Operational Efficiency

(3)

 

Average

Dayrate

(1)

 

 

Utilization (2)

 

Operational Efficiency

(3)





















Ultra-Deepwater Floaters

$452

48%

87.1%

$452

47%

86.7%

$479

71%

96.8%











Deepwater Floaters

$303

34%

94.5%

$301

35%

100%

$361

59%

90.3%











Mid-Water floaters

$311

33%

98.4%

$313

30%

99.4%

$289

31%

97.5%











Jack-ups

--

--

--

$335

13%

100%

$97

31%

99.8%











Fleet Total



91.0%



92.7%



95.5%

 

(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 September 30, 2016, our cold-stacked rigs included four ultra-deepwater semisubmersibles, three deepwater semisubmersibles, three mid-water semisubmersibles and four marketed-for-sale jack-up rigs. 



(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.

 

Non-GAAP Financial Measures (Unaudited)

To supplement the Company's unaudited condensed consolidated financial statements presented on a GAAP basis, this press release provides investors with adjusted operating income, adjusted net income and adjusted earnings per diluted share, which are non-GAAP financial measures.  Management believes that these measures provide meaningful information about the Company's performance by excluding certain charges that may not be indicative of the Company's ongoing operating results.  This allows investors and others to better compare the company's financial results across previous and subsequent accounting periods and to those of peer companies and to better understand the long-term performance of the Company.  Non-GAAP financial measures should be considered to be a supplement to, and not as a substitute for, or superior to, financial measures prepared in accordance with GAAP.  

In order to fully assess the financial operating results of the Company, management believes that the results of operations adjusted to exclude the second quarter 2016 impairment of rigs and associated inventory, as well as the related tax effect thereof and other second quarter discrete tax items, are appropriate measures of the continuing and normal operations of the Company.  However, these measures should be considered in addition to, and not as a substitute for, or superior to, contract drilling revenue, contract drilling expense, operating income, cash flows from operations or other measures of financial performance prepared in accordance with GAAP. 

 



Three Months Ended


September 30,
2016


June 30,

2016


Reconciliation of As Reported Operating (Loss) Income to 
     Adjusted Operating Income:

(In thousands)










As reported operating income (loss)

$           54,071


$      (626,669)







    Impairments and other charges:





        Impairment of rigs and associated inventory (1)

--


678,145







Adjusted operating income

$           54,071


$         51,476







Reconciliation of As Reported Net Loss to Adjusted Net Income:

(In thousands)










As reported net income (loss)

$           13,927


$      (589,937)







    Impairments and other charges:





        Impairment of rigs and associated inventory (1)

--


678,145







    Tax effect of impairments and other charges:





        Impairment of rigs and associated inventory (2)

--


(143,165)


        Discrete tax items (3)



77,252







Adjusted net income

$           13,927


$         22,295







 

 


Three Months Ended


September 30,
2016


June 30,

2016

Reconciliation of As Reported Income (Loss) per Diluted Share 
     to Adjusted Earnings per Diluted Share:








As reported income (loss) per diluted share

$                0.10


$                   (4.30)

    Impairments and other charges:




        Impairment of rigs and associated inventory (1)

--


4.94





    Tax effect of impairments and other charges:




        Impairment of rigs and associated inventory (2)

--


(1.04)

        Other discrete tax items (3)

--


0.56





Adjusted earnings per diluted share

$                0.10


$                      0.16

                      

(1)      

Represents the aggregate amount of impairment losses recognized during the second quarter of 2016 related to eight of our drilling rigs and associated inventory. 

(2)      

Represents the income tax effects of the aggregate impairment loss recognized in the second quarter of 2016.

(3)      

Represents the aggregate of certain discrete income tax adjustments recognized during the second quarter of 2016, primarily related to valuation allowances for current and prior year tax assets associated with foreign tax credits, which we no longer expect to be able to utilize to offset income taxes in the U.S. tax jurisdiction. 

 

Contact:
Samir Ali
Sr. Director, Investor Relations & Corporate Development
(281) 647-4035

 

Diamond Offshore Drilling, Inc. Logo. (PRNewsFoto/Diamond Offshore Drilling, Inc.)

 

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SOURCE Diamond Offshore Drilling, Inc.