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Diamond Offshore Announces Second Quarter 2016 Results
Three Months Ended |
||||||||
Thousands of dollars, except per share data |
June 30, |
March 31, |
Change |
|||||
Total revenues |
$ 388,747 |
$ 470,543 |
(17)% |
|||||
Operating (loss) income |
(626,669) |
111,569 |
(662)% |
|||||
Adjusted operating income |
51,476 |
111,569 |
(54)% |
|||||
Net (loss) income |
(589,937) |
87,425 |
(775)% |
|||||
Adjusted net income |
22,295 |
87,425 |
(74)% |
|||||
(Loss) earnings per diluted share |
($4.30) |
$0.64 |
(772)% |
|||||
Adjusted earnings per diluted share |
$0.16 |
$0.64 |
(75)% |
|||||
"Despite facing both market and operational headwinds during the quarter, Diamond was able to record adjusted earnings per share of
Results for the second quarter were significantly impacted by impairment charges and related taxes of
Operational efficiency of the Company's fleet was 92.7% in the second quarter, compared to 98.2% in the first quarter of 2016. The decline in operational efficiency was primarily driven by issues experienced within the ultra-deepwater floater category, specifically as it relates to four unplanned retrievals of blowout preventers.
Utilization in the deep-water segment increased by 25% in the second quarter of 2016, compared to the first quarter of 2016. The increase was driven by the Ocean Apex beginning its 18-month contract with Woodside in
During the quarter, the Company elected to cold stack the Ocean Endeavor and Ocean Scepter. The Company's decision was guided by its desire to minimize costs associated with the rigs, while ensuring the rigs are preserved in such a manner as to enable a quick reactivation when the market recovers. Additionally, the Company intends to scrap the Ocean Quest and
As of
Edwards also commented on the recently announced Helical Buoyancy™ riser joint development agreement with
Reflecting on the market, Edwards went on to say, "Although the market continues to be challenged, our focus is on striking a balance between controlling costs and laying the foundation to ensure
CONFERENCE CALL
A conference call to discuss
ABOUT
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
DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES |
||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||||
(Unaudited) |
||||||||
(In thousands, except per share data) |
||||||||
Three Months Ended |
Six Months Ended |
|||||||
June 30, |
June 30, |
|||||||
2016 |
2015 |
2016 |
2015 |
|||||
Revenues: |
||||||||
Contract drilling |
$ |
357,409 |
$ |
617,442 |
$ |
800,932 |
$ |
1,217,019 |
Revenues related to reimbursable expenses |
31,338 |
16,590 |
58,358 |
37,069 |
||||
Total revenues |
388,747 |
634,032 |
859,290 |
1,254,088 |
||||
Operating expenses: |
||||||||
Contract drilling, excluding depreciation |
198,336 |
342,869 |
411,177 |
693,527 |
||||
Reimbursable expenses |
16,527 |
16,336 |
43,318 |
36,428 |
||||
Depreciation |
105,016 |
123,329 |
209,256 |
260,628 |
||||
General and administrative |
18,139 |
16,548 |
33,537 |
34,000 |
||||
Impairment of assets |
678,145 |
-- |
678,145 |
358,528 |
||||
Restructuring and separation costs |
-- |
993 |
-- |
7,161 |
||||
Gain on disposition of assets |
(747) |
(164) |
(1,043) |
(775) |
||||
Total operating expenses |
1,015,416 |
499,911 |
1,374,390 |
1,389,497 |
||||
Operating (loss) income |
(626,669) |
134,121 |
(515,100) |
(135,409) |
||||
Other income (expense): |
||||||||
Interest income |
269 |
584 |
442 |
1,167 |
||||
Interest expense |
(24,156) |
(25,468) |
(49,672) |
(49,450) |
||||
Foreign currency transaction (loss) gain |
(3,513) |
(3,473) |
(7,121) |
2,117 |
||||
Other, net |
(12,046) |
264 |
(11,468) |
485 |
||||
(Loss) income before income tax benefit (expense) |
(666,115) |
106,028 |
(582,919) |
(181,090) |
||||
Income tax benefit (expense) |
76,178 |
(15,642) |
80,407 |
15,767 |
||||
Net (loss) income |
$ |
(589,937) |
$ |
90,386 |
$ |
(502,512) |
$ |
(165,323) |
(Loss) income per share |
$ |
(4.30) |
$ |
0.66 |
$ |
(3.66) |
$ |
(1.21) |
Weighted-average shares outstanding: |
||||||||
Shares of common stock |
137,170 |
137,159 |
137,166 |
137,155 |
||||
Dilutive potential shares of common stock |
-- |
42 |
-- |
-- |
||||
Total weighted average shares outstanding |
137,170 |
137,201 |
137,166 |
137,155 |
||||
DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES |
||||||
RESULTS OF OPERATIONS |
||||||
(Unaudited) |
||||||
(In thousands) |
||||||
Three Months Ended |
||||||
June 30, |
March 31, |
June 30, |
||||
2016 |
2016 |
2015 |
||||
REVENUES |
||||||
Floaters: |
||||||
Ultra-Deepwater |
$ |
214,102 |
$ |
325,961 |
$ |
315,670 |
Deepwater |
67,191 |
59,117 |
181,104 |
|||
Mid-water |
56,694 |
47,672 |
96,926 |
|||
Total Floaters |
337,987 |
432,750 |
593,700 |
|||
Jack-ups |
19,422 |
10,773 |
23,742 |
|||
Total Contract Drilling Revenue |
$ |
357,409 |
$ |
443,523 |
$ |
617,442 |
Revenues Related to Reimbursable Expenses |
$ |
31,338 |
$ |
27,020 |
$ |
16,590 |
CONTRACT DRILLING EXPENSE |
||||||
Floaters: |
||||||
Ultra-Deepwater |
$ |
127,185 |
$ |
123,736 |
$ |
161,485 |
Deepwater |
34,776 |
47,509 |
86,464 |
|||
Mid-water |
25,862 |
23,884 |
66,735 |
|||
Total Floaters |
187,823 |
195,129 |
314,684 |
|||
Jack-ups |
6,876 |
6,055 |
20,873 |
|||
Other |
3,637 |
11,657 |
7,312 |
|||
Total Contract Drilling Expense |
$ |
198,336 |
$ |
212,841 |
$ |
342,869 |
Reimbursable Expenses |
$ |
16,527 |
$ |
26,791 |
$ |
16,336 |
OPERATING (LOSS) INCOME |
||||||
Floaters: |
||||||
Ultra-Deepwater |
$ |
86,917 |
$ |
202,225 |
$ |
154,185 |
Deepwater |
32,415 |
11,608 |
94,640 |
|||
Mid-water |
30,832 |
23,788 |
30,191 |
|||
Total Floaters |
150,164 |
237,621 |
279,016 |
|||
Jack-ups |
12,546 |
4,718 |
2,869 |
|||
Other |
(3,637) |
(11,657) |
(7,312) |
|||
Reimbursable expenses, net |
14,811 |
229 |
254 |
|||
Depreciation |
(105,016) |
(104,240) |
(123,329) |
|||
General and administrative expense |
(18,139) |
(15,398) |
(16,548) |
|||
Impairment of assets |
(678,145) |
-- |
-- |
|||
Restructuring and separation costs |
-- |
-- |
(993) |
|||
Gain on disposition of assets |
747 |
296 |
164 |
|||
Total Operating (Loss) Income |
$ |
(626,669) |
$ |
111,569 |
$ |
134,121 |
DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES |
||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
||||||||
(Unaudited) |
||||||||
(In thousands) |
||||||||
June 30, |
December 31, |
|||||||
2016 |
2015 |
|||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ |
103,279 |
$ |
119,028 |
||||
Marketable securities |
57 |
11,518 |
||||||
Accounts receivable, net of allowance for bad debts |
324,588 |
405,370 |
||||||
Prepaid expenses and other current assets |
112,293 |
119,479 |
||||||
Assets held for sale |
6,200 |
14,200 |
||||||
Total current assets |
546,417 |
669,595 |
||||||
Drilling and other property and equipment, net of |
||||||||
accumulated depreciation |
5,848,172 |
6,378,814 |
||||||
Other assets |
110,689 |
101,485 |
||||||
Total assets |
$ |
6,505,278 |
$ |
7,149,894 |
||||
LIABILITIES AND STOCKHOLDERS' EQUITY |
||||||||
Short-term borrowings |
$ |
327,300 |
$ |
286,589 |
||||
Other current liabilities |
300,688 |
339,134 |
||||||
Long-term debt |
1,980,324 |
1,979,778 |
||||||
Deferred tax liability |
114,384 |
276,529 |
||||||
Other liabilities |
164,505 |
155,094 |
||||||
Stockholders' equity |
3,618,077 |
4,112,770 |
||||||
Total liabilities and stockholders' equity |
$ |
6,505,278 |
$ |
7,149,894 |
||||
DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES |
|||||||||
AVERAGE DAYRATE, UTILIZATION AND OPERATIONAL EFFICIENCY |
|||||||||
(Dayrate in thousands) |
|||||||||
Second Quarter |
First Quarter |
Second Quarter |
|||||||
Average |
Utilization |
Operational |
Average |
Utilization |
Operational |
Average |
Utilization |
Operational |
|
Ultra-Deepwater Floaters |
$452 |
47% |
86.7% |
$533 |
61% |
98.4% |
$483 |
63% |
90.9% |
Deepwater Floaters |
$301 |
35% |
100% |
$335 |
28% |
97.1% |
$451 |
63% |
99.3% |
Mid-Water floaters |
$313 |
30% |
99.4% |
$263 |
25% |
97.7% |
$278 |
32% |
99.7% |
Jack-ups |
$335 |
13% |
100% |
$118 |
18% |
100% |
$83 |
53% |
98.6% |
Fleet Total |
92.7% |
98.2% |
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 June 30, 2016, our cold-stacked rigs included four ultra-deepwater semisubmersibles, four deepwater semisubmersibles, four mid-water semisubmersibles and five 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. |
|
Three Months Ended |
|
Reconciliation of As Reported Operating (Loss) Income to Adjusted Operating Income: |
|
As reported operating loss |
$ (626,669) |
Impairments and other charges: |
|
Impairment of rigs and associated inventory (1) |
678,145 |
Adjusted operating income |
$ 51,476 |
Reconciliation of As Reported Net Loss to Adjusted Net Income: |
|
As reported net loss |
$ (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 |
$ 22,295 |
Reconciliation of As Reported Loss per Diluted Share to Adjusted Earnings per Diluted Share: |
|
As reported loss per diluted share |
$ (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 |
$ 0.16 |
______________________________ |
|
(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:
Sr. Director, Investor Relations & Corporate Development
(281) 647-4035
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