August 5, 2019 - 6:00 AM EDT
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Diamond Offshore Announces Second Quarter 2019 Results

HOUSTON, Aug. 5, 2019 /PRNewswire/ -- Diamond Offshore Drilling, Inc. (NYSE: DO) today reported the following results for the second quarter of 2019:

 


Three Months Ended

Thousands of dollars, except per share data

June 30, 2019


March 31, 2019

Total revenues 

$                  216,706


$                  233,542

Operating loss

(111,500)


(49,127)

Adjusted operating loss

(120,366)


(49,127)

Net loss

(113,988)


(73,328)

Adjusted net loss

(136,299)


(73,328)

Loss per diluted share 

$                      (0.83)


$                      (0.53)

Adjusted loss per diluted share 

$                      (0.99)


$                      (0.53)

 

"During the quarter, the Ocean GreatWhite successfully completed its first well, delivering over 97.5% operating efficiency," said Marc Edwards, President and Chief Executive Officer. "We also completed the reactivation and upgrade of the Ocean Endeavor and the upgrade of the Ocean Apex. Both rigs commenced operations in May."

Diamond Offshore recently announced the launch of its Stack-ViewTM service, which allows the Company to shift to predictive maintenance from time-based maintenance by utilizing 24/7 real-time monitoring, data visualization, and advanced analytics. "This is yet another example of Diamond continually working to improve offshore drilling economics by reducing the total cost of the well," said Edwards. "Stack-View will streamline maintenance and mitigate subsea downtime while improving BOP reliability, which will significantly enhance the operational efficiency of a drilling campaign."

As of July 1, 2019, the Company's total contracted backlog was $2.0 billion, including over $450 million of backlog secured year to date and excluding approximately a $130 million margin commitment from one of the Company's customers.

CONFERENCE CALL

A conference call to discuss Diamond Offshore's earnings results has been scheduled for 8:00 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 844-492-6043 or 478-219-0839 for international callers. The conference ID number is 2482667.  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 innovation, thought leadership and contract drilling services to solve complex deepwater challenges 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 certain 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, litigation and disputes, changes in tax laws and rates, regulatory initiatives and compliance with governmental regulations, 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

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share data)












Three Months Ended


Six Months Ended

June 30,


March 31,


June 30,


June 30,


June 30,


2019


2019


2018


2019


2018











Revenues:










Contract drilling 

$    207,273


$    226,697


$    265,353


$    433,970


$    553,279

Revenues related to reimbursable expenses 

9,433


6,845


3,508


16,278


11,092

Total revenues 

216,706


233,542


268,861


450,248


564,371











Operating expenses:










Contract drilling, excluding depreciation 

224,782


167,429


189,321


392,210


374,010

Reimbursable expenses 

9,313


6,743


3,414


16,057


10,884

Depreciation 

88,253


86,898


81,825


175,151


163,650

General and administrative 

15,294


17,312


18,236


32,605


36,749

Impairment of assets

-


-


27,225


-


27,225

Restucturing and separation costs

-


-


1,265


-


4,276

(Gain) loss on disposition of assets 

(9,436)


4,287


(50)


(5,149)


(560)

Total operating expenses 

328,206


282,669


321,236


610,874


616,234











Operating loss

(111,500)


(49,127)


(52,375)


(160,626)


(51,863)











Other income (expense):










Interest income 

1,933


2,414


2,001


4,346


3,638

Interest expense, net of amounts capitalized 

(31,159)


(29,925)


(29,585)


(61,084)


(57,903)

Foreign currency transaction (loss) gain

(721)


(1,085)


411


(1,806)


858

Other, net 

105


333


262


438


842











Loss before income tax benefit 

(141,342)


(77,390)


(79,286)


(218,732)


(104,428)











Income tax benefit 

27,354


4,062


10,012


31,416


54,475











Net loss

$   (113,988)


$    (73,328)


$    (69,274)


$   (187,316)


$    (49,953)











Loss per share 

$        (0.83)


$        (0.53)


$        (0.50)


$        (1.36)


$        (0.36)











Weighted-average shares outstanding:










Shares of common stock 

137,691


137,522


137,429


137,607


137,362

Dilutive potential shares of common stock 

-


-


-


-


-

Total weighted-average shares outstanding 

137,691


137,522


137,429


137,607


137,362

 

 

DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands)






June 30,


December 31,


2019


2018

ASSETS




Current assets:




Cash and cash equivalents 

$         147,509


$         154,073

Marketable securities

149,945


299,849

Accounts receivable, net of allowance for bad debts   

163,086


168,620

Prepaid expenses and other current assets   

130,124


163,396

Total current assets 

590,664


785,938





Drilling and other property and equipment, net of accumulated 




   depreciation 

5,163,696

5,184,222

Other assets 

222,876


65,534

Total assets 

$      5,977,236


$      6,035,694





LIABILITIES AND STOCKHOLDERS' EQUITY




Other current liabilities 

$         269,449


$         236,846

Long-term debt 

1,974,816


1,973,922

Deferred tax liability 

74,281


104,380

Other liabilities 

259,793


135,893

Stockholders' equity 

3,398,897


3,584,653

Total liabilities and stockholders' equity 

$      5,977,236


$      6,035,694

 

 

DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)






Six months ended


June 30,


2019


2018

Operating activities:




Net loss

$        (187,316)


$          (49,953)

Adjustments to reconcile net loss to net cash (used in)




provided by operating activities




Depreciation   

175,151


163,650

Loss on impairment of assets

-


27,225

Deferred tax provision   

(31,125)


(61,160)

Contract liabilities, net

14,017


(3,255)

Deferred contract costs, net

26,879


24,703

Other   

(4,174)


422

Net changes in operating working capital   

3,885

29,135

Net cash (used in) provided by operating activities 

(2,683)


130,767





Investing activities:




Capital expenditures 

(172,335)


(90,432)

Proceeds from maturities of marketable securities

2,025,000


300,000

Purchase of marketable securities

(1,872,107)


(573,837)

Proceeds from disposition of assets, net of disposal costs   

15,573


1,723

Net cash used in investing activities 

(3,869)


(362,546)





Financing activities:




Other   

(12)


(90)

Net cash used in financing activities 

(12)


(90)





Net change in cash and cash equivalents 

(6,564)


(231,869)

Cash and cash equivalents, beginning of period 

154,073


376,037

Cash and cash equivalents, end of period   

$         147,509


$         144,168

 

 

DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES

AVERAGE DAYRATE, UTILIZATION AND OPERATIONAL EFFICIENCY

(Dayrate in thousands)
































TOTAL FLEET


Second Quarter

First Quarter

Second Quarter

2019

2019

2018


Average
Dayrate
(1)

Utilization
(2)

Operational
Efficiency
(3)

Average
Dayrate
(1)

Utilization
(2)

Operational
Efficiency
(3)

Average
Dayrate
(1)

Utilization
(2)

Operational
Efficiency
(3)












$273

51%

88.7%

$309

48%

96.5%

$317

53%

90.8%

(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).  Our current fleet includes three floaters that are 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, non-revenue earning 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 loss, adjusted net loss and adjusted loss 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 items 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 various items and their related tax effects are appropriate measures of the continuing and normal operations of the Company. The amounts excluded from our adjusted results include an impairment loss and restructuring and separation costs incurred during the second quarter of 2018, the gain recognized in the second quarter of 2019 from the sale of the Ocean Guardian, the loss on sale of mooring equipment recognized during the second quarter of 2019 in relation to a new leasing initiative and other discrete tax items recognized in the second quarter of 2019.  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 or loss, cash flows from operations or other measures of financial performance prepared in accordance with GAAP.  

 



Three Months Ended 



June 30,


March 31,


June 30,



2019


2019


2018

Reconciliation of As Reported Operating Loss to
Adjusted Operating Loss:






(In thousands)








As reported operating loss

$  (111,500)


$    (49,127)


$    (52,375)








Impairments and other items:






Impairment of rigs

-


-


27,225

Restructuring and separation costs

-


-


1,265

Gain on sale of rig

(14,300)


-


-

Loss on sale of mooring equipment

5,434


-


-








Adjusted operating loss

$  (120,366)


$    (49,127)


$    (23,885)








Reconciliation of As Reported Net Loss to Adjusted Net
Loss:






(In thousands)








As reported net loss

$  (113,988)


$    (73,328)


$    (69,274)








Impairments and other items:






Impairment of rigs

-


-


27,225

Restructuring and separation costs

-


-


1,265

Gain on sale of rig

(14,300)


-


-

Loss on sale of mooring equipment

5,434


-


-








Tax effect of impairments and other items:






Impairment of rigs

-


-


(3,933)

Restructuring and separation costs

-


-


(183)

Gain on sale of rig

1,227


-


-

Loss on sale of mooring equipment

(466)


-


-

Other discrete items (1) 

(14,206)


-


-


Adjusted net loss

$  (136,299)


$    (73,328)


$    (44,900)

 

 



Three Months Ended 



June 30,


March 31,


June 30,



2019


2019


2018

Reconciliation of As Reported Loss per Diluted Share to
Adjusted Loss per Diluted Share:








As reported loss per diluted share 

$       (0.83)


$       (0.53)


$       (0.50)








Impairments and other items:






Impairment of rigs

-


-


0.19

Restructuring and separation costs

-


-


0.01

Gain on sale of rig

(0.10)


-


-

Loss on sale of mooring equipment

0.04


-


-








Tax effect of impairments and other items:






Impairment of rigs

-


-


(0.03)

Restructuring and separation costs

-


-


-

Gain on sale of rig

0.01


-


-

Loss on sale of mooring equipment

(0.01)


-


-

Other discrete items (1) 

(0.10)


-


-








Adjusted loss per diluted share 

$       (0.99)


$       (0.53)


$       (0.33)

(1) 

Represents a discrete income tax adjustment recognized during the second quarter of 2019 in relation to final regulations issued by the Internal Revenue Service in June 2019 with respect to the calculation of the toll charge associated with the deemed repatriation of previously deferred earnings of our non-U.S. subsidiaries in response to the Tax Cuts and Jobs Act enacted in 2017, or Transition Tax.  Based on the new regulations, we recorded a net tax benefit of $14.2 million in the second quarter of 2019.

Contact:     
Samir Ali
Vice President, 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.


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