EX-99.1 2 d352023dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

LOGO   

Contact:

Kevin Bordosky Senior Director, Investor Relations

(281) 647-4035

Diamond Offshore Announces Third Quarter 2022 Results and

$429 Million Project Award in Brazil

 

•  

Ocean Courage Awarded 4-Year Project

 

•  

Performance Bonus on First Well for Ocean BlackHawk

 

•  

$20 Million Increase in Revenue and $3 Million Increase in EBITDA

 

•  

Ocean GreatWhite Commences Reactivation

HOUSTON, November 7, 2022 — Diamond Offshore Drilling, Inc. (NYSE: DO) today reported the following results for the third quarter of 2022:

 

     Three Months Ended  

Thousands of dollars, except per share data

    September 30, 2022      June 30, 2022  

Total revenues

    $ 226,073      $ 205,702  

Operating loss

      (7,575 )       (9,763 ) 

Adjusted EBITDA

      18,421        15,245  

Net income (loss)

      5,510        (21,929 ) 

Income (loss) per diluted share

    $ 0.05      $ (0.22 ) 

Diamond Offshore also announced it received notification of award of a new drilling program with Petrobras in Brazil for the Ocean Courage. The Ocean Courage was awarded a four-year project with an unpriced option for an additional four years. The total estimated value of the firm term of the award is approximately $429 million, including a mobilization fee and the provision of certain additional services. The new contract is expected to be signed imminently and commence late in the fourth quarter of 2023 after conclusion of the rig’s current contract and new contract preparations.

Bernie Wolford, Jr., President and Chief Executive Officer, stated “This award is a testament to the exceptional performance of our crews and allows Diamond to continue serving the world’s largest operator of deepwater drilling rigs. This program is in addition to the $1.6 billion of backlog we reported as of October 1, 2022.”

Third Quarter Results

Contract drilling revenue for the third quarter totaled $190 million compared to $177 million in the second quarter of 2022. The increase in revenue was primarily driven by the Ocean BlackHawk beginning work in Senegal during the quarter, the Ocean Apex and Ocean Patriot both benefitting from a full quarter of utilization, and the Ocean Patriot operating under terms of

a contract extension with a favorable dayrate increase. These increases in contract drilling revenue were partially offset by the Ocean Onyx completing its contract in Australia and currently being stacked in Western Australia while the Company continues to pursue prospects in the region. Contract drilling expense for the third quarter increased by 9%, reflecting a higher operating cost structure for the Ocean BlackHawk in Senegal as well as the commencement of reactivation activities for the Ocean GreatWhite.

Net income for the quarter was $5.5 million, inclusive of a $23 million non-cash tax benefit, as compared to a net loss of $22 million in the prior quarter.

Operational Highlights

During the quarter, the Company’s fleet continued to perform well, improving to 97.3% revenue efficiency. The Ocean BlackHawk earned a performance bonus upon completion of its first well in Senegal. In addition, the Company continued to make sequential improvements in safety performance, with no lost-time-incidents.

In October, the managed drillship Vela commenced a one-well contract in the Gulf of Mexico to be followed by a five-well, or minimum 225-day duration, contract with options for up to seven wells.

Liquidity and Outlook

As of September 30, 2022, Diamond Offshore had total liquidity of $296 million, comprised of $23 million of unrestricted cash and $273 million of available capacity on its revolving credit facility and delayed draw First Lien Notes.

Remarking on the outlook for the offshore drilling market, Wolford commented, “Market fundamentals continue to improve in our industry, driving improved dayrates and growing visibility of future demand.”

CONFERENCE CALL

A conference call to discuss Diamond Offshore’s earnings results has been scheduled for 8:00 a.m. Central Time on Tuesday, November 8, 2022. A live webcast of the call will be available online on the Company’s website, www.diamondoffshore.com. Participants who want to join the call via telephone or want to participate in the question-and-answer session may register here to receive the dial-in numbers and unique PIN to access the call. 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 http://www.diamondoffshore.com/.

FORWARD-LOOKING STATEMENTS

Statements contained in this press release and statements made in the referenced conference call that are not historical facts are “forward-looking statements” within the meaning of

Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include, but are not limited to, any statement that may project, indicate or imply future results, events, performance or achievements, including statements relating to future financial results; future recovery in the offshore contract drilling industry; expectations regarding the Company’s plans, strategies and opportunities; expectations regarding the Company’s business or financial outlook; future borrowing capacity and liquidity; expected utilization, dayrates, revenues, operating expenses, rig commitments and availability, cash flows, contract status, terms and duration, contract backlog, capital expenditures, insurance, financing and funding; the effect, impact, potential duration and other implications of the ongoing COVID-19 pandemic; the offshore drilling market, including supply and demand, customer drilling programs, repricings, stacking of rigs, effects of new rigs on the market and effect of the volatility of commodity prices; expected work commitments, awards and contracts; future operations; increasing regulatory complexity; general market, business and industry conditions, trends and outlook; and general political conditions, including political tensions, conflicts and war. 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 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 Item 1A “Risk Factors” in the Company’s most recent annual report on Form 10-K and the Company’s other 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, levels 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, permits and approvals for drilling operations, the COVID-19 pandemic and related disruptions to the global economy, supply chain and normal business operations across sectors and countries, 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 and other considerations, 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, and 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  
     September 30,
2022		     June 30,
2022		  

Revenues:

     

Contract drilling

    $ 189,861     $ 176,879  

Revenues related to reimbursable expenses

      36,212       28,823  
  

 

 

    

 

 

  

Total revenues

      226,073       205,702  
  

 

 

    

 

 

  

Operating expenses:

     

Contract drilling, excluding depreciation

      155,567       142,150  

Reimbursable expenses

      35,765       28,554  

Depreciation

      26,069       25,693  

General and administrative

      16,320       19,753  

Gain on disposition of assets

      (73 )      (685 ) 
  

 

 

    

 

 

  

Total operating expenses

      233,648       215,465  
  

 

 

    

 

 

  

Operating loss

      (7,575 )      (9,763 ) 

Other income (expense):

     

Interest income

      11       —    

Interest expense

      (10,364 )      (10,103 ) 

Foreign currency transaction gain

      237       1,607  

Other, net

      172       (47 ) 
  

 

 

    

 

 

  

Loss before income tax benefit (expense)

      (17,519 )      (18,306 ) 

Income tax benefit (expense)

      23,029       (3,623 ) 
  

 

 

    

 

 

  

Net income (loss)

    $ 5,510     $ (21,929 ) 
  

 

 

    

 

 

  

Income (loss) per share, Basic and Diluted

    $ 0.05     $ (0.22 ) 
  

 

 

    

 

 

  

Weighted-average shares outstanding, Basic

      100,875       100,108  
  

 

 

    

 

 

  

Weighted-average shares outstanding, Diluted

      102,273       100,108  
  

 

 

    

 

 

  

DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands)

 

     September 30,
2022		      December 31,
2021		  

ASSETS

      

Current assets:

      

Cash and cash equivalents

    $ 22,650      $ 38,388  

Restricted cash

      38,592        24,341  

Accounts receivable, net of allowance for credit losses

      179,910        146,335  

Prepaid expenses and other current assets

      59,585        61,440  

Asset held for sale

      —          1,000  
  

 

 

     

 

 

  

Total current assets

      300,737        271,504  

Drilling and other property and equipment, net of accumulated depreciation

      1,143,268        1,175,895  

Other assets

      79,714        84,041  
  

 

 

     

 

 

  

Total assets

    $ 1,523,719      $ 1,531,440  
  

 

 

     

 

 

  

LIABILITIES AND STOCKHOLDERS’ EQUITY

      

Other current liabilities

    $ 231,470      $ 232,762  

Long-term debt

      335,540        266,241  

Noncurrent finance lease liabilities

      135,777        148,358  

Deferred tax liability

      1,838        1,626  

Other liabilities

      88,905        114,748  

Stockholders’ equity

      730,189        767,705  
  

 

 

     

 

 

  

Total liabilities and stockholders’ equity

    $ 1,523,719      $ 1,531,440  
  

 

 

     

 

 

  

DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

 

     Nine Months Ended
September 30,		  
     2022  

Operating activities:

   

Net loss

    $ (50,773 ) 

Adjustments to reconcile net loss to net cash used in operating activities:

   

Depreciation

      78,714  

Gain on disposition of assets

      (4,802 ) 

Deferred tax provision

      (7,961 ) 

Stock-based compensation expense

      16,471  

Contract liabilities, net

      (19,725 ) 

Contract assets, net

      1,330  

Deferred contract costs, net

      (4,193 ) 

Collateral deposits

      17,479  

Other assets, noncurrent

      (547 ) 

Other liabilities, noncurrent

      (160 ) 

Other

      1,275  

Net changes in operating working capital

      (49,038 ) 
  

 

 

  

Net cash used in operating activities

      (21,930 ) 
  

 

 

  

Investing activities:

   

Capital expenditures

      (42,653 ) 

Proceeds from disposition of assets, net of disposal costs

      5,861  
  

 

 

  

Net cash used in investing activities

      (36,792 ) 
  

 

 

  

Financing activities:

   

Borrowings under credit facility

      69,000  

Principal payments of finance lease liabilities

      (11,765 ) 
  

 

 

  

Net cash provided by financing activities

      57,235  
  

 

 

  

Net change in cash, cash equivalents and restricted cash

      (1,487 ) 

Cash, cash equivalents and restricted cash, beginning of period

      62,729  
  

 

 

  

Cash, cash equivalents and restricted cash, end of period

    $ 61,242  
  

 

 

  

DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES

AVERAGE DAYRATE, UTILIZATION AND OPERATIONAL EFFICIENCY

(Dayrate in thousands)

 

TOTAL FLEET  
Third Quarter
2022		     Second Quarter
2022		  
Average Dayrate (1)      Utilization (2)     Revenue Efficiency (3)     Average Dayrate (1)      Utilization (2)     Revenue Efficiency (3)  
$ 235        68 %      97.3 %    $ 228        57 %      96.3 % 

 

(1)

Average dayrate is defined as total contract drilling revenue for all of the rigs in our fleet (including managed rigs) 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 rigs in our fleet (including managed and cold-stacked rigs).

(3)

Revenue efficiency is calculated as actual contract drilling revenue earned divided by potential revenue, assuming a full dayrate is earned.

Non-GAAP Financial Measures (Unaudited)

To supplement the Company’s unaudited condensed consolidated financial statements presented on a basis in conformity with generally accepted accounting principles in the United States (GAAP), this press release provides investors with adjusted earnings before interest, taxes and depreciation and amortization (or Adjusted EBITDA), which is a non-GAAP financial measure. Management believes that this measure provides 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 a supplement 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.

Reconciliation of Loss Before Income Tax Benefit (Expense) to Adjusted EBITDA:

(In thousands)

 

     Three Months Ended  
     September 30,
2022		      June 30,
2022		  

As reported loss before income tax benefit (expense)

    $ (17,519 )     $ (18,306 ) 

Interest expense

      10,364        10,103  

Interest income

      (11 )       —    

Foreign currency transaction gain

      (237 )       (1,607 ) 

Depreciation

      26,069        25,693  

Gain on disposition of assets

      (73 )       (685 ) 

Other, net

      (172 )       47  
  

 

 

     

 

 

  

Adjusted EBITDA

    $ 18,421      $ 15,245