Chapter 11 Proceedings (Tables)

9 Months Ended

Sep. 30, 2020

Schedule of Reorganization Items Incurred

The following table provides information about reorganization items incurred during the three- and nine-month periods ended September 30, 2020, subsequent to the Petition Date (in thousands):

	Three Months Ended			Nine Months Ended
	September 30, 2020
Professional fees	$	18,634		$	39,293
Write-off of debt issuance costs		—			27,552
Net gain on settlement with certain unsecured vendors		(9,971	)		(4,205	)
Total reorganization items, net	$	8,663		$	62,640

Payments of $23.8 million related to professional fees and vendor cancellation costs have been presented as cash outflows from operating activities in our unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2020. See Note 5.

Summary of Liabilities Subject to Compromise

Liabilities subject to compromise at September 30, 2020 consist of the following (in thousands):

	September 30,
	2020
Debt subject to compromise:
Borrowings under credit facility	$	436,000
3.45% Senior Notes due 2023		250,000
7.875% Senior Notes due 2025		500,000
5.70% Senior Notes due 2039		500,000
4.875% Senior Notes due 2043		750,000
Lease liabilities		140,580
Accrued interest		47,636
Accounts payable		19,912
Other accrued liabilities		5,306
Other liabilities		4,221
Total liabilities subject to compromise	$	2,653,655

Debtor-in-Possession Condensed Combined Balance Sheet

Unaudited condensed combined financial statements of the Debtors are set forth below. These financial statements exclude the financial statements of the non-Debtor subsidiaries. Transactions and balances of receivables and payables between the Debtors have been eliminated in consolidation. Amounts payable to the non-Debtor subsidiaries are reported in the unaudited condensed consolidated balance sheet of the Debtors

DIAMOND OFFSHORE DRILLING, INC. AND CERTAIN SUBSIDIARIES PARTY TO THE BANKRUPTCY CASES (DEBTOR-IN-POSSESSION)

CONDENSED COMBINED BALANCE SHEET

(Unaudited)

(In thousands)

	September 30,
	2020
ASSETS
Current assets:
Cash and cash equivalents	$	407,222
Restricted cash		25,692
Accounts receivable		128,480
Less: allowance for credit losses		(175	)
Accounts receivable, net		128,305
Prepaid expenses and other current assets		49,577
Assets held for sale		1,000
Total current assets		611,796
Drilling and other property and equipment, net of
accumulated depreciation		4,232,543
Investments in non-debtor subsidiaries		2,458,447
Noncurrent deferred tax assets, net		31,356
Other assets		192,094
Total assets	$	7,526,236
LIABILITIES AND DEBTORS’ EQUITY
Current liabilities:
Accounts payable	$	28,993
Accrued liabilities		114,935
Taxes payable		26,062
Amounts payable to non-debtor subsidiaries		1,043,326
Total current liabilities		1,213,316
Note payable to non-debtor subsidiary		328,000
Other liabilities		45,157
Total liabilities not subject to compromise		1,586,473
Liabilities subject to compromise		2,653,655
Total debtors’ equity		3,286,108
Total liabilities and debtors’ equity	$	7,526,236

Debtor-in-Possession Condensed Combined Statement of Operations

DIAMOND OFFSHORE DRILLING, INC. AND CERTAIN SUBSIDIARIES PARTY TO THE BANKRUPTCY CASES (DEBTOR-IN-POSSESSION)

CONDENSED COMBINED STATEMENT OF OPERATIONS

(Unaudited)

(In thousands)

	Nine Months Ended
	September 30,
	2020
Revenues:
Contract drilling	$	460,877
Revenues related to reimbursable expenses		29,806
Total revenues		490,683
Operating expenses:
Contract drilling, excluding depreciation		415,613
Reimbursable expenses		28,020
Depreciation		242,480
General and administrative		41,497
Impairment of assets		774,028
Restructuring and separation costs		15,383
Gain on disposition of assets		(3,989	)
Total operating expenses		1,513,032
Operating loss		(1,022,349	)
Other income (expense):
Interest income		502
Interest expense, net of amounts capitalized		(50,155	)
Foreign currency transaction gain		591
Reorganization items, net		(62,640	)
Other, net		(499	)
Loss before income tax benefit		(1,134,550	)
Income tax benefit		27,117
Net loss	$	(1,107,433	)

Debtor-in-Possession Condensed Combined Statement of Cash Flows

DIAMOND OFFSHORE DRILLING, INC. AND CERTAIN SUBSIDIARIES PARTY TO THE BANKRUPTCY CASES (DEBTOR-IN-POSSESSION)

CONDENSED COMBINED STATEMENT OF CASH FLOWS

(Unaudited)

(In thousands)

	Nine Months Ended
	September 30,
	2020
Operating activities:
Net loss	$	(1,107,433	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation		242,480
Loss on impairment of assets		774,028
Reorganization items, net		22,107
Gain on disposition of assets		(3,989	)
Deferred tax provision		(16,846	)
Stock-based compensation expense		5,637
Contract liabilities, net		13,595
Contract assets, net		2,762
Deferred contract costs, net		(8,085	)
Long-term employee remuneration programs		(5,079	)
Noncurrent collateral deposits		(18,262	)
Other assets, noncurrent		(8,756	)
Other		3,013
Changes in operating assets and liabilities:
Accounts receivable		68,908
Prepaid expenses and other current assets		15,022
Accounts payable and accrued liabilities		1,439
Taxes payable		(15,462	)
Due to non-debtor subsidiaries		47,111
Net cash provided by operating activities		12,190
Investing activities:
Capital expenditures		(156,885	)
Capital contribution to non-debtor subsidiary		(5,724	)
Proceeds from disposition of assets, net of disposal costs		5,235
Net cash used in investing activities		(157,374	)
Financing activities:
Borrowings under credit facility		436,000
Net cash provided by financing activities		436,000
Net change in cash, cash equivalents and restricted cash		290,816
Cash, cash equivalents and restricted cash, beginning of period		142,098
Cash, cash equivalents and restricted cash, end of period	$	432,914