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Pacific Drilling Announces Third Quarter 2012 Results

Stocks in this article: PACD

Pacific Drilling S.A. (NYSE: PACD) today announced revenues of $172.0 million and a net loss of $2.0 million or $0.01 per diluted share for the three months ended September 30, 2012. In the comparable prior year period, the company had revenues of $17.0 million and a net loss of $11.0 million or $0.05 per diluted share.

CEO Chris Beckett commented, “The ultra-deepwater market continues to provide strong fundamentals with recent awards firmly in the high $500,000 to $600,000 per day range and demand exceeding the limited supply well into 2014 and possibly beyond. With this backdrop, the third quarter of 2012 reflected continued strong revenue efficiency for the Pacific Scirocco, Pacific Bora and Pacific Mistral, which have all completed the shakedown period. These three rigs averaged 97.2% efficiency during the third quarter. The Pacific Santa Ana, still in its shakedown phase, has experienced several issues with its blowout preventer that have resulted in a lower than anticipated efficiency level.

Our focus on achieving optimal operating efficiency means that our operational expenses did not meet our expectations, but instead increased as a result of costs associated with equipment, maintenance and repair events and personnel, particularly for the Santa Ana and the Mistral. We will continue to focus our efforts on bringing our operational expenses in line with our post shakedown expectations.”

Mr. Beckett added, “We have signed a letter of intent with a major oil company for the Pacific Khamsin and will provide more details once a final drilling contract is signed. Our operational track record has enhanced our active client discussions regarding future contracts, and when combined with ongoing market strength for ultra-deepwater drillships, contributes to our continued optimism regarding contract opportunities for the Pacific Meltem.”

Third Quarter 2012 Operational Commentary

Contract drilling revenue for the third quarter of 2012 was $172.0 million including recognition of $26.0 million of deferred revenue for mobilization, contract preparation and asset upgrades. During the three months ended September 30, 2012, our operating fleet of four drillships achieved an average revenue efficiency of 83.1% (a), in line with the guidance provided at the end of the second quarter. Our three drillships that have operated the longest exceeded our expectations for revenue efficiency for the third quarter 2012. Pacific Bora, Pacific Scirocco and Pacific Mistral achieved average revenue efficiency for the quarter ended September 30, 2012, of 97.8%, 99.5% and 94.1% respectively. As communicated last quarter, Pacific Santa Ana experienced problems with its blowout preventer (BOP), which were primarily responsible for the Santa Ana’s average revenue efficiency of 42.1% during the third quarter.

Contract drilling expenses for the third quarter of 2012 were $96.2 million, including $18.8 million in amortization of deferred mobilization costs and $6.6 million in shore-based and other support costs. The sequential increase in daily contract drilling expenses to an average of $192,500 was primarily driven by equipment and maintenance costs for Pacific Santa Ana and Pacific Mistral and personnel costs related to Pacific Bora and Pacific Scirocco.

EBITDA (b) for the third quarter of 2012 was $65.3 million, compared to $63.3 million during the second quarter of 2012.

Third Quarter 2012 Financial Commentary

Our cash balances on September 30, 2012, stood at $457 million, including $303 million of restricted cash related primarily to our project financing facility and collateral for our bonds and lines of credit.

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