Diamond Offshore Announces Second Quarter 2012 Results

Diamond Offshore Drilling, Inc. (NYSE:DO) today reported net income for the second quarter of 2012 of $201.5 million, or $1.45 per share on a diluted basis, compared with net income of $266.6 million, or $1.92 per share on a diluted basis, in the same period a year earlier. Revenues in the second quarter of 2012 were $738.2 million, compared with revenues of $889.5 million for the second quarter of 2011.

Results for the quarter included an after-tax gain of approximately $50.5 million, or $0.36 per share, related to the sale of five jack-up rigs. These transactions included the sale of the Ocean Sovereign for $38.5 million cash, in addition to the previously announced sales of the Ocean Heritage, Ocean Drake, Ocean Crusader and Ocean Champion. The reduction in the Company’s overall effective tax rate for the quarter, compared to the previous quarter, resulted primarily from the low effective tax rate associated with these sales transactions.

Since the first quarter of 2012, the Company put in place 14 new agreements that are expected to generate maximum total revenue of approximately $1.1 billion and 10 rig-years of contract drilling backlog. Significant among these awarded contracts are the following:
  • The Ocean Onyx was awarded a one-year contract with Apache Deepwater LLC, a subsidiary of Apache Corporation, at a rate of $490,000 per day. The rig will work in the U.S. Gulf of Mexico upon its completion and delivery from the shipyard in 3Q of 2013.
  • The Ocean Vanguard was extended with Statoil by 20 months to continue operating in the Norwegian sector of the North Sea into March of 2015. The new rate will be $450,000 per day, up from the previous rate of $352,000 per day.
  • The Ocean Nomad was awarded a two-year contract with Dana Petroleum to work in the U.K. North Sea until June of 2015. The rate will be $330,000 per day.
  • The Ocean Guardian was extended with Shell for one year at a rate of $350,000 per day to continue working in the U.K. North Sea until July of 2015. The current rate is $263,000 per day.

“Our contract announcements reflect the continued strength in deep and mid-water markets,” said Larry Dickerson, President and Chief Executive Officer of Diamond Offshore. “In particular, we are pleased with the award for the Ocean Onyx, our deepwater semisubmersible rig currently under construction. The Company is currently evaluating another potential project that would deliver a rig with enhanced capabilities, similar to the Ocean Onyx.”

“Over the past several quarters, our results have also benefitted from our ongoing efforts to control costs and reduce unanticipated rig downtime,” said Dickerson. “During the second quarter, we continued to execute on these initiatives, which contributed to our strong operating results.”

CONFERENCE CALL

Diamond Offshore will host a conference call to discuss first quarter results on Thursday, July 19, 2012 beginning at 9:00 a.m. CDT. 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 800-247-9979, or 973-321-1100 for international callers. The conference ID number is 93863487. An online replay will also be available on www.diamondoffshore.com following the call.

ABOUT DIAMOND OFFSHORE

Diamond Offshore provides contract drilling services to the energy industry and is a leader in deepwater drilling. Diamond Offshore’s fleet of offshore drilling rigs consists of 31 semisubmersibles, seven jack-ups, and one drillship, in addition to four ultra-deepwater drillships and one deepwater semisubmersible currently under construction. For additional information and access to SEC filings, please visit the Company’s website at www.diamondoffshore.com. Diamond Offshore is a 50.4% owned subsidiary of Loews Corporation (NYSE:L).

FORWARD-LOOKING STATEMENTS

Maximum contract revenue as stated above assumes 100% rig utilization. Generally, rig utilization rates approach 92-98% during contracted periods; however, utilization rates can be adversely impacted by additional downtime due to unscheduled repairs, maintenance and weather. Additional information on Diamond Offshore Drilling, Inc. (“the Company”) and access to the Company’s SEC filings is available on the Internet at www.diamondoffshore.com.

Statements contained in this press release that are not historical facts are “forward-looking statements” within the meaning of the federal securities laws. Such statements include, but are not limited to, statements concerning future revenues and backlog, future performance under contract awards and extensions, future operations and dayrates, delivery of the Ocean Onyx from the shipyard, market outlook and future market conditions, future rig construction and future contracting opportunities. 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 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 factors include, among others, general economic and business conditions, contract cancellations, customer bankruptcy, operating risks, casualty losses, industry fleet capacity, changes in foreign and domestic oil and gas exploration and production activity, competition, changes in foreign, political, social and economic conditions, regulatory initiatives and compliance with governmental regulations, customer preferences and various other matters, 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
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
   
Three Months Ended

 

Six Months Ended
June 30,  

 

June 30,
2012   2011 2012   2011
 
Revenues:
Contract drilling $ 726,261 $ 869,646 $ 1,481,416 $ 1,658,519
Revenues related to reimbursable expenses 11,927   19,850   25,414   37,366  
Total revenues 738,188   889,496   1,506,830   1,695,885  
 
Operating expenses:
Contract drilling, excluding depreciation 405,252 388,006 802,354 750,370
Reimbursable expenses 11,637 19,287 24,788 36,237
Depreciation 99,469 101,175 200,862 202,348
General and administrative 18,741 16,372 36,327 34,097
Bad debt recovery (400 ) (1,700 ) (1,018 ) (10,147 )
Gain on disposition of assets (53,695 ) (1,240 ) (79,077 ) (3,881 )
Total operating expenses 481,004   521,900   984,236   1,009,024  
 
Operating income 257,184 367,596 522,594 686,861
 
Other income (expense):
Interest income 1,496 1,091 3,279 1,541
Interest expense (12,731 ) (22,226 ) (28,060 ) (44,270 )
Foreign currency transaction gain (loss) 1,083 (1,555 ) 979 (3,161 )
Other, net (274 ) (880 ) (599 ) (96 )
 
Income before income tax expense 246,758 344,026 498,193 640,875
 
Income tax expense (45,297 ) (77,440 ) (111,563 ) (123,677 )
 
Net Income $ 201,461   $ 266,586   $ 386,630   $ 517,198  
 
Income per share:
Basic $ 1.45   $ 1.92   $ 2.78   $ 3.72  
Diluted $ 1.45   $ 1.92   $ 2.78   $ 3.72  
 
Weighted average shares outstanding:
Shares of common stock 139,029 139,027 139,028 139,027
Dilutive potential shares of common stock 11   25   11   25  

Total weighted average shares outstanding
139,040   139,052   139,039   139,052  
DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS
(Unaudited)
(In thousands)
 

Three Months Ended
Jun 30,   Mar 31,   Jun 30,
2012   2012   2011
   
REVENUES
Floaters:
Ultra-Deepwater $ 233,071 $ 244,589 $ 233,271
Deepwater 142,565 146,003 192,791
Mid-water   310,462       318,595       383,067  
Total Floaters 686,098 709,187 809,129
Jack-ups 40,163 45,968 60,512
Other   --       --       5  
Total Contract Drilling Revenue $ 726,261     $ 755,155     $ 869,646  
 
Revenues Related to Reimbursable Expenses

$

11,927
   

$

13,487
   

$

19,850
 
 
CONTRACT DRILLING EXPENSE
Floaters:
Ultra-Deepwater $ 137,087 $ 139,961 $ 132,907
Deepwater 68,653 58,594 59,658
Mid-water   160,642       162,779       149,773  
Total Floaters 366,382 361,334 342,338
Jack-ups 29,240 31,443 38,552
Other   9,630       4,325       7,116  
Total Contract Drilling Expense $ 405,252     $ 397,102     $ 388,006  
 
Reimbursable Expenses $ 11,637     $ 13,151     $ 19,287  
 
OPERATING INCOME
Floaters:
Ultra-Deepwater $ 95,984 $ 104,628 $ 100,364
Deepwater 73,912 87,409 133,133
Mid-water   149,820       155,816       233,294  
Total Floaters 319,716 347,853 466,791
Jack-ups 10,923 14,525 21,960
Other (9,630 ) (4,325 ) (7,111 )
Reimbursable expenses, net 290 336 563
Depreciation (99,469 ) (101,393 ) (101,175 )
General and administrative expense (18,741 ) (17,586 ) (16,372 )
Bad debt recovery 400 618 1,700
Gain on disposition of assets   53,695       25,382       1,240  
Total Operating Income $ 257,184     $ 265,410     $ 367,596  
DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
   
June 30,     December 31,
2012 2011
(unaudited)
ASSETS
 
Current assets:
Cash and cash equivalents $ 376,359 $ 333,765
 
Marketable securities 975,947 902,414
 
Accounts receivable, net of allowance for bad debts 532,302 563,934
 
Prepaid expenses and other current assets 160,012 192,570
   
Total current assets 2,044,620 1,992,683
 

Drilling and other property and equipment, net of accumulated depreciation
4,780,747 4,667,469
 
Other assets 257,530 304,005
Total assets $ 7,082,897 $ 6,964,157
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
Current liabilities $ 392,458 $ 427,291
 
Long-term debt 1,495,943 1,495,823
 
Deferred tax liability 535,965 536,815
 
Other liabilities 176,539 171,165
   
Stockholders’ equity 4,481,992 4,333,063
   
Total liabilities and stockholders’ equity $ 7,082,897 $ 6,964,157
DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES
AVERAGE DAYRATES AND UTILIZATION
(Dayrate in thousands)
     
Second Quarter First Quarter Second Quarter
    2012   2012   2011
    Dayrate   Utilization   Dayrate   Utilization   Dayrate   Utilization
Ultra-Deepwater Floaters $354   89% $364   85% $340   92%
Deepwater Floaters $372 83% $359 88% $422 98%
Mid-Water Floaters $262 66% $266 65% $265 77%
Jack-Ups $94 49% $87 44% $82 60%

Copyright Business Wire 2010

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