DIAMOND OFFSHORE DRILLING, INC. - FORM 8-K - EX-99.1 - December 15, 2010

Attached files

file filename
8-K - FORM 8-K - DIAMOND OFFSHORE DRILLING, INC.h78339e8vk.htm
     
1
Exhibit 99.1
DIAMOND OFFSHORE DRILLING, INC. RIG STATUS REPORT AS OF
December 15, 2010
RECENT COMMITMENTS — (See Body of Report For Contract Details/Date Changes and Other Information)
     
Ocean Titan
  One well
 
    
Ocean Summit
  42-day extension
 
    
Ocean Sovereign
  Six firm wells
                                 
    Nominal                   Dayrate        
Rig Name   WD*   Location   Status   Operator   Current Term   ($000s)   Start Date   Est. End Date
Domestic Deepwater Semisubmersibles (2) (Note 1)                    
Ocean Victory (Note 2)
  5,500’   GOM   Actively Marketing   DODI         mid Dec. 2010   late Mar. 2011
 
      GOM   Contract Continuation   ATP   continue six-well minimum   low 560’s   late Mar. 2011   mid July 2011
 
      GOM   Contract Continuation   ATP   balance 1-year term   low 540’s   mid July 2011   late Sept. 2011
Ocean Monarch (Note 3)
  10,000’   GOM   Resume Original Contract   Anadarko   cont. four-year term   low 440’s   early August 2010   mid March 2013
Domestic 2nd Generation Semisubmersibles (1) (Note 1)                    
Ocean Saratoga
  2,200’   GOM   Current Contract   Taylor   one-year extension   200-210   mid July 2010   late June 2011
Domestic Jack-ups (2) (Note 1)                            
Ocean Columbia
  250’ IC   GOM   Actively Marketing   DODI                
Ocean Titan
  350’ IC   GOM   Current Contract   Ankor   one well   low 70’s   early Dec. 2010   late Dec. 2010
Note (1). On October 12, 2010, the U.S. government lifted the ban on certain drilling activities in the GOM, which had been initially imposed on May 30, 2010 following the Macondo well blowout. All drilling in the GOM is now subject to compliance with enhanced safety requirements set forth in Notices to Lessees 2010-N05 and 2010-N06, both of which were implemented during the drilling ban. Additionally, all drilling in the GOM will be required to comply with the Interim Final Rule to Enhance Safety Measures for Energy Development on the Outer Continental Shelf (Drilling Safety Rule) and the Workplace Safety Rule on Safety and Environmental Management Systems, both of which were issued on September 30, 2010, once they become final. We continue to evaluate these new measures to ensure that our rigs and equipment are in full compliance, where applicable. Additional requirements could be forthcoming based on further recommendations by regulatory agencies investigating the Macondo incident. We are not able to predict the likelihood, nature or extent of additional rulemaking or when the interim rules, or any future rules, could become final. Nor are we able to predict when the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEM) will issue drilling permits to our customers. We are not able to predict the future impact of these events on our operations. Even with the drilling ban lifted, certain deepwater activities remain suspended until the BOEM resumes its regular permitting of those activities.
Note (2). — Victory — In regard solely to the ATP contract, and for a minimum of the first 240 days of the initial one-year contract period, Contract Drilling Revenue is to be recognized under normal GAAP accrual accounting at $540,000 per day, and additional contract dayrate of $20,000 is to be recognized as interest income over applicable periods reflecting deferred payment plan. The contract calls for $75,000 per day of the $560,000 contract dayrate to be paid on a current basis and the remaining $485,000 per day to be paid pursuant to an overriding royalty interest structure, as discussed in the Company’s Form 8-K that was filed on June 3, 2009. Remaining days under the initial one-year contract period will be deferred until approximately the third quarter of 2011, when the contract provides that the rig will be utilized by the operator at a dayrate of $540,000 payable in cash.
Note (3). Monarch — On September 13, 2010, we received notice of termination of the drilling contract from the operator, Anadarko Petroleum Corporation, on the grounds that the actions of certain governmental authorities, relating to a moratorium on certain drilling activities in the U.S. Gulf of Mexico following the Macondo well blowout, constitute a condition of force majeure under the drilling contract. The operator has also filed suit against us in U.S. District Court in Houston seeking a declaratory judgment that its termination of the drilling contract is warranted under the contract. We do not believe the events cited by the operator come within the definition of force majeure under the drilling contract, and we do not believe that the operator has the right to terminate the drilling contract on this basis. Although we cannot predict with certainty the results of any such litigation, and there can be no assurance as to its ultimate outcome, we intend to vigorously defend this litigation and challenge the operator’s attempt to terminate the drilling contract.

 

 

     
2
DIAMOND OFFSHORE DRILLING, INC. RIG STATUS REPORT AS OF
December 15, 2010
                                 
    Nominal                   Dayrate        
Rig Name   WD*   Location   Status   Operator   Current Term   ($000s)   Start Date   Est. End Date
International Semisubmersibles (26)                            
North Sea/Mediterranean                            
Ocean Nomad
  1,200’   North Sea   Current Contract   SPD/Xcite   one well + option   mid 240’s   late Sept. 2010   late Dec. 2010
 
      North Sea   Future Contract   BG Intl.   one well + 4 options   mid 240’s   late Dec. 2010   mid Mar. 2011
Ocean Guardian
  1,500’   Falkland Is.   Current Contract   AGR/Desire/ Rockhopper   Nine firm wells plus one remaining optional well   mid 240’s   mid Feb. 2010   mid Mar. 2011
Ocean Princess
  1,500’   North Sea   Current Contract   Talisman   remainder Nomad contract   high 330’s   late April 2010   early April 2011
 
      North Sea   Future Contract   Talisman   120-day additional term   mid 270’s   early April 2011   late July 2011
Ocean Vanguard
  1,500’   North Sea   Current Contract   Statoil   three-year term + unpriced option   high 340’s   mid Aug. 2010   mid June 2013
Ocean Endeavor (Note 4)
  10,000’   Egypt   Current Contract   Burullus   one-year term + unpriced option   mid 220’s   mid July 2010   mid July 2011
Ocean Confidence
  10,000’   Congo   Current Contract   Murphy   one-well extension +unpriced option   low 390’s   early Dec. 2010   early Jan. 2011
 
      Angola   Future Contract   Cobalt   two wells + one firm option well   low 360’s   early Jan. 2011   late Aug. 2011
 
          Mobe to GOM   DODI           late Aug. 2011   late Oct. 2011
 
      GOM   Future Contract   Murphy   resume interrupted contract + unpriced option   low 510’s   late Oct. 2011   late Oct. 2012
Ocean Valiant (Note 5)   5,500’   Angola   Current Contract   Total   two-year term   low 620’s   late Sept. 2009   late Sept. 2011
Note (4). Endeavor — In connection with the relocation of this rig out of the GOM pursuant to this contract, the previous operator paid an early termination fee of $31 million in order to satisfy certain contractual obligations.
Note (5). Valiant — Dayrate subject to certain potential adjustments that are not expected to be material.

 

 

     
3
DIAMOND OFFSHORE DRILLING, INC. RIG STATUS REPORT AS OF
December 15, 2010
                                 
    Nominal                   Dayrate        
Rig Name   WD*   Location   Status   Operator   Current Term   ($000s)   Start Date   Est. End Date
Australasia
                                
Ocean Patriot
  1,500’   Australia   Current Contract   Apache   two-year term + unpriced option   between 380-420   late Jan. 2009   early Jan. 2011
Ocean America
  5,500’   Australia   Current Contract   Woodside   two-year term   mid 420’s   late June 2010   mid Dec. 2010
 
          Interrupt Current Contract   DODI   Maintenance/mobe       mid Dec. 2010   late Mar. 2011
 
          Resume Current Contract   Woodside   remainder term   mid 420’s   late Mar. 2011   early Sept. 2012
Ocean Epoch
  3,000’   Australia   Current Contract   BHPB   90-day extension   low 280’s   mid Sept. 2010   mid Dec. 2010
 
      Australia   Future Contract   Japan Energy   one well   mid 290’s   mid Dec. 2010   mid Jan. 2011
Ocean General
  3,000’   Vietnam   Current Contract   PVEP   Approx. two-year term   high 250’s   mid Oct. 2008   late Dec. 2010
 
      Indonesia   Future Contract   Premier Oil   two wells + unpriced option   low 240’s   late Dec. 2010   mid Feb. 2011
Ocean Rover
  8,000’   Indonesia   Future Contract   Murphy/Hess   est. six months   high 370’s   mid Dec. 2010   late May 2011
 
      Malaysia   Resume Current Contract   Murphy   resume two-year ext.   low 450’s   late May 2011   late Oct. 2011

 

 

     
4
DIAMOND OFFSHORE DRILLING, INC. RIG STATUS REPORT AS OF
December 15, 2010
                                 
    Nominal                   Dayrate        
Rig Name   WD*   Location   Status   Operator   Current Term   ($000s)   Start Date   Est. End Date
Brazil
                                
Ocean Ambassador
  1,100’   Brazil   Current Contract   OGX   3-year term + unpriced option   low 260’s   mid Sept. 2009   mid Sept. 2012
Ocean Whittington
  1,650’   Brazil   Current Contract   Petrobras   5-year term (includes 50%
of pot.15% bonus) 		  low 240’s   late Jan. 2009   late Aug. 2012
Ocean Concord
  2,300’   Brazil   Current Contract   Petrobras   5-year term (includes 50%
of pot.15% bonus) 		  high 240’s   early Jan. 2008   early Jan. 2013
Ocean Lexington
  2,200’   Brazil   Current Contract   OGX   3-year term + unpriced option   mid 330’s   early Feb. 2010   early Feb. 2013
Ocean Yorktown
  2,850’   Brazil   Current Contract   Petrobras   5-year term (includes 50%
of pot.15% bonus) 		  low 250’s   mid Aug. 2008   mid Aug. 2013
Ocean Yatzy
  3,300’   Brazil   Current Contract   Petrobras   5-year term (includes 50%
of pot.10% bonus) 		  mid 250’s   early Oct. 2009   early Oct. 2014
Ocean Quest
  4,000’   Brazil   Current Contract   OGX   2-year term + unpriced option   low 340’s   mid Feb. 2010   mid Feb. 2011
 
      Brazil   Remainder term at new blended rate   OGX   revised 2-year term + unpriced option   low 270’s   mid Feb. 2011   late Dec. 2011
 
      Brazil   Future Contract   OGX   1-year extension + unpriced option   low 250’s   late Dec. 2011   late Dec. 2012
Ocean Winner
  4,000’   Brazil   Current Contract   Petrobras   5-year term (includes 50%
of pot.10% bonus) 		  mid 280’s   mid Oct. 2010   mid March 2015
Ocean Worker
  4,000’   Brazil   Current Contract   Petrobras   6-year term (includes 50%
of pot.10% bonus) 		  mid 280’s   late Feb. 2009   late Feb. 2015
Ocean Alliance
  5,250’   Brazil   Current Contract   Petrobras   6-year term (includes 50%
of pot.15% bonus) 		  mid 360’s   late July 2010   late June 2016
Ocean Star
  5,500’   Brazil   Current Contract   OGX   one year + unpriced option   low 340’s   mid Feb. 2010   mid Feb. 2011
 
          Future Contract   OGX   part one of 2-year term extension + unpriced option   low 310’s   mid Feb. 2011   late Dec. 2011
 
          Future Contract   OGX   part two of 2-year term extension + unpriced option   low 270’s   late Dec. 2011   mid Feb. 2013
Ocean Baroness
  7,000’   Brazil   Current Contract   Petrobras   three-year term (includes 50% of pot. 5% bonus) + option to convert to 5 years during 1st year of operation   mid 280’s   early Sept. 2010   early Sept. 2013

 

 

     
5
DIAMOND OFFSHORE DRILLING, INC. RIG STATUS REPORT AS OF
December 15, 2010
                                 
    Nominal                   Dayrate        
Rig Name   WD*   Location   Status   Operator   Current Term   ($000s)   Start Date   Est. End Date
Brazil Cont.
                                
Ocean Courage
  10,000’   Brazil   Current Contract   Petrobras   five-year term (includes 50% of pot. 6% bonus) + unpriced option   400 – 410   mid Feb. 2010   mid Feb. 2015
Ocean Valor
  10,000’   Brazil   Current Contract   Petrobras   3-year term + option to convert to 5 years during 1st year   low 450’s   late Oct. 2010   late Oct. 2013
Drillship (1)
                                
Ocean Clipper
  7,875’   Brazil   Current Contract   Petrobras   5-year term (includes 50%
of pot. 5% bonus) 		  mid 310’s   mid Dec. 2010   early March 2011
 
      Brazil   Upgrade for Petrobras   DODI           early March 2011   mid May 2011
 
      Brazil   Resume Future Contract   Petrobras   5-year term (includes 50%
of pot. 5% bonus) 		  mid 310’s   mid May 2011   mid Dec. 2015
International Jack-ups (7)                            
Ocean Nugget
  300’ IC   Mexico   Resume Current Contract   Pemex   849 day term   mid 130’s   early Feb. 2010   late July 2011
Ocean Summit
  300’ IC   Mexico   Current Contract   Pemex   42 day extension   low 80’s   mid Nov. 2010   late Dec. 2010
Ocean Scepter
  350’ IC   Brazil   Standby/acceptance testing   DODI           mid July 2010   late Dec. 2010
 
      Brazil   Future Contract   OGX   one-year term + unpriced option   mid 130’s   late Dec. 2010   late Dec. 2011
Ocean King
  300’ IC   Montenegro   Actively Marketing   DODI                
Ocean Sovereign
  300’ IC   Under tow   Under tow to Thailand   DODI               late Dec. 2010
 
      Thailand   Future Contract   Salamander   Six firm + three unpriced option wells   low 70’s   late Dec. 2010   late March 2011
Ocean Heritage
  300’ IC   Suez Gulf   Current Contract   SUCO   six-month extension   high 50’s   late July 2010   mid Jan. 2011
Ocean Spur
  300’ IC   Egypt   Current Contract   WEPCO   one-year extension + unpriced option   mid 60’s   late Oct. 2010   late Oct. 2011
NOTES: Rig utilization rates can be adversely impacted by additional downtime due to unscheduled repairs and maintenance, weather conditions and other factors.
An LOI is subject to customary conditions, including the execution of a definitive agreement and as such may not result in a binding contract.
Options are un-priced and any extension of contract is subject to mutually agreeable terms & conditions unless otherwise indicated.
Mobe revenues (if any) and mobe expenses are deferred, and generally are amortized over the life of the contract. GOM=Gulf of Mexico.
*Nominal Water Depth — Nominal water depth (in feet) reflects the current operating water depth capability for each drilling unit. In many cases, individual rigs are capable of drilling, or have drilled, in greater water depths. In all cases, floating rigs are capable of working successfully at greater depths than their nominal depth. On a case by case basis, we may achieve a greater depth capacity by providing additional equipment.
On rig utilization, assume 95% for DP units, 96% for conventionally moored rigs, and 98% for jack-ups.

 

 

     
6
DIAMOND OFFSHORE DRILLING, INC. RIG STATUS REPORT AS OF
December 15, 2010
EXPECTED 2010 DOWNTIME — 10 DAYS OR LONGER* (Subject to Change)
YTD Total thru Q3 =1,897
# Days
                     
Rig   November Actual     Q4 Est.     Comments
Shipyard — 5-Year Surveys/Maintenance
                   
Spur
     0       24     5-year survey
Winner
     30       61     5-year survey & steel replacement
   
 
      
 
    
Total 5-year Surveys
     30       85      
Contract Preparation/Mobe/Acceptance Testing
                    
Endeavor
     0       16     Mobe to Egypt
Rover
     12       21     Mobe
Scepter
     30       92     Contract prep, mobe for Brazil
   
 
      
 
    
Total Contract Prep.
     42       129      
New Rig Commissioning/Contract Prep/Maintenance/Other
                    
Valor
     0       24     Prep, mobe, accept. test for Brazil
   
 
      
 
    
Other Total
     0       24      
   
 
      
 
    
Total
     72       238      
 
* Does Not Include Cold or Hot Stacked Rigs (see following page for cold stacked units)
Survey Costs: During surveys, normal opex applies, plus additional costs.
Mobe Costs: Amortized mobe costs are generally offset by amortized mobe revenues.

 

 

     
7
DIAMOND OFFSHORE DRILLING, INC. RIG STATUS REPORT AS OF
December 15, 2010
                             
COLD STACKED RIGS: 7 — (4 jack-ups, 3 semisubmersibles)            
 
Ocean Crusader
   200’ MC   GOM   Stacked   DODI        
 
Ocean Drake
   200’ MC   GOM   Stacked   DODI        
 
Ocean Champion
   250’ MS   GOM   Stacked   DODI        
 
Ocean Spartan
   300’IC   GOM   Stacked   DODI        
 
Ocean Voyager
   3,200’   GOM   Stacked   DODI        
 
Ocean New Era
   1,500’   GOM   Stacked   DODI        
 
Ocean Bounty
   1,500’   Malaysia   Stacked   DODI        
 
Forward-Looking Statements: The rig status report contains “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, without limitation, any statement that may project, indicate or imply future results, events, performance or achievements, and may contain or be identified by the words “expect,” “intend,” “plan,” “predict,” “anticipate,” “estimate,” believe,” “should,” “could,” “may,” “might,” “will,” “will be,” “will continue,” “will likely result,” “project,” “budget,” “forecast,” and similar expressions. Statements by the Company in the rig status report that contain forward-looking statements include, but are not limited to, statements regarding the current term, future dayrates, future status, start and end dates, and comments concerning future contracts and availability, letters of intent, utilization, surveys, downtime and other aspects of the Company’s drilling rigs, as well as statements concerning the moratorium on, or suspension of, certain drilling activities in the GOM and enhanced safety requirements implemented by the U.S. government, related legal proceedings and outcomes thereof, the impact of these and related events on our operations and revenues, the effects of claims of force majeure and the outcomes of discussions with operators with regard thereto, rigs being upgraded or to be upgraded and the revised Ocean Victory contract. Such statements are inherently subject to a variety of assumptions, risks and uncertainties that could cause actual results to differ materially from those anticipated or projected. A discussion of the risk factors that could impact these areas and the Company’s overall business and financial performance can be found in the Company’s reports and other documents filed with the Securities and Exchange Commission. 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 concerns, investors and analysts should not place undue reliance on forward-looking statements. Each forward-looking statement speaks only as of the date of the rig status report, and the Company undertakes no obligation to publicly update or revise any forward-looking statement.

 

DIAMOND OFFSHORE DRILLING, INC. Reports

Also read