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8-K - FORM 8-K - DIAMOND OFFSHORE DRILLING, INC.d479496d8k.htm

Exhibit 99.1

 

LOGO  

Contact:

Darren Daugherty

Director, Investor Relations

(281) 492-5370

Diamond Offshore Announces Fourth Quarter 2012 Results

HOUSTON, February 5, 2013 — Diamond Offshore Drilling, Inc. (NYSE: DO) today reported net income for the fourth quarter of 2012 of $156 million, or $1.12 per share on a diluted basis, compared with net income of $188 million, or $1.36 per share on a diluted basis, in the same period a year earlier. Revenues in the fourth quarter of 2012 were $751 million, compared with revenues of $748 million in the prior-year quarter.

During the fourth quarter, the Company reclassified its four cold-stacked rigs as held for sale and recognized an after-tax impairment charge of $40.6 million, or $0.29 per share. These units are the semisubmersible rigs Ocean Epoch, Ocean New Era and Ocean Whittington and the jack-up rig Ocean Spartan.

The effective tax rate for the quarter was 15.9 percent, compared with 7.4 percent in the fourth quarter of 2011. Lower tax expense in the prior-year quarter was driven by a reduction of the Company’s liability for uncertain tax positions. The full-year 2012 effective tax rate was 21.5 percent versus the prior-year effective tax rate of 18.4 percent.

For the full-year 2012, the Company reported net income of $720 million, or $5.18 per share on a diluted basis, compared with net income of $963 million, or $6.92 per share on a diluted basis, in 2011. Revenues for the full-year 2012 were $2.987 billion, compared with $3.322 billion in 2011.

“Our results for the fourth quarter and full year reflect our continuing efforts to manage operating costs across the fleet,” said Larry Dickerson, President and Chief Executive Officer of Diamond Offshore. “While there is some cost inflation pressure in our industry, we remain focused on controlling and reducing expenses.”

The Company announced that the Ocean Patriot was awarded a three-year contract in the North Sea at a rate of $400,500 per day, which is expected to generate maximum total revenue of approximately $439 million. After completing its current contracts in Southeast Asia, the rig will undergo required North Sea enhancements at a total estimated cost of approximately $120 million. Following these upgrades and subsequent mobilization to the North Sea, the rig is expected to commence work early in the second quarter of 2014.


“The opportunity to upgrade the Ocean Patriot to work for our customer Shell in the North Sea demonstrates the ongoing strength in that market,” said Larry Dickerson. “This project is consistent with Diamond Offshore’s long-term strategy of investing in our fleet at attractive capital costs.”

Capital expenditures for the six rigs currently under construction totaled $499 million in full-year 2012, excluding capitalized interest. To complete these projects, the Company estimates that remaining capital expenditures, excluding capitalized interest, will be $1.3 billion in 2013 and $1.1 billion in 2014.

CONFERENCE CALL

Diamond Offshore will host a conference call to discuss fourth quarter results on Tuesday, February 5, 2013 beginning at 9:00 a.m. CST. 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 86787795. 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 30 semisubmersibles, seven jack-ups and one drillship, in addition to four ultra-deepwater drillships and two deepwater semisubmersibles 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 operating costs and expenses, future operations and dayrates, future financial condition, market outlook and future market conditions, future rig construction and upgrades and expected expenditures therefor, 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

 

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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.

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DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share data)

 

     Three Months Ended     Twelve Months Ended  
     December 31,     December 31,  
     2012     2011     2012     2011  

Revenues:

        

Contract drilling

   $ 740,623      $ 734,283      $ 2,936,066      $ 3,254,313   

Revenues related to reimbursable expenses

     9,914        14,074        50,442        68,106   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     750,537        748,357        2,986,508        3,322,419   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses:

        

Contract drilling, excluding depreciation

     377,589        406,763        1,537,224        1,548,502   

Reimbursable expenses

     9,427        13,609        48,778        66,052   

Depreciation

     92,844        95,089        392,913        398,612   

General and administrative

     14,837        16,334        64,640        65,310   

Impairment of assets

     62,437        —          62,437        —     

Bad debt recovery

     —          (1,300     (1,018     (6,713

Gain on disposition of assets

     (1,559     (414     (80,844     (4,758
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     555,575        530,081        2,024,130        2,067,005   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     194,962        218,276        962,378        1,255,414   

Other income (expense):

        

Interest income

     858        3,103        4,910        6,668   

Interest expense

     (9,436     (12,993     (46,216     (73,137

Foreign currency transaction gain (loss)

     (1,118     (3,985     (1,999     (8,588

Other, net

     (225     (854     (992     (1,086
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income tax expense

     185,041        203,547        918,081        1,179,271   

Income tax expense

     (29,380     (15,057     (197,604     (216,729
  

 

 

   

 

 

   

 

 

   

 

 

 

Net Income

   $ 155,661      $ 188,490      $ 720,477      $ 962,542   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income per share:

        

Basic

   $ 1.12      $ 1.36      $ 5.18      $ 6.92   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ 1.12      $ 1.36      $ 5.18      $ 6.92   
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares outstanding:

        

Shares of common stock

     139,031        139,027        139,029        139,027   

Dilutive potential shares of common stock

     31        9        19        11   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total weighted average shares outstanding

     139,062        139,036        139,048        139,038   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES

RESULTS OF OPERATIONS

(Unaudited)

(In thousands)

 

     Three Months Ended  
     Dec 31,     Sep 30,     Dec 31,  
     2012     2012     2011  

REVENUES

      

Floaters:

      

Ultra-Deepwater

   $ 229,560      $ 195,574      $ 189,148   

Deepwater

     145,310        163,816        190,615   

Mid-water

     326,520        319,491        312,256   
  

 

 

   

 

 

   

 

 

 

Total Floaters

     701,390        678,881        692,019   

Jack-ups

     39,233        35,146        42,264   
  

 

 

   

 

 

   

 

 

 

Total Contract Drilling Revenue

   $ 740,623      $ 714,027      $ 734,283   
  

 

 

   

 

 

   

 

 

 

Revenues Related to Reimbursable Expenses

   $ 9,914      $ 15,114      $ 14,074   
  

 

 

   

 

 

   

 

 

 

CONTRACT DRILLING EXPENSE

      

Floaters:

      

Ultra-Deepwater

   $ 135,837      $ 132,705      $ 132,187   

Deepwater

     67,772        58,029        52,843   

Mid-water

     143,124        135,935        169,481   
  

 

 

   

 

 

   

 

 

 

Total Floaters

     346,733        326,669        354,511   

Jack-ups

     21,582        24,245        45,597   

Other

     9,274        6,367        6,655   
  

 

 

   

 

 

   

 

 

 

Total Contract Drilling Expense

   $ 377,589      $ 357,281      $ 406,763   
  

 

 

   

 

 

   

 

 

 

Reimbursable Expenses

   $ 9,427      $ 14,563      $ 13,609   
  

 

 

   

 

 

   

 

 

 

OPERATING INCOME

      

Floaters:

      

Ultra-Deepwater

   $ 93,723      $ 62,869      $ 56,961   

Deepwater

     77,538        105,787        137,772   

Mid-water

     183,396        183,556        142,775   
  

 

 

   

 

 

   

 

 

 

Total Floaters

     354,657        352,212        337,508   

Jack-ups

     17,651        10,901        (3,333

Other

     (9,274     (6,367     (6,655

Reimbursable expenses, net

     487        551        465   

Depreciation

     (92,844     (99,207     (95,089

General and administrative expense

     (14,837     (13,476     (16,334

Impairment of assets

     (62,437     —          —     

Bad debt recovery

     —          —          1,300   

Gain on disposition of assets

     1,559        208        414   
  

 

 

   

 

 

   

 

 

 

Total Operating Income

   $ 194,962      $ 244,822      $ 218,276   
  

 

 

   

 

 

   

 

 

 

 

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DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands)

 

     December 31,  
     2012      2011  

ASSETS

     

Current assets:

     

Cash and cash equivalents

   $ 335,432       $ 333,765   

Marketable securities

     1,150,158         902,414   

Accounts receivable, net of allowance for bad debts

     499,660         563,934   

Prepaid expenses and other current assets

     136,099         192,570   

Assets held for sale

     11,594         —     
  

 

 

    

 

 

 

Total current assets

     2,132,943         1,992,683   

Drilling and other property and equipment, net of accumulated depreciation

     4,864,972         4,667,469   

Other assets

     237,371         304,005   
  

 

 

    

 

 

 

Total assets

   $ 7,235,286       $ 6,964,157   
  

 

 

    

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

     

Current liabilities

   $ 485,546       $ 427,291   

Long-term debt

     1,496,066         1,495,823   

Deferred tax liability

     490,946         536,815   

Other liabilities

     186,334         171,165   

Stockholders’ equity

     4,576,394         4,333,063   
  

 

 

    

 

 

 

Total liabilities and stockholders’ equity

   $ 7,235,286       $ 6,964,157   
  

 

 

    

 

 

 

 

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DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES

AVERAGE DAYRATES AND UTILIZATION

(Dayrate in thousands)

 

     Fourth Quarter     Third Quarter     Fourth Quarter  
     2012     2012     2011  
     Dayrate      Utilization     Dayrate      Utilization     Dayrate      Utilization  

Ultra-Deepwater Floaters

   $ 348         89   $ 354         75   $ 356         70

Deepwater Floaters

   $ 372         85   $ 373         95   $ 422         97

Mid-Water Floaters

   $ 268         70   $ 258         71   $ 271         60

Jack-Ups

   $ 85         71   $ 98         56   $ 79         36

 

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