Diamond Offshore Announces Fourth Quarter 2013 Results

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Feb 06, 2014, 06:00 ET

HOUSTON, Feb. 6, 2014 /PRNewswire/ -- Diamond Offshore Drilling, Inc. (NYSE: DO) today reported net income for the fourth quarter of 2013 of $93 million, or $0.67 per share. Results for the fourth quarter were negatively impacted by $0.41 per share to reserve for an uncertain tax position related to Egyptian operations. Partially offsetting this reserve was revenue recognized in connection with a settlement agreement with a customer, resulting in a gain of $0.12 per share, after tax.

In the fourth quarter of 2012, Diamond Offshore reported net income of $156 million, or $1.12 per share, which included an after-tax impairment charge of $40.6 million, or $0.29 per share, related to the reclassification of four cold-stacked rigs as held for sale. Revenues in the fourth quarter of 2013 were $726 million, compared with revenues of $751 million in the prior year quarter.

For the full year 2013, the Company reported net income of $549 million, or $3.95 per share, compared with net income of $720 million, or $5.18 per share, in 2012. Revenues for the full year 2013 were $2.920 billion, compared with $2.987 billion in 2012.

"We have taken delivery of the Ocean BlackHawk, the first of our four newbuild ultra-deepwater drillships," announced Larry Dickerson, President and Chief Executive Officer of Diamond Offshore. "The rig will soon be on its way to the U.S. Gulf of Mexico, where it will begin a five year contract with Anadarko. Additionally, our deepwater semi Ocean Onyx has been delivered by the shipyard and is currently on location in the U.S. Gulf working for Apache. These rig deliveries represent important milestones for Diamond's ongoing fleet renewal program."

"Additionally, our operating results for the quarter and the full year reflect our ongoing focus on managing costs and reducing downtime," said Dickerson.

Capital expenditures for newbuilds, upgrades and maintenance, but excluding capitalized interest, totaled $1.0 billion in 2013, and are expected to total $2.1 billion in 2014.

CONFERENCE CALL

A conference call to discuss Diamond Offshore's earnings results has been scheduled for 9:00 a.m. CST today. 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 31346715. An online replay will also be available on www.diamondoffshore.com following the call.

ABOUT DIAMOND OFFSHORE

Diamond Offshore is a leader in offshore drilling, providing contract drilling services to the energy industry around the globe with a total fleet of 45 offshore drilling rigs, including five rigs under construction. Diamond Offshore's fleet consists of 33 semisubmersibles, two of which are under construction, five dynamically positioned drillships, three of which are under construction, and seven jack-ups. Additional information about the Company and access to the Company's SEC filings are available at www.diamondoffshore.com. Diamond Offshore is owned 50.4% by Loews Corporation (NYSE: L).

FORWARD-LOOKING STATEMENTS

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 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.

(Logo: http://photos.prnewswire.com/prnh/20130725/NY53104LOGO-b )

Contact:
Darren Daugherty
Director, Investor Relations
(281) 492-5370

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,
			2013				2012					2013				2012

	Revenues:
	Contract drilling	$			707,972	$		740,623			$		2,843,584		$			2,936,066
	Revenues related to reimbursable expenses				18,525			9,914					76,837					50,442
	Total revenues				726,497			750,537					2,920,421					2,986,508

	Operating expenses:
	Contract drilling, excluding depreciation				408,907			377,589					1,572,525					1,537,224
	Reimbursable expenses				17,969			9,427					74,967					48,778
	Depreciation				96,985			92,844					388,092					392,913
	General and administrative				16,298			14,837					64,788					64,640
	Impairment of assets				--				62,437					--					62,437
	Bad debt expense (recovery)				(50)			--					22,513					(1,018)
	Gain on disposition of assets				(1,281)			(1,559)					(4,070)					(80,844)
	Total operating expenses				538,828			555,575					2,118,815					2,024,130

	Operating income				187,669			194,962					801,606					962,378

	Other income (expense):
	Interest income				(323)			858					701					4,910
	Interest expense				(7,130)			(9,436)					(24,843)					(46,216)
	Foreign currency transaction loss				(966)			(1,118)					(4,915)					(1,999)
	Other, net				945			(225)					1,691					(992)

	Income before income tax expense				180,195			185,041					774,240					918,081

	Income tax expense				(87,580)			(29,380)					(225,554)					(197,604)

	Net Income	$			92,615	$		155,661			$		548,686		$			720,477

	Income per share	$			0.67	$		1.12			$		3.95		$			5.18

	Weighted average shares outstanding:
	Shares of common stock				139,035			139,031					139,035				139,029
	Dilutive potential shares of common stock				12			31					29				19
	Total weighted average shares outstanding				139,047			139,062					139,064				139,048




DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS
(Unaudited)
(In thousands)

	Three Months Ended
	Dec 31,		Sep 30,		Dec 31,
	2013		2013		2012

REVENUES

Floaters:
Ultra-Deepwater	$	236,842	$	195,215	$	229,560
Deepwater		121,222		147,333		145,310
Mid-water		306,485		297,368		326,520
Total Floaters		664,549		639,916		701,390
Jack-ups		43,423		50,825		39,233
Total Contract Drilling Revenue	$	707,972	$	690,741	$	740,623

Revenues Related to Reimbursable Expenses	$	18,525	$	15,424	$	9,914

CONTRACT DRILLING EXPENSE
Floaters:
Ultra-Deepwater	$	135,153	$	139,689	$	135,837
Deepwater		76,649		74,609		67,772
Mid-water		156,075		165,518		143,124
Total Floaters		367,877		379,816		346,733
Jack-ups		29,349		28,685		21,582
Other		11,681		10,987		9,274
Total Contract Drilling Expense	$	408,907	$	419,488	$	377,589

Reimbursable Expenses	$	17,969	$	14,904	$	9,427

OPERATING INCOME
Floaters:
Ultra-Deepwater	$	101,689	$	55,526	$	93,723
Deepwater		44,573		72,724		77,538
Mid-water		150,410		131,850		183,396
Total Floaters		296,672		260,100		354,657
Jack-ups		14,074		22,140		17,651
Other		(11,681)		(10,987)		(9,274)
Reimbursable expenses, net		556		520		487
Depreciation		(96,985)		(97,143)		(92,844)
General and administrative expense		(16,298)		(15,240)		(14,837)
Impairment of assets		--		--		(62,437)
Bad debt recovery (expense)		50		(22,563)		--
Gain on disposition of assets		1,281		525		1,559
Total Operating Income	$	187,669	$	137,352	$	194,962




DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
				December 31,		December 31,
				2013			2012

ASSETS

Current assets:
	Cash and cash equivalents		$	347,011	$		335,432

	Marketable securities			1,750,053			1,150,158

	Accounts receivable, net of allowance for bad debts			469,355			499,660

	Prepaid expenses and other current assets			143,997			136,099

	Assets held for sale			7,694			11,594
		Total current assets		2,718,110			2,132,943

Drilling and other property and equipment, net of
accumulated depreciation				5,467,227			4,864,972

Other assets				206,097			237,371
		Total assets	$	8,391,434	$		7,235,286

LIABILITIES AND STOCKHOLDERS' EQUITY

Current portion of long-term debt			$	249,954	$		--

Other current liabilities				495,628			485,546

Long-term debt				2,244,189			1,496,066

Deferred tax liability				525,541			490,946

Other liabilities				238,864			186,334

Stockholders' equity				4,637,258			4,576,394

		Total liabilities and stockholders' equity	$	8,391,434	$		7,235,286

DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES

AVERAGE DAYRATES AND UTILIZATION

(Dayrate in thousands)

Fourth Quarter (a)

Third Quarter (a)

Fourth Quarter

2013

2012

Dayrate

Utilization

Dayrate

Utilization

Dayrate

Utilization

Ultra-Deepwater Floaters

$350

91%

$284

93%

$348

89%

Deepwater Floaters

$402

65%

$380

84%

$372

85%

Mid-Water Floaters

$277

66%

$258

68%

$268

70%

Jack-Ups

$87

76%

$93

84%

$85

71%

(a) Dayrate and utilization calculations include revenue earning days for which revenue was not recognized pursuant to GAAP. These days by rig category are ultra-deepwater floaters: Q4-82 days, Q3-88 days; deepwater floaters: Q3-31 days; and mid-water floaters: Q4-42 days, Q3-94 days.

SOURCE Diamond Offshore Drilling, Inc.