Diamond Offshore Announces Second Quarter 2011 Results

HOUSTON--()--Diamond Offshore Drilling, Inc. (NYSE:DO) today reported net income for the second quarter of 2011 of $266.6 million, or $1.92 per share on a diluted basis, compared with net income of $224.4 million, or $1.61 per share on a diluted basis, in the same period a year earlier. Revenues in the second quarter of 2011 were $889.5 million, compared with revenues of $822.6 million for the second quarter of 2010.

For the six months ended June 30, 2011, the Company reported net income of $517.2 million, or $3.72 per share on a diluted basis, compared with net income of $515.2 million, or $3.70 per share on a diluted basis, for the same period in 2010. Revenue for the six months ended June 30, 2011 was $1.7 billion, essentially identical with $1.7 billion for the first six months of 2010.

In addition, in the past 45 days the Company has put in place 10 new agreements that are expected to generate combined maximum total revenue of approximately $1 billion and represent over 14 years of contract drilling backlog. Significant among these agreements:

  • Petrobras has given notice of its intent to exercise a right to convert the Ocean Baroness and Ocean Valor contracts from three years to five years, in return for which the Company will lower each dayrate by $10,000. The two rigs are expected to earn additional combined maximum total revenue of approximately $500 million, excluding any potential performance bonus payments.
  • The Company has reached agreement with OGX to extend both the Ocean Quest and Ocean Star contracts in Brazil by one year. The extensions are expected to result in combined maximum total revenue of approximately $200 million.
  • The Ocean Yorktown has received a letter of award for a 930-day contract with Pemex in Mexico commencing mid-November 2011 that is expected to earn maximum total revenue of approximately $171 million. The unit is currently under contract to Petrobras in Brazil, but under mutually agreed terms will demobe to Mexico as soon as practical. The remaining days of the Yorktown contract with Petrobras will be added to the Ocean Concord contract.
  • The jack-up Ocean Summit has received a letter of award for a 985-day contract with Pemex in Mexico commencing in late February 2012 that is expected to earn maximum total revenue of approximately $85 million.
  • The jack-up Ocean Titan has received a letter of award for a 777-day contract with Pemex in Mexico commencing in mid-November 2011 that is expected to earn maximum total revenue of approximately $80 million.

Diamond Offshore provides contract drilling services to the energy industry and is a leader in deepwater drilling.

Maximum contract revenue as stated above assumes 100% rig utilization. Generally, rig utilization rates approach 95-98% 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 and access to the Company’s SEC filings is available on the Internet at www.diamondoffshore.com.

As previously announced, Diamond Offshore will provide a simulcast and rebroadcast of its second quarter 2011 earnings release conference call. The live broadcast of our quarterly conference call will be available online at www.diamondoffshore.com on July 21, 2011 beginning at 9:00 a.m. Central Daylight Time. The online replay will follow immediately and continue for the remainder of the calendar quarter after the original call. Please go to the website at least 15 minutes before the broadcast to register, download and install any necessary audio software.

Statements contained in this press release which are not historical facts are “forward-looking statements” within the meaning of the federal securities laws. Forward-looking statements are inherently uncertain and subject to a variety of risks that could cause actual results to differ materially from those 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 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 www.diamondoffshore.com. Given these risk factors, investors and analysts should not place undue reliance on forward-looking statements. Any such forward-looking statements speak 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,

2011   2010

 

2011

  2010
 
Revenues:
Contract drilling $ 869,646 $ 811,739 $ 1,658,519 $ 1,656,177

Revenues related to reimbursable expenses

19,850   10,864   37,366   26,107  
Total revenues 889,496   822,603   1,695,885   1,682,284  
 
Operating expenses:
Contract drilling, excluding depreciation 388,006 351,769 750,370 657,996
Reimbursable expenses 19,287 10,379 36,237 25,084
Depreciation 101,175 100,746 202,348 198,148
General and administrative 16,372 16,849 34,097 33,503
Bad debt recovery (1,700 ) (2,798 ) (10,147 ) (3,898 )
Gain on disposition of assets (1,240 ) (149 ) (3,881 ) (1,033 )
Total operating expenses 521,900   476,796   1,009,024   909,800  
 
Operating income 367,596 345,807 686,861 772,484
 
Other income (expense):
Interest income 1,091 477 1,541 1,759
Interest expense (22,226 ) (21,333 ) (44,270 ) (43,654 )
Foreign currency transaction loss (1,555 ) (3,991 ) (3,161 ) (3,530 )
Other, net (880 ) (34 ) (96 ) (121 )
 
Income before income tax expense 344,026 320,926 640,875 726,938
 
Income tax expense (77,440 ) (96,533 ) (123,677 ) (211,692 )
 
Net Income $ 266,586   $ 224,393   $ 517,198   $ 515,246  
 
Income per share:
Basic $ 1.92   $ 1.61   $ 3.72   $ 3.71  
Diluted $ 1.92   $ 1.61   $ 3.72   $ 3.70  
 
Weighted average shares outstanding:
Shares of common stock 139,027 139,026 139,027 139,026
Dilutive potential shares of common stock 25   53   25   78  
Total weighted average shares outstanding 139,052   139,079   139,052   139,104  
 

DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES

RESULTS OF OPERATIONS

(Unaudited)

(In thousands)

 

Three Months Ended

June 30,
  2011       2010  
 
REVENUES  
High Specification Floaters $ 452,289 $ 340,387
Intermediate Semisubmersibles 356,840 389,094
Jack-ups 60,512 82,223
Other   5       35  
Total Contract Drilling Revenue $ 869,646     $ 811,739  
 

Revenues Related to Reimbursable
Expenses

$

19,850

   

$

10,864

 
 
CONTRACT DRILLING EXPENSE
High Specification Floaters $ 203,459 $ 134,500
Intermediate Semisubmersibles 138,879 157,446
Jack-ups 38,552 51,717
Other   7,116       8,106  
Total Contract Drilling Expense $ 388,006     $ 351,769  
 
Reimbursable Expenses $ 19,287     $ 10,379  
 
OPERATING INCOME
High Specification Floaters $ 248,830 $ 205,887
Intermediate Semisubmersibles 217,961 231,648
Jack-ups 21,960 30,506
Other (7,111 ) (8,071 )
Reimbursable expenses, net 563 485
Depreciation (101,175 ) (100,746 )
General and administrative expense (16,372 ) (16,849 )
Bad debt recovery 1,700 2,798
Gain on disposition of assets   1,240       149  
Total Operating Income $ 367,596     $ 345,807  
 
DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
       
June 30,     December 31,
2011 2010
(unaudited)
ASSETS
 
Current assets:
Cash and cash equivalents $ 279,876 $ 464,393
 
Marketable securities 700,486 612,346
 
Accounts receivable, net of allowance for bad debts 592,157 609,606
 
Prepaid expenses and other 196,689 177,153
   
Total current assets 1,769,208 1,863,498
 
Drilling and other property and equipment, net of
accumulated depreciation 4,159,542 4,283,792
 
Long-term receivable -- 35,361
 
Construction deposits 478,320 154,427
 
Other assets 323,553 389,906
Total assets $ 6,730,623 $ 6,726,984
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
Current liabilities $ 370,059 $ 626,288
 
Long-term debt 1,495,707 1,495,593
 
Deferred tax liability 527,903 542,258
 
Other liabilities 197,357 201,133
   
Stockholders’ equity 4,139,597 3,861,712
   
Total liabilities and stockholders’ equity $ 6,730,623 $ 6,726,984
         

DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES

AVERAGE DAYRATES AND UTILIZATION

 
Second Quarter First Quarter Second Quarter
    2011     2011     2010
    Dayrate   Utilization     Dayrate   Utilization     Dayrate   Utilization
(Dayrate in thousands)
High Specification Floaters $364   94% $339   81% $373   69%
Intermediate Semis $266 76% $273 80% $269 82%
Jack-ups $82 60% $82 47% $85 76%

Contacts

Diamond Offshore Drilling, Inc.
Les Van Dyke, 281-492-5370
Director, Investor Relations

Contacts

Diamond Offshore Drilling, Inc.
Les Van Dyke, 281-492-5370
Director, Investor Relations