Diamond Offshore Announces Third Quarter 2012 Results

Diamond Offshore Announces Third Quarter 2012 Results

HOUSTON--(BUSINESS WIRE)-- Diamond Offshore Drilling, Inc. today reported net income for the third quarter of 2012 of $178 million, or $1.28 per share on a diluted basis, compared with net income of $257 million, or $1.85 per share on a diluted basis, in the same period a year earlier. Revenues in the third quarter of 2012 were $729 million, compared with revenues of $878 million in the third quarter of 2011.

Since the start of the third quarter of 2012, the Company entered into 13 new agreements that are expected to generate maximum total revenue of approximately $1.7 billion and 12.1 rig-years of contract drilling backlog. Significant among these awarded contracts are the following:

  • The Ocean Endeavor was awarded an 18-month contract at a dayrate of $505,000, plus a potential 6.6% performance bonus. The dayrate on the current contract is $285,000. The customer name and location of rig operation have not yet been announced.

  • The Ocean Lexington was awarded a 477-day job in Trinidad at a rate of $300,000 per day versus its current rate of $277,000 per day. The rig will be mobilized to Trinidad upon completion of its current contracted term in Brazil.

  • The Ocean Valiant received a two-well contract extension for work offshore Equatorial Guinea. The new rate will be $515,000 per day versus the current contract rate of $375,000 per day.

  • The Ocean America was awarded an 18-month contract for work offshore Australia at a dayrate of $475,000. The rig is currently contracted at a rate of $405,000 per day.


"We posted excellent operating results for the quarter and announced several new contracts at strong dayrates across all ranges of water depths," said Larry Dickerson, President and Chief Executive Officer of Diamond Offshore. "Our results for the quarter benefited from lower than anticipated operating expense, primarily owing to our continued emphasis on controlling costs."

"During the quarter, we entered into a $750 million revolving credit facility, which will provide additional flexibility to our already strong balance sheet, as we complete construction of six new rigs over the next two years," said Dickerson. "Among our industry peers, Diamond Offshore's balance sheet is the least levered, and we enjoy the highest credit ratings."

CONFERENCE CALL

Diamond Offshore will host a conference call to discuss third quarter results on Thursday, October 18, 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 35359805. 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 (NYS: 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, future financial condition, 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

Nine Months Ended

September 30,

September 30,

2012

2011

2012

2011

Revenues:

Contract drilling

$

714,027

$

861,511

$

2,195,443

$

2,520,030

Revenues related to reimbursable expenses

15,114

16,666

40,528

54,032

Total revenues

729,141

878,177

2,235,971

2,574,062

Operating expenses:

Contract drilling, excluding depreciation

357,281

391,369

1,159,635

1,141,739

Reimbursable expenses

14,563

16,206

39,351

52,443

Depreciation

99,207

101,175

300,069

303,523

General and administrative

13,476

14,879

49,803

48,976

Bad debt recovery

--

4,734

(1,018

)

(5,413

)

Gain on disposition of assets

(208

)

(463

)

(79,285

)

(4,344

)

Total operating expenses

484,319

527,900

1,468,555

1,536,924

Operating income

244,822

350,277

767,416

1,037,138

Other income (expense):

Interest income

773

2,024

4,052

3,565

Interest expense

(8,720

)

(15,874

)

(36,780

)

(60,144

)

Foreign currency transaction gain (loss)

(1,860

)

(1,442

)

(881

)

(4,603

)

Other, net

(168

)

(136

)

(767

)

(232

)

Income before income tax expense

234,847

334,849

733,040

975,724

Income tax expense

(56,661

)

(77,995

)

(168,224

)

(201,672

)

Net Income

$

178,186

$

256,854

$

564,816

$

774,052

Income per share:

Basic

$

1.28

$

1.85

$

4.06

$

5.57

Diluted

$

1.28

$

1.85

$

4.06

$

5.57

Weighted average shares outstanding:

Shares of common stock

139,030

139,027

139,029

139,027

Dilutive potential shares of common stock

23

14

17

21

Total weighted average shares outstanding

139,053

139,041

139,046

139,048

DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES

RESULTS OF OPERATIONS

(Unaudited)


(In thousands)

Three Months Ended

Sep 30,

Jun 30,

Sep 30,

2012

2012

2011

REVENUES

Floaters:

Ultra-Deepwater

$

195,574

$

233,071

$

220,415

Deepwater

163,816

142,565

217,379

Mid-water

319,491

310,462

377,127

Total Floaters

678,881

686,098

814,921

Jack-ups

35,146

40,163

46,540

Other

--

--

50

Total Contract Drilling Revenue

$

714,027

$

726,261

$

861,511

Revenues Related to Reimbursable Expenses

$

15,114

$

11,927

$

16,666

CONTRACT DRILLING EXPENSE

Floaters:

Ultra-Deepwater

$

132,705

$

137,087

$

119,868

Deepwater

58,029

68,653

57,662

Mid-water

135,935

160,642

163,957

Total Floaters

326,669

366,382

341,487

Jack-ups

24,245

29,240

43,281

Other

6,367

9,630

6,601

Total Contract Drilling Expense

$

357,281

$

405,252

$

391,369

Reimbursable Expenses

$

14,563

$

11,637

$

16,206

OPERATING INCOME

Floaters:

Ultra-Deepwater

$

62,869

$

95,984

$

100,547

Deepwater

105,787

73,912

159,717

Mid-water

183,556

149,820

213,170

Total Floaters

352,212

319,716

473,434

Jack-ups

10,901

10,923

3,259

Other

(6,367

)

(9,630

)

(6,551

)

Reimbursable expenses, net

551

290

460

Depreciation

(99,207

)

(99,469

)

(101,175

)

General and administrative expense

(13,476

)

(18,741

)

(14,879

)

Bad debt recovery (expense)

--

400

(4,734

)

Gain on disposition of assets

208

53,695

463

Total Operating Income

$

244,822

$

257,184

$

350,277

DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

September 30,

December 31,

2012

2011