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Diamond Offshore Announces Fourth Quarter 2011 Results

Diamond Offshore Drilling, Inc. (NYSE:DO) today reported net income for the fourth quarter of 2011 of $188 million, or $1.36 per share on a diluted basis, compared with net income of $242 million, or $1.74 per share on a diluted basis, in the same period a year earlier. Revenues in the fourth quarter of 2011 were $748 million, compared with revenues of $841 million in the prior year fourth quarter.

For the year ended December 31, 2011, the Company reported net income of $963 million, or $6.92 per share on a diluted basis, compared with net income of $955 million, or $6.87 per share on a diluted basis, for the year ended December 31, 2010. Revenues for the year ended December 31, 2011 were $3,322 million, compared with $3,323 million for 2010.

Results for the fourth quarter of 2011 were positively impacted by lower tax expense partially resulting from the reduction of the Company’s liability for uncertain tax positions. This adjustment, along with current year foreign tax expense adjustments, resulted in a fourth quarter effective tax rate of 7.4% and a full year 2011 effective tax rate of 18.4%.

Full year 2011 results benefited from reduced unanticipated equipment downtime, which was lower than the historical average. Results for the fourth quarter, however, were negatively impacted by a higher number of downtime days than in the preceding three quarters, attributable to scheduled rig maintenance and survey downtime.

Since the end of the third quarter, Diamond has received contract awards and extensions that when performed are expected to generate maximum total revenue of approximately $1.2 billion, or approximately 11 rig years of work. These contract awards and extensions have brought the current expected revenue backlog to approximately $8.4 billion.

“The $1.2 billion of revenue backlog we were able to add since the end of the last quarter demonstrates the strong demand in all of our key markets,” said Larry Dickerson, President and Chief Executive Officer of Diamond Offshore. “Our newbuild drillships, the Ocean BlackHawk and Ocean BlackHornet, have long-term contracts beginning in Q4 2013 and Q2 2014. Additionally, given the strong current environment, we think significant opportunity exists for our third newbuild drillship, the Ocean BlackRhino, as well as for deepwater units such as our recently announced Ocean Onyx.”

CONFERENCE CALL

Diamond Offshore will host a conference call to discuss fourth quarter results on Thursday, February 2, 2012 beginning at 9:00 a.m. Central Standard Time. A live webcast of the call will be available online on our Company’s website, www.diamondoffshore.com. Those interested in participating in the question and answer session should dial 800-247-9979, or for international callers, 973-321-1100. The conference ID number is 42885774. 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 32 semisubmersibles, 13 jack-ups, and one drillship, in addition to three ultra-deepwater drillships currently under construction. For additional information and access to SEC filings, please visit the Company’s website at www.diamondoffshore.com.

FORWARD-LOOKING STATEMENTS

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

 

Twelve Months Ended

 

December 31,

 

 

December 31,

 

2011

 

2010

 

2011

 

 

2010

 
Revenues:
Contract drilling $ 734,283 $ 824,561 $ 3,254,313 $ 3,229,736
Revenues related to reimbursable expenses 14,074   16,405   68,106   93,238  
Total revenues 748,357   840,966   3,322,419   3,322,974  
 
Operating expenses:
Contract drilling, excluding depreciation 406,763 382,535 1,548,502 1,391,086
Reimbursable expenses 13,609 15,843 66,052 91,240
Depreciation 95,089 95,912 398,612 393,177
General and administrative 16,334 16,098 65,310 66,600
Bad debt recovery (1,300 ) (3,843 ) (6,713 ) (9,789 )
Gain on disposition of assets (414 ) (1,289 ) (4,758 ) (34,714 )
Total operating expenses 530,081   505,256   2,067,005   1,897,600  
 
Operating income 218,276 335,710 1,255,414 1,425,374
 
Other income (expense):
Interest income 3,103 755 6,668 2,909
Interest expense (12,993 ) (24,477 ) (73,137 ) (90,698 )
Foreign currency transaction gain (loss) (3,985 ) 1,175 (8,588 ) 1,369
Other, net (854 ) (2,651 ) (1,086 ) (2,938 )
 
Income before income tax expense 203,547 310,512 1,179,271 1,336,016
 
Income tax expense (15,057 ) (68,825 ) (216,729 ) (380,559 )
 
Net Income $ 188,490   $ 241,687   $ 962,542   $ 955,457  
 
Income per share:
Basic $ 1.36   $ 1.74   $ 6.92   $ 6.87  
Diluted $ 1.36   $ 1.74   $ 6.92   $ 6.87  
 
Weighted average shares outstanding:
Shares of common stock 139,027 139,027 139,027 139,026
Dilutive potential shares of common stock 9   11   11   44  
Total weighted average shares outstanding 139,036   139,038   139,038   139,070  
 
 

DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES

RESULTS OF OPERATIONS

(Unaudited)

(In thousands)

 

— Three Months Ended —

Dec 31,   Sep 30,   Dec 31,
2011   2011   2010
   
REVENUES
Floaters:
Ultra-Deepwater $ 189,148 $ 220,415 $ 187,793
Deepwater 190,615 217,379 163,447
Mid-water   312,256       377,127       430,551  
Total Floaters 692,019 814,921 781,791
Jack-ups 42,264 46,540 42,678
Other   --       50       92  
Total Contract Drilling Revenue $ 734,283     $ 861,511     $ 824,561  
 

Revenues Related to Reimbursable Expenses

$

14,074

   

$

16,666

   

$

16,405

 
 
CONTRACT DRILLING EXPENSE
Floaters:
Ultra-Deepwater $ 132,187 $ 119,868 $ 108,184
Deepwater 52,843 57,662 65,958
Mid-water   169,481       163,957       164,627  
Total Floaters 354,511 341,487 338,769
Jack-ups 45,597 43,281 40,882
Other   6,655       6,601       2,884  
Total Contract Drilling Expense $ 406,763     $ 391,369     $ 382,535  
 
Reimbursable Expenses $ 13,609     $ 16,206     $ 15,843  
 
OPERATING INCOME
Floaters:
Ultra-Deepwater $ 56,961 $ 100,547 $ 79,609
Deepwater 137,772 159,717 97,489
Mid-water   142,775       213,170       265,924  
Total Floaters 337,508 473,434 443,022
Jack-ups (3,333 ) 3,259 1,796
Other (6,655 ) (6,551 ) (2,792 )
Reimbursable expenses, net 465 460 562
Depreciation (95,089 ) (101,175 ) (95,912 )
General and administrative expense (16,334 ) (14,879 ) (16,098 )
Bad debt (expense) recovery 1,300 (4,734 ) 3,843
Gain on disposition of assets   414       463       1,289  
Total Operating Income $ 218,276     $ 350,277     $ 335,710  
 
   
DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
 
December 31,
2011 2010
 
ASSETS
 
Current assets:
Cash and cash equivalents $ 333,765 $ 464,393
 
Marketable securities 902,414 612,346
 
Accounts receivable, net of allowance for bad debts 563,934 609,606
 
Prepaid expenses and other current assets 192,570 177,153
   
Total current assets 1,992,683 1,863,498
 

Drilling and other property and equipment, net of accumulated depreciation

4,667,469 4,283,792
 
Long-term receivable -- 35,361
 
Other assets 304,005 544,333
Total assets $ 6,964,157 $ 6,726,984
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
Current liabilities $ 427,291 $ 626,288
 
Long-term debt 1,495,823 1,495,593
 
Deferred tax liability 536,815 542,258
 
Other liabilities 171,165 201,133
 
Stockholders’ equity 4,333,063 3,861,712
   
Total liabilities and stockholders’ equity $ 6,964,157 $ 6,726,984
 
         

DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES

AVERAGE DAYRATES AND UTILIZATION

 
Fourth Quarter Third Quarter Fourth Quarter
    2011     2011     2010
    Dayrate     Utilization     Dayrate     Utilization     Dayrate     Utilization
(Dayrate in thousands)
Ultra-Deepwater Floaters $ 356     70 % $ 336     88 % $ 341     70 %
Deepwater Floaters $ 422 97 % $ 466 99 % $ 380 89 %
Mid-Water Floaters $ 271 60 % $ 268 70 % $ 285 80 %
Jack-Ups $ 79 36 % $ 84 44 % $ 82 43 %

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