Diamond Offshore Reports Fourth Quarter 2023 Results

$362 Million in Contract Awards Year to Date 2024$245 Million in Total Backlog Added in Q4Rig Performance Bonus Earned in SenegalOcean BlackHawk and Ocean Courage Commenced New Contracts in Q4

HOUSTON, Feb. 27, 2024 /PRNewswire/ — Diamond Offshore Drilling, Inc. (NYSE: DO) today reported the following results for the fourth quarter of 2023:

Bernie Wolford, Jr., President and Chief Executive Officer, stated, “2023 was a transformational year for Diamond Offshore. We marked our one-year anniversary of re-listing on the New York Stock Exchange, made measurable improvements in our capital structure, secured $485 million dollars in new contract awards throughout the year, safely completed Special Periodical Surveys on five rigs, and completed eight contract start-ups, including four contract commencements in the fourth quarter, one in each of the regions in which we operate. In the first quarter of 2024, as previously announced, we secured a two-year contract extension for the Ocean BlackLion in the Gulf of Mexico at a leading edge dayrate and secured additional P&A work for the Ocean Patriot to fill a portion of the gap prior to commencement of a long-term P&A campaign in 2025.

The recent $362 million in contract awards are in addition to our reported backlog of $1.4 billion as of January 1, which will result in notable average dayrate improvement as we transition to new contracts.”

Revenue for the fourth quarter totaled $298 million compared to $245 million in the third quarter of 2023. The increase in revenue quarter-over-quarter was primarily driven by the Ocean BlackHawk’s contract commencement in the Gulf of Mexico in the fourth quarter after completion of an MPD installation, Special Periodical Survey and contract preparation work and new contract commencements for the Ocean Patriot and Ocean Apex, partially offset by lower revenue for the Ocean Courage due to contract preparation activities related to its new multi-year contract in Brazil.

Contract drilling expense for the fourth quarter was $189 million, or a $7 million increase from the prior quarter, largely due to higher charter rental costs associated with the managed rigs and the annual bonus expense related to the drillships’ BOP service agreement. The increase in expense was partially offset by the deferral of certain costs associated with contract preparation activities for the Ocean Courage, as the Company continued to prepare the rig for a new contract that commenced during the quarter, and the absence of costs associated with the Ocean Apex shipyard project in the third quarter.

General and administrative expenses were $19 million in the fourth quarter, or a $3 million increase compared to the prior quarter, primarily due to an adjustment in accrued expenses associated with the Company’s incentive compensation plan.

Tax expense for the fourth quarter was $174 million as compared to a $125 million expense in the prior quarter. The non-cash tax expense in the fourth quarter reflected the expected continued normalization of the Company’s tax expense and the reversal of the tax benefit recorded earlier in 2023.

Operational Highlights

Operationally, the Company’s rigs continued to perform well, achieving revenue efficiency of approximately 95% across the fleet for the second successive quarter. This is a notable achievement given the unusually high amount of shipyard activity for the Company’s fleet and the start-up of contracts during the quarter. Of note, both the Ocean BlackHawk and Ocean Courage completed contract preparation activities in the fourth quarter and are now operating under new contracts in the Gulf of Mexico and offshore Brazil, respectively. Additionally, in the fourth quarter, the Company earned an additional bonus for efficient, injury-free operations in Senegal.

Additional Updates

The Company will discuss its earnings results and provide first quarter and full year 2024 guidance and an update on recovery operations for certain equipment from the Ocean GreatWhite during the earnings conference call.

CONFERENCE CALL

The earnings conference call has been scheduled for 8:00 a.m. CDT on Wednesday, February 28, 2024.  A live webcast of the call will be available online on the Company’s website www.diamondoffshore.com. Participants who want to join the call via telephone or want to participate in the question-and-answer session may register here to receive the dial-in numbers and unique PIN to access the call. 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 innovation, thought leadership and contract drilling services to solve complex deepwater challenges around the globe. Additional information and access to the Company’s SEC filings are available at www.diamondoffshore.com.

FORWARD-LOOKING STATEMENTS

Statements contained in this press release and made in the referenced conference call that are not historical facts are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include, but are not limited to, any statement that may project, indicate or imply future results, events, performance or achievements, including statements relating to future financial results; future recovery in the offshore contract drilling industry; expectations regarding the Company’s plans, strategies and opportunities; expectations regarding the Company’s business or financial outlook; future borrowing capacity and liquidity; expected utilization, dayrates, revenues, operating expenses, rig commitments and availability, cash flows, tax rates and accounting treatment, contract status, terms and duration, contract backlog, capital expenditures, insurance, financing and funding; the effect, impact, potential duration and other implications of the COVID-19 pandemic; the offshore drilling market, including supply and demand, customer drilling programs, repricings, stacking of rigs, effects of new rigs on the market and effect of the volatility of commodity prices; expected work commitments, awards and contracts; future operations; increasing regulatory complexity; general market, business and industry conditions, trends and outlook; and general political conditions, including political tensions, conflicts and war, including Russia’s invasion of Ukraine and related sanctions. 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 certain of the 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 Item 1A “Risk Factors” in the Company’s most recent annual report on Form 10-K and the Company’s other 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 risk factors include, among others, risks associated with worldwide demand for drilling services, levels of activity in the oil and gas industry, renewing or replacing expired or terminated contracts, contract cancellations and terminations, maintenance and realization of backlog, competition and industry fleet capacity, impairments and retirements, operating risks, litigation and disputes, permits and approvals for drilling operations, the COVID-19 pandemic and related disruptions to the global economy, supply chain and normal business operations across sectors and countries, changes in tax laws and rates, regulatory initiatives and compliance with governmental regulations, casualty losses, and various other factors, many of which are beyond the Company’s control. Given these risk factors and other considerations, 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, and 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.

Non-GAAP Financial Measures (Unaudited)

To supplement the Company’s unaudited condensed consolidated financial statements presented on a basis in conformity with generally accepted accounting principles in the United States (GAAP), this press release provides investors with adjusted earnings before interest, taxes, depreciation and amortization and loss on extinguishment of debt (or Adjusted EBITDA), which is a non-GAAP financial measure. Management believes that this measure provides meaningful information about the Company’s performance by excluding certain items that may not be indicative of the Company’s ongoing operating results. This allows investors and others to better compare the Company’s financial results across previous and subsequent accounting periods and to those of peer companies and to better understand the long-term performance of the Company. Non-GAAP financial measures should be considered a supplement to, and not as a substitute for, or superior to, contract drilling revenue, contract drilling expense, operating income or loss, cash flows from operations or other measures of financial performance prepared in accordance with GAAP. 

Contact:
Kevin Bordosky
Senior Director, Investor Relations
(281) 647-4035

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SOURCE Diamond Offshore Drilling, Inc.