News Press Releases

Diamond Offshore Announces Fourth Quarter 2015 Results

L | February 8, 2016

- Reports loss of $1.79 per share - Records after-tax impairment charge of $2.68 per share - Discontinues quarterly cash dividend

HOUSTON, Feb. 8, 2016 /PRNewswire/ -- Diamond Offshore Drilling, Inc. (NYSE: DO) today reported a fourth quarter 2015 net loss of $245 million, a loss of $1.79 per diluted share, compared to net income of $99 million, or $0.72 per diluted share, in the fourth quarter of 2014. Results for the quarter included a non-cash charge of $499 million associated with the impairment of nine drilling units, which resulted in an after-tax charge of $2.68 per share. Revenues in the fourth quarter of 2015 were $556 million, compared to revenues of $675 million in the fourth quarter of 2014.

For full year 2015, Diamond Offshore reported a net loss of $274 million or a loss of $2.00 per diluted share, compared to net income of $387 million, or $2.81 per diluted share, in 2014. Results for the full year included non-cash charges of $860 million associated with the impairment of 17 drilling units, which resulted in an after-tax charge of $5.05 per share. Revenues for full year 2015 were $2.419 billion, compared to $2.815 billion in 2014.

Diamond Offshore also announced that its Board of Directors has discontinued the quarterly cash dividend of $0.125 per share, which will preserve an additional $69 million on an annual basis.

"Given the severe and prolonged downturn in industry fundamentals, we believe it is prudent to bolster our already strong balance sheet," said Marc Edwards, President and Chief Executive Officer. "By conserving additional cash, we will have increased flexibility to manage the company through difficult market conditions and position ourselves for the eventual recovery in offshore drilling."

CONFERENCE CALL

A conference call to discuss Diamond Offshore's earnings results has been scheduled for 7:30 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 26416613. 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. Additional information and access to the Company's SEC filings are available at www.diamondoffshore.com. Diamond Offshore is owned 53% by Loews Corporation (NYSE: L).

FORWARD-LOOKING STATEMENTS

Statements contained in this press release or made during the above conference call that 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 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 risk factors include, among others, risks associated with worldwide demand for drilling services, level 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, declaration of dividends, operating risks, changes in tax laws and rates, regulatory initiatives and compliance with governmental regulations, construction of new builds, casualty losses, and various other factors, 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				Twelve Months Ended
		December 31,				December 31,
		2015		2014		2015		2014

Revenues:
Contract drilling	$	544,129	$	674,376	$	2,360,184	$	2,737,126
Revenues related to reimbursable expenses		11,434		945		59,209		77,545
Total revenues		555,563		675,321		2,419,393		2,814,671

Operating expenses:
Contract drilling, excluding depreciation		256,393		358,655		1,227,864		1,523,623
Reimbursable expenses		11,146		698		58,050		76,091
Depreciation		114,448		131,712		493,162		456,483
General and administrative		15,574		19,923		66,462		81,832
Impairment of assets		499,367		--		860,441		109,462
Restructuring and separation costs		1,043		--		9,778		--
(Gain) loss on disposition of assets		(2,309)		2,230		(2,290)		(5,382)
Total operating expenses		895,662		513,218		2,713,467		2,242,109

Operating (loss) income		(340,099)		162,103		(294,074)		572,562

Other income (expense):
Interest income		1,526		157		3,322		801
Interest expense		(23,134)		(15,997)		(93,934)		(62,053)
Foreign currency transaction gain		1,511		6,923		2,465		3,199
Other, net		171		84		873		682

(Loss) income before income tax (expense) benefit		(360,025)		153,270		(381,348)		515,191

Income tax benefit (expense)		114,641		(54,427)		107,063		(128,180)

Net (loss) income	$	(245,384)	$	98,843	$	(274,285)	$	387,011

(Loss) income per share:
Basic	$	(1.79)	$	0.72	$	(2.00)	$	2.82
Diluted	$	(1.79)	$	0.72	$	(2.00)	$	2.81


Weighted average shares outstanding:
Shares of common stock		137,159		137,148		137,157		137,473
Dilutive potential shares of common stock		--		59		--		50
Total weighted average shares outstanding		137,159		137,207		137,157		137,523

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

		Three Months Ended
		December 31,		September 30,		December 31,
		2015		2015		2014

REVENUES
Floaters:
Ultra-Deepwater	$	395,798	$	376,195	$	285,991
Deepwater		92,125		136,668		115,777
Mid-Water		44,766		69,500		231,933
Total Floaters		532,689		582,363		633,701
Jack-ups		11,440		16,673		40,675
Total Contract Drilling Revenue	$	544,129	$	599,036	$	674,376

Revenues Related to Reimbursable Expenses	$	11,434	$	10,706	$	945

CONTRACT DRILLING EXPENSE
Floaters:
Ultra-Deepwater	$	147,991	$	156,107	$	133,103
Deepwater		60,010		67,630		66,093
Mid-Water		28,767		35,784		119,763
Total Floaters		236,768		259,521		318,959
Jack-ups		10,749		12,507		25,268
Other		8,876		5,916		14,428
Total Contract Drilling Expense	$	256,393	$	277,944	$	358,655

Reimbursable Expenses	$	11,146	$	10,476	$	698

OPERATING (LOSS) INCOME
Floaters:
Ultra-Deepwater	$	247,807	$	220,088	$	152,888
Deepwater		32,115		69,038		49,684
Mid-Water		15,999		33,716		112,170
Total Floaters		295,921		322,842		314,742
Jack-ups		691		4,166		15,407
Other		(8,876)		(5,916)		(14,428)
Reimbursable expenses, net		288		230		247
Depreciation		(114,448)		(118,086)		(131,712)
General and administrative expense		(15,574)		(16,888)		(19,923)
Impairment of assets		(499,367)		(2,546)		--
Restructuring and separation costs		(1,043)		(1,574)		--
Gain (loss) on disposition of assets		2,309		(794)		(2,230)
Total Operating (Loss) Income	$	(340,099)	$	181,434	$	162,103

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

				December 31,		December 31,
				2015			2014

ASSETS

Current assets:
	Cash and cash equivalents		$	119,028	$		233,623

	Marketable securities			11,518			16,033

	Accounts receivable, net of allowance for bad debts			405,370			463,862

	Prepaid expenses and other current assets			119,479			185,541

	Assets held for sale			14,200			--

				669,595			899,059

Drilling and other property and equipment, net of
accumulated depreciation				6,378,814			6,945,953

Other assets				116,480			176,277
		Total assets	$	7,164,889	$		8,021,289

LIABILITIES AND STOCKHOLDERS' EQUITY

Current portion of long-term debt			$	--	$		249,962

Short-term borrowings				286,589			--
Other current liabilities				339,134			606,684

Long-term debt				1,994,773			1,994,526

Deferred tax liability				276,529			530,394

Other liabilities				155,094			188,160

Stockholders' equity				4,112,770			4,451,563

		Total liabilities and stockholders' equity	$	7,164,889	$		8,021,289

DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES
AVERAGE DAYRATES AND UTILIZATION
(Dayrate in thousands)

	Fourth Quarter 2015			Third Quarter 2015			Fourth Quarter 2014
	Average Dayrate (1)	Utilization (2)	Operational Efficiency (3)	Average Dayrate (1)	Utilization (2)	Operational Efficiency (3)	Average Dayrate (1)	Utilization (2)	Operational Efficiency (3)



Ultra-Deepwater Floaters	$531	70%	95.5%	$479	71%	96.8%	$493	66%	90.2%

Deepwater Floaters	$337	42%	97.7%	$361	59%	90.3%	$431	48%	97.3%

Mid-Water Floaters	$249	24%	97.8%	$289	31%	97.5%	$270	55%	96.8%

Jack-ups	$124	17%	100%	$97	31%	99.8%	$96	77%	99.5%

Fleet Total			96.6%			95.5%			95.5%

(1) Average dayrate is defined as contract drilling revenue for all of the specified rigs in our fleet per revenue earning day. A revenue earning day is defined as a 24-hour period during which a rig earns a dayrate after commencement of operations and excludes mobilization, demobilization and contract preparation days.

(2) Utilization is calculated as the ratio of total revenue-earning days divided by the total calendar days in the period for all specified rigs in our fleet (including cold-stacked rigs, but excluding rigs under construction). As of December 31, 2015, our cold-stacked rigs included one ultra-deepwater semisubmersible, two deepwater semisubmersibles, four mid-water semisubmersibles and five jack-up rigs.

(3) Operational efficiency is calculated as the ratio of total revenue-earning days divided by the sum of total revenue-earning days plus the number of days (or portions thereof) associated with unanticipated equipment downtime.