- Ocean GreatWhite Awarded Contract
- Three other Rigs Secure Additional Backlog
- 18% Increase in Contract Drilling Revenue and $26m Increase in EBITDA
Diamond Offshore Drilling reported the following results for the second quarter of 2022:
| Three Months Ended | |||||||
| Thousands of dollars, except per share data | June 30, 2022 | March 31, 2022 | |||||
| Total revenues | $ | 205,702 | $ | 186,239 | |||
| Operating loss | (9,763) | (33,916) | |||||
| Adjusted EBITDA | 15,245 | (11,008) | |||||
| Net loss | (21,929) | (34,354) | |||||
| Loss per diluted share | $ | (0.22) | $ | (0.34) | |||
Diamond Offshore also announced contract awards for the harsh environment semisubmersible Ocean GreatWhite in the U.K. North Sea, the semisubmersible Ocean Apex in Australia, and two 7th generation drillships – the Ocean BlackHornet and a Diamond-managed rig – in the U.S. Gulf of Mexico. These new contracts added approximately $610 million of backlog for the Company. The new contracts are in addition to the $995 million of backlog reported as of July 1, 2022.
Bernie Wolford, Jr., President and Chief Executive Officer, commented, “We are pleased to announce these significant backlog additions. The contract for the Ocean GreatWhite is a testament to the capabilities of this high-specification harsh environment asset and comes at a time when energy security and longer-term demand in the sector are increasingly visible. With the rig now contracted, we will have three assets working in the UK sector of the North Sea, allowing us to better serve our customer base while growing our presence in an established market.”
The Ocean GreatWhite was awarded five wells, with an estimated duration of 300 days. Contract commencement is expected in the first quarter of 2023. Total contract value of the committed scope is approximately $80 million. The contract also includes priced options for up to eight additional wells.
The Ocean Apex has been awarded three new contracts for work on the Northwest Shelf of Australia. The first new award commences in the second quarter of 2023, with an estimated duration of 75 days. The second award is also for an estimated duration of 75 days, commencing in direct continuation of the previous award. The third award has an estimated duration of 150 days with a commencement in 2024. The combined awards add approximately $90 million of backlog to the Ocean Apex. Wolford added, “A potential fourth new contract currently under negotiation would fill out the remaining availability in 2023, and combined, keep the rig fully contracted until late 2024.”
The Ocean BlackHornet has secured a two-year extension with its current client in the U.S. Gulf of Mexico in direct continuation of the rig’s current term. The two-year extension will keep the rig working until early 2025. Total contract value for the extension is approximately $290 million.
A Diamond-managed rig has been extended by its current client for work in the U.S. Gulf of Mexico for an additional one-year term in direct continuation of the rig’s current term. The contract value for this extension is approximately $150 million.
Wolford noted, “With improved dayrates and approximately 75% of 2023 marketed capacity contracted, we have an opportunity to earn considerably higher margins in 2023. I would like to thank everyone involved in securing this backlog, as these awards are a testament to the class-leading Diamond Offshore brand, our unwavering commitment to HSE, and the hard-working people who contribute to the Diamond Difference.”
Second Quarter Results
Contract drilling revenue for the second quarter totaled $177 million compared to $150 million in the first quarter of 2022. The increase in revenue was primarily driven by the Ocean Apex returning to active service under a new contract that commenced in May 2022, completion of shipyard stays for the Ocean Endeavor and Ocean Patriot, and a full quarter of drilling operations for the Auriga. Contract drilling expense for the second quarter was relatively flat at $142 million compared to $145 million in the first quarter of 2022. During the quarter, the Company continued to perform in an exceptional manner, achieving revenue efficiency of 96.3%.
Operational Highlights
After eight years of continuous and exceptional performance, the Ocean BlackHawk completed its inaugural contract in the U.S. Gulf of Mexico. The rig has now mobilized to Senegal to join the Ocean BlackRhino. The Ocean Apex returned to work in May and the Ocean Monarch completed its contract and was cold stacked.
Notably, three of the Company’s rigs reached significant safety milestones this quarter, each achieving three years without a recordable incident.
Liquidity and Outlook
As of June 30, 2022, Diamond Offshore had total liquidity of $339 million, comprised of $43 million of unrestricted cash and $296 million of available capacity on its revolving credit facility and delayed draw First Lien Notes.
Commenting on the outlook for the offshore drilling market, Wolford concluded, “The market continues to improve, as reflected by our recent fixtures for both semisubmersibles and drillships across multiple regions. Visible demand, energy security concerns, and tight supply could lead to sustainable demand for our drilling services for years to come.”
