Microsoft Word - Ocean Rig - Q4 2015 Earnings Release 08 03-clean.doc



OCEAN RIG UDW INC. REPORTS FINANCIAL AND OPERATING RESULTS FOR

THE FOURTH QUARTER 2015


March 8, 2016, Nicosia, Cyprus. Ocean Rig UDW Inc. (NASDAQ:ORIG), or Ocean Rig or the Company, an international contractor of offshore deepwater drilling services, today announced its unaudited financial and operating results for the quarter ended December 31, 2015.


Fourth Quarter 2015 Financial Highlights


  • For the fourth quarter of 2015, the Company reported a net loss of $174.4 million, or $1.26 basic and diluted loss per share.


    Included in the fourth quarter 2015 results are:


    • Non-cash gains associated with the purchase of the 7.25% Senior Unsecured Notes due 2019 and the 6.5% Senior Secured Notes due 2017 totaling $137.0 million, or $0.99 per share.


    • Impairment charge of $415.0 million, or $3.00 per share, associated with the Company's drilling rigs.


      Excluding the above items, the Company would have reported net income of $103.6 million, or $0.75 per share.


  • The Company reported Adjusted EBITDA(1) of $300.8 million for the fourth quarter of 2015.


    Recent Highlights


    • On March 7, 2016, the Company commenced arbitration proceedings against Total E&P Angola for the termination of the contract with Ocean Rig Olympia.


    • On March 7, 2016, the Company signed a drilling contract for one of its semi-submersible drilling rigs, the Leiv Eiriksson, with Lundin Norway AS. The drilling contract is for a minimum of 3 wells, for drilling offshore Norway, with an estimated backlog of approximately $23.6 million. The rig is scheduled to commence this contract in the third quarter of 2016.


    • As of March 7, 2016, the Company had purchased $369.0 million in principal amount of the 7.25% Senior Unsecured Notes due in 2019 and $340.3 million of the 6.5% Senior Secured Notes due in 2017, resulting in a total gain to the Company of $314.2 million.


    • On February 12, 2016, Premier Oil Plc. ("Premier") terminated the contract for the Eirik Raude operating in the Falkland Islands. The Company has commenced arbitration proceedings against Premier.


      (1) Adjusted EBITDA is a non-GAAP measure; please see later in this press release for reconciliation to net income / (loss)

    • On February 11, 2016, Total E&P Congo sent a notice to terminate the drilling contract for the Ocean Rig Apollo. As per the contract, the Company is entitled to a termination fee that varies from 50% to 95% of the operating rate that will be payable monthly until April 2018.


- On January 21, 2016, ENI Angola S.p.A terminated the drilling contract for the Ocean Rig Olympia operating offshore Angola. The Company is currently in discussions to settle the amount due to it in an amicable fashion.


George Economou, Chairman and Chief Executive Officer of the Company, commented:


"In the fourth quarter our fleet operated at 99.5% utilization continuing the strong trend from the previous three quarters. Our full year 2015 fleet operating efficiency was approximately 98.2%, allowing us to successfully monetize our contracted revenue backlog. For the fourth quarter of 2015 we recorded approximately $475.7 million in net revenue and after paying operating and G&A expenses, our EBITDA for the fourth quarter of 2015 amounted to approximately $300.8 million versus the fourth quarter of 2014 EBITDA of approximately

$276.7 million.


"Given recent conditions in the debt capital markets and with a view to further strengthen our balance sheet, we decided to expand further on the Notes buyback program. As of today, we have bought $369.0 million of our 7.25% Senior Unsecured Notes due in 2019 and $340.3 million of our 6.5% Senior Secured Notes due in 2017.


"Regrettably, however, during the first quarter of 2016, three of our clients have decided to terminate drilling contracts. The Eirik Raude, Ocean Rig Olympia and Ocean Rig Apollo are currently en route to their stacking locations and remain available for alternative employment.


"With regards to the termination of the contract of the Ocean Rig Apollo, the Company is still in discussions with the lenders of the respective loan agreement about the consequences of such termination, which may involve a significant prepayment of the loan.


"The above terminations act as a reminder of the extremely challenging times facing the offshore drilling industry. The prospects for the industry remain bleak with limited visibility of new contracts and are likely to remain so at least until 2018."

Financial Review: 2015 Fourth Quarter


The Company recorded net loss of $174.4 million, or $1.26 basic and diluted loss per share, for the three- month period ended December 31, 2015, as compared to a net income of $87.5 million, or $0.66 basic and diluted earnings per share, for the three-month period ended December 31, 2014.


Revenues decreased by $23.7 million to $475.7 million for the three-month period ended December 31, 2015, as compared to $499.4 million for the same period in 2014.


Drilling rigs and drillships' operating expenses decreased to $150.9 million and total depreciation and amortization increased to $95.1 million for the three-month period ended December 31, 2015, from $194.8 million and $84.5 million, respectively, for the three-month period ended December 31, 2014. Total general and administrative expenses decreased to $23.7 million in the fourth quarter of 2015 from $34.8 million during the same period in 2014.


Interest and finance costs, net of interest income, increased to $68.2 million for the three-month period ended December 31, 2015, compared to $62.3 million for the three-month period ended December 31, 2014.

Operating Fleet


The table below describes our operating fleet profile as of March 7, 2016:


Total backlog as of March 7, 2016 amounted to $2.67 billion.



Unit Year built/ or Scheduled Delivery


Redelivery


Operating Area


Leiv Eiriksson

2001

Q3 - 16

Norway

Ocean Rig Corcovado

2011

Q2 - 18

Brazil

Ocean Rig Poseidon

2011

Q2 - 17

Angola

Ocean Rig Mykonos

2011

Q1 - 18

Brazil

Ocean Rig Mylos

2013

Q3 - 16

Brazil

Ocean Rig Skyros

2013

Q3 - 21

Angola

Ocean Rig Athena

2014

Q2 - 17

Senegal

Ocean Rig UDW Inc. issued this content on 08 March 2016 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 08 March 2016 22:52:25 UTC

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