Ocean Rig UDW Inc. Reports Financial and Operating Results for the Third Quarter 2015
/EINPresswire.com/ -- NICOSIA, CYPRUS -- (Marketwired) -- 12/07/15 -- 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 third quarter ended September 30, 2015.
Third Quarter 2015 Financial Highlights
- For the third quarter of 2015, the Company reported a net income of $138.4 million, or $0.94 basic and diluted earnings per share.
Included in the third 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 $52.2 million or $0.36 per share.
Excluding the above items, the Company would have reported net income of $86.2 million, or $0.58 per share.
- The Company reported Adjusted EBITDA(1) of $273.4 million for the third quarter of 2015.
Recent Highlights
- As of December 7, 2015, the Company has purchased a principal amount of $268.1 million of the 7.25% Senior Unsecured Notes due in 2019 and $156.3 million of the 6.5% Senior Secured Notes due in 2017, resulting in a total gain to the Company of $173.5 million.
- On September 11, 2015, the Company entered into an agreement to provide third party technical management services for the offshore drilling unit Cerrado.
- On September 3, 2015, the Company reached an agreement to postpone the delivery of the Ocean Rig Santorini to the second quarter of 2017. As part of the agreement, certain portions of the pre-delivery payments were also deferred.
(1) Adjusted EBITDA is a non-GAAP measure; please see later in this press release for reconciliation to net income
George Economou, Chairman and Chief Executive Officer of the Company, commented:
"We are pleased to report another solid quarter, despite the current market conditions, with a fleet utilization of approximately 96% and further reductions in operating and corporate expenses. Our performance is a testament to the superior operating results associated with modern assets and the collective efforts of our operating team.
"In addition to further reducing our costs and maintaining a high level of operating efficiency, we remain focused on value creation initiatives for our shareholders. In August, we exchanged the remaining $80.0 million owed to us by DryShips for approximately 17.8 million of our shares owned by DryShips. Furthermore, as of today, we bought $268.1 million of our 7.25% Senior Unsecured Notes due in 2019 and $156.3 million of our 6.5% Senior Secured Notes due in 2017.
"During the third quarter of 2015, and as previously announced, the Ocean Rig Skyros started its new six year contract in Angola with Total. In addition the Ocean Rig Olympia started its new contract with Eni in Angola. Given these contracts, our total revenue backlog is $3.8 billion and results in contract coverage of 100% and 75% of our calendar days in 2015 and 2016.
"We continue to effectively manage our capital expenditures program by deferring instalments and pushing out construction as evidenced by the new delivery date of the Ocean Rig Santorini in mid-2017. This agreement significantly reduces our obligations for the next two years.
"The market remains challenging with limited visibility of new contracts and is likely to remain so through the next year. Even though we remain positive for the long term prospects of the industry, given the current environment, we will adjust our available capacity to the new market conditions."
Financial Review: 2015 Third Quarter
The Company recorded net income of $138.4 million, or $0.94 basic and diluted earnings per share, for the three-month period ended September 30, 2015, as compared to a net income of $104.2 million, or $0.79 basic and diluted earnings per share, for the three-month period ended September 30, 2014.
Revenues decreased by $78.3 million to $437.2 million for the three-month period ended September 30, 2015, as compared to $515.5 million for the same period in 2014, due to fewer operating days of our fleet.
Drilling rigs and drillships' operating expenses decreased to $135.5 million and total depreciation and amortization increased to $90.3 million for the three-month period ended September 30, 2015, from $198.4 million and $81.7 million, respectively, for the three-month period ended September 30, 2014. Total general and administrative expenses decreased to $23.2 million in the third quarter of 2015 from $33.5 million during the same period in 2014.
Interest and finance costs, net of interest income, amounted to $67.2 million for the three-month period ended September 30, 2015, compared to $81.8 million for the three-month period ended September 30, 2014.
Fleet List
The table below describes our fleet profile as of December 1, 2015:
Total backlog as of December 1, 2015 amounted to $3.8 billion.
Year built/ or
Scheduled
Unit Delivery Redelivery Operating Area
Norwegian
Leiv Eiriksson 2001 Q1 - 16 Continental
Shelf
Eirik Raude 2002 Q1 - 16 Falkland
Islands
Ocean Rig Corcovado 2011 Q2 - 18 Brazil
Ocean Rig Olympia 2011 Q2 - 16 Angola
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 Apollo 2015 Q2 - 18 West Africa
Newbuildings
Ocean Rig Santorini Q2 2017 N/A N/A
Ocean Rig Crete Q1 2018 N/A N/A
Ocean Rig Amorgos Q1 2019 N/A N/A
Ocean Rig UDW Inc.
Financial Statements
Unaudited Interim Condensed Consolidated Statements of Operations
(Expressed in
Thousands of U.S.
Dollars
except for share and Three Months Ended Nine Months Ended
per share data) September 30, September 30,
-------------------------- --------------------------
2014 2015 2014 2015
------------ ------------ ------------ ------------
REVENUES:
Revenues $ 515,514 $ 437,174 $ 1,317,711 $ 1,272,473
EXPENSES:
Drilling rigs and
drillships
operating expenses 198,413 135,479 533,017 431,190
Depreciation and
amortization 81,744 90,318 239,835 267,468
General and
administrative
expenses 33,510 23,236 96,915 76,647
Legal settlements
and other, net 1,145 (604) 2,733 (3,234)
------------ ------------ ------------ ------------
Operating income 200,702 188,745 445,211 500,402
OTHER
INCOME/(EXPENSES):
Interest and finance
costs, net of
interest income (81,819) (67,172) (225,575) (202,332)
Gain from repurchase
of senior notes - 52,213 - 52,213
Gain/(loss) on
interest rate swaps 3,943 (6,217) (6,224) (16,278)
Other, net (638) (5,630) 759 (13,256)
Income taxes (17,940) (23,539) (41,873) (66,336)
------------ ------------ ------------ ------------
Total other
expenses, net (96,454) (50,345) (272,913) (245,989)
------------ ------------ ------------ ------------
Net income
attributable to
Ocean Rig UDW Inc. $ 104,248 $ 138,400 $ 172,298 $ 254,413
============ ============ ============ ============
Net income
attributable to
Ocean Rig UDW Inc.
common stockholders $ 103,946 $ 137,702 $ 171,802 $ 253,238
============ ============ ============ ============
Earnings per common
share, basic and
diluted $ 0.79 $ 0.94 $ 1.30 $ 1.82
Weighted average
number of shares,
basic and diluted 131,822,515 146,670,990 131,832,444 138,885,188
Ocean Rig UDW Inc.
Unaudited Condensed Consolidated Balance Sheets
December 31, September 30,
(Expressed in Thousands of U.S. Dollars) 2014 2015
------------- -------------
ASSETS
Cash, cash equivalents and restricted cash
(current and non-current) $ 531,497 $ 895,755
Other current assets 446,695 462,343
Advances for drillships under construction
and related costs 622,507 385,467
Drilling rigs, drillships, machinery and
equipment, net 6,207,633 6,837,540
Other non-current assets 233,289 44,295
------------- -------------
Total assets 8,041,621 8,625,400
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Total debt 4,372,450 4,672,043
Total other liabilities 502,895 504,461
Total stockholders' equity 3,166,276 3,448,896
------------- -------------
Total liabilities and stockholders' equity $ 8,041,621 $ 8,625,400
============= =============
SHARE COUNT DATA
Common stock issued 132,017,178 160,888,606
Less: Treasury stock - (22,222,222)
------------ ------------
Common stock issued and outstanding 132,017,178 138,666,384
============ ============
Adjusted EBITDA Reconciliation
Adjusted EBITDA represents earnings before interest, taxes, depreciation and amortization, class survey costs and gains or losses on interest rate swaps. Adjusted EBITDA does not represent and should not be considered as an alternative to net income or cash flow from operations, as determined by United States generally accepted accounting principles, or U.S. GAAP, and our calculation of adjusted EBITDA may not be comparable to that reported by other companies. Adjusted EBITDA is included herein because it is a basis upon which the Company measures its operations. Adjusted EBITDA is also used by our lenders as a measure of our compliance with certain covenants contained in our loan agreements and because the Company believes that it presents useful information to investors regarding a company's ability to service and/or incur indebtedness.
The following table reconciles net income to Adjusted-EBITDA:
Three Months Ended Nine Months Ended
(Dollars in thousands) September 30, September 30,
-------------------- -------------------
2014 2015 2014 2015
--------- --------- --------- ---------
Net income $ 104,248 $ 138,400 $ 172,298 $ 254,413
Add: Net interest expense 81,819 67,172 225,575 202,332
Add: Depreciation and
amortization 81,744 90,318 239,835 267,468
Add: Income taxes 17,940 23,539 41,873 66,336
Less: Gain from repurchase of
senior notes - (52,213) - (52,213)
Add: (Gain)/loss on interest rate
swaps (3,943) 6,217 6,224 16,278
--------- --------- --------- ---------
Adjusted EBITDA $ 281,808 $ 273,433 $ 685,805 $ 754,614
========= ========= ========= =========
Drill Rigs Holdings Inc - Supplemental Information
Leiv Eiriksson
The Leiv Eiriksson is currently drilling offshore Norway under our three-year contract with Rig Management Norway, which is expected to expire in March 2016. During the third quarter of 2015, the unit achieved utilization of 100%.
Eirik Raude
The Eirik Raude is currently drilling its fourth well in the Falkland Islands under our six well contract with Premier Oil and Noble Energy. During the third quarter of 2015, the unit achieved utilization of 82.9%.
Summary Financials of Drill Rig Holdings Inc.:
Nine months
Year ended ended
December 31, September 30,
2014 2015
------------- -------------
(Dollars in thousands)
Total assets $ 1,254,454 $ 1,181,004
Total debt, net of financing fees (788,224) (791,357)
Shareholders equity (384,938) (325,530)
Total cash and cash equivalents $ 23,635 $ 7,290
Nine months Nine months
ended ended
September 30, September 30,
2014 2015
------------- --------------
(Dollars in thousands)
Total revenue $ 319,964 $ 298,484
EBITDA $ 178,353 $ 182,865
EBITDA reconciliation of Drill Rig Holdings Inc.:
Nine months ended
(Dollars in thousands) September 30,
-----------------------------
2014 2015
------------- --------------
Net Income $ 90,561 $ 70,207
Add: Net interest expense 27,416 42,126
Add: Depreciation and amortization 58,839 60,960
Add: Income taxes 1,537 9,572
------------- -------------
EBITDA $ 178,353 $ 182,865
============= =============
Conference Call and Webcast: December 8, 2015
As announced, the Company's management team will host a conference call, on Tuesday, December 8, 2015 at 8:00 a.m. Eastern Time to discuss the Company's financial results.
Conference Call Details
Participants should dial into the call 10 minutes before the scheduled time using the following numbers: 1(866) 819-7111 (from the US), 0(800) 953-0329 (from the UK) or +(44) (0) 1452 542 301 (from outside the US). Please quote "Ocean Rig."
A replay of the conference call will be available until December 15, 2015. The United States replay number is 1(866) 247-4222; from the UK 0(800) 953-1533; the standard international replay number is (+44) (0) 1452 550 000 and the access code required for the replay is: 55592075#.
A replay of the conference call will also be available on the Company's website at www.ocean-rig.com under the Investor Relations section.
Slides and audio webcast:
There will also be a simultaneous live webcast over the Internet, through the Ocean Rig UDW Inc. website www.ocean-rig.com. Participants to the live webcast should register on the website approximately 10 minutes prior to the start of the webcast.
About Ocean Rig UDW Inc.
Ocean Rig is an international offshore drilling contractor providing oilfield services for offshore oil and gas exploration, development and production drilling, and specializing in the ultra-deepwater and harsh-environment segment of the offshore drilling industry. The company owns and operates 13 offshore ultra deepwater drilling units, comprising of 2 ultra deepwater semisubmersible drilling rigs and 11 ultra deepwater drillships, 1 of which is scheduled to be delivered to the Company during 2017, 1 of which is scheduled to be delivered during 2018 and 1 of which is scheduled to be delivered during 2019.
Ocean Rig's common stock is listed on the NASDAQ Global Select Market where it trades under the symbol "ORIG"
Visit the Company's website at www.ocean-rig.com
Forward-Looking Statement
Matters discussed in this release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements in order to encourage companies to provide prospective information about their business. The Company desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is including this cautionary statement in connection with such safe harbor legislation.
Forward-looking statements relate to Ocean Rig's expectations, beliefs, intentions or strategies regarding the future. These statements may be identified by the use of words like "anticipate," "believe," "estimate," "expect," "intend," "may," "plan," "project," "should," "seek," and similar expressions. Forward-looking statements reflect Ocean Rig's current views and assumptions with respect to future events and are subject to risks and uncertainties.
The forward-looking statements in this release are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management's examination of historical operating trends, data contained in Ocean Rig's records and other data available from third parties. Although Ocean Rig believes that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond Ocean Rig's control, Ocean Rig cannot assure you that it will achieve or accomplish these expectations, beliefs or projections described in the forward- looking statements contained herein. Actual and future results and trends could differ materially from those set forth in such statements.
Important factors that, in Ocean Rig's view, could cause actual results to differ materially from those discussed in the forward-looking statements include factors related to (i) the offshore drilling market, including supply and demand, utilization, day rates and customer drilling programs, commodity prices, effects of new rigs and drillships on the market and effects of declines in commodity process and downturns in the global economy on the market outlook for our various geographical operating sectors and classes of rigs and drillships; (ii) hazards inherent in the drilling industry and marine operations causing personal injury or loss of life, severe damage to or destruction of property and equipment, pollution or environmental damage, claims by third parties or customers and suspension of operations; (iii) newbuildings, upgrades, and shipyard and other capital projects; (iv) changes in laws and governmental regulations, particularly with respect to environmental matters; (v) the availability of competing offshore drilling vessels; (vi) political and other uncertainties, including risks of terrorist acts, war and civil disturbances; piracy; significant governmental influence over many aspects of local economies, seizure; nationalization or expropriation of property or equipment; repudiation, nullification, modification or renegotiation of contracts; limitations on insurance coverage, such as war risk coverage, in certain areas; political unrest; foreign and U.S. monetary policy and foreign currency fluctuations and devaluations; the inability to repatriate income or capital; complications associated with repairing and replacing equipment in remote locations; import-export quotas, wage and price controls imposition of trade barriers; regulatory or financial requirements to comply with foreign bureaucratic actions; changing taxation policies; and other forms of government regulation and economic conditions that are beyond our control; (vii) the performance of our rigs; (viii) our ability to procure or have access to financing and our ability comply with our loan covenants; (ix) our substantial leverage, including our ability to generate sufficient cash flow to service our existing debt and the incurrence of substantial indebtedness in the future (x) our ability to successfully employ our drilling units; (xi) our capital expenditures, including the timing and cost of completion of capital projects; (xii) our revenues and expenses; (xiii) complications associated with repairing and replacing equipment in remote locations; and (xiv) regulatory or financial requirements to comply with foreign bureaucratic actions, including potential limitations on drilling activities. Due to such uncertainties and risks, investors are cautioned not to place undue reliance upon such forward-looking statements.
Risks and uncertainties are further described in reports filed by Ocean Rig UDW Inc. with the U.S. Securities and Exchange Commission, including the Company's most recently filed Annual Report on Form 20-F.
Investor Relations / Media:
Nicolas Bornozis
Capital Link, Inc. (New York)
Tel. 212-661-7566
E-mail: oceanrig@capitallink.com
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