Diamond Offshore Reports 1Q:22 Drilling Contract Revenue of $150mn 

(Diamond Offshore, 10.May.2022) — Diamond Offshore Drilling, Inc. (NYSE: DO) reported the following results for the first quarter of 2022.

Three Months Ended
Thousands of dollars, except per share data31 Mar. 202231 Dec. 2021
Total revenues $186,239$227,278
Operating loss(33,916)(127,296)
Adjusted operating (loss) income(33,916)5,153
Adjusted EBITDA(11,008)29,690
Net loss(34,354)(124,868)
Adjusted net (loss) income(34,354)8,216
Loss per diluted share $(0.34)$(1.25)
Adjusted (loss) income per diluted share $(0.34)$0.07

Bernie Wolford, Jr., President and Chief Executive Officer of Diamond Offshore, stated, “I am pleased that during the quarter we were able to relist Diamond Offshore on the New York Stock Exchange and commence the West Auriga contract for BP. The company has a long and successful history in offshore drilling, and we look forward to the opportunities before us as the recovery in the industry unfolds. I would like to take this opportunity to give a special thanks to the hard-working women and men of Diamond Offshore for their dedication and support in making the company a premier offshore driller. It is because of their continuing efforts that we have been able to successfully secure backlog and safely exceed the high expectations of our global client base.

“In addition, I am happy to acknowledge the appointment of Benjamin Duster to our Board of Directors. Ben brings a wealth of experience to our Board and will be a valuable asset as we continue to navigate this dynamic market.”

First Quarter Results

Contract drilling revenue for the first quarter totaled $150mn compared to $184mn in the fourth quarter of 2021. The decline in revenue was primarily driven by the Ocean Apex, which was off contract during the first quarter of 2022 but began working under a new contract in May 2022. Additionally, during the first quarter, the Ocean Patriot and Ocean Endeavor were both out of service for repairs, including a special survey for the Ocean Patriot. Both rigs are now back on contract and working in the North Sea.   

Contract drilling expense for the first quarter totaled $145mn compared to $139mn in the fourth quarter of 2021. The increase was primarily driven by the shipyard projects for the Ocean Patriot and Ocean Endeavor. The Ocean Endeavor may require another out-of-service period for further repairs and enhancements later in 2022, subject to ongoing assessments.

Diamond Offshore added $29mn of backlog during the first quarter, bringing the company’s total contracted backlog as of 1 April 2022 to $1.2bn, which represents 15.6 rig years of work.

Operational Highlights

During the first quarter, the company successfully commenced operations with the West Auriga (one of three rigs managed by the company) on a one-year contract. With the commencement of this contract, Diamond Offshore has three ultra-deepwater drillships working for BP in the Gulf of Mexico.

During the quarter, the company’s owned drillship fleet continued to perform in an exceptional manner, achieving an operating efficiency of nearly 100% during the quarter. Excluding the two rigs in shipyard during the first quarter, the company’s remaining fleet achieved operational efficiency of 97% during the quarter.

Liquidity and Outlook

As of 31 March 2022, Diamond Offshore had total liquidity of $388mn, comprised of $54mn of unrestricted cash, and $334mn of available capacity on its revolving credit facility and delayed draw First Lien Notes.

Discussing the offshore drilling market, Mr. Wolford commented “We continue to see improvements in the moored, DP and drillship segments of the market. Rates and utilization for drillships have improved and are at recent cycle highs, and we expect this trend to continue in the coming months. The moored segment has also improved; however, it has been at a more measured pace and more geographically diverse than that of drillships. We are pleased to have significant backlog with repricing and new opportunities available to us in the quarters ahead. Customers continue to favor working rigs, and we believe Diamond Offshore is well situated for the repricing cycle currently under way in both the moored and drillship segments.”