Ocean Rig UDW Inc. (NASDAQ:ORIG), (“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 June 30, 2018.
Second
Quarter
2018 Financial
Highlights
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For the second quarter of 2018, the Company reported net loss
of $19.1 million, or $0.21 basic and diluted loss per share. |
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Included in the net loss for the second quarter 2018 results
are: |
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Costs of
$6.4 million, or $0.07 per share, associated with the Ocean Rig
Mykonos, the Ocean Rig Skyros and the Leiv Eiriksson statutory
periodic surveys, which are included in operating expenses. |
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Excluding the above costs, the Company would have reported net
loss of $12.7 million, or $0.14 per share. |
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The Company reported Adjusted EBITDA(1) of $22.8 million for
the second quarter of 2018. |
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The Company’s rigs that are operating under drilling contracts
achieved a revenue efficiency of 88.1% for the second quarter of
2018. |
Recent
Events
- On July 3, 2018, the Company, pursuant to the previously
announced agreement, made the $22.25 million interim yard
installment payment to Samsung Heavy Industries (“SHI”) in
connection with the construction of the Ocean Rig Crete. Under the
agreement with SHI, the delivery of the Ocean Rig Crete has been
postponed to September 30, 2020, but may be brought forward at the
option of the Company.
Mr. Pankaj Khanna, President and Chief Executive
Officer of the Company, commented:
“We remain focused on keeping costs down and
growing our backlog. We believe our balance sheet is the cleanest
in the industry and, with the negotiations related to the drilling
contract for the Ocean Rig Skyros now finalized, our backlog
remains solid. This provides the Company with the maximum
flexibility to wait for a market upturn. Additionally, as recently
announced, the Ocean Rig Poseidon will be continuously employed
from September this year into Q1 2019. We are in discussions to
enter additional drilling contracts to extend the employment of the
Ocean Rig Poseidon and for new employment relating to the Ocean Rig
Mykonos and the Ocean Rig Corcovado, both of which are currently
hot stacked.
"Brent oil prices have stayed north of $70 per
barrel since April 2018 and oil demand remains robust and we see
the quarterly results of many of our customers that show they are
cashflow positive even after dividends, which suggests that there
is room for further capital expenditures. We are starting to see
signs of increased spending in the offshore sector as tenders and
requests for information keep coming in. Based on market reports
this is the highest level of market enquiry since 2012. While we do
not expect any material changes in drilling rates in the near
future we project better utilization of the floater fleet and
eventually a rate recovery in 2019. We believe that we are well
positioned for a recovery in the floater market whenever this
occurs.”
- Adjusted EBITDA is a non-U.S. GAAP measure; please see the
reconciliation to net income/(loss) (the nearest GAAP measure)
elsewhere in this press release.
Financial
Review:
2018 Second
Quarter
The Company recorded net loss of $19.1 million,
or $0.21 basic and diluted loss per share, for the three-month
period ended June 30, 2018, as compared to a net income of $57.0
million, or $6,357.57 basic and diluted earnings per share(1), for
the three-month period ended June 30, 2017.
Revenues decreased by $187.2 million to $97.3
million for the three-month period ended June 30, 2018, as compared
to $284.5 million for the three-month period ended June 30, 2017.
The decrease is mainly attributable to the i) conclusion of the
respective drilling contracts of three drilling units which are
currently hot stacked and ii) increased revenues earned during
the three-month period ended June 30, 2017, as a result of the
termination fees received upon the early termination relating to
the contracts of two drilling units.
Drilling units’ operating expenses decreased to
$60.6 million (including $6.4 million of statutory periodic survey
costs, associated with the Ocean Rig Mykonos, the Ocean Rig Skyros
and the Leiv Eiriksson) and total depreciation and amortization
decreased to $26.2 million for the three-month period ended June
30, 2018, from $70.6 million and $31.3 million, respectively, for
the three-month period ended June 30, 2017. Total general and
administrative expenses increased to $15.4 million during the
three-month period ended June 30, 2018 from $15.1 million during
the three-month period ended June 30, 2017.
Loss on sale of assets mainly associated with
scrapping of various equipment amounted to $0.2 million for the
three-month period ended June 30, 2018, as compared with a gain of
$0.01 million for the three-month period ended June 30, 2017.
Reorganization expenses amounted to $0.02 million for the
three-month period ended June 30, 2018, as compared with $24.2
million for the three-month period ended June 30, 2017.
Interest and finance costs, net of interest
income, decreased to $3.1 million for the three-month period ended
June 30, 2018, compared to $69.7 million for the three-month period
ended June 30, 2017. The decrease is mainly associated with the
decrease in the interest on long term debt due to the discharge of
$3.7 billion of debt, as a result of our restructuring which was
completed on September 22, 2017.
- Share and per share data for 2017 give effect to a 1-for-9,200
reverse stock split, which became effective on September 22,
2017.
Operating Fleet
The table below describes our operating fleet profile as of
August 8, 2018:
Unit |
Year built |
Redelivery |
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Leiv Eiriksson |
2001 |
Q4 –
2018 |
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Ocean Rig
Corcovado |
2011 |
N/A |
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Ocean Rig Poseidon |
2011 |
Q1 –
2019 |
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Ocean Rig Mykonos |
2011 |
N/A |
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Ocean Rig Skyros |
2013 |
Q3 –
2021 |
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Total estimated backlog(1) as of June 30, 2018 amounted
to approximately $743 million.
Note: The units the Eirik Raude, the Ocean Rig
Olympia, the Ocean Rig Apollo, the Ocean Rig Mylos, the Ocean Rig
Paros and the Ocean Rig Athena, have completed their preservation
work and are currently cold stacked in Greece, remaining available
for further employment. The Ocean Rig Mykonos and the Ocean Rig
Corcovado are in Las Palmas, Spain, where they remain “ready to
drill” and are being fitted with full Managed Pressure Drilling
("MPD") packages. The Ocean Rig Poseidon is in Walvis Bay, Namibia
where it remains “ready to drill” and is expected to commence its
previously announced drilling program, offshore Namibia, in the
third quarter of 2018.
- The estimated backlog of our fleet is adjusted for subsequent
events, new contracts and letter of intent, excludes options to
extend and assumes full utilization for the full term of the
drilling contract. The actual amount of revenues earned and the
actual periods during which revenues are earned may differ from the
amounts and periods described above due to, for example, off-hire
for maintenance projects, downtime, scheduled or unscheduled
dry-docking, cancellation or early termination of drilling
contracts, and other factors that may result in lower revenues than
our estimated backlog.
Ocean Rig UDW Inc.
Financial
StatementsUnaudited Interim Condensed Consolidated
Statements of Operations
(Expressed in thousands of U.S. Dollars except for share and
per share data) |
|
Three Months EndedJune 30, |
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Six Months Ended June 30, |
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2017 |
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2018 |
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2017 |
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2018 |
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REVENUES: |
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Revenues |
$ |
284,503 |
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$ |
97,349 |
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$ |
587,317 |
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$ |
291,493 |
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EXPENSES: |
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Drilling units
operating expenses |
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70,580 |
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60,613 |
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146,194 |
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136,772 |
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Depreciation and
amortization |
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31,338 |
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26,161 |
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62,649 |
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52,769 |
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(Gain)/Loss on sale of
assets |
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(14 |
) |
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235 |
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139 |
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515 |
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General and
administrative expenses |
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15,126 |
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15,416 |
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31,091 |
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31,507 |
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Operating
income/(loss) |
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167,473 |
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(5,076 |
) |
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347,244 |
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69,930 |
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OTHER
INCOME/(EXPENSES): |
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Interest and finance
costs, net of interest income |
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(69,700 |
) |
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(3,138 |
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(121,209 |
) |
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(10,241 |
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Reorganization
expenses |
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(24,164 |
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(20 |
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(41,043 |
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(227 |
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Other, net |
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1,319 |
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(4,955 |
) |
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1,212 |
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(7,696 |
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Income taxes |
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(17,926 |
) |
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(5,899 |
) |
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(37,013 |
) |
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(16,004 |
) |
Total other expenses,
net |
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(110,471 |
) |
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(14,012 |
) |
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(198,053 |
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(34,168 |
) |
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Net income/(loss)
attributable to Ocean Rig UDW Inc. |
$ |
57,002 |
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$ |
(19,088 |
) |
$ |
149,191 |
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$ |
35,762 |
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Net income/(loss)
attributable to Ocean Rig UDW Inc. common stockholders |
$ |
57,002 |
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$ |
(19,088 |
) |
$ |
149,010 |
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$ |
35,762 |
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Earnings/(loss) per
common share, attributable to common stockholders, basic and
diluted (1) |
$ |
6,357.57 |
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$ |
(0.21 |
) |
$ |
16,619.45 |
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$ |
0.39 |
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Weighted average number
of common shares, basic and diluted (1) |
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8,966 |
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91,567,982 |
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8,966 |
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91,567,982 |
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- Share and per share data for 2017 give effect to a 1-for-9,200
reverse stock split and for 2017 the issuance of 90,651,603 shares,
both became effective on September 22, 2017.
Ocean Rig UDW Inc.
Unaudited Condensed Consolidated Balance
Sheets
(Expressed in Thousands of U.S. Dollars) |
|
December 31,2017 |
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June 30,2018 |
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ASSETS |
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Cash,
cash equivalents and restricted cash (current and non-current) |
$ |
783,081 |
$ |
719,226 |
Other
current assets |
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207,637 |
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103,492 |
Advances
for drillships under construction and related costs |
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- |
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35,552 |
Drilling
units, machinery and equipment, net |
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1,852,167 |
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1,809,794 |
Other
non-current assets |
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9,080 |
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8,345 |
Total assets |
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2,851,965 |
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2,676,409 |
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LIABILITIES AND
STOCKHOLDERS’ EQUITY |
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Total
debt, net of deferred financing costs |
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531,632 |
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350,000 |
Total
other current liabilities |
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102,411 |
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74,724 |
Total
other non-current liabilities |
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14,702 |
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12,703 |
Total
stockholders’ equity |
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2,203,220 |
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2,238,982 |
Total liabilities and stockholders’ equity |
$ |
2,851,965 |
$ |
2,676,409 |
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SHARE COUNT DATA |
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Common
stock issued and outstanding |
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91,567,982 |
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91,567,982 |
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Adjusted
EBITDA
Reconciliation
Adjusted EBITDA represents earnings before
interest, taxes, depreciation and amortization, statutory periodic
survey costs, (gain)/loss on sale of assets, reorganization
expenses and other non-cash items as described below. 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 from time to time, 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/(loss) to Adjusted
EBITDA:
|
(U.S. Dollars in
thousands) |
|
Three Months EndedJune 30, |
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Six Months EndedJune 30, |
|
|
2017 |
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2018 |
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2017 |
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2018 |
Net income/(loss) |
$ |
57,002 |
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$ |
(19,088 |
) |
$ |
149,191 |
$ |
35,762 |
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Add: Net interest
expense |
|
69,700 |
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|
3,138 |
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|
121,209 |
|
10,241 |
Add: Depreciation and
amortization |
|
31,338 |
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|
26,161 |
|
|
62,649 |
|
52,769 |
Add: (Gain)/Loss on
sale of assets |
|
(14 |
) |
|
235 |
|
|
139 |
|
515 |
Add: Income taxes |
|
17,926 |
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|
5,899 |
|
|
37,013 |
|
16,004 |
Add: Statutory periodic
survey costs |
|
15,690 |
|
|
6,425 |
|
|
16,211 |
|
18,259 |
Add: Reorganization
expenses |
|
24,164 |
|
|
20 |
|
|
41,043 |
|
227 |
Adjusted EBITDA |
$ |
215,806 |
|
$ |
22,790 |
|
$ |
427,455 |
$ |
133,777 |
|
Conference
Call
and
Webcast:
August 9, 2018
As announced, the Company’s management team will
host a conference call, on Thursday, August 9, 2018 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(877) 553-9962 (US Toll Free Dial In), 0(808) 238-0669 (UK Toll
Free Dial In) or +44(0) 2071 928592 (Standard International Dial
In). Please quote “Ocean Rig” to the operator.
A telephonic replay of the conference call will
be available until August 16, 2018, by dialing 1(866) 331-1332 (US
Toll Free Dial In), 0(808) 238-0667 (UK Toll Free Dial In) or
+44(0) 3333 009785 (Standard International Dial In) 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.
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 new capital
structure; (ix) our ability to procure or have access to financing
and our ability to comply with covenants in documents governing our
debt; (x) 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; (xi) our
ability to successfully employ our drilling units our customer
contracts, including contract backlog, contract commencements and
contract terminations; (xii) our capital expenditures, including
the timing and cost of completion of capital projects; (xiii) our
revenues and expenses; (xiv) complications associated with
repairing and replacing equipment in remote locations; and (xv)
regulatory or financial requirements to comply with foreign
bureaucratic actions, including potential limitations on drilling
activities; (xvi) any litigation or adverse actions that may arise
from our recently completed financial restructuring. 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 of Ocean Rig filed with or submitted to the U.S. Securities
and Exchange Commission, including the Company’s most recently
filed Annual Report on Form 20-F. The information set forth herein
speaks only as of the date hereof, and the Company disclaims any
intention or obligation to update any forward-looking statements as
a result of developments occurring after the date of this
communication. Further, the Company cannot assess the effect of
each such factor on its business or the extent to which any factor,
or combination of factors, may cause actual results to be
materially different from those contained in any forward-looking
statement.
Investor
Relations
/
Media:
Nicolas BornozisCapital Link, Inc. (New York) Tel.
212-661-7566E-mail: oceanrig@capitallink.com
Grafico Azioni Ocean Rig Udw Inc. New (delisted) (NASDAQ:ORIG)
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