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 March 31, 2018.
First
Quarter
2018 Financial
Highlights
- For the first quarter of 2018, the Company reported net income
of $54.9 million, or $0.60 basic and diluted earnings per share.
Included in the first quarter 2018 results are:-- Costs of $11.8
million, or $0.13 per share, associated with the Ocean Rig Mykonos
and the Leiv Eiriksson shipyard stays, which are included in
operating expenses. Excluding the above costs, the Company would
have reported net income of $66.7 million, or $0.73 per share.
- The Company reported Adjusted EBITDA(1) of $111.0 million for
the first quarter of 2018.
- The Company’s rigs that are operating under drilling contracts
achieved a revenue efficiency of 98.1% for the first quarter of
2018.
Recent
Events
- On May 8, 2018, the Company prepaid in full the remaining
outstanding balance (as of that date) of $43.8 million on its $462
million senior secured credit facility (the “Senior Secured Credit
Facility”), with no prepayment penalty. The Senior Secured Credit
Facility was expected to mature in June 2018. Following the full
prepayment of the Senior Secured Credit Facility, the shares of the
Company’s subsidiary, Drillship Alonissos Owners Inc., the rig
owning subsidiary of the Ocean Rig Apollo, are in the process of
being transferred back to the Company and the Ocean Rig Apollo is
to be pledged under the Company’s $450 million credit agreement
dated September 22, 2017, the outstanding balance on which
currently stands at $350 million.
- On April 20, 2018, the Company, pursuant to the previously
announced agreement, made the $35.0 million interim yard
installment payment to Samsung Heavy Industries (“SHI”) in
connection with the construction of the Ocean Rig Santorini. Under
the agreement with SHI, the delivery of the Ocean Rig Santorini has
been postponed to September 2019, but may be brought forward at the
option of the Company.
- The Company’s drilling unit the Ocean Rig Corcovado, which is
expected to complete its current drilling contract with Petrobras
during May 2018, is planned to transit to Las Palmas, Spain, where
it will remain in “ready-to-drill” state, and is expected to be
actively marketed for employment.
(1) Adjusted EBITDA is a non-GAAP measure;
please see the reconciliation to net income (the nearest GAAP
measure) elsewhere in this press release.
Mr. Pankaj Khanna, President and Chief Executive
Officer of the Company, commented:
“We are pleased to report positive results for
the Company. We believe our balance sheet is “best-in-class”,
allowing us to prepay debt and fund future growth with no further
maturities until 2024. We are working on several fronts to add
backlog and get our three rigs that are in ready-to-drill state
operating.
“Oil prices have now topped $75 per barrel for
the first time since 2014 and the fundamentals remain in positive
territory. We are experiencing continued improvement in the level
of enquiry we see from our customers. Brazil in particular is
expected to make a comeback with rising rig demand from both
Petrobras and International Oil Companies operating in the country.
There are several other areas that are also showing improvement. We
remain cautiously optimistic about the near to medium term recovery
in the deep and ultra deepwater drilling markets.”
Financial
Review:
2018 First
Quarter
The Company recorded net income of $54.9
million, or $0.60 basic and diluted earnings per share, for the
three-month period ended March 31, 2018, as compared to a net
income of $92.2 million, or $10,300.45 basic and diluted earnings
per share(1), for the three-month period ended March 31, 2017.
Revenues decreased by $108.7 million to $194.1
million for the three-month period ended March 31, 2018, as
compared to $302.8 million for the three-month period ended March
31, 2017.
Drilling units’ operating expenses increased to
$76.2 million (including $11.8 million of shipyard stay costs,
associated with the Ocean Rig Mykonos and the Leiv Eiriksson) and
total depreciation and amortization decreased to $26.6 million for
the three-month period ended March 31, 2018, from $75.6 million and
$31.3 million, respectively, for the three-month period ended March
31, 2017. Total general and administrative expenses increased to
$16.1 million in the first quarter of 2018 from $16.0 million
during the three-month period ended March 31, 2017.
Loss on sale of assets mainly associated with
scrapping of various equipment amounted to $0.3 million for the
three-month period ended March 31, 2018, as compared with $0.2
million for the three-month period ended March 31, 2017.
Reorganization expenses amounted to $0.2 million for the
three-month period ended March 31, 2018, as compared with $16.9
million for the three-month period ended March 31, 2017.
Interest and finance costs, net of interest
income, decreased to $7.1 million for the three-month period ended
March 31, 2018, compared to $51.5 million for the three-month
period ended March 31, 2017.
(1) 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 May
15, 2018:
Unit |
Year built |
Redelivery |
|
Leiv Eiriksson |
2001 |
Q3 –
2018 |
|
Ocean Rig
Corcovado |
2011 |
Q2 –
2018 |
|
Ocean Rig Poseidon |
2011 |
Q3/Q4
– 2018 |
|
Ocean Rig Mykonos |
2011 |
N/A |
|
Ocean Rig Skyros |
2013 |
Q3 –
2021 |
|
Total backlog(1)(2) as of March 31, 2018 amounted to
approximately $822 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 is in Las Palmas,
Spain, where it remains “ready to drill”. 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 West Africa, in the third quarter of 2018.
(1) The contracted backlog of our fleet is
adjusted for subsequent events, 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 result in lower revenues than our
estimated contract backlog.(2) Excludes termination payments
associated with the Ocean Rig Apollo.
|
|
|
|
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 EndedMarch 31, |
|
|
|
2017 |
|
|
2018 |
|
|
|
|
|
|
|
|
REVENUES: |
|
|
|
|
|
Revenues |
$ |
302,814 |
|
$ |
194,144 |
|
|
|
|
|
|
|
|
EXPENSES: |
|
|
|
|
|
Drilling units
operating expenses |
|
75,614 |
|
|
76,159 |
|
|
Depreciation and
amortization |
|
31,311 |
|
|
26,608 |
|
|
Loss on sale of
assets |
|
153 |
|
|
280 |
|
|
General and
administrative expenses |
|
15,965 |
|
|
16,091 |
|
|
|
|
|
|
|
|
Operating income |
|
179,771 |
|
|
75,006 |
|
|
|
|
|
|
|
|
OTHER
INCOME/(EXPENSES): |
|
|
|
|
|
Interest and finance
costs, net of interest income |
|
(51,509) |
|
|
(7,103) |
|
|
Reorganization
expenses |
|
(16,879) |
|
|
(207) |
|
|
Other, net |
|
(107) |
|
|
(2,741) |
|
|
Income taxes |
|
(19,087) |
|
|
(10,105) |
|
|
Total other expenses,
net |
|
(87,582) |
|
|
(20,156) |
|
|
|
|
|
|
|
|
Net income attributable
to Ocean Rig UDW Inc. |
$ |
92,189 |
|
$ |
54,850 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable
to Ocean Rig UDW Inc. common stockholders |
$ |
92,189 |
|
$ |
54,850 |
|
|
|
|
|
|
|
|
Earnings per common
share of Class A and Class B common stock, attributable to common
stockholders, basic and diluted (1) |
$ |
10,300.45 |
|
$ |
0.60 |
|
|
Weighted average number
of Class A and Class B common stock, basic and diluted (1) |
|
8,950 |
|
|
91,567,982 |
|
|
|
|
|
|
|
|
|
(1) 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 |
|
March 31, 2018 |
|
|
|
|
|
ASSETS |
|
|
|
|
|
Cash, cash equivalents and restricted cash (current and
non-current) |
$ |
783,081 |
$ |
749,209 |
|
Other current assets |
|
207,637 |
|
166,028 |
|
Drilling units, machinery and equipment, net |
|
1,852,167 |
|
1,831,449 |
|
Other non-current assets |
|
9,080 |
|
8,715 |
|
Total assets |
|
2,851,965 |
|
2,755,401 |
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’
EQUITY |
|
|
|
|
|
|
|
|
|
|
|
Total debt, net of deferred financing costs |
|
531,632 |
|
397,000 |
|
Total other current liabilities |
|
102,411 |
|
86,495 |
|
Total other non-current liabilities |
|
14,702 |
|
13,836 |
|
Total stockholders’ equity |
|
2,203,220 |
|
2,258,070 |
|
Total liabilities and stockholders’ equity |
$ |
2,851,965 |
$ |
2,755,401 |
|
|
|
|
|
|
SHARE COUNT DATA |
|
|
|
|
|
Common stock issued and outstanding |
|
91,567,982 |
|
91,567,982 |
|
|
|
|
|
|
Adjusted
EBITDA
Reconciliation
Adjusted EBITDA represents earnings before
interest, taxes, depreciation and amortization, shipyard stay
costs, loss on sale of assets and reorganization expenses. 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 to Adjusted
EBITDA:
(Dollars in
thousands) |
|
Three Months EndedMarch 31, |
|
|
2017 |
|
2018 |
Net income |
$ |
92,189 |
$ |
54,850 |
|
|
|
|
|
Add: Net interest
expense |
|
51,509 |
|
7,103 |
Add: Depreciation and
amortization |
|
31,311 |
|
26,608 |
Add: Loss on sale of
assets |
|
153 |
|
280 |
Add: Income taxes |
|
19,087 |
|
10,105 |
Add: Shipyard stay
costs |
|
521 |
|
11,834 |
Add: Reorganization
expenses |
|
16,879 |
|
207 |
Adjusted EBITDA |
$ |
211,649 |
$ |
110,987 |
|
|
|
|
|
Conference
Call
and
Webcast:
May 17, 2018
As announced, the Company’s management team will
host a conference call, on Thursday, May 17, 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(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 Thursday, May 24, 2018. 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.
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.
Investor
Relations
/
Media:
Nicolas BornozisCapital Link, Inc. (New York) Tel.
212-661-7566E-mail: oceanrig@capitallink.com
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