Pacific Drilling Announces Third Quarter 2012 Results Business Wire LUXEMBOURG -- November 07, 2012 Pacific Drilling S.A. (NYSE: PACD) today announced revenues of $172.0 million and a net loss of $2.0 million or $0.01 per diluted share for the three months ended September 30, 2012. In the comparable prior year period, the company had revenues of $17.0 million and a net loss of $11.0 million or $0.05 per diluted share. CEO Chris Beckett commented, “The ultra-deepwater market continues to provide strong fundamentals with recent awards firmly in the high $500,000 to $600,000 per day range and demand exceeding the limited supply well into 2014 and possibly beyond. With this backdrop, the third quarter of 2012 reflected continued strong revenue efficiency for the Pacific Scirocco, Pacific Bora and Pacific Mistral, which have all completed the shakedown period. These three rigs averaged 97.2% efficiency during the third quarter. The Pacific Santa Ana, still in its shakedown phase, has experienced several issues with its blowout preventer that have resulted in a lower than anticipated efficiency level. Our focus on achieving optimal operating efficiency means that our operational expenses did not meet our expectations, but instead increased as a result of costs associated with equipment, maintenance and repair events and personnel, particularly for the Santa Ana and the Mistral. We will continue to focus our efforts on bringing our operational expenses in line with our post shakedown expectations.” Mr. Beckett added, “We have signed a letter of intent with a major oil company for the Pacific Khamsin and will provide more details once a final drilling contract is signed. Our operational track record has enhanced our active client discussions regarding future contracts, and when combined with ongoing market strength for ultra-deepwater drillships, contributes to our continued optimism regarding contract opportunities for the Pacific Meltem.” Third Quarter 2012 Operational Commentary Contract drilling revenue for the third quarter of 2012 was $172.0 million including recognition of $26.0 million of deferred revenue for mobilization, contract preparation and asset upgrades. During the three months ended September 30, 2012, our operating fleet of four drillships achieved an average revenue efficiency of 83.1%^(a), in line with the guidance provided at the end of the second quarter. Our three drillships that have operated the longest exceeded our expectations for revenue efficiency for the third quarter 2012. Pacific Bora, Pacific Scirocco and Pacific Mistralachieved average revenue efficiency for the quarter ended September 30, 2012, of 97.8%, 99.5% and 94.1% respectively. As communicated last quarter, Pacific Santa Ana experienced problems with its blowout preventer (BOP), which were primarily responsible for the Santa Ana’s average revenue efficiency of 42.1% during the third quarter. Contract drilling expenses for the third quarter of 2012 were $96.2 million, including $18.8 million in amortization of deferred mobilization costs and $6.6 million in shore-based and other support costs. The sequential increase in daily contract drilling expenses to an average of $192,500 was primarily driven by equipment and maintenance costs for Pacific Santa Ana and Pacific Mistral and personnel costs related to Pacific Bora and Pacific Scirocco. EBITDA^(b) for the third quarter of 2012 was $65.3 million, compared to $63.3 million during the second quarter of 2012. Third Quarter 2012 Financial Commentary Our cash balances on September 30, 2012, stood at $457 million, including $303 million of restricted cash related primarily to our project financing facility and collateral for our bonds and lines of credit. We invested $114 million in the construction of the fleet during the third quarter. At the end of the quarter, we estimated the remaining capital expenditures to complete construction of our committed drillships at approximately $1.5 billion. We anticipate funding the remaining costs of our three newbuilds with a combination of a $1 billion credit facility and senior secured bonds. The choice and timing for the specific elements of the financing plan will be determined by financial market conditions. We intend to take advantage of attractive opportunities in the bond market as available. Updates to Fourth Quarter 2012 Guidance and Investor Toolkit From a review of our third quarter operating expenses, we have identified approximately $5 million of costs predominantly related to rig shakedown and acceptance that we do not expect to be ongoing. Accordingly, we now expect direct rig operating costs per day per rig will range between $175,000 and $185,000 during the fourth quarter 2012 as a result of the above mentioned cost increases which will continue at least in part during the quarter. We reiterate other guidance provided with our second quarter 2012 results. Due to the newbuild status of our fleet, deferred revenues and cost amortizations, as well as our depreciation profile, are significant to our financial results. Therefore, updated schedules of expected amortization of deferred revenue, amortization of deferred mobilization expenses, depreciation and interest expense for the existing credit facilities and senior bonds as well as capital expenditures are included in the “Investor Toolkit” subsection of the “Investor Relations” section of our website, www.pacificdrilling.com. Please note the guidanceprovided above is based on current expectations and certain management assumptions, and is subject to change. Footnotes (a) Revenue efficiency is defined as actual contractual dayrate revenue (excludes mobilization fees, upgrade reimbursements and other revenue sources) divided by the maximum amount of contractual dayrate revenue that could have been earned during such period. (b) EBITDA is a non-GAAP measure. Please refer to the reconciliation to net income included later in this press release. Conference Call Pacific Drilling will conduct a conference call at 9:00 a.m. U.S. Central Standard Time on Thursday, November 8, 2012, to discuss third quarter 2012 results. To participate, dial +1 719-325-2307 or 1-888-296-4206 and refer to confirmation code 8466610 approximately five to ten minutes prior to the scheduled start time of the call. The call will also be broadcast live over the Internet in a listen-only mode and can be accessed by a link posted in the “Events & Presentations” subsection of the “Investor Relations” section of our website, www.pacificdrilling.com. An audio replay of the conference call will be available after 12:00 p.m. U.S. Central Standard Time on Thursday, November 8, 2012, by dialing +1 719-457-0820 or 1-888-203-1112 and using access code 8466610. A replay of the call will also be available on the company’s website. About Pacific Drilling With its best-in-class drillships and highly experienced team, Pacific Drilling is a fast growing company that is committed to becoming the industry’s preferred ultra-deepwater drilling contractor. Pacific Drilling’s fleet of seven ultra-deepwater drillships will represent one of the youngest and most technologically advanced fleets in the world. The company currently operates four recently delivered drillships under customer contract and has three drillships under construction at Samsung, one of which is under customer contract. For more information about Pacific Drilling, including our current Fleet Status, please visit our website at www.pacificdrilling.com. Forward-Looking Statements Certain statements and information in this press release concerning results for the fiscal period ended September 30, 2012, may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include words or phrases such as “believe,” “expect,” “anticipate,” “plan,” “intend,” “foresee,” “should,” “would,” “could” or other similar words, which are generally not historical in nature, and specifically include statements involving future operational performance; estimated duration of client contracts; contract dayrate amounts; future contract opportunities; future contract commencement dates and locations; backlog; timing and delivery of newbuilds; capital expenditures; growth opportunities; market outlook; revenue efficiency; cost adjustments; estimated rig availability; customers; new rig commitments; the expected period of time and number of rigs that will be in a shipyard for repairs, maintenance, enhancement or construction; direct rig operating costs; expected amortization of deferred revenue; expected amortization of deferred mobilization expenses; and expected depreciation and interest expense for the existing credit facilities and senior bonds. These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effect on us. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those that we anticipate. All comments concerning our expectations for future revenues and operating results are based on our forecasts for our existing operations and do not include the potential impact of any future acquisitions. Our forward-looking statements involve significant risks and uncertainties (some of which are beyond our control) and assumptions that could cause actual results to differ materially from our historical experience and our present expectations or projections. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to governmental regulatory, legislative and permitting requirements affecting drilling operations; changes in worldwide rig supply and demand, competition and technology; future levels of offshore drilling activity; downtime and other risks associated with offshore rig operations, relocations, severe weather or hurricanes; possible cancellation or suspension of drilling contracts as a result of mechanical difficulties, performance or other reasons; risks inherent to shipyard rig construction, repair, maintenance or enhancement; actual contract commencement dates; environmental or other liabilities, risks or losses; our ability to attract and retain skilled personnel on commercially reasonable terms; governmental action, civil unrest and political and economic uncertainties; terrorism, piracy and military action; and the outcome of litigation, legal proceedings, investigations or other claims or contract disputes. For additional information regarding known material factors that could cause our actual results to differ from our projected results, please see our filings with the SEC, including our Annual Report on Form 20-F and Current Reports on Form 6-K. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise. PACIFIC DRILLING S.A. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (in thousands, except par value and share amounts) September 30, December 31, 2012 2011 Assets: (unaudited) Cash and cash equivalents $ 153,512 $ 107,278 Restricted cash 100,675 168,681 Accounts receivable 134,706 62,578 Materials and supplies 48,673 42,986 Deferred financing costs 15,815 15,124 Current portion of deferred mobilization 46,489 54,523 costs Prepaid expenses and other current assets 23,759 10,376 Total current assets 523,629 461,546 Property and equipment, net 3,680,234 3,436,010 Restricted cash 202,403 208,287 Deferred financing costs 25,562 32,386 Other assets 62,183 46,060 Total assets $ 4,494,011 $ 4,184,289 Liabilities and shareholders' equity: Accounts payable $ 26,460 $ 26,845 Accrued expenses 43,073 39,095 Current portion of long-term debt 218,750 218,750 Accrued interest payable 17,051 12,099 Derivative liabilities, current 22,058 20,466 Current portion of deferred revenue 74,465 28,829 Total current liabilities 401,857 346,084 Long-term debt, net of current maturities 1,646,875 1,456,250 Deferred revenue 110,515 73,110 Other long-term liabilities 50,325 34,772 Total long-term liabilities 1,807,715 1,564,132 Commitments and contingencies Shareholders' equity: Common shares, $0.01 par value, 5,000,000,000 shares authorized, 224,100,000 shares issued and 216,902,000 2,169 2,169 and 216,900,000 shares outstanding as of September 30, 2012 and December 31, 2011, respectively Additional paid-in capital 2,348,106 2,344,226 Accumulated other comprehensive loss (71,322 ) (60,284 ) Retained earnings (accumulated deficit) 5,486 (12,038 ) Total shareholders' equity 2,284,439 2,274,073 Total liabilities and shareholders' $ 4,494,011 $ 4,184,289 equity PACIFIC DRILLING S.A. AND SUBSIDIARIES Condensed Consolidated Statements of Operations (in thousands, except share and per share information) (unaudited) Three Months Ended September Nine Months Ended September 30, 30, 2012 2011 2012 2011^(a) Revenues Contract $ 171,986 $ 17,030 $ 446,160 $ 17,030 drilling Costs and expenses Contract (96,190 ) (9,690 ) (244,564 ) (9,690 ) drilling General and administrative (10,506 ) (13,131 ) (33,750 ) (36,943 ) expenses Depreciation (36,129 ) (3,240 ) (91,235 ) (3,556 ) expense (142,825 ) (26,061 ) (369,549 ) (50,189 ) Loss of hire insurance - - 23,671 - recovery Operating 29,161 (9,031 ) 100,282 (33,159 ) income (loss) Other income (expense) Equity in earnings of - - - 18,955 Joint Venture Interest income from - - - 495 Joint Venture Interest (26,992 ) (2,603 ) (71,938 ) (2,908 ) expense Other income 35 1,271 3,859 2,433 Income (loss) before income 2,204 (10,363 ) 32,203 (14,184 ) taxes Income tax (4,180 ) (681 ) (14,679 ) (273 ) expense Net income $ (1,976 ) $ (11,044 ) $ 17,524 $ (14,457 ) (loss) Earnings (loss) per $ (0.01 ) $ (0.05 ) $ 0.08 $ (0.08 ) common share, basic Weighted average number 216,902,000 210,000,000 216,900,665 189,340,660 of common shares, basic Earnings (loss) per $ (0.01 ) $ (0.05 ) $ 0.08 $ (0.08 ) common share, diluted Weighted average number of common 216,902,000 210,000,000 216,902,566 189,340,660 shares, diluted (a) See accompanying schedule: Supplementary Data – Reconciliation of Net Loss to Pro Forma Net Loss. PACIFIC DRILLING S.A. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (in thousands) (unaudited) Nine Months Ended September 30, 2012 2011 Cash flow from operating activities: Net income (loss) $ 17,524 $ (14,457 ) Adjustments to reconcile net income to net cash provided by (used in) operating activities: Interest income from Joint Venture - (495 ) Depreciation expense 91,235 3,556 Equity in earnings of Joint Venture - (18,955 ) Amortization of deferred revenue (69,219 ) (2,210 ) Amortization of deferred mobilization 52,033 1,165 costs Amortization of deferred financing costs 10,236 270 Deferred income taxes 2,451 (2,740 ) Share-based compensation expense 3,880 3,533 Changes in operating assets and liabilities: Accounts receivable (72,128 ) (26,963 ) Materials and supplies (5,687 ) (27,598 ) Prepaid expenses and other assets (77,956 ) (72,179 ) Accounts payable and accrued expenses 28,221 28,336 Deferred revenue 152,260 80,093 Net cash provided by (used in) operating 132,850 (48,644 ) activities Cash flow from investing activities: Capital expenditures (344,128 ) (1,113,733 ) Decrease (increase) in restricted cash 73,890 (122,428 ) Net cash used in investing activities (270,238 ) (1,236,161 ) Cash flow from financing activities: Proceeds from issuance of common shares, - 575,485 net Proceeds from long-term debt 300,000 681,000 Payments on long-term debt (109,375 ) (25,000 ) Deferred financing costs (7,003 ) (6,803 ) Proceeds from related-party loan - 142,205 Net cash provided by financing activities 183,622 1,366,887 Increase in cash and cash equivalents 46,234 82,082 Cash and cash equivalents, beginning of 107,278 40,307 period Cash and cash equivalents, end of period $ 153,512 $ 122,389 PACIFIC DRILLING S.A. AND SUBSIDIARIES Supplementary Data - Average Revenue Efficiency (unaudited) Three Months Ended Six Months Ended September 30, June 30, March 31, December 31, 2012 2012 2012 2011 Pacific Bora 97.8 % 87.2 % 93.6 % 93.2 % (a) Pacific 94.1 % 76.1 % 63.7 % (b) - Mistral Pacific 42.1 % 84.1 % (c) - - Santa Ana Pacific 99.5 % 93.1 % 97.7 % - Scirocco (a) For the operating period of August 26, 2011, to December 31, 2011. (b) For the operating period of February 6, 2012, to March 31, 2012. (c) For the operating period of May 4, 2012, to June 30, 2012. EBITDA Reconciliation EBITDA is defined as earnings before interest, taxes, depreciation and amortization. EBITDA does not represent and should not be considered as an alternative to net income, operating income, cash flow from operations or any other measure of financial performance presented in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and our calculation of EBITDA may not be comparable to that reported by other companies. EBITDA is included herein because it is used by the Company to measure its operations. We believe that EBITDA presents useful information to investors regarding the company's operating performance. PACIFIC DRILLING S.A. AND SUBSIDIARIES Supplementary Data - Reconciliation of Net Income (Loss) to EBITDA (in thousands) (unaudited) Three Months Ended September Nine Months Ended 30, September 30, 2012 2011 2012 2011 Net income $ (1,976 ) $ (11,044 ) $ 17,524 $ (14,457 ) (loss) Add: Interest 26,992 2,603 71,938 2,413 expense, net Depreciation 36,129 3,240 91,235 3,556 expense Income taxes 4,180 681 14,679 273 EBITDA 65,325 (4,520 ) 195,376 (8,215 ) PACIFIC DRILLING S.A. AND SUBSIDIARIES Supplementary Data - Reconciliation of Net Loss to Pro Forma Net Loss (in thousands, except per share information) (unaudited) Nine Months Ended September 30, 2011 Net loss $ (14,457 ) Pro forma adjustments: Equity in earnings of Joint Venture (a) (18,955 ) Interest income from Joint Venture (b) (495 ) Interest expense (c) 305 Pro forma net loss $ (33,602 ) Loss per common share, basic and diluted $ (0.08 ) Pro forma adjustments per share: Equity in earnings of Joint Venture (a) (0.10 ) Interest income from Joint Venture (b) (0.00 ) Interest expense (c) 0.00 Pro forma loss per common share, basic and diluted $ (0.18 ) (a) Reflects the pro forma elimination of our equity method share of earnings from Joint Venture. (b) Reflects the pro forma elimination of interest income on notes receivable from Joint Venture. Reflects the pro forma elimination of interest expense incurred on a (c) letter of credit agreement with Transocean directly related to the Joint Venture. Contact: Pacific Drilling Services, Inc. Amy Roddy, +1 832 255 0502 Investor@pacificdrilling.com
Pacific Drilling Announces Third Quarter 2012 Results
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