Ocean Rig UDW Inc. Reports Financial and Operating Results for the First
NICOSIA, CYPRUS -- (Marketwired) -- 05/22/14 -- 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 first quarter
ended March 31, 2014.
First Quarter 2014 Financial Highlights
-- For the first quarter of 2014, the Company reported a net loss of $1.5
million, or $0.01 basic and diluted loss per share.
Included in the first quarter of 2014 results are:
-- Non-cash write-offs and redemption costs associated with the full
refinancing of Ocean Rig's $500.0 million 9.5% senior unsecured
notes due 2016, totaling $32.6 million or $0.25 per share.
Excluding the above items, the Company would have reported a net income
of $31.1 million, or $0.24 per share.
-- The Company reported Adjusted EBITDA of $172.2 million for the first
quarter of 2014, as compared to $104.7 million for the first quarter
-- On May 8, 2014, the Company announced that its Board of Directors
declared a quarterly cash dividend with respect to the quarter ended
March 31, 2014 of $0.19 per common share, to shareholders of record as
of May 20, 2014 and payable on or about May 30, 2014.
-- On April 8, 2014, the Company signed a contract to construct two 7th
generation new integrated design drillships at Samsung Heavy
Industries Co. Ltd, ("Samsung"). The drillships are scheduled to be
delivered to the Company in February 2017 and June 2017, respectively.
Each drillship's total cost is estimated to be approximately $685.0
million with favorable payment terms. The drillships will be capable
to drill in water depths of 12,000ft and possess a number of new
advanced design and technical features which include, among others,
capacity for dual 7-ram blow out preventers ("BOPs"); increased
storage and hoisting capacity; larger deck space and living quarters;
and are based on a new fuel efficient and superior motion stability
-- On April 8, 2014, the Company deferred the expected delivery of its
ultra deepwater drillship, the Ocean Rig Santorini, from late-2015 to
-- In connection with the previously announced Letter of Award, the
Company was awarded from Total E&P Angola, a 6 year contract for
drilling operations offshore Angola for its ultra deepwater drillship
Ocean Rig Skyros. The contract, which remains subject to signing of
final documentation, is expected to commence in the third quarter of
2015 and has an estimated backlog of $1.3 billion.
-- On March 26, 2014, the Company closed an offering of 7.25% senior
notes due 2019 in the amount of $500.0 million (the "7.25% Notes
Offering"). The Company used the proceeds from the 7.25% Notes
Offering, together with cash on hand, to repurchase and redeem the
9.5% senior unsecured notes due 2016 (the "Senior Unsecured Notes") of
which $500.0 million in aggregate principal amount was outstanding
prior to closing of the 7.25% Notes Offering.
-- On March 24, 2014, the Company took delivery of its ultra deepwater
drillship, the Ocean Rig Athena, and drew down the available amount of
$450.0 million under its $1.35 billion syndicated secured term loan
facility. The drillship is expected to commence drilling operations in
late June 2014 under the three year contract with ConocoPhillips.
-- On March 2, 2014, the Ocean Rig Skyros commenced a five well or a
minimum of a 275 day contract for drilling offshore West Africa with
Total E&P Angola.
George Economou, Chairman and Chief Executive Officer of the Company,
"During the first quarter of 2014, our fleet operated at 85.9%
utilization which is lower than Ocean Rig's usual standard of
reliability. A series of BOP related issues with the Ocean Rig Mylos,
not uncommon during the start-up period of a vessel, were the main
factor impacting our operating efficiency this quarter. The rest of
our fleet operated at a healthy 94.0% efficiency rate and I am
pleased to announce that the Ocean Rig Mylos has been back in
operation during the second quarter of 2014.
"In late March we took delivery of the Ocean Rig Athena, the last of
our 7th generation drillships that were delivered over the past ten
months, and we are mobilizing her to Angola to commence drilling
operations in late June. In addition the Ocean Rig Skyros
successfully completed the acceptance testing and commenced drilling
operations under the Total contract in Angola in early March.
"This quarter we are celebrating a milestone in our Company's
history, with the declaration of a dividend of $0.19 per share to our
shareholders, with respect to operations during the first quarter of
2014. Following last year's conclusion of several of our key
strategic objectives, this dividend marks the first step in
implementing our value creation initiatives.
"Having deferred the delivery of the Ocean Rig Santorini to mid-2016,
places us in an enviable position where we do not have any
uncontracted newbuilds being delivered during this market downturn;
in addition, we have the ability and capital resources to further
expand our fleet with newbuild deliveries in what we expect to be a
strong offshore drilling market in 2016 and beyond. This view
underpinned our decision to construct, at Samsung, two new integrated
design 7th generation drillships with expected delivery in the first
and second quarter of 2017 respectively. These newbuild drillships
possess several advanced specifications and capabilities that make
them ideal candidates for development drilling operations worldwide.
"During the first quarter, and as previously announced, we commenced
the refinancing of the 9.5% unsecured notes with our new $500 million
7.25% senior unsecured notes. The refinancing was completed on March
26, 2014. In February 2014, we also completed the refinancing of the
short-term tranche of our Term Loan B Facility with a fungible add-on
to the long-term tranche. The entire $1.9 billion Term Loan B
Facility will now mature not earlier than the third quarter of 2020.
In addition we drew down the final $450 million under the $1.35
billion Bank/ECA facility, to finance the acquisition of Ocean Rig
Athena. As a result of our refinancing activities over the past 18
months, we have diversified our sources of debt, pushed back our debt
maturities beyond 2016, as well as increased our dividend capacity
and harmonized our covenants.
"As a result of our prudent employment strategy we are in a best of
class position with 99% and 72% of our calendar days under contract
in 2014 and 2015 respectively.
"There continues to be some softness in the market as a result of
several drilling units coming off contract and certain newbuildings
without contracts scheduled for delivery in 2014. We believe that
these market conditions will not last for long and will not be as
deep as current market consensus expectations due to the overall
obsolescence of the offshore drilling fleet. Despite that rates for
premium ultra deepwater units, such as ours, remain at attractive
Financial Review: 2014 First Quarter
The Company recorded a net loss of $1.5 million, or $0.
01 basic and
diluted loss per share, for the three-month period ended March 31,
2014, as compared to a net income of $6.4 million, or $0.05 basic and
diluted earnings per share, for the three-month period ended March
31, 2013. Adjusted EBITDA(1) was $172.2 million for the first quarter
of 2014, as compared to $104.7 million for the same period in 2013.
Revenues from drilling contracts increased by $114.4 million to
$360.8 million for the three-month period ended March 31, 2014, as
compared to $246.4 million for the same period in 2013.
Drilling rigs and drillships' operating expenses increased to $151.5
million and total depreciation and amortization increased to $76.7
million for the three-month period ended March 31 2014, from $120.8
million and $53.4 million, respectively, for the three-month period
ended March 31, 2013. Total general and administrative expenses
increased to $35.4 million in the first quarter of 2014 from $22.5
million during the same period in 2013.
Interest and finance costs, net of interest income, amounted to $86.1
million for the three-month period ended March 31, 2014, compared to
$31.4 million for the three-month period ended March 31, 2013.
(1) Adjusted EBITDA is a non-GAAP measure; please see later in this
press release for reconciliation to net income.
The table below describes our fleet profile and drilling contract
backlog as of May 15, 2014:
Drilling Rigs / Drillships:
Unit Delivery Redelivery area Backlog ($m)
Leiv Eiriksson 2001 Q2 - 16 Norway $382
Eirik Raude Sierra
2002 Q4 - 14 Coast $116
Ocean Rig Corcovado 2011 Q2 - 15 Brazil $168
Ocean Rig Olympia Gabon,
2011 Q3 - 15 Angola $271
Ocean Rig Poseidon 2011 Q2 - 16 Angola $528
Ocean Rig Mykonos 2011 Q1 - 15 Brazil $142
Ocean Rig Mylos 2013 Q4 - 16 Brazil $579
Ocean Rig Skyros 2013 Q1 - 15 Angola $116
Q3 - 21 Angola $1,264(2)
Ocean Rig Athena 2014 Q2 - 17 Angola $758
Ocean Rig Apollo
(Expected delivery Jan.
2015) 2015 Q1 - 18 Congo $670
Ocean Rig Santorini
(Expected delivery Jun.
2016) 2016 N/A N/A N/A
Ocean Rig TBN#1
(Expected delivery Feb.
2017) 2017 N/A N/A N/A
Ocean Rig TBN#2
(Expected delivery Jun.
2017) 2017 N/A N/A N/A
Total $5.0 billion
(2) Contract remains subject to signing of final documentation.
Ocean Rig UDW Inc.
Unaudited Condensed Consolidated Statements of Operations
(Expressed in Thousands of U.S. Dollars Three Months Ended
except for share and per share data) March 31,
Drilling revenues, net $ 246,444 $ 360,764
Drilling rigs and drillships operating expenses 120,759 151,515
Depreciation and amortization 53,407 76,696
General and administrative expenses 22,546 35,425
Legal settlements and other, net - 1,605
Operating income 49,732 95,523
Interest and finan
ce costs, net of interest
income (31,369) (86,095)
Gain/(loss) on interest rate swaps 598 (2,195)
Other, net 1,586 18
Income taxes (14,164) (8,791)
Total other expenses, net (43,349) (97,063)
$ 6,383 $ (1,540)
Earnings/(loss) per common share, basic and
diluted $ 0.05 $ (0.01)
Weighted average number of shares, basic and
diluted 131,699,567 131,844,886
Ocean Rig UDW Inc.
Unaudited Condensed Consolidated Balance Sheets
December 31, March 31,
(Expressed in Thousands of U.S. Dollars) 2013 2014
Cash, cash equivalents and restricted cash
(current and non-current) $ 659,028 $ 728,145
Other current assets 400,689 496,752
Advances for drillships under construction and
related costs 662,313 338,058
Drilling rigs, drillships, machinery and
equipment, net 5,777,025 6,461,812
Other non-current assets 121,395 133,101
Total assets 7,620,450 8,157,868
LIABILITIES AND STOCKHOLDERS' EQUITY
Total debt 3,993,236 4,409,382
Total other liabilities 647,371 769,149
Total stockholders' equity 2,979,843 2,979,337
Total liabilities and stockholders' equity $ 7,620,450 $ 8,157,868
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/ (loss) to Adjusted EBITDA:
Three Months Ended
(Dollars in thousands) March 31,
Net income/(loss) $ 6,383 $ (1,540)
Add: Net interest expense 31,369 86,095
Add: Depreciation and amortization 53,407 76,696
Add: Income taxes 14,164 8,791
Add: (Gain)/(Loss) on interest rate swaps (598) 2,195
Adjusted EBITDA $ 104,725 $ 172,237
Drill Rigs Holdings Inc - Supplemental Information
The Leiv Eiriksson is currently drilling offshore Norway under our
three-year contract with Rig Management Norway. During the first
quarter of 2014, the unit achieved utilization of 98%.
The Eirik Raude is currently drilling offshore West Africa under our
contract with Lukoil, which is expected to end in December of 2014.
During the first quarter of 2014, the unit achieved utilization of
Summary Financials of Drill Rig Holdings Inc.:
Year ended Three Months ended
December 31, 2013 March 31, 2014
(Dollars in thousands)
Total revenue $ 407,633 $ 107,226
Total debt, net of financing fees (784,485) (785,382)
Shareholders equity (458,298) (418,066)
Total cash and cash equivalents $ 87,007 $ 43,598
EBITDA reconciliation of Drill Rig Holdings Inc.:
(Dollars in thousands) Three Months Ended March 31,
Net Income/(loss) $ (4,644) $ 35,662
Add: Net interest expense 7,608 8,860
Add: Depreciation and amortization 16,662 21,142
Add: Income taxes 2,590 289
EBITDA $ 22,216 $ 65,953
Ocean Rig UDW Inc. and its Operating Subsidiaries
Adjustments to the calculation of Consolidated Net Income under the
7.5% Senior Unsecured Notes.
There have been no adjustments to the calculation of consolidated net
income in connection with drydock, shipyard stay and special survey
expenses for the drilling rigs and drillships of Ocean Rig.
Conference Call and Webcast: May 23, 2014
As announced, the Company's management team will host a conference
call, on Friday, May 23, 2014 at 8:00 a.m. Eastern Daylight 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 May 30, 2014.
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:
A replay of the conference call will also be available on the
Company's website at www.ocean-rig.com under the Investor Relations
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 s
tart 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 2015, 1 of which is scheduled to be delivered
to the Company during 2016 and 2 of which are scheduled to be
delivered during 2017.
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
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 (i) factors related to the
offshore drilling market, including supply and demand, utilization,
day rates and customer drilling programs; (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) changes in laws and
governmental regulations, particularly with respect to environmental
matters; (iv) the availability of competing offshore drilling
vessels; (v) 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; (vi) the performance of our rigs; (vii) our
ability to procure or have access to financing and comply with our
loan covenants; (viii) our ability to successfully employ our
drilling units; (ix) our capital expenditures, including the timing
and cost of completion of capital projects; and (x) our revenues and
expenses. Due to such uncertainties and risks, investors are
cautioned not to place undue reliance upon such forward-looking
Risks and uncertainties are further described in reports filed by
Ocean Rig UDW Inc. with the U.S. Securities and Exchange Commission.
Investor Relations / Media:
Capital Link, Inc. (New York)
Press spacebar to pause and continue. Press esc to stop.