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Republic of the Marshall Islands | 1381 | N/A | ||
(State or other jurisdiction of incorporation or organization) | (Primary Standard Industrial Classification Code Number) | (I.R.S. Employer Identification Number) |
Ocean Rig UDW Inc. 10 Skopa Street, Tribune House 2ndFloor, Office 202, CY 1075 Nicosia, Cyprus 011 357 22767517 (Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices) | Seward & Kissel LLP Attention: Gary J. Wolfe One Battery Park Plaza New York, New York 10004 (212) 574-1200 (Name, address and telephone number of agent for service) |
Proposed Maximum | Proposed Maximum | Amount of | ||||||||||
Title of Each Class of | Amount to be | Offering | Aggregate | Registration | ||||||||
Securities to be Registered | Registered | Price per Unit | Offering Price | Fee | ||||||||
Common stock, par value $0.01 | 28,571,428 | $16.39(1) | $468,285,705(2) | $54,368(3) | ||||||||
Preferred stock purchase rights(4) | — | — | — | — | ||||||||
Total | 28,571,428 | $16.39(1) | $468,285,705(2) | $54,368(3) | ||||||||
(1) | Based upon the U.S. Dollar equivalent as of August 17, 2011 of the average of the bid and ask prices of the common stock as of August 16, 2011, as reported on the Norwegian OTC market. |
(2) | Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(f)(1) of the Securities Act of 1933, as amended (the “Securities Act”), based upon the U.S. Dollar equivalent of the average of the bid and ask prices of the common stock as of August 16, 2011, as reported on the Norwegian OTC market as prescribed by Rule 457(c). |
(3) | Determined in accordance with Section 6(b) of the Securities Act to be $54,368, which is equal to 0.00011610 multiplied by the proposed maximum aggregate offering price of $468,285,705. |
(4) | Preferred stock purchase rights are not currently separable from the common stock and are not currently exercisable. The value attributable to the preferred stock purchase rights, if any, will be reflected in the market price of the common stock. |
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The information in this Prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This Prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. |
REGISTERED SHARES OF COMMON STOCK,
PAR VALUE $0.01 PER SHARE
FOR 28,571,428 OUTSTANDING
UNREGISTERED SHARES OF COMMON STOCK,
PAR VALUE $0.01 PER SHARE
• | We are offering to exchange, commencing on , 2011, an aggregate of 28,571,428 new common shares that have been registered for exchange, or the Exchange Shares, for an equivalent number of common shares, previously sold in a private offering, or the Original Shares. We refer to this offer to exchange as the Exchange Offer. |
• | The terms of the Exchange Shares are identical to the terms of the Original Shares, except for the transfer restrictions. Each Original Share and Exchange Share includes a related preferred stock purchase right that trades with such Original Share and Exchange Share. | |
• | We will exchange all Original Shares that are validly tendered and not validly withdrawn. | |
• | The Exchange Offer will expire at 5:00 p.m., New York City time (11:00 p.m. Oslo time), on , 2011 unless we determine to extend it. | |
• | You may withdraw tenders of Original Shares at any time before 5:00 p.m., New York City time (11:00 p.m. Oslo time), on the date of the expiration of the Exchange Offer. | |
• | We will not receive any proceeds from the Exchange Offer. | |
• | We will pay the expenses of the Exchange Offer. | |
• | No dealer-manager is being used in connection with the Exchange Offer. | |
• | The Original Shares currently trade in the Norwegian OTC market. | |
• | The exchange of shares will not be a taxable exchange for U.S. federal income tax purposes. |
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Year Built | ||||||||||||||||
or | Drilling | |||||||||||||||
Scheduled | Water Depth | Depth to | ||||||||||||||
Delivery/ | to the | the Oil | Maximum | Drilling | ||||||||||||
Unit | Generation | Wellhead (ft) | Field (ft) | Customer | Contract Term | Dayrate | Location | |||||||||
Existing Drilling Rigs | ||||||||||||||||
Leiv Eiriksson | 2001/5th | 7,500 | 30,000 | Cairn Energy plc | Q2 2011 — Q4 2011 | $ | 560,000 | Greenland | ||||||||
Borders & Southern plc | Q4 2011 — Q2 2012 | $ | 530,000 | Falkland Islands | ||||||||||||
Eirik Raude | 2002/5th | 10,000 | 30,000 | Tullow Oil plc | Q4 2008 — Q4 2011 | $ | 665,000 | Ghana | ||||||||
Existing Drillships | ||||||||||||||||
Ocean Rig Corcovado(A) | 2011/6th | 10,000 | 40,000 | Cairn Energy plc | Q1 2011 — Q4 2011 | $ | 560,000 | Greenland | ||||||||
Petróleo Brasileiro S.A. | Q4 2011 — Q4 2014 | $ | 460,000 | Brazil | ||||||||||||
Ocean Rig Olympia(A) | 2011/6th | 10,000 | 40,000 | Vanco Cote d’Ivoire Ltd. and Vanco Ghana Ltd. | Q2 2011 — Q2 2012 | $ | 415,000 | West Africa | ||||||||
Ocean Rig Poseidon(A) | 2011/6th | 10,000 | 40,000 | Petrobras Tanzania Limited | Q3 2011 — Q1 2013 | $ | 632,000 | Tanzania and West Africa | ||||||||
Newbuilding Drillships | ||||||||||||||||
Ocean Rig Mykonos(A) | Q3 2011/6th | 10,000 | 40,000 | Petróleo Brasileiro S.A. | Q3 2011 — Q4 2014 | $ | 455,000 | Brazil | ||||||||
NB #1 (TBN)(A) | Q3 2013/7th | 12,000 | 40,000 | |||||||||||||
NB #2 (TBN)(A) | Q3 2013/7th | 12,000 | 40,000 | |||||||||||||
NB #3 (TBN)(A) | Q3 2013/7th | 12,000 | 40,000 | |||||||||||||
Optional Newbuilding Drillships | ||||||||||||||||
NB Option#1(A) | 12,000 | 40,000 | ||||||||||||||
NB Option #2(A) | 12,000 | 40,000 | ||||||||||||||
NB Option #3(A) | 12,000 | 40,000 |
(A) | Represents “sister ship” vessels built to the same or similar design and specifications. |
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Issuer | Ocean Rig UDW Inc., a corporation formed under the laws of the Republic of the Marshall Islands. | |
Background | In December 2010, we completed the offering of an aggregate of 28,571,428 common shares (representing 22% of our outstanding common stock) in our private offering. | |
Offer to Exchange Original Shares for Exchange Shares | Under the terms of the Exchange Offer, you are entitled to exchange the Original Shares for Exchange Shares. All Original Shares that are validly tendered and not validly withdrawn prior to the expiration of the Exchange Offer will be exchanged promptly. Any Original Shares not accepted for tender for any reason will be returned promptly after termination or expiration of the Exchange Offer. | |
Any holder electing to have Original Shares exchanged pursuant to this Exchange Offer must properly tender such holder’s Original Shares for Exchange Shares prior to 5:00 p.m. New York City time (11:00 p.m. Oslo time) on the Expiration Date, as defined below. | ||
The Exchange Offer is not being made to, nor will we accept surrenders of Original Shares for exchange from, holders of Original Shares in any jurisdiction in which the Exchange Offer or the acceptance thereof would not be in compliance with the securities or blue sky laws of the jurisdiction, nor to any person or entity to whom it is unlawful to make such offer. | ||
Affiliates of ours (within the meaning of Rule 405 under the Securities Act), may not participate in the Exchange Offer. | ||
Procedures for Tendering Original Shares | If you wish to tender your Original Shares for exchange in the Exchange Offer, you must instruct the Norwegian Exchange Agent to tender the Original Shares on your behalf, and you must send to the Norwegian Exchange Agent, on or before the Expiration Date, a properly completed and executed letter of transmittal, which has been provided to you with this prospectus and any other documentation requested by the letter of transmittal. | |
If you beneficially own Original Shares registered in the name of a broker, dealer, commercial bank, trust company or other nominee and you wish to tender your Original Shares in the Exchange Offer, you should contact the registered holder promptly and instruct it to tender on your behalf accordingly. | ||
Expiration Date | The Exchange Offer will remain open for at least 20 full business days and will expire at 5:00 p.m., New York City time (11:00 p.m. Oslo time), on , 2011, unless extended by us at our sole discretion, or the Expiration Date. | |
Resales of Exchange Shares | We believe that the Exchange Shares may be offered for resale, resold or otherwise transferred by you (unless you are an “affiliate” of ours within the meaning of Rule 405 of the Securities Act) |
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without compliance with the registration and prospectus delivery requirements of the Securities Act, provided that: | ||
• You acquire the Exchange Shares in the ordinary course of business; and | ||
• You are not participating, do not intend to participate, and have no arrangement or understanding with any person to participate in the distribution of the Exchange Shares. | ||
If any of the foregoing is not true and you transfer any Exchange Shares without delivering a prospectus meeting the requirements of the Securities Act and without an exemption for the transfer of your Exchange Shares from such requirements, you may incur liability under the Securities Act. We do not assume or indemnify you against such liability. If you are a broker-dealer and receive Exchange Shares for your own account in exchange for Original Shares that were acquired as a result of market-making activities or other trading activities, you must represent to us that you will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of the Exchange Shares. | ||
Consequences of Failure to Exchange | If we complete the Exchange Offer and you do not participate in it, then: | |
• Your Original Shares will continue to be subject to the existing restrictions upon their transfer; and | ||
• The liquidity of the market for your Original Shares could be adversely affected. | ||
Withdrawal of Tenders | You may withdraw your tender of Original Shares at any time prior to the Expiration Date. To withdraw, you must submit a notice of withdrawal to the Exchange Act before 5:00 p.m., New York City time (11:00 p.m. Oslo time) on the Expiration Date. | |
Conditions to Exchange Offer | The Exchange Offer is subject to certain customary conditions. | |
Tax Considerations | A shareholder will not recognize gain or loss for U.S. federal income tax purposes on the exchange of Original Shares for Exchange Shares pursuant to the Exchange Offer. | |
Under current Marshall Islands law, we are not subject to tax on income or capital gains, and no Marshall Islands withholding tax will be imposed upon payments of dividends by us to our shareholders. | ||
Until the shares become traded on an established securities market in the United States, any dividends paid by us will be treated as ordinary income to a U.S. shareholder. On the disposition of our shares, a U.S. shareholder will recognize capital gain or loss, which will be treated as long-term capital gain or loss if the shares have been held for more than one year. Under certain circumstances, we may be treated as a “passive foreign investment company” for U.S. federal income tax purposes. If we were to be so treated, a U.S. shareholder may be subject to adverse U.S. federal income tax consequences with respect to dividends received by us and gain on the sale of our shares, although a U.S. shareholder may be able to |
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make certain tax elections to ameliorate these adverse consequences. See “Taxation.” | ||
Use of Proceeds | We will not receive any cash proceeds from the issuance of the Exchange Shares in this Exchange Offer. See “Use of Proceeds.” | |
Exchange Agent | Nordea Bank Norge ASA has been appointed as the Norwegian Exchange Agent in connection with the Exchange Offer for purposes of obtaining the required documents from our shareholders to tender Original Shares in the Exchange Offer. American Stock Transfer & Trust Company, the Company’s transfer agent, will act as agent for purposes of exchanging Exchange Shares for Original Shares. Deliveries should be addressed to the Norwegian Exchange Agent at the address on the back cover of this prospectus. | |
Exchange Shares | The Exchange Shares are identical to the Original Shares except that the Exchange Shares have been registered under the Securities Act of 1933, as amended, or the Securities Act, and, therefore, will not bear legends restricting their transfer. |
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• | worldwide production and demand for oil and gas; | |
• | the cost of exploring for, developing, producing and delivering oil and gas; | |
• | expectations regarding future energy prices; | |
• | advances in exploration, development and production technology; | |
• | the ability of OPEC to set and maintain levels and pricing; | |
• | the level of production in non-OPEC countries; | |
• | government regulations; | |
• | local and international political, economic and weather conditions; | |
• | domestic and foreign tax policies; | |
• | development and exploitation of alternative fuels; | |
• | the policies of various governments regarding exploration and development of their oil and gas reserves; and | |
• | the worldwide military and political environment, including uncertainty or instability resulting from an escalation or additional outbreak of armed hostilities, insurrection or other crises in the Middle East or other geographic areas or further acts of terrorism in the United States, or elsewhere. |
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• | the availability of competing offshore drilling vessels; | |
• | the level of costs for associated offshore oilfield and construction services; | |
• | oil and gas transportation costs; | |
• | the discovery of new oil and gas reserves; | |
• | the cost of non-conventional hydrocarbons, such as the exploitation of oil sands; and | |
• | regulatory restrictions on offshore drilling. |
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• | terrorist acts, armed hostilities, war and civil disturbances; |
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• | acts of piracy, which have historically affected ocean-going vessels trading in regions of the world such as the South China Sea and in the Gulf of Aden off the coast of Somalia and which have increased significantly in frequency since 2008, particularly in the Gulf of Aden and off the west coast of Africa; | |
• | 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, including confiscatory taxation; | |
• | other forms of government regulation and economic conditions that are beyond our control; and | |
• | governmental corruption. |
• | the equipping and operation of drilling units; | |
• | repatriation of foreign earnings; | |
• | oil and gas exploration and development; | |
• | taxation of offshore earnings and earnings of expatriate personnel; and | |
• | use and compensation of local employees and suppliers by foreign contractors. |
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• | enter into other financing arrangements; | |
• | incur additional indebtedness; | |
• | create or permit liens on our assets; | |
• | sell our drilling units or the shares of our subsidiaries; | |
• | make investments; | |
• | change the general nature of our business; | |
• | pay dividends to our stockholders; | |
• | change the managementand/or ownership of the drilling units; | |
• | make capital expenditures; and | |
• | compete effectively to the extent our competitors are subject to less onerous restrictions. |
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• | we may not be able to obtain financing in the future for working capital, capital expenditures, acquisitions, debt service requirements or other purposes; | |
• | we may not be able to use operating cash flow in other areas of our business because we must dedicate a substantial portion of these funds to service the debt; | |
• | we could become more vulnerable to general adverse economic and industry conditions, including increases in interest rates, particularly given our substantial indebtedness, some of which bears interest at variable rates; | |
• | we may not be able to meet financial ratios included in our loan agreements due to market conditions or other events beyond our control, which could result in a default under these agreements and trigger cross-default provisions in our other loan agreements and debt instruments; | |
• | less leveraged competitors could have a competitive advantage because they have lower debt service requirements; and | |
• | we may be less able to take advantage of significant business opportunities and to react to changes in market or industry conditions than our competitors. |
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• | shipyard unavailability; | |
• | shortages of equipment, materials or skilled labor; | |
• | unscheduled delays in the delivery of ordered materials and equipment; | |
• | local customs strikes or related work slowdowns that could delay importation of equipment or materials; | |
• | engineering problems, including those relating to the commissioning of newly designed equipment; | |
• | latent damages or deterioration to the hull, equipment and machinery in excess of engineering estimates and assumptions; | |
• | work stoppages; | |
• | client acceptance delays; | |
• | weather interference or storm damage; | |
• | disputes with shipyards and suppliers; | |
• | shipyard failures and difficulties; | |
• | failure or delay of third-party equipment vendors or service providers; | |
• | unanticipated cost increases; and | |
• | difficulty in obtaining necessary permits or approvals or in meeting permit or approval conditions. |
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• | locate and acquire suitable drillships; | |
• | identify and consummate acquisitions or joint ventures; | |
• | enhance our customer base; | |
• | manage our expansion; and | |
• | obtain required financing on acceptable terms. |
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• | prevailing level of drilling services contract dayrates; | |
• | general economic and market conditions affecting the offshore contract drilling industry, including competition from other offshore contract drilling companies; | |
• | types, sizes and ages of drilling units; | |
• | supply and demand for drilling units; | |
• | costs of newbuildings; | |
• | governmental or other regulations; and | |
• | technological advances. |
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• | actual or anticipated variations in our operating results; | |
• | changes in our cash flow, EBITDA or earnings estimates; | |
• | publication of research reports about us or the industry in which we operate; | |
• | increases in market interest rates that may lead purchasers of common stock to demand a higher expected yield which, if our distributions are not expected to rise, will mean our share price will fall; | |
• | changes in applicable laws or regulations, court rulings and enforcement and legal actions; | |
• | changes in market valuations of similar companies; | |
• | adverse market reaction to any increased indebtedness we incur in the future; | |
• | additions or departures of key personnel; | |
• | actions by institutional stockholders; | |
• | speculation in the press or investment community; and | |
• | general market and economic conditions. |
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• | authorizing our board of directors to issue “blank check” preferred stock without shareholder approval; | |
• | providing for a classified board of directors with staggered, three-year terms; | |
• | prohibiting cumulative voting in the election of directors; | |
• | authorizing the removal of directors only for cause and only upon the affirmative vote of the holders of a majority of the outstanding shares of our common stock entitled to vote generally in the election of directors; | |
• | limiting the persons who may call special meetings of shareholders ; and | |
• | establishing advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted on by shareholders at shareholder meetings. |
• | upon consummation of the transaction that resulted in the shareholder becoming an interested shareholder, the interested shareholder owned at least 85% of our voting stock outstanding at the time the transaction commenced; | |
• | at or subsequent to the date of the transaction that resulted in the shareholder becoming an interested shareholder, the business combination is approved by the board of directors and authorized at an annual or special meeting of shareholders by the affirmative vote of at least 662/3% of the outstanding voting stock that is not owned by the interested shareholder; or | |
• | the shareholder became an interested shareholder prior to the consummation of our initial public offering under the Securities Act. |
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• | the offshore drilling market, including supply and demand, utilization rates, dayrates, customer drilling programs, commodity prices, effects of new rigs on the market and effects of declines in commodity prices and downturn in global economy on market outlook for our various geographical operating sectors and classes of rigs; | |
• | 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; | |
• | customer contracts, including contract backlog, contract commencements, contract terminations, contract option exercises, contract revenues, contract awards and rig mobilizations, newbuildings, upgrades, shipyard and other capital projects, including completion, delivery and commencement of operations dates, expected downtime and lost revenue; | |
• | political and other uncertainties, including political unrest, 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; | |
• | 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; | |
• | the level of expected capital expenditures and the timing and cost of completion of capital projects; | |
• | our ability to successfully employ our drilling units, procure or have access to financing, ability to comply with loan covenants, liquidity and adequacy of cash flow for our obligations; |
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• | factors affecting our results of operations and cash flow from operations, including revenues and expenses, uses of excess cash, including debt retirement, timing and proceeds of asset sales, tax matters, changes in tax laws, treaties and regulations, tax assessments and liabilities for tax issues, legal and regulatory matters, including results and effects of legal proceedings, customs and environmental matters, insurance matters, debt levels, including impacts of the financial and credit crisis; | |
• | the effects of accounting changes and adoption of accounting policies; | |
• | recruitment and retention of personnel; and | |
• | other important factors described in this prospectus under “Risk Factors.” |
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• | on an actual basis; | |
• | on an as adjusted basis to give effect to: |
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As of March 31, 2011 | ||||||||
Actual | As Adjusted | |||||||
(In thousands of U.S. dollars) | ||||||||
Cash and cash equivalents | $ | 30,007 | $ | 327,511 | ||||
Restricted cash(1) | $ | 289,999 | $ | 164,232 | ||||
Total secured bank debt, including current portion | 1,138,151 | 1,992,441 | ||||||
9.5% senior unsecured notes | — | 487,100 | ||||||
Intercompany loan | 127,500 | — | ||||||
Total debt(2) | $ | 1,265,651 | $ | 2,479,541 | ||||
Shareholders’ equity | ||||||||
Common stock, $0.01 par value; 250,000,000 shares authorized (actual) and 1,000,000,000 shares authorized (as adjusted); 131,696,928 shares issued and outstanding (actual and as adjusted)(3) | 1,317 | 1,317 | ||||||
Preferred stock; $0.01 par value; 0 shares authorized (actual) and 500,000,000 shares authorized (as adjusted); 0 shares issued and outstanding (actual and as adjusted)(3) | ||||||||
Additional paid-in capital | 3,458,085 | 3,461,675 | ||||||
Accumulated other comprehensive loss | (88,794 | ) | (88,794 | ) | ||||
Retained earnings | (459,954 | ) | (459,954 | ) | ||||
Total shareholders’ equity | 2,910,654 | 2,914,244 | ||||||
Total capitalization | $ | 4,176,305 | $ | 5,393,785 | ||||
(1) | Restricted cash represents bank deposits to be used to fund loan installments coming due and minimum cash deposits required to be maintained with certain banks under our borrowing arrangements. | |
(2) | Includes $1.1 billion of secured and guaranteed debt and $0 of unsecured debt as of March 31, 2011 and $1.6 billion of secured and guaranteed debt and $0.5 billion of unsecured debt, which is not guaranteed, as of March 31, 2011, as so adjusted. As of March 31, 2011, DryShips provided guarantees under the two Deutsche Bank credit facilities and our $325.0 million short-term loan agreement, which as of the date of this prospectus has been repaid. Our $1.04 billion credit facility is guaranteed by certain of our subsidiaries. | |
(3) | On May 3, 2011, following the approval by our board of directors and shareholders, we amended and restated our amended and restated articles of incorporation, among other things, to increase our authorized share capital to 1,000,000,000 common shares and 500,000,000 shares of preferred stock, each with a par value of $0.01 per share. |
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Ocean Rig ASA | Ocean Rig UDW Inc. | |||||||||||||||||||||||||||
(Predecessor) | (Successor) | |||||||||||||||||||||||||||
January 1, | Year Ended | Year | Three-Month | Three-Month | ||||||||||||||||||||||||
Year Ended | 2008 to | Year Ended | December 31, | Ended | Period Ended | Period Ended | ||||||||||||||||||||||
December 31, | May 14, | December 31, | 2009, as | December 31, | March 31, | March 31, | ||||||||||||||||||||||
2007 | 2008 | 2008 | Restated | 2010 | 2010 | 2011 | ||||||||||||||||||||||
(U.S. dollars in thousands) | ||||||||||||||||||||||||||||
Income statement data: | ||||||||||||||||||||||||||||
Leasing and service revenue | $ | 209,095 | $ | 99,172 | $ | 202,110 | $ | 373,525 | $ | 403,162 | $ | 80,561 | $ | 109,677 | ||||||||||||||
Other revenues | — | — | 16,553 | 14,597 | 2,550 | (305 | ) | (351 | ) | |||||||||||||||||||
Total revenues | 209,095 | 99,172 | 218,663 | 388,122 | 405,712 | 80,256 | 109,326 | |||||||||||||||||||||
Drilling rigs operating expenses | 123,543 | 48,144 | 86,229 | 133,256 | 119.369 | 29,100 | 41,850 | |||||||||||||||||||||
Goodwill impairment | — | — | 761,729 | — | — | — | — | |||||||||||||||||||||
Gain/(Loss) on disposal of assets | — | — | — | — | 1,458 | — | — | |||||||||||||||||||||
Depreciation and amortization | 53,239 | 19,367 | 45,432 | 75,348 | 75,092 | 18,468 | 28,197 | |||||||||||||||||||||
General and administrative | 14,062 | 12,140 | 14,462 | 17,955 | 19,443 | 5,517 | 6,100 | |||||||||||||||||||||
Total operating expenses | 190,844 | 79,651 | 907,852 | 226,559 | 215,362 | 53,085 | 76,147 | |||||||||||||||||||||
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Ocean Rig ASA | Ocean Rig UDW Inc. | |||||||||||||||||||||||||||
(Predecessor) | (Successor) | |||||||||||||||||||||||||||
January 1, | Year Ended | Year | Three-Month | Three-Month | ||||||||||||||||||||||||
Year Ended | 2008 to | Year Ended | December 31, | Ended | Period Ended | Period Ended | ||||||||||||||||||||||
December 31, | May 14, | December 31, | 2009, as | December 31, | March 31, | March 31, | ||||||||||||||||||||||
2007 | 2008 | 2008 | Restated | 2010 | 2010 | 2011 | ||||||||||||||||||||||
(U.S. dollars in thousands) | ||||||||||||||||||||||||||||
Operating income/(loss) | 18,251 | 19,521 | (689,189 | ) | 161,563 | 190,350 | 27,171 | 33,180 | ||||||||||||||||||||
Interest and finance costs | (60,630 | ) | (41,661 | ) | (71,692 | ) | (46,120 | ) | (8,418 | ) | (2,889 | ) | (2,624 | ) | ||||||||||||||
Interest income | 3,234 | 381 | 3,033 | 6,259 | 12,464 | 1,658 | 5,653 | |||||||||||||||||||||
Gain/(loss) on interest rate swaps | — | — | — | 4,826 | (40,303 | ) | (9,509 | ) | (1,517 | ) | ||||||||||||||||||
Other income/(expense) | (1,559 | ) | — | (2,300 | ) | 2,023 | 1,104 | (683 | ) | 137 | ||||||||||||||||||
Total finance expenses, net | (58,955 | ) | (41,280 | ) | (70,959 | ) | (33,012 | ) | (35,153 | ) | (11,423 | ) | 1,649 | |||||||||||||||
Income/(loss) before taxes | (40,704 | ) | (21,759 | ) | (760,148 | ) | 128,551 | 155,197 | 15,748 | 34,829 | ||||||||||||||||||
Income/(loss) taxes | (6,683 | ) | (1,637 | ) | (2,844 | ) | (12,797 | ) | (20,436 | ) | (4,577 | ) | (5,961 | ) | ||||||||||||||
Equity in income/(loss) of investee | — | — | (1,055 | ) | — | — | ||||||||||||||||||||||
Net income/(loss) | (47,387 | ) | (23,396 | ) | (764,047 | ) | 115,754 | 134,761 | 11,171 | 28,868 | ||||||||||||||||||
Less: Net income attributable to non controlling interest | — | — | (1,800 | ) | — | — | — | — | ||||||||||||||||||||
Net income/(loss) | $ | (47,387 | ) | $ | (23,396 | ) | $ | (765,847 | ) | $ | 115,754 | $ | 134,761 | $ | 11,171 | $ | 28,868 | |||||||||||
Ocean Rig ASA | Ocean Rig UDW Inc. | |||||||||||||||||||||||
(Predecessor) | (Successor) | |||||||||||||||||||||||
December 31, | ||||||||||||||||||||||||
December 31, | May 14, | December 31, | 2009, as | December 31, | March 31, | |||||||||||||||||||
2007 | 2008 | 2008 | Restated | 2010 | 2011 | |||||||||||||||||||
(U.S. dollars in thousands) | ||||||||||||||||||||||||
Balance sheet data: | ||||||||||||||||||||||||
Cash and cash equivalents | $ | 31,002 | — | $ | 272,940 | $ | 234,195 | $ | 95,707 | $ | 30,007 | |||||||||||||
Other current assets | 62,646 | 96,471 | 93,379 | 324,363 | 576,299 | 356,467 | ||||||||||||||||||
Total current assets | 93,648 | 96,471 | 366,319 | 558,558 | 672,006 | 386,474 | ||||||||||||||||||
Drilling rigs, machinery and equipment, net | 1,141,771 | 1,132,867 | 1,377,359 | 1,317,607 | 1,249,333 | 2,968,198 | ||||||||||||||||||
Intangibles, asset, net | — | — | 13,391 | 11,948 | 10,506 | 10,145 | ||||||||||||||||||
Other non current assets | 7 | — | 3,612 | 43,480 | 523,363 | 237,543 | ||||||||||||||||||
Rigs under construction | — | — | — | 1,178,392 | 1,888,490 | 832,377 | ||||||||||||||||||
Total assets | 1,235,426 | 1,229,338 | 1,760,681 | 3,109,985 | 4,343,698 | 4,434,737 | ||||||||||||||||||
Current liabilities, including current portion of long term debt | 147,810 | 538,679 | 885,039 | 682,287 | 667,918 | 777,686 | ||||||||||||||||||
Total long term debt, excluding current portion | 656,548 | 281,307 | 788,314 | 662,362 | 697,797 | 651,424 | ||||||||||||||||||
Other non current liabilities | 1,180 | 2,470 | 63,697 | 64,219 | 96,901 | 95,025 | ||||||||||||||||||
Total liabilities | 805,538 | 822,456 | 1,737,050 | 1,408,868 | 1,462,616 | 1,524,135 | ||||||||||||||||||
Stockholders’ equity | 429,888 | 406,882 | 23,631 | 1,701,117 | 2,881,082 | 2,910,602 | ||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 1,235,426 | $ | 1,229,338 | $ | 1,760,681 | $ | 3,109,985 | $ | 4,343,698 | $ | 4,434,737 |
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Ocean Rig ASA | Ocean Rig UDW Inc. | |||||||||||||||||||||||||||
(predecessor) | (successor) | |||||||||||||||||||||||||||
January 1, | Year Ended | Year | Three-Month | Three-Month | ||||||||||||||||||||||||
Year Ended | 2008 to | Year Ended | December 31, | Ended | Period Ended | Period Ended | ||||||||||||||||||||||
December 31, | May 14, | December 31, | 2009, as | December 31, | March 31, | March 31, | ||||||||||||||||||||||
2007 | 2008 | 2008 | Restated | 2010 | 2010 | 2011 | ||||||||||||||||||||||
(U.S. dollars in thousands, except for operating data) | ||||||||||||||||||||||||||||
Cash flow data: | ||||||||||||||||||||||||||||
Net cash provided by/(used in): | ||||||||||||||||||||||||||||
Operating activities | $ | 35,455 | $ | (29,089 | ) | $ | 21,119 | $ | 211,075 | $ | 221,798 | $ | 64,701 | $ | 74,308 | |||||||||||||
Investing activities | (48,507 | ) | (10,463 | ) | (1,020,673 | ) | (146,779 | ) | (1,441,347 | ) | (365,731 | ) | (141,244 | ) | ||||||||||||||
Financing activities | (47,611 | ) | 8,550 | 1,257,390 | (103,041 | ) | 1,081,061 | 322,436 | 1,236 | |||||||||||||||||||
Other financial data | ||||||||||||||||||||||||||||
EBITDA(1) (unaudited) | 69,931 | 38,888 | (648,912 | ) | 243,760 | 226,243 | 35,447 | 59,996 | ||||||||||||||||||||
Cash paid for interest (unaudited) | 55,524 | 22,628 | 23,103 | 51,093 | 43,203 | 11,257 | 11,492 | |||||||||||||||||||||
Capital expenditures (unaudited) | (48,507 | ) | (10,463 | ) | (16,584 | ) | (14,152 | ) | (6,834 | ) | (1,165 | ) | (1,084 | ) | ||||||||||||||
Payments for drillships under construction (unaudited) | — | — | — | (125,896 | ) | (705,022 | ) | (313,404 | ) | (629,775 | ) | |||||||||||||||||
Operating data, when on hire (unaudited) | ||||||||||||||||||||||||||||
Operating units | 2 | 2 | 2 | 2 | 2 | 2 | 3 | |||||||||||||||||||||
Average earning efficiency % | 88.0 | % | 83.3 | % | 88.7 | % | 95.2 | % | 92.7 | % | 96.9 | % | 99.2 | % |
(1) | EBITDA represents net income before interest, taxes, depreciation and amortization. EBITDA is anon-U.S. GAAP measure and does not represent and should not be considered as an alternative to net income or cash flow from operations, as determined by GAAP, and our calculation of EBITDA may not be comparable to that reported by other companies. EBITDA is included herein because it is a basis upon which we measure our operations and efficiency. EBITDA is also used by our lenders as a measure of our compliance with certain loan covenants and because we believe that it presents useful information to investors regarding a company’s ability to service and/or incur indebtedness. |
Ocean Rig ASA | Ocean Rig UDW Inc. | |||||||||||||||||||||||||||
(Predecessor) | (successor) | |||||||||||||||||||||||||||
January 1, | Year Ended | Year | Three-Month | Three-Month | ||||||||||||||||||||||||
Year Ended | 2008 to | Year Ended | December 31, | Ended | Period Ended | Period Ended | ||||||||||||||||||||||
December 31, | May 14, | December 31, | 2009, as | December 31, | March 31, | March 31, | ||||||||||||||||||||||
2007 | 2008 | 2008 | restated | 2010 | 2010 | 2011 | ||||||||||||||||||||||
(U.S. dollars in thousands) | ||||||||||||||||||||||||||||
As adjusted financial data (unaudited) | ||||||||||||||||||||||||||||
EBITDA reconciliation | ||||||||||||||||||||||||||||
Net income/(loss) | $ | (47,387 | ) | $ | (23,396 | ) | $ | (765,047 | ) | $ | 115,754 | $ | 134,761 | $ | 11,171 | $ | 28,868 | |||||||||||
Add: Depreciation and amortization | 53,239 | 19,367 | 45,432 | 75,348 | 75,092 | 18,468 | 28,197 | |||||||||||||||||||||
Add: Net interest expense | 57,396 | 41,280 | 68,659 | 39,861 | (4,046 | ) | 1,231 | (3,030 | ) | |||||||||||||||||||
Add: Income taxes | 6,683 | 1,637 | 2,844 | 12,797 | 20,436 | 4,577 | 5,961 | |||||||||||||||||||||
EBITDA | $ | 69,931 | $ | 38,888 | $ | (648,912 | ) | $ | 243,760 | $ | 226,243 | $ | 35,447 | $ | 59,996 |
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FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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• | Employment Days: We define employment days as the total number of days the drilling units are employed on a drilling contract. | |
• | Dayrates or maximum dayrates: We define drilling dayrates as the maximum rate in U.S. Dollars possible to earn for drilling services for one 24 hour day at 100% efficiency under the drilling contract. Such dayrate may be measured byquarter-hour,half-hour or hourly basis and may be reduced depending on the activity performed according to the drilling contract. | |
• | Earnings efficiency/Earnings efficiency on hire:Earnings efficiency measures the effective earnings ratio, expressed as a percentage of the full earnings rate, after reducing for certain operations paid at a reduced rate, non-productive time at zero rate, or off hire without dayrates. Earnings efficiency on hire measures the earning efficiency only for the period during which the drilling unit is on contract and does not include off-hire periods. | |
• | Mobilization/demobilization fees: In connection with drilling contracts, we may receive revenues for preparation and mobilization of equipment and personnel or for capital improvements to the drilling vessels, dayrate or fixed price mobilization and demobilization fees. | |
• | Revenue: For each contract, we determine whether the contract, for accounting purposes, is a multiple element arrangement, meaning it contains both a lease element and a drilling services element, and, if so, identify all deliverables (elements). For each element we determine how and when to recognize revenue. | |
• | Term contracts: These are contracts pursuant to which we agree to operate the unit for a specified period of time. For these types of contracts, we determine whether the arrangement is a multiple element arrangement. For revenues derived from contracts that contain a lease, the lease elements are recognized as “Leasing revenues” in the statement of operations on a basis approximating straight line over the lease period. The drilling services element is recognized as “Service revenues” in the period in which the services are rendered at fair value rates. Revenues related to the drilling element of mobilization and direct incremental expenses of drilling services are deferred and recognized over the estimated duration of the drilling period. | |
• | Well contracts: These are contracts pursuant to which we agree to drill a certain number of wells. Revenue from dayrate based compensation for drilling operations is recognized in the period during which the services are rendered at the rates established in the contracts. All mobilization revenues, direct incremental expenses of mobilization and contributions from customers for capital improvements are initially deferred and recognized as revenues over the estimated duration of the drilling period. |
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• | Implementing a new process and control over the determination of the completeness of the population of borrowings used in the determination of our capitalization rate; and | |
• | Implementing a new process and control over the identification of derivative hedging instruments associated with borrowings used in determining our capitalization rate. |
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Ocean Rig UDW Inc. | Ocean Rig UDW Inc. | |||||||||||||||
From January 1, | From January 1, | |||||||||||||||
2010 to March 31, | 2011 to March 31, | Percentage | ||||||||||||||
2010 | 2011 | Change | Change | |||||||||||||
(U.S. dollars in thousands) | ||||||||||||||||
REVENUES: | ||||||||||||||||
Leasing and service revenues | $ | 80,561 | $ | 109,677 | $ | 29,116 | 36.1 | % | ||||||||
Other revenues | (305 | ) | (351 | ) | (46 | ) | 15.1 | % | ||||||||
Total revenues | 80,256 | 109,326 | 29,070 | 36.2 | % | |||||||||||
EXPENSES: | ||||||||||||||||
Drilling rigs operating expenses | 29,100 | 41,850 | 12,750 | 43.8 | % | |||||||||||
Depreciation and amortization | 18,468 | 28,197 | 9,729 | 52.7 | % | |||||||||||
General and administrative expenses | 5,517 | 6,100 | 583 | 10.6 | % | |||||||||||
Total operating expenses | 53,085 | 76,146 | 23,061 | 43.4 | % | |||||||||||
Operating income/(loss) | 27,171 | 33,180 | 6,009 | 22.1 | % | |||||||||||
Interest and finance costs | (2,889 | ) | (2,624 | ) | 265 | (9.2 | )% | |||||||||
Interest income | 1,658 | 5,653 | 3,995 | 241.0 | % | |||||||||||
Gain/(loss) on interest rate swaps | (9,509 | ) | (1,517 | ) | 7,992 | (84.0 | )% | |||||||||
Other, net | (683 | ) | 137 | 820 | (120.1 | )% | ||||||||||
Total finance expenses, net | (11,423 | ) | 1,649 | 13,072 | (114.4 | )% | ||||||||||
Income/(loss) before taxes | 15,748 | 34,829 | 19,081 | 121.2 | % | |||||||||||
Income taxes | (4,577 | ) | (5,961 | ) | (1,384 | ) | 30.2 | % | ||||||||
Net income attributable to Ocean Rig UDW Inc. | $ | 11,171 | $ | 28,868 | $ | 17,697 | 158.4 | % | ||||||||
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Ocean Rig | ||||||||||||||||
UDW Inc. | Ocean Rig | |||||||||||||||
From | UDW Inc. | |||||||||||||||
January 1, | From | |||||||||||||||
2009 to | January 1, | |||||||||||||||
December 31, | 2010 to | |||||||||||||||
2009 | December 31, | Percentage | ||||||||||||||
(As Restated) | 2010 | Change | Change | |||||||||||||
(U.S. dollars in thousands) | ||||||||||||||||
REVENUES: | ||||||||||||||||
Leasing and service revenues | $ | 373,525 | $ | 403,162 | $ | 29,637 | 7.9 | % | ||||||||
Other revenues | 14,597 | 2,550 | (12,047 | ) | (82.5 | )% | ||||||||||
Total revenues | 388,122 | 405,712 | 17,590 | 4.5 | % | |||||||||||
EXPENSES: | ||||||||||||||||
Drilling rigs operating expenses | 133,256 | 119,369 | (13,887 | ) | (10.4 | )% | ||||||||||
Goodwill impairment | — | — | — | — | ||||||||||||
Depreciation and amortization | 75,348 | 75,092 | (256 | ) | (0.3 | )% | ||||||||||
Loss on sale of equipment | — | 1,458 | 1,458 | — | ||||||||||||
General and administrative expenses | 17,955 | 19,443 | 1,488 | 8.3 | % | |||||||||||
Total operating expenses | 226,559 | 215,362 | 11,197 | 4.94 | % | |||||||||||
Operating income/(loss) | 161,563 | 190,350 | 28,787 | 17.8 | % | |||||||||||
Interest and finance costs | (46,120 | ) | (8,418 | ) | 37,702 | (81.7 | )% | |||||||||
Interest income | 6,259 | 12,464 | 6,205 | 99.1 | % | |||||||||||
Gain/(loss) on interest rate swaps | 4,826 | (40,303 | ) | (45,129 | ) | (935.1 | )% | |||||||||
Other, net | 2,023 | 1,104 | (919 | ) | (45.4 | )% | ||||||||||
Total finance expenses, net | (33,012 | ) | (35,153 | ) | (2,141 | ) | 6.5 | % | ||||||||
Income/(loss) before taxes and equity in loss of investee | 128,551 | 155,197 | 26,646 | 20.7 | % | |||||||||||
Income taxes | (12,797 | ) | (20,436 | ) | (7,639 | ) | 59.7 | % | ||||||||
Equity in loss of investee | — | — | — | — | ||||||||||||
Net income (loss), | 115,754 | 134,761 | 19,007 | 16.4 | % | |||||||||||
Less: Net income attributable to non controlling interests | — | — | — | — | ||||||||||||
Net income attributable to Ocean Rig UDW Inc. | $ | 115,754 | $ | 134,761 | $ | 19,007 | 16.4 | % | ||||||||
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Ocean Rig | ||||||||||||||||
Ocean Rig | UDW Inc. | |||||||||||||||
UDW Inc. | From | |||||||||||||||
From | January 1, | |||||||||||||||
January 1, | 2009 to | |||||||||||||||
2008 to | December 31, | |||||||||||||||
December 31, | 2009 | Percentage | ||||||||||||||
2008 | (As Restated) | Change | Change | |||||||||||||
(U.S. dollars in thousands) | ||||||||||||||||
REVENUES: | ||||||||||||||||
Leasing and service revenues | $ | 202,110 | $ | 373,525 | $ | 171,415 | 84.8 | % | ||||||||
Other revenues | 16,553 | 14,597 | (1,956 | ) | (11.8 | )% | ||||||||||
Total revenues | 218,663 | 388,122 | 169,459 | 77.5 | % | |||||||||||
EXPENSES: | ||||||||||||||||
Drilling rigs operating expenses | 86,229 | 133,256 | 47,027 | 54.5 | % | |||||||||||
Goodwill impairment | 761,729 | — | (761,729 | ) | (100.0 | )% | ||||||||||
Depreciation and amortization | 45,432 | 75,348 | 29,916 | 65.8 | % | |||||||||||
General and administrative expenses | 14,462 | 17,955 | 3,493 | 24.0 | % | |||||||||||
Total operating expenses | 907,852 | 226,559 | (681,293 | ) | (75.0 | )% | ||||||||||
Operating income/(loss) | (689,189 | ) | 161,563 | 850,752 | (123.4 | )% | ||||||||||
Interest and finance costs | (71,692 | ) | (46,120 | ) | 25,572 | (35.7 | )% | |||||||||
Interest income | 3,033 | 6,259 | 3,226 | 106.4 | % | |||||||||||
Gain/(loss) on interest rate swaps | — | 4,826 | 4,826 | 100.0 | % | |||||||||||
Other, net | (2,300 | ) | 2,023 | 4,323 | (188.0 | )% | ||||||||||
Total finance expenses, net | (70,959 | ) | (33,012 | ) | 26,758 | (37.7 | )% | |||||||||
Income/(loss) before income taxes and equity in loss of investee | (760,148 | ) | 128,551 | 877,517 | (115.4 | )% | ||||||||||
Income taxes | (2,844 | ) | (12,797 | ) | 9,953 | 350.0 | % | |||||||||
Equity in loss of investee | (1,055 | ) | — | 1,055 | (100.0 | )% | ||||||||||
Net income/(loss) | (764,047 | ) | 115,754 | 879,801 | (115.2 | )% | ||||||||||
Less: Net income attributable to non controlling interest | (1,800 | ) | — | 1,800 | (113.7 | )% | ||||||||||
Net income attributable to Ocean Rig UDW Inc. | $ | (765,847 | ) | $ | 115,754 | $ | 881,601 | (115.1 | )% | |||||||
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Ocean Rig | Ocean Rig | |||||||||||||||
UDW Inc. | UDW Inc. | |||||||||||||||
(Pro Forma) | From | |||||||||||||||
From | January 1, | |||||||||||||||
January 1, | 2009 to | |||||||||||||||
2008 to | December 31, | |||||||||||||||
December 31, | 2009 | Percentage | ||||||||||||||
2008 | (As Restated) | Change | Change | |||||||||||||
(U.S. dollars in thousands) | ||||||||||||||||
REVENUES: | ||||||||||||||||
Leasing and service revenues | $ | 301,282 | $ | 373,525 | $ | 72,243 | 24.0 | % | ||||||||
Other revenues | 25,363 | 14,597 | (10,766 | ) | (42.4 | )% | ||||||||||
Total revenues | 326,645 | 388,122 | 61,477 | 18.8 | % | |||||||||||
EXPENSES: | ||||||||||||||||
Drilling rigs operating expenses | 134,373 | 133,256 | (1,117 | ) | (0.8 | )% | ||||||||||
Goodwill impairment | 761,729 | — | (761,729 | ) | — | |||||||||||
Depreciation and amortization | 71,708 | 75,348 | 3,640 | (5.1 | )% | |||||||||||
General and administrative expenses | 26,602 | 17,955 | (8,647 | ) | (32.5 | )% | ||||||||||
Total operating expenses | 994,412 | 226,559 | (767,853 | ) | 77.2 | % | ||||||||||
Operating income/(loss) | (667,767 | ) | 161,563 | 829,330 | (124.2 | )% | ||||||||||
Interest and finance costs | (124,669 | ) | (46,120 | ) | 78,549 | (63.0 | )% | |||||||||
Interest income | 3,414 | 6,259 | 2,845 | 83.3 | % | |||||||||||
Gain/(loss) on interest rate swaps | — | 4,826 | 4,826 | — | ||||||||||||
Other, net | (2,300 | ) | 2,023 | 4,323 | (188.0 | )% | ||||||||||
Total other income (expenses), net | (123,555 | ) | (33,012 | ) | 90,543 | (73.3 | )% | |||||||||
Income/(loss) before taxes and equity in loss of investee | (791,322 | ) | 128,551 | 919,873 | (116.2 | )% | ||||||||||
Income taxes | (4,481 | ) | (12,797 | ) | (8,316 | ) | 185.6 | % | ||||||||
Net income/(loss) attributable to Ocean Rig UDW Inc. | $ | (795,803 | ) | $ | 115,754 | $ | 911,557 | (114.5 | )% | |||||||
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Intangible Assets/Liabilities | Years | |||
Tradenames | 10 | |||
Software | 10 |
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Obligations(1) | Total | 1st year | 2nd year | 3rd year | 4th year | 5th year | Thereafter | |||||||||||||||||||||
(In thousands of U.S. dollars) | ||||||||||||||||||||||||||||
Long-term debt(1) | 1,285,357 | 568,333 | 195,000 | 522,024 | — | — | ||||||||||||||||||||||
Operating leases(2) | 1,393 | 936 | 368 | 33 | 33 | 24 | ||||||||||||||||||||||
Pension plan(3) | 1,725 | 83 | 84 | 66 | 106 | 107 | 1279 | |||||||||||||||||||||
Drillships under construction/Ocean Rig CorcovadoandOcean Rig Olympia(4) | 576,513 | 576,513 | — | — | — | — | — | |||||||||||||||||||||
Drillships under construction/Ocean Rig PoseidonandOcean Rig Mykonos(5) | 765,955 | 765,955 | — | — | — | — | — | |||||||||||||||||||||
Interest and borrowing fees(5) | 84,335 | 43,093 | 27,035 | 14,207 | — | — | — | |||||||||||||||||||||
Obligations to Cardiff(6) | 5,774 | 5,774 | ||||||||||||||||||||||||||
Total | 2,721,052 | 1,960,684 | 222,487 | 536,329 | 139 | 131 | 1,279 | |||||||||||||||||||||
(1) | The outstanding balance of our long-term debt at December 31, 2010 was $1,285 million (gross of unamortized deferred financing fees and bond redemption costs of $27 million). Our loans bear interest at LIBOR plus a margin. The amounts in the table above do not include interest payments. | |
(2) | We have entered into a new five year office lease agreement with Vestre Svanholmen 6 AS which commenced on July 1, 2007. This lease includes an option for an additional five year term, which must be exercised at least six months prior to the end of the term of the contract which expires in June 2012. The lease agreements relating to office space are considered to be operational lease contracts. The figures also include minor operating lease agreements. | |
(3) | We have three defined benefit plans for employees managed and funded through Norwegian life insurance companies at December 31, 2010. The pension plans covered 55 employees by year end 2010. Pension liabilities and pension costs are calculated based on the actuarial cost method as determined by an independent third party actuary. | |
(4) | As of December 31, 2010, an amount of $1,512.7 million was paid to the shipyard representing the first, second, third and fourth installments forOcean Rig Corcovado, the first, second, third and fourth installments for theOcean Rig Olympia, the first, second, third and fourth installments for theOcean Rig Poseidonand the first, second and third installments for theOcean Rig Mykonos. | |
(5) | Our long-term debt outstanding as of December 31, 2010 bears variable interest at a margin over LIBOR, but to some extent such variable interest is fixed by our existing interest rate swaps. The calculation of interest payments is based on the weighted average interest rate including hedge accounting interest rate swaps of 4.39% as of December 31, 2010. Our $325.0 million loan, drawn down on January 5, 2011 and repaid in April 2011, has been included in the Interest and borrowing fee calculation. | |
(6) | Represents amounts earned by Cardiff under management agreements terminated on December 21, 2010 which become due in 2011. |
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Effect on Profit | ||||||||||||
Before Tax (In | Effect Equity (In | |||||||||||
Increase/Decrease | Millions of U.S. | Millions of U.S. | ||||||||||
in U.S. Dollars | Dollars) | Dollars) | ||||||||||
2010 | +10 | % | 4.4 | 0 | ||||||||
2010 | −10 | % | (4.4 | ) | 0 | |||||||
2009 | +10 | % | (1.3 | ) | 0 | |||||||
2009 | −10 | % | 1.4 | 0 | ||||||||
2008 | +20 | % | 2.4 | 0 | ||||||||
2008 | −20 | % | (3.6 | ) | 0 |
Effect on Profit | ||||||||||||
Before Tax (In | Effect Equity (In | |||||||||||
Increase/Decrease | Millions of U.S. | Millions of U.S. | ||||||||||
in U.S. Dollars | Dollars) | Dollars) | ||||||||||
2010 | +100 | 24.0 | 13.6 | |||||||||
2010 | −100 | (22.3 | ) | (13.4 | ) | |||||||
2009 | +100 | 24.4 | 19.0 | |||||||||
2009 | −100 | (2.4 | ) | (2.0 | ) | |||||||
2008 | +100 | (9.0 | ) | 25.7 | ||||||||
2008 | −100 | 9.0 | (27.1 | ) |
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Reported | ||||||||
Contractor | Unit | Yard | Delivery | |||||
1 | Rowan | Rowan Norway | KFELS | Jul-11 | ||||
2 | Seadrill | West Elara | Jurong | Jul-11 | ||||
3 | Swecomex | Independencia 1 | Operadora Cicsa | Jul-11 | ||||
4 | Rowan | Joe Douglas | LeTourneau | Sep-11 | ||||
5 | Great Offshore | JU V351 | Bharati | Sep-11 | ||||
6 | Transocean | Transocean Honor | PPL | Nov-11 | ||||
7 | Rowan | Rowan EXL 4 | AMFELS | Nov-11 | ||||
8 | PV Drilling | PV Drill 4 | PV Shipyard | Dec-11 | ||||
9 | NDC Abu Dhabi | NDC Abu Dhabi TBA 1 | Lamprell, UAE | Feb-12 | ||||
10 | Essar | Essar 1 | AGB Shipyard | Apr-12 | ||||
11 | Standard Drilling | Standard Drilling TBA 1 | KFELS | Jul-12 | ||||
12 | NDC Abu Dhabi | NDC Abu Dhabi TBA 2 | Lamprell, UAE | Aug-12 | ||||
13 | Essar | Essar 2 | AGB Shipyard | Aug-12 | ||||
14 | Atwood | Atwood Mako | PPL | Sep-12 | ||||
15 | Saudi Aramco | Saudi Aramco TBA | KFELS | Oct-12 | ||||
16 | Transocean | Transocean TBA 2 | KFELS | Nov-12 | ||||
17 | Transocean | Transocean TBA 3 | KFELS | Nov-12 | ||||
18 | Prospector | POD TBA I | Dalian | Nov-12 |
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Reported | ||||||||
Contractor | Unit | Yard | Delivery | |||||
19 | Jasper | Jasper TBA I | KFELS | Nov-12 | ||||
20 | Noble | Noble TBA 1 | Jurong | Dec-12 | ||||
21 | Atwood | Atwood Manta | PPL | Dec-12 | ||||
22 | Seadrill | West Castor | Jurong | Dec-12 | ||||
23 | Seadrill | West Telesto | Dalian | Dec-12 | ||||
24 | Mermaid Drilling | Mermaid TBA 1 | KFELS | Dec-12 | ||||
25 | Greatship | Greatship TBA | Lamprell, UAE | Dec-12 | ||||
26 | Dynamic Drilling | Dynamic Drilling TBA | KFELS | Feb-13 | ||||
27 | Standard Drilling | Standard Drilling TBA 2 | KFELS | Mar-13 | ||||
28 | Noble | Noble TBA 2 | Jurong | Mar-13 | ||||
29 | Seadrill | West Tucana | Jurong | Mar-13 | ||||
30 | Prospector | POD TBA II | Dalian | Mar-13 | ||||
31 | Seadrill | West Oberon | Dalian | Mar-13 | ||||
32 | Mermaid Drilling | Mermaid TBA 2 | KFELS | Mar-13 | ||||
33 | Perforadora Central | Perforadora Central TBA | AMFELS | Mar-13 | ||||
34 | Japan Drilling Company | JDC TBA | KFELS | Mar-13 | ||||
35 | Discovery Offshore | Discovery Offshore TBA 1 | KFELS | Apr-13 | ||||
36 | Atwood | Atwood Orca | PPL | Jun-13 | ||||
37 | Clearwater | Standard Drilling TBA 3 | KFELS | Jun-13 | ||||
38 | Ensco | Ensco TBA1 | KFELS | Jun-13 | ||||
39 | Jasper | Jasper TBA II | KFELS | Jun-13 | ||||
40 | Standard Drilling | Standard Drilling TBA 4 | KFELS | Jul-13 | ||||
41 | Noble | Noble TBA 3 | Jurong | Sep-13 | ||||
42 | Seadrill | West CJ70 TBN | Jurong | Sep-13 | ||||
43 | Prospector | POD TBA III | Dalian | Sep-13 | ||||
44 | Prospector | POD TBA IV | Dalian | Sep-13 | ||||
45 | Gulf Drilling International | GDI TBA 1 | KFELS | Sep-13 | ||||
46 | Discovery Offshore | Discovery Offshore TBA 2 | KFELS | Oct-13 | ||||
47 | Standard Drilling | Standard Drilling TBA 5 | KFELS | Nov-13 | ||||
48 | Ensco | Ensco TBA2 | KFELS | Dec-13 | ||||
49 | Standard Drilling | Standard Drilling TBA 6 | KFELS | Dec-13 | ||||
50 | Maersk Contractors | Maersk TBA 1 | KFELS | Dec-13 | ||||
51 | Noble | Noble TBA 4 | Jurong | Mar-14 | ||||
52 | Standard Drilling | Standard Drilling TBA 7 | KFELS | May-14 | ||||
53 | Maersk Contractors | Maersk TBA 2 | KFELS | Jul-14 | ||||
54 | Gulf Drilling International | GDI TBA 2 | KFELS | Sep-14 |
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Reported | ||||||
# Owner | Unit | Yard | Delivery | |||
1 Seadrill | West Pegasus | Vyborg/Jurong | Q2 2011 | |||
2 Schahin | Schahin TBA 1 | Samsung | Q2 2011 | |||
3 Gazflot | Severnoye Siyanie | Vyborg/Samsung | Q2 2011 | |||
4 Noble | Noble Bully 1 | COSCO/Keppel | Q2 2011 | |||
5 CNOOC | Hai Yang Shi You 981 | Shanghai Waigaoqiao | Q2 2011 | |||
6 Delba Perforadora | Delba III | GPC, Abu Dhabi | Q3 2011 | |||
7 Songa | Songa Eclipse | Jurong | Q3 2011 | |||
8 Ensco | Ensco 8504 | KFELS | Q3 2011 | |||
9 Odebrecht | Norbe VIII | DSME | Q3 2011 | |||
10 OCR | Ocean Rig Poseidon | Samsung | Q3 2011 | |||
11 Pacific Drilling | Pacific Santa Ana | Samsung | Q3 2011 | |||
12 Vantage | Dragon Quest | DSME | Q3 2011 | |||
13 Saipem | Scarabeo 9 | Yantai Raffles/KFELS | Q3 2011 | |||
14 OCR | Ocean Rig Mykonos | Samsung | Q3 2011 | |||
15 IPC | La Muralla IV | DSME | Q3 2011 | |||
16 Saipem | Scarabeo 8 | Severodvinsk/Fincantieri | Q3 2011 | |||
17 Odfjell | Deepsea Metro 2 | Hyundai | Q4 2011 | |||
18 Seadrill | West Leo | Sevmarsh/Jurong | Q4 2011 | |||
19 Stena | Stena IceMax | Samsung | Q4 2011 | |||
20 Seadrill | West Capricorn | Jurong | Q4 2011 | |||
21 Noble | Noble Globetrotter 1 | STX Dalian/Huisman | Q4 2011 | |||
22 Pride | Deep Ocean Molokai | Samsung | Q4 2011 | |||
23 Schahin | Schahin TBA 2 | Samsung | Q4 2011 | |||
24 COSL Europe | COSLInnovator | Yantai Raffles | Q4 2011 | |||
25 Noble | Noble Bully 2 | COSCO/Keppel | Q4 2011 | |||
26 Petroserv | Carolina | DSME | Q4 2011 | |||
27 Ensco | Ensco 8505 | KFELS | Q1 2012 | |||
28 Odebrecht | ODN-1 | DSME | Q1 2012 | |||
29 Odebrecht | ODN-2 | DSME | Q1 2012 | |||
30 Sevan Drilling | Sevan Brasil | Cosco Qidong Shipyard | Q1 2012 | |||
31 Etesco | Etesco TBA | Samsung | Q2 2012 | |||
32 COSL Europe | COSLPromoter | Yantai Raffles | Q2 2012 | |||
33 MarAcc | Island Innovator | Cosco Zhoushan/Nymo | Q2 2012 | |||
34 Ensco | Ensco 8506 | KFELS | Q2 2012 | |||
35 Atwood | Atwood Condor | Jurong | Q2 2012 | |||
36 Petroserv | Catarina | DSME | Q2 2012 | |||
37 Queiroz Galvao | QG TBA I | Samsung | Q3 2012 | |||
38 Queiroz Galvao | QG TBA II | Samsung | Q3 2012 | |||
39 DVB Bank | Dalian Developer | COSCO Dalian | Q4 2012 | |||
40 Seadrill | West Auriga | Samsung | Q1 2013 | |||
41 Pacific Drilling | Pacific Khamsin | Samsung | Q2 2013 | |||
42 Vantage | Tungsten Explorer | DSME | Q2 2013 |
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Reported | ||||||
# Owner | Unit | Yard | Delivery | |||
43 Seadrill | West Vela | Samsung | Q2 2013 | |||
44 Pride | Deep Ocean Marquesas | Samsung | Q2 2013 | |||
45 Diamond | Ocean BlackHawk | Hyundai | Q2 2013 | |||
46 Noble | Noble DS TBA I | Hyundai | Q2 2013 | |||
47 OCR | Ocean Rig DS TBA I | Samsung | Q2 2013 | |||
48 Noble | Noble Globetrotter 2 | STX Dalian/Huisman | Q3 2013 | |||
49 Odebrecht | Odebrech DS 5 | DSME | Q3 2013 | |||
50 Odebrecht | Odebrecht SS 1 | DSME | Q3 2013 | |||
51 Atwood | Atwood Advantage | DSME | Q3 2013 | |||
52 Pacific Drilling | Pacific Sharav | Samsung | Q3 2013 | |||
53 Maersk Drilling | Maersk DS TBA 1 | Samsung | Q3 2013 | |||
54 OCR | Ocean Rig DS TBA II | Samsung | Q3 2013 | |||
55 Seadrill | West Tellus | Samsung | Q3 2013 | |||
56 FOE | FOE DS TBA I | Hyundai | Q3 2013 | |||
57 Rowan | Rowan DS TBA 1 | Hyundai | Q4 2013 | |||
58 Noble | Noble DS TBA II | Hyundai | Q4 2013 |
Shallow Water Drilling Rigs | <3000 ft (915m) water depth | |
Deepwater Drilling Rigs | >3000ft (915m) water depth | |
Ultra Deepwater Drilling Rigs | >7500ft (2286 m) water depth |
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(In millions) | ||||
Ocean Rig Mykonos | ||||
Construction payments | $ | 305.6 | ||
Other construction-related expenses (excluding financing costs) | $ | 25.4 | ||
NB #1 (TBN) | ||||
Construction payments | $ | 365.6 | ||
Other construction-related expenses (excluding financing costs) | $ | 30.0 | ||
NB #2 (TBN) | ||||
Construction payments | $ | 365.6 | ||
Other construction-related expenses (excluding financing costs) | $ | 30.0 | ||
NB #3 (TBN) | ||||
Construction payments | $ | 365.6 | ||
Other construction-related expenses (excluding financing costs) | $ | 30.0 |
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Year Built | ||||||||||||||||||||||||
or | Drilling | |||||||||||||||||||||||
Scheduled | Water Depth | Depth to | ||||||||||||||||||||||
Delivery/ | to the | the Oil | Maximum | Drilling | ||||||||||||||||||||
Unit | Generation | Wellhead (ft) | Field (ft) | Customer | Contract Term | Dayrate | Location | |||||||||||||||||
Existing Drilling Rigs | ||||||||||||||||||||||||
Leiv Eiriksson | 2001/5th | 7,500 | 30,000 | Cairn Energy plc | Q2 2011 — Q4 2011 | $ | 560,000 | Greenland | ||||||||||||||||
Borders & Southern plc | Q4 2011 — Q2 2012 | $ | 530,000 | Falkland Islands | ||||||||||||||||||||
Eirik Raude | 2002/5th | 10,000 | 30,000 | Tullow Oil plc | Q4 2008 — Q4 2011 | $ | 665,000 | Ghana | ||||||||||||||||
Existing Drillships | ||||||||||||||||||||||||
Ocean Rig Corcovado(A) | 2011/6th | 10,000 | 40,000 | Cairn Energy plc | Q1 2011 — Q4 2011 | $ | 560,000 | Greenland | ||||||||||||||||
Petróleo Brasileiro S.A. | Q4 2011 — Q4 2014 | $ | 460,000 | Brazil | ||||||||||||||||||||
Ocean Rig Olympia(A) | 2011/6th | 10,000 | 40,000 | Vanco Cote d’Ivoire Ltd. and Vanco Ghana Ltd. | Q2 2011 — Q2 2012 | $ | 415,000 | West Africa | ||||||||||||||||
Ocean Rig Poseidon(A) | 2011/6th | 10,000 | 40,000 | Petrobras Tanzania Limited | Q3 2011 — Q1 2013 | $ | 632,000 | Tanzania and West Africa | ||||||||||||||||
Newbuilding Drillships | ||||||||||||||||||||||||
Ocean Rig Mykonos(A) | Q3 2011/6th | 10,000 | 40,000 | Petróleo Brasileiro S.A. | Q3 2011 — Q4 2014 | $ | 455,000 | Brazil | ||||||||||||||||
NB #1 (TBN)(A) | Q3 2013/7th | 12,000 | 40,000 | |||||||||||||||||||||
NB #2 (TBN)(A) | Q3 2013/7th | 12,000 | 40,000 | |||||||||||||||||||||
NB #3 (TBN)(A) | Q3 2013/7th | 12,000 | 40,000 | |||||||||||||||||||||
Optional Newbuilding Drillships | ||||||||||||||||||||||||
NB Option#1(A) | 12,000 | 40,000 | ||||||||||||||||||||||
NB Option #2(A) | 12,000 | 40,000 | ||||||||||||||||||||||
NB Option #3(A) | 12,000 | 40,000 |
(A) | Represents “sister ship” vessels built to the same or similar design and specifications. |
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Original | Amount(1) | Repayment | ||||||||||||||||||||||||||
Facility | Amount | Drawn | Maturity | 2011 | 2012 | 2013 | 2014 | |||||||||||||||||||||
Amounts in $’000 | ||||||||||||||||||||||||||||
$1.04 billion credit facility | $1,040,000 | $578,333 | Q3 2013 | $ | 55,833 | $ | 70,000 | $452,500 | — | |||||||||||||||||||
$495.0 million loan agreement with Drillship Kithira Owners Inc. | $562,500 | $495,000 | Q3 2020 | — | $ | 55,000 | $55,000 | $ | 55,000 | |||||||||||||||||||
$495.0 million loan agreement with Drillship Skopelos Owners Inc. | $562,500 | $87,654 | Q4 2020 | — | $ | 55,000 | $32,654 | — | ||||||||||||||||||||
$800.0 million senior secured term loan agreement | $800,000 | $783,333 | Q2 2016 | $ | 16,667 | $ | 66,687 | $66,687 | $ | 66,687 | ||||||||||||||||||
$500.0 million of aggregate principal amount of 9.5% senior unsecured notes | $500,000 | $500,000 | Q2 2016 | — | — | — | — |
(1) | Amounts in table exclude deferred financing costs as of March 31, 2011 as follows: (a) $4.4 million for the $1.04 billion credit facility; (b) $7.3 million for the Deutsche bank loan agreement with Drillship Kithira Owners Inc.; and (c) $7.5 million for the Deutsche Bank loan agreement with Drillship Skopelos Owners Inc. |
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Name | Age | Position | ||||
George Economou | 58 | Chairman of the Board, President, Chief Executive Officer and Class A Director | ||||
Pankaj Khanna* | 40 | Class B Director | ||||
Michael Gregos | 39 | Class B Director | ||||
Trygve Arnesen | 53 | Class C Director | ||||
Savvas D. Georghiades | 61 | Class C Director | ||||
Prokopios (Akis) Tsirigakis* | 56 |
Name | Age | Position | ||||
Paul Carsten Pedersen | 56 | Acting Chief Executive Officer | ||||
Jan Rune Steinsland | 51 | Chief Financial Officer | ||||
Frank Tollefsen | 48 | Chief Operating Officer and Deputy Chief Executive Officer | ||||
John Rune Hellevik | 51 | Senior Vice President, Marketing & Contracts | ||||
Ronald Coull | 49 | Senior Vice President, Human Resources | ||||
Rolf Håkon Holmboe | 44 | Vice President, Quality, Health, Safety, Environment & Training |
* | Effective upon the completion of the Exchange Offer, Mr. Khanna is expected to resign from our board of directors. Prokopios (Akis) Tsirigakis has been appointed to serve on our board of directors effective upon the completion of the Exchange Offer to fill the vacancy resulting from the resignation of Mr. Khanna. |
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Percentage | ||||||||
Shares | of class | |||||||
beneficially | beneficially | |||||||
Identity of Person or Group | owned | owned | ||||||
DryShips Inc. | 103,125,500 | 78.3 | % | |||||
George Economou(1) | 2,869,428 | 2.38 | % | |||||
Other directors and principal officers as a group | 34,400 | * |
* | Less than 1% of our issued and outstanding common shares. | |
(1) | George Economou, our Chairman, President and Chief Executive Officer may be deemed to beneficially own these shares through Sphinx Investment Corp., a Marshall Islands corporation controlled by Mr. Economou. |
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• | any Exchange Shares received by you will be, and the Original Shares you are tendering in anticipation of receiving the Exchange Shares were, acquired in the ordinary course of business; | |
• | you do not have any arrangement or understanding with any person to participate in, are not engaged in, and do not intend to engage in, the distribution (within the meaning of the Securities Act) of the Exchange Shares in violation of the provisions of the Securities Act; | |
• | you are not an “affiliate” of ours, as defined in Rule 405 of the Securities Act; | |
• | you are not acting on behalf of any person who could not truthfully make the foregoing representations; and | |
• | if you are a broker-dealer, (i) you will receive Exchange Shares for your own account in exchange for Original Shares that were acquired as a result of market-making activities or other trading activities and (ii) you will deliver a prospectus (or, to the extent permitted by law, make available a prospectus to purchasers) meeting the requirements of the Securities Act in connection with any resale of those Exchange Shares to the extent required by applicable law or regulation or SEC pronouncement. |
• | such Exchange Shares are acquired in the ordinary course of the holder’s business; | |
• | such holder is not engaged in, has no arrangement with any person to participate in, and does not intend to engage in, any public distribution of the Exchange Shares; | |
• | such holder is not our “affiliate,” as defined in Rule 405 of the Securities Act; and | |
• | if such holder is a broker-dealer that receives Exchange Shares for its own account in exchange for Original Shares that were acquired as a result of market-making activities, that it will deliver a prospectus, as required by law, in any resale of such Exchange Shares. |
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• | cannot rely on the position of the staff of the SEC set forth in “Exxon Capital Holdings Corporation” or similar interpretive letters issued to third parties with respect to similar transactions that did not involve the issuer of securities or its affiliates; and | |
• | must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction. |
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• | delay acceptance of any Original Shares as may be permitted under SEC rules; | |
• | extend the Exchange Offer and retain all Original Shares tendered before the expiration date of the Exchange Offer, subject to the rights of the holders of tendered Original Shares to withdraw their tendered Original Shares; | |
• | terminate the Exchange Offer and refuse to accept any Original Shares; | |
• | waive the termination event with respect to the Exchange Offer and accept all properly tendered Original Shares that have not been withdrawn; or | |
• | following the Expiration Date, exchange the Exchange Shares for Original Shares. |
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• | instruct the Norwegian Exchange Agent to tender your Original Shares on your behalf by completing the letter of transmittal accompanying this prospectus; and | |
• | deliver a duly completed letter of transmittal to the Norwegian Exchange Agent at its address specified in the letter of transmittal. |
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• | specify the name of the person who tendered the Original Shares to be withdrawn; | |
• | identify the Original Shares to be withdrawn; and | |
• | be signed by the holder of such Original Shares in the same manner as the original signature on the letter of transmittal by which such Original Shares were tendered, or be accompanied by (i) documents of transfer sufficient to have our transfer agent register the transfer of the Original Shares into the name of the person withdrawing such Original Shares, and (ii) a properly completed irrevocable proxy authorizing such person to effect such withdrawal on behalf of such holder. |
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• | the designation of the series; | |
• | the number of shares of the series; | |
• | the preferences and relative, participating, option or other special rights, if any, and any qualifications, limitations or restrictions of such series; and | |
• | the voting rights, if any, of the holders of the series. |
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Marshall Islands | Delaware | |
Shareholder Meetings | ||
Held at a time and place as designated in the bylaws. | May be held at such time or place as designated in the certificate of incorporation or the bylaws, or if not so designated, as determined by the board of directors. | |
Special meetings of the shareholders may be called by the board of directors or by such person or persons as may be authorized by the articles of incorporation or by the bylaws. | Special meetings of the shareholders may be called by the board of directors or by such person or persons as may be authorized by the certificate of incorporation or by the bylaws. | |
May be held within or without the Marshall Islands. | May be held within or without Delaware. | |
Notice: | Notice: | |
Whenever shareholders are required to take any action at a meeting, written notice of the meeting shall be given which shall state the place, date and hour of the meeting and, unless it is an annual meeting, indicate that it is being issued by or at the direction of the person calling the meeting. | Whenever shareholders are required to take any action at a meeting, a written notice of the meeting shall be given which shall state the place, if any, date and hour of the meeting, and the means of remote communication, if any. |
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Marshall Islands | Delaware | |
A copy of the notice of any meeting shall be given personally or sent by mail not less than 15 nor more than 60 days before the meeting. | Written notice shall be given not less than 10 nor more than 60 days before the meeting. | |
Shareholders’ Voting Rights | ||
Any action required to be taken by a meeting of shareholders may be taken without meeting if consent is in writing and is signed by all the shareholders entitled to vote. | Any action required to be taken at a meeting of shareholders may be taken without a meeting if a consent for such action is in writing and is signed by shareholders having not fewer than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. | |
Any person authorized to vote may authorize another person or persons to act for him by proxy. | Any person authorized to vote may authorize another person or persons to act for him by proxy. | |
Unless otherwise provided in the articles of incorporation, a majority of shares entitled to vote constitutes a quorum. In no event shall a quorum consist of fewer than one- third of the shares entitled to vote at a meeting. | For stock corporations, the certificate of incorporation or bylaws may specify the number of shares required to constitute a quorum but in no event shall a quorum consist of less than one- third of shares entitled to vote at a meeting. In the absence of such specifications, a majority of shares entitled to vote shall constitute a quorum. | |
When a quorum is once present to organize a meeting, it is not broken by the subsequent withdrawal of any shareholders. | When a quorum is once present to organize a meeting, it is not broken by the subsequent withdrawal of any shareholders. | |
The articles of incorporation may provide for cumulative voting in the election of directors. | The certificate of incorporation may provide for cumulative voting in the election of directors. | |
Any two or more domestic corporations may merge into a single corporation if approved by the board and if authorized by a majority vote of the holders of outstanding shares at a shareholder meeting. | Any two or more corporations existing under the laws of the state may merge into a single corporation pursuant to a board resolution and upon the majority vote by shareholders of each constituent corporation at an annual or special meeting. | |
Any sale, lease, exchange or other disposition of all or substantially all the assets of a corporation, if not made in the corporation’s usual or regular course of business, once approved by the board, shall be authorized by the affirmative vote of two-thirds of the shares of those entitled to vote at a shareholder meeting. | Every corporation may at any meeting of the board sell, lease or exchange all or substantially all of its property and assets as its board deems expedient and for the best interests of the corporation when so authorized by a resolution adopted by the holders of a majority of the outstanding stock of the corporation entitled to vote. | |
Any domestic corporation owning at least 90% of the outstanding shares of each class of another domestic corporation may merge such other corporation into itself without the authorization of the shareholders of any corporation. | Any corporation owning at least 90% of the outstanding shares of each class of another corporation may merge the other corporation into itself and assume all of its obligations without the vote or consent of shareholders; however, in case the parent corporation is not the surviving corporation, the proposed merger shall be approved by a majority of the outstanding stock of the parent corporation entitled to vote at a duly called shareholder meeting. | |
Any mortgage, pledge of or creation of a security interest in all or any part of the corporate property may be authorized without the vote or consent of the shareholders, unless otherwise provided for in the articles of incorporation. | Any mortgage or pledge of a corporation’s property and assets may be authorized without the vote or consent of shareholders, except to the extent that the certificate of incorporation otherwise provides. | |
Directors | ||
The board of directors must consist of at least one member. | The board of directors must consist of at least one member. | |
The number of board members may be changed by an amendment to the bylaws, by the shareholders, or by | The number of board members shall be fixed by, or in a manner provided by, the bylaws, unless the certificate of incorporation fixes the number of | |
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action of the board under the specific provisions of a bylaw. | directors, in which case a change in the number shall be made only by an amendment to the certificate of incorporation. | |
If the board is authorized to change the number of directors, it can only do so by a majority of the entire board and so long as no decrease in the number shall shorten the term of any incumbent director. | If the number of directors is fixed by the certificate of incorporation, a change in the number shall be made only by an amendment of the certificate. | |
Removal: | Removal: | |
Any or all of the directors may be removed for cause by vote of the shareholders. | Any or all of the directors may be removed, with or without cause, by the holders of a majority of the shares entitled to vote unless the certificate of incorporation otherwise provides. | |
If the articles of incorporation or the bylaws so provide, any or all of the directors may be removed without cause by vote of the shareholders. | In the case of a classified board, shareholders may effect removal of any or all directors only for cause. | |
Dissenters’ Rights of Appraisal | ||
Shareholders have a right to dissent from any plan of merger, consolidation or sale of all or substantially all assets not made in the usual course of business, and receive payment of the fair value of their shares. | Appraisal rights shall be available for the shares of any class or series of stock of a corporation in a merger or consolidation, subject to limited exceptions, such as a merger or consolidation of corporations listed on a national securities exchange in which listed stock is the offered consideration. | |
A holder of any adversely affected shares who does not vote on or consent in writing to an amendment to the articles of incorporation has the right to dissent and to receive payment for such shares if the amendment: | ||
Alters or abolishes any preferential right of any outstanding shares having preference; or | ||
Creates, alters, or abolishes any provision or right in respect to the redemption of any outstanding shares; or | ||
Alters or abolishes any preemptive right of such holder to acquire shares or other securities; or | ||
Excludes or limits the right of such holder to vote on any matter, except as such right may be limited by the voting rights given to new shares then being authorized of any existing or new class. | ||
Shareholder’s Derivative Actions | ||
An action may be brought in the right of a corporation to procure a judgment in its favor, by a holder of shares or of voting trust certificates or of a beneficial interest in such shares or certificates. It shall be made to appear that the plaintiff is such a holder at the time of bringing the action and that he was such a holder at the time of the transaction of which he complains, or that his shares or his interest therein devolved upon him by operation of law. | In any derivative suit instituted by a shareholder of a corporation, it shall be averred in the complaint that the plaintiff was a shareholder of the corporation at the time of the transaction of which he complains or that such shareholder’s stock thereafter devolved upon such shareholder by operation of law. | |
A complaint shall set forth with particularity the efforts of the plaintiff to secure the initiation of such action by the board or the reasons for not making such effort. | Other requirements regarding derivative suits have been created by judicial decision, including that a shareholder may not bring a derivative suit unless he or she first demands that the corporation sue on its own behalf and that demand is refused (unless it is shown that such demand would have been futile). | |
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Marshall Islands | Delaware | |
Such action shall not be discontinued, compromised or settled, without the approval of the High Court of the Republic of The Marshall Islands. | ||
Reasonable expenses including attorney’s fees may be awarded if the action is successful. | ||
A corporation may require a plaintiff bringing a derivative suit to give security for reasonable expenses if the plaintiff owns less than 5% of any class of stock and the shares have a value of less than $50,000. |
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• | at least 75% of the corporation’s gross income for such taxable year consists of passive income (e.g., dividends, interest, capital gains and rents derived other than in the active conduct of a rental business); or | |
• | at least 50% of the average value of the assets held by the corporation during such taxable year produce, or are held for the production of, passive income. |
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• | the excess distribution or gain would be allocated ratably over the Non-Electing Holders’ aggregate holding period for the Exchange Shares; |
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• | the amount allocated to the current taxable year and any taxable year before we became a PFIC would be taxed as ordinary income; and | |
• | the amount allocated to each of the other taxable years would be subject to tax at the highest rate of tax in effect for the applicable class of taxpayer for that year, and an interest charge for the deemed deferral benefit would be imposed with respect to the resulting tax attributable to each such other taxable year. |
• | fails to provide an accurate taxpayer identification number; | |
• | is notified by the Internal Revenue Service that he has failed to report all interest or dividends required to be shown on his federal income tax returns; or | |
• | in certain circumstances, fails to comply with applicable certification requirements. |
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Page | ||||
F-2 | ||||
F-3 | ||||
F-4 | ||||
F-5 | ||||
F-6 | ||||
F-7 |
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May 14, 2008 | ||||
(Expressed in | ||||
thousands of U.S. | ||||
dollars — except | ||||
for share and | ||||
per share data) | ||||
ASSETS | ||||
CURRENT ASSETS: | ||||
Cash and cash equivalents | $ | — | ||
Restricted cash (Note 4) | 31,110 | |||
Trade accounts receivable | 40,188 | |||
Due from related parties (Note 3) | 15 | |||
Financial instruments (Note 7) | 923 | |||
Deferred operating expenses | 5,359 | |||
Prepayments and advances | 18,670 | |||
Other current assets | 206 | |||
Total current assets | 96,471 | |||
FIXED ASSETS, NET: | ||||
Drilling rigs, machinery and equipment, net (Note 5) | 1,132,867 | |||
Total fixed assets, net | 1,132,867 | |||
OTHER NON-CURRENT ASSETS: | ||||
Other non-current assets | — | |||
Total other non-current assets | — | |||
Total assets | 1,229,338 | |||
LIABILITIES AND STOCKHOLDER’S EQUITY | ||||
CURRENT LIABILITIES: | ||||
Current portion of long-term debt (Note 6) | 490,198 | |||
Accounts payable | 9,399 | |||
Accrued liabilities | 27,528 | |||
Deferred revenue | 6,668 | |||
Financial instruments (Note 7) | 621 | |||
Other current liabilities | 4,265 | |||
Total current liabilities | 538,679 | |||
NON-CURRENT LIABILITIES | ||||
Long-term debt, net of current portion (Note 6) | 281,307 | |||
Financial instruments (Note 7) | — | |||
Pension liability (Note 8) | 2,470 | |||
Total non-current liabilities | 283,777 | |||
COMMITMENTS AND CONTINGENCIES(Note 15) | ||||
STOCKHOLDER’S EQUITY: | ||||
Common stock, $0.01 par value; 170,374,980 shares authorized at December 31, 2007 and May 14, 2008;170,374,980 shares issued and 162,171,380 outstanding at December 31, 2007 and May 14, 2008, respectively | 132,109 | |||
Additional paid-in capital | 618,131 | |||
Treasury stock, 8,203,600 common shares, at par value, at December 31, 2007 and May 14, 2008, respectively | (6,361 | ) | ||
Accumulated other comprehensive income | 105,447 | |||
(Accumulated deficit)/Retained earnings | (442,444 | ) | ||
Total stockholder’s equity | 406,882 | |||
Total liabilities and stockholder’s equity | 1,229,338 | |||
F-3
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Period from | ||||
January 1, to | ||||
May 14, 2008 | ||||
(Expressed in | ||||
thousands of U.S. | ||||
dollars — except | ||||
for share and | ||||
per share data) | ||||
REVENUES: | ||||
Leasing revenues | $ | 60,078 | ||
Service revenues | 39,094 | |||
99,172 | ||||
EXPENSES: | ||||
Drilling rigs operating expenses exclusive of items shown separately below (Note 9) | 48,144 | |||
Depreciation and amortization (Note 5) | 19,367 | |||
General and administrative expenses | 12,140 | |||
Operating income | 19,521 | |||
OTHER INCOME/(EXPENSES): | ||||
Interest and finance costs (Note 10) | (41,661 | ) | ||
Interest income | 381 | |||
Other, net (Note 7) | — | |||
Total expenses, net | (41,280 | ) | ||
LOSS BEFORE INCOME TAXES | (21,759 | ) | ||
Income taxes (Note 13) | (1,637 | ) | ||
NET LOSS | (23,396 | ) | ||
EARNINGS/(LOSS) PER SHARE, BASIC AND DILUTED(Note 12) | $ | (0.14 | ) | |
WEIGHTED AVERAGE NUMBER OF SHARES, BASIC AND DILUTED | 162,171,380 | |||
F-4
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Accumulated | ||||||||||||||||||||||||||||||||
Common Stock | Additional | Other | Total | |||||||||||||||||||||||||||||
Comprehensive | Par | Paid-in | Treasury | Comprehensive | Retained | Stockholder’s | ||||||||||||||||||||||||||
Loss | # of Shares | Value | Capital | Stock | Income | Earnings | Equity | |||||||||||||||||||||||||
(Expressed in thousands of U.S. dollars — except for share and per share data) | ||||||||||||||||||||||||||||||||
BALANCE, December 31, 2007 | 170,374,980 | 132,109 | 615,453 | (6,361 | ) | 107,735 | (419,048 | ) | 429,888 | |||||||||||||||||||||||
-Net loss | (23,396 | ) | — | — | — | — | — | (23,396 | ) | (23,396 | ) | |||||||||||||||||||||
-Translation differences | (732 | ) | — | — | — | — | (732 | ) | — | (732 | ) | |||||||||||||||||||||
-Option program | — | — | — | 2,678 | — | — | 2,678 | |||||||||||||||||||||||||
-Increase/(decrease) in defined benefit plan adjustment, net of tax of $0 (Note 13) | (1,257 | ) | — | — | — | — | (1,257 | ) | — | (1,257 | ) | |||||||||||||||||||||
-Interest swap loss , net of tax of $0 (Note 13) | (299 | ) | — | — | — | — | (299 | ) | — | (299 | ) | |||||||||||||||||||||
Comprehensive income | 25,684 | |||||||||||||||||||||||||||||||
BALANCE, May 14, 2008 | 170,374,980 | 132,109 | 618,131 | (6,361 | ) | 105,447 | (442,444 | ) | $ | 406,882 | ||||||||||||||||||||||
F-5
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Period from | ||||
January 1 - May 14, | ||||
2008 | ||||
(Expressed in | ||||
thousands of U.S. | ||||
dollars — except | ||||
for share and | ||||
per share data) | ||||
Cash Flows from Operating Activities: | ||||
Net loss | (23,396 | ) | ||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||
Depreciation and amortization | 19,367 | |||
Amortization, write off of financing costs and premium paid over withdrawn loans | 22,680 | |||
Loss on disposal of assets | — | |||
Compensation costs related to share option program | 2,678 | |||
Difference between pension cost and pension paid | — | |||
Change in fair value of derivatives | (46 | ) | ||
Net unrealized foreign currency exchange gain/loss | — | |||
Changes in operating assets and liabilities: | — | |||
Trade receivable | (27,413 | ) | ||
Other current assets | 3,429 | |||
Due from related parties | (15 | ) | ||
Accounts payable | (4,271 | ) | ||
Income taxes paid | 546 | |||
Other current liabilities | (918 | ) | ||
Other prepaid/ Pension liability | 611 | |||
Accrued liabilities | (19,228 | ) | ||
Deferred revenue | 6,668 | |||
Change in restricted cash | (9,781 | ) | ||
Net Cash Provided by/(Used in) Operating Activities | (29,089 | ) | ||
Cash Flows from Investing Activities: | ||||
Drilling rigs, equipment and other improvements | (10,463 | ) | ||
Net Cash Used in Investing Activities | (10,463 | ) | ||
Cash Flows from Financing Activities: | ||||
Proceeds from long-term credit facility | — | |||
Proceeds from short-term credit facility | 193,500 | |||
Payments of short-term credit facility | (10,000 | ) | ||
Principal payments and repayments of long-term debt | (167,920 | ) | ||
Repurchase of shares | — | |||
Payment of financing costs | (7,030 | ) | ||
Net Cash (Used in) /Provided by Financing Activities | 8,550 | |||
Net increase in cash and cash equivalents | (31,002 | ) | ||
Net foreign exchange difference | — | |||
Cash and cash equivalents at beginning of period | 31,002 | |||
Cash and cash equivalents at end of period | — | |||
SUPPLEMENTAL CASH FLOW INFORMATION: | ||||
Cash paid during the year/period for: | ||||
Interest, net of amount capitalized | (22,628 | ) | ||
Income taxes | (546 | ) |
F-6
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Notes to Consolidated Financial Statements
As of and for the Period Ended May 14, 2008
(Expressed in thousands of U.S. Dollars — except for share and per share data)
1. | Basis of Presentation and General Information: |
2. | Significant Accounting policies: |
F-7
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Notes to Consolidated Financial Statements — (Continued)
As of and for the Period Ended May 14, 2008
(Expressed in thousands of U.S. Dollars — except for share and per share data)
F-8
Table of Contents
Notes to Consolidated Financial Statements — (Continued)
As of and for the Period Ended May 14, 2008
(Expressed in thousands of U.S. Dollars — except for share and per share data)
F-9
Table of Contents
Notes to Consolidated Financial Statements — (Continued)
As of and for the Period Ended May 14, 2008
(Expressed in thousands of U.S. Dollars — except for share and per share data)
F-10
Table of Contents
Notes to Consolidated Financial Statements — (Continued)
As of and for the Period Ended May 14, 2008
(Expressed in thousands of U.S. Dollars — except for share and per share data)
F-11
Table of Contents
Notes to Consolidated Financial Statements — (Continued)
As of and for the Period Ended May 14, 2008
(Expressed in thousands of U.S. Dollars — except for share and per share data)
F-12
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Notes to Consolidated Financial Statements — (Continued)
As of and for the Period Ended May 14, 2008
(Expressed in thousands of U.S. Dollars — except for share and per share data)
3. | Transactions with Related Parties: |
4. | Restricted cash: |
May 14, 2008 | ||||
Balance Sheet | ||||
Amount pledged as collateral for bank guarantees to suppliers | $ | 53 | ||
Taxes withheld from employees | 1,267 | |||
Minimum cash requirement | 29,790 | |||
Total | $ | 31,110 | ||
5. | Fixed assets: |
Accumulated | Net Book | |||||||||||
Cost | Depreciation | Value | ||||||||||
Balance December 31, 2007 | 1,388,484 | (246,714 | ) | 1,141,771 | ||||||||
Additions | 10,463 | — | 10,463 | |||||||||
Disposals | — | — | — | |||||||||
Depreciation | — | (19,367 | ) | (19,367 | ) | |||||||
Balance May 14, 2008 | $ | 1,398,947 | (266,081 | ) | $ | 1,132,867 | ||||||
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Notes to Consolidated Financial Statements — (Continued)
As of and for the Period Ended May 14, 2008
(Expressed in thousands of U.S. Dollars — except for share and per share data)
6. | Long-term Debt: |
May 14, 2008 | ||||
Loan Facilities | $ | 776,000 | ||
Less: Deferred financing costs | (4,495 | ) | ||
Total debt | 771,505 | |||
Less: Current portion | (490,198 | ) | ||
Long-term portion | $ | 281,307 | ||
Commitment | Utilization | |||||||
Tranche A | $ | 227,500 | $ | 227,500 | ||||
Tranche B | 55,000 | 55,000 | ||||||
Tranche C | 12,500 | 12,500 | ||||||
Tranche D | 60,000 | 60,000 | ||||||
Tranche E | 171,000 | 171,000 | ||||||
Total Facility | $ | 526,000 | $ | 526,000 | ||||
Uncommitted guarantee and hedging facility | 20,000 |
F-14
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Notes to Consolidated Financial Statements — (Continued)
As of and for the Period Ended May 14, 2008
(Expressed in thousands of U.S. Dollars — except for share and per share data)
F-15
Table of Contents
Notes to Consolidated Financial Statements — (Continued)
As of and for the Period Ended May 14, 2008
(Expressed in thousands of U.S. Dollars — except for share and per share data)
2008 | $ | 488,500 | ||
2009 | 40,000 | |||
2010 | 40,000 | |||
2011 | 207,500 | |||
Total principal payments | 776,000 | |||
Less: Financing fees | (4,495 | ) | ||
Total debt | $ | 771,505 | ||
7. | Financial Instruments and Fair Value Measurements: |
May 14, 2008 | ||||||||||||
Foreign | ||||||||||||
Interest | Currency | |||||||||||
Rate | Forward | |||||||||||
Swaps | Contracts | Total | ||||||||||
Current assets | — | 923 | $ | 923 | ||||||||
Current liabilities | (621 | ) | — | (621 | ) | |||||||
Non current liabilities | — | — | — | |||||||||
(621 | ) | 923 | 302 | |||||||||
F-16
Table of Contents
Notes to Consolidated Financial Statements — (Continued)
As of and for the Period Ended May 14, 2008
(Expressed in thousands of U.S. Dollars — except for share and per share data)
May 14, | May 14, | |||||||||||
Derivatives Designated as | Balance Sheet | 2008 | Balance Sheet | 2008 | ||||||||
Hedging Instruments | Location | Fair Value | Location | Fair Value | ||||||||
Interest rate swaps | Financial instruments | — | Financial instruments non current liabilities | $ | — | |||||||
Financial instruments current liabilities | $ | 621 | ||||||||||
Total derivatives designated as hedging instruments | — | 621 | ||||||||||
Derivatives Not Designated | ||||||||||||
as Hedging Instruments | ||||||||||||
Foreign currency forward contracts | Financial instruments-current assets | 923 | Financial instruments-current liabilities | — | ||||||||
Total derivatives not designated as hedging instruments | 923 | — | ||||||||||
Total derivatives | 923 | Total derivatives | $ | 621 | ||||||||
Amount of Gain/(Loss) Recognized in | ||||
Derivatives Designated for | OCI on Derivative (Effective Portion) | |||
Cash Flow Hedging Relationships | Year Ended May 14, 2008 | |||
Interest rate swaps | $ | (299 | ) | |
Total | $ | (299 | ) | |
Location of | Amount of Gain (Loss) | |||||||
Derivatives Not Designated as | Gain or (Loss) | for the Year Ended | ||||||
Hedging Instruments | Recognized | May 14, 2008 | ||||||
Foreign currency forward contracts | Other, net | $ | — | |||||
Total | $ | — | ||||||
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Notes to Consolidated Financial Statements — (Continued)
As of and for the Period Ended May 14, 2008
(Expressed in thousands of U.S. Dollars — except for share and per share data)
Quoted Prices | ||||||||||||||||
in Active | Significant | |||||||||||||||
Markets for | Other | |||||||||||||||
Identical | Observable | Unobservable | ||||||||||||||
May 14, | Assets | Inputs | Inputs | |||||||||||||
2008 | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
Recurring measurements: | ||||||||||||||||
Interest rate swaps-liability position | $ | (621 | ) | — | (621 | ) | $ | — | ||||||||
Foreign currency forward contracts — asset position | 923 | — | 923 | — | ||||||||||||
Total | $ | 302 | $ | — | $ | 302 | $ | — | ||||||||
8. | Pension Liability: |
F-18
Table of Contents
Notes to Consolidated Financial Statements — (Continued)
As of and for the Period Ended May 14, 2008
(Expressed in thousands of U.S. Dollars — except for share and per share data)
January 1- | ||||
May 14, 2008 | ||||
Change in pension benefit obligation | ||||
Projected benefits earned at beginning of the period | $ | 7,234 | ||
Service cost for benefits earned | 884 | |||
Interest cost | 120 | |||
Settlement | — | |||
Actuarial losses | 547 | |||
Plan amendments | 190 | |||
Benefits paid | (44 | ) | ||
Payroll tax of employer contribution | (77 | ) | ||
Foreign currency exchange rate changes | 520 | |||
Projected benefit obligation at end of period | $ | 9,374 | ||
January 1- | ||||
May 14, 2008 | ||||
Change in plan assets | ||||
Fair value of plan assets at beginning of the period | $ | 6,376 | ||
Expected return on plan assets | 140 | |||
Actual return on plan assets | (528 | ) | ||
Employer contributions | 543 | |||
Settlement | (44 | ) | ||
Foreign currency exchange rate changes | 417 | |||
Fair value of plan assets at end of period | $ | 6,904 | ||
January 1- | ||||
May 14, 2008 | ||||
Unfunded status at end of period | $ | 2,470 | ||
January 1- | ||||
May 14, 2008 | ||||
Net actuarial loss | $ | 6,130 | ||
Prior service cost | (2,746 | ) | ||
Defined benefit plan adjustment, before tax effect | $ | 3,384 | ||
F-19
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Notes to Consolidated Financial Statements — (Continued)
As of and for the Period Ended May 14, 2008
(Expressed in thousands of U.S. Dollars — except for share and per share data)
January 1- | ||||
May 14, 2008 | ||||
Components of net periodic benefit cost | ||||
Expected return on plan assets | $ | (140 | ) | |
Service cost | 883 | |||
Interest cost | 120 | |||
Amortization of prior service cost | 190 | |||
Amortization of actuarial loss | 77 | |||
Settlement | — | |||
Net periodic benefit cost | $ | 1,130 | ||
January 1- | ||||
May 14, 2008 | ||||
Net actuarial loss (gain) | $ | 2,679 | ||
Prior service cost (credit) | (1,155 | ) | ||
Amortization of actuarial loss (gain) | (77 | ) | ||
Amortization of prior service cost | (190 | ) | ||
Total recognized in net pension cost and other comprehensive income | $ | 1,257 | ||
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Table of Contents
Notes to Consolidated Financial Statements — (Continued)
As of and for the Period Ended May 14, 2008
(Expressed in thousands of U.S. Dollars — except for share and per share data)
January 1- | ||||
May 14, 2008 | ||||
Weighted average assumptions | ||||
Expected return on plan assets | 5.50 | % | ||
Discount rate | 4.50 | % | ||
Compensation increases | 4.75 | % |
May 14, 2008 | ||||
Share and other equity investments | $ | 808 | ||
Bonds | 3,970 | |||
Properties and real estate | 1,118 | |||
Other | 1,008 | |||
Total plan net assets at fair value | $ | 6,904 | ||
As of | ||||
May 14, 2008 | ||||
Shares and other equity instruments | 12 | % | ||
Bonds | 58 | % | ||
Properties and real estate | 16 | % | ||
Other | 14 | % | ||
Total | 100 | % | ||
F-21
Table of Contents
Notes to Consolidated Financial Statements — (Continued)
As of and for the Period Ended May 14, 2008
(Expressed in thousands of U.S. Dollars — except for share and per share data)
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Equity securities: | ||||||||||||||||
US Equities | 384 | — | 42 | 426 | ||||||||||||
Non-US Equities | 381 | — | — | 381 | ||||||||||||
Fixed Income: | ||||||||||||||||
Government Bonds | 2,487 | 897 | — | 3,384 | ||||||||||||
Corporate Bonds | 587 | — | — | 587 | ||||||||||||
Alternative Investments: | ||||||||||||||||
Hedge funds and limited partnerships | — | 159 | — | 159 | ||||||||||||
Other | 123 | — | — | 123 | ||||||||||||
Cash and cash equivalents | 725 | — | — | 725 | ||||||||||||
Real Estate | — | — | 1,119 | 1,119 | ||||||||||||
Net Plan Net Assets | $ | 4,687 | $ | 1,056 | $ | 1,161 | $ | 6,904 | ||||||||
F-22
Table of Contents
Notes to Consolidated Financial Statements — (Continued)
As of and for the Period Ended May 14, 2008
(Expressed in thousands of U.S. Dollars — except for share and per share data)
Level 3 | Total | |||||||
Balance, beginning of year | 863 | 863 | ||||||
Actual return on plan assets: | ||||||||
Assets sold during the period | — | — | ||||||
Assets still held at reporting date | 231 | 231 | ||||||
Purchases, sales, issuances and settlements (net) | 67 | 67 | ||||||
Net Plan Net Assets | $ | 1,161 | $ | 1,161 | ||||
The period from May 14, to December 31, 2008 | $ | 0 | ||
December 31, 2009 | 42 | |||
December 31, 2010 | 82 | |||
December 31, 2011 | 76 | |||
December 31, 2012 | 77 | |||
December 31, 2013 | 58 | |||
Thereafter | 1,065 | |||
Total pension payments | $ | 1,400 | ||
9. | Drilling Rig Operating Expenses: |
For the Period from | ||||
January 1, 2008 to | ||||
May, 2008 | ||||
Crew wages and related costs | $ | 30,723 | ||
Insurance | 3,989 | |||
Deferred rig operating cost | 1,215 | |||
Repairs and maintenance | 12,217 | |||
Total | $ | 48,144 | ||
F-23
Table of Contents
Notes to Consolidated Financial Statements — (Continued)
As of and for the Period Ended May 14, 2008
(Expressed in thousands of U.S. Dollars — except for share and per share data)
10. | Interest and Finance Cost: |
Year Ended | ||||
May 14, 2008 | ||||
Interest on long-term debt | $ | 18,360 | ||
Bank charges | 753 | |||
Amortization of financing fees | 22,548 | |||
Other | — | |||
Total | $ | 41,661 | ||
11. | Stock-based compensation: |
Exercise Price Equal to or Greater | ||||||||
Than Grant Date Share Fair Value | ||||||||
Weighted | ||||||||
Average | ||||||||
Number of | Exercise | |||||||
Shares | Price | |||||||
Balance at December 31, 2007 | 4,742,500 | 45.52 | ||||||
Exercised during 2008 | — | |||||||
Granted | 365,000 | 39.06 | ||||||
Forfeited | (3,667,500 | ) | 46.80 | |||||
Balance at May��14, 2008 | 1,440,000 | 40.62 | ||||||
F-24
Table of Contents
Notes to Consolidated Financial Statements — (Continued)
As of and for the Period Ended May 14, 2008
(Expressed in thousands of U.S. Dollars — except for share and per share data)
Weighted | ||||||||||||
Average | ||||||||||||
Exercise | ||||||||||||
Granted | Vested | Price | ||||||||||
(NOK) | ||||||||||||
Chairman | 700,000 | 233,333 | 46.25 | |||||||||
Members of the Board | 700,000 | 233,333 | 44.34 | |||||||||
Management | 2,737,500 | 1,167,500 | 46.00 | |||||||||
Others | 605,000 | 130,000 | 43.85 | |||||||||
Total | 4,742,500 | 1,764,166 | 45.52 | |||||||||
12. | Earnings / (loss) per share |
Weighted | ||||||||||||||||||||||||
Weighted | Earnings/ | Average | Diluted | |||||||||||||||||||||
Earnings/(Loss) | Average | (Loss) | Shares | Earnings/ | ||||||||||||||||||||
Applicable to | Shares | Basic Earnings | Applicable to | Outstanding | (Loss) per | |||||||||||||||||||
Common Shares | Outstanding | /(Loss) per | Diluted Shares | Diluted | Share | |||||||||||||||||||
(Numerator) | (Denominator) | Share Amount | (Numerator) | (Denominator) | Amount | |||||||||||||||||||
For the year ended May 14, 2008: | (23,396 | ) | 162,171,380 | (0.14 | ) | (23,396 | ) | 162,171,380 | (0.14 | ) |
13. | Income Taxes: |
F-25
Table of Contents
Notes to Consolidated Financial Statements — (Continued)
As of and for the Period Ended May 14, 2008
(Expressed in thousands of U.S. Dollars — except for share and per share data)
Period from | ||||
January 1 to | ||||
May 14, 2008 | ||||
Norway | $ | (17,146 | ) | |
UK | (63 | ) | ||
Canada | (112 | ) | ||
USA | (4,438 | ) | ||
Total | $ | (21,759 | ) | |
Period from | ||||
January 1 to | ||||
May 14, 2008 | ||||
Norway (28%) | $ | 5 | ||
UK (28%) | 772 | |||
Canada (10% — 19%) | — | |||
USA (15% — 35%) | 860 | |||
Current tax expense | $ | 1, 637 | ||
Deferred tax expense | — | |||
Taxes | $ | 1,637 | ||
Effective tax rate | (7.5 | )% | ||
F-26
Table of Contents
Notes to Consolidated Financial Statements — (Continued)
As of and for the Period Ended May 14, 2008
(Expressed in thousands of U.S. Dollars — except for share and per share data)
Period from | ||||
January 1 to | ||||
May 14, 2008 | ||||
Tax rate of 28% (Norwegian tax rate) multiplied by profit/(loss) before tax | $ | (6,093 | ) | |
Change in valuation allowance | 25,082 | |||
Differences in tax rates | 5,766 | |||
Effect of permanent differences | 18,162 | |||
Changes in assessment of tax loss carry forward and other differences | (41,286 | ) | ||
Withholding tax | 6 | |||
Total | $ | 1,637 | ||
Period from | ||||
January 1 to | ||||
Temporary Differences — Tax Effects | May 14, 2008 | |||
Deferred tax assets | ||||
Accrued expenses | $ | 374 | ||
Tax loss carry forwards | 296,930 | |||
Total deferred tax assets | 297,304 | |||
Deferred tax liabilities | ||||
Accelerated depreciation of assets for tax purposes | (198,134 | ) | ||
Pension assets | 764 | |||
Total deferred tax liabilities | (197,370 | ) | ||
Net deferred tax asset | 99,934 | |||
Valuation allowance | (99,934 | ) | ||
Net deferred tax assets | — | |||
Short-term deferred tax assets | 374 | |||
Short-term portion of valuation allowance | (374 | ) | ||
Long-term net deferred tax assets | 99,560 | |||
Long-term portion of valuation allowance | (99,560 | ) |
F-27
Table of Contents
Notes to Consolidated Financial Statements — (Continued)
As of and for the Period Ended May 14, 2008
(Expressed in thousands of U.S. Dollars — except for share and per share data)
14. | Segment information: |
F-28
Table of Contents
Notes to Consolidated Financial Statements — (Continued)
As of and for the Period Ended May 14, 2008
(Expressed in thousands of U.S. Dollars — except for share and per share data)
Period from | ||||
January 1 to | ||||
May 14, 2008 | ||||
USA | 50,922 | |||
Norway | 5,636 | |||
UK | 39,897 | |||
Ireland | 2,616 | |||
Canada | 0 | |||
Angola | 101 | |||
Other | — | |||
Total | 99,172 | |||
Period Ended | ||||
May 14, 2008 | ||||
Customer A | 49 | % | ||
Customer B | — | |||
Customer C | 51 | % |
F-29
Table of Contents
Notes to Consolidated Financial Statements — (Continued)
As of and for the Period Ended May 14, 2008
(Expressed in thousands of U.S. Dollars — except for share and per share data)
15. | Commitments and contingencies |
F-30
Table of Contents
Page | ||
Unaudited Condensed Consolidated Financial Statements | ||
F-32 | ||
F-33 | ||
F-34 | ||
F-35 | ||
F-47 | ||
Audited Consolidated Financial Statements | ||
F-48 | ||
F-49 | ||
F-50 | ||
F-51 | ||
F-52 | ||
F-98 |
F-31
Table of Contents
Consolidated Balance Sheets
December 31, | March 31, | |||||||
2010 | 2011 | |||||||
(Unaudited) | ||||||||
(Expressed in thousands of | ||||||||
U.S. dollars — except for share | ||||||||
and per share data) | ||||||||
ASSETS | ||||||||
CURRENT ASSETS: | ||||||||
Cash and cash equivalents | $ | 95,707 | $ | 30,007 | ||||
Restricted cash | 512,793 | 239,999 | ||||||
Trade accounts receivable, net | 24,286 | 50,097 | ||||||
Financial instruments (Note 8) | 1,538 | 1,675 | ||||||
Other current assets | 37,682 | 64,696 | ||||||
Total current assets | 672,006 | 386,474 | ||||||
FIXED ASSETS, NET: | ||||||||
Rigs under construction (Note 5) | 1,888,490 | 832,377 | ||||||
Drilling rigs, machinery and equipment, net (Note 6) | 1,249,333 | 2,968,198 | ||||||
Total fixed assets, net | 3,137,823 | 3,800,575 | ||||||
OTHER NON CURRENT ASSETS: | ||||||||
Restricted cash | 50,000 | 50,000 | ||||||
Intangible assets, net | 10,506 | 10,145 | ||||||
Above market acquired time charter | 1,170 | 819 | ||||||
Other non-current assets | 472,193 | 186,724 | ||||||
Total non current assets, net | 533,869 | 247,688 | ||||||
Total assets | $ | 4,343,698 | $ | 4,434,737 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
CURRENT LIABILITIES: | ||||||||
Current portion of long-term debt (Note 7) | $ | 560,561 | $ | 486,727 | ||||
Accounts payable | 6,189 | 10,581 | ||||||
Due to related parties (Note 4) | — | 130,384 | ||||||
Accrued liabilities | 45,631 | 79,756 | ||||||
Deferred revenue | 40,205 | 58,517 | ||||||
Financial instruments (Note 8) | 12,503 | 9,051 | ||||||
Other current liabilities | 2,829 | 2,670 | ||||||
Total current liabilities | 667,918 | 777,686 | ||||||
NON CURRENT LIABILITIES | ||||||||
Long term debt, net of current portion (Note 7) | 696,986 | 651,424 | ||||||
Financial instruments (Note 8) | 96,901 | 94,011 | ||||||
Deferred tax liability | 209 | 209 | ||||||
Pensions | 602 | 805 | ||||||
Total non current liabilities | 794,698 | 746,449 | ||||||
COMMITMENTS AND CONTINGENCIES(Note 12) | — | — | ||||||
STOCKHOLDERS’ EQUITY: | ||||||||
Common stock, $0.01 par value; 250,000,000 shares authorized, 131,696,928 issued and outstanding at December 31, 2010 and March 31, 2011 | 1,317 | 1,317 | ||||||
Additional paid in capital | 3,457,444 | 3,458,032 | ||||||
Accumulated other comprehensive loss | (60,722 | ) | (60,658 | ) | ||||
Retained earnings | (516,957 | ) | (488,089 | ) | ||||
Total stockholders’ equity | 2,881,082 | 2,910,602 | ||||||
Total liabilities and stockholders’ equity | $ | 4,343,698 | $ | 4,434,737 | ||||
F-32
Table of Contents
Unaudited Interim Condensed Consolidated Statements of Operations
Three Months Ended 31, March | ||||||||
2010 | 2011 | |||||||
(Expressed in thousands of | ||||||||
U.S. dollars — except for share | ||||||||
and per share data) | ||||||||
REVENUES: | ||||||||
Leasing revenues | $ | 36,257 | $ | 36,235 | ||||
Service revenues | 44,304 | 73,442 | ||||||
Other revenues/(amortization) | (305 | ) | (351 | ) | ||||
Total revenues | 80,256 | 109,326 | ||||||
EXPENSES: | ||||||||
Drilling rigs operating expenses | 29,100 | 41,850 | ||||||
Depreciation and amortization | 18,468 | 28,197 | ||||||
General and administrative expenses | 5,517 | 6,100 | ||||||
Operating profit | 27,171 | 33,180 | ||||||
OTHER INCOME / (EXPENSES): | ||||||||
Interest and finance costs (Note 9) | (2,889 | ) | (2,624 | ) | ||||
Interest income (Note 10) | 1,658 | 5,653 | ||||||
Gain/(loss) on interest rate swaps (Note 8) | (9,509 | ) | (1,517 | ) | ||||
Other, net (Note 8) | (683 | ) | 137 | |||||
Total expenses net | (11,423 | ) | 1,649 | |||||
INCOME BEFORE INCOME TAXES | 15,748 | 34,829 | ||||||
Income taxes (Note 11) | (4,577 | ) | (5,961 | ) | ||||
NET INCOME | 11,171 | 28,868 | ||||||
EARNINGS PER SHARE, BASIC AND DILUTED | 0.11 | 0.22 | ||||||
WEIGHTED AVERAGE NUMBER OF SHARES, BASIC AND DILUTED (Note 3) | 103,125,500 | 131,696,928 | ||||||
Total Comprehensive Income | 1,859 | 28,932 |
F-33
Table of Contents
Unaudited Interim Condensed Consolidated Statements of Cash Flows
Three Months Ended 31 March | ||||||||
2010 | 2011 | |||||||
(Expressed in thousands of | ||||||||
U.S. dollars — except for share | ||||||||
and per share data) | ||||||||
Net Cash Provided by Operating Activities | 64,701 | 74,308 | ||||||
Cash Flows from Investing Activities: | ||||||||
Advances for rigs under construction | (331,429 | ) | (394,934 | ) | ||||
Drillship options | — | (20,000 | ) | |||||
Drilling rigs, equipment and other improvements | (1,165 | ) | (1,084 | ) | ||||
Decrease/(Increase) in restricted cash | (33,137 | ) | 274,774 | |||||
Net Cash used in Investing Activities | (365,731 | ) | (141,244 | ) | ||||
Cash Flows from Financing Activities: | ||||||||
Capital contribution by stockholders | 352,642 | 588 | ||||||
Proceeds from credit facilities | 634 | 326,481 | ||||||
Proceeds from shareholder short-term loan | — | 127,500 | ||||||
Payments of credit facilities | (30,440 | ) | (453,333 | ) | ||||
Payment of financing costs | (400 | ) | — | |||||
Net Cash provided by/ (used in) Financing Activities | 322,436 | 1,236 | ||||||
Net increase/(decrease) in cash and cash equivalents | 21,406 | (65,700 | ) | |||||
Cash and cash equivalents at beginning of period | 234,195 | 95,707 | ||||||
Cash and cash equivalents at end of period | 255,601 | 30,007 | ||||||
F-34
Table of Contents
1. | Basis of Presentation and General Information: |
2. | Significant Accounting policies and Recent Accounting Pronouncements: |
3. | Shareholders’ equity |
F-35
Table of Contents
Notes to Unaudited Interim Condensed Consolidated Financial Statements — (Continued)
March 31, 2011
(Expressed in thousands of United States Dollars — except for share and
per share data, unless otherwise stated)
4. | Transactions with Related Parties: |
F-36
Table of Contents
Notes to Unaudited Interim Condensed Consolidated Financial Statements — (Continued)
March 31, 2011
(Expressed in thousands of United States Dollars — except for share and
per share data, unless otherwise stated)
5. | Advances for Rigs under Construction: |
December 31, 2010 | ||||||||||||||||||||||||||
Rig Fair Value | ||||||||||||||||||||||||||
Vessel | Delivery/ | Contract | Contract | Capitalized | Adjustments at | Transfer to | ||||||||||||||||||||
Name | Expected Delivery | Amount | Payments | Expenses | Acquisition Date | Complete | Total | |||||||||||||||||||
H1837 | January 3, 2011 | $ | 696,524 | 407,505 | 78,031 | 89,000 | — | $ | 574,536 | |||||||||||||||||
H1838 | March 30, 2011 | 695,000 | 407,505 | 55,670 | 89,000 | — | 552,175 | |||||||||||||||||||
H1865 | July 2011 | 731,987 | 374,833 | 33,033 | — | — | 407,866 | |||||||||||||||||||
H1866 | September 2011 | 731,614 | 322,812 | 31,101 | — | — | 353,913 | |||||||||||||||||||
$ | 2,855,125 | 1,512,655 | 197,835 | 178,000 | — | $ | 1,888,490 | |||||||||||||||||||
F-37
Table of Contents
Notes to Unaudited Interim Condensed Consolidated Financial Statements — (Continued)
March 31, 2011
(Expressed in thousands of United States Dollars — except for share and
per share data, unless otherwise stated)
March 31, 2011 | ||||||||||||||||||||||||||
Rig Fair Value | ||||||||||||||||||||||||||
Vessel | Delivery/ | Contract | Contract | Capitalized | Adjustments at | Transfer to | ||||||||||||||||||||
Name | Expected Delivery | Amount | Payments | Expenses | Acquisition Date | Complete | Total | |||||||||||||||||||
H1837 | January 3, 2011 | $ | 696,524 | 696,524 | 95,735 | 89,000 | (881,259 | ) | $ | — | ||||||||||||||||
H1838 | March 30, 2011 | 695,000 | 695,906 | 79,451 | 89,000 | (864,357 | ) | — | ||||||||||||||||||
H1865 | July 2011 | 731,987 | 374,833 | 45,167 | — | — | 420,000 | |||||||||||||||||||
H1866 | September 2011 | 731,614 | 374,832 | 37,545 | — | — | 412,377 | |||||||||||||||||||
$ | 2,855,125 | 2,142,095 | 257,898 | 178,000 | (1,745,616 | ) | $ | 832,377 | ||||||||||||||||||
Balance at January 1, 2010 | $ | 1,178,392 | ||
Advances for drillships under construction | 592,085 | |||
Capitalized interest | 35,781 | |||
Capitalized expenses | 78,249 | |||
Related parties | 3,983 | |||
Balance at, December 31, 2010 | $ | 1,888,490 | ||
Balance at January 1, 2011 | $ | 1,888,490 | ||
Advances for drillships under construction | 629,440 | |||
Capitalized interest | 16,117 | |||
Capitalized expenses | 38,173 | |||
Related parties | 5,774 | |||
Transfer to complete | (1,745,616 | ) | ||
Balance at, March 31, 2010 | $ | 832,376 | ||
6. | Drilling Rigs, machinery and equipment: |
Accumulated | Net Book | |||||||||||
Cost | Depreciation | Value | ||||||||||
Balance, December 31, 2010 | $ | 1,440,117 | (190,785 | ) | $ | 1,249,333 | ||||||
Transfer in from rigs under construction | 1,745,616 | — | 1,745,616 | |||||||||
Additions | 1,084 | — | 1,084 | |||||||||
Depreciation | — | (27,834 | ) | (27,834 | ) | |||||||
Disposals | — | — | — | |||||||||
Balance, March 31, 2011 | $ | 3,186,817 | (218,619 | ) | $ | 2,968,199 | ||||||
F-38
Table of Contents
Notes to Unaudited Interim Condensed Consolidated Financial Statements — (Continued)
March 31, 2011
(Expressed in thousands of United States Dollars — except for share and
per share data, unless otherwise stated)
7. | Long-term Debt: |
December 31, | March 31, | |||||||
2010 | 2011 | |||||||
Two 562,500 Loan Agreements | $ | 194,524 | $ | 196,654 | ||||
1,040,000 Credit Facility | 675,833 | 637,500 | ||||||
325,000 Credit Facility | — | 325,000 | ||||||
230,000 Credit Facility | 115,000 | — | ||||||
300,000 Credit Facility | 300,000 | — | ||||||
Total loan Facilities outstanding | 1,285,357 | 1,159,154 | ||||||
Less: Deferred financing costs | (27,810 | ) | (21,003 | ) | ||||
Total debt reflected in balance sheet | 1,257,547 | 1,138,151 | ||||||
Less: Current portion | (560,561 | ) | (486,727 | ) | ||||
Long-term portion | $ | 696,986 | $ | 651,424 | ||||
March 31, 2011 | $ | 488,750 | ||
March 31, 2012 | 195,000 | |||
March 31, 2013 | 475,404 | |||
Total principal payments | 1,159,154 | |||
Less: Financing fees | (21,003 | ) | ||
Total debt | $ | 1,138,151 | ||
F-39
Table of Contents
Notes to Unaudited Interim Condensed Consolidated Financial Statements — (Continued)
March 31, 2011
(Expressed in thousands of United States Dollars — except for share and
per share data, unless otherwise stated)
8. | Financial Instruments and Fair Value Measurements: |
December 31, 2010 | March 31, 2011 | |||||||||||||||||||||||
Foreign | Foreign | |||||||||||||||||||||||
Currency | Interest | Currency | ||||||||||||||||||||||
Interest | Forward | Rate | Forward | |||||||||||||||||||||
Rate Swaps | Contracts | Total | Swaps | Contracts | Total | |||||||||||||||||||
Current Assets | $ | — | 1,538 | $ | 1,538 | $ | — | 1,675 | $ | 1,675 | ||||||||||||||
Current liabilities | (12,503 | ) | — | (12,503 | ) | (9,051 | ) | — | (9,051 | ) | ||||||||||||||
Non-current liabilities | (96,901 | ) | — | (96,901 | ) | (94,011 | ) | — | (94,011 | ) | ||||||||||||||
Total | $ | (109,404 | ) | 1,538 | $ | (107,866 | ) | $ | (103,062 | ) | 1,675 | $ | (101,387 | ) | ||||||||||
F-40
Table of Contents
Notes to Unaudited Interim Condensed Consolidated Financial Statements — (Continued)
March 31, 2011
(Expressed in thousands of United States Dollars — except for share and
per share data, unless otherwise stated)
Asset Derivatives | Liability Derivatives | |||||||||||||||||||
December 31, | March 31, | December 31, | March 31, | |||||||||||||||||
Derivatives Designated as | 2010 | 2011 | 2010 | 2011 | ||||||||||||||||
Hedging Instruments | Balance Sheet Location | Fair value | Fair value | Balance Sheet Location | Fair value | Fair value | ||||||||||||||
Interest rate swaps | Financial instruments | $ | — | $ | — | Financial instruments non-current liabilities | $ | (36,523 | ) | $ | — | |||||||||
Total derivatives designated as hedging instruments | — | — | (36,523 | ) | — | |||||||||||||||
Derivatives not Designated as | ||||||||||||||||||||
Hedging Instruments | ||||||||||||||||||||
Interest rate swaps | Financial Instruments current assets | — | — | Financial Instruments current liabilities | (12,503 | ) | (9,051 | ) | ||||||||||||
Interest rate swaps | Financial Instruments non- current assets | — | — | Financial instruments-non current liabilities | (60,378 | ) | (94,011 | ) | ||||||||||||
Foreign currency forward contracts | Financial instruments current assets | 1,538 | 1,675 | Financial instruments current liabilities | — | — | ||||||||||||||
Total derivatives not designated as hedging instruments | 1,538 | 1,675 | (72,881 | ) | (103,062 | ) | ||||||||||||||
Total derivatives | $ | 1,538 | $ | 1,675 | Total derivatives | $ | (109,404 | ) | $ | (103,062 | ) | |||||||||
Amount of Gain/(Loss) | ||||||||
Recognized in OCI on | ||||||||
Derivatives | ||||||||
(Effective Portion) | ||||||||
Three-Month | Three-Month | |||||||
Period Ended | Period Ended | |||||||
Derivatives Designated for Cash Flow Hedging Relationships | March 31, 2010 | March 31, 2011 | ||||||
Interest rate swaps — unrealized gains/(losses) | $ | (8,534 | ) | $ | — | |||
Total | $ | (8,534 | ) | $ | — | |||
F-41
Table of Contents
Notes to Unaudited Interim Condensed Consolidated Financial Statements — (Continued)
March 31, 2011
(Expressed in thousands of United States Dollars — except for share and
per share data, unless otherwise stated)
Amount of Gain/(Loss) | ||||||||||
Three-Month | Three-Month | |||||||||
Derivatives Not Designated as | Location of Gain or | Period Ended | Period Ended | |||||||
Hedging Instruments | (Loss) Recognized | March 31, 2010 | March 31, 2011 | |||||||
Foreign currency forward contracts | Other, net | $ | (683 | ) | $ | 137 | ||||
Interest rate swaps | Gain/(loss) on interest rate swaps | (9,509 | ) | (1,517 | ) | |||||
Total | $ | (10,192 | ) | $ | (1,380 | ) | ||||
F-42
Table of Contents
Notes to Unaudited Interim Condensed Consolidated Financial Statements — (Continued)
March 31, 2011
(Expressed in thousands of United States Dollars — except for share and
per share data, unless otherwise stated)
Quoted Prices | ||||||||||||||||
in Active | Significant | |||||||||||||||
Markets for | Other | |||||||||||||||
Identical | Observable | Unobservable | ||||||||||||||
March 31, | Assets | Inputs | Inputs | |||||||||||||
2011 | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
Recurring measurements: | ||||||||||||||||
Interest rate swaps-liability position | $ | (103,062 | ) | — | (103,062 | ) | $ | — | ||||||||
Foreign currency forward contracts — liability position | 1,675 | 1,675 | — | — | ||||||||||||
Total | $ | (101,387 | ) | 1,675 | (103,062 | ) | $ | — | ||||||||
9. | Interest and Finance costs: |
Three - Month Period Ended March 31, | ||||||||
2010 | 2011 | |||||||
Interest on long-term debt(*) | $ | 8,491 | $ | 16,845 | ||||
Capitalized interest | (8,374 | ) | (16,117 | ) | ||||
Long-term debt commitment fees and Bank charges | 2,772 | 1,896 | ||||||
Total | $ | 2,889 | $ | 2,624 | ||||
(*) | In addition, a portion of interest expenses was recorded in accumulated other comprehensive loss related to cash flow hedges of the variability of interest on borrowings that was capitalized as part of rigs under construction. The amounts recorded were $0 and $5,665 for the three month periods end March 31 2011 and 2010, respectively. |
10. | Interest income: |
Three- Month Period Ended | ||||||||
March 31, | ||||||||
2010 | 2011 | |||||||
Interest Income | $ | 1,658 | $ | 5,653 | ||||
Total | $ | 1,658 | $ | 5,653 | ||||
11. | Income Tax |
F-43
Table of Contents
Notes to Unaudited Interim Condensed Consolidated Financial Statements — (Continued)
March 31, 2011
(Expressed in thousands of United States Dollars — except for share and
per share data, unless otherwise stated)
12. | Commitments and Contingencies |
F-44
Table of Contents
Notes to Unaudited Interim Condensed Consolidated Financial Statements — (Continued)
March 31, 2011
(Expressed in thousands of United States Dollars — except for share and
per share data, unless otherwise stated)
13. | Subsequent Events: |
F-45
Table of Contents
Notes to Unaudited Interim Condensed Consolidated Financial Statements — (Continued)
March 31, 2011
(Expressed in thousands of United States Dollars — except for share and
per share data, unless otherwise stated)
F-46
Table of Contents
F-47
Table of Contents
December 31, | ||||||||
2009 | December 31, | |||||||
(As Restated) | 2010 | |||||||
(Expressed in thousands of | ||||||||
U.S. dollars — except for share | ||||||||
and per share data) | ||||||||
ASSETS | ||||||||
CURRENT ASSETS: | ||||||||
Cash and cash equivalents | $ | 234,195 | $ | 95,707 | ||||
Restricted cash (Note 6) | 220,690 | 512,793 | ||||||
Trade accounts receivable, net | 65,486 | 24,286 | ||||||
Due from related parties (Note 4) | 4,934 | — | ||||||
Financial instruments (Note 11) | 434 | 1,538 | ||||||
Other current assets | 32,819 | 37,682 | ||||||
Total current assets | 558,558 | 672,006 | ||||||
FIXED ASSETS, NET: | ||||||||
Rigs under construction (Note 7) | 1,178,392 | 1,888,490 | ||||||
Drilling rigs, machinery and equipment, net (Note 8) | 1,317,607 | 1,249,333 | ||||||
Total fixed assets, net | 2,495,999 | 3,137,823 | ||||||
OTHER NON CURRENT ASSETS: | ||||||||
Restricted cash (Note 6) | — | 50,000 | ||||||
Intangible assets, net (Note 9) | 11,948 | 10,506 | ||||||
Above market acquired time charter (Note 9) | 2,392 | 1,170 | ||||||
Pensions (Note 12) | 388 | — | ||||||
Other non-current assets (Note 13) | 40,700 | 472,193 | ||||||
Total non current assets, net | 55,428 | 533,869 | ||||||
Total assets | $ | 3,109,985 | $ | 4,343,698 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
CURRENT LIABILITIES: | ||||||||
Current portion of long-term debt (Note 10) | $ | 537,668 | $ | 560,561 | ||||
Accounts payable | 13,591 | 6,189 | ||||||
Due to related parties (Note 4) | 48,110 | — | ||||||
Accrued liabilities | 34,235 | 45,631 | ||||||
Deferred revenue | 38,400 | 40,205 | ||||||
Financial instruments (Note 11) | 5,467 | 12,503 | ||||||
Other current liabilities | 4,816 | 2,829 | ||||||
Total current liabilities | 682,287 | 667,918 | ||||||
NON CURRENT LIABILITIES | ||||||||
Long term debt, net of current portion (Note 10) | 662,362 | 696,986 | ||||||
Financial instruments (Note 11) | 64,219 | 96,901 | ||||||
Deferred tax liability (Note 20) | — | 209 | ||||||
Pensions (Note 12) | — | 602 | ||||||
Total non current liabilities | 726,581 | 794,698 | ||||||
COMMITMENTS AND CONTINGENCIES(Note 22) | — | — | ||||||
STOCKHOLDERS’ EQUITY: | ||||||||
Common stock, $0,01 par value; 250,000,000 shares authorized, 131,696,928 issued and outstanding at December 31, 2010 (Note 14) | 10 | 1,317 | ||||||
Additional paid in capital | 2,386,953 | 3,457,444 | ||||||
Accumulated other comprehensive loss | (34,128 | ) | (60,722 | ) | ||||
Retained earnings | (651,718 | ) | (516,957 | ) | ||||
Total stockholders’ equity | 1,701,117 | 2,881,082 | ||||||
Total liabilities and stockholders’ equity | $ | 3,109,985 | $ | 4,343,698 | ||||
F-48
Table of Contents
Consolidated Statements of Operations
Year Ended | ||||||||||||
2009 | ||||||||||||
2008 | (As Restated) | 2010 | ||||||||||
(Expressed in thousands of U.S. dollars — | ||||||||||||
except for share and per share data) | ||||||||||||
REVENUES: | ||||||||||||
Leasing revenues | $ | 116,859 | $ | 223,774 | $ | 141,211 | ||||||
Service revenue | 85,251 | 149,751 | 261,951 | |||||||||
Other revenues | 16,553 | 14,597 | 2,550 | |||||||||
Total Revenues | 218,663 | 388,122 | 405,712 | |||||||||
EXPENSES: | ||||||||||||
Drilling rigs operating expenses (Note 16) | 86,229 | 133,256 | 119,369 | |||||||||
Depreciation and amortization (Note 8 and 9) | 45,432 | 75,348 | 75,092 | |||||||||
Gain/(loss) of sale assets | — | — | (1,458 | ) | ||||||||
Goodwill Impairment (Note 17) | 761,729 | — | — | |||||||||
General and administrative expenses | 14,462 | 17,955 | 19,443 | |||||||||
Operating income/(loss) | (689,189 | ) | 161,563 | 190,350 | ||||||||
OTHER INCOME/(EXPENSES): | ||||||||||||
Interest and finance costs (Note 18) | (71,692 | ) | (46,120 | ) | (8,418 | ) | ||||||
Interest income (Note 19) | 3,033 | 6,259 | 12,464 | |||||||||
Gain/(loss) on interest rate swaps (Note 11) | — | 4,826 | (40,303 | ) | ||||||||
Other, net (Note 11) | (2,300 | ) | 2,023 | 1,104 | ||||||||
Total expenses/ income, net | (70,959 | ) | (33,012 | ) | (35,153 | ) | ||||||
INCOME /(LOSS) BEFORE INCOME TAXES AND EQUITY IN LOSS OF INVESTEE | (760,148 | ) | 128,551 | 155,197 | ||||||||
Income taxes (Note 20) | (2,844 | ) | (12,797 | ) | (20,436 | ) | ||||||
Equity in loss of investee (Note 5.1) | (1,055 | ) | — | |||||||||
NET INCOME/(LOSS) | (764,047 | ) | 115,754 | 134,761 | ||||||||
Less: Net income attributable to non controlling interest | (1,800 | ) | — | — | ||||||||
NET INCOME/(LOSS) ATTRIBUTABLE TO OCEAN RIG UDW INC. | $ | (765,847 | ) | $ | 115,754 | $ | 134,761 | |||||
Earnings/(loss) per common share attributable to Ocean Rig UDW inc., basic and diluted(Note 15) | (7.43 | ) | 1.12 | 1.30 | ||||||||
Weighted average number of common shares, basic and diluted | 103,125,500 | 103,125,500 | 103,908,279 |
F-49
Table of Contents
Accumulated | ||||||||||||||||||||||||||||||||||||||||
Additional | Cash | Actuarial | Other | Total | ||||||||||||||||||||||||||||||||||||
Comprehensive | # of | Par | Paid-in | Flow | Pension | Option | Comprehensive | Retained | Stockholders | |||||||||||||||||||||||||||||||
Income/(Loss) | Shares | value | Capital | Hedge | Gain/(Loss) | Cost | Income/(Loss) | Earnings | Equity | |||||||||||||||||||||||||||||||
(Expressed in thousands of U.S. dollars — except for share and per share data) | ||||||||||||||||||||||||||||||||||||||||
BALANCE, December 31, 2007 | 103,125,500 | 10 | 162,057 | — | (3,425 | ) | 158,642 | |||||||||||||||||||||||||||||||||
Net income | (765,847 | ) | (765,847 | ) | (765,847 | ) | ||||||||||||||||||||||||||||||||||
Unrealized gain on cash flows hedges, net of tax of $0 (Note 20) | (46,637 | ) | (46,637 | ) | (46,637 | ) | (46,637 | ) | ||||||||||||||||||||||||||||||||
Increase in defined benefit plan adjustments, net of tax of $0 (Note 20) | 1,240 | 1,240 | 1,240 | 1,240 | ||||||||||||||||||||||||||||||||||||
Option costs | 812 | 812 | 812 | 812 | ||||||||||||||||||||||||||||||||||||
Capital contribution from DryShips Inc | 650,164 | 650,164 | ||||||||||||||||||||||||||||||||||||||
Capital contribution due to retirement of treasury shares | 16,582 | 16,582 | ||||||||||||||||||||||||||||||||||||||
Capital contribution for subsidiary due to stock option program employees | 7,087 | 7,087 | ||||||||||||||||||||||||||||||||||||||
Retained earnings acquired | 1,800 | 1,800 | ||||||||||||||||||||||||||||||||||||||
Redemption adjustment | (212 | ) | (212 | ) | ||||||||||||||||||||||||||||||||||||
Comprehensive income | (810,432 | ) | (46,637 | ) | 1,240 | 812 | ||||||||||||||||||||||||||||||||||
BALANCE, December 31, 2008 | 103,125,500 | 10 | 835,678 | (44,585 | ) | (767,472 | ) | 23,631 | ||||||||||||||||||||||||||||||||
Net income — As restated (Note 3) | 115,754 | 115,754 | 115,754 | |||||||||||||||||||||||||||||||||||||
Realized expense on Cash flow hedges, net of tax $0 (Note 20) — As restated(Note 3) | (6,253 | ) | (6,253 | ) | (6,253 | ) | (6,253 | ) | ||||||||||||||||||||||||||||||||
Unrealized gain on cash flows hedges, net of tax of $0 (Note 20) | 16,140 | 16,140 | 16,140 | 16,140 | ||||||||||||||||||||||||||||||||||||
Increase in defined benefit plan adjustments, net of tax of $0 (Note 20) | 570 | 570 | 570 | 570 | ||||||||||||||||||||||||||||||||||||
Contribution of net assets in Drillships Investments Inc.(Note 4) | 439,900 | 439,900 | ||||||||||||||||||||||||||||||||||||||
Cancellation of shares in relation to acquisition of Drillship Holding (Note 4) | (25,781,375 | ) | (3 | ) | (3 | ) | ||||||||||||||||||||||||||||||||||
Acquisition of Drillships Holdings Inc. (Note 4) | 25,781,375 | 3 | 358,000 | 358,003 | ||||||||||||||||||||||||||||||||||||
Capital contribution from DryShips Inc | 753,375 | 753,375 | ||||||||||||||||||||||||||||||||||||||
Comprehensive income | 126,211 | (36,750 | ) | 1,810 | 812 | |||||||||||||||||||||||||||||||||||
BALANCE, December 31, 2009 | ||||||||||||||||||||||||||||||||||||||||
As restated — (Note 3) | 103,125,500 | 10 | 2,386,953 | (34,128 | ) | (651,718 | ) | 1,701,117 | ||||||||||||||||||||||||||||||||
Net income | 134,761 | 134,761 | 134,761 | |||||||||||||||||||||||||||||||||||||
Realized expense on Cash flow hedges, net of tax $0 (Note 20) | (21,523 | ) | (21,523 | ) | (21,523 | ) | (21,523 | ) | ||||||||||||||||||||||||||||||||
Unrealized gain on cash flows hedges, net of tax of $0 (Note 20) | (5,495 | ) | (5,495 | ) | (5,495 | ) | (5,495 | ) | ||||||||||||||||||||||||||||||||
Increase in defined benefit plan adjustments, net of tax of $0 (Note 20) | 424 | 424 | 424 | 424 | ||||||||||||||||||||||||||||||||||||
Share dividend (Note 14) | 1,021 | (1,021 | ) | |||||||||||||||||||||||||||||||||||||
Private Placement (Note 14) | 28,571,428 | 286 | 488,015 | 488,301 | ||||||||||||||||||||||||||||||||||||
Capital contribution from DryShips Inc | 583,497 | 583,497 | ||||||||||||||||||||||||||||||||||||||
Comprehensive income | 108,168 | (63,768 | ) | 2,234 | 812 | |||||||||||||||||||||||||||||||||||
BALANCE, December 31, 2010 | 131,696,928 | 1,317 | 3,457,444 | (60,722 | ) | (516,957 | ) | 2,881,082 | ||||||||||||||||||||||||||||||||
F-50
Table of Contents
Consolidated Statement of Cash Flows
January 1 to | ||||||||||||||||
January 1 to | December 31, | January 1 to | ||||||||||||||
December 31, | 2009 | December 31, | ||||||||||||||
2008 | (As Restated) | 2010 | ||||||||||||||
(Expressed in thousands of United States dollars) | ||||||||||||||||
Cash Flows from Operating Activities: | ||||||||||||||||
Net income | $ | (765,847 | ) | 115,754 | $ | 134,761 | ||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||
Depreciation and amortization | 45,432 | 75,348 | 75,092 | |||||||||||||
Loss from disposal of assets | — | — | 1,458 | |||||||||||||
Commitments fees on undrawn line of credit | 6,188 | 4,300 | 6,375 | |||||||||||||
Amortization and premium paid over withdrawn loans | 14,062 | 10,973 | — | |||||||||||||
Net amortization of fair value of acquired drilling contracts | (16,553 | ) | (14,597 | ) | 1,222 | |||||||||||
Payments for Cash flow hedge not included in expense | — | (6,253 | ) | (21,523 | ) | |||||||||||
Interest income on restricted cash related to drillships | — | (3,837 | ) | (6,205 | ) | |||||||||||
Goodwill impairment charge | 761,729 | — | — | |||||||||||||
Income from associated companies | 1,055 | — | — | |||||||||||||
Change in fair value of derivatives | 2,512 | 31,654 | 33,119 | |||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||
Trade accounts receivable | (1,569 | ) | (23,626 | ) | 41,200 | |||||||||||
Other current assets | (1,012 | ) | (17,521 | ) | (4,863 | ) | ||||||||||
Deferred taxes | — | — | 209 | |||||||||||||
Accounts payable | (1,955 | ) | 6,147 | (7,402 | ) | |||||||||||
Due to related parties | (26,797 | ) | 48,110 | — | ||||||||||||
Other current liabilities | 1,759 | (3,207 | ) | (1,988 | ) | |||||||||||
Pension liability | (2,015 | ) | (142 | ) | 1,416 | |||||||||||
Accrued liabilities | (869 | ) | 1,940 | 5,022 | ||||||||||||
Deferred revenue | 4,999 | 26,732 | 1,805 | |||||||||||||
Payment of margin call for derivatives | — | (40,700 | ) | (37,900 | ) | |||||||||||
Net Cash Provided by Operating Activities | 21,119 | 211,075 | 221,798 | |||||||||||||
Cash Flows from Investing Activities: | ||||||||||||||||
Investments in Ocean Rig ASA, net of cash acquired | (972,802 | ) | — | — | ||||||||||||
Advances for vessels under construction | — | (130,832 | ) | (705,022 | ) | |||||||||||
Down payment for vessels under construction and other improvements | — | — | (294,569 | ) | ||||||||||||
Drillship options | — | — | (99,024 | ) | ||||||||||||
Drilling rigs, equipment and other improvements | (16,584 | ) | (14,152 | ) | (6,834 | ) | ||||||||||
Increase in restricted cash | (31,287 | ) | (185,565 | ) | (335,898 | ) | ||||||||||
Cash from acquisition of drillships | — | 183,770 | — | |||||||||||||
Net Cash Used in Investing Activities | (1,020,673 | ) | (146,779 | ) | (1,441,347 | ) | ||||||||||
Cash Flows from Financing Activities: | ||||||||||||||||
Capital contribution by DryShips Inc | 650,161 | 753,375 | 540,321 | |||||||||||||
Net proceeds from the issuance of common shares of subsidiary | 11,306 | — | — | |||||||||||||
Net proceeds from the issuance of common shares | 488,301 | |||||||||||||||
Proceeds from long-term credit facility | 2,050,000 | 150,000 | 8,250 | |||||||||||||
Proceeds from short term credit facility | — | — | 300,000 | |||||||||||||
Principal payments and repayments of long-term debt | (1,438,941 | ) | (650,000 | ) | (132,717 | ) | ||||||||||
Principal payments and repayments of short-term debt | — | (355,052 | ) | (115,000 | ) | |||||||||||
Payment of financing costs | (15,136 | ) | (1,364 | ) | (8,094 | ) | ||||||||||
Net Cash Provided by (used in) Financing Activities | 1,257,390 | (103,041 | ) | 1,081,061 | ||||||||||||
Net (decrease)/increase in cash and cash equivalents | 257,836 | (38,745 | ) | (138,488 | ) | |||||||||||
Cash and cash equivalents at beginning of period | 15,104 | 272,940 | 234,195 | |||||||||||||
Cash and cash equivalents at end of period | $ | 272,940 | 234,195 | $ | 95,707 | |||||||||||
SUPPLEMENTAL CASH FLOW INFORMATION: | ||||||||||||||||
Cash paid during the year/period for: | ||||||||||||||||
Interest, net of amount capitalized | 23,103 | 51,093 | 43,203 | |||||||||||||
Income taxes | 2,566 | 13,233 | 19,803 |
F-51
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F-52
Table of Contents
Notes to Consolidated Financial Statement — (Continued)
As of and for Periods Ended December 31, 2008, 2009 and 2010
(Expressed in thousands of United States Dollars — except for share and
per share data, unless otherwise stated)
2. | Significant Accounting policies: |
F-53
Table of Contents
Notes to Consolidated Financial Statement — (Continued)
As of and for Periods Ended December 31, 2008, 2009 and 2010
(Expressed in thousands of United States Dollars — except for share and
per share data, unless otherwise stated)
F-54
Table of Contents
Notes to Consolidated Financial Statement — (Continued)
As of and for Periods Ended December 31, 2008, 2009 and 2010
(Expressed in thousands of United States Dollars — except for share and
per share data, unless otherwise stated)
F-55
Table of Contents
Notes to Consolidated Financial Statement — (Continued)
As of and for Periods Ended December 31, 2008, 2009 and 2010
(Expressed in thousands of United States Dollars — except for share and
per share data, unless otherwise stated)
F-56
Table of Contents
Notes to Consolidated Financial Statement — (Continued)
As of and for Periods Ended December 31, 2008, 2009 and 2010
(Expressed in thousands of United States Dollars — except for share and
per share data, unless otherwise stated)
Intangible Assets/Liabilities | Years | |
Tradenames | 10 | |
Software | 10 | |
Fair value of above/below market acquired time charters | Over remaining contract term |
F-57
Table of Contents
Notes to Consolidated Financial Statement — (Continued)
As of and for Periods Ended December 31, 2008, 2009 and 2010
(Expressed in thousands of United States Dollars — except for share and
per share data, unless otherwise stated)
F-58
Table of Contents
Notes to Consolidated Financial Statement — (Continued)
As of and for Periods Ended December 31, 2008, 2009 and 2010
(Expressed in thousands of United States Dollars — except for share and
per share data, unless otherwise stated)
F-59
Table of Contents
Notes to Consolidated Financial Statement — (Continued)
As of and for Periods Ended December 31, 2008, 2009 and 2010
(Expressed in thousands of United States Dollars — except for share and
per share data, unless otherwise stated)
F-60
Table of Contents
Notes to Consolidated Financial Statement — (Continued)
As of and for Periods Ended December 31, 2008, 2009 and 2010
(Expressed in thousands of United States Dollars — except for share and
per share data, unless otherwise stated)
3. | Restatement of Previously Issued Financial Statements: |
For the Year Ended | ||||||||||||
As Previously | December 31, 2009 | |||||||||||
Consolidated Statement of Operations | Reported | Errors | As Restated | |||||||||
Interest and finance costs | $ | (57,309 | ) | 11,189 | $ | (46,120 | ) | |||||
Net profit attributable to Ocean Rig UDW Inc. | 104,565 | 11,189 | 115,754 | |||||||||
Income per common share, basic and diluted | $ | 1.01 | 0.1 | $ | 1.12 | |||||||
F-61
Table of Contents
Notes to Consolidated Financial Statement — (Continued)
As of and for Periods Ended December 31, 2008, 2009 and 2010
(Expressed in thousands of United States Dollars — except for share and
per share data, unless otherwise stated)
As Previously | December 31, 2009 | |||||||||||
Consolidated Balance Sheet | Reported | Errors | As Restated | |||||||||
Rigs under construction | $ | 1,173,456 | 4,936 | $ | 1,178,392 | |||||||
Total Fixed Assets, net | 2,491,063 | 4,936 | 2,495,999 | |||||||||
Total assets | 3,105,049 | 4,936 | 3,109,985 | |||||||||
Accumulated other comprehensive loss | (27,875 | ) | (6,253 | ) | (34,128 | ) | ||||||
Retained earnings | (662,907 | ) | 11,189 | (651,718 | ) | |||||||
Total equity | 1,696,181 | 4,936 | 1,701,117 | |||||||||
Total liabilities and stockholders’ equity | 3,105,049 | 4,936 | 3,109,985 | |||||||||
For the Year Ended | ||||||||||||
As Previously | December 31, 2009 | |||||||||||
Consolidated Cash Flow | Reported | Errors | As Restated | |||||||||
Net income | $ | 104,565 | 11,189 | $ | 115,754 | |||||||
Interest income on restricted cash related to drillships(*) | — | (3,837 | ) | (3,837 | ) | |||||||
Payments for Cash flow hedge not included in expense | — | (6,253 | ) | (6,253 | ) | |||||||
Net Cash provided by Operating Activities | 209,976 | 1,099 | 211,075 | |||||||||
Advances for vessels under construction | (125,896 | ) | (4,936 | ) | (130,832 | ) | ||||||
Increase in restricted cash *) | (189,403 | ) | (3,837 | ) | (185,565 | ) | ||||||
Net Cash Used in Investing Activities | (145,681 | ) | (1,099 | ) | (146,779 | ) | ||||||
Net (decrease)/increase in cash and cash equivalents | $ | (38,745 | ) | — | $ | (38,745 | ) | |||||
(*) | Interest income on restricted cash related to drillships has been reclassified from Increase in restricted cash, as included in the section Net Cash Used in Investing Activities, to Interest income on restricted cash related to drillships, as included in Net Cash provided by Operating Activities. |
4. | Transactions with Related Parties: |
F-62
Table of Contents
Notes to Consolidated Financial Statement — (Continued)
As of and for Periods Ended December 31, 2008, 2009 and 2010
(Expressed in thousands of United States Dollars — except for share and
per share data, unless otherwise stated)
Amount | ||||
Contracts for construction of drillship Hulls 1837 and 1838 | $ | 625,400 | ||
Cash deposits | 200 | |||
Debt assumed | (259,900 | ) | ||
Other liabilities | (7,700 | ) | ||
Net assets acquired | $ | 358,000 | ||
F-63
Table of Contents
Notes to Consolidated Financial Statement — (Continued)
As of and for Periods Ended December 31, 2008, 2009 and 2010
(Expressed in thousands of United States Dollars — except for share and
per share data, unless otherwise stated)
F-64
Table of Contents
Notes to Consolidated Financial Statement — (Continued)
As of and for Periods Ended December 31, 2008, 2009 and 2010
(Expressed in thousands of United States Dollars — except for share and
per share data, unless otherwise stated)
5. | Acquisition of Ocean Rig: |
F-65
Table of Contents
Notes to Consolidated Financial Statement — (Continued)
As of and for Periods Ended December 31, 2008, 2009 and 2010
(Expressed in thousands of United States Dollars — except for share and
per share data, unless otherwise stated)
January 1 to | ||||
Result of Operations | May 14, 2008 | |||
Revenues | $ | 99,172 | ||
Operating income/(loss) | $ | 19,521 | ||
Net Loss | $ | (23,396 | ) |
December 20, | May 14, | June 30, | July 10, | |||||||||||||||||||||
2007 | 2008 | 2008 | 2008 | Total | ||||||||||||||||||||
Cash consideration | $ | 405,168 | 682,427 | 288,978 | 21,283 | $ | 1,397,856 | |||||||||||||||||
Transaction costs | 855 | 6,154 | 3,510 | 240 | 10,761 | |||||||||||||||||||
Total purchase price | $ | 406,024 | 688,581 | 292,488 | 21,523 | $ | 1,408,618 | |||||||||||||||||
F-66
Table of Contents
Notes to Consolidated Financial Statement — (Continued)
As of and for Periods Ended December 31, 2008, 2009 and 2010
(Expressed in thousands of United States Dollars — except for share and
per share data, unless otherwise stated)
December 20, | May 14, | June 30, | July 10, | |||||||||||||||||
2007 | 2008 | 2008 | 2008 | Total | ||||||||||||||||
Total current assets | $ | 28,469 | 43,179 | 25,029 | 1,895 | $ | 98,572 | |||||||||||||
Drilling rigs, machinery and equipment | 386,080 | 664,659 | 288,981 | 21,976 | 1,361,696 | |||||||||||||||
Intangible assets | 4,366 | 6,829 | 3,007 | 232 | 14,434 | |||||||||||||||
Above market acquired time charter | 2,473 | 1,104 | 86 | 3,663 | ||||||||||||||||
Goodwill | 252,070 | 358,146 | 141,515 | 9,998 | 761,729 | |||||||||||||||
Total assets acquired | $ | 670,985 | 1,075,286 | 459,636 | 34,187 | $ | 2,240,094 | |||||||||||||
Total current liabilities | (45,439 | ) | (238,944 | ) | (108,629 | ) | (8,223 | ) | (401,235 | ) | ||||||||||
Total non current liabilities | (207,632 | ) | (130,127 | ) | (52,506 | ) | (3,975 | ) | (394,241 | ) | ||||||||||
Below market acquired time charter | (11,890 | ) | (17,633 | ) | (6,013 | ) | (464 | ) | (36,000 | ) | ||||||||||
Total Liabilities assumed | $ | (264,961 | ) | (386,705 | ) | (167,148 | ) | (12,663 | ) | $ | (831,476 | ) | ||||||||
Total purchase price | $ | 406,024 | 688,581 | 292,488 | 21,525 | $ | 1,408,618 | |||||||||||||
F-67
Table of Contents
Notes to Consolidated Financial Statement — (Continued)
As of and for Periods Ended December 31, 2008, 2009 and 2010
(Expressed in thousands of United States Dollars — except for share and
per share data, unless otherwise stated)
Accumulated | ||||||||||||||||||||||||||||
Amount | Amortization as of | Amount to be Amortized as of December 31 | ||||||||||||||||||||||||||
Acquired | December 31, 2010 | 2011 | 2012 | 2013 | 2014-18 | |||||||||||||||||||||||
Trade names | $ | 8,774 | 2,384 | 877 | 877 | 877 | $ | 3,759 | ||||||||||||||||||||
Software | 5,659 | 1,544 | 566 | 566 | 566 | 2,417 | ||||||||||||||||||||||
$ | 14,434 | 3,928 | 1,443 | 1,443 | 1,443 | $ | 6,177 | |||||||||||||||||||||
December 31, | ||||
2008 | ||||
Pro forma: | ||||
Revenues | $ | 317,835 | ||
Net Operating Income/(loss) | (669,675 | ) | ||
Net Income/(loss) | (789,250 | ) | ||
Earnings per Shares, basic and diluted | $ | (7.65 | ) |
6. | Restricted cash: |
December 31, | December 31, | |||||||
2009 | 2010 | |||||||
Amount pledged as collateral for bank loans (Note 10 b and e) | $ | 187,389 | $ | 529,815 | ||||
Amounts pledged as collateral to customer | 1,000 | 1,000 | ||||||
Amounts representing minimum liquidity requirements under the loan facilities (Note 10) | 30,000 | 30,000 | ||||||
Taxes withheld from employees | 2,301 | 1,978 | ||||||
Total restricted cash | $ | 220,690 | $ | 562,793 | ||||
F-68
Table of Contents
Notes to Consolidated Financial Statement — (Continued)
As of and for Periods Ended December 31, 2008, 2009 and 2010
(Expressed in thousands of United States Dollars — except for share and
per share data, unless otherwise stated)
7. | Rigs under Construction: |
December 31, 2009 (As Restated) | ||||||||||||||||||||||
Rig Fair Value | ||||||||||||||||||||||
Contract | Contract | Capitalized | Adjustments at | |||||||||||||||||||
Vessel Name | Expected Delivery | Amount | Payments | Expenses | Acquisition Date | Total | ||||||||||||||||
H1837 | January 2011 | $ | 691,008 | 254,346 | 27,178 | 89,000 | $ | 370,524 | ||||||||||||||
H1838 | March 2011 | 690,758 | 254,346 | 26,041 | 89,000 | 369,387 | ||||||||||||||||
H1865 | July 2011 | 715,541 | 205,940 | 13,827 | — | 219,767 | ||||||||||||||||
H1866 | September 2011 | 715,541 | 205,940 | 12,774 | — | 218,714 | ||||||||||||||||
$ | 2,812,848 | 920,572 | 79,820 | 178,000 | $ | 1,178,392 | ||||||||||||||||
December 31, 2010 | ||||||||||||||||||||||
Rig Fair Value | ||||||||||||||||||||||
Contract | Contract | Capitalized | Adjustments at | |||||||||||||||||||
Vessel Name | Expected Delivery | Amount | Payments | Expenses | Acquisition Date | Total | ||||||||||||||||
H1837 | January 2011 | $ | 696,524 | 407,505 | 78,031 | 89,000 | $ | 574,536 | ||||||||||||||
H1838 | March 2011 | 695,000 | 407,505 | 55,670 | 89,000 | 552,175 | ||||||||||||||||
H1865 | July 2011 | 731,987 | 374,833 | 33,033 | — | 407,866 | ||||||||||||||||
H1866 | September 2011 | 731,614 | 322,812 | 31,101 | — | 353,913 | ||||||||||||||||
$ | 2,855,125 | 1,512,655 | 197,835 | 178,000 | $ | 1,888,490 | ||||||||||||||||
F-69
Table of Contents
Notes to Consolidated Financial Statement — (Continued)
As of and for Periods Ended December 31, 2008, 2009 and 2010
(Expressed in thousands of United States Dollars — except for share and
per share data, unless otherwise stated)
Balance at December 31, 2008 | $ | — | ||
Acquisitions of Hulls 1837/ 1838 (May 15, 2009) | 625,445 | |||
Acquisitions of Hulls 1865/ 1866 (March 5, 2009) | 422,114 | |||
Advances for drillships under construction | 95,673 | |||
Capitalized interest (as restated) | 24,457 | |||
Capitalized expenses | 8,834 | |||
Related Parties | 1,869 | |||
Balance at, December 31, 2009 (as restated) | $ | 1,178,392 | ||
Balance at January 1, 2010 | $ | 1,178,392 | ||
Advances for drillships under construction | 592,085 | |||
Capitalized interest | 35,781 | |||
Capitalized expenses | 78,249 | |||
Related Parties | 3,983 | |||
Balance at, December 31, 2010 | $ | 1,888,490 | ||
8. | Drilling Rigs: |
Accumulated | Net Book | |||||||||||
Cost | Depreciation | Value | ||||||||||
Balance on acquisition May 14, 2008 | $ | 1,405,346 | — | $ | 1,405,346 | |||||||
Additions | 16,584 | — | 16,584 | |||||||||
Depreciation | — | (44,571 | ) | (44,571 | ) | |||||||
Balance, December 31, 2008 | 1,421,930 | (44,571 | ) | 1,377,359 | ||||||||
Additions | 14,152 | — | 14,152 | |||||||||
Depreciation | — | (73,905 | ) | (73,905 | ) | |||||||
Balance December 31, 2009 | 1,436,082 | (118,476 | ) | 1,317,607 | ||||||||
Additions | 6,835 | — | 6,835 | |||||||||
Disposals | (2,800 | ) | 1,342 | (1,458 | ) | |||||||
Depreciation | (73,651 | ) | (73,651 | ) | ||||||||
Balance December 31, 2010 | $ | 1,440,117 | ( 190,785 | ) | $ | 1,249,333 | ||||||
F-70
Table of Contents
Notes to Consolidated Financial Statement — (Continued)
As of and for Periods Ended December 31, 2008, 2009 and 2010
(Expressed in thousands of United States Dollars — except for share and
per share data, unless otherwise stated)
9. | Intangible Assets and Liabilities: |
Accumulated | Amortization | |||||||||||||||||||||||||||||||||||
Amortization | for the Year | |||||||||||||||||||||||||||||||||||
as of | Ended | |||||||||||||||||||||||||||||||||||
Amount | December 31, | December 31, | Amortization Schedule | |||||||||||||||||||||||||||||||||
Acquired | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | thereafter | ||||||||||||||||||||||||||||
Trade names | $ | 8,774 | (1,507 | ) | (877 | ) | (877 | ) | (877 | ) | (877 | ) | (877 | ) | (877 | ) | $ | (2,005 | ) | |||||||||||||||||
Software | 5,659 | (978 | ) | (565 | ) | (565 | ) | (565 | ) | (565 | ) | (565 | ) | (565 | ) | (1,291 | ) | |||||||||||||||||||
Total Intangible Assets, net | $ | 14,433 | (2,485 | ) | (1,442 | ) | (1,442 | ) | (1,442 | ) | (1,442 | ) | (1,442 | ) | (1,442 | ) | $ | (3,296 | ) | |||||||||||||||||
Above market time charters | $ | 3,663 | (1,271 | ) | (1,222 | ) | (1,170 | ) |
10. | Long-term Debt: |
December 31, | December 31, | |||||||
2009 | 2010 | |||||||
Two 562,500 Loan Agreements | $ | 186,274 | $ | 194,524 | ||||
1,040,000 Credit Facility | 808,550 | 675,833 | ||||||
230,000 Credit Facility | 230,000 | 115,000 | ||||||
300,000 Credit Facility | — | 300,000 | ||||||
Total loan Facilities outstanding | 1,224,824 | 1,285,357 | ||||||
Less: Deferred financing costs | (24,794 | ) | (27,810 | ) | ||||
Total debt reflected in balance sheet | 1,200,030 | 1,257,547 | ||||||
Less: Current portion | (537,668 | ) | (560,561 | ) | ||||
Long-term portion | $ | 662,362 | $ | 696,986 | ||||
December 31, 2011 | $ | 568,333 | ||
December 31, 2012 | 195,000 | |||
December 31, 2013 | 522,024 | |||
Total principal payments | 1,285,357 | |||
Less: Financing fees | (27,810 | ) | ||
Total debt reflected in balance sheet | $ | 1,257,547 | ||
F-71
Table of Contents
Notes to Consolidated Financial Statement — (Continued)
As of and for Periods Ended December 31, 2008, 2009 and 2010
(Expressed in thousands of United States Dollars — except for share and
per share data, unless otherwise stated)
F-72
Table of Contents
Notes to Consolidated Financial Statement — (Continued)
As of and for Periods Ended December 31, 2008, 2009 and 2010
(Expressed in thousands of United States Dollars — except for share and
per share data, unless otherwise stated)
F-73
Table of Contents
Notes to Consolidated Financial Statement — (Continued)
As of and for Periods Ended December 31, 2008, 2009 and 2010
(Expressed in thousands of United States Dollars — except for share and
per share data, unless otherwise stated)
F-74
Table of Contents
Notes to Consolidated Financial Statement — (Continued)
As of and for Periods Ended December 31, 2008, 2009 and 2010
(Expressed in thousands of United States Dollars — except for share and
per share data, unless otherwise stated)
December 31, 2009 | December 31, 2010 | |||||||||||||||||||||||
Foreign | Foreign | |||||||||||||||||||||||
Interest | Currency | Interest | Currency | |||||||||||||||||||||
Rate | Forward | Rate | Forward | |||||||||||||||||||||
Swaps | Contracts | Total | Swaps | Contracts | Total | |||||||||||||||||||
Current Assets | $ | — | 434 | 434 | — | 1,538 | $ | 1,538 | ||||||||||||||||
Current Liabilities | (5,467 | ) | — | (5,467 | ) | (12,503 | ) | — | (12,503 | ) | ||||||||||||||
Non-current liabilities | (64,219 | ) | — | (64,219 | ) | (96,901 | ) | — | (96,901 | ) | ||||||||||||||
Total | $ | (69,686 | ) | 434 | (69,252 | ) | (109,404 | ) | 1,538 | $ | (107,866 | ) | ||||||||||||
F-75
Table of Contents
Notes to Consolidated Financial Statement — (Continued)
As of and for Periods Ended December 31, 2008, 2009 and 2010
(Expressed in thousands of United States Dollars — except for share and
per share data, unless otherwise stated)
Asset Derivatives | Liability Derivatives | |||||||||||||||||||
December 31, | December 31, | December 31, | December 31, | |||||||||||||||||
Derivatives Designated as | Balance Sheet | 2009 | 2010 | Balance Sheet | 2009 | 2010 | ||||||||||||||
Hedging Instruments | Location | Fair value | Fair value | Location | Fair value | Fair value | ||||||||||||||
Interest rate swaps | Financial instruments | $ | — | — | Financial instruments non-current liabilities | (31,028 | ) | $ | (36,523 | ) | ||||||||||
— | — | Financial instruments current liabilities | — | — | ||||||||||||||||
Total derivatives designated as hedging instruments | — | — | (31,028 | ) | (36,523 | ) | ||||||||||||||
Derivatives not Designated as | ||||||||||||||||||||
Hedging Instruments | ||||||||||||||||||||
Interest rate swaps | Financial Instruments current assets | — | — | Financial Instruments current liabilities | (5,467 | ) | (12,503 | ) | ||||||||||||
Interest rate swaps | Financial Instruments non-current assets | — | — | Financial instruments-non current liabilities | (33,191 | ) | (60,378 | ) | ||||||||||||
Foreign currency forward contracts | Financial instruments current assets | 434 | 1,538 | Financial instruments current liabilities | — | — | ||||||||||||||
Total derivatives not designated as hedging instruments | 434 | 1,538 | (38,658 | ) | (72,781 | ) | ||||||||||||||
Total derivatives | $ | 434 | 1,538 | Total derivatives | (69,686 | ) | $ | (109,404 | ) | |||||||||||
F-76
Table of Contents
Notes to Consolidated Financial Statement — (Continued)
As of and for Periods Ended December 31, 2008, 2009 and 2010
(Expressed in thousands of United States Dollars — except for share and
per share data, unless otherwise stated)
Amount of Gain/(Loss) Recognized in OCI on Derivative | ||||||||
(Effective Portion) | ||||||||
Year Ended | Year Ended | |||||||
Derivatives Designated for Cash | December 31, | December 31, | ||||||
Flow Hedging Relationships | 2009 | 2010 | ||||||
Interest rate swaps | 9,887 | $ | (27,018 | ) | ||||
Total | 9,887 | $ | (27,018 | ) | ||||
Amount of Gain/(Loss) | ||||||||||
Year Ended | Year Ended | |||||||||
Location of Gain or (Loss) | December 31, | December 31, | ||||||||
Derivatives not Designated as Hedging Instruments | Recognized | 2009 | 2010 | |||||||
Foreign currency forward contracts | Other, net | 2,023 | $ | 1,104 | ||||||
Interest rate swaps | Gain/(loss) interest rate swaps | 4,826 | (40,303 | ) | ||||||
Total | 6,849 | $ | (39,199 | ) | ||||||
F-77
Table of Contents
Notes to Consolidated Financial Statement — (Continued)
As of and for Periods Ended December 31, 2008, 2009 and 2010
(Expressed in thousands of United States Dollars — except for share and
per share data, unless otherwise stated)
Quoted Prices | ||||||||||||||||
in Active | Significant | |||||||||||||||
Markets for | Other | |||||||||||||||
Identical | Observable | Unobservable | ||||||||||||||
December 31, | Assets | Inputs | Inputs | |||||||||||||
2009 | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
Recurring measurements: | ||||||||||||||||
Interest rate swaps-liability position | $ | (69,686 | ) | — | (69,686 | ) | $ | — | ||||||||
Foreign currency forward contracts — asset position | 434 | — | 434 | — | ||||||||||||
Total | $ | (69,252 | ) | — | (69,252 | ) | $ | |||||||||
Quoted Prices | ||||||||||||||||
in Active | Significant | |||||||||||||||
Markets for | Other | |||||||||||||||
Identical | Observable | Unobservable | ||||||||||||||
December 31, | Assets | Inputs | Inputs | |||||||||||||
2010 | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
Recurring measurements: | ||||||||||||||||
Interest rate swaps-liability position | $ | (109,404 | ) | — | (109,404 | ) | $ | — | ||||||||
Foreign currency forward contracts — asset position | 1,538 | 1,538 | — | — | ||||||||||||
Total | $ | (107,886 | ) | 1,538 | (109,404 | ) | $ | — | ||||||||
F-78
Table of Contents
Notes to Consolidated Financial Statement — (Continued)
As of and for Periods Ended December 31, 2008, 2009 and 2010
(Expressed in thousands of United States Dollars — except for share and
per share data, unless otherwise stated)
December 31, | December 31, | December 31, | ||||||||||
2008 | 2009 | 2010 | ||||||||||
Accumulated Cash flow interest expense | $ | — | (6,253 | ) | $ | (27,776 | ) | |||||
Amortized | — | — | — | |||||||||
Other Comprehensive Income | $ | — | (6,253 | ) | $ | (27,776 | ) | |||||
12. | Pensions: |
December 31, | December 31, | |||||||
2009 | 2010 | |||||||
Pension benefit obligation/ (asset) | $ | (388 | ) | $ | 602 | |||
2009 | 2010 | |||||||
Benefit obligation at January 1 | $ | 7,032 | $ | 8,897 | ||||
Service cost for benefits earned | 4,121 | 2,021 | ||||||
Interest cost | 280 | 334 | ||||||
Settlement | (1,983 | ) | (2,985 | ) | ||||
Actuarial gains/(losses) | (1,587 | ) | 149 | |||||
Benefits paid | (42 | ) | (72 | ) | ||||
Payroll tax of employer contribution | (442 | ) | (104 | ) | ||||
Foreign currency exchange rate changes | 1,518 | (143 | ) | |||||
Benefit obligation at end of year | $ | 8,897 | $ | 8,097 | ||||
F-79
Table of Contents
Notes to Consolidated Financial Statement — (Continued)
As of and for Periods Ended December 31, 2008, 2009 and 2010
(Expressed in thousands of United States Dollars — except for share and
per share data, unless otherwise stated)
2009 | 2010 | |||||||
Fair value of plan assets at January 1, | $ | 6,320 | $ | 9,284 | ||||
Expected return on plan assets | 378 | 395 | ||||||
Actual return on plan assets | (1,395 | ) | (760 | ) | ||||
Employer contributions | 3,138 | 741 | ||||||
Settlement | (624 | ) | (1,986 | ) | ||||
Foreign currency exchange rate changes | 1,467 | (178 | ) | |||||
Fair value of plan assets at end of year | $ | 9,284 | $ | 7,496 | ||||
Funded/ (unfunded) status at end of year | $ | 388 | $ | 602 | ||||
2008 | 2009 | 2010 | ||||||||||
Net actuarial loss | $ | 3,337 | $ | 2,766 | $ | 2,342 | ||||||
Prior service cost | 187 | 964 | 424 | |||||||||
Defined benefit plan adjustment, before tax effect | $ | 3,524 | $ | 3,730 | $ | 2,766 | ||||||
2008 | 2009 | 2010 | ||||||||||
Expected return on plan assets | $ | (410 | ) | $ | (378 | ) | $ | (395 | ) | |||
Service cost | 2,870 | 4,121 | 2,021 | |||||||||
Interest cost | 275 | 280 | 334 | |||||||||
Amortization of prior service cost | 190 | — | — | |||||||||
Amortization of actuarial loss | 146 | 168 | 47 | |||||||||
Settlement | (91 | ) | (539 | ) | 1 | |||||||
Net periodic pension cost | $ | 2,981 | $ | 3,652 | $ | 2,008 | ||||||
F-80
Table of Contents
Notes to Consolidated Financial Statement — (Continued)
As of and for Periods Ended December 31, 2008, 2009 and 2010
(Expressed in thousands of United States Dollars — except for share and
per share data, unless otherwise stated)
2008 | 2009 | 2010 | ||||||||||
Net actuarial loss (gain) | $ | 225 | $ | (1,091 | ) | $ | 1,101 | |||||
Prior service cost (credit) | (1,511 | ) | 777 | (1,020 | ) | |||||||
Amortization of actuarial loss | 236 | (256 | ) | (505 | ) | |||||||
Amortization of prior service cost | (190 | ) | — | — | ||||||||
Total recognized in net pension cost and other comprehensive income, before tax effects | $ | (1,240 | ) | $ | (570 | ) | $ | (424 | ) | |||
December 31, | December 31, | December 31, | ||||||||||
2008 | 2009 | 2010 | ||||||||||
Weighted average assumptions | ||||||||||||
Expected return on plan assets | 5.80 | % | 5.70 | % | 5.40 | % | ||||||
Discount rate | 3.80 | % | 4.50 | % | 4.00 | % | ||||||
Compensation increases | 4.25 | % | 4.50 | % | 4.00 | % |
F-81
Table of Contents
Notes to Consolidated Financial Statement — (Continued)
As of and for Periods Ended December 31, 2008, 2009 and 2010
(Expressed in thousands of United States Dollars — except for share and
per share data, unless otherwise stated)
2009 | 2010 | |||||||
Share and other equity investments | $ | 1,086 | $ | 1,214 | ||||
Bonds and other security — fixed yield | 2,618 | 1,289 | ||||||
Bonds held to maturity | 2,497 | 1,889 | ||||||
Properties and real estate | 1,504 | 1,207 | ||||||
Money market | 947 | 668 | ||||||
Other | 631 | 1,229 | ||||||
Total plan net assets at fair value | $ | 9,284 | $ | 7,496 | ||||
As of December 31, | ||||||||
2009 | 2010 | |||||||
Shares and other equity instruments | 12 | % | 16 | % | ||||
Bonds | 55 | % | 42 | % | ||||
Properties and real estate | 16 | % | 16 | % | ||||
Other | 17 | % | 26 | % | ||||
Total | 100 | % | 100 | % | ||||
F-82
Table of Contents
Notes to Consolidated Financial Statement — (Continued)
As of and for Periods Ended December 31, 2008, 2009 and 2010
(Expressed in thousands of United States Dollars — except for share and
per share data, unless otherwise stated)
F-83
Table of Contents
Notes to Consolidated Financial Statement — (Continued)
As of and for Periods Ended December 31, 2008, 2009 and 2010
(Expressed in thousands of United States Dollars — except for share and
per share data, unless otherwise stated)
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Equity securities: | ||||||||||||||||
US Equities | $ | 531 | — | 133 | $ | 663 | ||||||||||
Non-US Equities | 551 | — | — | 551 | ||||||||||||
Fixed Income: | ||||||||||||||||
Government Bonds | 2,336 | 842 | — | 3,178 | ||||||||||||
Corporate Bonds | 982 | — | — | 982 | ||||||||||||
Alternative Investments: | ||||||||||||||||
Hedge funds and limited partnerships | — | 225 | — | 225 | ||||||||||||
Other | 22 | — | — | 22 | ||||||||||||
Cash and cash equivalents | 667 | — | — | 667 | ||||||||||||
Real Estate | — | — | 1,207 | 1,207 | ||||||||||||
Net Plan Net Assets | $ | 5,089 | $ | 1,067 | $ | 1,340 | $ | 7,496 | ||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Equity securities: | ||||||||||||||||
US Equities | $ | 516 | — | 57 | $ | 573 | ||||||||||
Non-US Equities | 512 | — | — | 512 | ||||||||||||
Fixed Income: | ||||||||||||||||
Government Bonds | 3,344 | 1,206 | — | 4,550 | ||||||||||||
Corporate Bonds | 789 | — | — | 789 | ||||||||||||
Alternative Investments: | ||||||||||||||||
Hedge funds and limited partnerships | — | 214 | — | 214 | ||||||||||||
Other | 167 | — | — | 167 | ||||||||||||
Cash and cash equivalents | 975 | — | — | 975 | ||||||||||||
Real Estate | — | — | 1,504 | 1,504 | ||||||||||||
Net Plan Net Assets | $ | 6,304 | $ | 1,419 | $ | 1,561 | $ | 9,284 | ||||||||
F-84
Table of Contents
Notes to Consolidated Financial Statement — (Continued)
As of and for Periods Ended December 31, 2008, 2009 and 2010
(Expressed in thousands of United States Dollars — except for share and
per share data, unless otherwise stated)
Year Ended December 31, | ||||||||
2009 | 2010 | |||||||
Balance, beginning of year | $ | 1,161 | $ | 1,561 | ||||
Actual return on plan assets: | ||||||||
Assets sold during the period | — | — | ||||||
Assets still held at reporting date | 310 | 75 | ||||||
Purchases, sales, issuances and settlements (net) | 91 | (296 | ) | |||||
Net Plan Net Assets | $ | 1,561 | $ | 1,340 | ||||
December 31, 2011 | $ | 83 | ||
December 31, 2012 | 84 | |||
December 31, 2013 | 66 | |||
December 31, 2014 | 106 | |||
December 31, 2015 | 107 | |||
December 31, 2016 — 2021 | 1,279 | |||
Total pension payments | $ | 1,726 | ||
13. | Other non-current assets |
2009 | 2010 | |||||||
Margin calls | 40,700 | 78,600 | ||||||
Advance payments drillships | — | 294,569 | ||||||
Drillship options | — | 99,024 | ||||||
Total | 40,700 | 472,193 | ||||||
F-85
Table of Contents
Notes to Consolidated Financial Statement — (Continued)
As of and for Periods Ended December 31, 2008, 2009 and 2010
(Expressed in thousands of United States Dollars — except for share and
per share data, unless otherwise stated)
14. | Shareholders’ equity |
15. | Earnings/(loss) per share |
F-86
Table of Contents
Notes to Consolidated Financial Statement — (Continued)
As of and for Periods Ended December 31, 2008, 2009 and 2010
(Expressed in thousands of United States Dollars — except for share and
per share data, unless otherwise stated)
Earnings/ | Earnings/ (Loss) | Weighted Average | ||||||||||||||||||||||
(Loss) Applicable | Weighted Average | Basic Earnings/ | Applicable to | Shares Outstanding | Diluted Earnings / | |||||||||||||||||||
to Common Shares | Shares Outstanding | (Loss) per Share | Diluted Shares | Diluted | (Loss) per Share | |||||||||||||||||||
(Numerator) | (Denominator) | Amount | (Numerator) | (Denominator) | Amount | |||||||||||||||||||
For the year ended | 134,761 | 103,908,279 | 1.30 | 134,761 | 103,908,279 | 1.30 | ||||||||||||||||||
December 31, 2010: | ||||||||||||||||||||||||
For the year ended | 115,754 | 103,125,500 | 1.12 | 115,754 | 103,125,500 | 1.12 | ||||||||||||||||||
December 31, 2009: | ||||||||||||||||||||||||
For the year ended | (765,847 | ) | 103,125,500 | (7.43 | ) | (765,847 | ) | 103,125,500 | (7.43 | ) | ||||||||||||||
December 31, 2008: |
16. | Drilling rig operating expenses: |
Year Ended | Year Ended | Year Ended | ||||||||||
December 31, | December 31, | December 31, | ||||||||||
2008 | 2009 | 2010 | ||||||||||
Crew wages and related costs | $ | 46,951 | 76,628 | $ | 69,994 | |||||||
Insurance | 12,686 | 7,869 | 7,918 | |||||||||
Deferred rig operating cost | — | 4,361 | 3,787 | |||||||||
Repairs and maintenance | 26,592 | 44,398 | 37,670 | |||||||||
Total | $ | 86,229 | 133,256 | $ | 119,369 | |||||||
17. | Impairment Charge |
F-87
Table of Contents
Notes to Consolidated Financial Statement — (Continued)
As of and for Periods Ended December 31, 2008, 2009 and 2010
(Expressed in thousands of United States Dollars — except for share and
per share data, unless otherwise stated)
Balance at January 1, 2008 | $ | — | ||
Goodwill from acquisition of Ocean Rig ASA | 761,729 | |||
Goodwill impairment charge | (761,729 | ) | ||
Balance December 31, 2008 | $ | — | ||
18. | Interest and Finance Cost: |
Year Ended December 31, | ||||||||||||
2009 | ||||||||||||
2008 | (As Restated) | 2010 | ||||||||||
Interest costs on long-term debt(*) | $ | 55,165 | 57,154 | $ | 35,827 | |||||||
Capitalized interest (see note 7) | — | (24,457 | ) | (35,780 | ) | |||||||
Bank charges | 6,024 | 6,269 | 1,997 | |||||||||
Commissions and commitment fees | 10,503 | 7,154 | 6,374 | |||||||||
Total | $ | 71,692 | 46,120 | $ | 8,418 | |||||||
(*) | In addition, a portion of interest was recorded in accumulated other comprehensive loss related to cash flow hedges of the variability of interest on borrowings that was capitalized as part of rigs under construction. The amounts recorded were $21,523 and $6,253 for 2010 and 2009, respectively. |
19. | Interest Income: |
Year Ended December 31, | ||||||||||||
2008 | 2009 | 2010 | ||||||||||
Bank Interest Income | $ | 3,033 | 6,254 | $ | 12,464 | |||||||
Other Financial Income | — | 5 | — | |||||||||
Total | $ | 3,033 | 6,259 | $ | 12,464 | |||||||
20. | Income Taxes |
F-88
Table of Contents
Notes to Consolidated Financial Statement — (Continued)
As of and for Periods Ended December 31, 2008, 2009 and 2010
(Expressed in thousands of United States Dollars — except for share and
per share data, unless otherwise stated)
Year Ended | ||||||||||||
December 31, | ||||||||||||
December 31, | 2009 | December 31, | ||||||||||
2008 | (As Restated) | 2010 | ||||||||||
Cyprus | $ | (40,599 | ) | $ | (24,617 | ) | $ | (32,438 | ) | |||
Norway | (747,018 | ) | 499,879 | 14,811 | ||||||||
Marshall Islands | 12,883 | (370,007 | ) | 174,794 | ||||||||
Korea | — | 499 | — | |||||||||
UK | 62 | 1,915 | 763 | |||||||||
Canada | — | (485 | ) | (683 | ) | |||||||
USA | 13,820 | (262 | ) | — | ||||||||
Ghana | 704 | 21,628 | (2,050 | ) | ||||||||
Total income/(loss) before taxes and equity in loss of investee | $ | (760,148 | ) | $ | 128,551 | $ | 155,197 | |||||
Year Ended | ||||||||||||
December 31, | December 1, | December 31, | ||||||||||
2008 | 2009 | 2010 | ||||||||||
Cyprus (10.0%) | $ | — | $ | — | $ | 52 | ||||||
Norway (28.0%) | — | — | 13 | |||||||||
Marshall Islands (0.0%) | — | — | — | |||||||||
Turkey(*) | — | — | 7,950 | |||||||||
Korea (24.2%) | — | 110 | — | |||||||||
UK (28.0%) | 366 | 727 | 765 | |||||||||
Ireland (25.0%) | 423 | — | — | |||||||||
Canada (10% — 19%) | — | 45 | 82 | |||||||||
USA (15.0%-35.0%) | 1,399 | 470 | — | |||||||||
Ghana (**) | 656 | 11,445 | 11,365 | |||||||||
Current Tax expense | $ | 2,844 | $ | 12,797 | $ | 20,227 | ||||||
Deferred Tax expense/(benefit) | — | — | 209 | |||||||||
Income taxes | 2,844 | $ | 12,797 | $ | 20,436 | |||||||
Effective tax rate | 0 | % | 10 | % | 13 | % |
(*) | Ocean Rig 1 Inc. paid in 2010 withholding tax to Turkey authorities, based upon 5% of total contract revenues. | |
(**) | Tax in Ghana is a withholding tax, based upon 5% of total contract revenues. |
F-89
Table of Contents
Notes to Consolidated Financial Statement — (Continued)
As of and for Periods Ended December 31, 2008, 2009 and 2010
(Expressed in thousands of United States Dollars — except for share and
per share data, unless otherwise stated)
Year Ended | ||||||||||||
December 31, | December 31, | December 31, | ||||||||||
2008 | 2009 | 2010 | ||||||||||
Statutory tax rate multiplied by profit/(loss) before tax* | $ | (212,816 | ) | $ | — | $ | — | |||||
Change in valuation allowance | 115 407 | (93,358 | ) | (14,922 | ) | |||||||
Differences in tax rates | 135,908 | 138,865 | 14,177 | |||||||||
Effect of permanent differences | (74,929 | ) | 21,317 | 40 | ||||||||
Adjustments in respect to current income tax of previous years | — | — | 281 | |||||||||
Effect of exchange rate differences | 39,274 | (65,472 | ) | 1,465 | ||||||||
Withholding tax | — | 11,445 | 19,395 | |||||||||
Total | $ | 2,844 | $ | 12,797 | $ | 20,436 | ||||||
* | Ocean Rig has for 2008 and 2009 elected to use the statutory tax rate for each year based upon the location where the largest parts of its operations were domiciled. During 2008 most of its activities were domiciled in Norway with tax rate 28%. During 2009 and 2010, most of its activities were re-domiciled to Marshall Islands with tax rate of zero. |
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Notes to Consolidated Financial Statement — (Continued)
As of and for Periods Ended December 31, 2008, 2009 and 2010
(Expressed in thousands of United States Dollars — except for share and
per share data, unless otherwise stated)
Year Ended | ||||||||
December 31, | December 31, | |||||||
2009 | 2010 | |||||||
Deferred tax assets | ||||||||
Net operations loss carry forward | $ | 65,045 | $ | 49,707 | ||||
Accrued expenses | 728 | 944 | ||||||
Accelerated depreciation of assets | 9 | 8 | ||||||
Pension | — | 157 | ||||||
Total deferred tax assets | $ | 65,782 | $ | 50,816 | ||||
Less: valuation allowance | (65,552 | ) | (50,630 | ) | ||||
Total deferred tax assets, net | 230 | 186 | ||||||
Deferred tax liabilities | ||||||||
Depreciation and amortization | $ | (122 | ) | $ | (394 | ) | ||
Pension | (108 | ) | — | |||||
Total deferred tax liabilities | $ | (230 | ) | $ | (394 | ) | ||
Net deferred tax assets /(liability) | $ | — | $ | (209 | ) | |||
Short-term net deferred tax assets | — | — | ||||||
Long-term net deferred tax assets(liabilities) | $ | — | $ | (209 | ) | |||
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Notes to Consolidated Financial Statement — (Continued)
As of and for Periods Ended December 31, 2008, 2009 and 2010
(Expressed in thousands of United States Dollars — except for share and
per share data, unless otherwise stated)
Year Ended | ||||||||
December 31, | December 31, | |||||||
2009 | 2010 | |||||||
Norway | ||||||||
Net operations loss carry forward | $ | 183,998 | $ | 144,189 | ||||
Tax rate | 28 | % | 28 | % | ||||
Net operations loss carry forward, tax effect | 51,520 | 40,373 | ||||||
Cyprus | ||||||||
Net operations loss carry forward | $ | 57,112 | $ | 89,832 | ||||
Tax rate | 10 | % | 10 | % | ||||
Net operations loss carry forward, tax effect | 5,711 | 8,983 | ||||||
Canada | ||||||||
Net operations loss carry forward | $ | 24,419 | $ | 879 | ||||
Tax rate | 32 | % | 32 | % | ||||
Net operations loss carry forward, tax effect | 7,814 | 281 | ||||||
UK | ||||||||
Net operations loss carry forward | $ | — | $ | 249 | ||||
Tax rate | 28 | % | 28 | % | ||||
Net operations loss carry forward, tax effect | — | 70 | ||||||
Accumulated | ||||||||
Net operations loss carry forward | $ | 265,529 | $ | 235,106 | ||||
Net operations loss carry forward, tax effect | 65,045 | 49,707 |
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Notes to Consolidated Financial Statement — (Continued)
As of and for Periods Ended December 31, 2008, 2009 and 2010
(Expressed in thousands of United States Dollars — except for share and
per share data, unless otherwise stated)
21. | Segment information: |
21.1 | Products and services |
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Notes to Consolidated Financial Statement — (Continued)
As of and for Periods Ended December 31, 2008, 2009 and 2010
(Expressed in thousands of United States Dollars — except for share and
per share data, unless otherwise stated)
21.2 | Geographic segment information for offshore drilling operations |
2008 | 2009 | 2010 | ||||||||||
Ghana | $ | 40,120 | 230,815 | $ | 227,649 | |||||||
Turkey | — | — | 176,228 | |||||||||
Norway | 74,725 | 123,306 | (715 | ) | ||||||||
UK | — | 19,404 | — | |||||||||
USA | 53,394 | — | — | |||||||||
Ireland | 33,749 | — | — | |||||||||
Other | 122 | — | — | |||||||||
Total leasing and service revenues | $ | 202,110 | 373,525 | $ | 403,162 | |||||||
21.3 | Information about Major customers |
2008 | 2009 | 2010 | ||||||||||
Customer A | 20 | % | 62 | % | 57 | % | ||||||
Customer B | — | — | 43 | % | ||||||||
Customer C | 54 | % | 38 | % | — | |||||||
Customer D | 26 | % | — | — |
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Notes to Consolidated Financial Statement — (Continued)
As of and for Periods Ended December 31, 2008, 2009 and 2010
(Expressed in thousands of United States Dollars — except for share and
per share data, unless otherwise stated)
22. | Commitments and Contingencies |
22.1 | Legal proceedings |
22.2 | Potential Angolan Import-/Export duties |
22.3 | Purchase obligations: |
2011 | ||||
Obligations to Cardiff under management agreements terminated effective December 21, 2010 (Note 4) | 5,774 | |||
Drillships shipbuilding contracts and owner furnished equipment | 1,374,000 | |||
Total obligations | 1,379,774 | |||
22.4 | Rental payments |
F-95
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Notes to Consolidated Financial Statement — (Continued)
As of and for Periods Ended December 31, 2008, 2009 and 2010
(Expressed in thousands of United States Dollars — except for share and
per share data, unless otherwise stated)
23. | Subsequent Events: |
F-96
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Notes to Consolidated Financial Statement — (Continued)
As of and for Periods Ended December 31, 2008, 2009 and 2010
(Expressed in thousands of United States Dollars — except for share and
per share data, unless otherwise stated)
F-97
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F-98
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OCR UDW | OCR ASA | |||||||||||||||
01/01 - | 01/01- | Pro | ||||||||||||||
12/31/2008 | 05/14/2008 | Adjustments | Forma | |||||||||||||
(Expressed in thousands of United States dollars) | ||||||||||||||||
Condensed Statement of Operations: | ||||||||||||||||
Leasing and service revenues | 202,110 | 99,172 | 301,282 | |||||||||||||
Other revenues | 16,553 | — | 8,810 | (a) | 25,363 | |||||||||||
Total revenues | 218,663 | 99,172 | 8,810 | 326,645 | ||||||||||||
Drilling rigs operating expenses | 86,229 | 48,144 | — | 134,373 | ||||||||||||
Goodwill impairment | 761,729 | — | — | 761,729 | ||||||||||||
Depreciation and amortization | 45,432 | 19,367 | 6,909 | (b) | 71,708 | |||||||||||
General and administrative | 14,462 | 12,140 | 26,602 | |||||||||||||
Total operating expenses | 907,852 | 79,651 | 6,909 | 994,412 | ||||||||||||
Operating income/(loss) | (689,189 | ) | 19,521 | 1,901 | (667,767 | ) | ||||||||||
Interest and finance costs | (71,692 | ) | (41,661 | ) | (11,316 | )(c) | (124,669 | ) | ||||||||
Interest income | 3,033 | 381 | — | 3,414 | ||||||||||||
Gain/(loss) on interest rate swaps | — | — | — | — | ||||||||||||
Other, net | (2,300 | ) | — | — | (2,300 | ) | ||||||||||
Total expenses, net | (70,959 | ) | (41,280 | ) | (11,316 | ) | (123,555 | ) | ||||||||
Income/(loss) before income taxes | (760,148 | ) | (21,759 | ) | (9,415 | ) | (791,322 | ) | ||||||||
Income taxes | (2,844 | ) | (1,637 | ) | — | (d) | (4,481 | ) | ||||||||
Equity in loss of investee | (1,055 | ) | — | 1,055 | (e) | — | ||||||||||
Net income/(loss) | (764,047 | ) | (23,396 | ) | (8,360 | ) | (795,803 | ) | ||||||||
Less: Net income attributable to non controlling interest | (1,800 | ) | — | 1,800 | (f) | — | ||||||||||
Net income/(loss) | (765,847 | ) | (23,396 | ) | (6,560 | ) | (795,803 | ) |
F-99
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Unaudited Pro Forma Condensed Statement of Operations
For the Period Ended December 31, 2008
(Expressed in thousands of United States Dollars)
F-100
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10 Skopa Street, Tribune House
2nd Floor, Office 202, CY 1075
Nicosia, Cyprus
Securities Services — Issuer Services
Essendropsgate 7, P.O. Box 1166 Sentrum
N-0107 Oslo, Norway
Fax: (+47) 22 48 63 49
Tel: (+47) 22 48 62 62
E-mail: issuerservices@nordea.com
Table of Contents
Item 20. | Indemnification of Directors and Officers |
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Item 21. | Exhibits and Financial Statement Schedules |
Item 22. | Undertakings |
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By: | /s/ George Economou |
Title: | President, Chief Executive Officer and Chairman of the Board of Directors |
Name | Position | Date | ||||
/s/ George Economou George Economou | President, Chief Executive Officer and Chairman of the Board of Directors (Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer) | August 17, 2011 | ||||
/s/ Pankaj Khanna Pankaj Khanna | Director | August 17, 2011 | ||||
/s/ Michael Gregos Michael Gregos | Director | August 17, 2011 | ||||
/s/ Trygve Arnesen Trygve Arnesen | Director | August 17, 2011 | ||||
/s/ Savvas D. Georghiades Savvas D. Georghiades | Director | August 17, 2011 |
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By: | /s/ Donald J. Puglisi |
Title: | Authorized Representative |
II-5
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Number | Description of Exhibit | |||
3 | .1 | Second Amended and Restated Articles of Incorporation of the Company* | ||
3 | .2 | Second Amended and Restated Bylaws of the Company* | ||
4 | .1 | Form of Share Certificate | ||
4 | .2 | Amended and Restated Stockholders Rights Agreement, dated June 3, 2011* | ||
4 | .3 | Certificate of Designations of Rights, Preferences and Privileges of Series A Participating Preferred Stock of the Company* | ||
5 | .1 | Opinion of Seward & Kissel LLP, as to the legality of the Exchange Shares | ||
8 | .1 | Opinion of Seward & Kissel LLP, as to certain tax matters | ||
10 | .1 | Drillship Master Agreement, dated November 22, 2010, between DryShips Inc. and Samsung Heavy Industries Co., Ltd.* | ||
10 | .2 | Novation Agreement, dated December 30, 2010, between Samsung Heavy Industries Co., Ltd., DryShips Inc. and Ocean Rig UDW Inc.* | ||
10 | .3 | Addendum No. 1 dated May 16, 2011 to a Drillship Master Agreement, dated November 22, 2010, between DryShips Inc. and Samsung Heavy Industries Co., Ltd., as novated by a Novation Agreement, dated December 30, 2010, between Samsung Heavy Industries Co., Ltd., DryShips Inc. and Ocean Rig UDW Inc.* | ||
10 | .4 | Senior Secured Credit Facility Agreement, dated April 15, 2011, by and among Drillships Holdings Inc. and Nordea Bank Finland plc, London Branch and certain financial institutions listed therein relating to a credit facility of $800,000,000* | ||
10 | .5 | Facility Agreement, dated December 21, 2010, by and among Drillship Hydra Owners Inc., Deutsche Bank AG, London Branch and certain financial institutions listed therein relating to a short-term loan facility of $325,000,000* | ||
10 | .6 | $230,000,000 Secured Loan Agreement, dated September 10, 2007, by and among Drillship Hydra Owners Inc. and Drillship Paros Owners Inc. and DVB Bank AG(1) | ||
10 | .7 | First Supplemental Agreement to Secured Loan Facility Agreement dated September 10, 2007, by and among Drillship Hydra Owners Inc. and Drillship Paros Owners Inc. and DVB Bank AG, relating to a loan of up to $230,000,000(2) | ||
10 | .8 | Second Supplemental Agreement to Secured Loan Facility Agreement dated September 10, 2007, as amended and supplemented by a First Supplemental Agreement dated January 10, 2008, by and among Drillship Hydra Owners Inc. and Drillship Paros Owners Inc. and DVB Bank AG, relating to a loan of up to $230,000,000(3) | ||
10 | .9 | Waiver Letter, dated April 16, 2010, to a Secured Loan Facility Agreement dated January 10, 2007, as amended by a First Supplemental Agreement dated January 10, 2008 and a Second Supplemental Agreement dated January 23, 2009, by and among Drillship Hydra Owners Inc. and Drillship Paros Owners Inc. and DVB Bank AG, relating to a loan of up to $230,000,000(4) | ||
10 | .10 | Compliance Confirmation Letter, dated June 16, 2010, to a Secured Loan Facility Agreement dated January 10, 2007, as amended by a First Supplemental Agreement dated January 10, 2008 and a Second Supplemental Agreement dated January 23, 2009, by and among Drillship Hydra Owners Inc. and Drillship Paros Owners Inc. and DVB Bank AG, relating to a loan of up to $230,000,000* | ||
10 | .11 | Compliance Confirmation Letter, dated June 16, 2010, to a Secured Loan Facility Agreement dated January 10, 2007, as amended by a First Supplemental Agreement dated January 10, 2008 and a Second Supplemental Agreement dated January 23, 2009, by and among Drillship Hydra Owners Inc. and Drillship Paros Owners Inc. and DVB Bank AG, relating to a loan of up to $230,000,000(5) | ||
10 | .12 | Compliance Confirmation Letter, dated September 3, 2010, to a Secured Loan Facility Agreement dated January 10, 2007, as amended by a First Supplemental Agreement dated January 10, 2008 and a Second Supplemental Agreement dated January 23, 2009, by and among Drillship Hydra Owners Inc. and Drillship Paros Owners Inc. and DVB Bank AG, relating to a loan of up to $230,000,000(6) |
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Number | Description of Exhibit | |||
10 | .13 | Compliance Confirmation Letter, dated November 25, 2010, to a Secured Loan Facility Agreement dated January 10, 2007, as amended by a First Supplemental Agreement dated January 10, 2008 and a Second Supplemental Agreement dated January 23, 2009, by and among Drillship Hydra Owners Inc. and Drillship Paros Owners Inc. and DVB Bank AG, relating to a loan of up to $230,000,000(7) | ||
10 | .14 | Guarantee and Indemnity, dated January 23, 2009, by DryShips Inc. in favor of DVB Bank SE, relating to a $230,000,000 secured loan agreement, dated September 10, 2007, as amended and supplemented, by and among Drillship Hydra Owners Inc. and Drillship Paros Owners Inc. and DVB Bank AG* | ||
10 | .15 | Guarantee, Revolving Credit and Term Loan Facility Agreement dated September 17, 2008 by and between Ocean Rig ASA, Ocean Rig Norway AS and certain financial institutions listed therein for $1,040,000,000(8) | ||
10 | .16 | Addendum No. 1, dated December 19, 2008, to a Guarantee, Revolving Credit and Term Loan Facility Agreement dated September 17, 2008 by and between Ocean Rig ASA, Ocean Rig Norway AS and certain financial institutions listed therein for $1,040,000,000(9) | ||
10 | .17 | Amendment and Restatement Agreement, dated November 19, 2009, relating to a Guarantee, Revolving Credit and Term Loan Facility Agreement dated September 17, 2008 by and between Ocean Rig ASA, Ocean Rig Norway AS and certain financial institutions listed therein, relating to a loan of up to $1,040,000,000(10) | ||
10 | .18 | Credit Facility Agreement, dated July 18, 2008, by and between Drillship Skopelos Owners Inc., Deutsche Bank AG and certain financial institutions listed therein, relating to a loan of up to $562,500,000* | ||
10 | .19 | Credit Facility Agreement, dated July 18, 2008, by and between Drillship Kithira Owners Inc., Deutsche Bank AG and certain financial institutions listed therein, relating to a loan of up to $562,500,000* | ||
10 | .20 | Supplemental Agreement, dated September 17, 2008, relating to a $562,500,000 Credit Facility Agreement dated July 18, 2008, between Drillship Skopelos Owners Inc. and Deutsche Bank AG(11) | ||
10 | .21 | Supplemental Agreement, dated September 17, 2008, relating to a $562,500,000 Credit Facility Agreement dated July 18, 2008, between Drillship Kithira Owners Inc. and Deutsche Bank AG(12) | ||
10 | .22 | Supplemental Agreement No. 2, dated December 18, 2008, relating to a $562,500,000 Credit Facility Agreement dated July 18, 2008, as amended and supplemented by Supplemental Agreement dated September 17, 2008, between Drillship Skopelos Owners Inc. and Deutsche Bank AG(13) | ||
10 | .23 | Supplemental Agreement No. 2, dated December 18, 2008, relating to a $562,500,000 Credit Facility Agreement dated July 18, 2008, as amended and supplemented by Supplemental Agreement dated September 17, 2008, between Drillship Kithira Owners Inc. and Deutsche Bank AG(14) | ||
10 | .24 | Waiver Letter, dated May 21, 2009, relating to a $562,500,000 Credit Facility Agreement dated July 18, 2008, as amended and supplemented by the Supplemental Agreement dated September 17, 2008 and the Supplemental Agreement No. 2 dated December 18, 2008, between Drillship Skopelos Owners Inc. and Deutsche Bank AG(15) | ||
10 | .25 | Waiver Letter, dated May 21, 2009, relating to a $562,500,000 Credit Facility Agreement dated July 18, 2008, as amended and supplemented by the Supplemental Agreement dated September 17, 2008 and the Supplemental Agreement No. 2 dated December 18, 2008, between Drillship Kithira Owners Inc. and Deutsche Bank AG(16) | ||
10 | .26 | Facility Agent’s and Security Trustee’s Consent Letter, dated June 5, 2009, relating to a $562,500,000 Credit Facility Agreement dated July 18, 2008, as amended and supplemented by the Supplemental Agreement dated September 17, 2008 and the Supplemental Agreement No. 2 dated December 18, 2008, between Drillship Skopelos Owners Inc. and Deutsche Bank AG(17) | ||
10 | .27 | Facility Agent’s and Security Trustee’s Consent Letter, dated June 5, 2009, relating to a $562,500,000 Credit Facility Agreement dated July 18, 2008, as amended and supplemented by the Supplemental Agreement dated September 17, 2008 and the Supplemental Agreement No. 2 dated December 18, 2008, between Drillship Kithira Owners Inc. and Deutsche Bank AG(18) | ||
10 | .28 | Supplemental Agreement No. 3, dated January 29, 2010, relating to a $562,500,000 Credit Facility Agreement dated July 18, 2008, as amended and supplemented by the Supplemental Agreement dated September 17, 2008 and the Supplemental Agreement No. 2 dated December 18, 2008, between Drillship Skopelos Owners Inc. and Deutsche Bank AG(19) |
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Number | Description of Exhibit | |||
10 | .29 | Supplemental Agreement No. 3, dated January 29, 2010, relating to a $562,500,000 Credit Facility Agreement dated July 18, 2008, as amended and supplemented by the Supplemental Agreement dated September 17, 2008 and the Supplemental Agreement No. 2 dated December 18, 2008, between Drillship Kithira Owners Inc. and Deutsche Bank AG(20) | ||
10 | .30 | Facility Agent’s Consent Letter, dated June 23, 2010 relating to a $562,500,000 Credit Facility Agreement dated July 18, 2008, as amended and supplemented by the Supplemental Agreement dated September 17, 2008, the Supplemental Agreement No. 2 dated December 18, 2008 and the Supplemental Agreement No. 3 dated January 29, 2010, between Drillship Skopelos Owners Inc. and Deutsche Bank AG(21) | ||
10 | .31 | Facility Agent’s Consent Letter, dated June 23, 2010, relating to a $562,500,000 Credit Facility Agreement dated July 18, 2008, as amended and supplemented by the Supplemental Agreement dated September 17, 2008, the Supplemental Agreement No. 2 dated December 18, 2008 and the Supplemental Agreement No. 3 dated January 29, 2010, between Drillship Kithira Owners Inc. and Deutsche Bank AG(22) | ||
10 | .32 | Amendment and Restatement Agreement, dated April 27, 2011, to the Credit Facility Agreement, dated July 18, 2008, as amended and supplemented on September 17, 2008, December 18, 2008 and January 29, 2010, between Drillship Skopelos Owners Inc., Deutsche Bank AG and certain financial institutions listed therein, relating to a loan of up to $562,500,000* | ||
10 | .33 | Amendment and Restatement Agreement, dated April 27, 2011, to the Credit Facility Agreement dated July 18, 2008, as amended and supplemented on September 17, 2008, December 18, 2008 and January 29, 2010, between Drillship Kithira Owners Inc., Deutsche Bank AG and certain financial institutions listed therein, relating to a loan of up to $562,500,000* | ||
10 | .34 | Amendment Agreement to the Credit Agreement, dated August 10, 2011, between Drillship Skopelos Owners Inc., Deutsche Bank AG and certain financial institutions listed therein | ||
10 | .35 | Sponsor Construction and Post-Delivery Guarantee, dated July 18, 2008, by and among DryShips Inc., Deutsche Bank Luxembourg S.A. and certain financial institutions listed therein* | ||
10 | .36 | Sponsor Construction and Post-Delivery Guarantee, dated July 18, 2008, by and among DryShips Inc., Deutsche Bank Luxembourg S.A. and certain financial institutions listed therein* | ||
10 | .37 | Guarantee, dated April 27, 2011, by and among Ocean Rig UDW Inc., Deutsche Bank Luxembourg S.A. and Deutsche Bank AG Filiale Deutschlandgeschaft, relating to the Amendment and Restatement Agreement, dated April 27, 2011, to the Credit Facility Agreement, dated July 18, 2008, as amended and supplemented, between Drillship Skopelos Owners Inc., Deutsche Bank AG and certain financial institutions listed therein* | ||
10 | .38 | Guarantee, dated April 27, 2011, by and among Ocean Rig UDW Inc., Deutsche Bank Luxembourg S.A. and Deutsche Bank AG Filiale Deutschlandgeschaft, relating to the Amendment and Restatement Agreement, dated April 27, 2011, to the Credit Facility Agreement, dated July 18, 2008, as amended and supplemented, between Drillship Kithira Owners Inc., Deutsche Bank AG and certain financial institutions listed therein* | ||
10 | .39 | Global Services Agreement, dated December 1, 2010, by and between DryShips Inc. and Cardiff Marine Inc.* | ||
10 | .40 | Consultancy Agreement, dated September 1, 2010, by and between DryShips Inc. and Vivid Finance Limited* | ||
10 | .41 | Bond Agreement between Ocean Rig UDW Inc. and Norsk Tillitsmann ASA, dated April 14, 2011* | ||
21 | .1 | List of Subsidiaries* | ||
23 | .1 | Consent of Seward & Kissel LLP (included in Exhibit 5.1) | ||
23 | .2 | Consent of Independent Registered Public Accounting Firm (Ernst & Young AS) | ||
23 | .3 | Consent of Fearnley Offshore AS | ||
24 | Power of Attorney* | |||
99 | .1 | Letter of Transmittal* |
* | Previously filed. |
(1) | Incorporated by reference from Exhibit 4.65 to the Annual Report of DryShips Inc. filed onForm 20-F on April 9, 2010. |
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(2) | Incorporated by reference from Exhibit 4.66 to the Annual Report of DryShips Inc. filed onForm 20-F on April 9, 2010. | |
(3) | Incorporated by reference from Exhibit 4.67 to the Annual Report of DryShips Inc. filed onForm 20-F on April 9, 2010. |
(4) | Incorporated by reference from Exhibit 4.97 to the Annual Report of DryShips Inc. filed onForm 20-F on April 15, 2011. |
(5) | Incorporated by reference from Exhibit 4.98 to the Annual Report of DryShips Inc. filed onForm 20-F on April 15, 2011. |
(6) | Incorporated by reference from Exhibit 4.99 to the Annual Report of DryShips Inc. filed onForm 20-F on April 15, 2011. |
(7) | Incorporated by reference from Exhibit 4.100 to the Annual Report of DryShips Inc. filed onForm 20-F on April 15, 2011. |
(8) | Incorporated by reference from Exhibit 4.44 to the Annual Report of DryShips Inc. filed onForm 20-F on March 30, 2009. | |
(9) | Incorporated by reference from Exhibit 4.58 to the Annual Report of DryShips Inc. filed onForm 20-F on April 9, 2010. | |
(10) | Incorporated by reference from Exhibit 4.59 to the Annual Report of DryShips Inc. filed onForm 20-F on April 9, 2010. | |
(11) | Incorporated by reference from Exhibit 4.51 to the Annual Report of DryShips Inc. filed onForm 20-F on April 9, 2010. | |
(12) | Incorporated by reference from Exhibit 4.52 to the Annual Report of DryShips Inc. filed onForm 20-F on April 9, 2010. | |
(13) | Incorporated by reference from Exhibit 4.53 to the Annual Report of DryShips Inc. filed onForm 20-F on April 9, 2010. | |
(14) | Incorporated by reference from Exhibit 4.54 to the Annual Report of DryShips Inc. filed onForm 20-F on April 9, 2010. |
(15) | Incorporated by reference from Exhibit 4.78 to the Annual Report of DryShips Inc. filed onForm 20-F on April 15, 2011. |
(16) | Incorporated by reference from Exhibit 4.79 to the Annual Report of DryShips Inc. filed onForm 20-F on April 15, 2011. |
(17) | Incorporated by reference from Exhibit 4.80 to the Annual Report of DryShips Inc. filed onForm 20-F on April 15, 2011. |
(18) | Incorporated by reference from Exhibit 4.81 to the Annual Report of DryShips Inc. filed onForm 20-F on April 15, 2011. |
(19) | Incorporated by reference from Exhibit 4.55 to the Annual Report of DryShips Inc. filed onForm 20-F on April 9, 2010. | |
(20) | Incorporated by reference from Exhibit 4.56 to the Annual Report of DryShips Inc. filed onForm 20-F on April 9, 2010. |
(21) | Incorporated by reference from Exhibit 4.84 to the Annual Report of DryShips Inc. filed onForm 20-F on April 15, 2011. |
(22) | Incorporated by reference from Exhibit 4.85 to the Annual Report of DryShips Inc. filed onForm 20-F on April 15, 2011. |
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