- Earnings call transcript Q3 2022

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day and thank you for standing by. Welcome to the Q3 2022 Diamond Offshore Drilling earnings conference call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question and answer session. To ask a question during this session, you will need to press star-one-one on your telephone and you will then hear an automated message advising your hand is raised. today’s being that advised be conference recorded. is Please hand over Senior to would of now speaker conference to like Bordosky, I your the today, Relations. Investor Director Kevin Please go ahead.

Kevin Bordosky

joining morning are today Wolford, Financial Senior President Officer, thank Michelle. Vice the Executive Bernie everyone Chief Dominic you me on Good you Thank Officer. for and us. and President With call Chief and Savarino, and

therefore remarks, reported as any our begin the I sensitive and on of call we that at information remind no Before certain replay may only this speaks today accurate call. longer time information you of be this of time

and statements. include statements certain many are statements we to to on press XX-K addition, and and covered forward-looking expressly issued or performance in Refer factors any today current any that the regarding our of nature. predict with call disclosure statements unable These materially note obligation risks or or results please or risk made cause In implied to uncertainties our the Further, risks disclaim performance are SEC. by may revise any may the our be differ risks known XX-Q forward-looking our and filings that our to call from and statements. by in incorporated update uncertainties, evening, during disclosed in of expressed this results or the forward-looking actual these These release we yesterday include contents uncertainties expectations which based are and control. These unknown future and disclosure.

figures non-GAAP be today. note call In that addition, please will our referencing we on

issued financials GAAP yesterday. to reconciliation our in a find press can release You

over call I turn Now Bernie. will to the

Bernie Wolford

interest on safe I Diamond a or Offshore you for like unrelenting Good entire focus in through XXXX. to we strong the the and of our third team delivering afternoon thank present would operations. thanking for and by the quarter to everyone, morning their for results Diamond start call Kevin. quarter as Thanks efficient your achieving

the to differentiators the cover and highlights quarter, operational our customer the Today view outlook our then regarding to excellence, of as results information are over call as will remainder our it industry-leading drive turn cover of the the what macro provide Dominic I business some that backlog. to commitment and our we for guidance. difference, will year. the our and for contract financial Our return I financial environment, the Diamond well XXXX strong additional

reflect improvements $XX.X EBITDA utilization quarter growth EBITDA. Our revenue were in These and third the revenue results quarter. Total primarily million for respectively. by driven quarter and million $XXX.X for the the higher and both were in

Turning the given highlights, efficiency moves had BOP to to operating above our revenue of Diamond quarter across quarter. the during runs report of fleet, our XX.X% and average third that particularly number pleased I’m rig impressive

plus followed earning successfully Vela customer, Gulf options drill managed contract Mexico focused in commenced successful to subsidiary Beacon as and Our crews performance compared its be commenced and exceptional our continues delivering of off safety I prouder improve October, well quarter In performance. a previous men a Senegal. the Hats both a notably of the laser start-up for Woodside, by this for BlackHawk a well. five-well Woodside July, to on the who with while with our the on the and first Offshore. In be offshore very ship, contract women for will bonus which on-time one its their were Ocean year. to performance couldn’t delivering safe, of contract

in experienced areas recent have We achievements as well. other

XX% bus operations are carbon emissions. for fuel announced time and configuration. its For closed ’XX plant configurations facilitated bus historical and an bus previously continue We Closed ships, GreatWhite to to footprint. for and rigs Please fuel note usage operations. closed the equipped The arrived closely to with all open we open in example, more over clients and Diamond contract gas our usage electrical active an operations for large Scotland support efficient bus to remainder of greenhouse with data to analyzed continues company. Diamond’s usage comparable up and activities The continue reduce bus comparing work of fuel period recently DP BP. in promises to preparation progress our fuel rigs be Black maximize bus our our making closed savings recently to of to the Ocean in reducing

Ocean conduct in a diagonal ensure The Endeavor are of hole first five-year recently the commencement Norway quarter track for We replace the high in survey availability future. special rig for arrived XXXX. to eight on contract and braces to

in capital turn We to will years project ’XX, XX% We a making further be Turning $XX Administration multiple dividends projects. this and the cycle prices close barrel year continue This has upstream significant oil environment elevated of macro potential to actions historically heels services in tight growth to now outlook, drive QX Information a to investment year to manner. We market the will customers, flow cash averaging responsible supply meaningful total upstream are now representing of investment years. billion the on commitments which generation greenfield to Brent long-dated supply XXXX in $XX are capital believe investments. led inflation. Oil increase demand $XX in $XXX for gas full security existing U.S. will spanning their approximately anticipate to strength and increases trending concerns with multi-year continues compared for to business in surge with increased home driving our Energy despite in supply under-investment year-over-year. foreseeable the the averaging targeting developing future in lead of offshore per priorities relative a fundamentals driving governmental aimed our spending projecting the have leg sufficient and billion supports a Energy Brent barrel. to ’XX fund our securing at with upward. futures predicts this prices believe that by undertaking. while per be energy Commodity remained Rystad in securing ability supplies

duration. seen presence. recently have the the will Markit, Auriga floating of through rig in quarter-over-quarter the established to rig announced markets, sold in six ship drill increase IHS With going quarter, Ocean in negotiation new in managed Africa, added fixtures third saw Mexico, this compared third we nearly where and years number the with These The capacity $XXX and a the increase Apex, fixtures XXXX. Triangle, demand balance of attributed and increased The all is BlackHornet, level work and of backlog awarded million to in third approaching work as seeing where on rigs Ocean of for in Gulf high we quarter. we We that supported double XX quarter. for rigs. years West opportunities for to of in we term South is XX We to years the of of tightening additional opportunities XX% compared in majority According to two fixtures quarter number the the the progress to second America GreatWhite, rig quarter, Ocean success years of our contracts of most in commencing the the fixtures U.S. work XX rig U.S., on supply-demand areas XX% emerge direct represent drill tightening supply campaigns These are these previously the for second ships operating direct have materially are the an backlog Golden the In out, Vela. XXXX. quarter. revenue secured meaningful commitments negotiations during commercial as

of which changers to call and returning XXXX successful to outcomes. un-priced also current This It which contract will deepwater the anticipated to of drill and billion our EBITDA ship, deliver Offshore second drilling in the Ocean generation remarks. backlog program Upon I with the $XXX in energy the finish its of this backlog $X.X new concluding a After option billion. a award expected in organization and Courage. before million, to turn after current the provision customers and high of this term award the an cash new signed a Courage drilling right allows Petrobras quarter, focusing stage testament award received $X a takes grow its are serving demand women in additional by our project performance very fourth we for responsibly. end operator fee years. additions over late entire awarded on on Diamond of things imminently the including and of These firm the beyond. value deliver mobilization total an re-pricing surrounded We and to seventh four-year contract look of be contract proud our to be quarter world’s for additional just meaningful from is of improvements rig Ocean for men to contract Senegal with continue contract The four opportunities of early for flow ’XX growing preparations. count to work The approximately forward Ocean largest to that Diamond crews with to over caliber of in was half ’XX. concludes the our BlackHawk, would the and the an the game exceptional current of I’m the commence is services. Dominic Brazil rigs. execution, for the now certain in is set and The the notification some the is completes

Dominic Savarino

for good our look I’ll into provide this key be XXXX, briefly and a morning, touch XXXX. overview and remarks quarter, our and influencing Bernie our it and liquidity my quarter the at going some results everyone. to prepared also our Thanks projected or fourth provide on the providing morning past afternoon In preliminary an this activities results from of year full projections forward, for insight

net with share. reported drilling included million of The quarter, EBITDA as the Apex share operations full a over non-recurring, $XX Onyx was non-cash work of Australia $X.XX well earnings or third the at share. and EBITDA million, and reported largely net tax $X.X is for million our higher prior were in net in in reported quarter For slight quarter of diluted This well expense Senegal and second in allowance, with per the recognition just with being due third income quarter certain beginning Ocean in income was of per in per of which BlackHawk as associated in favorably of million by and as the contract contract benefit activity deferred of reversal the compares increased the these release adjusted increases our was The improvement These a million of for associated a quarter of loss diluted quarter valuation from $XX jurisdictions. completing or to Ocean the the partially the results offset $X.XX we quarter assets, quarter the the increase $X.X quarter. the a of the limitations by having stacked. Australia. The as by the expiration driven its during came for expenditures operations expense in associated capital statute driven the the Ocean tax tax $XX million. in reserves a $XX.X to Interest improvement

collect that the a Ocean had and during we capital delay rates transitioning a Ocean Patriot quarter the temporary to the in of day as result collection quarter also working and higher BlackHawk, expect BlackLion, build Ocean fourth to the quarter. accounts a We in receivable in

million, the credit $XX facility and of million at of liquidity $XXX unrestricted on undrawn and at delay notes. $XXX capacity third including the draw Our quarter the stood cash million end lien revolving first of

shipyard a as a well over rates, the and fleet to hole earnings of few of half full ’XX enjoy half in quarter the Endeavor began the profile operating contracts we a quarter awards our benefit in higher status the the survey cash for of to contract GreatWhite, over between programs, maintenance next liquidity second work as the the and our the Apex dip ongoing XXXX. to Ocean Once liquidity expect shipyard quarters. and we throughout of going first for referenced in result our continue As at yesterday, as recent report other flow of improve significantly the ’XX published Ocean expect and Ocean special potential, reactivation our day fourth the its into little we to in

in expect QX, $XX largely GreatWhite Turning and QX full to revenue our place the Ocean taking and we $XXX QX be excluding be to guidance, shipyard drilling between XXXX we now of EBITDA expected Ocean to reactivation our activities year million have due with between full to $XXX I overview and these our the an to Endeavor previously slightly to contract breakeven million, is XXXX to are in million. being XXXX reimbursables and expected be year like for above capital will provided. XXXX. $XX QX, we the for in be results line results achieve Should our million expectations guidance expenditures provide to would

backlog October X, $X.X Our XXXX as billion. of is

award a future $XXX addition, In as we near worth to, are with alluded contract the in million. anticipating Bernie finalizing Petrobras

shipyard Our backlog available great revenue position of XX% and opportunity we beyond. days gives our In days. into are us for excluding for XXXX, visibility planned XXXX our contracted

addition, to average as $XXX,XXX QX. day day per approximately rate our $XXX,XXX XXXX for day compared is across In fleet our for per

is between expected As to million be $XXX million. and a revenue result, for $XXX our preliminary XXXX

expected to XX% This EBITDA five-fold over for improvement XXXX. expected $XXX is Our our and expected million. a be is of between preliminary for $XXX EBITDA to margin margin million XX% EBITDA XXXX

During XXXX comments. provide will closing a approved the it more budget for XXXX now is I Bernie will That over back remarks for after outlook some complete board. by my conference hand QX prepared and and to call, our process fulsome we our concludes

Bernie Wolford

stage you and been and be value never while has to shareholders. what The focus well performance Thank to best-in-class established of difference continues our compromising performance, Diamond no for on may deliver Diamond, is customers we Dominic. our safety in. the always deliver cycle At matter

and beyond. now to open continue up-cycle appreciate in improved to interest call in will position We results XXXX in this Diamond your Offshore our for and expect the questions. nascent deliver capabilities and leveraging We

Operator

[Operator Energy. question comes Pickering with first Smith instructions] David Our from

Your now open. line is

David Smith

Hey, good operating results on QX. in morning. strong Congratulations for my taking the question. Thanks

Bernie Wolford

David. Thanks

David Smith

share contracted for owned the circle available the BlackHawk you might about after wanted but and and third customers job. your current your conversations to next quarter the back to see I you already potential to next Wanted its coming rig’s for - be if having earliest how to that ask outlook for your contract, could availability also year. contract extend you options this BlackHawk sounds like it fleet for with

Bernie Wolford

interest Sure David, and for your thanks today.

the you Senegal. Woodside in know, BlackHawk As is with

options, year understand rig make from next exercised As likely we’re which contract, hole including into expectation today, finish bringing any that sometime the its next before survey moving Las would where August then the--conduct we’ll we is forward late demob ’XX that and Palmas, project. special around it its to of the ’XX, onto

its of of number project, discussions for we’re active next potential a terms commitments currently BlackHawk. in around In the

Given the sort explore to the this consider at primary vein. that tight look supply forward to and in negotiation would in Gulf of that continue stage of opportunities Mexico, I target our direct

David Smith

in follow-up should and BlackHawk, mark other other if a surveys A circuit any could for you costs? than and I the terms about the it. year, think Apex how special downtime drill Appreciate related, XX-year planning the and modern are we for next the sneak a SPS hitting of question,

Bernie Wolford

question, Right, so David, first no. the for

’XX QX the is ’XX. BlackLion their in early BlackRhino BlackHornet next and the are have for and We special,

the regard maintenance monitoring to contracts relationship our BOPs. ships have position thanks and our of with were for somewhat HMH in We with of allows the a Black those able to expect that We’re COCs lengthy continuous essentially us maintain unique condition-based you otherwise. might special necessarily and extended would out less of the than particular to costly not less BOPs take theoretically service period. have and be Those what for hole to surveys to an

David Smith

Very much appreciated.

Operator

a question. question, press for please stand telephone. a by reminder, As ask to your our on star-one-one Please next

Stene Our from Clarkson. comes next with question Fredrik

Your is now open. line

Fredrik Stene

strategy forward. the okay Hey call nice back also to I Brazil here. going the it award. quarter, and contracting say, actually circle hear Congratulations would wanted me you guys, hopefully could to can I on on you

I painting world think and peers many the an of your guys upbeat are going forward. picture of you

some play term around available, You’re but talking potentially value over work any there some make do about rigs longer you any--have XXXX improvements. open direct to capture market wondering, contracts signed if thinking was having is term to in commitments the Do that? that you day negotiations, you’re shorter how able made will of sure you strong a now, expect from onwards. have also just I capacity to time? it they’re rate that You’ve for your

Bernie Wolford

is demand to late the mob terms continue this Yes, further we is rates way spec another have best high in tight which pressure - we at of for the it work think that stage. rigs plus that two early ’XX picture envelope to know, going I remain in three additional and and to rigs fees just push describe in availability needed put for The you ’XX. Brazil to BMSXX unfilled, are on

the have, get bit. as test contract BlackHawk, feel that to powder place superior the in we much terms generation. we’re where cash first a we’re at the Given a represented in we just in point to that, a of Not dry than have more specific by total we the but market rig limited envelope looking to like room

Fredrik Stene

think five you it’s to one? Do handle on that possible [indiscernible]

Bernie Wolford

say Well, makes great with hard so the significant fours bias for tender it depends me--makes great see with the Petrobras - the do me moves. be kind where yes certainly market to is upcoming market that to it the Recency We We’ll you. a with of with have high as interest. I be mobilizations watching honest to today, how question. being it’s

see significant slightly or and cold higher reactivation how really I demand day. think the the gets opportunity kind single certainly the every that’s developing, assets of of next cost but market stranded to of is just is

Fredrik Stene

closely. be I’ll this watching Thank you.

capacity some on the the and Onyx, Valiant, Just a fleet one for the final the Monarch. have me - you here, open

and on color to those the see you Do the we work three have your fleet? for rigs in is Onyx working think looking can return said how and potentially any you when I them release. press

Bernie Wolford

us in first think of We a are program, market. being P&A, Southeast is to we on terms the where any spec we P&A is the option that Valiant would The of market seeing mentioned million area as in drill. in not could put play circumstance, $XX its under call, that has Energy I’ll seeing changed of a pricing, of we would for really through firm demand be market we of it sector rig true a ONGC it a the reactivation previous dramatically Also, could terms lot start it, on Asia with pretty so if right but need this incentives a the stage. and seeing--finally the call security at million to I Monarch for certainly spot with to think as reactivate contract. The not for tough U.K. some P&A so work, get I out on it the the one unless to Sure, bright the return consider we a so region, and and funded Monarch, Valiant. again development the materialize $XX on new operators in pay in now. for to work term in wouldn’t in are

Finally, programs feel today Australia. number and term, in three in is the capture we the demand late in significant We one They’re next materializing. situated all market is and see the those for materializing early opportunities. the to there well Onyx, perfectly year of significant so very the rigs of situated available programs Onyx with just that’s ’XX ’XX and

Fredrik Stene

thanks. guys. much thank so me, all That’s for All right, you

Bernie Wolford

Fredrik. Thanks

Operator

question. star-one-one ask Please to As a telephone. your on a for our press reminder, by question, next stand

Smith comes from Pickering question with David Energy. next Our

Your now open. is line

David Smith

realize last $XXX want the thanks for Wanted EBITDA it outlook on which to letting and I kind to that ask year. million $XXX follow to Hey, but Onyx how that me outlook, factors next of Ocean did of tie million is for to I kind back ’XX preliminary, up the in. into question

Bernie Wolford

built in range, regard that room a think of to a We I conservative range. expectations there’s second to for the have the question, we the short and be half our kind with range middle a but taken next range the into of where it year, in at but purposely reflect or Onyx next year we’ve utilization of we back created expectation that in the half do view conservative a upside day pretty next year an working answer for of some rate. to expect long downside of

David Smith

EBITDA I next preliminary or go the but Great free with along cash Sticking to hear. have to we you outlook, preliminary ’XX until flow be outlook, call? would to wait to mean the don’t happen should outlook quarter’s a with greedy, preliminary

Dominic Savarino

next until wait quarter’s call, Yes, Dave.

continuing and finalizing budgets patient We’re please movers our capex through have to some we’re is there still that and so so working like, for significant the time. there next you we’ll evaluate, that be

David Smith

for time today. right, All all thanks your

Operator

questions. the turn no I At remarks. would Wolford now closing back further this I like conference time, showing to am Bernie to for

Bernie Wolford

to appreciate for next you in Good participating and your and thanks We look speaking interest forward today’s in all the again Thanks, call. day. you of with Diamond really Offshore. in quarter,

Operator

conference call. you concludes today’s for participating. This Thank

may disconnect. now You

Diamond Offshore Drilling (DODRW) 8 Nov 222022 Q3 Earnings call transcript