Earnings call transcript Q1 2023

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

Operator

Good morning, and thank you for standing by. Welcome to the First Quarter 2023 Diamond Offshore Drilling Earnings Conference Call. [Operator Instructions]. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Kevin Bordosky, Senior Director of Investor Relations. ahead. go Please

Kevin Bordosky

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

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

Some presentation find call of a Investor of of on is today our section Calendar the information that referenced Events. included in our Relations in slide website under can you the

current results and any these to performance to disclosed predict call cause performance differ which In be are nature. unable SEC. and our forward-looking may expectations in addition, These our uncertainties, risks we known are from statements. or actual These in control. our statements expressed the and unknown and and many with uncertainties statements certain XX-K include during materially risk uncertainties of risks the this and risks filings include may or These or on factors made or implied results based XX-Q future by

our yesterday any issued we today evening, disclosure statements. are Refer and regarding or note Further, to call disclaim obligation release disclosure. revise please expressly the the our covered in forward-looking update to any of contents press forward-looking by statements that that incorporated

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

the And GAAP issued call now turn financials will You in can our yesterday. to Bernie. find over to release a I reconciliation press

Bernie Wolford

and Diamond base quarter as recognizing Stock that in reached has or our for we Offshore interest for X-year first during relisting, like morning shares your and of seen York Exchange. liquidity shareholder you Good trading first by thank our relisting our nearly Kevin. the investors. start the XXX on afternoon I'd New present institutional results quarter, to Diamond significant anniversary XXXX. to of everyone, Thanks, Since grown have to the its in we

and will Today, financial the cover first I highlights operating quarter. for

the of on the our the achieved quarter then well provide on view Our more our market first XXXX to remainder and successes commercial for upcoming turn the detail outlook also first I'll quarter Dominic as after of operational review for over services. it our provide to and as guidance financials for quarter. a our

million, Total primarily the to million revenue Ocean and dayrate for first $XXX Our quarter adjusted EBITDA. higher quarter adjusted were both and and respectively. results $XX.X in reflect improvements substantially revenue BlackHornet These during quarter. were the for the a growth moving driven the EBITDA by

was quarter active for our an first one The company.

to our that quarter. fleet our its rigs across efficiency considering late which commenced recrews the is report operations management Shetlands are safely west the the the to a harsh working start-up notable team's the redelivery of and of give project team milestones in region number revenue in during and testament X us the following survey. delivered special efficiency our XX.X% operation the completion pleased These Endeavor environment I'm support of This of GreatWhite, important of Ocean and capability. March

the well-based utilizing operations of successfully generation the performance Gulf with a consecutive we new the client and U.S. a received in third commenced Vela, bonus we addition, in Mexico, drillship for quarter. In seventh Senegal

Best North fleets men in hard chapter, awards recognized Safety U.K. commitment and and work all the women and North result Best protect demonstrate of the crew Ocean direct are rigs the by floating rig, to honor the it safety Patriot. Offshore, Sea categories the support won the individual the in among in declared the We as the a active IADC industry-leading Safety excellence category floating Diamond rig in and fleet was Sea. Diamond Performance X Our winner for Offshore recently also These who safety Performance of company's the and and an dedication the

determination for continuing categorize commitment Ocean made on sale. to Monarch the reflects Finally, discipline strategic as our maximizing held returns. decision at quarter This to our we and shareholder end, the focus capital

S&P March continues new XX, upstream capital demand price $XXX XXXX market drilling XX constructive and costs strong and Turning well grow We According supported in FID to analysts to by above the at expect forecast oil flows since of prompted production year-over-year have offshore CapEx spend outlook. XXXX, Industry These for our to as drilling XXXX. by floating for XX% from rigs offshore XXXX. demand gas expenditures. for approximately cycle level continued Global, the our offshore on the its evidence approaching was in the cash and average recovery billion maintain tender significant by ended business upstream to a months XXXX, outlook oil highest realized up growing be breakeven hurdles. factors sector companies, to

We the priority market these anticipate pursuit is global as The pivot driving services. our for offshore supply gains momentum. diversity to a grow remains a will as of ongoing basins of source the investments further supply further and incremental

capital deployed exploration investment. further Additional extend being cycle for this may appraisal and of

government's where offshore U.K. Starting brownfield Sea. continues EPL would North we profits I like offer The prospects or regarding Next, with to compete. U.K. comments energy levy, impact markets the to the the

offshore shorter-term programs up a U.K. starting or plus of However, 'XX X 'XX. programs starting new in to are later there and this in year next, the significant number early

expect U.K., in to for X XXXX contracted Overall, additional and be late unit we an additional semisubmersible XXXX. the in

years a of other Norway, exploration with and in recent This in the of high-specification mix owing rig Coast soft P&A, X demand a prompted a region rig commencing number and work In offshore contract Northwest the of a relatively Also, in of has Southeast Shelf years on a campaign XXXX. of continues the a rigs signs recent the later may news demand work to for leave offshore add XXXX, likely for region. areas, Namibia. for attractive demand in further opportunities X consortium positive development the Although Australia, emerged announcements further in award of trend materialize. that in work have remains there a development will back the the to on

Southeast this remains and with flat for to late XXXX. incremental into demand year floaters X relatively X Asia

grow to X modestly Namibia, Guinea India XXXX. Africa Nigeria. demand driven X future of expect semisubmersible opportunities being the driving and by demand areas is and emerging We in one Equatorial primarily adding is semisubmersible as drillship Africa growth. West in key West

to by is the activity up drillship the Ivory X particularly Coast, has to Mozambique, Angola, We in driven units by X in XXXX. demand in East up to demand. Ghana XXXX, in to Equatorial Namibia, primarily Guinea. grow for further expect upside semisubmersible expected region by demand to the and grow potential Drillship Africa, rigs

flat. modest expected the see Black relatively in to demand Mediterranean be demand region increases X incremental We Drillship and with Sea semisubmersible XXXX. is the unit in in potentially through

South America by is contributing. Colombia other this rigs Triangle or bulk through the America, XXXX. Brazil driving more new Latin and the the demand driving In Golden could is corner Guyana, demand grow with growth. South X Suriname of drillship and demand of

rest American relatively the the through and Mexico Latin remain expect to XXXX. region We of flat

XXXX. for incremental upside due semisubmersible Canadian America, likely see in to drillship that flat in noting region program opportunities to exodus generation North in upside It seventh dayrates the of environment with harsh in West demand remains but to we a is and possibly X one another the the units region. and potential exploration Brazil Africa. in demand subject success certain wildcard in with worth relatively remain XXXX and Finally, remaining biased the

in-house not to this for semisubmersibles growing global dates, to final units portion demand options a through of Translating already XXXX factoring investment the by allow growing number perspective demand today. of some X in adverse reflected open through conservatism in for and XX and by this to A foresee decisions, demand same we X drillships we exercised to potential and X units tenders incremental the start is and slippage incremental period. for have

of markets, These new are million new to we in multiple the X, Yesterday, billion additional announced $X.X XXXX. April addition backlog. contracts of across geographies success Speaking and in had reported strength the great contract we as securing types. $XXX rig backlog have awards contract of our in

contracted. of to but to also capacity These options, -- only performance our commitments XX%. the commitments, have semi reputation take With these priced XXXX marketed which markets, continued we Diamond not could now reflect XX% for in we are awards now approach excludes This drillship strategic strength XXXX Offshore's our the the of and markets.

with Ocean Starting BlackHawk. the

the Anadarko have priced wholly the including followed mobilization Palmas. after secured XXXX U.S. the Gulf installation owned in of We Corporation, X-year contract system of is current a was The MPD surveys, regulatory mid-fourth be a X-year in X-year Occidental an Mexico. awarded commence of quarter to expected July, contract to conclusion from option rig contract new preparations, of with expected by a work of and with subsidiary Petroleum Las and early rig's a

term contract including It $XX,XXX current noted Occidental base to be to Senegal. the see firm rig also any be is working pressure as managed levels at previously Woodside per of operating but the drilling Total current on value, compared expected years its Senegal. day Ocean excluding campaign prior utilized should million. should for the a least in $XXX in to that expense rig approximately reduction in services, X BlackHawk for mobilization,

and and the with a this the Diamond contract total a to potential North late remaining new in contract value approximately Sea XXXX season. fill million. through had contracting under second days with success out an contract winter keep duration availability $XX expected also securing year. the currently September The is in XX rig the contracted the estimated U.K. Ocean contract commence of would Patriot A of in negotiation of X-well

days extension XXXX, the client. duration in term. an The revert early which and $XX contract current X-well option to Further, with and expected will million mid-January to after of is exercised rate contract value contract had Ocean well initial estimated for to with period. GreatWhite was client for approximately XX option is commence current days. the the extension $XX the awarded Total of in its XXX Endeavor mid-contract for the of of November completion with an well wells million X XXXX estimated its current is covering commence is the balance duration its by the Total contract we value expected Ocean after first approximately an firm

additional our Securing dayrates improved clients wells to going to options I in team backlog. for quality strength the employees, remaining. for above There would both and X all the these is priced this and thank demonstrates the with securing market at wins customers and offshore in beyond onshore to shareholders. up and further delivering Diamond like are value

Offshore global strength markets continued opportunities further in provides Diamond XXXX. upside The in

Ocean will drillship in late working the up repricing Senegal, the offshore BlackRhino, be of for second Our quarter availability anticipated currently with next XXXX.

drillships pursuing and work significantly opportunities exist top-tier for BlackRhino Ocean at the the as for multiple is take that Ocean demand rates Commencement the Asia mentioned, the place relatively constrained to Southeast continued secure contract. than of supply, rig's the half current Given are XXXX. great Australia. Onyx in for and are previously Also, anticipated higher for we in to these opportunities projects first

Africa over first and quarter, the demand to upward to on Growing drillships turn With Australia upcycle before will more become opportunities substantial pressure alike. the I with providing for returning the put resilience, continue concluding West that, call breadth in of Brazil, the and while depth remarks. semisubmersibles has and Dominic only evident. dayrates some Through

Dominic Savarino

of our quarter, this good my quarter XXXX some as on full first results well information presentation a of prepared Kevin Thanks, financial I the In year as And everyone. remarks on will the a or Bernie, our to opening website the in morning afternoon recap the alluded as for structure. we morning, remarks, outlook comments to for today. that capital his some our second and discuss I'll includes have provide provide refer and to

$X.X diluted first million net share. per the quarter, we For of income $X.XX reported or

with year and is reported income million before on $XX the annual The net computation tax standards the GAAP tax of swing earnings a of $XX expected U.S. million. first of discrete of Despite income move our significantly our cash the position as for Taxes this year. net tax loss and effective of application tax for the outlay a accordance to consists swings, tax to quarter-to-quarter a based benefit in course adjusted taxes total below accounting $XX.X from quarter profit big million. continue loss recorded net position rate company's these benefit be in a to The recorded the will items. is before over

The included to EBITDA first a fourth adjusted of reported results million quarter as of reported for XXXX. $XX.X adjusted of the quarter compared in EBITDA the $XX.X million

higher in quarter guidance revenue the Ocean at new to from in than a first $XXX Apex EBITDA result million, the GreatWhite. came of prior a Both deliveries the revenue of shipyard result for the our primarily quarter revenue for and more million rolling the a as anticipated Ocean prior anticipated including largely contract our having the was of above Ocean revenue, by before start offset timing up project, reimbursable the Excluding partially dayrates. of quarter, effects, $XXX BlackHornet the later over as earning days Endeavor and than

we're noted, that should being the than was high duration however, despite It later of. anticipated, GreatWhite and of aware specification originally lowest shortest reactivation reactivation be the floater that cost Ocean any

Pressure by decreased expense a cold of million to compared for Control for drilling full $XXX Contract the annual Hour Ocean quarter, to being stacked $XXX primarily and Onyx as quarter bonus expense prior operating the quarter change for the used the the free million quarter result We with in prior quarter. $XX million expenditures the the cash working results. of in CapEx for by capital of in included cash in negative $XX million approximately after quarter, the considering million driven $XX the being flow a

XXXX expenditures. result working of contrast, capital generation our swings and of fourth CapEx free In flow other $XX the largely cash direction was lower million a in quarter

the $XXX million $XX adjusted to we and quarter, second of $XX expect drilling to million. million of revenue $XXX reimbursables, contract ahead Looking excluding EBITDA to million

special and activity, and shipyard second and GreatWhite offset hull EBITDA growth spending dayrates. the Ocean substantially from in work quarter comments days early anticipated the quarter, upgrades the to for the returned While by second half work still adjusted of rising last QX. survey full operating in similar QX with is Ocean be to quite the the a in its consistent with EBITDA QX returning should in have to certain higher Apex Endeavor my is Ocean And quarter contribute that EBITDA having as more for of a to at adjusted year result before of

million full revenue, on I would $XXX and guidance our XXXX million $XXX earnings also presentation. of like of drilling year found million for as contract million, to $XXX of our X reimbursables, $XXX to EBITDA reiterate adjusted to excluding Page

to has drilling result and the to a install million BlackHawk yesterday of any pressure year. a requirement Ocean managed reminder, contract Our Onyx as contract CapEx CapEx does $XXX CapEx guidance not to should the include our announced And award XXXX for for guidance a of the the we expenditure reactivation $XXX win this system. a as for million the for XXXX increased Ocean it later

million, awards totals Our April new X, contract of of $XXX plus our backlog billion. as $X.X

new our to contracts, $XXX,XXX result as day to compared these a backlog the day increased XXXX in As the for average has per XXXX per backlog. $XXX,XXX of dayrate approximately

coverage in also at X owned to for at yet sitting calendar beyond. With contract still dayrate Slide average into fill on this to new drillships XXXX ample contract and our for increased our $XXX,XXX managed for visibility day. results our awards opportunity in as This per presentation. higher coverage currently represented and the and the of out contracts dayrates award for certainty in our These and XX% provides XXXX XX% year gives earnings for greater XXXX us level contract and next, XXXX,

balance Moving comments to on some sheet. our

quarter. total million Our lease exited the X.X%. liability restricted our excluding rate $XXX stands as a average net of is And million debt, coupon finance with approximately cash at we our liquidity and weighted $XXX

any the post-emergence that flexibility of contracts back to award we way our we X and X are regular and not the in 'XX, given as our away than the that results, On and refinance be maturities exit yesterday, opportunities pressure in move outstanding the not of the are XXXX establish we capital still to our announced our provides and To debt years continued to XXXX. profile 'XX new we are and evaluating liquidity market current debt, more instruments. increasing mention structure under own clear, we anticipate through improvement financing enhance including the

increase we our series to of a transactions. average simplify to increase transaction facility, our debt our time refinancing a of entertain reduce we would maintain cost be opportunistically revolving maturity weighted and our or our able should stack, However, capital, liquidity, credit

sizing, to would covenants attractive, Of pricing to course, terms the modification and need in be to our help this. facilitate certain of transactions have we revolver and such would restrictions and

the prepared on Overall, go we our for and quarter my it to That remarks. Bernie a Q&A. I forecasted before remain was it for deliver now comments company, some closing great concludes hand track into results. will we back to

Bernie Wolford

beginning rig significant deliver have we all Diamond industry-leading and safety. productive Thank appreciate a relatively call a compromising the margins, for our continuing the higher your excellence and remained have Dominic. open customers, key of while since -- year, an We with now operational maintained Offshore executing never At securing low-cost in you, to client we'll on backlog the important project Diamond, reactivation shipyard we interest for new for questions. delivering and

Operator

Instructions]. [Operator

question comes Barclays. from The first Eddie Kim with

Eddie Kim

the contracts, the would firm eye today. mentioned $XXX,XXX And of on remarks you $XXX to keeping which been for in is what a of while. for day, imply is an that the backlog kind edge one on million BlackHawk, Congratulations in we've dayrates leading a around right Ocean which $XXX,XXX are with line something prepared

to XXXX. BlackRhino come So the mentioned next quarter that of the off contract the you is second drillship in

level expect And when that are based than you would dayrates expect that secured you on what for at be just trending, announcement contract the signed rig should for where a a just So to we higher BlackHawk? rig?

Bernie Wolford

Eddie. the for question, Thanks

have mean, it Triangle. the at the today, looking bid Golden we BlackRhino, as across So I of

the location ultimately So finds in. certainly, the rates will work be the impacted rig by that

day a for rates include provision cost to additional Petrobras Brazil can services. that service a from know, generally you $XX,XXX As $XX,XXX in anywhere for

the do expect, in other expect regions. was BlackHawk. With the to somewhat than higher inflated similar rates to what And what regard rates rates rates so exact are we margins marginally to we earning compared same those awarded naturally

and structure seen to as announced clean current a as it's fixture closer understand but of day but the it services. or special We've we low understand in inclusive to date. a like will later a be $XXX,XXX The somewhat per highest rates $XXX,XXX we've be $XXX,XXX case $XXX the rate to $XXX,XXX, special clean today, on year of relationship We rate may there seen feel and sort basis. range at this that's around

your as likely. answer short to higher than long the rates BlackHawk of we So see most would marginally the question, those

would we that when of now, terms months as it'd Eddie. commitment In to say approximately general X from be just I for would a rig, expect secure a guide,

Eddie Kim

it. Got Got it.

But That's Great. hear. the reactivations is industry-wide, reactivations on that going a on couple great to Okay. of my currently. pace follow-up of just there drillship are

have your additional the year. reactivations recently peers for alluded of Some potential in the to later

it to the drillship. terms You, of course, of industry, of the based the is don't response is dayrate on pace now, to keeping like XX impact your than more have like right demand these kind doesn't especially and just enough across now you strength that West lid Brazil potentially over progression next places But just X of absorb it. months, reactivations? reactivations Africa the Or concerns the something seem in cold-stacked of the a on in

Bernie Wolford

a Yes, that. of on things Eddie, would I say couple

$XXX,XXX all, if wasn't be somewhere going in continue about would we of to range delivery and to the commitment sufficient completion, of first from reactivations, already there's XX into my XX to First reactivations months. no to doubt dayrate mind, believe that. contract is between the reactivations. average, it for on to absorb reactivation and anticipated quite frankly, And I I There the is that, demand day mean, today. solidly

preventing an obvious sooner currently to $XXX,XXX at Brazil, quite it some the public although So the see tenders we it's rather that rate, of in us from later. in alarming but than moving is the not it's pace,

rates anticipated, to average utilization. it think certain in on keep longer the drive but any a high it otherwise we I would doesn't than in So extent, does XXXs gaps significant have

Operator

[Operator from Clarksons Stein Frederick Instructions]. comes The next Securities. with question

Unidentified Analyst

the new or a X contracts things. to wanted I touch on bit

visibility I as think you I more taken. XXXX and remainder you fixed what willing with also think price just over the to tie changed up more you question X capacity, approach this -- that risk? forward, are on and looking color. you is it. price for fixing you time? just thereafter that part some close balance options options to But mentioned sheet similarly if gave we there? go Has to do XX% Are to year take How think that and of obviously yesterday you're your to First, there way did fixed assume -- move if you is terms the you to more kind good and fixing of now the potentially optimize/simplify Or the potentially for

Bernie Wolford

bottom would case rig. I we X Yes, will generally We line associated our mean, for to with I margin that looking we're what flow believe of Frederick. opportunities I at pursuing for similar. to Thanks, for the say the consideration company. X start-up, BlackHawk, in look margin expenses and after approach be speaking, And fairly the all services. that always associated any is project be were the cash delivery or that a going positive and maximize to

the well, of terms durations X of would now, although kind projects for for like definitely we're looking of what right for, say, not what is full on EBITDA is the the important, speaking. to the not as absolutely rig terms mean, on spot I seen tenders. we we're you've I But in years best critical. we're change but us longer-term us of to looking for sweet bid X much public the sort In Petrobras highest approach, really the periods. in utilization forward-looking margin in generally going and what's Instead, our focused give utilization is

Unidentified Analyst

Perfect. guidance the on your the feature And updated MPD CapEx you doing BlackHawk. second question,

it's on but if going comments and/or on about with and you flow Are through a the bumpy well to you Just it, ride, to any from XXXX. written development 'XX underlying going report improvements pace on EBITDA forward? call cash quarter-over-quarter and able to of general be that slope at I'm a basis, still average give think this least the comments the tying as

Dominic Savarino

forecasting I have and of and future, been QX we're again, then to more Dominic. incrementally for say QX going QX to But would out be the than we we're probably, I EBITDA should is QX. to, where for given is going -- uptick this than year for that to QX mean in and as Yes, what Frederick, in significant have the obviously our incrementally that. looking I QX QX achieve more alluded results into terms be Yes,

So the EBITDA quarter-to-quarter as higher for profile of the we full being grows reap certainly benefit on contracts. dayrates

So Apex you'll fourth as we QX. the later on an the as Courage see contract quarter as get in in the comes increase back, quarter-over-quarter well BlackHawk, starting as the EBITDA in

Bernie Wolford

capital I Frederick, add By Apex, Courage we And a point end behind to the and would view. from Endeavor, this the BlackHawk that expenditure of have of will us. year,

Ocean we 'XX, So BlackRhino their SPSs and the for scheduled Ocean and the into BlackLion. then going 'XX, in have the BlackHornet

it probably higher with our this is year So similar years comes to being next of when somewhat one cost less. SPSs but

Operator

Bernie turn I call closing back show to now Wolford would time. to remarks. no I for this like further questions the at

Bernie Wolford

the you joining we next today, Bye-bye. for Have and to day a all to all. to quarter. forward Thanks again speaking call look good

Operator

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

may disconnect. You now

Diamond Offshore Drilling (DODRW) 9 May 232023 Q1 Earnings call transcript