Diamond Offshore Reports Fourth Quarter 2023 Results

Source: www.gulfoilandgas.com 2/27/2024, Location: North America

Diamond Offshore Drilling, Inc. (NYSE: DO) today reported the results for the fourth quarter of 2023.

Bernie Wolford, Jr., President and Chief Executive Officer, stated, "2023 was a transformational year for Diamond Offshore. We marked our one-year anniversary of re-listing on the New York Stock Exchange, made measurable improvements in our capital structure, secured $485 million dollars in new contract awards throughout the year, safely completed Special Periodical Surveys on five rigs, and completed eight contract start-ups, including four contract commencements in the fourth quarter, one in each of the regions in which we operate. In the first quarter of 2024, as previously announced, we secured a two-year contract extension for the Ocean BlackLion in the Gulf of Mexico at a leading edge dayrate and secured additional P&A work for the Ocean Patriot to fill a portion of the gap prior to commencement of a long-term P&A campaign in 2025.

The recent $362 million in contract awards are in addition to our reported backlog of $1.4 billion as of January 1, which will result in notable average dayrate improvement as we transition to new contracts."

Revenue for the fourth quarter totaled $298 million compared to $245 million in the third quarter of 2023. The increase in revenue quarter-over-quarter was primarily driven by the Ocean BlackHawk's contract commencement in the Gulf of Mexico in the fourth quarter after completion of an MPD installation, Special Periodical Survey and contract preparation work and new contract commencements for the Ocean Patriot and Ocean Apex, partially offset by lower revenue for the Ocean Courage due to contract preparation activities related to its new multi-year contract in Brazil.

Contract drilling expense for the fourth quarter was $189 million, or a $7 million increase from the prior quarter, largely due to higher charter rental costs associated with the managed rigs and the annual bonus expense related to the drillships' BOP service agreement. The increase in expense was partially offset by the deferral of certain costs associated with contract preparation activities for the Ocean Courage, as the Company continued to prepare the rig for a new contract that commenced during the quarter, and the absence of costs associated with the Ocean Apex shipyard project in the third quarter.

General and administrative expenses were $19 million in the fourth quarter, or a $3 million increase compared to the prior quarter, primarily due to an adjustment in accrued expenses associated with the Company's incentive compensation plan.

Tax expense for the fourth quarter was $174 million as compared to a $125 million expense in the prior quarter. The non-cash tax expense in the fourth quarter reflected the expected continued normalization of the Company's tax expense and the reversal of the tax benefit recorded earlier in 2023.

Operational Highlights

Operationally, the Company's rigs continued to perform well, achieving revenue efficiency of approximately 95% across the fleet for the second successive quarter. This is a notable achievement given the unusually high amount of shipyard activity for the Company's fleet and the start-up of contracts during the quarter. Of note, both the Ocean BlackHawk and Ocean Courage completed contract preparation activities in the fourth quarter and are now operating under new contracts in the Gulf of Mexico and offshore Brazil, respectively. Additionally, in the fourth quarter, the Company earned an additional bonus for efficient, injury-free operations in Senegal.

Additional Updates

The Company will discuss its earnings results and provide first quarter and full year 2024 guidance and an update on recovery operations for certain equipment from the Ocean GreatWhite during the earnings conference call.

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