OCEAN RIG UDW INC. REPORTS FINANCIAL AND OPERATING RESULTS FOR THE FIRST QUARTER 2012
5/29/2012 5:00 PM EST
May 29, 2012, Nicosia, Cyprus. Ocean Rig UDW Inc.
(NASDAQ: ORIG), or the Company, a global contractor of
off-shore deepwater drilling services today announced
its unaudited financial and operating results for the
first quarter ended March 31, 2012.
First Quarter 2012 Financial Highlights
For the first quarter of 2012, the
Company
reported a net loss of $46.3 million, or $0.35 basic
and diluted loss per share. The loss is largely
attributed to downtime and mobilization related to the
commencement of new contracts.
Included in the first quarter of 2012 results are
charges relating to an out-of-court settlement and
associated legal costs for $6.4 million, or $0.05 per
share. As has been previously disclosed, a legal claim
was made by the Company's manager in Angola for the
reimbursement of import/export duties levied by the
Angolan government for the period 2002 to 2007 when
the Leiv Eiriksson operated in Angola. An agreement
has been reached for an amount paid by the Company in
full and final settlement of the London High Court
proceedings.
Excluding the above items, the Company's net results
would have amounted to a net loss of $39.9 million or
$0.30 per share.
The Company reported Adjusted EBITDA
of $52.1
million for the first quarter of 2012 as compared to
$61.5 million for the first quarter of 2011.(1)
Recent Events
· On May 15, 2012 the Ocean Rig Corcovado
completed the general testing of equipment as required
by Petroleo Brazilieiro S.A., and has commenced
revenue-generating drilling operations in Brazil.
· On May 14 and May 9, 2012, the Company signed
amendments under its $990 million senior secured
credit facilities and $800 million senior secured term
loan agreement, respectively, to, among other things,
allow: Ocean Rig UDW Inc. to pay dividends in an
amount up to 50% of its net income subject to certain
conditions being met; allow borrowers, which are
subsidiaries of the Company, to pay dividends to Ocean
Rig UDW Inc., as long as certain conditions are met;
and remove all cross-default or cross-acceleration
clauses relating to the debt of DryShips Inc.
· On May 10, 2012 the Company signed definitive
documentation for the Ocean Rig Olympia
(1) Adjusted EBITDA is a non-GAAP measure, please see
later in this press release for a reconciliation to
net income.
with Total E&P Angola ("Total"). The contract is for a
three-year period for drilling offshore West Africa,
with an estimated backlog of approximately $652
million. Total has the option to extend the contract
for two periods of one year each.
George Economou, Chairman and Chief Executive Officer
of the Company commented:
"The build out of Ocean Rig continues as all six rigs
are now operating on contracts. The short term
contracts we had taken during 2010 and 2011 will all
play out over the next twelve months, after which all
the rigs will be on long-term contracts. This year we
have entered into two three-year contracts with Total,
solely on the Ocean Rig Olympia and as lead operator
on the Leiv Eiriksson contract. With these contracts
our total backlog has increased to $2.9 billion and
provides good cash flow visibility.
"During the quarter we also streamlined our bank debt
covenants to allow for dividends of the parent company
and remove the ring fencing of our various lending
facilities. In addition, we have now removed all
cross-default provisions relating to the debt of
DryShips creating a clear separation of the credit
profile of Ocean Rig.
"We believe the outlook for the ultra deepwater
drilling industry is very positive given the high
level of demand we are seeing from all over the globe.
Capital expenditures from oil companies are expected
to increase by close to 15% this year and a major
portion of this will be targeted towards exploration
and development. An increasing number of large
discoveries have also been announced in deepwater and
ultra deepwater in several new oil and gas provinces,
which should provide long-term demand for rigs into
the foreseeable future. Given strong industry
fundamentals and the fact that there are virtually no
available units in 2012 we expect to further increase
our backlog by entering into long term contracts for
our three 2013 newbuilding drillships, the Eirik Raude
and the Ocean Rig Poseidon."
Financial Review: 2012 First Quarter
The Company recorded net loss of $46.3 million, or
$0.35 basic and diluted loss per share, for the three-
month period ended March 31, 2012, as compared to net
income of $28.9 million, or $0.22 basic and diluted
earnings per share, for the three-month period ended
March 31, 2011. Adjusted EBITDA was $52.1 million for
the first quarter of 2012 as compared to $61.5 million
for the same period in 2011.
Revenues from drilling contracts increased by $53.7
million to $163.0 million for the three-month period
ended March 31, 2012, as compared to $109.3 million
for the same period in 2011.
Rig operating expenses and total depreciation and
amortization increased to $85.3 million and $54.7
million, respectively, for the three-month period
ended March 31, 2012, from $41.9 million and $28.2
million, respectively, for the three-month period
ended December 31, 2011. Total general and
administrative expenses increased to $16.3 million in
the first quarter of 2012 from $7.2 million during the
comparative period in 2011.
Fleet List
The table below describes our fleet profile as of May
29, 2012:
Drilling Rigs / Drillships:
Unit Year built Redelivery Operating area
Backlog ($m) (*)
Leiv Eiriksson 2001 Q4 - 12 Falkland Islands
$ 118
Leiv Eiriksson 2001 Q1 - 16 North Sea $ 653
Eirik Raude 2002 Q2 - 12 Ivory Coast $ 42
Eirik Raude 2002 Q3 - 12 Equatorial Guinea
$ 50
Eirik Raude 2002 Q1- 13 West Africa $ 75
Ocean Rig Corcovado 2011 Q2 - 15 Brazil $ 534
Ocean Rig Olympia 2011 Q2 - 12 Ghana $ 54
Ocean Rig Olympia 2011 Q3- 15 Angola $ 652
Ocean Rig Poseidon 2011 Q2 - 13 Tanzania
$ 233
Ocean Rig Mykonos 2011 Q1 - 15 Brazil $ 524
Total $ 2,935
(*) Backlog as of March 31, 2012 as adjusted for firm
contracts thereafter
(Expressed in Thousands of U.S. Dollars
except for share and per share data)
Three Months Ended
March 31,
2011 2012
REVENUES:
Revenues from drilling contracts $
109,326 $ 162,999
EXPENSES:
Drilling rig operating expenses 41,850
85,340
Depreciation and amortization 28,197
54,680
General and administrative expenses 7,156
16,269
Legal settlements - 6,424
Operating income 32,123 286
OTHER INCOME/(EXPENSES):
Interest and finance costs, net of interest income
3,029 (30,328)
Loss on interest rate swaps
(1,517) (3,362)
Other, net 1,193 (2,911)
Income taxes (5,961) (10,032)
Total other expenses (3,256)
(46,633)
Net income/(loss)
$ 28,867
$ (46,347)
Earnings/(loss) per common share, basic and diluted
$ 0.22 $ (0.35)
Weighted average number of shares, basic and diluted
131,696,928 131,696,928
Ocean Rig UDW Inc.
Unaudited Condensed Consolidated Balance Sheets
(Expressed in Thousands of U.S. Dollars)
December 31, 2011
March 31, 2012
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $
250,878 $ 126,589
Restricted cash 57,060 55,264
Other current assets 188,471
242,660
Total current assets 496,409
424,513
FIXED ASSETS, NET:
Advances for rigs assets under construction
and acquisitions 754,925
766,601
Drilling rigs, machinery and equipment, net
4,538,838 4,512,128
Total fixed assets, net 5,293,763
5,278,729
OTHER NON-CURRENT ASSETS:
Restricted cash 125,040
125,063
Other non-current assets 100,143
161,336
Total non-current assets 225,183
286,399
Total assets 6,015,355
5,989,641
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt
210,166 210,244
Other current liabilities
217,391 277,556
Total current liabilities
427,557 487,800
NON-CURRENT LIABILITIES:
Long-term debt, net of current portion
2,525,599 2,466,490
Other non-current liabilities 63,743
77,400
Total non-current liabilities 2,589,342
2,543,890
STOCKHOLDERS' EQUITY:
Total stockholders' equity
2,998,456 2,957,951
Total liabilities and stockholders' equity
$ 6,015,355 $ 5,989,641
Adjusted EBITDA Reconciliation
Adjusted EBITDA represents net income before interest,
taxes, depreciation and amortization, gains or losses
on interest rate swaps and other operating expenses.
Adjusted EBITDA does not represent and should not be
considered as an alternative to net income or cash
flow from operations, as determined by United States
generally accepted accounting principles, or U.S.
GAAP, and our calculation of adjusted EBITDA may not
be comparable to that reported by other companies.
Adjusted EBITDA is included herein because it is a
basis upon which the Company measures its operations
and efficiency. Adjusted EBITDA is also used by our
lenders as a measure of our compliance with certain
covenants contained in our loan agreements and because
the Company believes that it presents useful
information to investors regarding a company's ability
to service and/or incur indebtedness.
The following table reconciles net income to Adjusted
EBITDA
(Dollars in thousands)
Three Months Ended
March 31,
2011 2012
Net income/(loss) $ 28,867 $
(46,347)
Add: Net interest expense/(income)
(3,029) 30,328
Add: Depreciation and amortization 28,197
54,680
Add: Income taxes 5,961 10,032
Add: Loss on interest rate swaps 1,517
3,362
Adjusted EBITDA $ 61,513 $ 52,055
Conference Call and Webcast: May 30, 2012
As announced, the Company's management team will host
a conference call, on Wednesday, May 30, 2012 at 8:00
a.m. Eastern Daylight Time to discuss the Company's
financial results.
Conference Call Details
Participants should dial into the call 10 minutes
before the scheduled time using the following numbers:
1(866) 819-7111 (from the US), 0(800) 953-0329 (from
the UK) or +(44) (0) 1452 542 301 (from outside the
US). Please quote "Ocean Rig"
A replay of the conference call will be available
until June 06, 2012. The United States replay number
is 1(866) 247-4222; from the UK 0(800) 953-1533; the
standard international replay number is (+44) (0) 1452
550 000 and the access code required for the replay
is: 55592075#.
A replay of the conference call will also be available
on the Company's website at www.ocean-rig.com under
the Investor Relations section.
Slides and audio webcast:
There will also be a simultaneous live webcast over
the Internet, through the Ocean Rig UDW Inc. website
www.ocean-rig.com. Participants to the live webcast
should register on the website approximately 10
minutes prior to the start of the webcast.
About Ocean Rig UDW Inc.
Ocean Rig is an international offshore drilling
contractor providing oilfield services for offshore
oil and gas exploration, development and production
drilling, and specializing in the ultra-deepwater and
harsh-environment segment of the offshore drilling
industry. The company owns and operates 9 offshore
ultra deepwater drilling units, comprising of 2 ultra
deepwater semisubmersible drilling rigs and 7 ultra
deepwater drillships, 3 of which remain to be
delivered to the company during 2013.
Ocean Rig' common stock is listed on the NASDAQ Global
Select Market where it trades under the symbol "ORIG"
Visit the Company's website at www.ocean-rig.com
Forward-Looking Statement
Matters discussed in this release may constitute
forward-looking statements. Forward-looking statements
reflect our current views with respect to future
events and financial performance and may include
statements concerning plans, objectives, goals,
strategies, future events or performance, and
underlying assumptions and other statements, which are
other than statements of historical facts.
The forward-looking statements in this release are
based upon various assumptions, many of which are
based, in turn, upon further assumptions, including
without limitation, management's examination of
historical operating trends, data contained in our
records and other data available from third parties.
Although we believe that these assumptions were
reasonable when made, because these assumptions are
inherently subject to significant uncertainties and
contingencies which are difficult or impossible to
predict and are beyond our control, we cannot assure
you that it will achieve or accomplish these
expectations, beliefs or projections.
Important factors that, in our view, could cause
actual results to differ materially from those
discussed in the forward-looking statements include
the strength of world economies and currencies,
general market conditions, including changes in
charterhire rates and vessel values, changes in demand
that may affect attitudes of time charterers to
scheduled and unscheduled dry-docking, changes in our
operating expenses, including bunker prices, dry-
docking and insurance costs, or actions taken by
regulatory authorities, potential liability from
pending or future litigation, domestic and
international political conditions, potential
disruption of shipping routes due to accidents and
political events or acts by terrorists.
Risks and uncertainties are further described in
reports filed by Ocean Rig UDW Inc. with the US
Securities and Exchange Commission.
Investor Relations / Media:
Nicolas Bornozis
Capital Link, Inc. (New York)
Tel. 212-661-7566
E-mail: oceanrig@capitallink.