NICOSIA, CYPRUS—(Marketwired – Aug 11, 2016) – Ocean Rig UDW Inc. (
NASDAQ
:
ORIG
), or Ocean Rig or the Company, an international contractor of offshore deepwater drilling services, today announced its unaudited financial and operating results for the quarter ended June 30, 2016.
Second Quarter 2016 Financial Highlights
For the second quarter of 2016, the Company reported a net income of $156.1 million, or $1.83 basic and diluted earnings per share.
The Company reported Adjusted EBITDA(1) of $326.5 million for the second quarter of 2016.
Recent Highlights
On August 11, 2016 we reached an agreement with Samsung Heavy Industries (“SHI”) related to the construction of our three drillships which provides for the re–scheduling of certain installments, the postponement of the delivery of the first two of these drillships currently under construction and the amendment of certain other terms (including the contract price).
The Leiv Eiriksson completed, as planned, its 15–year class survey and scheduled equipment and winterization upgrades related to its next contract, and on July 18, 2016 mobilized on location in Norway to commence its previously announced contract with Lundin Norway AS.
On June 16, 2016, we reached an agreement with Repsol Sinopec to terminate the contract of the Ocean Rig Mylos operating offshore Brazil against full payment of the remaining backlog.
On April 27, 2016, we reached agreement with ENI to settle the dispute related to the termination of the contract of the Ocean Rig Olympia against a total payment of $54 million and the extension by 81 days for the contract of the Ocean Rig Poseidon at a daily gross operating rate of $115,000.
(1) Adjusted EBITDA is a non–GAAP measure; please see later in this press release for reconciliation to net income
George Economou, Chairman and Chief Executive Officer of the Company, commented:
“Despite the continued positive operational performance of the Company (fleet utilization for the second quarter of 96.3%) the market conditions remain extremely negative. Oil companies continue to reduce their offshore budgets and as more floaters come off contract in the next six months, an already grossly oversupplied market is expected to worsen. In this current and anticipated poor market environment which we expect to persist for an extended period of time, we believe it is prudent to focus on maintaining liquidity and de–levering the Company.
Given the ongoing distressed market environment as well as the consensus view that a recovery may not occur for several years, we have engaged financial and legal advisors to assess the viability of our capital structure and alternatives that may be available to pursue. In the recent period, we have been approached by several of our debt holders who have in certain cases also retained legal counsel and financial advisors. While we have not made any specific decisions, it is evident to the Company and a number of its creditors that its debt obligations will need to be amended or exchanged for new debt and/or equity securities, and some debt holders may have little or no recovery on their investment. We continue to explore and consider alternatives, which may include a possible reorganization under US bankruptcy laws or another jurisdiction, so that we can ride out this very difficult cycle with feasible prospects for strong, long–term success.”
Financial Review: 2016 Second Quarter
The Company recorded net income of $156.1 million, or $1.83 basic and diluted earnings per share, for the three–month period ended June 30, 2016, as compared to a net income of $74.9 million, or $0.54 basic and diluted earnings per share, for the three–month period ended June 30, 2015.
Revenues increased by $19.4 million to $452.6 million for the three–month period ended June 30, 2016, as compared to $433.2 million for the same period in 2015.
Drilling units' operating expenses decreased to $111.4 million and total depreciation and amortization decreased to $82.8 million for the three–month period ended June 30, 2016, from $142.8 million and $88.8 million, respectively, for the three–month period ended June 30, 2015. Total general and administrative expenses increased to $27.0 million in the second quarter of 2016 from $25.4 million during the same period in 2015.
Interest and finance costs, net of interest income, decreased to $55.0 million for the three–month period ended June 30, 2016, compared to $73.5 million for the three–month period ended June 30, 2015.
The table below describes our operating fleet profile as of August 10, 2016:
Total backlog as of August 10, 2016 amounted to $2.2 billion.
Unit
Year built/ or Scheduled Delivery
Redelivery
Leiv Eiriksson
2001
Q4 – 16
Ocean Rig Corcovado
2011
Q2 – 18
Ocean Rig Poseidon
2011
Q3 – 17
Ocean Rig Mykonos
2011
Q1 – 18
Ocean Rig Skyros
2013
Q3 – 21
Ocean Rig Athena
2014
Q2 – 17
Note: Units Eirik Raude, Ocean Rig Olympia, Ocean Rig Apollo and Ocean Rig Paros, have completed their preservation works and are currently cold stacked in Greece, remaining available for further employment. The unit Ocean Rig Mylos is presently undergoing preservation works in Las Palmas before going to its final stacking location in Greece.
Ocean Rig UDW Inc.
Financial Statements
Unaudited Interim Condensed Consolidated Statements of Operations
(Expressed in thousands of U.S. Dollars except for share and per share data)
Three Months Ended
June 30,
Six Months Ended
June 30,
2015
2016
2015
2016
REVENUES:
Revenues
$
433,216
$
452,556
$
835,299
$
960,563
EXPENSES:
Drilling units operating expenses
142,784
111,439
295,711
256,998
Depreciation and amortization
88,790
82,847
177,150
168,766
General and administrative expenses
25,410
26,993
53,411
45,805
Legal settlements and other, net
(2,630
)
(6,709
)
(2,630
)
(6,677
)
Operating income
178,862
237,986
311,657
495,671
OTHER INCOME/(EXPENSES):
Interest and finance costs, net of interest income
(73,470
)
(54,991
)
(135,160
)
(114,692
)
Gain from repurchase of senior notes
–
–
–
125,001
Loss on interest rate swaps
(1,870
)
(1,480
)
(10,061
)
(6,547
)
Other, net
(5,443
)
1,129
(7,626
)
(10
)
Income taxes
(23,207
)
(26,580
)
(42,797
)
(55,335
)
Total other expenses, net
(103,990
)
(81,922
)
(195,644
)
(51,583
)
Net income attributable to Ocean Rig UDW Inc.
$
74,872
$
156,064
$
116,013
$
444,088
Net income attributable to Ocean Rig UDW Inc. common stockholders
$
74,525
$
155,602
$
115,536
$
442,791
Earnings per common share, attributable to common stockholders, basic and diluted
$
0.54
$
1.83
$
0.86
$
3.96
Weighted average number of common shares, basic and diluted
137,830,742
84,800,384
134,927,763
111,726,952
Ocean Rig UDW Inc.
Unaudited Condensed Consolidated Balance Sheets
(Expressed in Thousands of U.S. Dollars)
December 31, 2015
June 30, 2016
ASSETS
Cash, cash equivalents and restricted cash (current and non–current)
$
747,485
$
883,635
Other current assets
500,637
419,218
Advances for drilling units under construction and related costs
394,852
420,912
Drilling units, machinery and equipment, net
6,336,892
6,248,584
Other non–current assets
40,354
17,461
Total assets
8,020,220
7,989,810
LIABILITIES AND STOCKHOLDERS' EQUITY
Total debt, net of deferred financing costs
4,328,468
4,057,592
Total other liabilities
416,987
262,123
Total stockholders' equity
3,274,765
3,670,095
Total liabilities and stockholders' equity
$
8,020,220
$
7,989,810
SHARE COUNT DATA
Common stock issued
160,888,606
160,888,606
Less: Treasury stock
(22,222,222
)
(78,301,755
)
Common stock issued and outstanding
138,666,384
82,586,851
Adjusted EBITDA Reconciliation
Adjusted EBITDA represents earnings before interest, taxes, depreciation and amortization, class survey costs, impairment loss, loss on sale of assets, gain from repurchase of senior notes and gains or losses on interest rate swaps. 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. 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
June 30,
Six Months Ended
June 30,
2015
2016
2015
2016
Net income
$
74,872
$
156,064
$
116,013
$
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