Ocean Rig UDW Inc., a global contractor of off-shore deepwater drilling services today announced its unaudited financial and operating results for the second quarter ended June 30, 2012.
Second Quarter 2012 Financial Highlights
-- For the second quarter of 2012, the Company reported a net loss of
$2.8 million, or $0.02 basic and diluted loss per share.
Included in the second quarter of 2012 results are:
-- 10 year class survey costs of $3.0 million for the Eirik Raude, or
$0.02 per share
-- losses incurred on our interest rate swaps totaling $7.6 million,
or $0.06 per share
Excluding the above items, the Company's net results would have
amounted to a net income of $7.8 million or $0.06 per share.
-- The Company reported Adjusted EBITDA of $105.5 million for the second
quarter of 2012 as compared to $54.0 million for the second quarter of
2011.(1)
Recent Events
-- The Company signed Letters of Intent(2) with three major oil companies
for three drillships for an additional backlog of $2.2 billion over
three years.
-- On August 13, 2012, the Ocean Rig Olympia was accepted by Total and
commenced a three year contract.
-- On August 7, 2012, the Company entered into an amortizing interest
rate swap agreement for an initial notional amount of $450 million
maturing in July 2017. This agreement was entered into to hedge the
Company's exposure to interest rate fluctuations by fixing the
interest rate at 1.0425% from July 2013 until July 2017.
-- In July 2012, the Company formally commenced syndication of a $1.35
billion senior secured term loan facility to partially finance our
drillship newbuilding hulls 1979, 2013 and 2032. This facility will be
led by DNB and Nordea and is expected to have both a commercial
tranche and an export credit agency (ECA) tranche. The Company has
received conditional commitments for the commercial tranche, and is
expecting to receive commitments from ECAs in the third quarter of
2012.
(1) Adjusted EBITDA is a non-GAAP measure, please see later in this press release for a reconciliation to net income. (2) Subject to certain conditions
George Economou, Chairman and Chief Executive Officer of the Company commented:
"2012 is a transition year for Ocean Rig as we transition out of the short-term contracts signed at the bottom of the market to the current longer term contracts. This transition is reflected in the results for the first half of the year, which was challenging with many of our rigs mobilizing or starting new contracts. With the recent acceptance of the Ocean Rig Olympia, we have all our rigs in operation for the first time in 2012.
We have repeatedly stated our belief in the strength of the ultra deepwater market fundamentals and finally we can report the signing of letters of intent with three major oil companies for three of our drillships, including two of our newbuildings. The additional backlog from these three contracts is approximately $2.2 billion over three years. Assuming these contracts materialize, our total backlog will nearly double from $2.6 billion to $4.8 billion over three years and will provide Ocean Rig with substantial cash flow visibility and growth.
During the quarter we also continued to work with our banks and commenced the syndication process for a $1.35 billion credit facility to fund the installments and other expenses due on delivery of our three 2013 newbuildings. The syndication is progressing smoothly and we expect to report further details in the coming months.
We believe the outlook for the ultra deepwater drilling industry is very positive given the high level of demand we are continuing to witness for our units from all over the world. Oil Company CAPEX for 2012 and 2013 is projected to grow at a double-digit rate with most of this directed at exploration and production. 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 and drillships into the foreseeable future.
Given strong industry fundamentals and the fact that there are very few ultra deepwater units available in 2013 we expect to further increase our already substantial backlog by entering into contracts for our two remaining units available in 2013. We continue to build on the Ocean Rig story and have positioned the company to build further on this strong platform to become the preferred contractor in the ultra deepwater sector."
Financial Review: 2012 Second Quarter
The Company recorded a net loss of $2.8 million, or $0.02 basic and diluted loss per share, for the three-month period ended June 30, 2012, as compared to a net loss of $17.7 million, or $0.13 basic and diluted loss per share, for the three-month period ended June 30, 2011. Adjusted EBITDA was $105.5 million for the second quarter of 2012 as compared to $54.0 million for the same period in 2011.
Revenues from drilling contracts increased by $136.9 million to $263.5 million for the three-month period ended June 30, 2012, as compared to $126.6 million for the same period in 2011.
Rig operating expenses and total depreciation and amortization increased to $145.1 million and $56.8 million, respectively, for the three-month period ended June 30, 2012, from $62.3 million and $36.7 million, respectively, for the three-month period ended June 30, 2011. Total general and administrative expenses increased to $17.8 million in the second quarter of 2012 from $10.4 million during the comparative period in 2011.