Conference call set 9 a.m. Central time Tuesday, May 5
-
EBITDA(a) for the first quarter of $147.3 million, a 46
percent increase over the prior year’s first-quarter EBITDA and
representing an EBITDA margin(b) of 52.0 percent
-
Revenue efficiency(c) of 95.2 percent for the first quarter
yielded revenue of $283.4 million, a 25.6 percent increase over the
prior year’s first-quarter revenue
-
Record cash flow from operations of $147.9 million for the quarter
LUXEMBOURG--(BUSINESS WIRE)--
Pacific Drilling S.A. (NYSE: PACD) today announced net income for
first-quarter 2015 of $51.7 million or $0.24 per diluted share, compared
to net income of $68.0 million or $0.32 per diluted share for
fourth-quarter 2014. Net income for first-quarter 2014 was $22.2 million
or $0.10 per diluted share.
CEO Chris Beckett said, "The company had an exceptional fourth quarter
in 2014, and our first-quarter operational and financial performance
very nearly matched it. With an operating fleet of five and a half rigs,
during the quarter we generated a record level of cash flow from
operations.”
Turning to the state of the offshore drilling market, Beckett added, "We
continue to experience a very weak market, but are pleased to have the
highest-quality contract portfolio in the industry. The market for
offshore rigs continues to develop as we anticipated, with clients
increasingly focused on the capabilities and efficiencies of the rigs in
their contracted fleets. In this regard, clients are more and more
discerning about both the quality of the asset and the drilling service
delivered, and we believe our high-specification fleet and focus on the
client relationship will provide a competitive advantage. We expect
industry-wide contracting activity in the remainder of 2015 to be
limited, but provided oil prices continue to rebound, exploration
drilling picks up, and industry rationalization of supply does not
falter, we should begin to see market improvement."
First-Quarter 2015 Operational and Financial
Commentary
Contract drilling revenue for first-quarter 2015 was $283.4 million,
which included $22.7 million of deferred revenue amortization, compared
to contract drilling revenue of $319.7 million for fourth-quarter 2014,
which included $25.9 million of deferred revenue amortization. Contract
drilling revenue was impacted by the conclusion on Feb. 5, 2015, of the
drilling contract for Pacific Mistral. During the three months
ended March 31, 2015, our operating fleet achieved average revenue
efficiency of 95.2 percent.
Contract drilling expenses for first-quarter 2015 were $117.7 million,
compared to $123.8 million for fourth-quarter 2014. Contract drilling
expenses for first-quarter 2015 included $5.8 million in reimbursable
costs, $9.3 million in shore-based and other support costs, and $8.5
million in amortization of deferred costs. Direct rig-related daily
operating expenses, excluding reimbursable costs, averaged $174,200 in
first-quarter 2015, in line with the prior quarter.
General and administrative expenses for first-quarter 2015 were $16.4
million, compared to $14.9 million for fourth-quarter 2014. The increase
was primarily the result of non-recurring personnel expenses.
EBITDA for first-quarter 2015 was $147.3 million, compared to EBITDA of
$179.1 million for the prior quarter. EBITDA margin for the quarter was
52.0 percent. A reconciliation of net income to EBITDA is included in
the accompanying schedules to this release.
Interest expense for the first quarter was $36.7 million, compared to
$39.9 million for the prior quarter. The decrease in interest expense
was primarily due to the repayment of our unsecured bonds.
Income tax expense for first-quarter 2015 was $1.8 million, compared to
$14.6 million for the prior quarter. The decrease in income tax expense
was primarily the result of a decrease in uncertain tax positions of
$9.6 million in first-quarter 2015.
Liquidity and Capital Expenditures
During first-quarter 2015, cash flow from operations was $147.9 million.
Cash balances totaled $132.9 million as of March 31, 2015, and total
outstanding debt was $3.0 billion. During the quarter, we used a portion
of our cash on hand and $180 million under our 2014 revolving credit
facility to fund the $286.5 million repayment of the outstanding
principal on our unsecured bonds. We also amended financial covenants in
our senior secured credit facility (SSCF) and revolving credit
facilities to address delays in our newbuild deliveries.
On April 24, 2015, we drew an additional $85 million under the SSCF,
while the remaining $15 million in undrawn SSCF availability will expire
on May 8, 2015. Subsequent to the first quarter, we also repaid $80
million of the $180 million in outstanding balance on our 2014 revolving
credit facility. Consequently, we now have $550 million of available and
undrawn liquidity under our existing credit facilities, including $300
million under the 2013 revolving credit facility and $250 million under
the 2014 revolving credit facility. We will have access to an additional
$150 million available under the 2014 revolving credit facility upon
delivery of the Pacific Zonda and entry into a satisfactory
drilling contract.
During first-quarter 2015, capital expenditures were $57.5 million, of
which $34.1 million related to newbuild rig construction. Capitalized
interest amounted to $13.0 million. The remaining expenditures primarily
related to fleet spares. We estimate the remaining capital expenditures
required to complete construction of our newbuild drillship and develop
spare equipment will be approximately $459.2 million, excluding
capitalized interest. We expect to cover these capital expenditures with
a combination of existing cash balances, future operating cash flows,
and undrawn capacity under existing credit facilities.
During the quarter, we repurchased 4.3 million of our shares at an
average price of $3.69 per share for a total purchase price of $15.9
million. To date, we have repurchased 7.1 million shares of the
authorized and approved 8 million shares under our share repurchase
program.
Updates to 2015 Guidance
We reiterate our guidance on revenue efficiency provided with the fleet
status report posted today, May 4, 2015. The average revenue efficiency
ranges apply to our operating rigs on contract and include our
expectations for unplanned downtime as well as planned events such as
maintenance. With respect to our newbuild rigs, we expect an average
revenue efficiency of 90 percent during a rig's first six months of
operations and 95 percent thereafter. However, revenue efficiency for
individual rigs tends to be volatile on a monthly and even on a
quarterly basis.
|
We are updating our income tax expense guidance for full-year 2015:
|
|
|
|
|
|
|
|
|
|
|
|
Item
|
|
|
|
Range
|
|
Income tax expense as percent of total contract drilling revenue
|
|
|
|
3.5% - 4%
|
|
|
|
|
|
|
We reiterate our guidance for other certain expenses as summarized in
our fourth-quarter and full-year 2014 results release issued on Feb. 23,
2015.
Updated schedules of expected amortization of deferred revenue,
depreciation expense, interest expense for our existing financing, and
capital expenditures are available in the “Quarterly and Annual Results”
subsection of the “Investor Relations” section of our website, www.pacificdrilling.com.
Please note that our guidance is based on management’s current
expectations about the future, and both stated and unstated assumptions,
and does not constitute any form of guarantee, assurance or promise that
the matters indicated will actually be achieved. Actual conditions and
assumptions are subject to change. The guidance we provide is subject to
all cautionary statements and limitations described under the
“Forward-Looking Statements” section of this press release.
|
Footnotes
|
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|
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|
|
|
|
|
|
(a)
|
|
EBITDA is a non-GAAP financial measure. For a definition of EBITDA
and a reconciliation to net income, please refer to the schedule
included in this release.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b)
|
|
EBITDA margin is defined as EBITDA divided by contract drilling
revenue. Management uses this operational metric to track company
results and believes that this measure provides additional
information that consolidates the impact of our operating efficiency
as well as the operating and support costs incurred in achieving the
revenue performance.
|
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(c)
|
|
Revenue efficiency is defined as actual contractual dayrate revenue
(excluding mobilization fees, upgrade reimbursements and other
revenue sources) divided by the maximum amount of contractual
dayrate revenue that could have been earned during such period.
|
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|
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|
Conference Call
Pacific Drilling will conduct a conference call at 9 a.m. Central time
on Tuesday, May 5, to discuss first-quarter 2015 results. To participate
in the May 5 call, please dial +1 913-312-0643 or 1-800-753-9057 and
refer to confirmation code 8339610 five to 10 minutes prior to the
scheduled start time. The call also will be webcast on www.pacificdrilling.com
and can be accessed by a link posted in the “Events & Presentations”
subsection of the “Investor Relations” section.
An audio replay of the call may be accessed after noon Central time on
Tuesday, May 5, 2015, by dialing +1 719-457-0820 or 1-888-203-1112, and
using access code 8339610. A replay of the call also will be available
on the company’s website.
About Pacific Drilling
With its best-in-class drillships and highly experienced team, Pacific
Drilling is committed to becoming the industry’s preferred
high-specification, floating-rig drilling contractor. Pacific Drilling’s
fleet of eight drillships represents one of the youngest and most
technologically advanced fleets in the world. For more information about
Pacific Drilling, including our current Fleet Status, please visit our
website at www.pacificdrilling.com.
Forward-Looking Statements
Certain statements and information contained in this press release (and
oral statements made regarding the subjects of this press release,
including the conference call announced herein) constitute
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. Where any
forward-looking statement includes a statement about the assumptions of
bases underlying the forward-looking statement, we caution that, while
we believe these assumptions or bases to be reasonable and made in good
faith, assumed facts or bases almost always vary from actual results,
and the differences between assumed facts or bases and actual results
can be material, depending on the circumstances. Where, in any
forward-looking statement, our management expresses an expectation or
belief as to future results, such expectation or belief is expressed in
good faith and is believed to have a reasonable basis as and when made.
We cannot assure you, however, that the future result will be achieved
or accomplished. These statements relate to analyses and other
information that are based on forecasts of future results and estimates
of amounts not yet determinable. These statements also relate to our
future prospects, developments and business strategies. Forward-looking
statements typically include words or phrases such as “believe,”
“expect,” “anticipate,” “project,” “plan,” “intend,” “tends to,”
“foresee,” “our ability to,” “estimate,” “potential,” “will,” “should,”
“would,” “could” or other similar words, which are generally not
historical in nature. Such forward-looking statements specifically
include statements involving: future client contract opportunities;
market outlook; contract dayrate amounts; competition in our industry;
future operational performance; revenue efficiency levels; estimated
duration of client contracts; future contract commencement dates and
locations; backlog; construction, timing and delivery of newbuild
drillships; capital expenditures; cost adjustments; estimated rig
availability; direct rig operating costs; shore based support costs;
general and administrative expenses; income tax expense; expected
amortization of deferred revenue and deferred mobilization expenses;
growth opportunities and expected depreciation and interest expense for
the existing credit facilities and senior bonds. These forward-looking
statements are based on our current expectations and beliefs concerning
future developments and their potential effect on us. While management
believes that these forward-looking statements are reasonable as and
when made, there can be no assurance that future developments affecting
us will be those that we anticipate. All comments concerning our
expectations for future revenue and operating results are based on our
forecasts for our existing operations and do not include the potential
impact of any future acquisitions. Our forward-looking statements
involve significant risks and uncertainties (many of which are beyond
our control) and assumptions that could cause actual results to differ
materially from our historical experience and our present expectations
or projections. Important factors that could cause actual results to
differ materially from projected cash flows and other projections in the
forward-looking statements include, but are not limited to: changes in
worldwide rig supply and demand, competition and technology; our ability
to secure new and maintain existing drilling contracts, including
possible cancellation or suspension of drilling contracts as a result of
mechanical difficulties, performance, market changes or other reasons;
future levels of offshore drilling activity; actual contract
commencement dates; downtime and other risks associated with offshore
rig operations, including unscheduled repairs or maintenance;
relocations, severe weather or hurricanes; adequacy of and access to
sources of liquidity; governmental action, civil unrest and political
and economic uncertainties; impact of potential licensing or patent
litigation; risks inherent to shipyard rig construction, repair,
maintenance or enhancement; environmental or other liabilities, risks or
losses; governmental regulatory, legislative and permitting requirements
affecting drilling operations; our ability to attract and retain skilled
personnel on commercially reasonable terms; terrorism, piracy and
military action; and the outcome of litigation, legal proceedings,
investigations or other claims or contract disputes.
For additional information regarding known material risk factors that
could cause our actual results to differ from our projected results,
please see our filings with the Securities and Exchange Commission
(SEC), including our Annual Report on Form 20-F and Current Reports on
Form 6-K. These documents are available through our website at www.pacificdrilling.com
or through the SEC’s Electronic Data and Analysis Retrieval System at www.sec.gov.
Readers are cautioned not to place undue reliance on forward-looking
statements, which speak only as of the date hereof. We undertake no
obligation to publicly update or revise any forward-looking statements
after the date they are made, whether as a result of new information,
future events or otherwise.
|
|
|
|
|
|
PACIFIC DRILLING S.A. AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(in thousands, except per share amounts) (unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
March 31,
2015
|
|
|
December 31,
2014
|
|
|
March 31,
2014
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
Contract drilling
|
|
|
$
|
283,392
|
|
|
|
$
|
319,737
|
|
|
|
$
|
225,591
|
|
|
Costs and expenses
|
|
|
|
|
|
|
|
|
|
|
Contract drilling
|
|
|
(117,669
|
)
|
|
|
(123,836
|
)
|
|
|
(110,966
|
)
|
|
General and administrative expenses
|
|
|
(16,366
|
)
|
|
|
(14,889
|
)
|
|
|
(12,533
|
)
|
|
Depreciation expense
|
|
|
(57,072
|
)
|
|
|
(56,547
|
)
|
|
|
(46,154
|
)
|
|
|
|
|
(191,107
|
)
|
|
|
(195,272
|
)
|
|
|
(169,653
|
)
|
|
Operating income
|
|
|
92,285
|
|
|
|
124,465
|
|
|
|
55,938
|
|
|
Other expense
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(36,709
|
)
|
|
|
(39,874
|
)
|
|
|
(26,031
|
)
|
|
Other expense
|
|
|
(2,051
|
)
|
|
|
(1,902
|
)
|
|
|
(1,169
|
)
|
|
Income before income taxes
|
|
|
53,525
|
|
|
|
82,689
|
|
|
|
28,738
|
|
|
Income tax expense
|
|
|
(1,795
|
)
|
|
|
(14,645
|
)
|
|
|
(6,508
|
)
|
|
Net income
|
|
|
$
|
51,730
|
|
|
|
$
|
68,044
|
|
|
|
$
|
22,230
|
|
|
Earnings per common share, basic
|
|
|
$
|
0.24
|
|
|
|
$
|
0.32
|
|
|
|
$
|
0.10
|
|
|
Weighted average number of common shares, basic
|
|
|
213,627
|
|
|
|
217,132
|
|
|
|
217,121
|
|
|
Earnings per common share, diluted
|
|
|
$
|
0.24
|
|
|
|
$
|
0.32
|
|
|
|
$
|
0.10
|
|
|
Weighted average number of common shares, diluted
|
|
|
213,686
|
|
|
|
217,197
|
|
|
|
217,464
|
|
|
|
|
|
|
|
|
|
|
PACIFIC DRILLING S.A. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands, except par value) (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
2015
|
|
|
December 31,
2014
|
|
Assets:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
132,868
|
|
|
|
$
|
167,794
|
|
|
Accounts receivable
|
|
|
165,653
|
|
|
|
231,027
|
|
|
Materials and supplies
|
|
|
99,745
|
|
|
|
95,660
|
|
|
Deferred financing costs, current
|
|
|
14,561
|
|
|
|
14,665
|
|
|
Deferred costs, current
|
|
|
19,523
|
|
|
|
25,199
|
|
|
Prepaid expenses and other current assets
|
|
|
27,587
|
|
|
|
17,056
|
|
|
Total current assets
|
|
|
459,937
|
|
|
|
551,401
|
|
|
Property and equipment, net
|
|
|
5,433,878
|
|
|
|
5,431,823
|
|
|
Deferred financing costs
|
|
|
42,717
|
|
|
|
45,978
|
|
|
Other assets
|
|
|
32,965
|
|
|
|
48,099
|
|
|
Total assets
|
|
|
$
|
5,969,497
|
|
|
|
$
|
6,077,301
|
|
|
Liabilities and shareholders’ equity:
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
$
|
39,291
|
|
|
|
$
|
40,577
|
|
|
Accrued expenses
|
|
|
31,438
|
|
|
|
45,963
|
|
|
Long-term debt, current
|
|
|
82,500
|
|
|
|
369,000
|
|
|
Accrued interest
|
|
|
37,219
|
|
|
|
24,534
|
|
|
Derivative liabilities, current
|
|
|
10,067
|
|
|
|
8,648
|
|
|
Deferred revenue, current
|
|
|
74,238
|
|
|
|
84,104
|
|
|
Total current liabilities
|
|
|
274,753
|
|
|
|
572,826
|
|
|
Long-term debt, net of current maturities
|
|
|
2,959,678
|
|
|
|
2,781,242
|
|
|
Deferred revenue
|
|
|
96,480
|
|
|
|
108,812
|
|
|
Other long-term liabilities
|
|
|
28,921
|
|
|
|
35,549
|
|
|
Total long-term liabilities
|
|
|
3,085,079
|
|
|
|
2,925,603
|
|
|
Shareholders’ equity:
|
|
|
|
|
|
|
|
Common shares, $0.01 par value per share, 5,000,000 shares
authorized,
|
|
|
|
|
|
|
|
|
|
232,770 shares issued and 211,556 and 215,784 shares outstanding as
|
|
|
|
|
|
|
|
|
|
of March 31, 2015 and December 31, 2014, respectively
|
|
|
2,175
|
|
|
|
2,175
|
|
|
Additional paid-in capital
|
|
|
2,372,497
|
|
|
|
2,369,432
|
|
|
Treasury shares, at cost
|
|
|
(24,133
|
)
|
|
|
(8,240
|
)
|
|
Accumulated other comprehensive loss
|
|
|
(28,314
|
)
|
|
|
(20,205
|
)
|
|
Retained earnings
|
|
|
287,440
|
|
|
|
235,710
|
|
|
Total shareholders’ equity
|
|
|
2,609,665
|
|
|
|
2,578,872
|
|
|
Total liabilities and shareholders’ equity
|
|
|
$
|
5,969,497
|
|
|
|
$
|
6,077,301
|
|
|
|
|
|
|
|
PACIFIC DRILLING S. A. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(in thousands) (unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
March 31,
2015
|
|
|
December 31,
2014
|
|
|
March 31,
2014
|
|
Cash flow from operating activities:
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
$
|
51,730
|
|
|
|
$
|
68,044
|
|
|
|
$
|
22,230
|
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
|
|
|
|
|
Depreciation expense
|
|
|
57,072
|
|
|
|
56,547
|
|
|
|
46,154
|
|
|
Amortization of deferred revenue
|
|
|
(22,689
|
)
|
|
|
(25,884
|
)
|
|
|
(28,008
|
)
|
|
Amortization of deferred costs
|
|
|
8,483
|
|
|
|
11,531
|
|
|
|
13,210
|
|
|
Amortization of deferred financing costs
|
|
|
2,725
|
|
|
|
2,951
|
|
|
|
2,578
|
|
|
Amortization of debt discount
|
|
|
227
|
|
|
|
235
|
|
|
|
173
|
|
|
Deferred income taxes
|
|
|
(5,507
|
)
|
|
|
15,281
|
|
|
|
(12
|
)
|
|
Share-based compensation expense
|
|
|
3,107
|
|
|
|
2,952
|
|
|
|
1,966
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
65,374
|
|
|
|
(46,736
|
)
|
|
|
29,685
|
|
|
Materials and supplies
|
|
|
(4,085
|
)
|
|
|
(3,564
|
)
|
|
|
(8,336
|
)
|
|
Prepaid expenses and other assets
|
|
|
2,412
|
|
|
|
(16,123
|
)
|
|
|
(14,600
|
)
|
|
Accounts payable and accrued expenses
|
|
|
(11,404
|
)
|
|
|
(964
|
)
|
|
|
(4,682
|
)
|
|
Deferred revenue
|
|
|
491
|
|
|
|
8,267
|
|
|
|
62,474
|
|
|
Net cash provided by operating activities
|
|
|
147,936
|
|
|
|
72,537
|
|
|
|
122,832
|
|
|
Cash flow from investing activities:
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
(57,503
|
)
|
|
|
(386,519
|
)
|
|
|
(88,826
|
)
|
|
Net cash used in investing activities
|
|
|
(57,503
|
)
|
|
|
(386,519
|
)
|
|
|
(88,826
|
)
|
|
Cash flow from financing activities:
|
|
|
|
|
|
|
|
|
|
|
Net proceeds (payments) from shares issued under share-based
compensation plan
|
|
|
(42
|
)
|
|
|
(79
|
)
|
|
|
750
|
|
|
Proceeds from long-term debt
|
|
|
180,000
|
|
|
|
400,000
|
|
|
|
-
|
|
|
Payments on long-term debt
|
|
|
(288,375
|
)
|
|
|
(36,208
|
)
|
|
|
(1,875
|
)
|
|
Payments for financing costs
|
|
|
(500
|
)
|
|
|
(7,069
|
)
|
|
|
(500
|
)
|
|
Purchases of treasury shares
|
|
|
(16,442
|
)
|
|
|
(7,227
|
)
|
|
|
-
|
|
|
Net cash provided by (used in) financing activities
|
|
|
(125,359
|
)
|
|
|
349,417
|
|
|
|
(1,625
|
)
|
|
Increase (decrease) in cash and cash equivalents
|
|
|
(34,926
|
)
|
|
|
35,435
|
|
|
|
32,381
|
|
|
Cash and cash equivalents, beginning of period
|
|
|
167,794
|
|
|
|
132,359
|
|
|
|
204,123
|
|
|
Cash and cash equivalents, end of period
|
|
|
$
|
132,868
|
|
|
|
$
|
167,794
|
|
|
|
$
|
236,504
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA Reconciliation
EBITDA is defined as earnings before interest, taxes, depreciation and
amortization. EBITDA does not represent and should not be considered an
alternative to net income, operating income, cash flow from operations
or any other measure of financial performance presented in accordance
with generally accepted accounting principles in the United States of
America (“GAAP”) and our calculation of EBITDA may not be comparable to
that reported by other companies. EBITDA is included herein because it
is used by management to measure the company's operations. Management
believes that EBITDA presents useful information to investors regarding
the company's operating performance during the first quarter of 2015.
|
|
|
|
|
|
PACIFIC DRILLING S.A. AND SUBSIDIARIES
Supplementary Data—Reconciliation of Net Income to Non-GAAP EBITDA
(in thousands) (unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
March 31,
2015
|
|
|
December 31,
2014
|
|
|
March 31,
2014
|
|
Net income
|
|
|
$
|
51,730
|
|
|
|
$
|
68,044
|
|
|
|
$
|
22,230
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
36,709
|
|
|
|
39,874
|
|
|
|
26,031
|
|
Depreciation expense
|
|
|
57,072
|
|
|
|
56,547
|
|
|
|
46,154
|
|
Income tax expense
|
|
|
1,795
|
|
|
|
14,645
|
|
|
|
6,508
|
|
EBITDA
|
|
|
$
|
147,306
|
|
|
|
$
|
179,110
|
|
|
|
$
|
100,923
|
Source: Pacific Drilling