News Details

Pacific Drilling Announces Second-Quarter 2019 Results

08/12/2019
  • Pacific Santa Ana extended by Total for one well in Mauritania
  • Delivered revenue efficiency of 97.4% during the second quarter

LUXEMBOURG--(BUSINESS WIRE)-- Pacific Drilling S.A. (NYSE: PACD) (“Pacific Drilling” or the “Company”) today reported results for the second quarter of 2019. Net loss for second-quarter 2019 was $73.6 million or $0.98 per diluted share, compared to net loss of $84.0 million or $1.12 per diluted share in first-quarter 2019. EBITDA(a) for second-quarter 2019 was $14.0 million, compared to $1.9 million in first-quarter 2019.

“During the second quarter, we maintained our focus on putting rigs to work while delivering improved revenue and EBITDA compared to the first quarter. We added backlog for our fleet as an option was exercised for Pacific Santa Ana. The ramp-up of Pacific Khamsin, in preparation for its contract with Equinor, remains on schedule for start of operations in November,” said CEO Bernie Wolford.

“The market for deepwater drilling continues to show signs of gradual strengthening as both the pace and number of new fixtures improved during the second quarter. We also saw customers moving beyond the spot market to consider more substantial drilling campaigns, including tenders for programs with one or more year terms. In particular, the Gulf of Mexico is showing signs of improving demand, especially in Mexico, as operators are approaching their lease commitment-well deadlines.”

Second-Quarter 2019 Operational and Financial Commentary

Second-quarter 2019 contract drilling revenue was $76.4 million, which included $3.8 million in reimbursable revenue. This compared to first-quarter 2019 contract drilling revenue of $65.9 million, which included $3.4 million in reimbursable revenue. The increase in revenue resulted primarily from the Pacific Santa Ana commencing operations with Total in Senegal.

Operating expenses were $52.3 million for both second-quarter 2019 and first-quarter 2019.

General and administrative expenses for the second-quarter of 2019 were $10.0 million, as compared to $11.2 million for the first-quarter of 2019. The decrease in general and administrative expenses was primarily due to the impact of cost control and process optimization initiatives implemented during the first quarter of 2019.

Adjusted EBITDA(a) for second-quarter 2019 was $15.6 million, compared to $4.3 million in first-quarter 2019.

Capital expenditures for the second-quarter of 2019 were $3.8 million compared to $17.6 million in the first-quarter of 2019.

Footnotes

(a)

EBITDA and Adjusted EBITDA are non-GAAP financial measures. For a definition of EBITDA and Adjusted EBITDA and a reconciliation to net loss, please refer to the schedule included in this release. Management uses this operational metric to track company results and believes that this measure provides additional information that highlights the impact of our operating efficiency as well as the operating and support costs incurred in achieving the revenue performance.

2019 Guidance

A schedule of Pacific Drilling’s updated 2019 guidance as of August 12, 2019 is available in the “Quarterly and Annual Results” subsection of the “Investor Relations” section of our website, www.pacificdrilling.com.

Conference Call

Pacific Drilling will conduct a conference call at 10 a.m. Central time on Tuesday, August 13, 2019 to discuss second-quarter 2019 results. To access the conference call, participants should contact the Conference Call Operator at +1 800-353-6461 within North America or +1 334-323-0501 outside of North America approximately 10 minutes prior to the scheduled start time and provide confirmation code #8853719. On the following day a replay of the call will be available on the company’s website or by dialing +1 888-203-1112 within North America or +1 719-457-0820 outside of North America and providing confirmation code #8853719.

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, deepwater drilling contractor. Pacific Drilling’s fleet of seven drillships represents one of the youngest and most technologically advanced fleets in the world. Pacific Drilling has principal offices in Luxembourg and Houston. 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 constitute “forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, and are generally identifiable by their use of words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “intend,” “our ability to,” “may,” “plan,” “potential,” “predict,” “project,” “projected,” “should,” “will,” “would”, or other similar words which are not generally historical in nature. The forward-looking statements speak only as of the date hereof, and 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.

Our forward-looking statements express our current expectations or forecasts of possible future results or events, including future financial and operational performance and cash balances; revenue efficiency levels; market outlook; forecasts of trends; future client contract opportunities; future contract dayrates; our business strategies and plans or objectives of management; estimated duration of client contracts; backlog; expected capital expenditures; projected costs and savings; and the potential impact of our completed Chapter 11 proceedings on our future operations and ability to finance our business.

Although we believe that the assumptions and expectations reflected in our forward-looking statements are reasonable and made in good faith, these statements are not guarantees, and actual future results may differ materially due to a variety of factors. These statements are subject to a number of risks and uncertainties and are based on a number of judgments and assumptions as of the date such statements are made about future events, many of which are beyond our control. Actual events and results may differ materially from those anticipated, estimated, projected or implied by us in such statements due to a variety of factors, including if one or more of these risks or uncertainties materialize, or if our underlying assumptions prove incorrect.

Important factors that could cause actual results to differ materially from our expectations include: the global oil and gas market and its impact on demand for our services; the offshore drilling market, including reduced capital expenditures by our clients; changes in worldwide oil and gas supply and demand; rig availability and supply and demand for high-specification drillships and other drilling rigs competing with our fleet; our ability to enter into and negotiate favorable terms for new drilling contracts or extensions; our ability to successfully negotiate and consummate definitive contracts and satisfy other customary conditions with respect to letters of intent and letters of award that we receive for our drillships; possible cancellation, renegotiation, termination or suspension of drilling contracts as a result of mechanical difficulties, performance, market changes or other reasons; costs related to stacking of rigs; downtime and other risks associated with offshore rig operations, including unscheduled repairs or maintenance, relocations, severe weather or hurricanes; our small fleet and reliance on a limited number of clients; our ability to execute our business plans; the effects of our completed Chapter 11 proceedings on our future operations; and the other risk factors described in our 2018 Annual Report on Form 20-F filed with the Securities and Exchange Commission on March 12, 2019 and our Reports on Form 6-K. These documents are available through our website at www.pacificdrilling.com or through the SEC’s website at www.sec.gov.

PACIFIC DRILLING S.A. AND SUBSIDIARIES

 

Condensed Consolidated Statements of Operations

(in thousands, except per share information) (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Successor

 

 

Predecessor

 

Successor

 

 

Predecessor

 

 

Three Months

 

Three Months

 

 

Three Months

 

Six Months

 

 

Six Months

 

 

Ended June 30,

 

Ended March 31,

 

 

Ended June 30,

 

Ended June 30,

 

 

Ended June 30,

 

 

2019

 

2019

 

 

2018

 

2019

 

 

2018

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contract drilling

 

$

76,415

 

$

65,916

 

 

$

66,564

 

$

142,331

 

 

$

148,633

Costs and expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

(52,254)

 

 

(52,296)

 

 

 

(55,968)

 

 

(104,550)

 

 

 

(120,322)

General and administrative expenses

 

 

(10,010)

 

 

(11,246)

 

 

 

(12,881)

 

 

(21,256)

 

 

 

(30,085)

Depreciation and amortization expense

 

 

(59,330)

 

 

(58,899)

 

 

 

(70,070)

 

 

(118,229)

 

 

 

(139,990)

 

 

 

(121,594)

 

 

(122,441)

 

 

 

(138,919)

 

 

(244,035)

 

 

 

(290,397)

Operating loss

 

 

(45,179)

 

 

(56,525)

 

 

 

(72,355)

 

 

(101,704)

 

 

 

(141,764)

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(24,406)

 

 

(24,039)

 

 

 

(17,211)

 

 

(48,445)

 

 

 

(32,140)

Reorganization items

 

 

(878)

 

 

(1,003)

 

 

 

(13,477)

 

 

(1,881)

 

 

 

(25,509)

Interest income

 

 

1,665

 

 

1,972

 

 

 

912

 

 

3,637

 

 

 

1,700

Equity earnings in unconsolidated subsidiaries

 

 

(263)

 

 

(1,052)

 

 

 

 

 

(1,315)

 

 

 

Expenses to unconsolidated subsidiaries, net

 

 

(437)

 

 

(272)

 

 

 

 

 

(709)

 

 

 

Other expense

 

 

(220)

 

 

(91)

 

 

 

(1,135)

 

 

(311)

 

 

 

(1,330)

Loss before income taxes

 

 

(69,718)

 

 

(81,010)

 

 

 

(103,266)

 

 

(150,728)

 

 

 

(199,043)

Income tax expense

 

 

(3,868)

 

 

(2,969)

 

 

 

(478)

 

 

(6,837)

 

 

 

(752)

Net loss

 

$

(73,586)

 

$

(83,979)

 

 

$

(103,744)

 

$

(157,565)

 

 

$

(199,795)

Loss per common share, basic

 

$

(0.98)

 

$

(1.12)

 

 

$

(4.86)

 

$

(2.10)

 

 

$

(9.36)

Weighted average shares outstanding, basic

 

 

75,001

 

 

75,031

 

 

 

21,366

 

 

75,016

 

 

 

21,352

Loss per common share, diluted

 

$

(0.98)

 

$

(1.12)

 

 

$

(4.86)

 

$

(2.10)

 

 

$

(9.36)

Weighted average shares outstanding, diluted

 

 

75,001

 

 

75,031

 

 

 

21,366

 

 

75,016

 

 

 

21,352

PACIFIC DRILLING S.A. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(in thousands) (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

June 30,

 

March 31,

 

December 31,

 

 

2019

 

2019

 

2018

Assets:

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

305,488

 

$

337,173

 

$

367,577

Restricted cash

 

 

8,500

 

 

16,965

 

 

21,498

Accounts receivable, net

 

 

65,403

 

 

46,895

 

 

40,549

Other receivable

 

 

28,000

 

 

28,000

 

 

28,000

Materials and supplies

 

 

42,441

 

 

40,598

 

 

40,429

Prepaid expenses and other current assets

 

 

14,916

 

 

16,390

 

 

9,149

Total current assets

 

 

464,748

 

 

486,021

 

 

507,202

Property and equipment, net

 

 

1,878,848

 

 

1,901,540

 

 

1,915,172

Receivable from unconsolidated subsidiaries

 

 

204,790

 

 

204,790

 

 

204,790

Intangible asset

 

 

20,640

 

 

53,025

 

 

85,053

Investment in unconsolidated subsidiaries

 

 

11,234

 

 

11,264

 

 

11,876

Other assets

 

 

30,014

 

 

29,630

 

 

24,120

Total assets

 

$

2,610,274

 

$

2,686,270

 

$

2,748,213

 

 

 

 

 

 

 

 

 

 

Liabilities and shareholders’ equity:

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

17,835

 

$

13,072

 

$

14,941

Accrued expenses

 

 

18,327

 

 

17,716

 

 

25,744

Accrued interest

 

 

15,703

 

 

32,279

 

 

16,576

Deferred revenue, current

 

 

1,298

 

 

1,443

 

 

Total current liabilities

 

 

53,163

 

 

64,510

 

 

57,261

Long-term debt

 

 

1,056,037

 

 

1,047,431

 

 

1,039,335

Payable to unconsolidated subsidiaries

 

 

3,741

 

 

4,381

 

 

4,400

Other long-term liabilities

 

 

33,528

 

 

34,228

 

 

28,259

Total liabilities

 

 

1,146,469

 

 

1,150,550

 

 

1,129,255

Shareholders’ equity:

 

 

 

 

 

 

 

 

 

Common shares

 

 

750

 

 

750

 

 

750

Additional paid-in capital

 

 

1,648,756

 

 

1,646,557

 

 

1,645,692

Treasury shares, at cost

 

 

(652)

 

 

(124)

 

 

Accumulated deficit

 

 

(185,049)

 

 

(111,463)

 

 

(27,484)

Total shareholders’ equity

 

 

1,463,805

 

 

1,535,720

 

 

1,618,958

Total liabilities and shareholders’ equity

 

$

2,610,274

 

$

2,686,270

 

$

2,748,213

PACIFIC DRILLING S. A. AND SUBSIDIARIES

 

Condensed Consolidated Statements of Cash Flows

(in thousands) (unaudited)

 

 

 

 

 

 

 

 

 

 

Successor

 

 

Predecessor

 

 

Six Months

 

 

Six Months

 

 

Ended June 30,

 

 

Ended June 30,

 

 

2019

 

 

2018

 

 

 

 

 

 

 

 

Cash flow from operating activities:

 

 

 

 

 

 

 

Net loss

 

$

(157,565)

 

 

$

(199,795)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

Depreciation and amortization expense

 

 

118,229

 

 

 

139,990

Amortization of deferred revenue

 

 

(1,146)

 

 

 

(12,003)

Amortization of deferred costs

 

 

586

 

 

 

9,261

Amortization of debt premium, net

 

 

(221)

 

 

 

Interest paid-in-kind

 

 

16,923

 

 

 

Deferred income taxes

 

 

4,760

 

 

 

(2,408)

Share-based compensation expense

 

 

3,064

 

 

 

1,171

Reorganization items

 

 

 

 

 

6,877

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable

 

 

(24,854)

 

 

 

3,316

Materials and supplies

 

 

(2,012)

 

 

 

1,955

Prepaid expenses and other assets

 

 

(15,229)

 

 

 

3,871

Accounts payable and accrued expenses

 

 

3,155

 

 

 

(19,039)

Deferred revenue

 

 

2,444

 

 

 

(481)

Net cash used in operating activities

 

 

(51,866)

 

 

 

(67,285)

Cash flow from investing activities:

 

 

 

 

 

 

 

Capital expenditures

 

 

(21,454)

 

 

 

(10,788)

Net cash used in investing activities

 

 

(21,454)

 

 

 

(10,788)

Cash flow from financing activities:

 

 

 

 

 

 

 

Payments for shares issued under share-based compensation plan

 

 

 

 

 

(4)

Payments for financing costs

 

 

(1,115)

 

 

 

Purchases of treasury shares

 

 

(652)

 

 

 

Net cash used in financing activities

 

 

(1,767)

 

 

 

(4)

Net decrease in cash and cash equivalents

 

 

(75,087)

 

 

 

(78,077)

Cash, cash equivalents and restricted cash, beginning of period

 

 

389,075

 

 

 

317,448

Cash, cash equivalents and restricted cash, end of period

 

$

313,988

 

 

$

239,371

EBITDA and Adjusted EBITDA Reconciliation

EBITDA is defined as earnings before interest expense, taxes, depreciation and amortization. Adjusted EBITDA is defined as earnings before interest expense, taxes, depreciation, amortization, equity earnings in unconsolidated subsidiaries, expenses to unconsolidated subsidiaries, net and reorganization items. EBITDA and Adjusted EBITDA do 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 U.S. generally accepted accounting principles (“GAAP”) and our calculation of EBITDA and Adjusted EBITDA may not be comparable to that reported by other companies. EBITDA and Adjusted EBITDA are included herein because they are used by management to measure the Company’s operations. Management believes that EBITDA and Adjusted EBITDA present useful information to investors regarding the Company’s operating performance.

PACIFIC DRILLING S.A. AND SUBSIDIARIES

 

Supplementary Data—Reconciliation of Net Loss to Non-GAAP EBITDA and Adjusted EBITDA

(in thousands) (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Successor

 

 

Predecessor

 

Successor

 

 

Predecessor

 

 

Three Months

 

Three Months

 

 

Three Months

 

Six Months

 

 

Six Months

 

 

Ended

 

Ended

 

 

Ended

 

Ended

 

 

Ended

 

 

June 30,

 

March 31,

 

 

June 30,

 

June 30,

 

 

June 30,

 

 

2019

 

2019

 

 

2018

 

2019

 

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(73,586)

 

$

(83,979)

 

 

$

(103,744)

 

$

(157,565)

 

 

$

(199,795)

Add:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

24,406

 

 

24,039

 

 

 

17,211

 

 

48,445

 

 

 

32,140

Depreciation and amortization expense

 

 

59,330

 

 

58,899

 

 

 

70,070

 

 

118,229

 

 

 

139,990

Income tax expense

 

 

3,868

 

 

2,969

 

 

 

478

 

 

6,837

 

 

 

752

EBITDA

 

$

14,018

 

$

1,928

 

 

$

(15,985)

 

$

15,946

 

 

$

(26,913)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Add:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity earnings in unconsolidated subsidiaries

 

 

263

 

 

1,052

 

 

 

 

 

1,315

 

 

 

Expenses to unconsolidated subsidiaries, net

 

 

437

 

 

272

 

 

 

 

 

709

 

 

 

Reorganization items

 

 

878

 

 

1,003

 

 

 

13,477

 

 

1,881

 

 

 

25,509

Adjusted EBITDA

 

$

15,596

 

$

4,255

 

 

$

(2,508)

 

$

19,851

 

 

$

(1,404)

 

Investor Contact:
James Harris
Pacific Drilling S.A.
+713 334 6662
Investor@pacificdrilling.com

Media Contact:
Amy Roddy
Pacific Drilling S.A.
+713 334 6662
Media@pacificdrilling.com

Source: Pacific Drilling S.A.

Investor Relations
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