Ocean Rig UDW Inc international contractor of offshore deepwater drilling services reports unaudited losses in Q4 & year-end 2912 financial results.
Year Ended December 31, 2012 Financial Highlights
For the year ended 2012, the Company reported a net loss of $132.3 million, or $1.00 basic and diluted loss per share.
Included in the year ended 2012 results are:
◦ Costs associated with the 10-year class survey for the Eirik Raude of $65.5 million, or $0.50 per share.
Excluding the above items, the Company's net results would have amounted to a net loss of $66.8 million, or $0.50 per share.
• The Company reported Adjusted EBITDA of $354.4 million for the year ended 2012, as compared to $387.9 million for the year ended 2011.
- On March 3, 2013, our customer European Hydrocarbons Limited, or European Hydrocarbons, unilaterally cancelled our drilling contract in West Africa for the Eirik Raude. Under the terms of the contract, European Hydrocarbons will have to reimburse the Company with an early termination payment of approximately $13 million plus accrued work performed to date.
- On February 28, 2013, the Company signed definitive documentation for a $1.35 billion syndicated secured term loan facility to partially finance the construction costs of the newbuilding drillships Ocean Rig Mylos, the Ocean Rig Skyros and the Ocean Rig Athena, scheduled for delivery in July 2013, October 2013 and November 2013, respectively. The facility has a five-year term and a repayment profile of approximately 11 years and bears interest at LIBOR plus a margin.
- On February 14, 2013 the Company received a Letter of Award (LOA) from a major oil company for a three-year drilling contract offshore West Africa with an estimated backlog of approximately $680 million, including mobilization for the Ocean Rig Apollo, our newbuilding drillships schedule for delivery in January 2015. The contract is scheduled to commence in the first quarter of 2015. The customer has the option to extend the contract for four periods of six months each, with the first option exercisable not less than one year before the estimated completion date. The Company has the option to elect the Ocean Rig Apollo or similar vessel, to drill under this contract. The LOA is subject to definitive documentation and customary approvals.
- On February 1, 2013, the Company entered into a firm four-well program plus options, with Lukoil Overseas Sierra-Leone B.V., or Lukoil, for the Eirik Raude for drilling offshore West Africa. The contract has estimated duration of about 12 months and an estimated backlog of approximately $217 million, including mobilization and demobilization fees. This contract is scheduled to commence in the second half of 2013, following the completion of the drilling contract with ExxonMobil discussed below.
- On January 9, 2013, the Company entered into a drilling contract with ExxonMobil Exploration and Production Ireland (Offshore) Limited, or ExxonMobil, for a one-well program for the Eirik Raude for drilling offshore Ireland. The contract has an estimated duration of up to six months and an estimated backlog of approximately $112 million, including mobilization and demobilization fees. The contract commenced on March 3, 2013, in direct continuation of the cancelled contract with European Hydrocarbons.
George Economou, Chairman and Chief Executive Officer of the Company commented:
"During the fourth quarter of 2012, our drilling units operated at acceptable levels of efficiency but our results were adversely impacted by the scheduled drydock of the Eirik Raude which was completed in the fourth quarter of 2012. All-in-all, in 2012 we experienced various delays mobilizing to drilling locations and acceptance testing took longer than projected for our long-term contracts in Brazil. In addition, we had several short term contracts that resulted in more frequent mobilization and certain of our rigs travelled long distances between drilling locations. Despite the mobilization delays and the Eirik Raude's 10 year class survey, we achieved an 89% utilization rate over available drilling days fleet wide and a 91% utilization rate over available drilling days for our four operating drillships.
Currently, the vast majority of our drilling units are either drilling under, or soon scheduled to commence long-term contracts. Following the completion of certain upgrades to the Leiv Eiriksson in early 2013, we expect all six of our drilling units to be operating efficiently in their respective locations throughout the remainder of 2013. In addition, in 2014 we will enjoy the additional revenue contribution from our three newbuilding drillships scheduled to be delivered in 2013.
We have recently received a letter of award for a three-year contract to drill offshore West Africa for the Ocean Rig Apollo or a similar drillship. Assuming this contract materializes, our total backlog will reach approximately $5.1 billion over three years and will provide Ocean Rig with substantial cash flow visibility and growth.
On the financing front, we are pleased to have signed definitive documentation for a $1.35 billion credit facility to fund the installments and other expenses due on delivery of our three 2013 newbuildings. The lending syndicate is impressive and consists of DNB Bank, Nordea Bank, Eksportkredit/GIEK, Import-Export Bank of Korea, SEB, Swedbank, ABN AMRO and DVB Bank. We are proud that such institutions continue to place their faith in our Company. We are also seeing early interest from commercial lenders to finance our fourth newbuilding drillship to be delivered in the first quarter of 2015.
Given strong industry fundamentals, we expect to further increase our already substantial backlog by entering into contracts for our remaining units. We are focused on maintaining the highest level of operating efficiency and containing our costs within the industry's challenging operating environment."