Financial Performance - Contract drilling revenue for Q3 2021 was $183.2 million, up from $129.3 million in Q3 2020, reflecting a 42% increase [223][224]. - Revenue-earning days (R-E days) increased to 874 in Q3 2021 from 675 in Q3 2020, representing a 30% rise [221][224]. - Rig utilization improved to 79% in Q3 2021 compared to 49% in Q3 2020, indicating a significant operational efficiency gain [221][224]. - Average daily revenue rose to $209,500 in Q3 2021 from $191,800 in Q3 2020, marking a 9.2% increase [221][224]. - Total revenues for Q3 2021 were $213.9 million, compared to $138.3 million in Q3 2020, a 55% increase [221]. - Operating income for contract drilling services was $48.0 million in Q3 2021, a turnaround from a loss of $1.6 million in Q3 2020 [221]. - General and administrative expenses increased to $21.0 million in Q3 2021 from $12.8 million in Q3 2020, primarily due to severance benefits and legal costs [228][229]. - Depreciation expense decreased significantly to $25.2 million in Q3 2021 from $75.3 million in Q3 2020, reflecting a reduced asset base [226]. - The net loss for the period from April 24 through September 30, 2021, was $52.5 million, compared to a net loss of $1.96 billion in the Predecessor period [256]. - Income tax expense for the period from April 24 through September 30, 2021, was $15.2 million, reflecting a negative effective tax rate of 40.8% [255]. Contract Backlog and Utilization - As of October 1, 2021, the contract drilling backlog was $1,034 million, down from $1,187 million on January 1, 2021, and $1,169 million on October 1, 2020 [203]. - The percentage of rig days committed for 2021 was 77%, with projections of 57% for 2022 and 16% for 2023 [209]. - The contract drilling backlog includes future dayrate revenue, excluding mobilization and demobilization revenues, which are accounted for separately [202]. - The company's contractual backlog was $1.0 billion as of October 1, 2021, with $0.2 billion related to Q4 2021 [262]. Strategic Initiatives - The company is exploring strategic alternatives to maximize shareholder value, including potential asset acquisitions or business combinations [196]. - The company has retained Goldman Sachs & Co. LLC as a financial advisor in connection with the exploration of strategic alternatives [196]. - The company is focused on growth opportunities and competitive positioning in the market, including the entry of new competitive rigs [283]. - The company is assessing the impacts of the COVID-19 pandemic on customer spending programs and the financial condition of its customers [283]. - The company is managing risks related to interest rates and foreign exchange, with fixed-rate Exit Notes mitigating interest rate shifts [289]. Costs and Expenses - The company incurred additional costs due to COVID-19, including increased travel expenses and health protocols for crew safety [210]. - Contract drilling expense, excluding depreciation, for the period from April 24 through September 30, 2021, was $225.9 million, primarily driven by payroll and benefits costs of $98.0 million [239]. - General and administrative expenses during the period from April 24 through September 30, 2021, totaled $37.2 million, including $8.0 million in severance benefits for executives [244]. - The company incurred interest expense of $6.9 million in Q3 2021, related to new debt and lease classification changes [230]. - Cash capital expenditures for the remaining three months of 2021 are expected to be approximately $10 million to $15 million, totaling around $95 million to $100 million for the year [271]. Debt and Financial Obligations - The company emerged from Chapter 11 bankruptcy on April 23, 2021, adopting fresh start accounting, resulting in a new entity for financial reporting purposes [192][193]. - The company emerged from Chapter 11 reorganization on April 23, 2021, significantly reducing its indebtedness and entering into a $400 million senior secured revolving credit facility [259]. - As of November 1, 2021, the company had $113.5 million in borrowings under the Exit RCF and $283.9 million available for further borrowings [259]. - The company had total contractual cash obligations of $831.5 million as of September 30, 2021, including various debt instruments and finance leases [273]. - The company has $123.5 million in variable interest rate debt under the Exit RCF, with a potential $2.4 million increase in annual interest expense from a 100-basis point rise in market interest rates [289]. Market Conditions - Floater utilization was approximately 69% in October 2021, with expectations for improvement in the offshore drilling market driven by increased demand for hydrocarbons [198]. - The International Energy Agency forecasts crude oil demand to rise from approximately 96.5 million barrels per day in 2021 to over 103 million barrels per day by 2025 [198]. - Commodity prices, including Brent crude oil, have risen to the mid-$80-per-barrel range, positively impacting demand for contract drilling services [197]. - The company is monitoring market conditions, including oil prices, which could affect future results of operations [283]. Compliance and Internal Controls - The company is committed to compliance with applicable laws and maintaining internal controls over financial reporting [285]. - The company is addressing contractual obligations related to its Well Control Equipment services agreement and potential asset impairments [285].
Diamond Offshore Drilling(DO) - 2021 Q3 - Quarterly Report