Financial Restructuring - The company emerged from Chapter 11 reorganization on April 23, 2021, eliminating a net $2.2 billion of debt[10] - Fresh start accounting was adopted, resulting in a new entity for financial reporting with no beginning retained earnings or deficit as of the fresh start reporting date[11] Contract Backlog and Revenue - As of January 1, 2022, the company's contract backlog was $1.2 billion, consistent with the previous year, with 80% of the backlog attributable to three customers[34] - During the Successor period from April 24, 2021, to December 31, 2021, BP and Woodside accounted for 25.4% of total consolidated revenues[31] - The company’s drilling contracts typically provide for a basic dayrate, with historical dayrate contracts accounting for the majority of revenues[24] Fleet and Operations - The company operates a fleet of mobile offshore drilling rigs, including 4 drillships and 8 semisubmersibles, with various attributes such as dynamic positioning[15][18] - As of March 1, 2022, the fleet includes rigs capable of operating at water depths ranging from 3,000 feet to 12,000 feet[18] - The company has approximately 690 mobile drilling rigs in service worldwide, including about 190 floater rigs, indicating a highly competitive offshore contract drilling industry[35] Management and Workforce - The company entered into a management and marketing services arrangement with Aquadrill LLC in May 2021, managing three rigs and earning fixed daily fees[28] - The company expects to commence management of a third rig, the West Vela, in the first quarter of 2022[29] - As of December 31, 2021, the company managed a global workforce of approximately 1,900 persons, with over 67% having been employed for five years or more, and an average tenure of 10 years[39] Market and Industry Conditions - The principal markets for offshore contract drilling services include the Gulf of Mexico, Canada, South America, Australia, Europe, East and West Africa, and the Mediterranean[22] - The offshore drilling industry is characterized by the movement of rigs from low utilization areas to regions with higher activity and dayrates, intensifying price competition due to current oversupply[37] Financial Risk Management - The company’s variable interest rate debt included $83.5 million of outstanding borrowings under the Exit RCF and $100.0 million Exit Term Loan, with a 100-basis point increase in market interest rates estimated to increase annual interest expense by $1.9 million[294][295] - The company’s First Lien Notes are issued at fixed rates, meaning interest expense would not be impacted by interest rate shifts[295] - The impact of a 100-basis point increase or decrease in interest rates on fixed rate debt would have resulted in a decrease in market value of $5.1 million or an increase of $5.4 million, respectively, as of December 31, 2020[296] - The company’s market risk exposure is managed by senior management, who approve the overall investment strategy and ensure consistency with acceptable risk levels[293] Health, Safety, and Environment (HSE) - The company emphasizes a commitment to Health, Safety, and the Environment (HSE) as part of its core values and culture[42] - The company’s operations are subject to extensive domestic and international laws and regulations, which could significantly limit business activities and increase costs[38] - The company employs a comprehensive training program to ensure that rig crew employees receive position-specific training as part of their career development[45]
Diamond Offshore Drilling(DO) - 2021 Q4 - Annual Report