Financial Data and Key Metrics Changes - For Q2 2023, the company reported total revenue of $282 million and adjusted EBITDA of $36 million, reflecting growth compared to previous quarters [8][49] - Net income for the quarter was $239 million, translating to $2.29 per diluted share, influenced by a recorded tax benefit of $243 million [37][70] - Contract drilling expenses increased to $213 million, up from $173 million in the prior quarter, primarily due to higher costs associated with the APEC being in the shipyard [50] Business Line Data and Key Metrics Changes - Revenue excluding reimbursable revenue for Q2 was $265 million, up from $214 million in the prior quarter, driven by the Endeavor and GreatWhite being on contract for the full quarter [48] - Adjusted EBITDA for Q2 was $36 million, compared to $22 million in Q1, exceeding guidance due to the timing of the Patriot termination fee recognition [49] - The company achieved a revenue efficiency of 96% across its fleet during the quarter [15] Market Data and Key Metrics Changes - The market outlook indicates a tightening rig supply and improving day rates across multiple asset classes, suggesting a strong upcycle [13][22] - Demand for offshore rigs is increasing, with operators contracting rigs for longer terms and with longer lead times, indicating a shift in procurement behavior [23] - The average day rate in the 2024 backlog is projected at $321,000 per day, compared to $285,000 per day year-to-date in 2023 [57] Company Strategy and Development Direction - The company is focused on maintaining a disciplined approach to securing contracts, ensuring recovery of reactivation costs and delivering meaningful cash flow [29] - There is a commitment to upgrading rigs with managed pressure drilling systems to enhance competitiveness in the market [26] - The company anticipates significant EBITDA improvement beginning in Q4 2023, supported by a strong pipeline of opportunities [46] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the market's strength, citing persistent strong commodity pricing and significant subsea infrastructure commitments [22] - The company expects to see substantial growth in EBITDA and cash flow generation in 2024, with only two planned out-of-service periods for SPSs compared to five in 2023 [60] - Management noted that the constrained supply of ready-to-work rigs and high specifications of their fleet position the company well for future opportunities [42] Other Important Information - The company secured over $229 million in additional backlog during the quarter, enhancing visibility for 2024 revenue streams [12] - Sustainability reporting has been improved to better measure and assess operational footprints, with a recent publication of the 2022 sustainability report [21] Q&A Session Summary Question: Future opportunities for the Ocean GreatWhite - Management is confident that the client will exercise most, if not all, of the options on the Ocean GreatWhite, with expectations for future work in various regions [86] Question: Contracting capacity beyond visibility - Management confirmed that operators are willing to contract capacity beyond their immediate visibility to ensure availability for future drilling programs [80] Question: Balance sheet optimization thoughts - Management is exploring options for optimizing the balance sheet, including potential new financing structures, but noted that there is no urgency due to the lack of immediate maturities [82] Question: Opportunities for moored semis - Management indicated that there are several opportunities for moored assets in West Africa and the Mediterranean, with a focus on near-term contracts [98] Question: Health for sale decision on the Monarch rig - Management clarified that the Monarch remains held for sale, with ongoing evaluations of opportunities that could justify bringing it back to the market [107]
Diamond Offshore Drilling(DO) - 2023 Q2 - Earnings Call Transcript