Financial Data and Key Metrics Changes - For Q4 2023, the company reported total revenue of $298 million and adjusted EBITDA of $72 million, reflecting a significant increase from $28 million in the previous quarter [9][40] - The net loss for the quarter was approximately $146 million, or $1.42 per diluted share, primarily due to a non-cash tax expense of $174 million [39] - Full year 2023 revenue, excluding reimbursable revenue, was $984 million with adjusted EBITDA of $158 million [42] Business Line Data and Key Metrics Changes - The BlackHawk rig commenced its contract in the Gulf of Mexico in November, contributing to the revenue increase [20][43] - The BlackLion contract is expected to generate approximately $115 million in annualized rig level EBITDA, significantly contributing to cash flow [16] - The average day rate in the drillship backlog increased to $408,000 per day due to recent contract awards [49] Market Data and Key Metrics Changes - The company secured $362 million in new contracts year-to-date, with 87% of its 2024 capacity contracted [36][81] - The forecast for floater exploration wells indicates a year-on-year growth of 34% [11] - The North Sea sector is highlighted as a bright spot with increasing demand and shrinking rig supply [35] Company Strategy and Development Direction - The company aims to capitalize on the ongoing upcycle in offshore drilling, supported by strong commodity prices and robust upstream capital spending [31] - There is a focus on securing longer-term contracts to de-risk future revenue streams, with an average contract duration of over a year [108] - The company plans to reduce planned shipyard days, which is expected to enhance EBITDA and cash flow [58] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to secure meaningful day rate increases as contracts roll over, despite a slight expected decrease in revenue for 2024 [56][51] - The company anticipates a normalized revenue guidance for 2024 between $940 million and $960 million, excluding the impact of the GreatWhite incident [51] - The outlook for 2024 includes expectations of increased EBITDA margins due to the return of lower-margin managed rigs to their owners [82] Other Important Information - The company is currently estimating recovery costs from the GreatWhite incident to be between $20 million and $25 million, with potential insurance coverage for lost revenue [46][78] - The company exited 2023 with unrestricted cash and cash equivalents of $124 million and total liquidity of $422 million [73] Q&A Session Summary Question: What is the expected timing for contract awards? - Management expects five to six contracts to be awarded by mid-2024, particularly for contracts starting in Q3 and Q4 2024 [61][113] Question: How does the company view the impact of the GreatWhite incident on financials? - The company plans to normalize results for any impact from the GreatWhite incident, ensuring clarity in financial reporting [96] Question: What is the outlook for the Patriot rig? - The Patriot is expected to fill some gaps in its schedule with a two-well P&A campaign starting soon, before its long-term contract in 2025 [67][80] Question: What is the company's strategy regarding potential M&A activity? - The company views itself as a net acquirer moving forward, given the strength of its backlog and balance sheet [124] Question: How does the company perceive the current contracting environment? - Management noted that clients are increasingly looking to secure longer-term contracts to mitigate future rate exposure, indicating a positive trend in contract signings [108][138]
Diamond Offshore Drilling(DO) - 2023 Q4 - Earnings Call Transcript