Pacific Drilling S.A. reported results for the first quarter of 2020. Net loss for first-quarter 2020 was $61.0 million or $0.81 per diluted share, compared to net loss of $308.1 million or $4.11 per diluted share in fourth-quarter 2019.
Pacific Drilling CEO Bernie Wolford commented, “The first quarter of this year started strong with improving market fundamentals and solid demand growth for high-specification drillships, reflected in increased utilization and rising dayrates. Pacific Khamsin worked through the quarter in the U.S. Gulf of Mexico on a contract that is expected to keep the rig busy operating with Equinor and Total into the fourth quarter of this year. Pacific Bora and Pacific Sharav both completed their projects for Eni and Chevron respectively, just after the end of the quarter. And, Pacific Santa Ana worked under contract for Petronas in Mauritania until March 29 when the client provided us with a notice of suspension due to force majeure. We have subsequently agreed to a reduced standby rate, which we believe is likely to continue through the end of this year.
Mr. Wolford continued, “Since mid-March, we have seen significant cuts in our clients’ current year’s capital expenditure budgets as a result of COVID-19 pandemic related oil demand destruction and the resulting severe oversupply of oil. We expect a significant reduction in exploration drilling in the near term as well as deferral of major development programs until 2021 or later. As we look ahead, we see significant uncertainty in the global market for our services as our customers have cancelled or delayed to 2021 work that had been scheduled or awarded to us for 2020. These market conditions will negatively affect our revenue, profitability and cash flows for 2020 and 2021. In light of these unprecedented market conditions and in an abundance of caution to protect our access to working capital, we drew the full availability under our $50 million revolving credit facility on March 20, 2020. We continue to work closely with our clients to keep our employees safe and our rigs sanitary as we navigate through these challenging times.”
First-Quarter 2020 Operational and Financial Commentary
First-quarter 2020 contract drilling revenue was $89.4 million, which included $6.4 million in reimbursable revenue. This compared to fourth-quarter 2019 contract drilling revenue of $33.1 million, which included $1.7 million in reimbursable revenue. The increase in revenue resulted primarily from the Pacific Santa Ana returning to work with Petronas in Mauritania, the Pacific Khamsin operating for the full-quarter with Equinor in the U.S. Gulf of Mexico, and the Pacific Bora starting operations with Eni in Oman.
Operating expenses for first-quarter 2020 were $86.5 million compared to $63.3 million in fourth-quarter 2019. The change in operating expenses was due to the large increase in the number of days operating under contract. Additionally, operating expenses included reimbursable expenses for first-quarter 2020 of $5.8 million compared to $1.4 million in the fourth quarter of 2019.
General and administrative expenses for the first quarter of 2020 were $9.6 million, as compared to $8.2 million for the fourth quarter of 2019.
Adjusted EBITDA(a) for first-quarter 2020 was $(1.8) million, compared to $(36.8) million in fourth-quarter 2019 as a result of the increase in the number of drillships operating under contract.
Capital expenditures for the first quarter of 2020 were $5.9 million compared to $4.0 million in the fourth quarter of 2019.
Footnotes
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(a) |
EBITDA and Adjusted EBITDA are non-GAAP financial measures. For a definition of EBITDA and Adjusted EBITDA and a reconciliation to net loss, please refer to the schedule included in this release. Management uses this operational metric to track company results and believes that this measure provides additional information that highlights the impact of our operating efficiency as well as the operating and support costs incurred in achieving the revenue performance. |
2020 Guidance
Given the uncertainty caused by recent market conditions, the Company is withdrawing its full year 2020 financial guidance that was provided with its March 11, 2020 Fourth-Quarter and Full-Year 2019 Results Announcement. We expect Full-Year 2020 results to reflect substantial reductions from our previous guidance as a result of initiated cost reduction measures, including reducing operating expenses and general and administrative expenses via layoffs and non-labor spend cuts and decreasing capex.
Source: Pacific Drilling
