Diamond Offshore Drilling, Inc. (NYSE:DO) Q4 2018 Earnings Conference Call Transcript

Feb 11, 2019 • 09:00 am ET

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Diamond Offshore Drilling, Inc. (NYSE:DO) Q4 2018 Earnings Conference Call Transcript

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Operator
Operator

Good day, ladies and gentlemen, and welcome to the Q4 2018 Diamond Offshore Drilling Incorporated Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be given at that time. (Operator Instructions) As a reminder, today's conference is being recorded.

I would now like to turn the call over to Samir Ali, Vice President, Investor Relations and Corporate Development. Sir, begin.

Executive
Samir Ali

Thank you, Mark.

Good morning, everyone, and thank you for joining us. With me on the call today are Marc Edwards, President and Chief Executive Officer; Ron Woll, Senior Vice President and Chief Commercial Officer; and Scott Kornblau, Senior Vice President and Chief Financial Officer.

Before we begin our remarks, I remind you that the information reported on this call speaks only as of today, and therefore you are advised that time-sensitive information may no longer be accurate at any time of replay of this call. In addition, certain statements made during this call maybe forward-looking in nature. Those statements are based on our current expectations and include known and unknown risks and uncertainties, many of which we are unable to predict or control that may cause our actual results or performance to differ materially from any future results or performance expressed or implied by these statements. These risks and uncertainties include the risk factors disclosed in our filings with the SEC, included in our 10-K and 10-Q filings. Further, we expressly disclaim any obligation to update or revise any forward-looking statements. Please refer to the disclosure regarding forward-looking statements incorporated in our press release issued earlier today. And please note that the contents of our call today are covered by that disclosure.

We will be referencing non-GAAP figures on our call today. Please find the reconciliation to GAAP financials on our website.

And now, I will turn the call over to Marc.

Executive
Marc Edwards

Thank you, Samir. Good morning, everyone, and thank you for joining us today.

In the fourth quarter of 2018, including one-time charges related to tax reform, Diamond Offshore posted a loss per share of $0.58. Excluding these one-time items, adjusted loss per share was $0.42 compared to fourth quarter 2017 adjusted loss per share of $0.05. The decline year-over-year was primarily driven by various rigs being contracted at lower rates in the fourth quarter of 2018 compared to the fourth quarter of 2017. Partially offsetting the year-over-year revenue decrease, our operating costs were reduced by 24% over the same period.

Despite the continued decline in revenue, we believe dayrates have now found a floor. In the moored market, we are increasing our dayrates as contracts renew albeit off a very low market trough. And on the dynamically positioned side, rates appear to be moving higher. However, we still expect the continued oversupply of sixth and seventh generation drillships to push a real recovery of dayrates for this asset class beyond 2019.

But allow me to address Diamond's seventh generation assets for a minute. Our