DIAMOND OFFSHORE DRILLING, INC. (DO)·Q1 2024 Earnings Summary

Executive Summary

• Q1 2024 revenue was $274.6M, down 7.7% QoQ on the Ocean GreatWhite incident and the West Auriga charter expiry; adjusted EBITDA was $64.2M and adjusted EPS was $0.25 as DO excluded a $10M insurance deductible related to the GreatWhite incident .
• Year-to-date contract awards totaled $731M ($713M in Q1), lifting total backlog to $1.9B as of April 1; management expects the average contract dayrate “to notably increase” as newly awarded work ramps .
• Operationally, revenue efficiency was 94% excluding GreatWhite; six rigs achieved >96% revenue efficiency; GreatWhite repairs were on track for a safe return to the wellsite in the first half of June, supporting near-term revenue normalization .
• No formal financial guidance ranges were provided in the press release; management emphasized tightening supply-demand for high-spec deepwater and new marketing rights for three 7th-gen drillships—potential catalysts for dayrate uplift and backlog additions .
• Wall Street consensus from S&P Global (for estimates comparisons) was unavailable via our feed for this ticker this quarter; therefore, beat/miss analysis to Street consensus cannot be shown (see Estimates Context) [GetEstimates tool error noted].

What Went Well and What Went Wrong

• What Went Well

  • Contracting momentum: $713M in new awards in Q1, including two-year extensions for Ocean BlackLion and Ocean BlackHornet at “leading-edge dayrates,” plus additional P&A work for Ocean Patriot; backlog reached $1.9B as of April 1 .
  • Operational execution: Six rigs exceeded 96% revenue efficiency; overall 94% revenue efficiency excluding GreatWhite’s incident, supporting strong adjusted EBITDA generation despite headwinds .
  • Strategic positioning: Secured marketing rights for three 7th-gen drillships (West Dorado, West Draco in multiple international markets; Tidal Action in U.S. Gulf) to expand optionality and pipeline .
  • CEO tone: “The high-specification deepwater rig supply-demand balance continues to tighten… The average contract dayrate across our fleet will notably increase as we transition to our recently awarded contracts” .

• What Went Wrong

  • Revenue decline QoQ: Total revenue fell to $274.6M from $297.6M due to GreatWhite downtime and West Auriga’s charter ending; adjusted EBITDA also declined to $64.2M from $72.3M QoQ .
  • Extraordinary costs: $10M insurance deductible recorded (including $7.6M in contract drilling expense and $2.4M in loss on asset disposition), depressing reported profitability and requiring non-GAAP adjustments .
  • Tax and cost noise: While Q1 saw a net tax benefit of $3.2M (including a $12.2M FX-driven remeasurement benefit), the recent Q4 carried a $174M non-cash tax expense and general cost variability has pressured reported net income trends .

Financial Results

Overall P&L summary (USD millions unless noted)

Notes: Q1 2024 adjusted figures exclude a $10.0M insurance deductible related to Ocean GreatWhite’s equipment incident ($7.6M in operating expense; $2.4M in loss on disposition) .

Margins and efficiency

KPI commentary: Management also cited 94% revenue efficiency for Q1 excluding the GreatWhite incident and six rigs above 96% revenue efficiency .

Non-GAAP and expense items (Q1 2024 specific)

• Adjusted EBITDA: $64.163M; adjustment reflects the $10.0M insurance deductible .
• Contract drilling expense: $184M; includes $7.6M insurance deductible; G&A $18.6M (flat vs Q4) .
• Tax benefit: $3.2M including $12.2M FX remeasurement benefit .

Guidance Changes

No formal quantitative revenue, margin, OpEx, OI&E, tax, or dividend guidance ranges were provided in the Q1 press release; management focused on operational timelines and commercial updates.

Earnings Call Themes & Trends

(Press releases and fleet status reports used as primary sources due to transcript retrieval limitations)

Management Commentary

• “The high-specification deepwater rig supply-demand balance continues to tighten… The average contract dayrate across our fleet will notably increase as we transition to our recently awarded contracts.” — Bernie Wolford, Jr., President & CEO .
• “Looking ahead, we are focused on the Ocean GreatWhite returning to work safely, securing additional backlog for our rigs, and delivering operational excellence across the fleet to maximize our cash flow generation.” — Bernie Wolford, Jr. .

Q&A Highlights

• The Q1 2024 earnings call transcript is available (e.g., Seeking Alpha and MarketScreener), but full transcript content could not be retrieved through our document tools for detailed Q&A extraction at this time .
• Based on the press release, management emphasized operational recovery (Ocean GreatWhite timeline), contracting momentum, and dayrate uplift drivers .

Estimates Context

• S&P Global/Capital IQ consensus estimates for Q1 2024 (EPS and Revenue) were unavailable for DO via our tool mapping this quarter; therefore, we cannot quantify beat/miss versus Street consensus. We will update this section when the S&P Global data feed mapping is restored [GetEstimates error].

Key Takeaways for Investors

• Contracting momentum and backlog: $713M of Q1 awards and $1.9B backlog position DO for dayrate and revenue uplift as awards roll on, particularly in the U.S. Gulf and internationally .
• Near-term operational catalyst: Ocean GreatWhite’s return to the wellsite in H1 June should normalize revenue efficiency and reduce downtime headwinds into Q2/Q3 .
• Dayrate trajectory positive: Management expects average fleet dayrates to “notably increase” as new contracts commence, a key driver for EBITDA and cash flow inflection .
• Non-GAAP adjustments clarify earnings power: Removing the $10M insurance deductible (GreatWhite incident) lifts Q1 adjusted EPS to $0.25 and adjusted EBITDA to $64.2M, highlighting underlying improvement despite incident headwinds .
• Regional and asset optionality expanding: Marketing rights for three 7th-gen drillships broaden commercial reach (Brazil/LatAm/West Africa/SE Asia/GOM), enhancing bidding funnel and optionality for incremental backlog .
• Watch tax/FX and cost variability: Q1’s $3.2M net tax benefit (with $12.2M FX remeasurement) contrasts with Q4’s $174M non-cash tax expense; reported earnings may remain noisy even as operations strengthen .
• Near-term focus: Execution on scheduled reactivations/repairs, seamless commencements of newly awarded work, and additional high-dayrate awards are likely the narrative and stock catalysts over the next 1–2 quarters .

Appendix: Additional Data Points

• Revenue bridge commentary: Q1 revenue down QoQ primarily from reduced GreatWhite revenue following the incident and West Auriga charter expiry; partially offset by full-quarter contributions at higher dayrates from Ocean BlackHawk and Ocean Courage .
• Expense notes: Q1 contract drilling expense of $184M (down $5M QoQ), reflecting lower managed rig expenses and absence of a prior-quarter efficiency bonus, offset by BlackHawk/Courage full-quarter ops and GreatWhite deductible .
• After quarter-end contract: Ocean BlackRhino signed an estimated 30-day, one-well contract (~$18M) pre-paid before commencement post SPS/MPD upgrade—immediate cash flow support upon start .