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DO

DIAMOND OFFSHORE DRILLING, INC. (DO)·Q2 2024 Earnings Summary

Executive Summary

  • Q2 2024 was operationally solid but softer sequentially: revenue fell to $252.9M from $274.6M in Q1; adjusted EBITDA was $58.0M, in line with guided range, and adjusted EPS was $0.12 .
  • The company secured material backlog additions: a $350M two-year extension for Ocean Blackhawk and an $89M US GOM contract for Ocean BlackRhino; total 2024 awards reached nearly $1.2B and backlog exceeded $2.0B as of July 1 .
  • Ocean GreatWhite repairs were completed and the rig resumed operations in early July; loss-of-hire insurance recovery (~90 days) was expected but not reflected in Q2 results .
  • Diamond Offshore discontinued all financial guidance and did not host a Q2 call due to the pending merger with Noble, reducing near-term visibility and removing guidance catalysts .

What Went Well and What Went Wrong

What Went Well

  • Strong commercial momentum: Ocean Blackhawk extension ($350M) and Ocean BlackRhino US GOM award (~$89M) post-quarter, driving 2024 awards to nearly $1.2B and backlog >$2.0B .
  • Performance bonuses: $8.7M in well-performance bonuses in Senegal; CEO: “We are pleased with our second quarter results, achieving adjusted EBITDA of $58 million... recognition of $8.7 million in well-performance bonuses...” .
  • Asset recovery: Ocean GreatWhite repairs completed and operations resumed with bp in the North Sea in early July; received $20M in insurance proceeds to date .

What Went Wrong

  • Sequential revenue decline: revenue fell to $253M from $275M, primarily from the West Auriga charter termination (returned in Q1) and Ocean GreatWhite off-rate during repairs, partially offset by Senegal bonuses .
  • Higher G&A: G&A rose to $23M (from $19M) driven by ~$5M transaction costs tied to the pending Noble merger .
  • Taxes and early termination: net tax expense of $8M (vs. $3M benefit in Q1), and early termination of an Ivory Coast one-well campaign (retained $8M prepaid deposit as fee) .

Financial Results

Summary Financials vs Prior Year and Prior Quarter

MetricQ2 2023Q1 2024Q2 2024
Revenue ($USD Millions)$281.6 $274.6 $252.9
Operating Income ($USD Millions)$10.2 $21.8 $28.3
Net Income ($USD Millions)$238.8 $11.6 $9.3
Diluted EPS ($USD)$2.29 $0.11 $0.09
Adjusted EBITDA ($USD Millions)$36.2 $64.2 $58.0
Adjusted EPS ($USD)N/A$0.25 $0.12

Margins (derived)

MarginQ2 2023Q1 2024Q2 2024
Operating Margin %3.6% (= $10.2 / $281.6) 8.0% (= $21.8 / $274.6) 11.2% (= $28.3 / $252.9)
Net Income Margin %84.8% (= $238.8 / $281.6) 4.2% (= $11.6 / $274.6) 3.7% (= $9.3 / $252.9)
Adjusted EBITDA Margin %12.9% (= $36.2 / $281.6) 23.4% (= $64.2 / $274.6) 23.0% (= $58.0 / $252.9)

Revenue Breakdown (Contract vs Reimbursables)

MetricQ2 2023Q1 2024Q2 2024
Contract Drilling Revenue ($USD Millions)$265.0 $258.8 $240.2
Reimbursables ($USD Millions)$16.6 $15.8 $12.7

Operating Expenses Components

Metric ($USD Millions)Q2 2023Q1 2024Q2 2024
Contract Drilling (excl. D&A)$212.9 $184.2 $164.5
Depreciation$27.9 $31.4 $31.7
G&A$16.8 $18.6 $23.2

KPIs

KPIQ2 2023Q1 2024Q2 2024
Average Dayrate ($000/day)$299 $305 $318
Utilization (%)70% 68% 69%
Revenue Efficiency (%)95.8% 88.7% 86.7%

Actual vs Consensus (S&P Global)

MetricQ2 2024 ActualQ2 2024 S&P Global ConsensusBeat/Miss
Revenue ($USD Millions)$252.9 Unavailable (missing CIQ mapping)N/A
EPS ($USD)$0.09 Unavailable (missing CIQ mapping)N/A
Note: S&P Global consensus estimates were unavailable due to missing CIQ mapping for DO in the estimates system.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Financial guidance (all metrics)FY 2024 / QuarterlyCompany previously provided guidance historically via earnings calls (no specific figures in cited press releases) Discontinued due to pending merger; investors cautioned not to rely on prior guidance Withdrawn

Earnings Call Themes & Trends

Company did not hold a Q2 2024 call due to the pending Noble merger . Themes are drawn from press releases and fleet status across the last two quarters.

TopicQ4 2023 (Q‑2) MentionsQ1 2024 (Q‑1) MentionsQ2 2024 Current PeriodTrend
Backlog & ContractingAdded $245M backlog in Q4; 2023 awards $485M; average dayrate improvement expected Secured $713M awards in Q1; backlog $1.9B (Apr 1) $350M extension (Blackhawk); $89M US GOM award (BlackRhino); 2024 awards nearly $1.2B; backlog >$2.0B (Jul 1) Improving
Operations & EfficiencyRevenue efficiency ~95% across fleet despite shipyard/start-ups Overall revenue efficiency 94% excluding GreatWhite incident; six rigs >96% ~95% excluding GreatWhite; total fleet KPI shows 86.7% revenue efficiency Mixed (excl. incident strong)
Ocean GreatWhite status & insuranceLMRP/riser incident noted; 90–100 days OOS estimated Repairs progressing; expected back half of June Repairs complete; resumed ops in early July; $20M insurance proceeds to date; ~90 days loss-of-hire recovery expected (not in Q2 results) Resolving/Positive
Guidance policyQ4 indicated guidance to be discussed in call Company provided guidance via call format Guidance discontinued due to pending merger; no Q2 call Visibility reduced
Regional activity (US GOM, UK, Brazil, Australia)Multiple commencements; BlackHawk & Courage started new contracts BlackHawk & Courage full-quarter operations; Patriot/Endeavor transitions; Apex shipyard Apex transitioned to new Santos contract; Patriot completed P&A and on standby for 2025; BlackRhino mobilizing to US GOM after SPS/MPD upgrade Stable-to-positive

Management Commentary

  • “We are pleased with our second quarter results, achieving adjusted EBITDA of $58 million, which is in line with our guided range… recognition of $8.7 million in well-performance bonuses in Senegal… repairs to the Ocean GreatWhite were completed during the quarter, and the rig resumed operations… in early July.” — Bernie Wolford, Jr., President & CEO .
  • “The demand landscape remains compelling… high-specification deepwater rig supply-demand balance continues to tighten… average contract dayrate across our fleet will notably increase as we transition to our recently awarded contracts.” — Q1 press release CEO remarks .

Q&A Highlights

  • Q2 2024: No earnings call or Q&A session was held due to the pending Noble merger .
  • Q1 2024: A call was held; topics included earnings results and operations updates per press release references, but transcript content is not available here .

Estimates Context

  • S&P Global consensus for Q2 2024 EPS and revenue was unavailable due to missing CIQ mapping for ticker DO; thus, no beat/miss assessment vs consensus could be made. The company reported revenue of $252.9M and diluted EPS of $0.09 for Q2 2024 .

Key Takeaways for Investors

  • Commercial backlog momentum is strong: $350M Blackhawk extension and $89M BlackRhino US GOM award post-Q2; total 2024 awards nearly $1.2B and backlog >$2.0B as of July 1 — supportive of dayrate uplift and forward revenue visibility .
  • Adjusted EBITDA held up at $58.0M despite lower revenue, aided by performance bonuses and reduced contract drilling expense; margins expanded sequentially at the operating line .
  • Ocean GreatWhite risk resolved operationally; additional insurance (loss-of-hire) recovery expected but not in Q2 results, providing potential near-term cash benefits .
  • Guidance withdrawal and absence of a Q2 call lower near-term visibility; merger-related costs (~$5M in Q2 G&A) impacted reported earnings and should be considered in non-GAAP adjustments .
  • Sequential revenue headwinds (West Auriga charter return, GreatWhite off-rate) appear transitory; fleet KPI trends (average dayrate rising) and regional activity (US GOM/UK/Brazil/Australia) support medium-term cash flow inflection .
  • Early termination in Ivory Coast mitigated by retention of $8M prepaid deposit; BlackRhino repositioning to US GOM for Q1 2025 start adds near-term utilization/cash flow visibility .
  • With consensus estimates unavailable, focus should be on backlog conversion, dayrate trajectory, and integration/merger milestones as primary stock catalysts .