Ocean Rig UDW Inc. Reports Financial and Operating Results for the Second Quarter 2012

News Release Ocean Rig UDW Inc. (Corporate Head Office) August 17, 2012

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN">
<HTML><HEAD><TITLE></TITLE>
<META content="text/html; charset=unicode" http-equiv=Content-Type>
<META name=GENERATOR content="MSHTML 8.00.6001.19258"></HEAD>
<BODY>
<DIV>
August 16, 2012, Nicosia, Cyprus.
Ocean Rig UDW Inc. (NASDAQ: ORIG), or the Company, a
global contractor of off-shore deepwater drilling services today
announced its unaudited financial and
operating results for the second quarter ended June 30,
2012.
Second Quarter 2012 Financial
Highlights
 For the second quarter of 2012, the Company reported a
net loss of $2.8 million, or $0.02 basic
and diluted loss per share.
Included in the second quarter of 2012 results are:
- 10 year class survey costs of $3.0 million for the Eirik Raude,
or $0.02 per share
- losses incurred on our interest rate swaps totaling $7.6
million, or $0.06 per share
Excluding the above items, the Company’s net results would have
amounted to a net income of
$7.8 million or $0.06 per share.
 The Company reported Adjusted EBITDA of $105.5 million
for the second quarter of 2012 as
compared to $54.0 million for the second quarter of
2011.(1)
Recent Events
- The Company signed Letters of Intent (2)
with three major oil companies for three drillships
for an additional backlog of $2.2 billion over three years.
- On August 13, 2012, the Ocean Rig Olympia was accepted by Total
and commenced a three
year contract.
- On August 7, 2012, the Company entered into an amortizing
interest rate swap agreement for
an initial notional amount of $450 million maturing in July 2017.
This agreement was entered
into to hedge the Company’s exposure to interest rate fluctuations
by fixing the interest rate at
1.0425% from July 2013 until July 2017.
- In July 2012, the Company formally commenced syndication of a
$1.35 billion senior secured
term loan facility to partially finance our drillship newbulding
hulls 1979, 2013 and 2032.
This facility will be led by DNB and Nordea and is expected to
have both a commercial
tranche and an export credit agency (ECA) tranche. The Company has
received conditional
commitments for the commercial tranche, and is expecting to
receive commitments from
ECAs in the third quarter of 2012.
(1) Adjusted EBITDA is a non-GAAP measure, please see later
in this press release for a reconciliation to net income.
(2) Subject to certain conditions
2
George Economou, Chairman and Chief Executive Officer of the
Company commented:
"2012 is a transition year for Ocean Rig as we transition out of
the short-term contracts signed at the
bottom of the market to the current longer term contracts. This
transition is reflected in the results for
the first half of the year, which was challenging with many of our
rigs mobilizing or starting new
contracts. With the recent acceptance of the Ocean Rig Olympia, we
have all our rigs in operation for
the first time in 2012.
“We have repeatedly stated our belief in the strength of the ultra
deepwater market fundamentals and
finally we can report the signing of letters of intent with three
major oil companies for three of our
drillships, including two of our newbuildings. The additional
backlog from these three contracts is
approximately $2.2 billion over three years. Assuming these
contracts materialize, our total
backlog will nearly double from $2.6 billion to $4.8 billion over
three years and will provide Ocean
Rig with substantial cash flow visibility and growth.
“During the quarter we also continued to work with our banks and
commenced the syndication process
for a $1.35 billion credit facility to fund the installments and
other expenses due on delivery of
our three 2013 newbuildings. The syndication is progressing
smoothly and we expect to report further
details in the coming months.
“We believe the outlook for the ultra deepwater drilling industry
is very positive given the high level
of demand we are continuing to witness for our units from all over
the world. Oil Company CAPEX
for 2012 and 2013 is projected to grow at a double-digit rate with
most of this directed at exploration
and production. An increasing number of large discoveries have
also been announced in deepwater
and ultra deepwater in several new oil and gas provinces, which
should provide long-term demand for
rigs and drillships into the foreseeable future.
“Given strong industry fundamentals and the fact that there are
very few ultra deepwater units
available in 2013 we expect to further increase our already
substantial backlog by entering into
contracts for our two remaining units available in 2013. We
continue to build on the Ocean Rig story
and have positioned the company to build further on this strong
platform to become the preferred
contractor in the ultra deepwater
sector."
Financial Review: 2012 Second Quarter
The Company recorded a net loss of $2.8 million, or $0.02 basic
and diluted loss per share, for the
three-month period ended June 30, 2012, as compared to a net loss
of $17.7 million, or $0.13 basic
and diluted loss per share, for the three-month period ended June
30, 2011. Adjusted EBITDA was
$105.5 million for the second quarter of 2012 as compared to $54.0
million for the same period in
2011.
Revenues from drilling contracts increased by $136.9 million to
$263.5 million for the three-month
period ended June 30, 2012, as compared to $126.6 million for the
same period in 2011.
Rig operating expenses and total depreciation and amortization
increased to $145.1 million and $56.8
million, respectively, for the three-month period ended June 30,
2012, from $62.3 million and $36.7
million, respectively, for the three-month period ended June 30,
2011. Total general and
administrative expenses increased to $17.8 million in the second
quarter of 2012 from $10.4 million
during the comparative period in 2011.
3
Fleet List
The table below describes our fleet profile as of August 16,
2012:
Drilling Rigs / Drillships:
Unit Year built Redelivery Operating area Backlog ($m)
(1)(2)
Leiv Eiriksson 2001 Q4 – 12 Falkland Islands $78
Leiv Eiriksson 2001 Q1 – 16 North Sea $653
Eirik Raude 2002 Q3 – 12 Equatorial Guinea $49
Eirik Raude 2002 Q1- 13 West Africa $75
Ocean Rig Corcovado 2011 Q2 – 15 Brazil $483
Ocean Rig Olympia 2011 Q3 – 12 Ghana $4
Ocean Rig Olympia 2011 Q3- 15 Angola $652
Ocean Rig Poseidon 2011 Q2 – 13 Tanzania $162
Ocean Rig Mykonos 2011 Q1 – 15 Brazil $452
Total $2,608
(1) Backlog as of June 30, 2012
(2) Does not include additional backlog of $2.2 billion over three
years resulting from conditional LOIs
4
Ocean Rig UDW Inc.
Financial Statements
Unaudited Condensed Consolidated Statements of
Operations
(Expressed in Thousands of U.S. Dollars
except for share and per share data)
Three Months Ended
June 30,
Six Months Ended
June 30,
2011 2012 2011 2012
REVENUES:
Revenues from drilling contracts $ 126,629 $ 263,491 $ 235,955 $
426,490
EXPENSES:
Drilling rig operating expenses 62,287 145,052 104,137 230,392
Depreciation and amortization 36,710 56,806 64,908 111,486
General and administrative expenses and other 10,363 17,814 17,519
34,083
Legal settlements - (30) - 6,394
Operating income 17,269 43,849 49,391
44,135
OTHER INCOME/(EXPENSES):
Interest and finance costs, net of interest income (14,078)
(32,299) (11,820) (62,627)
Loss on interest rate swaps (17,099) (7,578) (18,616) (10,940)
Other, net 63 4,828 1,256 1,917
Income taxes (3,817) (11,596) (9,778)
(21,628)
Total other expenses (34,931) (46,645)
(38,958) (93,278)
Net income/ (loss) $ (17,662) $ (2,796)
$ 10,433 $ (49,143)
Earnings/ (loss) per common share, basic and diluted $ (0.13) $
(0.02) $ 0.08 $ (0.37)
Weighted average number of shares, basic and diluted 131,696,928
131,696,928 131,696,928 131,696,928
5
Ocean Rig UDW Inc.
Unaudited Condensed Consolidated Balance
Sheets
(Expressed in Thousands of U.S. Dollars) December 31,
2011
June 30, 2012
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 250,878 $ 191,158
Restricted cash 57,060 59,374
Other current assets 188,471 260,097
Total current assets 496,409
510,629
FIXED ASSETS, NET:
Advances for rigs assets under construction and acquisitions
754,925 780,418
Drilling rigs, machinery and equipment, net 4,538,838
4,479,597
Total fixed assets, net 5,293,763
5,260,015
OTHER NON-CURRENT ASSETS:
Restricted cash 125,040 113,854
Other non-current assets 100,143 110,465
Total non-current assets 225,183
224,319
Total assets 6,015,355
5,994,963
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt 210,166 235,951
Other current liabilities 217,391
281,689
Total current liabilities 427,557
517,640
NON-CURRENT LIABILITIES:
Long-term debt, net of current portion 2,525,599 2,406,440
Other non-current liabilities 63,743
105,277
Total non-current liabilities 2,589,342
2,511,717
STOCKHOLDERS’ EQUITY:
Total stockholders’ equity 2,998,456
2,965,606
Total liabilities and stockholders’ equity $ 6,015,355 $
5,994,963
6
Adjusted EBITDA Reconciliation
Adjusted EBITDA represents net income before interest, taxes,
depreciation and amortization and
gains or losses on interest rate swaps. Adjusted EBITDA does not
represent and should not be
considered as an alternative to net income or cash flow from
operations, as determined by United
States generally accepted accounting principles, or U.S. GAAP, and
our calculation of adjusted
EBITDA may not be comparable to that reported by other companies.
Adjusted EBITDA is included
herein because it is a basis upon which the Company measures its
operations and efficiency. Adjusted
EBITDA is also used by our lenders as a measure of our compliance
with certain covenants
contained in our loan agreements and because the Company believes
that it presents useful information
to investors regarding a company's ability to service and/or incur
indebtedness.
The following table reconciles net income to Adjusted
EBITDA:
(Dollars in thousands) Three Months
Ended
June 30,
Six Months Ended
June 30,
2011 2012 2011 2012
Net income/ (loss) $ (17,662)
(2,796) 10,433 $ (49,143)
Add: Net interest expense 14,078 32,299 11,820 62,627
Add: Depreciation and amortization 36,710 56,806 64,908
111,486
Add: Income taxes 3,817 11,596 9,778 21,628
Add: Loss on interest rate swaps 17,099 7,578 18,616 10,940
Adjusted EBITDA $ 54,042 105,483
115,555 $ 157,538
7
Conference Call and Webcast: August 17,
2012
As announced, the Company’s management team will host a conference
call, on Friday, August 17,
2012 at 7:00 a.m. Eastern Standard Time to discuss the Company's
financial results.
Conference Call Details
Participants should dial into the call 10 minutes before the
scheduled time using the following
numbers: 1(866) 819-7111 (from the US), 0(800) 953-0329 (from the
UK) or +(44) (0) 1452 542
301 (from outside the US). Please quote "Ocean Rig"
A replay of the conference call will be available until August 24,
2012. The United States replay
number is 1(866) 247-4222; from the UK 0(800) 953-1533; the
standard international replay
number is (+44) (0) 1452 550 000 and the access code required for
the replay is: 55592075#.
A replay of the conference call will also be available on the
Company’s website at www.oceanrig.
com under the Investor Relations
section.
Slides and audio webcast:
There will also be a simultaneous live webcast over the Internet,
through the Ocean Rig UDW
Inc. website www.ocean-rig.com. Participants to the live webcast
should register on the website
approximately 10 minutes prior to the start of the
webcast.
About Ocean Rig UDW Inc.
Ocean Rig is an international offshore drilling contractor
providing oilfield services for offshore oil
and gas exploration, development and production drilling, and
specializing in the ultra-deepwater and
harsh-environment segment of the offshore drilling industry. The
company owns and operates 9
offshore ultra deepwater drilling units, comprising of 2 ultra
deepwater semisubmersible drilling rigs
and 7 ultra deepwater drillships, 3 of which remain to be
delivered to the company during 2013.
Ocean Rig’ common stock is listed on the NASDAQ Global Select
Market where it trades under the
symbol “ORIG”
Visit the Company’s website at www.ocean-rig.com
8</DIV></BODY></HTML>