NICOSIA, CYPRUS--(Marketwired - Feb 18, 2014) - Ocean Rig UDW Inc. (NASDAQ: ORIG), or Ocean Rig or the Company, an international contractor of offshore deepwater drilling services, today announced its unaudited financial and operating results for the fourth quarter ended December 31, 2013.

Fourth Quarter 2013 Financial Highlights

  • For the fourth quarter of 2013, the Company reported a net income of $39.7 million, or $0.30 basic and diluted earnings per share.

  • The Company reported Adjusted EBITDA of $163.8 million for the fourth quarter of 2013, as compared to $75.4 million for the fourth quarter of 2012.(1)

Year Ended December 31, 2013 Financial Highlights

  • For the year ended December 31, 2013, the Company reported a net income of $63.3 million, or $0.48 basic and diluted earnings per share.

    Included in the year ended December 31, 2013 results are:

    • Non-cash write-offs and breakage costs associated with the full repayment of Ocean Rig's $800.0 million secured term loan agreement and the two $495.0 million senior secured credit facilities totaling $61.1 million or $0.46 per share.

      Excluding the above items, the Company would have reported a net income of $124.4 million, or $0.94 per share.

  • The Company reported Adjusted EBITDA(1) of $545.7 million for the year ended 2013, as compared to $354.4 million for the year ended 2012.

Recent Highlights

  • On February 7, 2014, the Company refinanced its existing short-term Tranche B-2 Term Loans with a fungible add-on to its existing long-term Tranche B-1 Term Loans. As a result of this refinancing, the total $1.9 billion of Tranche B-1 Term Loans will mature no earlier than the third quarter of 2020.

  • On January 27, 2014, the Ocean Rig Skyros arrived in Angola and commenced the acceptance testing under the contract with Total E&P.

  • On December 30, 2013, the Company agreed with a major oil company to further extend until March 30, 2014, the expiration of the previously announced Letter of Award for its ultra deepwater drillship Ocean Rig Skyros.

  • On December 20, 2013, the Company took delivery of its ultra deepwater drillship, the Ocean Rig Skyros and drew down $450.0 million under its $1.35 billion syndicated secured term loan facility.

(1) Adjusted EBITDA is a non-GAAP measure; please see later in this press release for reconciliation to net income.

George Economou, Chairman and Chief Executive Officer of the Company, commented:

"In the fourth quarter our fleet operated at 95.8% utilization continuing the strong trend from the previous three quarters. Our full year 2013 fleet operating efficiency was approximately 94.7%, allowing us to successfully monetize our contracted revenue backlog. As a result, for 2013 we recorded approximately $1,180 million in net revenue and after paying operating and G&A expenses our EBITDA for 2013 amounted to approximately $546 million.

"In 2013 we took delivery of two 7th generation UDW drillships, Ocean Rig Mylos and Ocean Rig Skyros, and expect to take delivery of the Ocean Rig Athena, last of these three sister-drillships, in March. We are focused on smoothly integrating these newbuild units into our on-the-water fleet, and ensuring the on-time delivery of our two 2015 UDW drillships, the Ocean Rig Apollo and Ocean Rig Santorini. Unfortunately unscheduled rig downtime is an industry fact and in the end of December we experienced a series of subsea equipment related downtime with respect to the Ocean Rig Mylos which resulted in low operating efficiency for this unit year-to-date. 

"We are pleased with the successful refinancing, completed this month, of the short-term tranche of our Term Loan B Facility with a fungible add-on to the long-term tranche. The entire $1.9 billion Term Loan B Facility will now mature not earlier than the third quarter of 2020.

"Recently there has been some softness in the market as a result of several drilling units coming off-contract and certain newbuildings without contracts scheduled for delivery in 2014. We believe that these market conditions will not last for long and will not be as deep as current market consensus expectations due to the overall obsolescence of the offshore drilling fleet. Rates for premium UDW units, such as ours, remain firm and we expect upcoming contract announcements will provide a clear price point for premium units.

"With our fleet fully contracted in 2014 and 72% contracted in 2015, and with attractive free cashflow generation capacity, we are in the enviable position to focus on implementing our announced value creation initiatives for our shareholders."

Financial Review: 2013 Fourth Quarter

The Company recorded a net income of $39.7 million, or $0.30 basic and diluted earnings per share, for the three-month period ended December 31, 2013, as compared to a net loss of $71.0 million, or $0.54 basic and diluted losses per share, for the three-month period ended December 31, 2012. Adjusted EBITDA(1) was $163.8 million for the fourth quarter of 2013, as compared to $75.4 million for the same period in 2012.

Revenues from drilling contracts increased by $115.7 million to $345.5 million for the three-month period ended December 31, 2013, as compared to $229.8 million for the same period in 2012.

Rig operating expenses decreased to $138.3 million and total depreciation and amortization increased to $65.3 million for the three-month period ended December 31 2013, from $173.1 million and $56.5 million, respectively, for the three-month period ended December 31, 2012. Total general and administrative expenses increased to $41.2 million in the fourth quarter of 2013 from $23.5 million during the same period in 2012.

Interest and finance costs, net of interest income, amounted to $47.0 million for the three-month period ended December 31, 2013, compared to $29.8 million for the three-month period ended December 31, 2012.

New Director

On February 14, 2014, director Michael Gregos resigned for personal reasons. In his place, Professor John Liveris was appointed to our board of directors. Professor Liveris is an international consultant in the energy and technology industries. During the years 2007 to 2011, Professor Liveris served as Chairman of the Board of OceanFreight Inc., which was a shipping company listed on the NASDAQ. Prior to his current activities and until 1999, Professor Liveris was the Group Senior Advisor at Intracom, the leading Greek telecommunications and electronics manufacturer. Professor Liveris studied mechanical engineering at Tufts University in Boston, Mass. and did his graduate and doctoral studies in engineering management at the George Washington University in Washington, DC. There he taught from 1979 to 1996, attaining Professorial rank.

(1) Adjusted EBITDA is a non-GAAP measure; please see later in this press release for reconciliation to net income.

Fleet List

The table below describes our fleet profile and drilling contract backlog as of February 14, 2014:

Drilling Rigs / Drillships:

Unit   Year built/ or Scheduled Delivery   Redelivery   Operating area   Backlog
Leiv Eiriksson   2001   Q2 - 16   Norway   $431
Eirik Raude   2002   Q4 - 14   Sierra Leone, Ivory Coast   $167
Ocean Rig Corcovado   2011   Q2 - 15   Brazil   $204
Ocean Rig Olympia   2011   Q3 - 15   Gabon, Angola   $323
Ocean Rig Poseidon   2011   Q2 - 16   Angola   $588
Ocean Rig Mykonos   2011   Q1 - 15   Brazil   $177
Ocean Rig Mylos   2013   Q4 - 16   Brazil   $612
Ocean Rig Skyros   2013   Q4 - 14   Angola   $158
        Q4 - 20   Angola   $1,264(1)
Ocean Rig Athena (Expected delivery Mar. 2014)   2014   Q2 - 17   Angola   $757
Ocean Rig Apollo (Expected delivery Jan. 2015)   2015   Q1 - 18   Congo   $670
Ocean Rig Santorini (Expected delivery Dec. 2015)   2015   N/A   N/A   N/A
Total               $5,351

(1) Letter of Award is subject to definitive documentation and other approvals.

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
 December 31,
    Year Ended
December 31,
    2012     2013     2012     2013  
Drilling revenues, net   $ 229,751     $ 345,458     $ 941,903     $ 1,180,250  
Drilling rig operating expenses     173,092       138,311       563,583       504,957  
Depreciation and amortization     56,454       65,275       224,479       235,473  
General and administrative expenses and other, net     23,528       41,182       83,780       126,868  
Legal settlements and other, net     -       -       4,524       6,000  
Operating income/(loss)     (23,323 )     100,690       65,537       306,952  
OTHER INCOME/(EXPENSES):                                
Interest and finance costs, net of interest income     (29,826 )     (46,952 )     (115,874 )     (210,969 )
Gain/(loss) on interest rate swaps     (4,860 )     (2,384 )     (36,974 )     8,616  
Other, net     (1,650 )     (2,198 )     (1,068 )     3,315  
Income taxes     (11,354 )     (9,492 )     (43,957 )     (44,591 )
Total other expenses     (47,690 )     (61,026 )     (197,873 )     (243,629 )
Net income/ (loss)   $ (71,013 )   $ 39,664     $ (132,336 )   $ 63,323  
Earnings/ (loss) per common share, basic and diluted   $ (0.54 )   $ 0.30     $ (1.00 )   $ 0.48  
Weighted average number of shares, basic and diluted     131,696,955       131,762,989       131,696,935       131,727,504  
Ocean Rig UDW Inc.
Unaudited Condensed Consolidated Balance Sheets

(Expressed in Thousands of U.S. Dollars)
  December 31, 2012  
December 31, 2013
  Cash, cash equivalents and restricted cash (current and non-current)   $ 510,061   $ 659,028
  Other current assets     242,447     400,689
  Advances for drillships under construction and related costs     992,825     662,313
  Drilling rigs, drillships, machinery and equipment, net     4,399,462     5,777,025
  Other non-current assets     80,319     121,395
  Total assets     6,225,114     7,620,450
  Total debt     2,853,410     3,993,236
  Total other liabilities     463,189     647,371
  Total stockholders' equity     2,908,515     2,979,843
  Total liabilities and stockholders' equity   $ 6,225,114   $ 7,620,450

Adjusted EBITDA Reconciliation

Adjusted EBITDA represents earnings before interest, taxes, depreciation and amortization, class survey costs 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/ (loss) to Adjusted EBITDA:

(Dollars in thousands)  

Three Months Ended
December 31,

Year Ended
December 31,
    2012     2013   2012     2013  
Net income/ (loss)   $ (71,013 )   $ 39,664   $ (132,336 )   $ 63,323  
Add: Net interest expense     29,826       46,952     115,874       210,969  
Add: Depreciation and amortization     56,454       65,275     224,479       235,473  
Add: Class survey costs     43,912       -     65,491       -  
Add: Income taxes     11,354       9,492     43,957       44,591  
Add: Loss/ (Gain) on interest rate swaps     4,860       2,384     36,974       (8,616 )
Adjusted EBITDA   $ 75,393     $ 163,767   $ 354,439     $ 545,740  

Drill Rigs Holdings Inc - Supplemental Information

Leiv Eiriksson

The Leiv Eiriksson is currently drilling offshore Norway under our three-year contract with Rig Management Norway. During the fourth quarter of 2013, the unit achieved utilization of 93%. 

Eirik Raude

The Eirik Raude is currently drilling offshore West Africa under our contract with Lukoil, which is expected to end in December of 2014. During the fourth quarter of 2013, the unit achieved utilization of 100% .

Summary Financials of Drill Rig Holdings Inc.:

    Year ended
December 31, 2012
    Year ended December 31, 2013  
(Dollars in thousands)                
Total revenue     313,479     $ 407,633  
EBITDA     99,651       229,419  
Total assets   $ 1,271,829       1,366,349  
Total debt, net of financing fees     (781,001 )     (784,485 )
Shareholders equity     (337,086 )     (458,298 )
Total cash and cash equivalents   $ 62,429     $ 87,007  

EBITDA reconciliation of Drill Rig Holdings Inc.:

(Dollars in thousands)   Three Months Ended
December 31,
  Year Ended
December 31,
    2012     2013   2012     2013
Net Income/(loss)   $ (75,962 )   $ 34,756   $ (75,875 )   $ 109,013
Add: Net interest expense     6,885       15,333     30,451       44,117
Add: Depreciation and amortization     18,117       17,841     73,322       72,110
Add: Class survey costs     43,912       -     65,491       -
Add: Income taxes     17       1,573     6,262       4,179
EBITDA   $ (7,031 )   $ 69,503   $ 99,651     $ 229,419

Conference Call and Webcast: February 19, 2014

As announced, the Company's management team will host a conference call, on Wednesday, February 19, 2014 at 8:00 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 February 26, 2014. 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 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 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 11 offshore ultra deepwater drilling units, comprising of 2 ultra deepwater semisubmersible drilling rigs and 9 ultra deepwater drillships, 1 of which is scheduled to be delivered to the Company during 2014 and 2 of which are scheduled to be delivered during 2015.

Ocean Rig's common stock is listed on the NASDAQ Global Select Market where it trades under the symbol "ORIG"

Visit the Company's website at

Forward-Looking Statement

Matters discussed in this release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements in order to encourage companies to provide prospective information about their business. The Company desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is including this cautionary statement in connection with such safe harbor legislation.

Forward- looking statements relate to Ocean Rig's expectations, beliefs, intentions or strategies regarding the future. These statements may be identified by the use of words like "anticipate," "believe," "estimate," "expect," "intend," "may," "plan," "project," "should," "seek," and similar expressions. Forward-looking statements reflect Ocean Rig's current views and assumptions with respect to future events and are subject to risks and uncertainties.

The forward-looking statements in this release are based upon various assumptions, may of which are based, in turn, upon further assumptions, including without limitation, management's examination of historical operating trends, data contained in Ocean Rig's records and other data available from third parties. Although Ocean Rig believes that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond Ocean Rig's control, Ocean Rig cannot assure you that it will achieve or accomplish these expectations, beliefs or projections described in the forward- looking statements contained herein. Actual and future results and trends could differ materially from those set forth in such statements.

Important factors that, in Ocean Rig's view, could cause actual results to differ materially from those discussed in the forward-looking statements include (i) factors related to the offshore drilling market, including supply and demand, utilization, day rates and customer drilling programs; (ii);hazards inherent in the drilling industry and marine operations causing personal injury or loss of life, severe damage to or destruction of property and equipment, pollution or environmental damage, claims by third parties or customers and suspension of operations; (iii) changes in laws and governmental regulations, particularly with respect to environmental matters; (iv) the availability of competing offshore drilling vessels; (v) political and other uncertainties, including risks of terrorist acts, war and civil disturbances; piracy; significant governmental influence over many aspects of local economies, seizure; nationalization or expropriation of property or equipment; repudiation, nullification, modification or renegotiation of contracts; limitations on insurance coverage, such as war risk coverage, in certain areas; political unrest; foreign and U.S. monetary policy and foreign currency fluctuations and devaluations; the inability to repatriate income or capital; complications associated with repairing and replacing equipment in remote locations; import-export quotas, wage and price controls imposition of trade barriers; regulatory or financial requirements to comply with foreign bureaucratic actions; changing taxation policies; and other forms of government regulation and economic conditions that are beyond our control; (vi) the performance of our rigs; (vii) our ability to procure or have access to financing and comply with our loan covenants; (viii) our ability to successfully employ our drilling units; (ix) our capital expenditures, including the timing and cost of completion of capital projects; and (x) our revenues and expenses. Due to such uncertainties and risks, investors are cautioned not to place undue reliance upon such forward-looking statements.

Risks and uncertainties are further described in reports filed by Ocean Rig UDW Inc. with the U.S. Securities and Exchange Commission.

Contact Information:

Investor Relations / Media:

Nicolas Bornozis
Capital Link, Inc. (New York)
Tel. 212-661-7566