NICOSIA, CYPRUS--(Marketwired - Nov 5, 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 third quarter ended September 30, 2014.

Third Quarter 2014 Financial Highlights

  • For the third quarter of 2014, the Company reported net income of $104.2 million, or $0.79 basic and diluted earnings per share.

Included in the third quarter 2014 results are:

  • Non-cash write offs and breakage costs associated with the full refinancing of the $1.35 billion Senior Secured Credit Facility totaling $22.0 million or $0.17 per share.

Excluding the above items, the Company would have reported net income of $126.2 million, or $0.96 per share.

  • The Company reported Adjusted EBITDA of $281.8 million for the third quarter of 2014, as compared to $161.4 million for the third quarter of 2013.(1)

Recent Highlights

  • On October 15, 2014, the Company's Board of Directors declared a quarterly cash dividend with respect to the quarter ended September 30, 2014, of $0.19 per common share, to shareholders of record as of October 31, 2014 and payable on or about November 11, 2014.

  • On October 14, 2014, Ocean Rig Partners LP (the "MLP"), a wholly-owned subsidiary of the Company, filed a registration statement on Form F-1 with the SEC relating to a possible initial public offering of units in a majority-owned master limited partnership.

  • The Company has been awarded extensions of the drilling contracts for the Ocean Rig Corcovado and the Ocean Rig Mykonos by Petrobras for drilling offshore Brazil. The term of each extension is for 1,095 days with a total combined revenue backlog of over $1.1 billion, excluding reimbursement by Petrobras for contract related equipment upgrades. The new contracts will commence in direct continuation from the end of the current agreements with Petrobras, in the first and second quarter of 2015, respectively.

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

"We are pleased to report that during the third quarter of 2014, our fleet operated at 98.6% utilization rate which marks our best operating performance yet and is a testament to the superior operating results associated with modern assets and the collective efforts of our team. In addition and as a result of the high utilization rate as well as our cost control initiatives, we are happy to report a record Adjusted EBITDA of $281.8 million for the third quarter.

"During the fourth quarter we were awarded by Petrobras, three year contract extensions for our drillships Ocean Rig Corcovado and Ocean Rig Mykonos. These multi year extensions increase our total revenue backlog to $5.5 billion and result in contract coverage of 87% and 64% of our calendar days in 2015 and 2016, respectively. With its strong backlog, Ocean Rig remains insulated from the short-term softness seen in the market today.

"Our focus on value creation for our stakeholders continues and consists of several initiatives. Following our corporate restructuring last year, we have achieved significant cost reductions, driving our average fleet-wide daily operating expenses to below $200,000 per drilling unit, despite our presence in high cost drilling areas (Norway, Angola and Brazil). In addition, our MLP subsidiary filed a registration statement with the SEC and the actual MLP IPO launch will depend on prevailing market conditions.

"I am also pleased to report that for the third consecutive quarter, our Board of Directors declared a quarterly cash dividend of $0.19 per share to our shareholders, with respect to operations during the third quarter of 2014. We expect this will continue into the future.

"The current market softness has increased stacking activity of older and less capable rigs. High specification units have improved capabilities and offer significant cost savings to oil companies by reducing ancillary drilling related costs. In previous down cycles, approximately 18% of the drilling fleet was cold stacked before the market improved. Thus we believe that cold stacking of older units will accelerate in the future and drive the ensuing market recovery."

Financial Review: 2014 Third Quarter

The Company recorded net income of $104.2 million, or $0.79 basic and diluted earnings per share, for the three-month period ended September 30, 2014, as compared to a net loss of $21.5 million, or $0.16 basic and diluted loss per share, for the three-month period ended September 30, 2013. Adjusted EBITDA(1) was $281.8 million for the third quarter of 2014, as compared to $161.4 million for the same period in 2013.

Revenues from drilling contracts increased by $187.0 million to $515.5 million for the three-month period ended September 30, 2014, as compared to $328.5 million for the same period in 2013.

Drilling rigs and drillships' operating expenses increased to $198.4 million and total depreciation and amortization increased to $81.7 million for the three-month period ended September 30, 2014, from $128.9 million and $61.2 million, respectively, for the three-month period ended September 30, 2013. Total general and administrative expenses decreased to $33.5 million in the third quarter of 2014 from $39.6 million during the same period in 2013.

Interest and finance costs, net of interest income, amounted to $81.8 million for the three-month period ended September 30, 2014, compared to $102.3 million for the three-month period ended September 30, 2013.

(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 October 31, 2014:

Drilling Rigs / Drillships:

Unit   Year built/ or Scheduled Delivery   Redelivery   Operating Area   Backlog ($m)
Leiv Eiriksson   2001   Q4 - 16   Norwegian Continental Shelf   $ 401
Eirik Raude   2002   Q1 - 15   Ivory Coast   36
        Q4 - 15   Falkland Islands   164
Ocean Rig Corcovado   2011   Q2 - 15   Brazil   88
        Q2 - 18   Brazil   567
Ocean Rig Olympia (1)   2011   Q3 - 15   Angola   170
Ocean Rig Poseidon   2011   Q2 - 16   Angola   411
Ocean Rig Mykonos   2011   Q1 - 15   Brazil   63
        Q1 - 18   Brazil   565
Ocean Rig Mylos   2013   Q3 - 16   Brazil   428
Ocean Rig Skyros   2013   Q4 - 14   Angola   25
        Q3 - 21   Angola   1,298
Ocean Rig Athena   2014   Q2 - 17   Angola   627
Ocean Rig Apollo   Jan. 2015   Q2 - 18   West Africa   692
Ocean Rig Santorini   Jun. 2016   N/A   N/A   N/A
Ocean Rig TBN#1   Feb. 2017   N/A   N/A   N/A
Ocean Rig TBN#2   Jun. 2017   N/A   N/A   N/A
Total             $5.5 billion

(1) An addendum has been signed with TEPA to extend the validity of the fixed price option at current rates of $595,000 per day, subject to certain conditions such as rig availability.

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
 September 30,
    Nine Months Ended
September 30,
    2013     2014     2013     2014  
Revenues from drilling contracts   $ 328,513     $ 515,514     $ 834,792     $ 1,317,711  
Drilling rig operating expenses     128,906       198,413       366,646       533,017  
Depreciation and amortization     61,231       81,744       170,198       239,835  
General and administrative expenses     39,618       33,510       85,686       96,915  
Legal settlements and other, net     -       1,145       6,000       2,733  
Operating income     98,758       200,702       206,262       445,211  
OTHER INCOME/(EXPENSES):                                
Interest and finance costs, net of interest income     (102,281 )     (81,819 )     (164,017 )     (225,575 )
Gain/(loss) on interest rate swaps     (8,871 )     3,943       11,000       (6,224 )
Other, net     1,439       (638 )     5,513       759  
Income taxes     (10,524 )     (17,940 )     (35,099 )     (41,873 )
Total other expenses, net     (120,237 )     (96,454 )     (182,603 )     (272,913 )
Net income / (loss) attributable to Ocean Rig UDW Inc.   $
)   $
Net income attributable to Ocean Rig UDW Inc. common stockholders   $
)   $
Earnings / (loss) per common share, basic and diluted   $ (0.16 )   $ 0.79     $ 0.18     $ 1.30  
Weighted average number of shares, basic and diluted     131,734,754       131,822,515       131,715,545       131,832,444  
Ocean Rig UDW Inc.
Unaudited Condensed Consolidated Balance Sheets
(Expressed in Thousands of U.S. Dollars)   December 31, 2013   September 30, 2014
  Cash, cash equivalents and restricted cash (current and non-current)   $ 659,028   $ 497,161
  Other current assets     400,689     533,819
  Advances for drillships under construction and related costs     662,313     592,204
  Drilling rigs, drillships, machinery and equipment, net     5,777,025     6,287,005
  Other non-current assets     121,395     131,124
  Total assets     7,620,450     8,041,313
  Total debt     3,993,236     4,376,708
  Total other liabilities     647,371     560,191
  Total stockholders' equity     2,979,843     3,104,414
  Total liabilities and stockholders' equity   $ 7,620,450   $ 8,041,313

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. 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
September 30,
    Nine Months Ended
September 30,
    2013     2014     2013     2014
Net income / (loss)   $ (21,479 )   $ 104,248     $ 23,659     $ 172,298
Add: Net interest expense     102,281       81,819       164,017       225,575
Add: Depreciation and amortization     61,231       81,744       170,198       239,835
Add: Income taxes     10,524       17,940       35,099       41,873
Add: Loss/ (Gain) on interest rate swaps     8,871       (3,943 )     (11,000 )     6,224
Adjusted EBITDA   $ 161,428     $ 281,808     $ 381,973     $ 685,805

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 third quarter of 2014, the unit achieved utilization rate of 93.5%. 

Eirik Raude

The Eirik Raude is currently drilling offshore Ivory Coast under our contract with Lukoil, which is expected to end in December 2014. During the third quarter of 2014, the unit achieved utilization of 100%. Following the completion of the Lukoil contract, the Eirik Raude is scheduled to commence mobilization from West Africa to the Falkland Islands to commence a minimum six well contract with Premier Oil. The drilling unit is expected to commence drilling operations under our Premier Oil contract in the first quarter of 2015.

Summary Financials of Drill Rig Holdings Inc.:

    Year ended
December 31, 2013
    Nine Months ended September 30, 2014  
(Dollars in thousands)                
Total assets   $ 1,366,349     $ 1,294,027  
Total debt, net of financing fees     (784,485 )     (787,256 )
Shareholders equity     (458,298 )     (405,784 )
Total cash and cash equivalents   $ 87,007     $ 10,723  
    Nine Months ended
September 30, 2013
    Nine Months ended September 30, 2014  
(Dollars in thousands)                
Total revenue   $ 295,327     $ 319,964  
EBITDA   $ 159,916     $ 178,353  

 EBITDA reconciliation of Drill Rig Holdings Inc.:

(Dollars in thousands)   Nine Months Ended September 30,
      2013     2014
Net Income   $ 74,257   $ 90,561
Add: Net interest expense     28,784     27,416
Add: Depreciation and amortization     54,269     58,839
Add: Income taxes     2,606     1,537
EBITDA   $ 159,916   $ 178,353

Conference Call and Webcast: November 6, 2014

As announced, the Company's management team will host a conference call, on Thursday, November 6, 2014 at 8:00 a.m. Eastern 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 November 13, 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 13 offshore ultra deepwater drilling units, comprising of 2 ultra deepwater semisubmersible drilling rigs and 11 ultra deepwater drillships, 1 of which is scheduled to be delivered to the Company during 2015, 1 of which is scheduled to be delivered to the Company during 2016 and 2 of which are scheduled to be delivered during 2017.

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, including the Company's most recently filed Annual Report on Form 20-F.

Contact Information:

Investor Relations / Media:

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