Dolphin Drilling (DDRIL) Q4 2023 earnings summary

Executive summary

• Fleet expanded to five rigs after the Paul B. Loyd, Jr. and Transocean Leader acquisitions; three rigs were contracted, with reported revenue backlog of $1.1bn, including $480m firm and $634m in options and LOIs.

• Priorities included restarting rigs, collecting overdue GHL receivables and converting backlog into cash flow.

Financial highlights

• Q4 revenue was $23.6m versus $24.2m in Q3; adjusted EBITDA was $3.9m versus $4.6m, with a 19% adjusted margin. Reported EBITDA was $2.8m versus $4.6m in Q3.

• Q4 net profit was $15.7m, or $0.07/share, including a $22.2m reversal of prior inventory and PP&E impairments; excluding the reversal, net loss was $0.03/share.

• FY 2023 revenue was $71.3m versus $21.1m in FY 2022; adjusted EBITDA was $(6.6)m versus $(48.4)m, while reported EBITDA was $(8.0)m versus $(52.4)m.

• FY 2023 net loss was $7.2m versus $68.4m in FY 2022; FY basic EPS was $(0.06) versus $(0.55).

• Q4 revenue included $3.2m of other revenue, primarily mobilization-fee amortization and cost recharges.

Outlook and guidance

• Paul B. Loyd, Jr. has a Harbour Energy contract to February 2028 plus options; estimated EBITDA backlog is $150m. Harbour Energy’s options could extend the contract by five years.

• Blackford Dolphin’s Oil India award covers 14 months plus seven option months, with $156m of backlog including other services; campaign start is expected in Q3 2024.

• Borgland Dolphin’s EnQuest contract starts in April 2025; a UK LOI is planned to follow, with options potentially extending total backlog to 3.5 years. Reactivation and SPS budget is $20m; rig acceptance is scheduled for 15 March 2025.

• Estimated EBITDA backlog provides high visibility into 2025, with operational leverage expected in 2026 and beyond.