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Paragon Offshore: Results And Provides Fleet Status Report

The following excerpt is from the company's SEC filing.

Adjusted EBITDA of

$140.3 million

net of impairments and tax benefit; revenues of

$369.0 million

Non-cash impairment charge of

$1.15 billion

Expect full-year 2015 contract drilling services costs to decrease by 13% and G&A to decrease by 14% year-on-year

$733.0 million

cash balance

$1.29 billion

Board has approved engagement with lenders and noteholders regarding proposal to improve strength of balance sheet and maximize value for all stakeholders

Delivery date for

Prospector 7



November 9, 2015

- Paragon Offshore plc (“Paragon”) (NYSE: PGN) today reported a

third quarter

net loss of

$1.08 billion

, or a loss of


per diluted share as compared to a

$869.2 million


per diluted share. Results for the current quarter included:

, or $13.22 per share, non-cash asset impairment charge comprising:

$781.2 million

related to five rigs of Paragon’s floating fleet including the

Paragon MSS2

Paragon MDS1, Paragon DPDS1, Paragon DPDS2

, and

Paragon DPDS3

$289.3 million

related to 16 rigs of Paragon’s jackup fleet including rigs currently cold-stacked;

$43.0 million

related to deposits previously made by subsidiaries of Prospector Offshore Drilling S.A. to the shipyard for the construction of

Prospector 6, Prospector 7

Prospector 8

$37.4 million

of goodwill related to the company’s previous acquisitions

$66.3 million

per share, tax benefit as a result of the impairment

Excluding the above charge and tax benefit, Paragon’s adjusted net loss for the quarter (see Reconciliation of GAAP to Non-GAAP Financial Measures Table for a reconciliation to net income) was

$0.3 million

per diluted share. Results for the third quarter 2014 included a

$928.0 million


per diluted share, non-cash impairment charge net of tax benefits related to Paragon’s three drillships in Brazil and its cold-stacked FPSO in the U.S. Gulf of Mexico and a

$6.9 million

per diluted share, gain related to the previously disclosed repurchase of an aggregate principal amount of $50.2 million of its senior unsecured notes.

“Conditions in the contract drilling industry continued to worsen during the third quarter as customers continued to curtail capital spending in light of low commodity prices,” said Randall D. Stilley, President and Chief Executive Officer. “Dayrates and utilization deteriorated for all rig classes in all markets and as a result, our annual assessment of asset values resulted in a required impairment of various rig values. Despite these conditions, Paragon delivered operational performance ahead of expectations for the quarter.”

Stilley continued, “Consistent with our strategy as the high-quality, low-cost drilling contractor, we have taken steps to lower costs as we aggressively market our available units. We have quickly stacked idle rigs, reduced shorebased support costs, and lowered our corporate operations support costs. As a result, we expect our 2015 full-year contract drilling services costs will be approximately 13% lower and our G&A costs to be approximately 14% lower than 2014 totals, excluding certain costs related to our ongoing review of strategic alternatives related to our capital structure. We also expect our capital spending for the year will be close to $60 million below 2014 levels. Finally, Paragon has a significant available cash balance of

$733 million

, providing liquidity and flexibility in this difficult market.”

Total revenues for the


$393.2 million


quarter of

. Paragon reported utilization for its marketed rig fleet, which excludes available days related to rigs that were stacked and not marketed during the quarter, as

percent for the second and

. Average daily revenues decreased

percent in the


per rig compared to the previous quarter average of


per rig. Contract drilling services costs declined in the

$190.5 million

$197.0 million

Net cash from operating activities was

$79.7 million

as compared to $96.6 million for the

. Capital expenditures in the


$43.7 million

September 30, 2015

, liquidity, defined as cash and cash equivalents plus availability under the company’s revolving credit facility, totaled

$735.7 million

while the company’s leverage ratio, the ratio of the company’s net debt to trailing twelve months EBITDA as defined in the company’s revolving credit facility, was

On July 24, 2015 the company closed a sale-leaseback transaction in connection with

Prospector 1

Prospector 5

. Net of fees and expenses, the company received proceeds of approximately

$291.6 million

Operating Highlights

Paragon’s total contract backlog at

was an estimated

$1.59 billion

at June 30, 2015, including approximately

$142.1 million

of backlog for the

which Paragon’s customer Petrobras has indicated it may contest in connection with the length of prior shipyard projects relating to the rig.

Utilization of Paragon’s marketed floating rig fleet was

percent in both the

and the

. Average daily revenues for Paragon’s floating rig fleet increased

percent to


per rig in the


Utilization of Paragon’s marketed jackup rig fleet was

and in the

. Average daily revenues for Paragon’s jackup fleet during the

declined by


per rig from


per rig during the

At the end of the

, an estimated 55 percent of the marketed rig operating days were committed for

percent and

percent of the floating and jackup rig days, respectively. The calculations for committed operating days exclude available days related to rigs that were stacked and not marketed during the quarter.

During the quarter, Paragon added approximately

$39.3 million

in net backlog related primarily to

$209.8 million

of previously disclosed new contracts and extensions in the Middle East and North Sea, offset by

$170.5 million

in backlog reductions primarily related to the early release by Petrobras of the

in Brazil. In the Middle East, the

Paragon B152

received a contract extension from late November 2015 to late November 2017 at a rate of $81,000 while the

Dhabi II

received a contract extension from mid-July 2015 to mid-July 2017 at a dayrate of $76,000. In the North Sea, the

Paragon C461

received a contract extension from mid-November 2015 to mid-November 2017 at a dayrate of $113,000. The

Paragon C20051

received a contract extension from early December 2015 to late May 2016 at dayrates between $125,000 and $135,000. The company agreed to a backlog swap between...