OREANDA-NEWS. Pacific Drilling S.A. (NYSE:PACD) today announced a net loss for fourth-quarter 2015 of $13.6 million or $0.06 per diluted share, compared to net income for third-quarter 2015 of $41.0 million or $0.19 per diluted share. Net income for fourth-quarter 2014 was $68.0 million or $0.32 per diluted share.

Net income for full-year 2015 was $126.2 million or $0.60 per diluted share, compared to net income for full-year 2014 of $188.3 million or $0.87 per diluted share.

On Oct. 29, 2015, we exercised our right to rescind the construction contract for the Pacific Zonda due to the shipyard’s failure to timely deliver the vessel in accordance with the specifications of the construction contract, and in connection with the rescission, the 2014 revolving credit facility was terminated on Oct. 30, 2015. Our fourth-quarter and full-year 2015 net income included a non-recurring loss of $40.2 million from the construction contract rescission and a $6.0 million write-off of deferred financing charges from termination of the 2014 revolving credit facility. A reconciliation of net income excluding charges(d) to reported net income is included in an accompanying schedule to this release.

CEO Chris Beckett said, “Pacific Drilling delivered another financially robust quarter capping a year with a strong revenue efficiency, and the most cost efficient operations since the company began operating, delivering record adjusted EBITDA for the year. In the face of a very challenging market environment, the Pacific team has demonstrated tremendous dedication and professionalism enabling us to achieve our cost cutting goals, generate additional liquidity, and achieve new performance records.”

Mr. Beckett continued, “Going forward, our efforts will continue to be focused on providing our clients with the highest quality service and safe and efficient operations, in combination with innovative technical and creative commercial solutions, which will continue to be differentiating factors for us. With the shipyard’s failure to deliver our final drillship by the required date, we have completed our current newbuild program and have no further new construction expenditures. Pacific Drilling has the newest and highest-quality fleet in the industry and is well positioned for an extended downturn.”

Fourth-Quarter and Full-Year 2015 Operational and Financial Commentary

Contract drilling revenue for fourth-quarter 2015 was $267.6 million, which included $20.4 million of deferred revenue amortization, compared to contract drilling revenue of $260.2 million for third-quarter 2015, which included $21.7 million of deferred revenue amortization. Revenue benefited from an overall improved revenue efficiency performance during the quarter, offset by the Pacific Khamsin completing its drilling operations on Dec. 17, 2015. Contract drilling revenue for the year ended Dec. 31, 2015, was $1,085.1 million, including $86.3 million of deferred revenue amortization, as compared to contract drilling revenue of $1,085.8 million, including $109.2 million of deferred revenue amortization, for the year ended Dec. 31, 2014.

Operating expenses for fourth-quarter 2015 were $104.9 million as compared to $98.3 million for third-quarter 2015. Operating expenses for fourth-quarter 2015 included $5.8 million in amortization of deferred costs, $7.0 million in reimbursable expenses, and $7.6 million in shore-based and other support costs. Direct rig-related daily operating expenses for operating rigs, excluding reimbursable costs and non-recurring personnel charges related to our Nigerian operations, averaged $150,300 in fourth-quarter 2015, as compared to $154,800 for third-quarter 2015. Operating expenses for full-year 2015 were $431.3 million as compared to our initial 2015 guidance of $500-$525 million and $459.6 million for full-year 2014. The decrease in operating expenses was primarily the result of fleet-wide cost savings measures. In 2015, operating expenses included $26.0 million in amortization of deferred costs, $27.3 million in reimbursable expenses, and $32.5 million in shore-based and other support costs.

General and administrative expenses for fourth-quarter 2015 were $12.6 million as compared to $13.2 million for third-quarter 2015. General and administrative expenses for full-year 2015 were $55.5 million as compared to our initial 2015 guidance of $63-$66 million and $57.7 million for the prior year. The decrease in general and administrative expenses was primarily related to Company-wide cost savings measures.

Adjusted EBITDA for fourth-quarter 2015 was $149.8 million, compared to EBITDA of $148.2 million in the prior quarter. Adjusted EBITDA for the year ended Dec. 31, 2015, was $595.1 million, compared to adjusted EBITDA of $563.3 million for the year ended Dec. 31, 2014. Adjusted EBITDA margin for full-year 2015 was 54.8 percent, as compared to adjusted EBITDA margin of 51.9 percent for full-year 2014. A reconciliation of EBITDA and adjusted EBITDA to net income is included in the accompanying schedules to this release.

Interest expense for fourth-quarter 2015 was $50.1 million, as compared to $36.4 million for third-quarter 2015, primarily due to a reduction in capitalized interest resulting from placing the Pacific Meltem into service in late August 2015. Interest expense for full-year 2015 was $156.4 million.

Liquidity and Capital Expenditures

For full-year 2015, cash flow from operations was $422.1 million. Cash balances totaled $116.0 million as of Dec. 31, 2015, and total outstanding debt was $2.89 billion. As of Dec. 31, 2015, we had approximately $566.0 million of available liquidity, including $450.0 million of undrawn capacity under our 2013 revolving credit facility.

CFO Paul Reese commented, “2015 was a year of significant cost savings, which, coupled with the fourth quarter amendments of our credit facilities, generated substantial additional liquidity. In the fourth quarter, we exceeded our goals bringing daily rig related operating expenses to $150,000 and daily idle costs below $40,000. With no further new-build construction capex and no debt maturities until Dec. 2017, the cash that is generated from our existing backlog should reduce our net debt balance significantly. This positions us well during these challenging times in our industry.”

About Pacific Drilling

With its best-in-class drillships and highly experienced team, Pacific Drilling is committed to becoming the industry’s preferred high-specification, floating-rig drilling contractor. Pacific Drilling’s fleet of seven drillships represents one of the youngest and most technologically advanced fleets in the world.