Ocean Rig UDW Reports Strong Quarter

Ocean Rig UDW Inc., an international contractor of offshore deep-water drilling services today announced its unaudited financial and operating results for the second quarter ended June 30, 2013.

The Company recorded a net income of $38.8 million, or $0.29 basic and diluted earnings per share, for the three-month period ended June 30, 2013, as compared to a net loss of $2.8 million, or $0.02 basic and diluted losses per share, for the three-month period ended June 30, 2012. Adjusted EBITDA was $115.8 million for the second quarter of 2013, as compared to $101.1 million for the same period in 2012.

Revenues from drilling contracts decreased marginally by $3.7 million to $259.8 million for the three-month period ended June 30, 2013, as compared to $263.5 million for the same period in 2012.

Rig operating expenses decreased to $117.0 million and total depreciation and amortization decreased to $55.6 million for the three-month period ended June 30 2013, from $145.1 million and $56.8 million, respectively, for the three-month period ended June 30, 2012. Total general and administrative expenses increased to $23.5 million in the second quarter of 2013 from $22.3 million during the comparative period in 2012.

Recent Events

– On July 30, 2013, the Company signed definitive documentation with Total E&P Congo, following the previously announced Letter of Award, for its ultra deepwater drillship Ocean Rig Apollo.

The contract is for a three-year drilling campaign offshore West Africa, with an estimated backlog of approximately $677 million, and is expected to commence in the first quarter of 2015.

– On July 19, 2013, the Company received a Letter of Award for its ultra deepwater drillship Ocean Rig Skyros from a major oil company. The Letter of Award is for a six-year contract for drilling offshore West Africa, with an estimated backlog of approximately $1.3 billion. The contract is expected to commence in direct continuation of the previous contract for the Ocean Rig Skyros with Total E&P Angola before the first quarter of 2015.

– In July 2013, the Company entered into a $1.9 billion senior secured term loan facility, comprised of tranche B-1 term loans in an aggregate principal amount equal to $1,075.0 million and tranche B-2 term loans in an aggregate principal amount equal to $825.0 million, with respective maturity dates in the first quarter of 2021 and the third quarter of 2016.

– On July 10, 2013, the Company entered into a drilling contract with Total E&P Angola for a fivewell program or a minimum of 275 days for its ultra deepwater drillship Ocean Rig Skyros for drilling offshore West Africa, with an estimated backlog of approximately $190 million. The Ocean Rig Skyros is expected to commence this contract upon delivery from the shipyard in November 2013.

George Economou, Chairman and Chief Executive Officer of the Company commented: “We are very pleased with the operating performance of our fleet in the second quarter. Although our results were partially affected by the planned mobilization of three of our units, the improvement in fleet operating efficiency (96% average fleet-wide) and cost control initiatives have resulted in a strong quarter for our Company.

“I am pleased to report that we have received a Letter of Award for the Ocean Rig Skyros for a six-year contract for drilling offshore West Africa. With the addition of this award our fleet is effectively fully contracted through 2014. I believe that our current contract backlog of approximately $6.0 billion provides us with a solid foundation for the years to come.

“We believe that the ultra-deepwater (“UDW”) drilling market for high quality assets will remain strong in the foreseeable future as indicated by the high level of demand we are continuing to witness. After multiple large offshore discoveries, the industry moves into the development stage of the well cycle, which is expected to result in more technically complex projects and longer term contracts. We are excited about the future employment prospects of our high quality homogeneous fleet and believe we are optimally positioned in the UDW market.

“During the third quarter we successfully completed the refinancing of the Nordea and Deutsche Bank facilities with a new $1.9 billion senior secured term loan facility comprised of two term loans. The transition from project-based debt to corporate debt marks an important milestone in our Company’s development. We have released restricted cash, extended and staggered our debt maturities, relaxed certain dividend restrictions and reduced our mandatory annual debt amortization by approximately $158.0 million. Our prime relationships with commercial lenders and national export credit agencies, as well as our proven access to the debt capital markets, have enabled us to diversify our funding sources and provide us with considerable financing flexibility.

“We will continue to build on the Ocean Rig story and execute our plans to maximize long-term value for all our stakeholders.”

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Press Release, August 09, 2013