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DO DO
Q2 2012 Earnings Call Transcript

Transcript Call Date 07/19/2012

Operator: Good Morning. My name is Maria and I'll be your conference operator today. At this time, I would like to welcome everyone to the Diamond Offshore Second Quarter 2012 Earnings Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session.

Thank you. I would now like to turn the call over to Darren Daugherty to begin. Please go ahead.

Darren Daugherty - Director, IR: Thank you, Operator. Good morning, everyone and thank you for joining us. With me on the call today are Larry Dickerson, President and Chief Executive Officer; Gary Krenek, Senior Vice President and Chief Financial Officer; and Michael Acuff, Senior Vice President of Marketing.

Before we begin our remarks, I should remind you that statements made during this conference call may constitute forward-looking statements which are inherently subject to a variety of risks and uncertainties. Actual results achieved by the Company may differ materially from projections made in any forward-looking statements. Forward-looking statements may include, but are not limited to discussions about future revenues and earnings, capital expenditures, industry conditions and competition, dates that drilling rigs will enter service, as well as management's plans and objectives for the future.

A discussion of the risk factors that could impact these areas of the Company's overall business and financial performance can be found in the Company's 10-K and 10-Q filings with the SEC. Given these factors, investors and analysts should not place undue reliance on forward-looking statements. Forward-looking statements reflect circumstances at the time they are made, and the Company expressly disclaims any obligation to update or revise any forward-looking statements.

After we have discussed our results, we will have a question-and-answer session. We ask that you please limit it to one question and a follow-up, so that we can open the floor to as many people as possible.

Now, I'll turn the call over to Larry.

Lawrence R. Dickerson - President and CEO: Thank you and welcome again to everyone for joining us. We were very pleased obviously with the results that we reported for the quarter, and I will start by making some comments on the operating results and some of our future day-rates. I’ll be followed by Michael Acuff, who will elaborate more on markets around the world in an opening statement and then Gary Krenek, our CFO, will make some further commentary on the numbers that are in this quarter and how those may impact us on a go-forward basis.

First on the operations, removing the items related to the sale of the jack-ups, we still substantially performed above our budget and the average street consensus. One thing I'd like to comment on there, we’ve got lots of initiatives ongoing – in place for a long time and some of those really bore fruit in this quarter, particularly, efforts to reduce unplanned downtime. We came in at 60 days of unplanned downtime, in other words, things that result from equipment breaking or being taken offline where the rig has to suspend operations during the quarter - the past two quarters, on a budgetary basis, we have experienced in the 140 day range and that's what we set as our budget for the year. We have previously performed better than that, we did 110 days I think end of last year and we were in the 60s if you go back several years, but we're very pleased with that. And as a reflection of our preventative maintenance program and the amount of spares that we have so that if equipment fails we're able to very rapidly get that replaced. I'll just give you an example, this happened here right at the beginning of July, it wasn't in the quarter but it's typical, on one of our rigs during a routine maintenance inspection one of our employees noted that some sheaves on the Crown Mounted Compensator on a big rig appeared to have a crack. And I have seen photographs of what he looked at and given the condition with grease and sea spray and all kind of things on it, it was really a tremendous catch. The rig was able to obviously, again on top of this instead of having a catastrophic failure that could have had a not only been down for longer period of time, but could – had the potential for injuries, we're able to get - plan what we're going to do. Our initial plan was that it may take four day but due to the competency of our crews and great planning they were able to execute this change out in 55 hours.

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