Ocean Rig buys back $52.2 million of senior notes in Q3, ends quarter with $4.67 billion debt

By Lisa Kerner

Charlotte, N.C., Dec. 8 – Ocean Rig UDW Inc. spent $52.2 million during the third quarter to purchase a portion of its 7.25% senior unsecured notes due 2019 and a portion of its 6.5% senior secured notes due 2017, said executive vice president Anthony Kandylidis during the company’s earnings call on Tuesday.

To date, the company has bought back $268.1 million of the 7.25% notes and $156.3 million of the 6.5% notes.

As of Dec. 7, there is $232 million outstanding on the 7.25% notes and $644 million outstanding on the 6.5% notes, according to the earnings presentation.

Additional outstanding debt includes $1.9 billion on a term loan B, $1.3 billion on a second term loan B and $433 million on a commercial bank loan.

Ocean Rig’s next large debt maturity of $715 million occurs in the fourth quarter of 2017.

Total debt at Sept. 30 was $4.67 billion, compared to $4.37 billion at Dec. 31. The company’s weighted average debt maturity is 4.4 years.

Cash, cash equivalents and restricted cash totaled about $896 million at quarter end and $532 million at the end of 2014.

There are no immediate plans to repurchase any additional debt, said management during the question and answer portion of the call.

Also during the quarter, Ocean Rig reached an agreement to postpone delivery of the Ocean Rig Santorini until the second quarter of 2017. The agreement significantly reduces the company’s obligations over the next two years, according to the release.

Financial highlights

Ocean Rig had third-quarter net income of $138.4 million, or $0.94 basic and diluted earnings per share. This compares to net income of $104.2 million, or $0.79 basic and diluted earnings per share, for the prior-year period.

Revenues were down $78.3 million year over year at $437.2 million. The decrease was attributed to fewer fleet operating days.

“The market remains challenging with limited visibility of new contracts and is likely to remain so through the next year,” said chairman and chief executive officer George Economou in the release. Even though we remain positive for the long term prospects of the industry, given the current environment, we will adjust our available capacity to the new market conditions.”

Ocean Rig is a deepwater driller based in Nicosia, Cyprus.

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