UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 
 
 
 
 
 
FORM 8-K
 
 
 
 
 
 
 
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of report (date of earliest event reported): November 9, 2015
 
 
 
 
 
 
PARAGON OFFSHORE plc
(Exact name of Registrant as specified in its charter)

 
 
 
 
 
 
 
 
 
 
 
 
England and Wales
 
001-36465
 
98-1146017
(State or other jurisdiction of
incorporation or organization)
 
(Commission
file number)
 
(I.R.S. employer
identification number)
 
 
 
 
3151 Briarpark Drive, Suite 700
Houston, Texas
 
77042
(Address of principal executive offices)
 
(Zip Code)
Registrant’s telephone number, including area code: + 1 832 783 4000
 
 
 
 
 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))



Item 2.02.    Results of Operation and Financial Condition.
On November 9, 2015, Paragon Offshore plc (the “Company”) issued a press release announcing its consolidated and combined financial results for the three and nine months ended September 30, 2015. A copy of such press release is included as Exhibit 99.1 hereto and will be published on the Company’s web site at www.paragonoffshore.com.
Pursuant to the rules and regulations of the Securities and Exchange Commission, the press release is being furnished and shall not be deemed to be “filed” under the Securities Exchange Act of 1934.
 

Item 9.01.    Financial Statements and Exhibits.
 
(d)
Exhibits

Exhibit 99.1
Paragon Offshore plc Press Release dated November 9, 2015.



2


SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
 
 
 
 
 
 
 
Paragon Offshore plc, a public limited company incorporated under the laws of England and Wales
 
 
 
 
Date:
November 9, 2015
 
 
 
 
 
 
 
 
 
 
 
By:
 
/s/ Steven A. Manz
 
 
 
Name:
 
Steven A. Manz
 
 
 
Title:
 
Senior Vice President and Chief Financial Officer


3


INDEX TO EXHIBITS

Exhibit No.
Description

99.1
Paragon Offshore plc Press Release dated November 9, 2015, announcing its consolidated and combined financial results for the three and nine months ended September 30, 2015.            



4





EXHIBIT 99.1
 
Paragon Offshore plc
3151 Briarpark Drive
Suite 700
Houston, Texas 77042
 
 
 
 
PRESS RELEASE
PARAGON OFFSHORE REPORTS THIRD QUARTER 2015 RESULTS AND PROVIDES FLEET STATUS REPORT
 
•
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
•
Contract backlog at September 30, 2015 of $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 extended

HOUSTON, November 9, 2015 - Paragon Offshore plc (“Paragon”) (NYSE: PGN) today reported a third quarter 2015 net loss of $1.08 billion, or a loss of $12.46 per diluted share as compared to a third quarter 2014 net loss of $869.2 million, or a loss of $10.26 per diluted share. Results for the current quarter included:
•
a $1.15 billion, 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, and Prospector 8; and
◦
$37.4 million of goodwill related to the company’s previous acquisitions
•
a $66.3 million, or $0.76 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, or $0.00 per diluted share. Results for the third quarter 2014 included a $928.0 million, or $10.95 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, or $0.08 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.”


5


Total revenues for the third quarter of 2015 were $369.0 million compared to $393.2 million in the second quarter of 2015. 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 69 percent for the second and third quarters of 2015. Average daily revenues decreased three percent in the third quarter of 2015 to $144,000 per rig compared to the previous quarter average of $149,000 per rig. Contract drilling services costs declined in the third quarter to $190.5 million compared to $197.0 million in the second quarter of 2015.

Net cash from operating activities was $79.7 million in the third quarter of 2015 as compared to $96.6 million for the second quarter of 2015. Capital expenditures in the third quarter totaled $43.7 million. At 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 3.07 at September 30, 2015.

On July 24, 2015 the company closed a sale-leaseback transaction in connection with Prospector 1 and Prospector 5. Net of fees and expenses, the company received proceeds of approximately $291.6 million.
Operating Highlights
Paragon’s total contract backlog at September 30, 2015 was an estimated $1.29 billion compared to $1.59 billion at June 30, 2015, including approximately $142.1 million of backlog for the Paragon DPDS3 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 100 percent in both the third quarter and the second quarter of 2015. Average daily revenues for Paragon’s floating rig fleet increased one percent to $260,000 per rig in the third quarter of 2015 from $258,000 per rig in the second quarter of 2015.
Utilization of Paragon’s marketed jackup rig fleet was 64 percent in the third quarter and in the second quarter of 2015. Average daily revenues for Paragon’s jackup fleet during the third quarter declined by six percent to $116,000 per rig from $124,000 per rig during the second quarter of 2015.
At the end of the third quarter of 2015, an estimated 55 percent of the marketed rig operating days were committed for 2015, including 56 percent and 54 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 Paragon DPDS2 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 the Paragon C462 and Paragon C463 and received a contract extension from late December 2015 to early March 2016 on the Paragon C463 at a dayrate of $130,000. In addition, the Paragon C462 received an accommodation contract from early September 2015 to late October 2015.

Paragon Extends Delivery of High Specification Jackup Prospector 7
Paragon also reported that a wholly-owned subsidiary has signed an agreement with Shanghai Waigaoqiao Shipbuilding Co., LTD., to extend the delivery date of the high specification Friede and Goldman JU-2000E jackup Prospector 7 to a date 12 months after the subsidiary has technically accepted the unit from the shipyard.  The company anticipates that technical acceptance of the unit will occur on or before December 31, 2015. Under the terms of the agreement, no payments are due to the shipyard until the delivery date and upon completion of the delivery protocol.
Paragon Comments on Advisory Process and Outlook
In September 2015, Paragon announced the engagement of Lazard and Weil, Gotshal & Manges LLP to advise the company on strategic alternatives related to its capital structure. The company also drew down substantially all of the remaining available capacity of its Revolving Credit Facility in the amount of approximately $332.0 million.

6


Mr. Stilley commented, “In light of current market conditions, we do not expect the company to remain in compliance with our Revolving Credit Facility leverage ratio covenant at some point during the next twelve months. Accordingly, under the direction of an independent committee of the board of directors, the company has been proactively exploring long-term solutions to improve Paragon’s overall balance sheet strength and position the company for long-term success. The board has approved engagement with the company’s lenders and noteholders with the intent of maximizing value for the company’s shareholders and other stakeholders. We believe that significant value can be unlocked through this process and we intend to work constructively with all involved parties to move forward as quickly as possible and reach our desired outcome. In the meantime, we continue to operate normally and fulfill our commitments to our customers, suppliers, and employees.”
Turning to the market outlook, Mr. Stilley concluded, “There is no indication that conditions in offshore drilling markets will improve in the near future. Current oil prices suggest that our customers’ 2016 capital budgets may be at or below 2015 levels, placing additional pressure on utilization and dayrates in our industry. We expect oil markets to begin a recovery late in 2016, with drilling activity, particularly in shallow waters, to follow. In the meantime, Paragon remains committed to its strategy of supplying safe, reliable, and efficient operations to our customers. We will focus on our core areas of operation and continue to optimize our cost structure for this environment in order to best position ourselves for the recovery.”
Paragon Provides Fleet Status Report; Provides Additional Information; Going Concern Risk
Paragon also announced today that it issued a report on drilling rig status and contract information as of November 9, 2015.  The report, titled “Fleet Status Report,” can be accessed on the Company’s website at www.paragonoffshore.com under the “Our Fleet” or “Investor Relations-Fleet Status Reports” sections of the website.

For periods prior to Paragon’s spin-off from Noble Corporation plc (“Noble”) on August 1, 2014 (the “Spin-Off”), results of operations are based on Noble’s standard-specification business (our “Predecessor”) and include contributions from three standard specification rigs retained by Noble and three standard specification rigs that were sold prior to the Spin-Off. For more information regarding the Spin-Off, please see Paragon’s filings with the U.S. Securities and Exchange Commission (the “SEC”) available on the company’s website at www.paragonoffshore.com.

Paragon’s quarterly report on Form 10-Q for the third quarter 2015 will contain explanatory paragraphs regarding a potential breach of financial covenants and adverse market conditions as they relate to the the company’s ability to continue as a going concern. Investors are urged to review the contents of the company’s Form 10-Q including the discussions under “Risk Factors” when the document is filed later today.
About Paragon Offshore
Paragon is a global provider of offshore drilling rigs. Paragon’s operated fleet includes 34 jackups, including two high specification heavy duty/harsh environment jackups, and six floaters (four drillships and two semisubmersibles). Paragon’s primary business is contracting its rigs, related equipment and work crews to conduct oil and gas drilling and workover operations for its exploration and production customers on a dayrate basis around the world. Paragon’s principal executive offices are located in Houston, Texas. Paragon is a public limited company registered in England and Wales with company number 08814042 and registered office at 20-22 Bedford Row, London, WC1R 4JS, England. Additional information is available at www.paragonoffshore.com.
Forward-Looking Disclosure Statement
This release contains forward-looking statements. Statements regarding contract backlog, earnings, costs, cost reductions, revenue, rig demand, fleet condition or performance, shareholder value, contract commitments, dayrates, contract commencements, contract extensions or renewals, contract disputes, industry fundamentals, customer relationships and requirements, strategic initiatives, future performance, growth opportunities, market outlook, compliance with financial covenants, ability to achieve value through lender and/or bondholder discussions, as well as any other statements that are not historical facts in this release, are forward-looking statements that involve certain risks, uncertainties and assumptions. These include but are not limited to risks associated with the general nature of the oil and gas industry, risks associated with the operation of Paragon as a separate, publicly traded company, actions by regulatory authorities, customers and other third parties, and other factors detailed in the “Risk Factors” section of Paragon’s annual report on Form 10-K for the fiscal year ended December 31, 2014, and in Paragon’s other filings with the SEC, which are available free of charge on the SEC’s website at www.sec.gov. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated.



7


Conference Call
Paragon also scheduled a teleconference and webcast related to its third quarter 2015 results on Monday, November 9, 2015, at 11:00 a.m. U.S. Central Time. The teleconference can be accessed from the U.S. and Canada by dialing 1-888-771-4371, or internationally by dialing 1-847-585-4405, and using access code: 40850324. Interested parties may also listen to the webcast through a link posted on Paragon’s website at www.paragonoffshore.com, under “Events & Presentations” in the “Investor Relations” section of the website.
A telephonic replay of the conference call will be available on Monday, November 9, 2015, beginning at approximately 2:00 p.m. U.S. Central Time, through Monday, November 23, 2015, ending at approximately 11:00 p.m. U.S. Central Time. The phone number for the conference call replay is 1-888-843-7419 or, for calls from outside of the U.S., 1-630-652-3042, using access code: 40850324.  A replay of the conference call will also be available on Paragon’s website at www.paragonoffshore.com, under “Events & Presentations” in the “Investor Relations” section of the website.
For additional information, contact:
For Investors
  
Lee M. Ahlstrom
& Media:
  
Senior Vice President – Investor Relations, Strategy and Planning
 
  
 +1.832.783.4040

8


PARAGON OFFSHORE plc
CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
 
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 30,
 
September 30,
 
 
2015
 
2014
 
2015
 
2014
Operating revenues
 
 
 
 
 
 
 
 
Contract drilling services
 
$
338,710

 
$
456,174

 
$
1,101,618

 
$
1,410,471

Labor contract drilling services
 
6,853

 
8,562

 
21,224

 
24,919

Reimbursables and other
 
23,410

 
40,486

 
70,023

 
63,379

 
 
368,973

 
505,222

 
1,192,865

 
1,498,769

Operating costs and expenses
 
 
 
 
 
 
 
 
 Contract drilling services
 
190,536

 
217,378

 
612,610

 
666,158

 Labor contract drilling services
 
4,792

 
6,593

 
16,086

 
19,029

 Reimbursables
 
19,517

 
35,592

 
58,173

 
51,442

 Depreciation and amortization
 
95,826

 
108,027

 
280,574

 
331,147

 General and administrative
 
12,800

 
12,037

 
41,901

 
37,965

 Loss on impairments
 
1,150,846

 
928,947

 
1,152,547

 
928,947

 Gain on disposal of assets, net
 
—

 
—

 
(12,717
)
 
—

 Gain on repurchase of long-term debt
 
—

 
(6,931
)
 
(4,345
)
 
(6,931
)
 
 
1,474,317

 
1,301,643

 
2,144,829

 
2,027,757

Operating loss
 
(1,105,344
)
 
(796,421
)
 
(951,964
)
 
(528,988
)
Other income (expense)
 
 
 
 
 
 
 
 
Interest expense, net of amount capitalized
 
(33,900
)
 
(22,453
)
 
(93,107
)
 
(28,690
)
Other, net
 
(983
)
 
340

 
1,421

 
830

Loss before income taxes
 
(1,140,227
)
 
(818,534
)
 
(1,043,650
)
 
(556,848
)
Income tax benefit (provision)
 
55,389

 
(50,626
)
 
67,301

 
(92,701
)
Net loss
 
$
(1,084,838
)
 
$
(869,160
)
 
$
(976,349
)
 
$
(649,549
)
Net income attributable to non-controlling interest
 
—

 
—

 
(31
)
 
—

Net loss attributable to Paragon
 
$
(1,084,838
)
 
$
(869,160
)
 
$
(976,380
)
 
$
(649,549
)
 
 
 
 
 
 
 
 
 
Loss per share
 
 
 
 
 
 
 
 
Basic and diluted
 
$
(12.46
)
 
$
(10.26
)
 
$
(11.39
)
 
$
(7.66
)


9


PARAGON OFFSHORE plc
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
 
 
 
September 30,
 
December 31,
 
 
2015
 
2014
ASSETS
 
 
 
 
Current assets
 
 
 
 
Cash and cash equivalents
 
$
732,960

 
$
56,772

Restricted cash
 
3,000

 
12,502

Accounts receivable, net of allowance for doubtful accounts
 
335,132

 
539,376

Prepaid and other current assets
 
106,355

 
104,644

Total current assets
 
1,177,447

 
713,294

 
 
 
 
 
Property and equipment, net
 
1,152,066

 
2,410,360

Other assets
 
145,114

 
129,735

Total assets
 
$
2,474,627

 
$
3,253,389

 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
Current liabilities
 
 
 
 
Current maturities of long-term debt
 
$
40,990

 
$
272,166

Accounts payable
 
122,269

 
160,874

Accrued payroll and related costs
 
51,438

 
81,416

Other current liabilities
 
133,932

 
207,838

Total current liabilities
 
348,629

 
722,294

 
 
 
 
 
Long-term debt
 
2,569,435

 
1,888,439

Deferred income taxes
 
9,585

 
58,497

Other liabilities
 
34,981

 
89,910

Total liabilities
 
2,962,630

 
2,759,140

 
 
 
 
 
Total shareholders’ equity (deficit)
 
(488,003
)
 
491,608

Non-controlling interest
 
—

 
2,641

Total equity (deficit)
 
(488,003
)
 
494,249

Total liabilities and equity
 
$
2,474,627

 
$
3,253,389



10


PARAGON OFFSHORE plc
CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
 
 
Nine Months Ended
 
 
September 30,
 
 
2015
 
2014
Cash flows from operating activities
 
 
 
 
Net loss
 
$
(976,349
)
 
$
(649,549
)
Adjustments to reconcile net loss to net cash from operating activities:
 
 
 
 
Depreciation and amortization
 
280,574

 
331,147

Loss on impairments
 
1,152,547

 
928,947

Gain on disposal of assets, net
 
(12,717
)
 
—

Gain on repurchase of long-term debt
 
(4,345
)
 
(6,931
)
Other changes in operating activities
 
(52,959
)
 
(37,512
)
Net cash provided by operating activities
 
386,751

 
566,102

 
 
 
 
 
Cash flows from investing activities
 
 
 
 
Capital expenditures
 
(156,753
)
 
(182,351
)
Proceeds from sale of assets
 
29,316

 
6,570

 Acquisition of Prospector Offshore Drilling S.A. non-controlling interest
 
(2,185
)
 
—

Change in restricted cash
 
(17,297
)
 
—

Change in accrued capital expenditures
 
(11,768
)
 
(3,000
)
Net cash used in investing activities
 
(158,687
)
 
(178,781
)
 
 
 
 
 
Cash flows from financing activities
 
 
 
 
Net change in borrowings on Predecessor bank credit facilities
 
—

 
707,472

Proceeds from issuance of Senior Notes and Term Loan Facility
 
—

 
1,710,550

Borrowings under Revolving Credit Facility
 
697,000

 
—

Net proceeds from Sale-Leaseback
 
291,576

 
—

Repayment of Revolving Credit Facility
 
(154,000
)
 
—

Repayment of Sale-Leaseback
 
(8,365
)
 
—

Repayment of Term Loan Facility
 
(4,875
)
 
—

Repayment of Prospector Senior Credit Facility
 
(265,666
)
 
—

Repayment of Prospector Bonds
 
(101,000
)
 
—

Purchase of Senior Notes
 
(6,546
)
 
(42,468
)
Debt issuance costs
 
—

 
(19,253
)
Net transfers to parent
 
—

 
(2,698,295
)
Net cash provided by (used in) financing activities
 
448,124

 
(341,994
)
Net change in cash and cash equivalents
 
676,188

 
45,327

Cash and cash equivalents, beginning of period
 
56,772

 
36,581

Cash and cash equivalents, end of period
 
$
732,960

 
$
81,908



11


PARAGON OFFSHORE plc
OPERATIONAL INFORMATION
(Unaudited)
 
 
 
As Reported
 
Rigs Retained or Sold by Noble
 
As Adjusted
 
 
Three Months Ended
 
Three Months Ended
 
Three Months Ended
 
 
September 30,
 
June 30,
 
September 30,
 
June 30,
 
September 30,
 
June 30,
 
 
2015
 
2014
 
2015
 
2015
 
2014
 
2015
 
2015
 
2014
 
2015
Rig fleet operating statistics (1)(2)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Jackups:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average Rig Utilization
 
60
%
 
77
%
 
64
%
 
n/a
 
50
%
 
n/a
 
60
%
 
77
%
 
64
%
Marketed Utilization (3)
 
64
%
 
79
%
 
64
%
 
n/a
 
50
%
 
n/a
 
64
%
 
80
%
 
64
%
Operating Days
 
1,891

 
2,447

 
1,989

 
n/a
 
31

 
n/a
 
1,891

 
2,416

 
1,989

Average Dayrate
 
$
116,071

 
$
116,967

 
$
123,556

 
n/a
 
$
98,194

 
n/a
 
$
116,071

 
$
117,208

 
$
123,556

Floaters:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average Rig Utilization
 
83
%
 
76
%
 
83
%
 
n/a
 
100
%
 
n/a
 
83
%
 
75
%
 
83
%
Marketed Utilization (3)
 
100
%
 
100
%
 
100
%
 
n/a
 
100
%
 
n/a
 
100
%
 
100
%
 
100
%
Operating Days
 
459

 
583

 
455

 
n/a
 
31

 
n/a
 
459

 
552

 
455

Average Dayrate
 
$
259,844

 
$
291,498

 
$
257,764

 
n/a
 
$
414,839

 
n/a
 
$
259,844

 
$
284,571

 
$
257,764

Total:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average Rig Utilization
 
64
%
 
77
%
 
67
%
 
n/a
 
67
%
 
n/a
 
64
%
 
77
%
 
67
%
Marketed Utilization (3)
 
69
%
 
82
%
 
69
%
 
n/a
 
67
%
 
n/a
 
69
%
 
83
%
 
69
%
Operating Days
 
2,350

 
3,030

 
2,444

 
n/a
 
62

 
n/a
 
2,350

 
2,968

 
2,444

Average Dayrate
 
$
144,158

 
$
150,548

 
$
148,537

 
n/a
 
$
256,516

 
n/a
 
$
144,158

 
$
148,334

 
$
148,537

 
(1)
We define average rig utilization for a specific period as the total number of days our rigs are operating under contract, divided by the product of the total number of our rigs, including cold-stacked rigs, and the number of calendar days in such period. Information reflects our policy of reporting on the basis of the number of available rigs in our fleet.
(2)
Amounts exclude the Paragon FPSO1.
(3)
Marketed utilization excludes the impact of Paragon cold-stacked rigs for the current quarter.


12


PARAGON OFFSHORE plc
CALCULATION OF BASIC AND DILUTED LOSS PER SHARE
(In thousands, except per share amounts)
(Unaudited)
The following table sets forth the computation of basic and diluted loss per share:
 
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 30,
 
September 30,
 
 
2015
 
2014
 
2015
 
2014
Allocation of loss:
 
 
 
 
 
 
 
 
Basic and diluted
 
 
 
 
 
 
 
 
Net loss attributable to Paragon
 
$
(1,084,838
)
 
$
(869,160
)
 
$
(976,380
)
 
$
(649,549
)
Earnings allocated to unvested share-based payment awards (1)
 
—

 
—

 
—

 
—

Net loss to ordinary shareholders - basic and diluted
 
$
(1,084,838
)
 
$
(869,160
)
 
$
(976,380
)
 
$
(649,549
)
 
 
 
 
 
 
 
 
 
Weighted average shares outstanding - basic and diluted
 
87,077

 
84,753

 
85,703

 
84,753

 
 
 
 
 
 
 
 
 
Weighted average unvested share-based payment awards (1)
 
6,947

 
2,973

 
6,023

 
1,002

 
 
 
 
 
 
 
 
 
Loss per share
 
 
 
 
 
 
 
 
Basic and diluted
 
$
(12.46
)
 
$
(10.26
)
 
$
(11.39
)
 
$
(7.66
)

(1)
No earnings were allocated to unvested share-based payment awards in our earnings per share calculation for the three and nine months ended September 30, 2015 and 2014 due to net losses in the current and comparable periods.
    

13


PARAGON OFFSHORE plc
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In thousands, except per share amounts)
(Unaudited)
The following table sets forth the reconciliation of net loss to adjusted net income (loss) (non-GAAP):
 
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 30,
 
September 30,
 
 
2015
 
2014
 
2015
 
2014
 
 
 
 
 
 
 
 
 
Net loss attributable to Paragon
 
$
(1,084,838
)
 
$
(869,160
)
 
$
(976,380
)
 
$
(649,549
)
Adjustments:
 
 
 
 
 
 
 
 
Gain on repurchase of long-term debt
 
—

 
(6,931
)
 
(4,345
)
 
(6,931
)
Gain loss on disposal of assets, net
 
—

 
—

 
(12,717
)
 
—

Loss on impairments
 
1,150,846

 
928,947

 
1,152,547

 
928,947

Tax impact of loss on impairments
 
(66,341
)
 
(977
)
 
(66,341
)
 
(977
)
Adjusted net income (loss)
 
$
(333
)
 
$
51,879

 
$
92,764

 
$
271,490

 
 
 
 
 
 
 
 
 
Allocation of adjusted net income (loss):
 
 
 
 
 
 
 
 
Basic and diluted
 
 
 
 
 
 
 
 
Adjusted net income (loss)
 
$
(333
)
 
$
51,879

 
$
92,764

 
$
271,490

Earnings allocated to unvested share-based payment awards (1)
 
—

 
(1,758
)
 
(6,091
)
 
(3,172
)
Adjusted net income (loss) to ordinary shareholders - basic and diluted
 
$
(333
)
 
$
50,121

 
$
86,673

 
$
268,318

 
 
 
 
 
 
 
 
 
Weighted average number of shares outstanding - basic and diluted
 
87,077

 
84,753

 
85,703

 
84,753

 
 
 
 
 
 
 
 
 
Weighted average unvested share-based payment awards (1)
 
6,947

 
2,973

 
6,023

 
1,002

 
 
 
 
 
 
 
 
 
Adjusted earnings per share
 
 
 
 
 
 
 
 
Basic and diluted
 
$
—

 
$
0.59

 
$
1.01

 
$
3.17


(1)
No earnings were allocated to unvested share-based payment awards in our adjusted earnings per share calculation for the three months ended September 30, 2015 due to our adjusted net loss in the current quarter.


14


PARAGON OFFSHORE plc
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (Cont’d)
(In thousands)
(Unaudited) 
 
 
As Reported
 
Rigs Retained or Sold by Noble
 
As Adjusted
 
 
Three Months Ended
 
Three Months Ended
 
Three Months Ended
 
 
September 30,
 
June 30,
 
September 30,
 
June 30,
 
September 30,
 
June 30,
 
 
2015
 
2014
 
2015
 
2015
 
2014
 
2015
 
2015
 
2014
 
2015
Operating revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Contract drilling services
 
$
338,710

 
$
456,174

 
$
363,089

 
n/a
 
$
15,904

 
n/a
 
$
338,710

 
$
440,270

 
$
363,089

Labor contract drilling services
 
6,853

 
8,562

 
7,206

 
n/a
 
—

 
n/a
 
6,853

 
8,562

 
7,206

Reimbursables and other
 
23,410

 
40,486

 
22,949

 
n/a
 
327

 
n/a
 
23,410

 
40,159

 
22,949

 
 
368,973

 
505,222

 
393,244

 

 
16,231

 

 
368,973

 
488,991

 
393,244

Operating costs and expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Contract drilling services
 
190,536

 
217,378

 
196,969

 
n/a
 
5,701

 
n/a
 
190,536

 
211,677

 
196,969

Labor contract drilling services
 
4,792

 
6,593

 
5,681

 
n/a
 
—

 
n/a
 
4,792

 
6,593

 
5,681

Reimbursables
 
19,517

 
35,592

 
18,678

 
n/a
 
158

 
n/a
 
19,517

 
35,434

 
18,678

Depreciation and amortization
 
95,826

 
108,027

 
94,673

 
n/a
 
3,877

 
n/a
 
95,826

 
104,150

 
94,673

General and administrative
 
12,800

 
12,037

 
13,737

 
n/a
 
536

 
n/a
 
12,800

 
11,501

 
13,737

Loss on impairments
 
1,150,846

 
928,947

 
1,701

 
n/a
 
—

 
n/a
 
1,150,846

 
928,947

 
1,701

Loss on disposal of assets, net
 
—

 
—

 
4,078

 
n/a
 
—

 
n/a
 
—

 
—

 
4,078

Gain on repurchase of long-term debt
 
—

 
(6,931
)
 
—

 
n/a
 
—

 
n/a
 
—

 
(6,931
)
 
—

 
 
1,474,317

 
1,301,643

 
335,517

 

 
10,272

 

 
1,474,317

 
1,291,371

 
335,517

Operating income (loss)
 
(1,105,344
)
 
(796,421
)
 
57,727

 

 
5,959

 

 
(1,105,344
)
 
(802,380
)
 
57,727

Other income (expense)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense, net of amount capitalized
 
(33,900
)
 
(22,453
)
 
(29,029
)
 
n/a
 
n/a

 
n/a
 
(33,900
)
 
(22,453
)
 
(29,029
)
Other, net
 
(983
)
 
340

 
156

 
n/a
 
n/a

 
n/a
 
(983
)
 
340

 
156

Income (loss) before income taxes
 
(1,140,227
)
 
(818,534
)
 
28,854

 
n/a
 
5,959

 
n/a
 
(1,140,227
)
 
(824,493
)
 
28,854

Income tax benefit (provision)
 
55,389

 
(50,626
)
 
18,477

 
n/a
 
n/a

 
n/a
 
55,389

 
(50,626
)
 
18,477

Net income (loss)
 
$
(1,084,838
)
 
$
(869,160
)
 
$
47,331

 
n/a
 
$
5,959

 
n/a
 
$
(1,084,838
)
 
$
(875,119
)
 
$
47,331

Adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Depreciation and amortization
 
 
 
 
 
 
 
 
 
 
 
 
 
95,826

 
104,150

 
94,673

 Loss on impairments
 
 
 
 
 
 
 
 
 
 
 
 
 
1,150,846

 
928,947

 
1,701

Loss on disposal of assets, net
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
—

 
4,078

Gain on repurchase of long-term debt
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
(6,931
)
 
—

Interest expense, net of amount capitalized
 
 
 
 
 
 
 
 
 
 
 
 
 
33,900

 
22,453

 
29,029

Income tax (benefit) provision
 
 
 
 
 
 
 
 
 
 
 
 
 
(55,389
)
 
50,626

 
(18,477
)
EBITDA
 
 
 
 
 
 
 
 
 
 
 
 
 
$
140,345

 
$
224,126

 
$
158,335


15