Diamond Offshore sees $33M-$35M impact from Ocean GreatWhite incident in 1H24

In a regulatory filing, the company stated, “As previously reported, on February 1, 2024, the Ocean GreatWhite, a semisubmersible drilling rig owned by a subsidiary of Diamond Offshore Drilling, reported that the rig’s lower marine riser package and deployed riser string unintentionally separated from the rig at the slip joint tensioner ring and the LMRP and riser dropped to the seabed while located approximately 200 km to the west of the Shetland Islands. Since the incident, the Company has been working closely with its customer and local authorities in response and has pursued efforts to recover the equipment and replace missing or damaged equipment. The Company has successfully retrieved the LMRP to the rig and removed the blowout preventor from the secure well and raised the BOP to the rig. The rig has departed the location of the incident and is currently in transit to a repair facility, where the Company plans to repair the LMRP and complete related work. Consistent with previous reports, there continues to be no reports of damage to seabed infrastructure and no known environmental impacts or lower hull damage to the rig from the incident. It remains too early for the Company to reliably predict the future financial impact of the incident. Based on the facts known to the Company to date, including the impact of weather delays on the recovery process, the Company currently estimates that recovery and repair activities will result in the Ocean GreatWhite being off rate for approximately 120 to 130 days from the date of the incident and currently estimates that the rig will return to earning rate under its current contract by late May or early June 2024. The Company maintains insurance coverage for property damage with a $10 million deductible, and the Company continues to anticipate that the incident will be covered by the policy. In addition, the Company maintains loss of hire insurance on the Ocean GreatWhite. Under the loss of hire insurance policy, after a 60-day waiting period, the policy provides for the Company to receive $150,000 per day for up to 180 days for each day of lost revenue as a result of a covered property claim. If the Ocean GreatWhite is off rate for approximately 120 to 130 days, the Company estimates that the downtime would result in an aggregate of approximately $32 million to $35 million in reduced revenue during the first and second fiscal quarters of 2024 and that the Company’s loss of hire insurance may provide the Company with proceeds of approximately $9 million to $10.5 million. The Company’s current estimate of incremental recovery costs and repairs and maintenance is approximately $25 million to $30 million and current estimate of replacement capital expenditures is approximately $12 million to $15 million. After taking all of the relevant factors currently known to the Company into account, including the insurance deductible of $10 million, the Company currently anticipates the total estimated negative financial impact to the Company of the Ocean GreatWhite incident to be approximately $33 million to $35 million in the first half of 2024, although at this time the Company is unable to reliably predict the future financial impact of the incident and can provide no assurance that its assumptions and estimates will ultimately be realized.”