Pacific Drilling Announces Second-Quarter 2019 Results

Pacific Drilling S.A. (NYSE: PACD) ("Pacific Drilling” or the "Company”) today reported results for the second quarter of 2019. Net loss for second-quarter 2019 was $73.6 million or $0.98 per diluted share, compared to net loss of $84.0 million or $1.12 per diluted share in first-quarter 2019. EBITDA^(a) for second-quarter 2019 was $14.0 million, compared to $1.9 million in first-quarter 2019.

"During the second quarter, we maintained our focus on putting rigs to work while delivering improved revenue and EBITDA compared to the first quarter. We added backlog for our fleet as an option was exercised for Pacific Santa Ana. The ramp-up of Pacific Khamsin, in preparation for its contract with Equinor, remains on schedule for start of operations in November,” said CEO Bernie Wolford.

"The market for deepwater drilling continues to show signs of gradual strengthening as both the pace and number of new fixtures improved during the second quarter. We also saw customers moving beyond the spot market to consider more substantial drilling campaigns, including tenders for programs with one or more year terms. In particular, the Gulf of Mexico is showing signs of improving demand, especially in Mexico, as operators are approaching their lease commitment-well deadlines.”

Second-Quarter 2019 Operational and Financial Commentary

Second-quarter 2019 contract drilling revenue was $76.4 million, which included $3.8 million in reimbursable revenue. This compared to first-quarter 2019 contract drilling revenue of $65.9 million, which included $3.4 million in reimbursable revenue. The increase in revenue resulted primarily from the Pacific Santa Ana commencing operations with Total in Senegal.

Operating expenses were $52.3 million for both second-quarter 2019 and first-quarter 2019.

General and administrative expenses for the second-quarter of 2019 were $10.0 million, as compared to $11.2 million for the first-quarter of 2019. The decrease in general and administrative expenses was primarily due to the impact of cost control and process optimization initiatives implemented during the first quarter of 2019.

Adjusted EBITDA^(a) for second-quarter 2019 was $15.6 million, compared to $4.3 million in first-quarter 2019.

Capital expenditures for the second-quarter of 2019 were $3.8 million compared to $17.6 million in the first-quarter of 2019.

Footnotes

2019 Guidance

A schedule of Pacific Drilling’s updated 2019 guidance as of August 12, 2019 is available in the "Quarterly and Annual Results” subsection of the "Investor Relations” section of our website, www.pacificdrilling.com.

Conference Call

Pacific Drilling will conduct a conference call at 10 a.m. Central time on Tuesday, August 13, 2019 to discuss second-quarter 2019 results. To access the conference call, participants should contact the Conference Call Operator at +1 800-353-6461 within North America or +1 334-323-0501 outside of North America approximately 10 minutes prior to the scheduled start time and provide confirmation code #8853719. On the following day a replay of the call will be available on the company’s website or by dialing +1 888-203-1112 within North America or +1 719-457-0820 outside of North America and providing confirmation code #8853719.

About Pacific Drilling

With its best-in-class drillships and highly experienced team, PACIFIC DRILLING is committed to becoming the industry’s preferred high-specification, deepwater drilling contractor. Pacific Drilling’s fleet of seven drillships represents one of the youngest and most technologically advanced fleets in the world. Pacific Drilling has principal offices in Luxembourg and Houston. For more information about Pacific Drilling, including our current Fleet Status, please visit our website at www.pacificdrilling.com.

Forward-Looking Statements

Certain statements and information contained in this press release constitute "forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, and are generally identifiable by their use of words such as "anticipate,” "believe,” "could,” "estimate,” "expect,” "forecast,” "intend,” "our ability to,” "may,” "plan,” "potential,” "predict,” "project,” "projected,” "should,” "will,” "would”, or other similar words which are not generally historical in nature. The forward-looking statements speak only as of the date hereof, and we undertake no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise.

Our forward-looking statements express our current expectations or forecasts of possible future results or events, including future financial and operational performance and cash balances; revenue efficiency levels; market outlook; forecasts of trends; future client contract opportunities; future contract dayrates; our business strategies and plans or objectives of management; estimated duration of client contracts; backlog; expected capital expenditures; projected costs and savings; and the potential impact of our completed Chapter 11 proceedings on our future operations and ability to finance our business.

Although we believe that the assumptions and expectations reflected in our forward-looking statements are reasonable and made in good faith, these statements are not guarantees, and actual future results may differ materially due to a variety of factors. These statements are subject to a number of risks and uncertainties and are based on a number of judgments and assumptions as of the date such statements are made about future events, many of which are beyond our control. Actual events and results may differ materially from those anticipated, estimated, projected or implied by us in such statements due to a variety of factors, including if one or more of these risks or uncertainties materialize, or if our underlying assumptions prove incorrect.

Important factors that could cause actual results to differ materially from our expectations include: the global oil and gas market and its impact on demand for our services; the offshore drilling market, including reduced capital expenditures by our clients; changes in worldwide oil and gas supply and demand; rig availability and supply and demand for high-specification drillships and other drilling rigs competing with our fleet; our ability to enter into and negotiate favorable terms for new drilling contracts or extensions; our ability to successfully negotiate and consummate definitive contracts and satisfy other customary conditions with respect to letters of intent and letters of award that we receive for our drillships; possible cancellation, renegotiation, termination or suspension of drilling contracts as a result of mechanical difficulties, performance, market changes or other reasons; costs related to stacking of rigs; downtime and other risks associated with offshore rig operations, including unscheduled repairs or maintenance, relocations, severe weather or hurricanes; our small fleet and reliance on a limited number of clients; our ability to execute our business plans; the effects of our completed Chapter 11 proceedings on our future operations; and the other risk factors described in our 2018 Annual Report on Form 20-F filed with the Securities and Exchange Commission on March 12, 2019 and our Reports on Form 6-K. These documents are available through our website at www.pacificdrilling.com or through the SEC’s website at www.sec.gov.

EBITDA and Adjusted EBITDA Reconciliation

EBITDA is defined as earnings before interest expense, taxes, depreciation and amortization. Adjusted EBITDA is defined as earnings before interest expense, taxes, depreciation, amortization, equity earnings in unconsolidated subsidiaries, expenses to unconsolidated subsidiaries, net and reorganization items. EBITDA and Adjusted EBITDA do not represent and should not be considered an alternative to net income, operating income, cash flow from operations or any other measure of financial performance presented in accordance with U.S. generally accepted accounting principles ("GAAP”) and our calculation of EBITDA and Adjusted EBITDA may not be comparable to that reported by other companies. EBITDA and Adjusted EBITDA are included herein because they are used by management to measure the Company’s operations. Management believes that EBITDA and Adjusted EBITDA present useful information to investors regarding the Company’s operating performance.

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