| Debt
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Years | |
Drillships and related equipment | 15-35 |
Other property and equipment | 2-7 |
|
December 31, | |||||||
2015 | 2014 | ||||||
(in thousands) | |||||||
Drillships and related equipment | $ | 5,856,564 | $ | 5,907,226 | |||
Other property and equipment | 14,938 | 10,353 | |||||
Property and equipment, cost | 5,871,502 | 5,917,579 | |||||
Accumulated depreciation | (727,946 | ) | (485,756 | ) | |||
Property and equipment, net | $ | 5,143,556 | $ | 5,431,823 |
|
|
December 31, | |||||||
2015 | 2014 | ||||||
(in thousands) | |||||||
Due within one year: | |||||||
2015 Senior Unsecured Bonds | $ | — | $ | 286,500 | |||
2018 Senior Secured Term Loan B | 7,500 | 7,500 | |||||
Senior Secured Credit Facility | 82,083 | 75,000 | |||||
Total current debt | 89,583 | 369,000 | |||||
Long-term debt: | |||||||
2017 Senior Secured Bonds | 498,887 | 498,369 | |||||
2018 Senior Secured Term Loan B | 721,958 | 728,706 | |||||
2013 Revolving Credit Facility | 50,000 | — | |||||
Senior Secured Credit Facility | 775,000 | 804,167 | |||||
2020 Senior Secured Notes | 750,000 | 750,000 | |||||
Total long-term debt | 2,795,845 | 2,781,242 | |||||
Total debt | $ | 2,885,428 | $ | 3,150,242 |
• | Consolidated Tangible Net Worth: maintain at least $1.0 billion consolidated tangible net worth. |
• | Maximum Leverage Ratio: maintain a net debt to EBITDA ratio no greater than 4.75 to 1.00 as of December 31, 2015 and increasing incrementally to 6.00 to 1.00 during the period from July 1, 2016 through December 31, 2017, and 4.00 to 1.00, thereafter. |
• | Total Debt to Capitalization Ratio: maintain a ratio of not greater than 3.0 to 5.0 of total debt to total capitalization. |
• | Total Debt: maintain less than $3.0 billion in total debt. |
• | Minimum Liquidity: maintain no less than $50.0 million in cash and cash equivalents. |
• | Net Debt to Applicable Rigs ratio: maintain a net debt per rig ratio of not greater than $425.0 million through June 30, 2016 and decreasing incrementally to $360.0 million during the period from October 1, 2017 through December 31, 2017. |
• | Maximum Leverage Ratio: maintain a net debt to EBITDA ratio no greater than 4.75 to 1.00 as of December 31, 2015 and increasing incrementally to 6.00 to 1.00 during the period from July 1, 2016 through December 31, 2017, and 4.25 to 1.00, thereafter. |
• | Minimum Liquidity: maintain no less than $100.0 million in cash and cash equivalents (including undrawn capacity for borrowings under the 2013 Revolving Credit Facility). |
• | Net Debt to Applicable Rigs ratio: maintain a net debt per rig ratio of not greater than $425.0 million through June 30, 2016 and decreasing incrementally to $360.0 million during the period from October 1, 2017 through December 31, 2017. |
(in thousands) | |||
Years ending December 31, | |||
2016 | $ | 89,583 | |
2017 | 589,584 | ||
2018 | 848,333 | ||
2019 | 610,833 | ||
2020 | 750,000 | ||
Thereafter | — | ||
Total | $ | 2,888,333 |
|
Years ended December 31, | |||||||||||
2015 | 2014 | 2013 | |||||||||
(in thousands) | |||||||||||
Luxembourg | $ | 94,558 | $ | 36,783 | $ | 55,904 | |||||
United States | 4,812 | 3,631 | 206 | ||||||||
Other Jurisdictions | 55,731 | 193,463 | (8,085 | ) | |||||||
Total | $ | 155,101 | $ | 233,877 | $ | 48,025 |
Years ended December 31, | |||||||||||
2015 | 2014 | 2013 | |||||||||
(in thousands) | |||||||||||
Current income tax expense: | |||||||||||
Luxembourg | $ | (1,107 | ) | $ | (979 | ) | $ | (816 | ) | ||
United States | (2,347 | ) | (6,030 | ) | (1,885 | ) | |||||
Other Foreign | (15,577 | ) | (19,950 | ) | (22,941 | ) | |||||
Total current | $ | (19,031 | ) | $ | (26,959 | ) | $ | (25,642 | ) | ||
Deferred tax benefit (expense): | |||||||||||
Luxembourg | $ | (2,908 | ) | $ | (1 | ) | $ | (32 | ) | ||
United States | (1,071 | ) | 4,281 | 2,053 | |||||||
Other Foreign | (5,861 | ) | (22,941 | ) | 1,098 | ||||||
Total deferred | $ | (9,840 | ) | $ | (18,661 | ) | $ | 3,119 | |||
Income tax expense | $ | (28,871 | ) | $ | (45,620 | ) | $ | (22,523 | ) |
Years ended December 31, | ||||||||
2015 | 2014 | 2013 | ||||||
Statutory rate | 29.2 | % | 29.2 | % | 29.2 | % | ||
Effect of tax rates different than the Luxembourg statutory tax rate | (22.5 | )% | (27.6 | )% | 25.2 | % | ||
Change in valuation allowance | 10.6 | % | 10.2 | % | (9.0 | )% | ||
Changes in unrecognized tax benefits | 1.9 | % | 10.1 | % | 1.9 | % | ||
Equity based compensation shortfall | 1.4 | % | — | % | — | % | ||
Adjustments related to prior years | (2.0 | )% | (2.4 | )% | (0.4 | )% | ||
Effective tax rate | 18.6 | % | 19.5 | % | 46.9 | % |
December 31, | |||||||
2015 | 2014 | ||||||
(in thousands) | |||||||
Deferred tax assets: | |||||||
Net operating loss carryforwards | $ | 40,422 | $ | 33,537 | |||
Depreciation and amortization | 62,702 | 54,815 | |||||
Accrued payroll expenses | 7,662 | 9,086 | |||||
Deferred revenue | 8,851 | 19,107 | |||||
Other | 2,025 | 1,187 | |||||
Deferred tax assets | 121,662 | 117,732 | |||||
Less: valuation allowance | (94,422 | ) | (78,328 | ) | |||
Total deferred tax assets | $ | 27,240 | $ | 39,404 | |||
Deferred tax liabilities: | |||||||
Depreciation and amortization | $ | (3,642 | ) | $ | — | ||
Deferred expenses | (12,483 | ) | (21,937 | ) | |||
Other | (1,817 | ) | (1,220 | ) | |||
Total deferred tax liabilities | $ | (17,942 | ) | $ | (23,157 | ) | |
Net deferred tax assets | $ | 9,298 | $ | 16,247 |
December 31, | |||||||
2015 | 2014 | ||||||
(in thousands) | |||||||
Balance, beginning of year | $ | 23,248 | $ | 736 | |||
Increases in unrecognized tax benefits as a result of tax positions taken during prior years | 1,327 | 3,473 | |||||
Decreases in unrecognized tax benefits as a result of tax positions taken during prior years | (9,592 | ) | — | ||||
Increases in unrecognized tax benefits as a result of tax positions taken during current year | 9,931 | 19,039 | |||||
Balance, end of year | $ | 24,914 | $ | 23,248 |
|
Derivatives Designated as Hedging Instruments | December 31, | |||||||||
Balance Sheet Location | 2015 | 2014 | ||||||||
(in thousands) | ||||||||||
Long-term—Interest rate swaps | Other assets | $ | — | $ | 5,601 | |||||
Short-term—Interest rate swaps | Derivative liabilities, current | (5,899 | ) | (8,381 | ) | |||||
Long-term—Interest rate swaps | Other long-term liabilities | (238 | ) | — | ||||||
Short-term—Foreign currency forward contracts | Derivative liabilities, current | (1,584 | ) | (267 | ) | |||||
Long-term—Foreign currency forward contracts | Other long-term liabilities | — | (296 | ) | ||||||
Total | $ | (7,721 | ) | $ | (3,343 | ) |
Derivatives in Cash Flow Hedging Relationships | Gain (Loss) Recognized in Other Comprehensive Income (“OCI”) for the Years Ended December 31, | Loss Reclassified from Accumulated OCI into Income for the Years Ended December 31, | Gain (Loss) Recognized in Income (Ineffective Portion and Amount Excluded from Effectiveness Testing) for the Years ended December 31, | |||||||||||||||||||||||||||||||||
2015 | 2014 | 2013 | 2015 | 2014 | 2013 | 2015 | 2014 | 2013 | ||||||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||||||||||
Interest rate swaps | $ | (1,701 | ) | $ | (11,085 | ) | $ | 49,859 | $ | 10,440 | $ | 7,737 | $ | 47,720 | $ | — | $ | — | $ | — | ||||||||||||||||
Foreign currency forward contracts | $ | (1,584 | ) | $ | (563 | ) | $ | — | $ | — | $ | — | $ | — | $ | (296 | ) | $ | — | $ | — |
|
December 31, | |||||||||||||||
2015 | 2014 | ||||||||||||||
Carrying Value | Estimated Fair Value | Carrying Value | Estimated Fair Value | ||||||||||||
(in thousands) | |||||||||||||||
2015 Senior Unsecured Bonds | $ | — | $ | — | $ | 286,500 | $ | 284,351 | |||||||
2017 Senior Secured Bonds | 498,887 | 250,000 | 498,369 | 447,500 | |||||||||||
2018 Senior Secured Term Loan B | 729,458 | 307,125 | 736,206 | 614,551 | |||||||||||
2020 Senior Secured Notes | 750,000 | 322,500 | 750,000 | 600,000 |
December 31, 2015 | |||||||||||||
Fair Value Measurements Using | |||||||||||||
Carrying Value | Level 1 | Level 2 | Level 3 | ||||||||||
(in thousands) | |||||||||||||
Liabilities: | |||||||||||||
Interest rate swaps | $ | (6,137 | ) | — | $ | (6,137 | ) | — | |||||
Foreign currency forward contracts | $ | (1,584 | ) | — | $ | (1,584 | ) | — | |||||
December 31, 2014 | |||||||||||||
Fair Value Measurements Using | |||||||||||||
Carrying Value | Level 1 | Level 2 | Level 3 | ||||||||||
(in thousands) | |||||||||||||
Assets: | |||||||||||||
Interest rate swaps | $ | 5,601 | — | $ | 5,601 | — | |||||||
Liabilities: | |||||||||||||
Interest rate swaps | $ | (8,381 | ) | — | $ | (8,381 | ) | — | |||||
Foreign currency forward contracts | $ | (563 | ) | — | $ | (563 | ) | — |
|
(In thousands) | |||
Years Ending December 31, | |||
2016 | $ | 2,327 | |
2017 | 2,259 | ||
2018 | 2,183 | ||
2019 | 2,083 | ||
2020 | 2,121 | ||
Thereafter | 8,102 | ||
Total future minimum lease payments | $ | 19,075 |
|
Years Ended December 31, | ||||||||
2015 | 2014 | 2013 | ||||||
Chevron | 81.2 | % | 67.4 | % | 55.6 | % | ||
Total | 17.2 | % | 17.3 | % | 22.6 | % | ||
Petrobras | 1.6 | % | 15.3 | % | 21.8 | % |
|
Years Ended December 31, | ||||||||
2015 | 2014 | 2013 | ||||||
Nigeria | 60.3 | % | 60.2 | % | 52.1 | % | ||
Gulf of Mexico | 38.1 | % | 24.5 | % | 26.1 | % | ||
Brazil | 1.6 | % | 15.3 | % | 21.8 | % |
|
December 31, | |||||||
2015 | 2014 | ||||||
(in thousands) | |||||||
Assets | $ | 17,612 | $ | 18,349 | |||
Liabilities | (19,250 | ) | (10,559 | ) | |||
Net carrying amount | $ | (1,638 | ) | $ | 7,790 |
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|
|
Years | |
Drillships and related equipment | 15-35 |
Other property and equipment | 2-7 |
|
Years | |
Drillships and related equipment | 15-35 |
Other property and equipment | 2-7 |
December 31, | |||||||
2015 | 2014 | ||||||
(in thousands) | |||||||
Drillships and related equipment | $ | 5,856,564 | $ | 5,907,226 | |||
Other property and equipment | 14,938 | 10,353 | |||||
Property and equipment, cost | 5,871,502 | 5,917,579 | |||||
Accumulated depreciation | (727,946 | ) | (485,756 | ) | |||
Property and equipment, net | $ | 5,143,556 | $ | 5,431,823 |
|
Years | |
Drillships and related equipment | 15-35 |
Other property and equipment | 2-7 |
December 31, | |||||||
2015 | 2014 | ||||||
(in thousands) | |||||||
Drillships and related equipment | $ | 5,856,564 | $ | 5,907,226 | |||
Other property and equipment | 14,938 | 10,353 | |||||
Property and equipment, cost | 5,871,502 | 5,917,579 | |||||
Accumulated depreciation | (727,946 | ) | (485,756 | ) | |||
Property and equipment, net | $ | 5,143,556 | $ | 5,431,823 |
|
December 31, | |||||||
2015 | 2014 | ||||||
(in thousands) | |||||||
Due within one year: | |||||||
2015 Senior Unsecured Bonds | $ | — | $ | 286,500 | |||
2018 Senior Secured Term Loan B | 7,500 | 7,500 | |||||
Senior Secured Credit Facility | 82,083 | 75,000 | |||||
Total current debt | 89,583 | 369,000 | |||||
Long-term debt: | |||||||
2017 Senior Secured Bonds | 498,887 | 498,369 | |||||
2018 Senior Secured Term Loan B | 721,958 | 728,706 | |||||
2013 Revolving Credit Facility | 50,000 | — | |||||
Senior Secured Credit Facility | 775,000 | 804,167 | |||||
2020 Senior Secured Notes | 750,000 | 750,000 | |||||
Total long-term debt | 2,795,845 | 2,781,242 | |||||
Total debt | $ | 2,885,428 | $ | 3,150,242 |
(in thousands) | |||
Years ending December 31, | |||
2016 | $ | 89,583 | |
2017 | 589,584 | ||
2018 | 848,333 | ||
2019 | 610,833 | ||
2020 | 750,000 | ||
Thereafter | — | ||
Total | $ | 2,888,333 |
|
Years ended December 31, | |||||||||||
2015 | 2014 | 2013 | |||||||||
(in thousands) | |||||||||||
Luxembourg | $ | 94,558 | $ | 36,783 | $ | 55,904 | |||||
United States | 4,812 | 3,631 | 206 | ||||||||
Other Jurisdictions | 55,731 | 193,463 | (8,085 | ) | |||||||
Total | $ | 155,101 | $ | 233,877 | $ | 48,025 |
Years ended December 31, | |||||||||||
2015 | 2014 | 2013 | |||||||||
(in thousands) | |||||||||||
Current income tax expense: | |||||||||||
Luxembourg | $ | (1,107 | ) | $ | (979 | ) | $ | (816 | ) | ||
United States | (2,347 | ) | (6,030 | ) | (1,885 | ) | |||||
Other Foreign | (15,577 | ) | (19,950 | ) | (22,941 | ) | |||||
Total current | $ | (19,031 | ) | $ | (26,959 | ) | $ | (25,642 | ) | ||
Deferred tax benefit (expense): | |||||||||||
Luxembourg | $ | (2,908 | ) | $ | (1 | ) | $ | (32 | ) | ||
United States | (1,071 | ) | 4,281 | 2,053 | |||||||
Other Foreign | (5,861 | ) | (22,941 | ) | 1,098 | ||||||
Total deferred | $ | (9,840 | ) | $ | (18,661 | ) | $ | 3,119 | |||
Income tax expense | $ | (28,871 | ) | $ | (45,620 | ) | $ | (22,523 | ) |
Years ended December 31, | ||||||||
2015 | 2014 | 2013 | ||||||
Statutory rate | 29.2 | % | 29.2 | % | 29.2 | % | ||
Effect of tax rates different than the Luxembourg statutory tax rate | (22.5 | )% | (27.6 | )% | 25.2 | % | ||
Change in valuation allowance | 10.6 | % | 10.2 | % | (9.0 | )% | ||
Changes in unrecognized tax benefits | 1.9 | % | 10.1 | % | 1.9 | % | ||
Equity based compensation shortfall | 1.4 | % | — | % | — | % | ||
Adjustments related to prior years | (2.0 | )% | (2.4 | )% | (0.4 | )% | ||
Effective tax rate | 18.6 | % | 19.5 | % | 46.9 | % |
December 31, | |||||||
2015 | 2014 | ||||||
(in thousands) | |||||||
Deferred tax assets: | |||||||
Net operating loss carryforwards | $ | 40,422 | $ | 33,537 | |||
Depreciation and amortization | 62,702 | 54,815 | |||||
Accrued payroll expenses | 7,662 | 9,086 | |||||
Deferred revenue | 8,851 | 19,107 | |||||
Other | 2,025 | 1,187 | |||||
Deferred tax assets | 121,662 | 117,732 | |||||
Less: valuation allowance | (94,422 | ) | (78,328 | ) | |||
Total deferred tax assets | $ | 27,240 | $ | 39,404 | |||
Deferred tax liabilities: | |||||||
Depreciation and amortization | $ | (3,642 | ) | $ | — | ||
Deferred expenses | (12,483 | ) | (21,937 | ) | |||
Other | (1,817 | ) | (1,220 | ) | |||
Total deferred tax liabilities | $ | (17,942 | ) | $ | (23,157 | ) | |
Net deferred tax assets | $ | 9,298 | $ | 16,247 |
December 31, | |||||||
2015 | 2014 | ||||||
(in thousands) | |||||||
Balance, beginning of year | $ | 23,248 | $ | 736 | |||
Increases in unrecognized tax benefits as a result of tax positions taken during prior years | 1,327 | 3,473 | |||||
Decreases in unrecognized tax benefits as a result of tax positions taken during prior years | (9,592 | ) | — | ||||
Increases in unrecognized tax benefits as a result of tax positions taken during current year | 9,931 | 19,039 | |||||
Balance, end of year | $ | 24,914 | $ | 23,248 |
|
Derivatives Designated as Hedging Instruments | December 31, | |||||||||
Balance Sheet Location | 2015 | 2014 | ||||||||
(in thousands) | ||||||||||
Long-term—Interest rate swaps | Other assets | $ | — | $ | 5,601 | |||||
Short-term—Interest rate swaps | Derivative liabilities, current | (5,899 | ) | (8,381 | ) | |||||
Long-term—Interest rate swaps | Other long-term liabilities | (238 | ) | — | ||||||
Short-term—Foreign currency forward contracts | Derivative liabilities, current | (1,584 | ) | (267 | ) | |||||
Long-term—Foreign currency forward contracts | Other long-term liabilities | — | (296 | ) | ||||||
Total | $ | (7,721 | ) | $ | (3,343 | ) |
Derivatives in Cash Flow Hedging Relationships | Gain (Loss) Recognized in Other Comprehensive Income (“OCI”) for the Years Ended December 31, | Loss Reclassified from Accumulated OCI into Income for the Years Ended December 31, | Gain (Loss) Recognized in Income (Ineffective Portion and Amount Excluded from Effectiveness Testing) for the Years ended December 31, | |||||||||||||||||||||||||||||||||
2015 | 2014 | 2013 | 2015 | 2014 | 2013 | 2015 | 2014 | 2013 | ||||||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||||||||||
Interest rate swaps | $ | (1,701 | ) | $ | (11,085 | ) | $ | 49,859 | $ | 10,440 | $ | 7,737 | $ | 47,720 | $ | — | $ | — | $ | — | ||||||||||||||||
Foreign currency forward contracts | $ | (1,584 | ) | $ | (563 | ) | $ | — | $ | — | $ | — | $ | — | $ | (296 | ) | $ | — | $ | — |
|
December 31, | |||||||||||||||
2015 | 2014 | ||||||||||||||
Carrying Value | Estimated Fair Value | Carrying Value | Estimated Fair Value | ||||||||||||
(in thousands) | |||||||||||||||
2015 Senior Unsecured Bonds | $ | — | $ | — | $ | 286,500 | $ | 284,351 | |||||||
2017 Senior Secured Bonds | 498,887 | 250,000 | 498,369 | 447,500 | |||||||||||
2018 Senior Secured Term Loan B | 729,458 | 307,125 | 736,206 | 614,551 | |||||||||||
2020 Senior Secured Notes | 750,000 | 322,500 | 750,000 | 600,000 |
December 31, 2015 | |||||||||||||
Fair Value Measurements Using | |||||||||||||
Carrying Value | Level 1 | Level 2 | Level 3 | ||||||||||
(in thousands) | |||||||||||||
Liabilities: | |||||||||||||
Interest rate swaps | $ | (6,137 | ) | — | $ | (6,137 | ) | — | |||||
Foreign currency forward contracts | $ | (1,584 | ) | — | $ | (1,584 | ) | — | |||||
December 31, 2014 | |||||||||||||
Fair Value Measurements Using | |||||||||||||
Carrying Value | Level 1 | Level 2 | Level 3 | ||||||||||
(in thousands) | |||||||||||||
Assets: | |||||||||||||
Interest rate swaps | $ | 5,601 | — | $ | 5,601 | — | |||||||
Liabilities: | |||||||||||||
Interest rate swaps | $ | (8,381 | ) | — | $ | (8,381 | ) | — | |||||
Foreign currency forward contracts | $ | (563 | ) | — | $ | (563 | ) | — |
|
(In thousands) | |||
Years Ending December 31, | |||
2016 | $ | 2,327 | |
2017 | 2,259 | ||
2018 | 2,183 | ||
2019 | 2,083 | ||
2020 | 2,121 | ||
Thereafter | 8,102 | ||
Total future minimum lease payments | $ | 19,075 |
|
Years Ended December 31, | ||||||||
2015 | 2014 | 2013 | ||||||
Chevron | 81.2 | % | 67.4 | % | 55.6 | % | ||
Total | 17.2 | % | 17.3 | % | 22.6 | % | ||
Petrobras | 1.6 | % | 15.3 | % | 21.8 | % |
|
Years Ended December 31, | ||||||||
2015 | 2014 | 2013 | ||||||
Nigeria | 60.3 | % | 60.2 | % | 52.1 | % | ||
Gulf of Mexico | 38.1 | % | 24.5 | % | 26.1 | % | ||
Brazil | 1.6 | % | 15.3 | % | 21.8 | % |
|
December 31, | |||||||
2015 | 2014 | ||||||
(in thousands) | |||||||
Assets | $ | 17,612 | $ | 18,349 | |||
Liabilities | (19,250 | ) | (10,559 | ) | |||
Net carrying amount | $ | (1,638 | ) | $ | 7,790 |
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