Pacific Drilling Announces First Quarter 2013 Earnings of $15.1 Million

PACIFIC DRILLING S.A. (NYSE: PACD):

• Revenue for the first quarter of 2013 was $175 million on revenue efficiency^(a) of 90.3%
• Direct rig related operating expenses, net of reimbursable expenses, in the first quarter 2013 were $178,000 per day
• EBITDA^(b) for the first quarter of 2013 was $79.7 million
• Cash flow from operations reached $72.1 million
• Total extended the Scirocco contract, adding $180 million in backlog
• Company closed on $1 billion Senior Secured Credit Facility

Pacific Drilling S.A. (NYSE: PACD) today announced revenue of $175.0 million and net income of $15.1 million or $0.07 per diluted share for the three months ended March 31, 2013. In the prior year period, excluding loss of hire insurance recovery of $23.7 million, net loss was $5.3 million or $0.02 per diluted share on revenue of $117.4 million. As reflected on our March 31, 2012, financial statements, reported net income for the quarter was $18.3 million or $0.08 per diluted share.

CEO Chris Beckett commented, "We delivered another solid quarter driven by strong operational uptime and our continued focus on drilling expenses. I’m encouraged to report that, excluding planned BOP maintenance, our fleet delivered revenue efficiency in excess of the fourth quarter’s outstanding results.”

Regarding the state of the offshore drilling market, Mr. Beckett continued, "The market for deepwater drillships remains healthy with a steady stream of announcements during the month of April. This continued market strength bodes well for the Pacific Meltem and our eighth rig, the Pacific Zonda."

First Quarter 2013 Operational and Financial Commentary

Contract drilling revenue for the first quarter of 2013 was $175.0 million as compared to $191.9 million in the fourth quarter of 2012. The lower revenue reflected the 8 fewer rig-days in the first quarter than in the prior quarter, which translated into a $3.4 million sequential revenue reduction, together with a $9.6 million reduction in deferred revenue amortization on the Pacific Scirocco and a 4.3% decrease in revenue efficiency. The first quarter included deferred revenue amortization of $16.9 million as compared to $26.5 million in the fourth quarter of 2012. The reduction in deferred revenue amortization, related to the Pacific Scirocco’s mobilization, resulted from the completion of the rig’s initial one-year primary contract term, ended on January 7, 2013.

During the three months ended March 31, 2013, our operating fleet of four drillships achieved an average revenue efficiency of 90.3% as compared to 94.6% in the fourth quarter of 2012. Unpaid BOP maintenance time for the Pacific Scirocco and the Pacific Bora totaled 19 days, which represented a 5.5% impact on fleet revenue efficiency. This routine BOP maintenance for two of our drillships, after extended periods of uninterrupted service, was included in our first quarter revenue efficiency targets as well as in our full year efficiency.

Contract drilling expenses for the first quarter of 2013 were $84.5 million as compared to $86.9 million for the fourth quarter of 2012. Direct rig related daily operating expenses, excluding reimbursable costs that are fully recovered in our revenue, averaged $178,000 in the first quarter of 2013, as compared to $168,000 for the fourth quarter of 2012. This increase resulted primarily from higher maintenance costs related to the planned BOP maintenance on the Pacific Scirocco and the Pacific Bora and from annual salary increases to our operational personnel. Contract drilling expenses for the first quarter of 2013 included $9.6 million in amortization of deferred mobilization costs and $5.6 million in shore-based and other support costs, as compared to $18.6 million in deferred mobilization costs and $4.6 million in shore-based and other support costs for the fourth quarter of 2012. The $9.0 million decrease in deferred mobilization costs resulted from the completion of the Pacific Scirocco’s initial one-year primary contract term. Total direct rig related daily operating expenses, including reimbursable costs, averaged $192,000 in the first quarter of 2013, as compared to $173,000 for the fourth quarter of 2012. Reimbursable costs accounted for approximately $14,000 per day in the first quarter of this year as compared to approximately $5,000 per day in the fourth quarter of 2012. In addition to the normal recurring level of reimbursable expenses, the first quarter of 2013 included approximately $2.7 million of specific project and modification costs fully reimbursed by our clients.

Interest expense for the first quarter of 2013 was $22.8 million as compared to $32.7 million for the fourth quarter of 2012. The decrease in interest expense resulted mainly from a fourth quarter 2012 one-time, non-cash $2.8 million charge related to the accounting for our interest rate cash flow hedges and decreases in interest incurred on our Project Facilities Agreement due to both lower outstanding debt balances and interest rates.

EBITDA for the first quarter of 2013 was $79.7 million, as compared to EBITDA of $92.7 million during the fourth quarter of 2012.

Liquidity and Capital Expenditures

Our cash balances on March 31, 2013 were $640 million, including $172 million of restricted cash related primarily to our Project Facilities Agreement and collateral for our temporary importation bonds and lines of credit. Our total outstanding debt was $2.2 billion as of March 31, 2013.

During the first quarter of 2013, we invested $98 million in the construction of our fleet. We estimate the remaining capital expenditures to complete our four newbuild drillships under construction to be approximately $2.0 billion, including approximately $608 million for our eighth drillship, the Pacific Zonda.

We anticipate funding the remaining costs of the four newbuild drillships with a combination of cash on hand, cash flows from operations, our $1 billion senior secured credit facility agreement signed in February 2013 and additional debt to be placed prior to the delivery of our eighth drillship, the Pacific Zonda. We believe that current financial markets should provide us the opportunity to refinance our Project Facilities Agreement, further strengthening our long-term liquidity position. However, the choice, timing and ultimately, closing of the specific elements of any such financing plans will be determined by future capital market conditions.

Updates to 2013 Guidance

In the first quarter of 2013, we have added additional disclosure on our direct rig operating expenses, specifically on the level of costs reimbursed by our clients. These reimbursable costs include one-time as well as recurring items that are beyond the initial scope of our contract and the corresponding initial contractual dayrate. We incur these costs on behalf of our clients and they are subsequently reimbursed fully by them. These reimbursable costs can be large and often fluctuate significantly between periods based on the needs of our clients, making them difficult to forecast. For this reason, we will continue to provide additional information on actual and forecast direct rig related daily operating expenses showing the estimated range inclusive and exclusive of estimated reimbursable expense charges.

Including reimbursable expenses, we reiterate our annual guidance provided with our fourth quarter 2012 results of total direct rig related operating expenses ranging between $182,000 and $187,000 per operating rig per day. Excluding reimbursable expenses, we estimate the range for full year direct rig related operating expenses to be between $175,000 and $180,000 per operating rig per day.

Our 2013 guidance on general and administrative costs represented an increase over 2012 and also represented an increase to the annualized general and administrative expenses incurred during the first quarter of 2013. We reiterate our expectation for increases in estimated general and administrative expenses to occur in future quarters as a result of annual compensation increases to employees made effective April 1, 2013, increases in share-based compensation expenses due to new 2013 grants and increases in the number of employees during 2013 to strengthen our organization to support an eight rig fleet. Therefore, we expect general and administrative expenses for the second quarter of 2013 to range between $13.0 and $14.0 million. We reiterate other annual guidance provided with our fourth quarter and full year 2012 results.

Updated schedules of expected amortization of deferred revenue, amortization of deferred mobilization expense, depreciation and interest expense for our existing financing as well as capital expenditures are included in the "Investor Toolkit” subsection of the "Investor Relations” section of our website, www.pacificdrilling.com.

Please note the guidance provided above is based on management’s current expectations about the future and both stated and unstated assumptions, and does not constitute any form of guarantee, assurance or promise that the matters indicated will actually be achieved. Actual conditions and assumptions are subject to change. The guidance set forth above is subject to all cautionary statements and limitations described under the "Forward-Looking Statements” section of this press release.

Conference Call

Pacific Drilling will conduct a conference call at 9:00 a.m. U.S. Central Time on Tuesday, May 7, 2013, to discuss first quarter 2013 results. To participate, dial +1 785-830-7990 or 1-800-768-6544 and refer to confirmation code 8755753 approximately five to ten minutes prior to the scheduled start time of the call. The call will also be broadcast live over the Internet in a listen-only mode and can be accessed by a link posted in the "Events & Presentations” subsection of the "Investor Relations” section of the company’s website, www.pacificdrilling.com.

An audio replay of the conference call will be available after 12:00 p.m. U.S. Central Time on Tuesday, May 7, 2013, by dialing +1 719-457-0820 or 1-888-203-1112 and using access code 8755753. A replay of the call will also be available on the company’s website.

About Pacific Drilling

With its best-in-class drillships and highly experienced team, Pacific Drilling is a fast growing company that is committed to becoming the industry’s preferred ultra-deepwater drilling contractor. Pacific Drilling’s fleet of eight ultra-deepwater drillships will represent one of the youngest and most technologically advanced fleets in the world. The company currently operates four drillships under client contract, and has four drillships under construction at Samsung Heavy Industries, two of which are under client contract. 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 in this press release concerning results for the fiscal period ended March 31, 2013, and the latest Investor Toolkit may constitute "forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include words or phrases such as "believe,” "expect,” "anticipate,” "plan,” "intend,” "foresee,” "should,” "would,” "could” or other similar words, which are generally not historical in nature, and specifically include statements involving future operational performance; revenue efficiency levels; estimated duration of client contracts; contract dayrate amounts; future contract opportunities; future contract commencement dates and locations; backlog; timing and delivery of newbuilds; capital expenditures; growth opportunities; market outlook; cost adjustments; estimated rig availability; clients; new rig commitments; the expected period of time and number of rigs that will be in a shipyard for repairs, maintenance, enhancement or construction; direct rig operating costs; compensation levels; shore based support costs; selling, general and administrative expenses; income tax expense; potential refinancing of our Project Facilities Agreement; expected amortization of deferred revenue; expected amortization of deferred mobilization expenses; and expected depreciation and interest expense for the existing credit facilities and senior bonds. These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effect on us. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those that we anticipate. All comments concerning our expectations for future revenue and operating results are based on our forecasts for our existing operations and do not include the potential impact of any future acquisitions. Our forward-looking statements involve significant risks and uncertainties (some of which are beyond our control) and assumptions that could cause actual results to differ materially from our historical experience and our present expectations or projections. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to downtime and other risks associated with offshore rig operations, including unscheduled repairs or maintenance; relocations, severe weather or hurricanes; possible cancellation or suspension of drilling contracts as a result of mechanical difficulties, performance or other reasons; changes in worldwide rig supply and demand, competition and technology; future levels of offshore drilling activity; impact of potential licensing or patent litigation; actual contract commencement dates; risks inherent to shipyard rig construction, repair, maintenance or enhancement; environmental or other liabilities, risks or losses; governmental regulatory, legislative and permitting requirements affecting drilling operations; our ability to attract and retain skilled personnel on commercially reasonable terms; governmental action, civil unrest and political and economic uncertainties; terrorism, piracy and military action; and the outcome of litigation, legal proceedings, investigations or other claims or contract disputes.

For additional information regarding known material factors that could cause our actual results to differ from our projected results, please see our filings with the SEC, including our Annual Report on Form 20-F and Current Reports on Form 6-K.

Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. 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.

EBITDA Reconciliation

EBITDA is defined as earnings before interest, taxes, depreciation and amortization. EBITDA does 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 generally accepted accounting principles in the United States of America ("GAAP”) and our calculation of EBITDA may not be comparable to that reported by other companies. EBITDA is included herein because it is used by the Company to measure its operations. We believe that EBITDA presents useful information to investors regarding the Company's operating performance.