News Releases

Independence Contract Drilling, Inc. Reports Financial Results for the Fourth Quarter and Year Ended December 31, 2020 and Announces Additional Rig Reactivations

HOUSTON, Feb. 24, 2021 /PRNewswire/ -- Independence Contract Drilling, Inc. (the "Company" or "ICD") (NYSE: ICD) today reported financial results for the three and twelve months ended December 31, 2020 and announced additional rig reactivations.

Fourth Quarter 2020 Highlights

  • Net loss of $43.1 million, or $7.02 per share.
  • Adjusted net loss, as defined below, of $16.3 million, or $2.65 per share. 
  • Adjusted EBITDA loss, as defined below, of $1.5 million.
  • Net debt, excluding finance leases and net of deferred financing costs, of $125.1 million.
  • Marketed fleet utilization of 27%.
  • Fully burdened margin of $3,001 per day.

Fleet Summary Highlights

  • Eight rigs operating as of December 31, 2020.
  • Twelve rigs expected to be operating at March 31, 2021, based on executed contracts in place.

In the fourth quarter of 2020, the Company reported revenues of $13.3 million and a net loss of $43.1 million, or $7.02 per share, compared to revenues of $45.3 million and a net loss of $35.0 million, or $9.32 per share, in the fourth quarter of 2019, and to revenues of $10.2 million and a net loss of $15.2 million, or $2.67 per share in the third quarter of 2020.  In addition, the Company reported adjusted net loss (defined below) of $16.3 million, or $2.65 per share, and adjusted EBITDA loss (defined below) of $1.5 million in the fourth quarter of 2020, compared to adjusted net loss of $7.7 million, or $2.04 per share, and adjusted EBITDA of $7.2 million in the fourth quarter of 2019, and to adjusted net loss of $15.5 million, or $2.73 per share, and adjusted EBITDA loss of $0.5 million in the third quarter of 2020. 

For the year ended December 31, 2020, the Company reported revenues of $83.4 million and a net loss of $96.6 million, or $19.69 per share, compared to revenues of $203.6 million and a net loss of $60.8 million, or $16.11 per share for the year ended December 31, 2019.  In addition, the Company reported adjusted net loss of $53.3 million, or $10.86 per share, and adjusted EBITDA of $7.0 million for the year ended December 31, 2020 compared to adjusted net loss of $18.1 million, or $4.80 per share, and adjusted EBITDA of $43.4 million for the year ended December 31, 2019.  Adjusted net loss and adjusted EBITDA are both non-GAAP financial measures that are defined and reconciled below.

Chief Executive Officer Anthony Gallegos commented, "The fourth quarter of 2020 marked an inflection point as our contracted rig count increased materially as demand for our services continued to recover from the effects of the COVID-19 pandemic.  Our operating teams, supported by our industry leading systems and processes, performed exceptionally well during this period.  In addition, several of our prior customers reinitiated drilling activities and contracted ICD rigs to execute their programs.  Overall, since the trough of three operating rigs during the third quarter of 2020, we reactivated five rigs as of year end, representing a 167% increase over this low point.  All of these reactivations were completed safely, on time, on budget and with exceptional uptime performance.  We are grateful for our customers and appreciate the hard work of ICD's dedicated employees to make this performance possible."

"Looking out across our primary markets, including the Permian, Haynesville and Eagle Ford, we continue to see opportunities to increase our contracted rig count as the underlying macro environment continues to improve.  Since the beginning of 2021, we have reactivated an additional three rigs and a fourth reactivation is scheduled to occur in early March.  Driven by our desire to maximize shareholder returns and capitalize on improving market conditions, our Board of Directors has approved a capital budget for 2021 of $5.8 million, the vast majority of which will be maintenance driven, representing a substantial reduction compared to 2020 capital expenditures of $14.2 million."

Quarterly Operational Results

In the fourth quarter of 2020, the Company's marketed fleet operated at 27% utilization and recorded 707 revenue days, compared to 77% utilization and 1,984 revenue days in the fourth quarter of 2019, and 17% utilization and 460 revenue days in the third quarter of 2020.   Operating days in the fourth quarter of 2020 include 34 standby days in which the Company earned a substantially lower dayrate.

Operating revenues in the fourth quarter of 2020 totaled $13.3 million, compared to $45.3 million in the fourth quarter of 2019 and $10.2 million in the third quarter of 2020.  Revenues in the fourth quarter 2019 and third quarter of 2020 included early termination revenues of $0.6 million and $1.2 million, respectively.  There was no early termination revenue in the fourth quarter of 2020.  Revenue per day in the fourth quarter of 2020 was $16,720, compared to $20,241 in the fourth quarter of 2019 and $18,078 in the third quarter of 2020, excluding early termination revenue from the earlier periods. This decrease in average revenue per day resulted from a significant decline in spot dayrates during 2020, as well as the expiration of various higher dayrate legacy term contracts during 2020.  The Company does not have any legacy dayrate contracts with primary terms extending into 2021.

Operating costs in the fourth quarter of 2020 totaled $12.4 million, compared to $33.9 million in the fourth quarter of 2019 and $8.7 million in the third quarter of 2020.  Fully burdened operating costs were $13,719 per day in the fourth quarter of 2020, compared to $14,707 in the fourth quarter of 2019 and $14,155 in the third quarter of 2020. The sequential decrease was primarily attributable to stronger absorption of overhead costs associated with a larger operating fleet during the fourth quarter of 2020.

Excluding the impact from early termination revenues and decommissioning and reactivation costs, fully burdened rig operating margins in the fourth quarter of 2020 were $3,001 per day, compared to $5,534 per day in the fourth quarter of 2019 and $3,923 per day in the third quarter of 2020.

Selling, general and administrative expenses in the fourth quarter of 2020 were $3.4 million (including $0.4 million of non-cash stock-based compensation and $0.5 million of transaction costs incurred in connection with entering into an equity line of credit during the quarter). Excluding the equity line of credit costs, selling, general and administrative expenses during the fourth quarter of 2020 were $2.9 million (including $0.4 million of non-cash stock-based compensation).  This compares to selling, general and administrative expenses of $4.7 million (including $0.5 million of non-cash stock-based compensation) in the fourth quarter of 2019 and $2.8 million (including $0.7 million of non-cash stock-based compensation) in the third quarter of 2020.  The sequential increase in selling, general and administrative expenses was primarily due to seasonal audit and professional fees.

Impairment Charge

During the fourth quarter of 2020, due to the highly competitive market, management evaluated the Company's marketed fleet of drilling rigs to assess which rigs would be most relevant in the post-COVID pandemic market place and the capital requirements associated with each of these rigs.  As a result of this review, the Company made the decision to reduce its marketed fleet from 29 rigs to 24 rigs.  The Company does not expect to add any rigs back to its marketed fleet unless market conditions substantially improve over expectations.  As a result of this review, the Company recorded an impairment charge of $24.4 million related to the remaining assets on these rigs, as well as certain other component equipment.

Drilling Operations Update

The Company exited the fourth quarter with eight rigs earning revenues under drilling contracts and currently has 12 rigs under contract, including a rig scheduled for mobilization in early March 2021.  The majority of the Company's rigs are operating on short-term pad-to-pad contracts that are excluded from the Company's reported backlog.  As such, the Company's backlog of drilling contracts with original terms of six months or longer was $6.1 million as of December 31, 2020, representing 1.1 rig years of activity.  All of this backlog will be realized during 2021.

Capital Expenditures and Liquidity Update

The Company's capital expenditure budget for 2021, before asset sales and recoveries is $5.8 million.  As of December 31, 2020, the Company had cash on hand of $12.3 million, $7.5 million of availability under its $40.0 million ABL Credit Facility, $15.0 million committed accordion under its existing term loan facility and $5.0 million available under its committed equity line of credit. 

Conference Call Details

A conference call for investors will be held today, February 24, 2021, at 11:00 a.m. Central Time (12:00 p.m. Eastern Time) to discuss the Company's fourth quarter and year end 2020 results. 

The call can be accessed live over the telephone by dialing (855) 239-3115 or for international callers, (412) 542-4125.  A replay will be available shortly after the call and can be accessed by dialing (877) 344-7529 or for international callers, (412) 317-0088.  The passcode for the replay is 10151640.  The replay will be available until March 3, 2021.

Interested parties may also listen to a simultaneous webcast of the conference call by logging onto the Company's website at www.icdrilling.com in the Investor Relations section.  A replay of the webcast will also be available for approximately 30 days following the call.

About Independence Contract Drilling, Inc.

Independence Contract Drilling provides land-based contract drilling services for oil and natural gas producers in the United States. The Company constructs, owns and operates a fleet of pad-optimal ShaleDriller rigs that are specifically engineered and designed to accelerate its clients' production profiles and cash flows from their most technically demanding and economically impactful oil and gas properties. For more information, visit www.icdrilling.com.

Forward-Looking Statements

This news release contains certain forward-looking statements within the meaning of the federal securities laws. Words such as "anticipated," "estimated," "expected," "planned," "scheduled," "targeted," "believes," "intends," "objectives," "projects," "strategies" and similar expressions are used to identify such forward-looking statements. However, the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements relating to Independence Contract Drilling's operations are based on a number of expectations or assumptions which have been used to develop such information and statements but which may prove to be incorrect. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict, and there can be no assurance that actual outcomes and results will not differ materially from those expected by management of Independence Contract Drilling. For more information concerning factors that could cause actual results to differ materially from those conveyed in the forward-looking statements, please refer to the "Risk Factors" section of the Company's Annual Report on Form 10-K, filed with the SEC and the information included in subsequent amendments and other filings. These forward-looking statements are based on and include our expectations as of the date hereof. Independence Contract Drilling does not undertake any obligation to update or revise such forward-looking statements to reflect events or circumstances that occur, or which Independence Contract Drilling becomes aware of, after the date hereof.

INDEPENDENCE CONTRACT DRILLING, INC.
Unaudited
(in thousands, except par value and share data)
CONSOLIDATED BALANCE SHEETS



December 31, 2020


December 31, 2019

Assets




Cash and cash equivalents

$

12,279



$

5,206


Accounts receivable, net

10,023



35,834


Inventories

1,038



2,325


Assets held for sale



8,740


Prepaid expenses and other current assets

4,102



4,640


Total current assets

27,442



56,745


Property, plant and equipment, net

382,239



457,530


Other long-term assets, net

3,528



2,726


Total assets

$

413,209



$

517,001


Liabilities and Stockholders' Equity




Liabilities




Current portion of long-term debt (1)

$

7,637



$

3,685


Accounts payable

4,072



22,674


Accrued liabilities

10,723



16,368


Merger consideration payable to an affiliate



3,022


Current portion of contingent consideration



2,814


Total current liabilities

22,432



48,563


Long-term debt (2)

137,633



134,941


Merger consideration payable to an affiliate

2,902




Deferred income taxes, net

505



652


Other long-term liabilities

2,704



1,249


Total liabilities

166,176



185,405


Stockholders' equity




Common stock, $0.01 par value, 50,000,000 shares authorized;
6,254,396 and 3,876,196 shares issued, respectively, and 6,175,818
and 3,812,050 shares outstanding, respectively

62



38


Additional paid-in capital

517,948



505,831


Accumulated deficit

(267,064)



(170,426)


Treasury stock, at cost, 78,578 shares and 64,146 shares, respectively

(3,913)



(3,847)


Total stockholders' equity

247,033



331,596


Total liabilities and stockholders' equity

$

413,209



$

517,001




(1)

As of December 31, 2020 and December 31, 2019, current portion of long-term debt includes $3.4 million
and $3.7 million, respectively, of finance lease obligations.  As of December 31, 2020, current portion of
long-term debt also includes $4.3 million related to the PPP Loan.



(2)

As of December 31, 2020 and December 31, 2019, long-term debt includes $4.6 million and $7.5 million,
respectively, of long-term finance lease obligations.  As of December 31, 2020, long-term debt also includes
$5.7 million related to the PPP Loan.

 

INDEPENDENCE CONTRACT DRILLING, INC.
Unaudited
(in thousands, except par value and share data)
CONSOLIDATED STATEMENTS OF OPERATIONS



Three Months Ended


Twelve Months Ended


December 31,


September 30,


December 31,


2020


2019


2020


2020


2019











Revenues

$

13,319



$

45,292



$

10,224



$

83,418



$

203,602


Costs and expenses










Operating costs

12,380



33,881



8,663



65,367



144,913


Selling, general and administrative

3,383



4,743



2,796



13,484



16,051


Severance and merger-related expenses



10





1,076



2,698


Depreciation and amortization

10,581



11,529



10,767



43,919



45,367


Asset impairment, net

24,388



25,909





41,007



35,748


Loss (gain) on disposition of assets, net

1,931



1,440



(326)



723



4,943


Other expense









377


Total cost and expenses

52,663



77,512



21,900



165,576



250,097


Operating loss

(39,344)



(32,220)



(11,676)



(82,158)



(46,495)


Interest expense

(3,815)



(3,502)



(3,554)



(14,627)



(14,415)


Loss before income taxes

(43,159)



(35,722)



(15,230)



(96,785)



(60,910)


Income tax benefit

(63)



(712)



(31)



(147)



(122)


Net loss

$

(43,096)



$

(35,010)



$

(15,199)



$

(96,638)



$

(60,788)












Net loss per share:










Basic and diluted

$

(7.02)



$

(9.32)



$

(2.67)



$

(19.69)



$

(16.11)












Weighted average number of common
shares outstanding:










Basic and diluted

6,135



3,755



5,703



4,907



3,774


 

INDEPENDENCE CONTRACT DRILLING, INC.
Unaudited
(in thousands, except par value and share data)
CONSOLIDATED STATEMENTS OF CASH FLOWS



Twelve Months Ended December 31,


2020


2019

Cash flows from operating activities




Net loss

$

(96,638)



$

(60,788)


Adjustments to reconcile net loss to net cash provided by operating activities




Depreciation and amortization

43,919



45,367


Asset impairment, net

41,007



35,748


Stock-based compensation

1,979



1,871


Loss on disposition of assets, net

723



4,943


Deferred income taxes

(147)



(122)


Amortization of deferred financing costs

988



814


Bad debt expense

16



459


Changes in operating assets and liabilities




Accounts receivable

26,026



5,695


Inventories

117



(349)


Prepaid expenses and other assets

(1,023)



1,473


Accounts payable and accrued liabilities

(16,680)



(7,190)


Net cash provided by operating activities

287



27,921


Cash flows from investing activities




Purchases of property, plant and equipment

(14,229)



(38,320)


Proceeds from the sale of assets

5,107



8,951


Proceeds from insurance claims



1,000


Collection of principal on note receivable

145




Net cash used in investing activities

(8,977)



(28,369)


Cash flows from financing activities




Borrowings under Revolving Credit Facilities

11,045



4,511


Repayments under Revolving Credit Facilities

(11,038)



(7,077)


Borrowings under PPP Loan

10,000




Proceeds from issuance of common stock

10,978




Common stock issuance costs

(772)



(177)


Purchase of treasury stock

(66)



(809)


RSUs withheld for taxes

(44)



(34)


Financing costs paid under Term Loan Facility



(5)


Financing costs paid under Revolving Credit Facilities



(22)


Payments for finance lease obligations

(4,340)



(2,980)


Net cash provided by (used in) financing activities

15,763



(6,593)


Net increase (decrease) in cash and cash equivalents

7,073



(7,041)


Cash and cash equivalents




Beginning of year

5,206



12,247


End of year

$

12,279



$

5,206


 


Twelve Months Ended December 31,


2020


2019

Supplemental disclosure of cash flow information




Cash paid during the year for interest

$

13,309



$

13,974


Supplemental disclosure of non-cash investing and financing activity




Change in property, plant and equipment purchases in accounts payable

$

(7,201)



$

1,607


Additions to property, plant and equipment through finance leases

$

2,650



$

13,143


Extinguishment of finance lease obligations from sale of assets classified as finance leases

$

(1,549)



$

(249)


Transfer of assets from held and used to held for sale

$



$

(18,506)


Transfer from inventory to fixed assets

$



$

(406)


The following table provides various financial and operational data for the Company's operations for the three months ending December 31, 2020 and 2019 and September 30, 2020, and the twelve months ending December 31, 2020 and 2019.  This information contains non-GAAP financial measures of the Company's operating performance.  The Company believes this non-GAAP information is useful because it provides a means to evaluate the operating performance of the Company on an ongoing basis using criteria that are used by our management.  Additionally, it highlights operating trends and aids analytical comparisons.  However, this information has limitations and should not be used as an alternative to operating income (loss) or cash flow performance measures determined in accordance with GAAP, as this information excludes certain costs that may affect the Company's operating performance in future periods.

OTHER FINANCIAL & OPERATING DATA
Unaudited



Three Months Ended


Twelve Months Ended


December 31,


September 30,


December 31,


2020


2019


2020


2020


2019











Number of marketed rigs end of period(1)

24



29



29



24



29


Rig operating days(2)

707



1,984



460



3,739



8,985


Average number of operating rigs(3)

7.7



21.6



5.0



10.2



24.6


Rig utilization(4)

27

%


77

%


17

%


35

%


83

%

Average revenue per operating day(5)

$

16,720



$

20,241



$

18,078



$

19,000



$

20,628


Average cost per operating day(6)

$

13,719



$

14,707



$

14,155



$

13,984



$

14,202


Average rig margin per operating day

$

3,001



$

5,534



$

3,923



$

5,016



$

6,426




(1)

Marketed rigs exclude idle rigs that will not be reactivated until upgrades or conversions are complete.



(2)

Rig operating days represent the number of days our rigs are earning revenue under a contract during the
period, including days that standby revenues are earned.



(3)

Average number of operating rigs is calculated by dividing the total number of rig operating days in the period
by the total number of calendar days in the period.



(4)

Rig utilization is calculated as rig operating days divided by the total number of days our marketed drilling rigs
are available during the applicable period.



(5)

Average revenue per operating day represents total contract drilling revenues earned during the period divided
by rig operating days in the period.  Excluded in calculating average revenue per operating day are revenues
associated with the reimbursement of (i) out-of-pocket costs paid by customers of $1.5 million, $4.5 million and
$0.8 million during the three months ended December 31, 2020 and 2019, and September 30, 2020, respectively,
and $9.0 million and $15.8 million during the twelve months ended December 31, 2020 and 2019, respectively, (ii)
revenues associated with the amortization of intangible revenue acquired in the Sidewinder Merger of $1.1 million
during the twelve months ended December 31, 2019, and (iii) early termination revenues of zero, $0.6 million and
$1.2 million during the three months ended December 31, 2020 and 2019, and September 30, 2020, respectively,
and $3.3 million and $1.4 million during the twelve months ended December 31, 2020 and 2019, respectively.



(6)

Average cost per operating day represents operating costs incurred during the period divided by rig operating days
in the period.  The following costs are excluded in calculating average cost per operating day: (i) out-of-pocket costs
paid by customers of $1.5 million, $4.5 million and $0.8 million during the three months ended December 31, 2020
and 2019, and September 30, 2020, respectively, and $9.0 million and $15.8 million during the twelve months ended
December 31, 2020 and 2019, respectively, (ii) new crew training costs of zero, $0.2 million and zero during the three
months ended December 31, 2020 and 2019, and September 30, 2020, respectively, and $0.2 million and $0.3 million
during the twelve months ended December 31, 2020 and 2019, respectively, (iii) construction overhead costs expensed
due to reduced rig construction activity of $0.5 million, zero and $0.5 million during the three months ended December 
31, 2020 and 2019, and September 30, 2020, respectively, and $1.9 million and $1.1 million during the twelve months
ended December 31, 2020 and 2019, respectively, and (iv) rig decommissioning costs associated with stacking deactivated
rigs and rig reactivation costs associated with the redeployment of previously stacked rigs of $0.7 million, zero and $0.8
million during the three months ended December 31, 2020 and 2019, and September 30, 2020, respectively, and $2.0 million
and $0.2 million during the twelve months ended December 31, 2020, and 2019, respectively.

Non-GAAP Financial Measures

Adjusted net (loss) income, EBITDA and adjusted EBITDA are supplemental non-GAAP financial measures that are used by management and external users of our financial statements, such as industry analysts, investors, lenders and rating agencies.  In addition, adjusted EBITDA is consistent with how EBITDA is calculated under our credit facility for purposes of determining our compliance with various financial covenants.  We define "adjusted net (loss) income" as net (loss) income before: asset impairment, net; (gain) loss on disposition of assets, net; intangible revenue; severance and merger-related expenses; and other adjustments.  We define "EBITDA" as earnings (or loss) before interest, taxes, depreciation, and amortization, and we define "adjusted EBITDA" as EBITDA before stock-based compensation, non-cash asset impairments, gains or losses on disposition of assets, and other non-recurring items added back to, or subtracted from, net income for purposes of calculating EBITDA under our credit facilities.  Neither adjusted net (loss) income, EBITDA or adjusted EBITDA is a measure of net income as determined by U.S. generally accepted accounting principles ("GAAP").

Management believes adjusted net (loss) income, EBITDA and adjusted EBITDA are useful because they allow our stockholders to more effectively evaluate our operating performance and compliance with various financial covenants under our credit facility and compare the results of our operations from period to period and against our peers without regard to our financing methods or capital structure or non-recurring, non-cash transactions. We exclude the items listed above from net income (loss) in calculating adjusted net (loss) income, EBITDA and adjusted EBITDA because these amounts can vary substantially from company to company within our industry depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired. None of adjusted net (loss) income, EBITDA or adjusted EBITDA should be considered an alternative to, or more meaningful than, net income (loss), the most closely comparable financial measure calculated in accordance with GAAP, or as an indicator of our operating performance or liquidity. Certain items excluded from adjusted net (loss) income, EBITDA and adjusted EBITDA are significant components in understanding and assessing a company's financial performance, such as a company's return on assets, cost of capital and tax structure. Our presentation of adjusted net (loss) income, EBITDA and adjusted EBITDA should not be construed as an inference that our results will be unaffected by unusual or non-recurring items.  Our computations of adjusted net (loss) income, EBITDA and adjusted EBITDA may not be comparable to other similarly titled measures of other companies.

Reconciliation of Net Loss to Adjusted Net Loss:



(Unaudited)


(Unaudited)


Three Months Ended


Twelve Months Ended


December 31,


September 30,


December 31,


2020


2019


2020


2020


2019


Amount


Per Share


Amount


Per Share


Amount


Per Share


Amount


Per Share


Amount


Per Share

(in thousands)




















Net loss

$

(43,096)



$

(7.02)



$

(35,010)



$

(9.32)



$

(15,199)



$

(2.67)



$

(96,638)



$

(19.69)



$

(60,788)



$

(16.11)


Add back:




















Asset impairment, net (1)

24,388



3.98



25,909



6.90







41,007



8.36



35,748



9.47


Loss (gain) on disposition of assets, net (2)

1,931



0.31



1,440



0.38



(326)



(0.06)



723



0.15



4,943



1.31


Intangible revenue (3)

















(1,079)



(0.28)


Severance and merger-related expenses (4)





10









1,076



0.22



2,698



0.71


Purchase agreement costs (5)

497



0.08











497



0.10






Other expense

















377



0.10


Adjusted net loss

$

(16,280)



$

(2.65)



$

(7,651)



$

(2.04)



$

(15,525)



$

(2.73)



$

(53,335)



$

(10.86)



$

(18,101)



$

(4.80)


 

Reconciliation of Net Loss to EBITDA and Adjusted EBITDA:



(Unaudited)


(Unaudited)


Three Months Ended


Twelve Months Ended


December 31,


September 30,


December 31,


2020


2019


2020


2020


2019

(in thousands)










Net loss

$

(43,096)



$

(35,010)



$

(15,199)



$

(96,638)



$

(60,788)


Add back:










Income tax benefit

(63)



(712)



(31)



(147)



(122)


Interest expense

3,815



3,502



3,554



14,627



14,415


Depreciation and amortization

10,581



11,529



10,767



43,919



45,367


Asset impairment, net (1)

24,388



25,909





41,007



35,748


EBITDA

(4,375)



5,218



(909)



2,768



34,620


Loss (gain) on disposition of assets, net (2)

1,931



1,440



(326)



723



4,943


Stock-based compensation

425



486



694



1,979



1,871


Intangible revenue (3)









(1,079)


Severance and merger-related expenses (4)



10





1,076



2,698


Purchase agreement costs (5)

497







497




Other expense









377


Adjusted EBITDA

$

(1,522)



$

7,154



$

(541)



$

7,043



$

43,430




(1)

During the fourth quarter of 2020, due to the highly competitive market and in an effort to minimize capital
spending, management drafted and approved a plan to upgrade our existing fleet, by utilizing the primary
components needed to complete the upgrades from five rigs and these rigs were removed from our marketed
fleet.  We recorded an impairment charge of $24.4 million related to the remaining assets on these rigs, as
well as certain other component equipment.  In the fourth quarter of 2019, we recorded impairments totaling
$25.9 million relating primarily to our decision to remove two rigs from our marketed fleet, as well as a plan to
sell or otherwise dispose of rigs and related component equipment, much of which was acquired in connection
with the Sidewinder Merger.



(2)

In the fourth quarter of 2020 and 2019, and the third quarter of 2020, we recorded a loss, loss and gain,
respectively, of $1.9 million, $1.4 million and $0.3 million, respectively, on disposition of miscellaneous
drilling equipment in the respective quarter.



(3)

We amortized $1.1 million of intangible revenue related to an unfavorable contract liability acquired in the
Sidewinder Merger for the year ended December 31, 2019.



(4)

Severance expense of $1.1 million was recorded in 2020 in connection with our cost reduction measures
instituted in response to the COVID-19 pandemic and deteriorating market conditions.  Severance and
merger-related expenses of $2.7 million were recorded in 2019 primarily comprised of severance,
professional fees and other Sidewinder merger-related expenses.



(5)

Purchase agreement costs were recorded in the fourth quarter of 2020 in connection with our
committed equity line of credit.

INVESTOR CONTACTS:
Independence Contract Drilling, Inc.
E-mail inquiries to: Investor.relations@icdrilling.com
Phone inquiries: (281) 598-1211

Independence Contract Drilling (PRNewsFoto/Independence Contract Drilling)

SOURCE Independence Contract Drilling, Inc.



Independence Contract Drilling was founded in 2011 as a provider of premium integrated onshore drilling services.