United states securities and exchange commission

Years Ended December 31, 

		2017			2016			Change
		(in thousands)
Cash flow from operating activities:
Net loss		$	(525,166)		$	(37,157)		$	(488,009)
Depreciation expense			278,949			275,901			3,048
Amortization of deferred revenue			(46,829)			(67,053)			20,224
Amortization of deferred costs			11,689			13,945			(2,256)
Amortization of deferred financing costs			24,889			18,786			6,103
Amortization of debt discount			940			1,279			(339)
Write-off of deferred financing costs			30,846			—			30,846
Deferred income taxes			7,409			15,494			(8,085)
Share-based compensation expense			6,819			7,094			(275)
Gain on debt extinguishment			—			(36,233)			36,233
Other-than-temporary impairment of available-for-sale securities			6,829			—			6,829
Reorganization items			5,315			—			5,315
Changes in operating assets and liabilities, net			83,437			57,048			26,389
Net cash provided by (used in) operating activities		$	(114,873)		$	249,104		$	(363,977)

 

The decrease in net cash from operating activities resulted primarily from reduced revenue from our fleet and higher legal and advisory costs related to our debt restructuring efforts and Chapter 11 proceedings, partially offset by lower operating expenses for the year ended December 31, 2017.

The following table provides a comparison of our net cash used in investing activities for the years ended December 31, 2017 and 2016:

		Years Ended December 31,
		2017			2016			Change
		(in thousands)
Cash flow from investing activities:
Capital expenditures		$	(36,645)		$	(52,625)		$	15,980
Purchase of available-for-sale securities			(6,000)			—			(6,000)
Net cash used in investing activities		$	(42,645)		$	(52,625)		$	9,980

 

The decrease in capital expenditures resulted primarily from fleet-wide cost control measures implemented. Capital expenditures for the year ended December 31, 2017 primarily consisted of purchases of equipment committed to in prior years, including a final milestone payment of $16.3 million for a fleet spare blowout preventer. Purchase of available-for-sale securities for the year ended December 31, 2017 consisted of $6.0 million in purchases of Hyperdynamics shares. See Note 11 to our consolidated financial statements.

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The following table provides a comparison of our net cash provided by (used in) financing activities for the years ended December 31, 2017 and 2016:

		Years Ended December 31,
		2017			2016			Change
		(in thousands)
Cash flow from financing activities:
Payments for shares issued under share-based compensation plan		$	(199)		$	(89)		$	(110)
Proceeds from long-term debt			—			450,000			(450,000)
Payments on long-term debt			(146,473)			(110,832)			(35,641)
Payments for financing costs			(4,530)			(25,423)			20,893
Net cash provided by (used in) financing activities		$	(151,202)		$	313,656		$	(464,858)

 

The decrease in cash from financing activities for the year ended December 31, 2017, as compared to the same period in 2016, resulted from no debt drawdown and higher debt payments in 2017. During the year ended December 31, 2016, we drew an aggregate of $450.0 million under our 2013 Revolving Credit Facility. During the year ended December 31, 2017, we made a $76.0 million prepayment of the SSCF in accordance with our obligation to maintain the loan to rig value covenant in the SSCF at the required level as at December 31, 2016, we applied the cash collateral of $31.7 million to the principal installments due in May 2017 under the SSCF, and we permanently repaid $25.0 million under the 2013 Revolving Credit Facility. During the year ended December 31, 2016, we made $79.8 million of amortization payments under the SSCF, and repurchased $60.6 million of the 2017 Senior Secured Notes for a purchase price of $23.6 million plus accrued interest.  

Year ended December 31, 2016 compared to Year ended December 31, 2015

The following table provides a comparison of our net cash provided by operating activities for the years ended December 31, 2016 and 2015:

		Years Ended December 31,
		2016			2015			Change
		(in thousands)
Cash flow from operating activities:
Net income (loss)		$	(37,157)		$	126,230		$	(163,387)
Depreciation expense			275,901			243,457			32,444
Amortization of deferred revenue			(67,053)			(86,276)			19,223
Amortization of deferred costs			13,945			25,951			(12,006)
Amortization of deferred financing costs			18,786			11,278			7,508
Amortization of debt discount			1,279			1,015			264
Write-off of deferred financing costs			—			5,965			(5,965)
Loss from construction contract rescission			—			38,084			(38,084)
Deferred income taxes			15,494			9,840			5,654
Share-based compensation expense			7,094			12,534			(5,440)
Gain on debt extinguishment			(36,233)			—			(36,233)
Changes in operating assets and liabilities, net			57,048			34,068			22,980
Net cash provided by operating activities		$	249,104		$	422,146		$	(173,042)