Diamond Offshore Shares on the Rise

Posted by Eric Haun
Thursday, April 24, 2014
Photo courtesy Diamond Offshore

Diamond Offshore Drilling Inc, one of the world's top five offshore rig contractors, reported a better-than-expected quarterly profit as it cut drilling costs and hiked prices, sending its shares up as much as 10.5 percent.

The company - owned 50.4 percent by hotel, energy and financial services conglomerate Loews Corp - also said it would pay a special cash dividend of 75 cents per share on top of its regular quarterly dividend of 13 cents.

Diamond Offshore, which has one of the oldest fleet of rigs, said dayrates rose across all four drilling businesses, while drilling costs fell 1.4 percent in the quarter ended March 31.

"Diamond managed to record better-than-expected cost containment results across all segments of the floater market," Cowen and Co analyst J.B. Lowe said in a note to clients.

The contract driller is adding capacity and upgrading its fleet of 45 ultra-deepwater, deepwater, mid-water and jack-ups rigs, which have an average age of 25.7 years. A rig in service for more than 25 years is considered old.

"We will continue to invest as we grow the fleet but at the same time let's not underestimate the capability of some of the assets that are described as older in our fleet," Chief Executive Marc Edwards said on a conference call.

To be sure, two of the company's 40 plus-year-old deepwater rigs are returning to work in the next two months - one sooner-than-expected and one at a higher rate than expected. (http://r.reuters.com/wap78v)

However, Edwards, a former Halliburton Co executive who took charge at Diamond Offshore in February, warned that 2014-15 "could be a tough environment for offshore drillers."

Demand for contract drilling is softening as vessels ordered during boom times are being delivered now, just as energy companies tighten spending on exploration.

Analysts expect only a modest recovery in demand in the second half of 2014, with rig utilization rates staying below 2013 levels.

While the fall in demand and utilization is likely to affect the entire sector, analysts expect Diamond Offshore to fare worse than rivals, given the age of its fleet.

Diamond Offshore, whose competitors include Ensco Plc , Transocean Ltd and Helmerich & Payne Inc , has two rigs due for delivery in 2014 but has not yet announced any contracts for them.

Helmerich & Payne on Thursday reported a 14 percent rise in revenue from its offshore contract drilling business as average rig revenue per day rose. However, utilization rates stayed flat in the second quarter ended March 31.

Diamond Offshore's utilization rates, however, fell for its ultra-deepwater, deepwater and mid-water rigs in the quarter. Rates rose for its jack-up rigs, but that business is the company's smallest.

The company's net profit fell 17 percent to $145.8 million, or $1.05 per share. Excluding a tax gain, its profit of 93 cents per share beat analysts' average estimate of 65 cents per share.

Drilling costs fell 1.4 percent to $369.8 million, driven by a 9 percent drop in ultra-deepwater drilling expenses.

Revenue fell about 3 percent to $709.4 million, also beating the average analysts' estimate of $686.3 million, according to Thomson Reuters I/B/E/S.

Diamond Offshore's shares, which had fallen about 30 percent in the last nine months to Wednesday, were up 7.7 percent at $52.25 in afternoon trading on the New York Stock Exchange.

Helmerich & Payne's shares were down 6 percent at $107.09.

(By Shubhankar Chakravorty; Editing by Sriraj Kalluvila, Ted Kerr and Savio D'Souza)

Maritime Today


The Maritime Industry's original and most viewed E-News Service

Maritime Reporter May 2016 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

People & Company News

DP World to Manage Somaliland Port for 30 Years

DP World has reached an agreement to manage the Berbera port in Somaliland, which would allow it to become a major hub for goods to transit to and from the Horn of Africa,

Abu Dhabi Ports Try to Lure Chinese Businessmen

Abu Dhabi Ports - the master developer, operator and manager of ports and Khalifa Industrial Zone in the Emirate - presented the integrated offerings of Khalifa

NASSCO Lays Keel for Jones Act Tanker Liberty

U.S. shipbuilder General Dynamics NASSCO hosted a keel laying ceremony on Thursday, May 26 for the Liberty, one of three new ECO Class Jones Act tankers under a

Offshore

Mermaid Maritime Bags Subsea Contracts, Delays Newbuilding

Thailand’s Mermaid Maritime said it has been awarded a number of subsea contracts in the Middle East with a total worth of $11million.   It has also reached

Hercules Offshore Filing for Bankruptcy Again

Hercules Offshore Inc said it planned to file for prepackaged Chapter 11 bankruptcy, just six months after the rig contractor emerged from bankruptcy protection.

DONG Energy Listing to Value Group at up to $16 Bln

DONG Energy's has set a potential $16 billion price tag on its stock market debut, giving investors a chance to buy into the growth in offshore wind power, but

Finance

CMA CGM Intends Offer to Acquire NOL

Following the satisfaction and waiver (as the case may be) of the conditions set forth in the pre-conditional offer announcement dated 7 December 2015, CMA CGM S.

Oman Shipping Makes Profit

Oman Shipping Company (OSC) reported a $180 million profit in 2015. Tariq bin Mohammed Al Junaidi, chief executive officer of OSC has been quoted by  Oman News

Korean Shipbuilder Could Be Liquidated

South Korea's STX Offshore & Shipbuilding Co. has filed for receivership, following massive losses that have mounted up over the past two years, says a report in the WSJ.

Energy

Strike In France: Implications for Tanker Demand

After the oil industry suffered from a severe drought in Venezuela, forest fires in Canada and rebel attacks on oil installations in Nigeria, it is now facing

Floating Storage Flattens Fortunes of $50 Crude

The prices of WTI and Brent crude briefly rose above $50/bbl during intraday trading on Thursday, the highest level seen since the end of July 2015, giving traders a brief moment of optimism,

GloMEEP Project Forges Ahead with Train-the-Trainer Workshop

A global Train-the-Trainer workshop on energy efficiency has been delivered in China (23-27 May), preparing the personnel needed to cascade knowledge on energy

News

APM Terminals Bahrain Push for Safety, IT systems

Hidd, Khalifa Bin Salman Port, Bahrain - APM Terminals Bahrain, operators of Khalifa bin Salman Port (KBSP), has recently made significant advances in Safety performance

Seized Hanjin Shipping Vessel Resumes Operation in South Africa

Hanjin Paradip resume  its sailing from South Africa as talks continue with owner over unpaid charter fees. The ship had been detained in Richards Bay, South Africa

Deployment: The Transpacific Trade Steps Up To The Plate

In 2015, it was the Asia-Europe route which was the focus of changing deployment trends, says Clarksons Research.   This year, it is the Transpacific trade which

Offshore Energy

Strike In France: Implications for Tanker Demand

After the oil industry suffered from a severe drought in Venezuela, forest fires in Canada and rebel attacks on oil installations in Nigeria, it is now facing

Floating Storage Flattens Fortunes of $50 Crude

The prices of WTI and Brent crude briefly rose above $50/bbl during intraday trading on Thursday, the highest level seen since the end of July 2015, giving traders a brief moment of optimism,

Höegh LNG FSRUs on Strong Ground

Höegh LNG is upbeat on the group’s FSRU prospects as its profit rise comes on the back of an almost tripled average regasification flow rate on Höegh LNG’s FSRU

 
 
Maritime Contracts Maritime Security Naval Architecture Navigation Offshore Oil Salvage Ship Repair Ship Simulators Sonar Winch
rss | archive | history | articles | privacy | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.1789 sec (6 req/sec)