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 Reporter July 2014 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

People & Company News

Dool to Serve as Chair of SLSMC Board

The St. Lawrence Seaway Management Corporation (SLSMC) announced that Tim Dool has been named as Chair of the Board of Directors, effective September 1. Dool was

Bollore First Half Boosted by Transport, Advertising Unit

French industrial group Bollore said first-half operating income rose 11 percent to 314 million euro because of strength at its transport business and advertising agency Havas,

Scrap Metal Exporter Pens Terminal Agreement

Port Canaveral Scrap Terminal LLC (PCST), a bulk ferrous scrap exporter, has signed a lease with the Canaveral Port Authority to operate a terminal in the north cargo area at Port Canaveral.

Offshore

Odfjell Drilling in Tighter 2Q North Sea Market

Odfjell Drilling reports second quarter 2014 financial results showing a profit of US$29-million. Profit & loss Q2 2014 Operating revenue for Q2 2014 was USD 272 million (USD 289 million),

Brazil AHTS Contract Breakthrough for Havyard

Havyard says it is to deliver the ship design and equipment for four anchor handling tug supply (AHTS) vessels that are to be built and operated by the Brazilian

EOC Takes Full Ownership of OSVs

On 26 August 2014, EOC Limited agreed to acquire 50% of the entire issued share capital of Lewek Antares Shipping Pte. Ltd. (the "Target") , a company incorporated under the laws of Singapore,

Finance

Bollore First Half Boosted by Transport, Advertising Unit

French industrial group Bollore said first-half operating income rose 11 percent to 314 million euro because of strength at its transport business and advertising agency Havas,

CMA CGM Continues Expansion, Confirms Profits

The Board of Directors of CMA CGM Group, the world’s third largest container shipping company, met under the chairmanship of Jacques R. Saadé, Chairman and Chief Executive Officer,

Odfjell Drilling in Tighter 2Q North Sea Market

Odfjell Drilling reports second quarter 2014 financial results showing a profit of US$29-million. Profit & loss Q2 2014 Operating revenue for Q2 2014 was USD 272 million (USD 289 million),

News

Dool to Serve as Chair of SLSMC Board

The St. Lawrence Seaway Management Corporation (SLSMC) announced that Tim Dool has been named as Chair of the Board of Directors, effective September 1. Dool was

Bollore First Half Boosted by Transport, Advertising Unit

French industrial group Bollore said first-half operating income rose 11 percent to 314 million euro because of strength at its transport business and advertising agency Havas,

East and South China Sea Disputes Need Creative Diplomacy

China and the United States appear headed for a damaging confrontation over the extent of China's territorial claims in the South and East China Seas. Now that

Offshore Energy

Maritime Reporter @ 75: The Daily Cartoon

Maritime Reporter & Engineering News was founded by John J. O'Malley (1905-1980) in 1939, and today ranks as the world's largest audited trade publication in the world serving the maritime industry,

Odfjell Drilling in Tighter 2Q North Sea Market

Odfjell Drilling reports second quarter 2014 financial results showing a profit of US$29-million. Profit & loss Q2 2014 Operating revenue for Q2 2014 was USD 272 million (USD 289 million),

Rosneft Restores Meteorological Observations System in Kara Sea

As part of a large-scale summer Arctic research expedition "Kara-Summer - 2014" a meteorological station was installed that meets the latest modern requirements for such equipment,

 
 
Maritime Careers / Shipboard Positions Maritime Contracts Maritime Security Maritime Standards Naval Architecture Offshore Oil Ship Electronics Ship Repair Shipbuilding / Vessel Construction Sonar
rss | archive | history | articles | privacy | terms and conditions | 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: 0.1959 sec (5 req/sec)