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 2015 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

People & Company News

Marad Visits TX Maritime Technology & Training Center

United States Maritime Administration tours Maritime Technology and Training Center site.   Administrators from the United States Maritime Administration (MARAD),

ISS Announces CEO Transition

Captain Claus Hyldager yesterday decided to step down as the Chief Executive Officer of Inchcape Shipping Services (“ISS”).    The current Chief Financial Officer,

CME Lifts Force Majeure for all Illinois River Grain Terminals

CME Group has lifted its declaration of force majeure at all Illinois River terminals that are regular for Chicago Board of Trade corn and soybean futures delivery,

Finance

FURUNO of Japan Increases Investment in ENL

ENL Group and FURUNO Electric Co. Ltd of Japan have announced that FURUNO has increased its investment into the New Zealand company to a total of 29.5%. The

Pressure for Australia Sub Deal Grows

Australia to spend A$65 bln on ships and subs over 20 years; PM pledges A$40 bln for domestic shipbuilders. Australia will spend A$89 billion ($65 billion) on

S.Africa Considering Ship-Based Power Generation

South Africa could deploy power barges using gas to generate electricity to help overcome chronic supply shortages, a senior government official said on Tuesday.

Energy

S.Africa Considering Ship-Based Power Generation

South Africa could deploy power barges using gas to generate electricity to help overcome chronic supply shortages, a senior government official said on Tuesday.

Asian Nations Call for Stop to South China Sea Land Work

Calls grow for China to halt land reclamation. Southeast Asian countries on Tuesday backed a U.S. call to halt land reclamation in the South China Sea, underlining

Koole Expands Rotterdam Operations

Koole Terminals has begun operations at the storage facility for petrol and diesel in Pernis that it recently acquired from BP.   The companies have a long-standing relationship.

News

Marad Visits TX Maritime Technology & Training Center

United States Maritime Administration tours Maritime Technology and Training Center site.   Administrators from the United States Maritime Administration (MARAD),

ISS Announces CEO Transition

Captain Claus Hyldager yesterday decided to step down as the Chief Executive Officer of Inchcape Shipping Services (“ISS”).    The current Chief Financial Officer,

CME Lifts Force Majeure for all Illinois River Grain Terminals

CME Group has lifted its declaration of force majeure at all Illinois River terminals that are regular for Chicago Board of Trade corn and soybean futures delivery,

Offshore Energy

Egypt Gets FSRU from BW Gas

Norway-based BW Gas will provide Egypt with a liquefied natural gas (LNG) floating import terminal under a five-year contract.   This comes as as the North African

CWind Joins National Workboat Association

Citing crew transfer services as an integral part of its offering, offshore wind industry service provider CWind announced it is now a member of the National Workboat Association (NWA) of the U.

Strategic Marine: Stock Program Full Power Ahead

Strategic Marine confirmed its stock program of personnel transport vessels is market-ready.  “Our stock program currently incorporates two class leading designs

 
 
Maritime Contracts Maritime Security Maritime Standards Navigation Offshore Oil Pipelines Salvage Ship Electronics Shipbuilding / Vessel Construction 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: 0.2843 sec (4 req/sec)