As the offshore energy market continues to search for signs of recovery, latest news from Diamond Offshore points to better times ahead.
On Monday, October 30, 2017 Diamond Offshore reported better-than-expected quarterly profits, in part driven by additional deals won for its deep-water drilling rigs at better rate, sending its shares up 8.3% at the time of reporting..
While Diamond Offshore CEO Marc Edwards was not prepared to call the bottom of the market, the news certainly bodes well for a global industry collectively looking for any light at the end of a nearly four year oil downturn turnnel
"The number of tenders has increased, albeit from a very low platform and customer inquiries have picked up, although also starting from a low base. Yet contract durations for the most part remain short and pricing is very challenging," said Edwards.
Diamond Offshore had said in February that oil prices needed
to be "well over $60" to spur a recovery in offshore drilling.
Brent crude averaged at $52.17 per barrel in the third quarter this year, up 11 percent from a year ago. It was trading at $60.41 per barrel on Monday, giving some hope to the industry.
Diamond Offshore said it was able to secure additional work for its fleet in the latest quarter, with new contracts for its deep-water drillers Ocean Apex and Ocean Patriot at rates well above cash flow breakeven.
Contract drilling revenue rose 5.3 percent to $357.7 million, while total revenue was up 4.8 percent at $366 million.
Diamond Offshore, majority owned by Loews Corp, said net income fell to $10.8 million, or 8 cents per share, for the third quarter ended Sept. 30 from $13.9 million, or 10 cents per share, a year earlier.
The company booked $34.4 million in costs related to debt repayment.
Excluding items, it reported a profit of 25 cents per share beating the average analyst estimate of 20 cents per share, according to Thomson Reuters I/B/E/S.
Shares of Diamond Offshore were up 5.5 percent at $16.68 in late morning trading.
(Reuters and Staff reports)