Diamond Offshore Earnings Lower Than Expected

Diamond Offshore Drilling Inc.'s second-quarter earnings plunged 93 percent because strong oil prices have not yet fuelled recovery in its main area of operation: mid-depth offshore drilling markets.

Net income for the quarter totaled $3.6 million, or 3 cents per share, down from $53.2 million, or 37 cents per share, in the second quarter of 1999. Analysts had expected earnings of 5 cents a share, according to First Call/Thomson Financial. Diamond Offshore's revenues also fell sharply, to $143.3 million from $215.3 million, mainly due to sharply lower contributions from semi-submersible rigs drilling in medium water depths.

"The mid-water market remains weak and that has primarily contributed to the decline in earnings," President and Chief Operating Officer Larry Dickerson said in a conference call. Dickerson made no specific projections for the future but suggested it would bring improved results.

"We believe the market has said that this will be a trough for us," he said of the company's second-quarter performance.