Diamond Beats Expectations Despite Drop in Earnings
Diamond Offshore Drilling, Inc. reported that net income for the second quarter of 2013 was $185 million, or $1.33 per share, compared with a net income of $201 million, or $1.45 per share, in the second quarter of 2012.
“Our solid operating results for the quarter reflect our ongoing focus on cost and downtime management,” said Larry Dickerson, Diamond Offshore president and chief executive officer, in a press statement.
While showing a year-on-year decline, the earnings were above the expectations of some analysts. The better-than-expected performance was attributed to floater drilling costs that were lower than expected, Barclarys said. They had expected per-share earnings to come in at $1.24.
“During the quarter, we announced an agreement to build a new harsh environment semisubmersible that will work offshore South Australia for BP beginning in 2016,” Dickerson said. “This represents a unique opportunity to construct a rig whose initial contract should return a substantial portion of our investment. Additionally, our construction efforts include four ultra-deepwater drillships and two deepwater semis that should meaningfully contribute to earnings beginning next year, based on the contracts covering the first three units.”
While there was some concern about the older rigs racking up increased downtime, Barclays noted that Diamond Offshore “…continues to display sound cost-management capabilities.” However, it lowered its 2013 earnings-per-share estimate to $4.40 from $4.60 due primarily to later-than-expected contract starts for the Ocean BlackHawk (DW semisub) and the Ocean Onyx (DW semisub) that have had start-up delays.
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