Feb 8 (Reuters) - Diamond Offshore Drilling Inc, one of the world's top five offshore rig contractors, reported a better-than-expected quarterly profit as cost cutting pays off, and the company said it was suspending its dividend to add to cost savings.
A near-70 percent fall in crude oil prices since mid-2014 has pushed Diamond Offshore's oil and gas customers to lower spending and scale back drilling activity, forcing rig contractors to idle or even scrap rigs.
The dividend suspension comes after the company scrapped a special dividend of 75 cents last February.
The company, which initiated the special dividend in 2006, has paid a regular dividend of 12.5 cents per share every quarter since mid-2005.
Suspending the quarterly cash dividend will help Diamond Offshore save about $69 million annually, the company said on Monday.
"By conserving additional cash, we will have increased flexibility to manage the company through difficult market conditions and position ourselves for the eventual recovery in offshore drilling," Chief Executive Marc Edwards said in a statement.
In a bid to simplify operations and reduce downtime, Diamond Offshore said it was transferring the maintenance and service of well-control equipment to General Electric Co's oil & gas unit.
Under the 10-year service agreement, GE will buy the blowout preventer systems on four of Diamond Offshore's rigs located in the U.S. Gulf of Mexico for $210 million.
Loews Corp, which owns a majority stake in Diamond Offshore, swung to a loss in the fourth quarter.
Loews, controlled by New York's wealthy Tisch family was hurt by a $499 million impairment charge at Diamond Offshore and lower revenue from its insurance business, CNA Financial Corp .
Excluding the charge, Diamond Offshore's profit was 90 cents per share, above analysts' average estimate of 54 cents, according to Thomson Reuters I/B/E/S.
The Houston-based company posted a net loss of $245.4 million, or $1.79 per share in the quarter ended Dec. 31, compared with a profit of $98.8 million, or 72 cents per share, a year earlier.
Revenue fell about 18 percent to $555.6 million, while contract drilling expenses, excluding depreciation, fell by nearly 29 percent.
Up to Friday's close of $18.85, the company's shares had fallen 44 percent in 12 months.
(Reporting by Anet Josline Pinto in Bengaluru; Editing by Shounak Dasgupta)
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