Diamond Offshore Drilling Inc.
(
DO
) reported adjusted second quarter 2012 earnings of $1.09 per
share, beating the Zacks Consensus Estimate of 90 cents, mainly on
account of higher day rates for the company's ultra-deepwater rigs.
However, quarterly results decreased significantly from the
year-earlier earnings of $1.92 per share.
Total revenue in the quarter decreased 17% year over year to $738.2
million, marginally missing the Zacks Consensus Estimate of $739
million.
Dividend Story
Diamond Offshore declared a 75 cent per share special dividend in
the quarter, which remained unchanged from the prior quarter. The
company will also pay its regular quarterly dividend of 12.5 cents
per share (50 cents per share annualized).
Operational Performance
Revenue from the Contract Drilling segment declined 16.5% year over
year to $726.2 million, mainly due to a 15.2% revenue decline in
total floaters. These floaters accounted for nearly 94.5% of the
total quarterly contract drilling revenue, while jackups
contributed 5.5%.
Ultra-Deepwater floaters recorded an average dayrate of $354,000
during the quarter, up from $340,000 in the year-earlier quarter.
Deepwater floaters realized an average dayrate of $372,000 versus
$422,000 in the year-ago quarter. Mid-water floaters recorded an
average dayrate of $262,000 during the quarter, down from $265,000
in the year-earlier quarter. Jackup rigs' dayrates averaged
$94,000, up from $82,000 in the second quarter of 2011.
Rig utilization for Ultra-Deepwater floaters decreased to 89% from
92% in the year-ago quarter. Utilization of Deepwater floaters
dipped to 83% during the quarter from 98% in the year-ago quarter.
Mid-water category rig utilization was 66%, down substantially from
77% in the comparable quarter last year, while jackup rig
utilization decreased to 49% from 60% in the year-earlier quarter.
Financials
As of June 30, 2012, Diamond Offshore had approximately $376.4
million in cash and cash equivalents, while long-term debt stood at
$1,495.9 million. The debt-to-capitalization ratio at the end of
the quarter was 25.0% (down from about 25.4% in the preceding
quarter).
Outlook
Houston, Texas-based Diamond Offshore exhibits long-term earnings
growth visibility based on its strong leverage to the offshore
deepwater drilling market. Additionally, the company's significant
free cash flow generation potential and healthy balance sheet
enhances the possibility of further share buybacks and/or special
dividends, going forward.
Diamond's rival
Noble Corporation
(
NE
) reported second quarter 2012 earnings of 59 cents per share,
outpacing the Zacks Consensus Estimate of 57 cents, mainly on the
back of solid demand for its wide range of rigs and vessels.
We maintain our long-term Neutral recommendation on Diamond
Offshore shares, given the volatile oil and gas prices scenario as
well as geopolitical risks associated with international
operations. Diamond Offshore currently holds a Zacks #3 Rank
(short-term Hold rating).
DIAMOND OFFSHOR (DO): Free Stock Analysis
Report
NOBLE CORP (NE): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment
Research