Diamond Offshore Drilling Inc
) reported fourth quarter 2013 earnings of 96 cents per share,
surpassing the Zacks Consensus Estimate of 79 cents. The
outperformance was mainly backed by higher ultra deepwater and
jackup rig utilization. However, the quarter's results decreased
31.9% from the year-earlier earnings of $1.41 per share.
For full-year 2013, the company registered earnings of $3.95 per
share, missing the Zacks Consensus Estimate of $4.62 per share
and decreasing from the year-earlier earnings of $5.18.
Total revenue in the quarter decreased 3.2% year over year to
$726.5 million but surpassed the Zacks Consensus Estimate of
$704.0 million. In 2013, total revenue decreased 2.2% year over
year to $2,920.4 million. Also, total revenue came in below the
Zacks Consensus Estimate of $2,928.0 million.
Diamond Offshore declared a special dividend of 75 cents per
share in the quarter, 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). Both dividends
will be paid on Mar 3, 2014 to shareholders of record on Feb 19.
In the fourth quarter, revenue from the Contract Drilling segment
fell 5.7% year over year to approximately $708.0 million, mainly
due to a 5.3% decrease in total floaters revenue. These floaters
accounted for 93.9% of the total quarterly contract drilling
revenue, while jackups contributed 6.1%.
Ultra-Deepwater floaters recorded an average dayrate of $350,000
during the quarter, up from $348,000 in the year-earlier quarter.
Deepwater floaters realized an average dayrate of $402,000 versus
$372,000 in the year-ago quarter. Mid-water floaters recorded an
average dayrate of $277,000, up from $268,000 in the year-earlier
quarter. Jackup rigs' dayrates averaged $87,000, up from $85,000
in the fourth quarter of 2012.
Rig utilization for Ultra-Deepwater floaters increased to 91%
from 89% in the year-ago quarter. Utilization of Deepwater
floaters dropped to 65% during the quarter from 85% in the
year-ago quarter. Mid-water category rig utilization was 66%
compared with 70% in the comparable quarter last year while
jackup rig utilization increased to 76% from 71%.
As of Dec 31, 2013, Diamond Offshore had approximately $347.0
million in cash and cash equivalents, while long-term debt stood
at $2,244.2 million. Debt-to-capitalization ratio at the end of
the quarter was 21.1% (down from about 24.6% in the year-ago
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 enhance the possibility of further share buybacks
and/or special dividends, going forward.
Diamond Offshore carries a Zacks Rank #3, which is equivalent to
a Hold rating for a period of one to three months.
However, there are better-ranked stocks in the oil and gas
sector. These include
Cabot Oil & Gas Corp.
QEP Midstream Partners, LP
Swift Energy Co.
), each sporting a Zacks Rank #1 (Strong Buy).
CABOT OIL & GAS (COG): Free Stock Analysis
DIAMOND OFFSHOR (DO): Free Stock Analysis
QEP MIDSTRM PTR (QEPM): Free Stock Analysis
SWIFT ENERGY CO (SFY): Free Stock Analysis
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