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Diamond Offshore (DO) Slips to 52-Week Low on Weak Pricing

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Shares of Diamond Offshore Drilling Inc.DO , a major contract driller, fell more than 6% on NYSE to touch a 52-week low of $17.22 on Sep 28. The weakness can be blamed on the still dull crude pricing environment. Finally, the shares closed the session at $17.39.

This drop in price continues the recent downtrend for Diamond Offshore, which has lost about 28% over the past month and is down nearly 52% year to date.

What Led to the Share Price Decline?

The West Texas Intermediate (WTI) crude has been trading around the $44 per barrel threshold for quite some time now. This is owing to plentiful supply of the commodity especially in the face of lackluster global demand. The U.S. shale producers and Organization of the Petroleum Exporting Countries (OPEC) continue to produce more of the commodity for fear of losing their market share. This has affected the performance of offshore drillers in general and Diamond Offshore in particular. In the second quarter, revenues from the company's Contract Drilling segment fell 4.9% year over year to approximately $617.4 million.

Further, higher rig availability is a major concern in 2015 as the global floater market is poised to remain considerably stressed through 2016. As a result, major operators are reducing their spending extensively, postponing projects and reviewing their cost structure.

Hence, with the drastic fall in oil prices , upstream energy players will ask for lesser drilling rigs for exploration and production activities. Also, with crude prices falling amid abundant rig supply, we don't see this offshore driller earning significant cash flows for its shareholders.

All these are reflected in the 52-week low share price of the company.

Zacks Rank & Stock Picks

Currently, Diamond Offshore carries a Zacks Rank #3 (Hold).

Some better-ranked players in the energy sector are Alon USA Partners, LP ALDW , Braskem S.A. BAK and ReneSola Ltd SOL . All these stocks sport a Zacks Rank #1 (Strong Buy).

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RENESOLA LT-ADR (SOL): Free Stock Analysis Report

DIAMOND OFFSHOR (DO): Free Stock Analysis Report

BRASKEM SA (BAK): Free Stock Analysis Report

ALON USA PTNRS (ALDW): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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