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Deep Sea Driller Diamond Offshore Drilling reported worse than expected second quarter earnings before the market Monday. Low oil prices comtinueimpacting day rates. The world's largest offshore drilling company Transocean $RIG reported last week.

Diamond Offshore Rig

Drilling in the U.S. is still operating at two speeds right now shale drilling has been increasing all year, deep water drilling has been sideways after falling off the cliff with oil three years ago and has not recovered with the different breakeven points.

Diamond Offshore Drilling Inc. (NYSE: $DO) Reported Earnings Before Open Monday

($0.42) Missed Exp ($0.40) EPS and $232.50 Missed $246.90 Revenue Forecast

Earnings

Diamond Offshore Drilling Inc. (DO) on Monday reported a quarterly loss of $0.99 per share larger than the consensus estimate of a loss of $0.89. This compares to loss of $0.33 per share a year ago. These figures are adjusted for non-recurring items. $DO posted revenues of $216.71 million for the quarter missing consensus estimates by 4.51% from the $233.5 million estimate. This compares to year-ago revenues of $268.86 million.

Diamond Offshore Drilling Inc NYSE: $DO

Market Reaction Pre-Market $6.17 USD −1.23 (-16.62%)

Highlights

Over the past several quarters, Diamond's rig utilization has hovered around the 50% mark, lagging the overall floater space by at least ten percentage points. The company has a heavier mix of ultra-deep-water rigs in its fleet, the low oil prices have severely hurt the need for these rigs.

Day rates conitnue to drop, down 14% YOY and 12% sequentially.  

Outlook

"Uutilization rates have historically had to increase to the 80%-range before pricing power [shifts] to the drilling contractor from the customer", this does not inspire confidence.

Drilling profits turned negative in the second quarter, with loss of scale, along with higher mobilization and floater fleet personnel expenses. There was also increase in amortization expenses.

The outlook is not rosy and the market has reacted accordingly/

About Diamond Offshore

Diamond Offshore is a leader in offshore drilling, providing contract drilling services to the energy industry around the globe with a total fleet of 24 offshore drilling rigs, consisting of 19 semisubmersibles, four dynamically positioned drillships, and one jack-up.

Source: Diamond Offshore

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