Diamond Offshore Beats Q2 Earnings Estimates, Revenues Miss
Diamond Offshore Drilling Inc. (NYSE: DO) posted second-quarter 2014 earnings of 66 cents per share, surpassing the Zacks Consensus Estimate of 59 cents. The performance was primarily attributable to higher dayrates. However, the reported figure decreased 50.4% from the year-earlier quarter earnings of $1.33 per share.
Total revenue in the quarter decreased 8.7% year over year to $692.2 million and lagged the Zacks Consensus Estimate of $695.0 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 are payable on Sep 2, 2014 to shareholders of record on Aug 6.
In the second quarter, revenues from the Contract Drilling segment fell 12.8% year over year to $649.6 million, mainly due to a 5.4% decrease in total floaters revenue. These floaters accounted for 93% of the total contract drilling revenue, while jackups constituted 7%.
Ultra-Deepwater floaters recorded an average dayrate of $403,000, up from $342,000 in the year-earlier quarter. Deepwater floaters realized an average dayrate of $418,000, up from $409,000 in the year-ago quarter. Mid-water floaters recorded an average dayrate of $266,000 versus $271,000 in the year-earlier quarter. Jackup rigs' dayrates averaged $97,000, up from $88,000 in the second quarter of 2013.
Rig utilization for Ultra-Deepwater floaters decreased to 51% from 92% in the year-ago quarter. Utilization of Deepwater floaters decreased to 51% from 99% in the year-ago quarter. Mid-water category rig utilization was 68%, up from 65% in the comparable quarter last year while jackup rig utilization was 74%, unchanged from the prior-year quarter.
As of Jun 30, 2014, Diamond Offshore had approximately $980.8 million in cash and cash equivalents, while long-term debt was $2,244.3 million. Debt-to-capitalization ratio at the end of the quarter was 33% (up from about 32.9% in the preceding quarter).
Diamond Offshore currently carries a Zacks Rank #5 (Sell). However, better-ranked stocks in the oil and gas industry like Magellan Midstream Partners LP (NYSE: MMP), Exco Resources Inc (NYSE: XCO) and CNOOC Ltd (NYSE: CEO), appear promising and are worth consideration. All these stocks sport a Zacks Rank #1 (Strong Buy).
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