Diamond Offshore 1Q Profit Falls 26% On Lower Revenue, Higher Costs
04/19/2012| 06:37am US/Eastern
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Diamond Offshore Drilling Inc.'s (>> Diamond Offshore Drilling, Inc.) first-quarter earnings slid 26% as the contract driller was hit with higher costs.
The company declared a special quarterly dividend of 75 cents a share, in addition to its regular dividend of 12.5 cents a share.
The offshore drilling sector has had a challenging time since 2010's Deepwater Horizon disaster in the Gulf of Mexico, when a rig explosion killed 11 men and triggered a massive oil spill. U.S. authorities began approving deep-water drilling projects in February of last year, though the government's official moratorium was previously lifted.
Diamond Offshore, which is majority owned by Loews Corp. (L), reported a profit of $185.2 million, or 1.33 a share, down from $250.6 million, or $1.80 a share, a year earlier.
The latest period included an after-tax gain of 12 cents a share from the sale of jack-up rig Ocean Columbia.
Revenue decreased 4.7% to $768.6 million. Analysts polled by Thomson Reuters most recently projected earnings of 99 cents on revenue of $757 million.
Operating margins fell to 34.5% from 39.6%. Contract drilling expenses rose 9.6%.
Day rates and utilization declined for the company's mid-water floaters. Rates were off 3.3% and utilization declined to 65% from 81%.
For ultra-deepwater floaters, day rates were up 6.1% and utilization improved to 85% from 77% a year earlier. For deepwater floaters, day rates were up 4.7% and utilization grew to 88% from 83%. Both types of vessels typically operate in deeper water than conventional drilling platforms.
Loews Corp. is set to report its first-quarter results April 30.
Shares of Diamond Offshore closed Wednesday at $66.15 and were inactive premarket.
-By Tess Stynes, Dow Jones Newswires; 212-416-2481; Tess.Stynes@dowjones.com
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