Crude Collapse – Diamond Offshore to Scrap Three Rigs

The three rigs to be scrapped are the Ocean Saratoga (pictured above), Ocean Worker and Ocean Yorktown.

May 4 (Reuters) – Diamond Offshore Drilling Inc, one of the world’s top five offshore rig contractors, said it was scrapping three rigs in the face of weak demand due to a steep fall in global crude prices.

The company said on Monday it recorded an impairment charge of $319 million for eight rigs, including the rigs being retired, in its first-quarter results.

The charge caused the company to report a quarterly loss for the first time since June 2004.

Diamond Offshore, which has 33 rigs, said last year it would idle or sell eight rigs.

Excluding the write-down and a $4 million charge for restructuring and severance costs, the company posted an adjusted profit of 50 cents per share, according to Thomson Reuters I/B/E/S. Analysts on average had expected 43 cents.

A number of oilfield companies are cutting jobs and retiring rigs in response to weakened demand from oil producers, who are scaling back spending to cope with a 43 percent decline in global crude prices since June.

Utilization rates for Diamond Offshore’s ultra-deepwater rigs, its biggest business, fell to 51 percent in the quarter ended March 31, from 66 percent, a year earlier.

Net loss was $255.7 million, or $1.86 per share, in the first quarter, compared with a profit of $145.8 million, or $1.05 per share, a year earlier.

The Houston-based company’s total revenue fell 12.6 percent to $620 million.

Up to Friday’s close of $33.47, the stock had declined nearly 9 percent this year. (Reporting by Sneha Banerjee in Bengaluru; Editing by Saumyadeb Chakrabarty)

© 2015 Thomson Reuters. All rights reserved.

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