Feb 9 (Reuters) – Rig contractor Diamond Offshore Drilling Inc reported a 7 percent drop in quarterly revenue as demand fell due to weak oil prices, and said it would not pay a special dividend as it had been doing since 2006.
The company said scrapping the special dividend of 75 cents per share would help it save cash to take advantage of opportunities in a distressed market.
The company slashed its special dividend in 2010 following an oil price crash. (http://bit.ly/191QvcA)
Shares of the company fell 3 percent in premarket trading.
“We had been expecting Diamond Offshore to follow its prior downturn playbook,” analysts at Jefferies & Co wrote in a note to clients.
The analysts said they expected the company to reduce, not scrap the special dividend. “We…imagine this cut to be more drastic than investors’ expectations as well,” they said.
North American energy and services companies such as Canadian Oil Sands Ltd and LinnCo LLC have also cut their dividends over the past few months.
Diamond’s smaller rivals Noble Corp more than halved its capital budget for 2015, while a couple of land rig contractors have also taken measures to face the downturn.
Helmerich & Payne Inc and Patterson-UTI Energy Inc cut their capital spending plans and lowered their rig construction programs for 2015. Helmerich also said it would cut 2,000 jobs.
Diamond Offshore said on Monday utilization rates fell for its ultra-deepwater, deepwater and mid-water floaters, which contributed about 94 percent of total revenue during the fourth quarter ended Dec. 31.
Utilization rates for its ultra-deepwater rigs, its biggest business, fell to 66 percent from 80 percent a year earlier.
Revenue fell to $675.3 million in the fourth quarter from $726.5 million a year earlier.
The company earned 72 cents per share in the quarter, above the analysts’ average estimate of 66 cents, according to Thomson Reuters I/B/E/S, helped by a 4.7 percent drop in costs and higher day rates.
Up to Friday’s close, Diamond Offshore’s stock had lost almost a third of its value since June 2014, reflecting a 50 percent slump in crude prices. (Reporting by Sneha Banerjee and Shubhankar Chakravorty in Bengaluru; Editing by Don Sebastian)
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