Diamond Offshore Rocks the 3rd Quarter, Earnings Up 29%

Diamond Offshore Drilling Inc. (DO) third-quarter earnings rose 29% as the oil driller booked stronger revenue and higher average day and utilization rates for high-specification floaters.

Chief Executive Larry Dickerson said the company added 14 new contracts, totaling 18 rig years or $1.4 billion of revenue backlog since the second quarter and added results benefited from revenue related to the mobilization of a rig from Brazil to the Gulf of Mexico and a shift of some planned downtime into the fourth quarter.

The third quarter marks the second straight period of rising revenue and profit at Diamond Offshore, after declining for six consecutive quarters on generally weaker day rates and lower rig-utilization levels. But the company warned that scheduled maintenance would reduce the number of earning days for several rigs in the second half.

The offshore drilling sector has had a challenging year since last year’s Deepwater Horizon disaster in the Gulf of Mexico, when a rig explosion triggered a massive oil spill. U.S. authorities began approving deep-water drilling projects in late February, though the government’s official moratorium was lifted last fall.

Diamond Offshore, which is majority owned by Loews Corp. (L), reported a profit of $256.9 million, or $1.85 a share, up from $198.5 million, or $1.43 a share, a year earlier. Revenue jumped 9.8% to $878.2 million.

Analysts polled by Thomson Reuters had most recently forecast earnings of $1.48 a share on revenue of $821 million.

Operating margin rose to 39.9% from 39.7%.

The average day rate for high-specification floaters rose 4.4% from a year earlier, while the utilization rate climbed to 93% from 56% a year earlier. For intermediate submersibles, day rates decreased 4.3% and the utilization rate slipped to 68% from 76%. Both types of vessels typically operate in deeper water than conventional drilling platforms.

Shares closed Wednesday at $59.75 and were inactive premarket. The stock has fallen 18% over the past three months.

-By Melodie Warner and Lauren Pollock, Dow Jones Newswires