Diamond Offshore’s Rig Rates on the Rise, 13 New Contracts Signed [UPDATED]

• The Ocean Endeavor was awarded an 18-month contract with an undisclosed operator at a dayrate of $505,000, plus a potential 6.6% performance bonus. The dayrate on the current contract is $285,000.
• The Ocean Lexington was awarded a 477-day job in Trinidad at a rate of $300,000 per day versus its current rate of $277,000 per day. The rig will be mobilized to Trinidad upon completion of its current contracted term in Brazil.
• The Ocean Valiant received a two-well contract extension for work with Hess offshore Equatorial Guinea. The new rate will be $515,000 per day versus the current contract rate of $375,000 per day.
• The Ocean America was awarded an 18-month contract for work offshore Australia with Chevron at a dayrate of$475,000. The rig is currently contracted at a rate of $405,000 per day.

Diamond’s rig rates over the past three months were still down 20% from a year earlier within the deepwater floater sector, and were mostly even within the Ultra-Deepwater, Mid-water, and Jack-up sectors.  Utilization within Diamond’s Ultra-deepwater fleet fell to 75%, or 14% lower than the previous quarter.  3 year rates for the ultra-deepwater market are hovering around the $600k rate, while 5-year rates are in the $500k range.  In West Africa, rates are slightly higher.

In the US Gulf of Mexico, the offshore drilling market remains steady, if not slightly increasing according to Diamond Offshore’s SVP of Marketing and Contracts, Michael Acuff.

“We posted excellent operating results for the quarter and announced several new contracts at strong dayrates across all ranges of water depths,” said Larry Dickerson, President and Chief Executive Officer of Diamond Offshore. “Our results for the quarter benefited from lower than anticipated operating expense, primarily owing to our continued emphasis on controlling costs.”

“During the quarter, we entered into a $750 million revolving credit facility, which will provide additional flexibility to our already strong balance sheet, as we complete construction of six new rigs over the next two years,” said Dickerson. “Among our industry peers, Diamond Offshore’s balance sheet is the least levered, and we enjoy the highest credit ratings.”

Diamond currently has 4 ultra-deepwater rigs under construction at Hyundai Heavy Industries, and 2 midwater floaters being built at Keppel AMFELS in Brownsville, Texas and Jurong Shipyard in Singapore.

Updated: February 28, 2019 (Originally published October 18, 2012)

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