Diamond Offshore Wins Contracts for Two Rigs. 3Q Profit Drops

Diamond Offshore Drilling, a Houston-based drilling contractor, today revealed it has received two letters of intent for two of its offshore drilling rigs.

The company, which today reported net income of $95 million for the third quarter of 2013, said that the Ocean Scepter jack-up rig received a LOI for a 1,136-day contract extension at a new rate of $158,000 per day. The rig is under contract with the Mexican national oil company, Pemex.

The second LOI is for the Ocean Apex rig. The rig will begin work for an international oil company in Southeast Asia during Q4 2014 at a dayrate “comparable to that of our other new deepwater semisubmersible, the Ocean Onyx.” According to Diamond Offshore’s latest fleet status report, the dayrate for the Ocean Onyx is 490.000.

Results

The company’s net profit dropped to $95 million for the third quarter of 2013  compared with net income of $178 million in the same period a year earlier. Revenues in the third quarter of 2013 totaled $691 million, compared with revenues of $714 million in the prior-year quarter.

Results for the quarter included the unfavorable pretax impact of $93 million, or an after tax impact of $0.54 per diluted share, related to customer non-payments, as follows:

Unrecognized revenue of $70 million, pretax, and

Bad debt expense of $23 million, pretax.

“Although our results were adversely affected this quarter by customers with cash flow issues, which is highly unusual, we are working hard to reposition these rigs,” said Larry Dickerson, President and Chief Executive Officer. “The overall market remains stable, supported by Brent oil prices above $100 per barrel and ongoing rig demand.”

Dividend

In a separate press release,  the company has declared a special quarterly cash dividend of $0.75 per share of common stock and a regular quarterly cash dividend of $0.125 per share of common stock. Both dividends are payable on December 2, 2013 to shareholders of record on November 5, 2013.

The Board reiterated its stated policy of considering paying special cash dividends, in amounts to be determined, on a quarterly basis. Any determination to declare a special dividend, as well as the amount of any special dividend that may be declared, will be based on the Company’s financial position, earnings, earnings outlook, capital spending plans and other relevant factors at that time.

October 24, 2013

 

 

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