Energy Business

Diamond Offshore Cuts Cost, but Revenues Lag

Diamond Offshore Drilling Inc. (NYSE: DO) reported third-quarter 2016 results before markets opened on Monday. The offshore drill rig operator posted adjusted diluted earnings per share (EPS) of $0.10 and revenues of $349.18 million. In the third quarter of 2015, the company reported EPS of $1.01 on revenues of $609.74 million. Thomson Reuters had a consensus estimate for EPS of $0.08 and revenues of $363.23 million.

Diamond is controlled by Loews Corp. (NYSE: L) which itself reported Monday morning adjusted EPS of $0.97 for the third quarter. The commercial property and casualty insurance company posted revenue of $3.29 billion in the period.

On a GAAP basis, Diamond also posted EPS of $0.10 per share, attributed primarily to cost cutting.

Company president and CEO Marc Edwards said:

Despite continued market headwinds, Diamond Offshore achieved earnings per share of $0.10. Overall, I am pleased with our third quarter results and our ability to manage costs, while remaining focused on maintaining our backlog position.

Third-quarter operating expenses dropped from $428.31 million last year to $295.11 million, primarily contract drilling savings.

As of September 30, 2016, the company’s total contracted backlog was $4.1 billion, which represents 27 rig years of work. Approximately 96% of the Diamond’s available ultra-deepwater rig days for the remainder of 2016 are contracted with top-tier customers.

Shares traded down about 3.8% in the noon hour Monday to $16.52. The stock’s 52-week range is $14.18 to $26.72, and the consensus 12-month price target is $17.18.

Loews traded up about 5.8% to $43.38, in a 52-week range of $33.84 to $43.68, a new high set earlier Monday morning. The consensus 12-month price target is $42.00.

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