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Analysts Expect 2 Straight Quarters of Rising Revenue for DO

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Analysts’ revenue estimates

Wall Street analysts expect revenue of just over $358 million for Diamond Offshore Drilling (DO) in 4Q16. This revenue would represent a rise from DO’s 3Q16 revenue of $349 million, but it would represent a 35% fall from its 4Q15 revenue of $555 million.

The company’s revenue is further expected to rise to $396 million in 1Q17.

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Revenue sources

Diamond Offshore earns revenue by operating ultra-deepwater, deepwater, mid-water, and jack-up rigs. The company operates its rigs in the United States, South America, Europe, Australia, Asia, and Mexico.

Full-year estimates

Though analysts expect DO’s revenue to rise in the coming quarters, the yearly fall in its revenue is expected to continue. The offshore drilling (IYE) downturn, which started in late 2014, saw a fall in Diamond Offshore’s 2015 revenue to $2.4 billion from $2.8 billion in 2014.

In 2016 and 2017, analysts expect DO’s revenues to be $1.5 billion and $1.48 billion, respectively. A fall in revenue isn’t unique for Diamond Offshore. A similar situation is expected for other offshore drillers (OIH) Transocean (RIG), Seadrill (SDRL), Noble Energy (NE), Rowan Companies (RDC), and Atwood Oceanics (ATW).

Are analysts too optimistic?

Based on analysts’ revenue expectations for 2017, we can infer that analysts don’t expect the company to secure any new contracts. DO’s revenue expectations are similar to the company’s current 2017 backlog of $1.5 billion. Analysts aren’t very optimistic about new opportunities for Diamond Offshore.

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