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Drilling into Diamond Offshore’s 3Q17 Results

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Revenue and earnings fall

Diamond Offshore Drilling’s (DO) revenue fell 8% in 3Q17 to $366 million, compared to $399 million in the previous quarter. Its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) fell quarter-over-quarter. In 3Q17, its recorded EBITDA was $141 million, compared to $178 million in the previous quarter.

Actual versus estimates

In 3Q17, Diamond Offshore’s revenue exceeded the estimate by Reuters of $363 million by 0.8%, with revenue of $366 million. Its EBITDA was near the Reuters estimate of $142 million, coming in at $143 million.

Contracts

Diamond Offshore stock on the day of its earnings rose 9%. The company secured a few new contracts with day rates well above the cash break-even. It secured additional terms for two rigs in Australia and the North Sea. It also secured a new contract with Shell (RDS.A) for its rig Ocean Patriot.

Stock performance

Diamond Offshore stock had a good run in the last three months, rising 39%. In the same period, Noble Corporation (NE) rose 5%, Transocean (RIG) rose 22%, Rowan Companies (RDC) rose 26%, and Ensco (ESV) rose 4.3%.

Series focus

In this series, we’ll look at Diamond Offshore Drilling’s 3Q17 results and conference call highlights. We’ll analyze how the company performed in the quarter and take a look at its costs and capital expenditure guidance for the fourth quarter. Finally, we’ll see which Wall Street analysts changed their recommendations and target prices after DO’s 3Q17 earnings announcement.

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