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Drilling Deep into Diamond Offshore’s 4Q17 Results

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Revenue and earnings fell

Diamond Offshore Drilling’s (DO) total revenue fell 5.4% in 4Q17 to $346 million—compared to $366 million in the previous quarter. The company’s EBITDA (earnings before interest, tax, depreciation, and amortization) fell 20% quarter-over-quarter. In 4Q17, Diamond Offshore’s EBITDA was $113 million—compared to $141 million in the previous quarter.

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CEO’s statement

In Diamond Offshore’s 4Q17 earnings results, CEO Marc Edwards stated, “Although market conditions continue to be challenging, we were able to secure additional work for the Ocean Valor and Ocean Valiant, extending both the rigs’ current contracts through 2020.” Further, he stated, “these contract extensions comprise a majority of the additional 48 months of backlog Diamond was able to secure this past quarter.” Also, he stated, “the moored market continues to tighten, evidenced by our three other contract wins during the quarter.”

Stock performance

Diamond Offshore’s stock has been falling since the beginning of the year. The stock has fallen 24.9% YTD (year-to-date) as of February 21, 2018. The following are other offshore drillers’ YTD returns:

  • Noble (NE) fell 11.3%.
  • Rowan Companies (RDC) fell 19.4%.
  • Ensco (ESV) fell 18.8%.
  • Transocean (RIG) fell 15.6%.
  • Seadrill Partners (SDLP) fell 9.3%.

The VanEck Vectors Oil Services ETF (OIH), which has 22.3% exposure to oil and drilling stocks, fell 7.0% that week.

Series focus

In this series, we’ll look at Diamond Offshore Drilling’s 4Q17 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 1Q18. Finally, we’ll see which Wall Street analysts changed their recommendations and target prices after Diamond Offshore’s 4Q17 earnings announcement.

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