Diamond Offshore Drilling Inc. (DO) reported fourth-quarter 2014 earnings of 72 cents per share, surpassing the Zacks Consensus Estimate of 66 cents. However, the quarter's results decreased 25% from the year-earlier earnings of 96 cents per share. The underperformance was mainly due to lower rig utilization. However, jackup utilizations increased during the same period.
For full-year 2014, the company registered earnings of $3.76 per share, beating the Zacks Consensus Estimate of $3.07 per share. However, results missed the year-earlier earnings of $4.24.
Total revenue in the quarter decreased 7% year over year to $675.3 million and missed the Zacks Consensus Estimate of $693.0 million. For full-year 2014, total revenue decreased 3.6% year over year to $2,814.7 million. Also, total revenue came in below the Zacks Consensus Estimate of $2,830.0 million.
Dividend Story
Diamond Offshore declared its regular quarterly dividend of 12.5 cents per share (50 cents per share annualized). The dividend will be paid on Mar 2, 2015 to shareholders on record as of Feb 20.
Operational Performance
In the fourth quarter, revenue from the Contract Drilling segment fell 4.8% year over year to approximately $674.4 million, mainly due to a 7.2% decrease in total floaters revenue. These floaters accounted for 94% of the total quarterly contract drilling revenue, while jackups contributed 6%.
Ultra-Deepwater floaters recorded an average dayrate of $493,000 during the quarter, up from $403,000 in the year-earlier quarter. Deepwater floaters realized an average dayrate of $431,000 compared with $404,000 in the year-ago quarter. Mid-water floaters recorded an average dayrate of $270,000, down from $292,000 in the year-earlier quarter. Jackup rig dayrates averaged $96,000, up from $89,000 in the fourth quarter of 2013.
Rig utilization for Ultra-Deepwater floaters decreased to 66% from 80% in the year-ago quarter. Utilization of Deepwater floaters dropped to 48% during the quarter from 65% in the year-ago quarter. Mid-water category rig utilization was 55% compared with 63% in the comparable quarter last year, while jackup rig utilization increased to 77% from 76%.
Financials
As of Dec 31, 2014, Diamond Offshore had approximately $233.6 million in cash and cash equivalents, while long-term debt stood at $1,994.5 million. Debt-to-capitalization ratio at the end of the quarter was 30.9% (up from about 21.1% in the year-ago quarter).
Ranks
Diamond Offshore carries a Zacks Rank #4 (Sell).
Better-ranked stocks in the oil and gas sector include InterOil Corp. (IOC), Golar Energy Partners LP (GMLP) and World Fuel Services Corp. (INT). Each of these stocks sports a Zacks Rank #1 (Strong Buy).
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