Diamond profit beats estimates, but rig delays weigh on shares

Reuters

* Five rigs to come out of shipyard later than expected

* Shares down 3 percent

* Net profit falls due to cash flow problems at customers

* Overall market remains stable -CEO

Oct 24 (Reuters) - Diamond Offshore Drilling Inc posted a higher-than-expected quarterly profit, but delays ingetting rigs out of the shipyard weighed on its prospects for2014, and its stock fell 3 percent.

Cowen & Co analyst J.B. Lowe flagged delays to five rigsthat are either new or to be retrofitted and due to come out ofthe shipyard next year. Diamond disclosed the information lateWednesday in its fleet status report.

As for rigs already deployed, Diamond said utilization, ameasure of use as a percentage of the fleet's potential, rose to93 percent from 75 percent for ultra-deepwater drillers in thethird quarter. Utilization and daily rates both rose for itsshallow-water rigs.

"The overall market remains stable, supported by Brent oilprices above $100 per barrel and ongoing rig demand," said ChiefExecutive Officer Larry Dickerson, who will retire in March.

Bigger rivals Noble Corp and Ensco Plc hadreported higher-than-expected profit growth for the thirdquarter as rates paid for their rigs improved.

But Diamond's net income dropped 47 percent to $94.7million, or 68 cents per share, hurt by previously disclosedcash flow issues for two of its customers.

Diamond, which is majority owned by Loews Corp, saidit was working to relocate rigs contracted to the oil and gasproducers struggling to make payments: Canada's Niko Resources and Brazil's OGX.

Excluding a charge for customers' nonpayments, the profitwas $1.22 per share, beating the analysts' average estimate of$1.17 per share, according to Thomson Reuters I/B/E/S.

Revenue fell 3 percent to $706 million, missing analysts'expectations of $752 million.

Diamond's shares were down 3 percent at $61.33 in middaytrading.

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