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Analyzing Diamond Offshore Drilling’s Growth Drivers

Alex Chamberlin

Sneak Peek: Diamond Offshore Drilling's 4Q15 Earnings

(Continued from Prior Part)

Diamond Offshore Drilling’s revenue

In fiscal 3Q15, Diamond Offshore Drilling (DO) recorded total revenue of $610 million—down 17% from $738 million recorded in fiscal 3Q14. Quarter-over-quarter, Diamond Offshore Drilling’s revenue fell more in fiscal 3Q15. It fell by 4%. Oceaneering International (OII) is Diamond Offshore Drilling’s peer. Its revenue fell by 24% in fiscal 3Q15 compared to the previous year.

Diamond Offshore Drilling accounts for 0.18% of the Guggenheim S&P 500 Equal Weight ETF (RSP). For investors looking for some exposure to the energy sector, energy accounts for 8% of RSP’s total holdings.

Diamond Offshore Drilling operates Ultra-Deepwater, Deepwater, Mid-Water, and Jack-ups rigs. YoY (year-over-year), the Deepwater segment was the best performer with 23% revenue growth in fiscal 3Q15. The Mid-Water segment was the worst performer with a 73% one-year revenue fall.

In terms of the operating income, Diamond Offshore Drilling’s Deepwater segment was the best performer in fiscal 3Q15 compared to fiscal 3Q14. The operating income rose by 77%. Compared to fiscal 2Q15, the segment was the worst performer. Its operating income fell 27%. YoY, the Jack-up segment’s operating income fell by 76% in fiscal 3Q15. Quarter-over-quarter, it improved 45%.

Diamond Offshore Drilling’s growth drivers

  • YoY, Diamond Offshore Drilling’s Ultra-Deepwater, Deepwater, and Mid-Water rigs saw higher day rates
  • Quarter-over-quarter, Mid-Water and Jack-ups rigs’ day rates increased
  • The average utilization improved for Ultra-Deepwater rigs

Factors negatively impacted the performance in fiscal 3Q15 

  • YoY, there was significantly lower rig utilization in Deepwater, Jack-ups, and Mid-Water rigs
  • Quarter-over-quarter, Deepwater rigs’ day rate fell

Next, we’ll discuss what Diamond Offshore Drilling’s share price movements indicate.

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