October 18, 2012 / 10:20 AM / 8 years ago

Diamond Offshore profit beats on lower costs

(Reuters) - Diamond Offshore Drilling Inc (DO.N), one of the world’s top-five offshore rig contractors, reported a better-than-expected profit on lower operating costs.

Net profit fell 31 percent in the third quarter while revenue dropped 17 percent, falling short of analysts’ estimates. Operating costs fell 8 percent.

The company said it had won 13 rig contracts in the third quarter, compared with 14 in the second quarter and a year earlier. The contracts are expected to add up to $1.7 billion in revenue to the company’s drilling backlog.

Companies like Diamond Offshore and Noble Corp (NE.N) are poised to benefit as activity in the Gulf of Mexico begins to improve. The region is expected to be busier this year than at any point since the Deepwater Horizon spill in 2010.

Diamond Offshore said it secured the new contracts at strong dayrates.

The company said utilization rates fell for its deepwater rigs in the third quarter. Utilization rates measure the number of rigs being used as a percentage of a company’s fleet.

Noble, owner of the world’s third-largest offshore drilling fleet, on Wednesday reported a decline in quarterly profit, hit by extended downtime for its rigs.

“Our results for the quarter benefited from lower-than-anticipated operating expense, primarily owing to our continued emphasis on controlling costs,” Diamond Offshore Chief Executive Larry Dickerson said in a statement.

Diamond, majority-owned by Loews Corp (L.N), said third-quarter net income fell to $178 million, or $1.28 per share, from $257 million, or $1.85 per share, a year earlier.

Revenue fell to $729 million from $878 million.

Analysts had expected a profit of $1.02 per share on revenue of $734.50 million, according to Thomson Reuters I/B/E/S.

Diamond Offshore, which has a market value of $9.70 billion, said it will pay a special dividend of 75 cents per share and a regular quarterly cash dividend of 12.5 cents per share.

Diamond Offshore shares, which have risen 26 percent this year, closed at $69.77 on the New York Stock Exchange on Wednesday.

Reporting by Braden Reddall in San Francisco and Swetha Gopinath in Bangalore; Editing by Sriraj Kalluvila

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