Diamond Offshore Profit Beat Street on Rig Demand

Total operating expenses also down 10.5 pct.

Diamond Offshore Drilling Inc, one of the world's top-five offshore rig contractors, reported a much higher-than-expected quarterly profit, helped by demand for its high-tech ultra-deepwater rigs and a drop in operating costs.

Modern, faster rigs are cheaper to run and they can drill more efficiently, making them attractive to oil and gas companies, which are looking to cut spending due to low oil prices.

Diamond Offshore, majority owned by U.S. conglomerate Loews Corp, said on Monday that revenue from its ultra-deepwater business rose 72.8 percent to $315.7 million in the second quarter.

Average day-rates in the business, which accounts for half of the company's total revenue, rose 11 percent to $483,000.

Utilization rates in both its ultra-deepwater rigs business and its deepwater rigs business, its second-largest, rose to 63 percent from 51 percent.

Diamond Offshore also said that it had won an 18-month contract to deploy its deepwater rig in Ocean Apex, Australia, at a rate of $285,000 per day.

The company's net profit rose to $90.4 million, or 66 cents per share, in the quarter ended June 30 from $89.7 million, or 65 cents per share. Total operating expenses fell nearly 10.5 percent to $499.9 million.

Total revenue declined 8.4 percent to $634 million.

Analysts on average had expected a profit of 47 cents per share and revenue of $605.4 million, according to Thomson Reuters I/B/E/S.

The Houston-based company's shares closed at $21.95 on Friday on the New York Stock Exchange. Up to Friday's close, the stock had fallen 40 percent this year.

Reporting by Anet Josline Pinto and Darshana Sankararaman