Diamond Offshore: Two Petrobras Rig Contracts Terminated

Posted by Joseph Keefe November 2, 2015

Diamond Offshore Drilling Inc, one of the world's top-five offshore rig contractors, said contracts for two rigs with Brazil's Petrobras had ended ahead of schedule.

The company said it had secured an 875-day extension on another rig working for the Brazilian oil and gas producer in exchange for the terminations.

Diamond, which also reported a better-than-expected quarterly profit on Monday, said the extension of term will add $333 million to the company's revenue backlog.

The terminated contracts will reduce revenue backlog by about $91 million, the company said. While one of the rigs terminated will be cold-stacked, the other will be scrapped.

Diamond, like most of its rivals, has been scrapping rigs and cutting costs in the face of weak demand due to a steep fall in global crude prices.

However, the company also said on Monday it booked a one-year contract for a rig in the UK North Sea at $220,000 per day, starting March 2016.

Diamond's third-quarter profit more than doubled to $136.4 million, or 99 cents per share, helped mainly by lower expenses and improved rig dayrates.

In the year-earlier period, the company had incurred an asset impairment charge of $109.5 million.

Excluding one-time items, Diamond earned $1.01 per share in the quarter ended Sept. 30, above the average analyst estimate of 60 cents, according to Thomson Reuters I/B/E/S.

Total revenue fell 17.3 percent to $609.7 million, but beat the average estimate of $594.5 million, helped by higher dayrates for its deepwater and mid-water rigs.