Wednesday 8 February 2017

The tide is slowly changing for offshore drillers, but the sector still awaits smoother sailing based on analysts’ and company earnings reports.

Houston-based Diamond Offshore Drilling Inc.’s reported Feb. 6 a profit of $73 million for fourth-quarter 2016, compared with a loss of more than $245 million a year earlier. The company—which has a fleet of 19 semisubmersibles, four drillships and a jackup—has been clawing its way back from the downturn that slowed offshore drilling as oil and gas companies clamped down on spending.

Lower demand for rigs and lower day rates have sent revenues tumbling for many offshore drillers. Diamond saw its total revenues fall to about $392 million for the quarter, compared with more than $555 a year earlier. Improved market conditions pushed up revenues by 12% in the third quarter.

The offshore drilling market has so far gained the most from OPEC members’ decision in November 2016 to cut production, according to Barclays analysts. In its offshore driller quarterly update, analysts said offshore drillers’ stock performance saw a 20% improvement since the cut was announced, surpassing nearly every other oilfield service sector except proppant and offshore service vessels.

“Subsequently, investors are taking another look at the offshore sector as the cycle is clearly turning,” Barclays said in the Feb. 3 update. “But recent [international oil company] commentary shows that offshore spending is not imminent and we remain very cautious on the offshore drillers.”

more [source: EP Mag]