New Opportunities in 2013 - Research Report on Diamond Offshore Drilling, Inc.
As traditional oil fields begin to decline, offshore drilling companies like
Diamond Offshore Drilling are pressured to perform better in the coming year
to meet the demand for oil and to ward off competition from renewable energy
NEW YORK, January 24, 2013
NEW YORK, January 24, 2013 /PRNewswire/ --
There is an increased pressure on offshore drilling companies like Diamond
Offshore Drilling, Inc. (NYSE: DO) [Full Research Report]^[^1^] to meet the
demand for deep water drill rigs as traditional oil fields begin to decline.
To supply the market with sufficient oil, Diamond's senior vice president
predicts that 40 deep water rigs could be operational in the U.S. Gulf of
Mexico this year. The average contract duration for ultra-deep water rigs have
also doubled to about four years compared to the first six months of 2012.
Offshore oil drilling was brought to a halt after Deepwater Horizon oil well
collapsed in 2010. But the conditions in the area have improved since last
year, and drilling activity has begun to recover. Furthermore, since
traditional oil fields have been producing less and less yield each year, oil
companies are forced to look for oil in deep water locations. This has opened
new opportunities for companies such as Diamond Offshore Drilling. Undervalued
stocks across the sector are also attracting more investors.
In the third quarter of 2012, the company reported $1.28 earnings per share,
going past the analyst consensus estimate of $1.02 by $0.26. This was
unexpected due to Diamond Offshore Drilling's revenue decreasing by 17%
compared to the same quarter last year. Diamond Offshore Drilling currently
has the highest return on equity in the oil and gas drilling industry, with an
ROE of 17.1%. The company is scheduled to announce its fourth quarter 2012
results on February 5.
The Road Ahead
While all this seems promising for Diamond Offshore Drilling, there may be a
challenging road ahead for oil and gas in 2013. With a strong support from the
government and the private sector, the industry faces strong competition from
renewable energy providers. Everyday new research and developments are finding
new ways to efficiently produce renewable energy, including Warren Buffet,
whose MidAmerican Energy Holding's Co managed to complete constructing two
wind farms in California a few weeks ago.
Offshore drilling remains as a risky business, although many believe that 2013
is shaping up to become a strong year for offshore investments. Obama has
given leaseholders in the Gulf of Mexico an ultimatum: that they must drill or
lose their contract. This puts even a greater pressure for companies like
Diamond Offshore Drilling to meet the demand for deep water drill rigs.
LaMotte, an advisor at Guggenheim Securities comments that the industry's
success is now about demonstrating operational excellence through the training
and retention of personnel, health, safety and environmental practices and
globalizing the best practices. "Operating offshore isn't just about building
the equipment and showing up… it's going to require-quite simply-working
^[^1^]The Full Research Report on Diamond Offshore Drilling, Inc. - including
full detailed breakdown, analyst ratings and price targets - is available to
download free of charge at:
Consider National Traders Association
Tired of hearing about the latest, greatest trade opportunity... only to
realize that the ship has long sailed? You need a strong, informative
community in your arsenal. Join the group that has been consistently
identifying momentous situations as they develop -- long before they become
the next top news on major financial networks.
SOURCE National Traders Association
Press spacebar to pause and continue. Press esc to stop.