Diamond Offshore Falls as Rig Downtime Estimates Increase
Diamond Offshore Drilling Inc. (DO), the largest offshore rig contractor in the U.S., fell the most in more than a year after forecasting more downtime for its vessels in 2013 than analysts expected.
Diamond Offshore declined 3.5 percent to $73.77 at 10:30 a.m., after falling as much as 6.7 percent, the biggest intraday drop since August 2011. The Houston-based company is 50 percent owned by Loews Corp. (L), according to data compiled by Bloomberg.
The company estimated its rigs wouldn’t be available for 1,383 days this year as they undergo maintenance and other work, according to a filing after the close of regular trading yesterday. That’s 32 percent higher than the 1,050 days expected by Luke Lemoine, an analyst at Capital One Southcoast in New Orleans.
“Downtime was more than people were expecting,” Lemoine said in a phone interview. He rates the shares an add, which means investors should buy the stock, and owns none. “This is the first time they actually quantified the number of days. That’s what’s sending the stock down.”
Downtime should be “much lower” in 2014, Chief Executive Officer Larry Dickerson said on an earnings conference call today. The company reported adjusted fourth-quarter profit of $1.40 a share, 28 percent more than the average of 35 analysts’ estimates compiled by Bloomberg.
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