Diamond Drilling (NYSE:DO) reversed Q1 losses to post a healthy profit in the second quarter, as stronger demand upped dayrates for its units.
In an August 8 filing Damond posted net income of just under $239m for the quarter, compared with a loss of $22m in Q1.
Revenues also rose from $232m up to March, reaching $281m for the three months to the end of June 2023.
The increase in revenue was primarily driven by a full quarter’s utilization for the Ocean Endeavor and the Ocean GreatWhite, Diamond said. At the same time its Ocean BlackHornet saw a full quarter at a higher dayrate.
These results were partially offset by the Ocean Apex being in the shipyard throughout the period for its special periodic survey and upgrades.
Contract drilling expense for the second quarter increased to $213 million, compared to $173 million in the prior quarter, largely due to higher charter costs for managed rigs as a result of higher dayrates and more revenue earning days in the quarter and the Ocean Apex incurring additional costs associated with its shipyard activity.
Operationally, Diamond said its rigs performed “exceptionally well” while fleet utilisation grew from 63% in the previous three months to 70% this past quarter.
President and CEO Bernie Wolford Jr. said backlog had also grown to $1.6 billion, amid “notable average day-rate improvement” as the group looks to the latter half of the year.
In particular, Diamond pointed to the reactivation of the Ocean GreatWhite, which is now under contract with BP in North Sea until next year, having already drilled the underwhelming Ben Lawers well west of Shetland in March.
The Ocean BlackHawk completed a campaign in Senegal in early July and has mobilized to Las Palmas for its upgrades and preparation for its return to the Gulf of Mexico.
vResults for the second quarter also included $12.2 million in revenue associated with the previously announced termination of the Ocean Patriot’s contract in the North Sea.
The Patriot had been due to carry out work for Apache in the Beryl area until August 2024, though the operator opted to cut the contract short – a decision it blamed the North Sea windfall tax.
It has since won work with Repsol Sinopec with a two-well contract starting in September and due to end in Q4.
Mr Wolford Jr added: “Our clients continue to commit additional capital to offshore drilling and make critical investments in long-lead subsea equipment. This coupled with strong commodity demand outlooks and favorable economics for deepwater projects are setting the stage for sustainable demand for our drilling services as momentum continues to build in this cycle.
“During the quarter, we secured term work for the Ocean BlackHawk and added a two-well contract for the Ocean Patriot, both at higher dayrates. We also extended the Ocean Endeavor by two wells, and our customers exercised options for the Ocean GreatWhite and the Ocean BlackRhino.
“These wins, which total more than $229 million in additional backlog, provide increased visibility to our 2024 revenue stream and are a testament to our team’s performance.
“We now have $1.6 billion of backlog with notable average day-rate improvement as we transition to new contracts in the back half of this year.”
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