Houston’s Diamond Offshore Drilling Inc., one of the top offshore rig contractors in the world, on Thursday reported better-than-expected quarterly earnings from lower operating costs. Competitor Noble Corp. reported a mixed profit report, but CEO David Williams said the fundamentals for the offshore industry remain strong.

“Industry fundamentals remain solid across the offshore spectrum, as evidenced by the continued success with securing contracts for both floating and jackup rigs,” said Williams. “The standard jackup sector has experienced substantial improvement over 2012, with recent contract signings on 15 rigs in the Noble fleet representing an average day rate improvement of approximately 40% from the previous contract day rate.

“In the ultra-deepwater sector, a record year for announced discoveries, along with expanding geographic reach by our customers, greater offshore access and a building field development project backlog, are leading to expected higher customer demand, longer contract durations and the prospects for higher dayrates.”

At Diamond, operating costs fell 8% in 3Q2012 from a year earlier. However, net profits year/year (y/y) were down 31% to $178 million ($1.28/share) from $257 million ($1.85), while revenue plunged 17% to $729 million from $878 million. The earnings results were in line with Wall Street expectations, but analysts on average had expected revenue to be about $5 million higher.

The revenue decline resulted from lower rig utilization in the quarter. Utilization rates, which measure the number of rigs being used as a percentage of a company’s fleet, fell for deepwater rigs in the period, which was attributed in part to downtime from Hurricane Isaac, which impacted Gulf of Mexico (GOM) operations.

“Our results for the quarter benefited from lower-than-anticipated operating expense, primarily owing to our continued emphasis on controlling costs,” said Diamond CEO Larry Dickerson.

The CEO, like Williams, also pointed to better days ahead revenue-wise during a conference call with analysts. The company won 13 rig contracts between July and September, compared with 14 a year ago and in 2Q2012. The latest contracts are expected to add up to $1.7 billion in revenue and 12.1 rig-years of contract drilling backlog, Dickerson said.

Diamond, which is majority owned by Loews Corp., has reported declining revenue over the past year as the entire offshore drilling sector continues to recover from the 2010 Macondo well blowout in the deepwater GOM.

The company’s operating margins in the latest period fell to 33.6% from 39.6% in 3Q2011. Day rates for ultra deepwater floaters rose 5.4% y/y, but utilization fell to 75% from 88%. For deepwater floaters, dayrates were down 20% and utilization dropped to 95% from 99%. Midwater floaters declined 3.7% decline in dayrates, with utilization improving to 71% from 70% a year ago.

Revenue from Diamond’s contract drilling segment fell 17.1% y/y to $714 million mostly because of a 16.7% fall-off in total floater revenue. Floaters accounted for almost 95% of the total quarterly contract drilling revenue; jackups contributed the remainder.

Noble, which is based in Switzerland, attributed its lower-than-expected earnings in 3Q2012 in part to lower utilization rates for two drillships, as well as extended downtime in the GOM from Hurricane Isaac. Some out-of-service time from mechanical problems that involved several rigs also impacted results.

Profits for the latest quartered tallied $115 million (45 cents/share), versus $135 million (53 cents) in 3Q2011. However, operating income climbed 8.8% to $178.9 million from $163.6 million. And contract drilling services revenues jumped almost 20% y/y to $833 million, compared with $705 million.

In addition, Noble’s rig utilization rose slightly to 78% from 76% y/y.

“The decline in third quarter financial results was due primarily to lower-than-expected utilization on two of our new drillships…as we worked to solve a number of operational issues, as well as delays in returning rigs to work in Brazil…,” said Williams.

Williams said even though profits declined, Noble improved the utilization rate within its jackup fleet and “were able to secure a number of additional contracts at significantly higher dayrates…During the quarter we also reached a number of key milestones in our newbuild construction program as we prepare to deliver three ultra-deepwater drillships and three high specification jackups in 2013, continuing our efforts to transform the Noble fleet to a premium, versatile and more technically advanced fleet.”

Average dayrates across Noble’s fleet declined 7% in 3Q2012 from 2Q2012, which the company attributed primarily to lower average daily revenues for floating rigs. Semisubmersible rig dayrates y/y on average, were about 5.4% higher at $331,900. Drillships averaged rates of $267,166 versus $225,669, while their average capacity utilization jumped to 73% from 60%. The average dayrates for jackups rose to $97,857 from $89,352; average capacity utilization was nearly flat at 83% versus 82%.

At the end of September 83% of Noble’s available rig operating days were committed for the remainder of the year, including 87% of the floating rig fleet and 87% of the jackup fleet. For 2013, 69% of operating days already are committed, including 80% of the floating rig days and 67% of jackup days.

Noble’s total backlog at the end of 3Q2012 stood at $14.8 billion.

“Our newbuild delivery schedule is well timed to address increasing customer needs for ultra-deepwater drillships and high-specification jackups, both of which address the increasing complexity of many wells to be drilled in the future, while offering improved operating efficiencies,” said Williams.

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