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What’s in Store for Diamond Offshore’s Rig Contract with BP?


Diamond Offshore Drilling, Inc. DO recently declared that its customer BP plc, BP has it informed it that BP will discontinue drilling campaign in the Great Australian Bight.

In 2013, Diamond Offshore Drilling received a contract for one of its harsh environment ultra-deepwater semisubmersible, the Ocean GreatWhite, from BP for the Great Australian Bight campaign of the latter.

In spite of its decision to discontinue drilling activities in the Great Australian Bight, BP has assured that its decision will not affect Diamond Offshore Drilling's rig contract. Currently, both Diamond Offshore Drilling and BP are exploring alternative locations for the Ocean GreatWhite.

Ocean GreatWhite is a new Moss CS60E design semisubmersible drilling rig. Diamond Offshore Drilling engaged Hyundai Heavy Industries to build the rig, which is specifically designed for use in deep water and harsh marine environments.

Diamond Offshore Drilling is a major contract driller that provides comprehensive offshore drilling services to the global energy industry. The company’s drilling fleet of 32 consists of 23 semi-submersibles (of which one is under construction), five jackups and four dynamically-positioned drillships. The company’s rigs operate in South America, Australia and Southeast Asia, the Middle East, Europe, East and West Africa, the Mediterranean, and the Gulf of Mexico.



Diamond Offshore Drilling remains in good financial health and has a track record of disciplined capital outlays and financial conservatism. Diamond Offshore Drilling mostly stresses on operational performance to enable it to survive the prolonged downturn in the oil and gas industry.

The company aims to increase its footprint in emerging markets (such as Brazil, Australia and West Africa) to reap benefits from the recent discoveries of deepwater fields. Also, the gradual improvement in the Gulf of Mexico drilling market (especially after the deepwater drilling ban was lifted), along with better bidding activity, will prove beneficial for a contract drilling company like Diamond Offshore Drilling.

Currently, Diamond Offshore carries a Zacks Rank #4 (Sell). Some better-ranked players from the energy sector include Enviva Partners, LP EVA and W&T Offshore Inc WTI. All of these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Enviva Partners has a mixed earnings surprise history. The partnership posted positive earnings surprise in two of the last four quarters. It reported a positive earnings surprise of 20.51% in the preceding quarter.

W&T Offshore posted a positive earnings surprise of 29.85% in the preceding quarter. It reported a positive earnings surprise in all of the four preceding quarters.

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