Deepwater driller Diamond Offshore (NYSE: DO) was caught in something of a double bind on Thursday. Not only was the day difficult for energy companies of all sorts, as oil pulled back somewhat from the lofty levels it has reached of late, but the company also -- horror of horrors -- fell short of analysts' expectations for its quarterly earnings.

For the quarter, Diamond earned $290.6 million, or $2.09 per share. The numbers compared to a net of $224.2 million, or $1.64 a share, in the first quarter of 2007. Revenues rose by 29% to $786.1 million. As a result, its share price was trimmed by more than 2% on the day, since the dart throwers had been anticipating per-share earnings of $2.12. Along with its earnings, the company announced the declaration of another special dividend of $1.25 a share and a regular dividend of 13 cents.

As I listened to the company's analyst call following the release of earnings, I was taken by a few key phenomena affecting the company and its business. Those phenomena are probably not new to Fools who have made a practice of following offshore drilling closely.

  • Dayrates continue to rise and, with crude well above $100 a barrel and natural gas prices firming, it's difficult to perceive retrenchment. Diamond's high-specification "floaters" are bringing in an average of $323,000 a day, or about 15% above last year. And while the average dayrate for jack-ups is down about 9% to about $102,000, a resurgence in Gulf of Mexico activity should move that number higher.
  • While the Gulf of Mexico and North Sea both have seen a decline in activity recently, there appears to be renewed activity in both horizons. Factors pushing this revitalization include lease sales and an interest among operators in revisiting previously abandoned projects.
  • Outside the Gulf of Mexico, term contracts are very much the order of the day. The affect, of course, is to render the company's earnings far more stable than has historically been the case.

Diamond Offshore joins fellow contractors Noble Corp. (NYSE: NE) and ENSCO (NYSE: ESV) in releasing strong earnings growth, although, in Diamond's case perhaps not as strong as the analysts would have liked. Nevertheless, the group's earnings growth has exceeded that of such big oilfield service companies as Schlumberger (NYSE: SLB) and Halliburton (NYSE: HAL).

Given Diamond's growth, its forward P/E below 13 times, the increased predictability of its business, its shareholder-friendly dividend policy, and its stellar balance sheet, I continue to suggest that Fools with an interest in energy -- and that should be most of you -- consider Diamond Offshore carefully.

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Fool contributor David Lee Smith owns shares of Noble, but not of the other companies mentioned. He does welcome your questions, comments, or moving help. The Fool has a disclosure policy capable of surviving in the deepest of water.