Diamond Offshore Drilling (NYSE:DO) announced its second-quarter results before the opening bell this morning. The offshore driller reported revenue of $692 million and net income of $90 million, or $0.65 per share. Both numbers beat estimates as analysts were expecting the company to report revenue of $683.8 million and earn $0.56 per share this quarter.
Second quarter results, however, were affected by several items in the quarter. The company's net income was boosted by $0.08 per share due to a settlement agreement and by $0.05 per share due to the gain on the sale of a jack-up rig. However, the company's results were also negatively affected by $0.14 per share relating to a customer contract cancellation. Combined, these items knocked $0.02 per share off of Diamond Offshore's second-quarter results.
Also impacting second-quarter results was the commencing of operations of the first of its newbuild drillships. The Ocean Blackhawk started service this quarter in the Gulf of Mexico. The company expects to add four more rigs to its fleet by early next year, which should help to offset some of the negative headwinds the company is facing.
Those headwinds in the market, which include a reluctance by energy companies to sign new long-term drilling contracts, caused Diamond Offshore Drilling's results to fall over last year. The company's revenue is down by 18% while its profit is half of what it was in last year's second quarter.
That being said, the company sees its new drillships providing a boost over the next year. Further, Diamond Offshore retains one of the strongest credit ratings in the sector along with a healthy balance sheet and because of that, CEO Marc Edwards noted in the company's earnings press release that Diamond Offshore, "remains well positioned to navigate through the current market cycle."