(Reuters) - Diamond Offshore Drilling Inc’s (DO.N) Chief Executive Officer Marc Edwards said the rig contractor’s path to recovery is starting to take shape after the company posted fourth-quarter revenue that beat analysts’ estimates on Monday.
The operator of ultra-deepwater rigs reported a 24 percent increase in revenue and saw higher utilization from last year.
Offshore drillers largely missed out on the OPEC-led rally in oil prices, which pushed U.S. shale producers to record output last year.
Crude CLc1 prices have risen about 12 percent since January 2017, but Diamond’s stock has dropped 17 percent in the same period.
“Utilization is improving with positive implications for an eventual recovery in day rates,” Edwards told analysts on a post-earnings conference call.
Edwards said there have been some improvements with major oil companies such as Exxon Mobil (XOM.N), Royal Dutch Shell (RDSa.L), Total SA (TOTF.PA) and BP (BP.L) sanctioning new offshore developments.
Tudor Pickering Holt & Co analyst Taylor Zurcher said demand continues to “surprise to upside”, but he does not think it will be long enough to drive any notable pricing momentum in the near-term - suggesting an offshore recovery could take longer-than-expected.
The company’s shares dropped 3 percent in early trading.
Offshore projects, which take years to develop and are capital intensive, were the hardest hit by the slump in crude prices as oil and gas producers slashed spending.
Diamond’s total revenue of $346.21 million beat analysts’ estimates of $331.91 million, according to Thomson Reuters I/B/E/S.
The company reported a net loss of $32 million, or 23 cents per share, for the fourth quarter, compared with a profit of $116.1 million, or 85 cents per share, a year earlier.
Diamond Offshore took a charge of $28 million related to its rigs.
Excluding items, the company posted a loss of 5 cents per share, smaller than analysts’ average estimate of a 6-cent loss.
Reporting by John Benny in Bengaluru; Editing by Maju Samuel, Bernard Orr