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Rig company Diamond Offshore mentions 'prolonged downturn'

The company reported a net loss for the second quarter of $69 million, with day rates down about 20 percent from the same time last year.

By Daniel J. Graeber
Rig company Diamond Offshore mentions 'prolonged downturn'
The head of rig company Diamond Offshore pointed to a "prolonged downturn" in an announcement of a loss for the second quarter. File Photo by Stephen Shaver/UPI | License Photo

July 30 (UPI) -- Rig company Diamond Offshore on Monday became the latest energy company to report weak earnings during the second quarter, despite higher oil prices.

The company reported a net loss for the second quarter of $69 million, compared with income of $19.3 million for the three months ending March 31. The slump comes even as the price for crude oil continues to improve. At around $75 per barrel for Brent, the global benchmark for the price of oil, the market is up about 45 percent from this point last year.

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Marc Edwards, the president and CEO of the company, said future contracts for its rigs are better than expected in terms of rates.

"We believe this contracting activity positions Diamond Offshore for success during the remainder of this prolonged downturn, and beyond," he said in a statement.

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His comments were similar to those made in 2016, when the price of oil was struggling to break the $50 per barrel mark. For offshore drillers, Edwards said two years ago, the future was less certain and any recovery might not be as robust as some in the industry were expecting.

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Although Edwards said rates were above market, the company reported an average lease rate of $317,000 per day for one of its floating rigs, down about 20 percent from the same period last year.

After an auction for rights to drill in the U.S. Gulf of Mexico earlier this year, William Turner, a senior research analyst at Wood Mackenzie, said the results show the industry is still wary about making big bets offshore.

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Of the 14 rigs listed in service by Diamond Offshore, five were in the U.S. waters of the Gulf of Mexico and had the highest day rates.

Results for major energy companies have been mixed so far in the second quarter. Oil and gas field services company Weatherford International reported a net loss of $264 million for the second quarter.

Total revenue for Schlumberger, the largest company of its kind, was up 6 percent from the first quarter.

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