Diamond Offshore Drilling Inc. (DO) reported better-than-expected first quarter 2010 earnings of $2.09 per share, compared to the Zacks Consensus Estimate of $1.94 and the year-ago profit of $2.51. Total revenue of $859.7 million decreased approximately 3% year over year, mainly due to lower utilization rates.
 
Though the results came in above our expectations, the company reduced its special cash dividend to $1.375 per share from $1.875 due to poor market conditions. However, it has maintained its regular quarterly dividend of 12.5 cents per share (50 cents per share annualized).
 
Despite higher dayrates for high specification floaters, contract drilling revenue decreased 1.3% year over year to $844.4 million. The high specification floaters and intermediate semi-submersibles accounted for nearly 45% of the total quarterly contract drilling revenue each, while jack-ups accounted for the rest.
 
High specification floaters recorded an average dayrate of $400,000 during the quarter, up from $360,000 in the year-earlier quarter. Intermediate semi-submersible rigs realized an average dayrate of $276,000, down from $283,000. Jack-up rigs’ dayrates averaged $100,000, down from $131,000 in the first quarter of 2009.
 
High specification rig utilization was 79% during the quarter, down from 80% in the year-ago quarter. Intermediate category rig utilization was 78%, down from 85% in the year-earlier level. Meanwhile, jack-up rig utilization was 63%, down significantly from 73% in the prior-year quarter.
 
At the end of the quarter, Diamond had approximately $306 million in cash on hand and $1.5 billion in long-term debt. Debt-to-capitalization ratio at the end of the quarter stood at about 29%.
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