With Diamond Offshore adding $240 million to its backlog over the past fiscal quarter, the company is looking forward to improved financial performance heading into 2024. In the company’s Q3 2023 earnings call on 7 November, President and CEO Bernie Wolford noted that the company remains “well positioned” to take advantage of an industry upcycle in the next year.
“Our business continues to benefit from improving energy industry fundamentals. As we enter the fourth quarter, we see a continuation of positive indicators of a strong and lasting upcycle,” Mr Wolford said. He noted that Diamond Offshore should have “multiple opportunities” with its MPD-equipped seventh-generation drillships in 2024. A long-term plug and abandonment (P&A) contract for its harsh-environment semisubmersible Patriot is also cause for optimism in the near-term future.
The Patriot contract, which will begin in early 2025, is a 35-well contract with TAQA Bratani in the UK North Sea with an estimated duration of three years. The contract includes up to an additional 17 priced option wells that could add up to a year of work. Mr Wolford said in the conference call that the term for the Patriot contract was “notable” and indicative of future market tightness in the UK region.
In the drillship market, Mr Wolford said Diamond Offshore will have two MPD-equipped drillships available for contracts in the second half of next year. The BlackRhino, which is currently working for Woodside offshore Senegal, is expected to end its campaign in early July 2024. The BlackLion, currently working for BP in the US Gulf of Mexico, will be available in Q4 2024. Mr Wolford said Diamond Offshore is currently tracking 10 opportunities for these rigs, all of whom have expected start dates in the back half of 2024, and that the company expects to secure contracts for both of them.
“The industry is in a period of demand expansion, and Diamond is ideally positioned to capitalize on these opportunities,” he said.
Diamond Offshore recorded a net loss of $145 million in Q3 2023 and a dip in revenue – $245 million compared to $282 million in Q2 2023 – attributing that to additional contract work, an early termination fee and deferral of particular contract prep costs. Mr Wolford put the decrease in revenue down to various factors, including an additional 17 days of work on the Ocean Courage jackup prior to its contract ending, a one-well early termination fee of the Ocean Apex semisubmersible and deferral of costs for the Ocean BlackHawk drillship.