Diamond Offshore Drilling (DO) - Excellent, but Maybe Some Other Time

We are getting a larger and larger basket of names with excellent earnings that no one cares about. Diamond Offshore Drilling (DO) is another deep sea driller and once more, at crude $80, $100, $120, $140 there will be a strong demand for rigs, especially of the deeper sea variety (see Mark shout in wind here) Not that it matters nowadays (you'll start hearing that in increasing amount it appears) but...

• Diamond Offshore Drilling Inc (DO), a drilling contractor, reported a better-than-expected 65 percent increase in second-quarter profit on Thursday as tight supply and high demand lifted rates for its rigs.
• But shares of the company fell more than 1 percent, following the decline of other energy stocks. Energy shares were hit after a report showed a build in natural gas stocks and worry about a global recession.
• "Diamond's results were very good, yet the market is ignoring them," Mark Urness, oilfield services analyst with Calyon Securities, said. "The market is ignoring fundamentals and is being driven by fear."
• Profit rose to $416.3 million, or $2.99 per share, from $251.9 million, or $1.81 per share, a year earlier. Wall Street analysts had expected, on average, a profit of $2.77 per share, according to Reuters Estimates.
• Revenue jumped 47 percent to $954.4 million.
• Diamond and other drillers have seen dayrates soar as high energy prices prompt demand for offshore rigs from exploration and production companies. Dayrates have topped $500,000 for rigs used to drill in deeper waters.
• The Houston company which has a fleet of 46 rigs, also set a special cash dividend of $1.25 per share, a figure that might have disappointed some investors who were hoping for an increase, analysts said.
• In the quarter, the company said the average rate for its floating rigs used to drill in deeper waters was $385,000 per day, up 26 percent from a year earlier.
• Diamond also said it had signed letters of intent for four of its rigs at rates of $520,0000 to $540,000 per day, which analysts said were rates that are in line or exceeded expectations.

Yawn. Revenue up nearly 50%. Earnings over 60%. Contracts signed for 6 year range at >$500K dayrates. Wake me up when something exciting happens; my friend, the supercomputer at our hedge fund, says it broke the 200 day moving average so it's a sell sell sell. Yawn. Fundamentals. Booooooriiiiing. That's so 1990s.

And the beat goes on - we'll continue to post the information that no one cares about at this moment in time :) We don't own this name anymore in the fund, but own peers.

No position