Both companies reported better-than-expected quarterly profit and confirmed that pricing was improving across their fleets, sending their shares higher on Thursday.
“Despite the uncertainty in commodity prices seen in the second quarter, we continue to observe strong customer demand for both deepwater and shallow water for our fleet,” Noble Chief Executive David Williams said on a conference call.
Noble and Diamond executives see little drilling capacity available in 2013 across the industry, with most rigs under construction expected to hit the market the following year.
“We believe now that 2013 is close to being sold out and expect demand to continue to materialize into 2014, looking at the availability of rigs in that time frame,” said Michael Acuff, vice president of marketing for Diamond.
He highlighted the deal just announced for its Ocean Onyx, a rig under construction in Texas, which will start a one-year contract with Apache Corp (APA.N) in the third quarter of 2013. UBS analyst Angie Sedita said the Onyx’s rate of $490,000 per day was nearly $100,000 above the high end of her estimate.
Noble last week announced a three-year deal for an ultra-deepwater drillship now being built, in a contract that will average $618,000 per day starting 2014 - making it one of the Swiss company’s most lucrative rigs. Noble executive Simon Johnson forecast a “plethora” of deals in the near future.
Quarterly profit tripled at Noble, owner of the world’s third-largest offshore fleet, as costly downtime decreased and revenue grew with the addition of new rigs.
Its second-quarter profit, excluding one-time items, was 59 cents per share, 2 cents above analysts’ average estimate, according to Thomson Reuters I/B/E/S.
Diamond said that, excluding a gain on the sale of rigs, its adjusted profit was $1.09 per share, 19 cents above analysts’ expectations.
Diamond said on its call it would look at selling off its remaining shallow-water jackups, apart from the four working in Mexico, which may be joined by one more. It has two working in the Mediterranean and one in storage in the Gulf of Mexico.
Noble has been talking for the past year about disposing of its less-capable rigs in one big deal, but Williams said it was still seeking the right buyer.
Sector leader Transocean (RIG.N) has plans to sell off up to $1 billion of rigs this year, as all the leading rig operators focus on improving the profiles of their fleets.
Noble shares were up 2.2 percent at $36.20 in midday trading, while Diamond was up 3.2 percent at $65.94.
Through Wednesday, the shares of both companies had gained 17 percent this year. Shares of Transocean had risen 22 percent, while Ensco (ESV.N) was up 6 percent. Ensco is due to report quarterly earnings next week, followed by Transocean a week after that and then Norway-listed Seadrill (SDRL.OL) later in August.
Reporting by Braden Reddall in San Francisco; additional reporting by Swetha Gopinath in Bangalore; editing by John Wallace