Diamond Offshore Drilling Inc (NYSE:DO)’s recent orders have beaten the industry’s price expectations. It received two well drilling orders for The Ocean Saratoga, its mid-water semisubmersibles, in Nicaragua, at $323,000 per day versus the industry estimate of $260,000 per day. The company will start working on this in mid-November 2013. It also received well drilling contracts for its semisubmersible rig, The Ocean Victory, and jack-up, The Ocean King, in the Gulf of Mexico.
The Ocean Victory was signed at $480,000 per day versus the industry estimate of $425,000 per day, while The Ocean King was signed at $115,000 per day versus the industry estimate of $85,000 per day. These contracts are estimated to boost cash flow and will also reduce the downtime of its rigs. Diamond Offshore Drilling Inc (NYSE:DO) is currently facing downtime issues and its first-quarter downtime was 157 days versus 130 days in the fourth quarter of 2012.
Talking about the dividend, Diamond Offshore Drilling Inc (NYSE:DO) has followed a policy of paying special quarterly dividends to its shareholders in the past. In the first quarter, it declared special dividend of $0.75 per share, along with its regular quarterly dividend of $0.125 per share.
New contracts, new equipment, higher profit
With the increasing demand and efficiency, these companies are signing new exploration contracts to gain better share in the market. Diamond Offshore Drilling Inc (NYSE:DO) will benefit from better than expected prices for its rigs and new orders will also solve its downtime issues. Helmerich & Payne, Inc. (NYSE:HP) will benefit from the increased capacity of its AC drive rigs, which will help it generate better revenue. Noble Corporation (NYSE:NE)’s ongoing construction of two drill ships will provide an upside to revenue once deliveries are made.
Overall, I recommend buying these three stocks for the long-term.
The article 3 Oil Companies You Should Buy This Year originally appeared on Fool.com and is written by Madhu Dube.
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