Diamond Offshore: Lots of Value

Houston, Texas-based Diamond Offshore Drilling, Inc. (DO) is a major contract driller, providing comprehensive offshore drilling services to the global energy industry. The company's drilling fleet consists of 30 semi-submersibles (9 of these are high-specification rigs, capable of providing deepwater drilling services), 15 jackups (including the recently delivered Ocean Shield and Ocean Scepter), and a dynamically positioned drillship.

Our continued favorable view of Diamond shares reflects the company's strong leverage to the still positive outlook for deepwater drilling despite the pullback in oil prices and continued credit market turmoil. The company's $11.5 billion backlog provides for a very high level of earnings and cash flow visibility.

Diamond has more cash on its balance sheet than debt and remains on track to easily generate free cash flows in excess of $ 1 billion each in 2009 and 2010. And management has established quite a track record in returning excess cash to shareholders through regular special dividends.

Read the full analyst report on DO

Read the full analyst report on DO