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Diamond Offshore Secures $489M From Senior Notes Offering

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Offshore driller Diamond Offshore Drilling Inc. (DO - Free Report) recently concluded the offering of $500 million worth of senior notes, with an interest rate of 7.875%, due 2025.

The company generated net cash flow of $489 million from the offering after deducting estimated costs and fees for underwriters. Diamond Offshore will likely utilize the proceeds along with cash balances for the redemption of outstanding senior notes, carrying an interest rate of 5.875%, expected to get matured by 2019.

Investors should know that the business scenario of Houston, TX-based Diamond Offshore has improved substantially from 2016 as oil recovered from the lows of mid-February 2016. Drillers have started to gather on offshore plays again as per the latest rig count data provided by Houston-based oilfield service provider Baker Hughes, a GE company (BHGE - Free Report) . Per the report, oil rig count jumped by three to 768. This shows that the rigs exploring for crude rose again after last week’s fall. Also, the current tally, though far off from the peak of 1,609 attained in October 2014, is significantly above the prior year’s count of 396.  

The improving operating scenario is reflected in the last few earnings reports of the company.  Diamond Offshore managed to beat the Zacks Consensus Estimate in each of the last four quarters, with an average positive earnings surprise of 128.43%.

Despite these improvements, the firm’s price chart is unimpressive. Over the last one year, Diamond Offshore fell 48.4% as compared with the 36.6% decline of the industry.

As a result, the offshore driller carries a Zacks Rank #3 (Hold). Meanwhile, a few better-ranked players in the energy sector are TransCanada Corporation (TRP - Free Report) and Range Resources Corporation (RRC - Free Report) . Both the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

TransCanada posted an average positive earnings surprise of 4.06% for the last four quarters.

Range Resources’ earnings are estimated to grow 116.5% in 2017.

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