Diamond Offshore Drilling Rtgs Raised;Off S&P Watch.NEW YORK--(BUSINESS WIRE)--S&P CreditWire 4/22/98--Standard & Poor's today raised its corporate credit rating on Diamond Offshore Drilling Diamond Offshore Drilling, Inc. is a deepwater drilling contractor which provides drilling services to the energy industry. The company's headquarters are located in Houston, Texas, but they have offices in Louisiana, Africa, Australia, Brazil, Indonesia, Scotland, Singapore, and Inc. to single-'A' from single-'A'-minus. The company's $400 million convertible subordinated notes due 2007 was also raised to single-'A'-minus from triple-'B'-plus The ratings on the company are removed from CreditWatch, where they were placed Sept. 17, 1997 The outlook is now stable. The rating upgrade reflects a growing contractual revenue base, and a demonstrated firm pricing through the current depressed oil pricing conditions. Also, Standard & Poor's expects the supply of mobile offshore drilling Offshore drilling typically refers to the act of extracting resources, primarily oil, in an ocean or lake. Controversy As with all oil drilling, there has been a certain level of controversy surrounding the issue. equipment to increase in an orderly fashion in the near-to-medium term. In addition, Standard & Poor's expects the probability of the oil industry to experience an extreme construction cycle that would eventually lead to a severe supply overhang Overhang Calculated as stock options granted, plus the remaining options to still be granted, and then divided by the total shares outstanding. Notes: A high percentage for the overhang is usually a bad thing. and poor dayrates is now reduced. As such, market conditions are expected to remain very favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. for Diamond Offshore Drilling over the near-to-medium term; but most importantly Adv. 1. most importantly - above and beyond all other consideration; "above all, you must be independent" above all, most especially , a market downside Downside The dollar amount by which the market or a stock has the potential to fall. Notes: You might hear someone say that the downside on stock XYZ is $10. What that means is that the stock could fall by this amount if things got bad. would not be as severe as the last market trough Trough The stage of the economy's business cycle that marks the end of a period of declining business activity and the transition to expansion. . This rating action also follows similar upgrades in the vastly improved contract drilling sector over the last few quarters. Financial performance for these companies has been extraordinarily strong, and could improve further over the next one to two years such as with old long-term contracts rolling-over at higher dayrates, or with the addition of new equipment. However, Standard & Poor's also has concluded that such high level of financial performance is unsustainable over the long-term. Still, given expectations that conservative financial policies and strong balance sheets will continue; lower probability of the construction cycle overheating Overheating An economy that is growing very quickly, with the risk of high inflation. ; good visibility of earnings and cash flows; and the prospects of less-severe downturns than has historically been the case, Diamond Offshore Drilling should perform at their current rating levels over the term of the next business cycle. Fleet size, geographic and equipment class diversification, as well as participation in long-term drilling markets are key rating attributes, which combined with debt tolerance levels ultimate differentiate the ratings among the contract drillers. OUTLOOK: STABLE Maintenance of the current rating depends on continued adherence to currently conservative financial policies, Standard & Poor's said. -- CreditWire CONTACT: Carlos Catoya, 212/208-8081 |
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