UPDATE 1-Diamond Offshore sees tough winter market in UK, shares fall
(Adds details from statement and conference call, analyst comment, share movement)
By Anannya Pramanick and Tanvi Mehta
July 24 (Reuters) - Diamond Offshore Drilling Inc warned its customers in the North Sea were reluctant to sign contracts for its rigs for the winter months, overshadowing a handy quarterly profit beat that was driven by lower-than-expected costs.
Shares of the company, which also said that its midwater market is "challenging," fell as much as 8 percent to $45.92 in morning trading.
"We are seeing an element of seasonality in the North Sea, which is pressuring rigs in this market with near-term availability," Chief Executive Marc Edwards said on a conference call with analysts.
High operating costs and dwindling reserves in the North Sea have plagued drillers for months, with the poor weather adding to their troubles in the first quarter.
The number of oil and gas wells drilled in Britain's part of the North Sea fell to the lowest level seen for a second quarter in at least 10 years.
Revenue from Diamond Offshore's expensive ultra-deepwater and deepwater rigs fell as oil and gas companies shied away from drilling in the deep sea to cut costs.
Demand for offshore contract drilling is softening as vessels ordered during boom times are being delivered now, when energy companies are tightening spending. Continued...