* Q4 EPS $2.11 Vs $1.19 a yr-ago
* Q4 contract drilling revenue up 36.2 pct at $887.5 mln
* Maintains special dividend
* Shares flat (Recasts; adds share price, comments from conference call, analyst comment, byline, changes dateline from NEW YORK)
By Anna Driver
HOUSTON, Feb 5 (Reuters) - Diamond Offshore Drilling Inc (DO.N) said on Thursday its fourth-quarter profit rose on gains in drilling revenue and the company maintained its special cash dividend, a big reason investors buy the stock.
Shares of Diamond Offshore were trading up slightly in late morning trading on the New York Stock Exchange.
“I think that the results were fine,” Waqar Syed, an analyst at Tristone Capital, said. “But the key for Diamond Offshore is the dividend and it is a pretty hefty dividend yield. And it looks like they have the backlog to pay it.”
Diamond declared a special cash dividend of $1.875 per share and a regular cash dividend of $0.125 per share. Both dividends are payable on March 2 to shareholders of record on Feb. 13.
Offshore drillers have not yet suffered the dramatic drop in activity seen on land that declines in oil and gas prices have caused, but drilling in shallower waters has started to show signs of weakness and some rigs have started to be pulled off the market as a result.
For 2009, Diamond Offshore said it will spend about $470 million, mostly on maintenance for its drilling rig fleet. That figure is down sharply from $720 million last year, when Diamond had rig upgrades to complete and newly built rigs in shipyards, a company spokesman said.
That budget for 2009 leaves the company in a good position to be able to buy one or two rigs, Larry Dickerson, Diamond Offshore’s chief executive officer told investors on a conference call.
“This company has a long-term history of buying rigs in down markets,” Dickerson said. “So that’s a part of our strategy and one that we will pursue.
Net income in the quarter was $293.5 million, or $2.11 a share, up from a year-ago profit of $164.9 million, or $1.19 a share.
Profit was hit by $51 million in currency losses and $31 million in bad debt related to a rig contract with Oilexco IncOIL.TO whose North Sea operations in the United Kingdom are under bankruptcy protection, the company said.
Quarterly contract drilling revenues rose 36.2 percent to $887.5 million, and total revenue was $903 million.
Diamond Offshore also said it has signed an agreement to sell its jack-up rig Ocean Tower, which was damaged by Hurricane Ike.
Shares of Diamond Offshore were up 30 cents at $64.36 on the NYSE. (Additional reporting by Euan Rocha in New York; Editing by Derek Caney and Gunna Dickson)