Hoover's - A D&B Company - We Make It Easier
Browse Company Record


    15415 Katy FwyPhone: +1-281-492-5300
    HoustonTXFax: +1-281-492-5316
    United StatesMap Map This Company
    http://www.diamondoffshore.comHoover's coverage by Stuart Hampton


    Loews, a New York City-based holding company owned by billionaire brothers Larry and Bob Tisch, paid $48.5 million for offshore drilling rig operator Diamond M in 1989 during the depths of a major oil bust (the bust lasted from the mid-1980s through the mid-1990s). Few oil rigs were operating, and most of those were earning day rates of less than $30,000.

    Diamond M was a Houston-based drilling firm that dated to the 1960s. Texas oilman and rancher Don McMahon had formed the company from several oil rigs in default when an oil bust was mirrored by a banking crisis. McMahon named the firm after his Houston area ranch, the Diamond M. (The logo used by Diamond M, and later Diamond Offshore, was styled after the ranch's brand.) At one point Diamond M was the world's largest barge drilling company, although it no longer operates drilling barges.

    Kaneb Services, a Richardson, Texas-based oil pipeline and energy services company, bought Diamond M in 1978. After oil prices dropped and drilling activity slowed in the 1980s, Kaneb sold Diamond M to the Tisches, who through Loews have developed a reputation for buying companies in underperforming industries and waiting for an up cycle. Former Kaneb Services EVP Robert Rose headed Loews' new subsidiary.

    With rig prices still low, Diamond M bought Odeco Drilling from Murphy Oil for $377 million in 1992. It was the first major consolidation in the offshore drilling industry; many more have followed. The Odeco acquisition gave Diamond M added deepwater capabilities and enough rigs to enter the international offshore drilling market.

    In 1993 Loews' drilling interests were combined into a company named Diamond Offshore Drilling. When Loews spun off Diamond Offshore in 1995, it was operating 37 offshore rigs and 10 land rigs, all in South Texas. That year PETROBRAS contracted for several additional rigs off Brazil.

    Diamond Offshore acquired deepwater rival Arethusa (Off-Shore) Limited in 1996 to add 11 oil rigs to its fleet. That year the company sold its land-based drilling operations in South Texas, Diamond M Onshore Inc., to DI Industries. By late 1996 day rates for deepwater rigs had rebounded to as high as $140,000. In 1997 Diamond Offshore acquired Polyconfidence, a semisubmersible accommodation vessel, and began converting it to an ultra-deepwater rig.

    In 1998 Lawrence Dickerson, former SVP and CFO and a veteran of Diamond M, replaced Robert Rose as president; chairman James Tisch took over Rose's CEO duties. Also that year BP Amoco (now BP), citing equipment problems, canceled a Gulf of Mexico drill rig project. Undeterred, Diamond Offshore won a three-year contract in 1999 for its Ocean Clipper drillship (idled by the collapse of the BP Amoco deal) to provide deepwater drilling services offshore Brazil.

    The next year Diamond Offshore sold one of its older jack-up drilling rigs. It also won a three-year contract from PETROBRAS for the use of one of its most modern semisubmersibles, the Ocean Alliance.

    Lower operating day-rate contracts and underutilization of semisubmersibles led the company to post lower revenues in 2000. However, early in 2001, buoyed by higher oil prices and increased exploration activity, the company reported much stronger sales for its semisubmersible unit.

    In 2007 the company won four drilling contracts from PETROBRAS in Brazil for approximately $2.3 billion.

    During 2009 the company acquired two new-build deepwater, semisubmersible, dynamically positioned drilling rigs, the Ocean Courage and the Ocean Valor.

    A weak global economy depressed the day rates Diamond Offshore could charge in 2009. Nevertheless, the company was able to add new contracts in 2009 and enter 2010 with a contract backlog of $8.5 billion, and with improved revenues for 2009. To raise cash, in 2010 it sold a jack-up rig to Ensco for $186 million.

    Continue To People

    (Company name or ticker or symbol)