We Can Learn From Diamond Offshore's Recent Mistake

We Can Learn From Diamond Offshore's Recent Mistake

Investors who follow the rig market can learn a very valuable lesson from the big earnings hit that Diamond Offshore had this past quarter: Know who a rig company's clients are. Both Diamond and Ensco learned this lesson the hard way when Diamond took a $70 million revenue hit and Ensco's earnings per share was knocked down by $0.12 because of problems with exploration and production companies not being able to pay the bills. With Brazilian oil company OGX going into bankruptcy, both Diamond and Ensco are going to have to find new takes for these four rigs that were working off the coast of Brazil.

For investors, knowing the clients on a company's books is another tool we can use for evaluating these companies. Tune into the video below to find out how this OGX default will affect the two companies and whether other major rig companies Seadrill and Transocean are at risk of a company not paying its bills as well.

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The article We Can Learn From Diamond Offshore's Recent Mistake originally appeared on Fool.com.

Fool contributor Tyler Crowe has no position in any stocks mentioned. You can follow him at Fool.com under the handle TMFDirtyBird, on Google +, or on Twitter @TylerCroweFool.The Motley Fool recommends and owns shares of Seadrill. It also owns shares of Transocean. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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