Image: Drillship Ocean Endeavor.
Investment Thesis
Diamond Offshore (DO) is one of the best offshore drillers with a clean balance sheet, low net debt, and potential for growth assuming a full-blown recovery in the offshore drilling sector that seems to materialize, albeit at an agonizingly slow pace.
The company presents a puzzling situation involving a fundamental business contradiction. This dichotomy is simple to describe but very difficult to solve. On the one hand, the company is stable financially, but on the other side, this financial strength has been possible by weakening its