Seadrill Ltd (SDRL)

[OilStockReport]

Thoughts?

Diamond Offshore falls just short of perfection with a score of nine. Despite some obvious turbulence in the drilling industry, the company has done a good job delivering growth, although it hit a snag over the past year.

With oil prices having risen significantly over the past five years, Diamond Offshore has done its best to capitalize, driving growth and seeing impressive profits. The company has faster long-term growth rates than competitors Ensco (NYSE: ESV ) and Nabors (NYSE: NBR ) , and investors expect that trend to continue into the future.

But last year's Gulf disaster put a dent in the company's progress. Even though the government has started issuing Gulf permits again, Diamond and Transocean (NYSE: RIG ) have moved assets out of the Gulf toward areas with less-strict regulation. Moreover, pressure from Seadrill (NYSE: SDRL ) and its impressive world-class drilling fleet has forced Diamond to change its long-held strategy of merely upgrading old rigs rather than building new ones.

Just last week, Diamond Offshore posted mostly positive results for its second quarter. After a year of poorer year-over-year results, sales and income both rose compared to the second quarter of 2010 and outpaced Wall Street's expectations. A big increase in expected downtime spooked the shares, but with backlog on the rise, Diamond Offshore shouldn't be lacking for business anytime soon.