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Diamond Offshore Leak Dates to 2004

A report surfaces on Tuesday that a Diamond Offshore Drilling oil rig in the Gulf of Mexico is leaking, but it turns out that the leak dates all the way back to 2004.

NEW YORK (

TheStreet

) -- Offshore drilling stocks don't need additional reasons for pressure on their shares with the BP oil spill hanging over the sector, and now one pressure point for

Diamond Offshore Drilling

(DO) - Get Report

turns out to be a case of inaccurate reports refuted by an energy company late on Tuesday.

Goldman Sachs

(GS) - Get Report

downgraded Diamond Offshore and

Atwood Oceanics

(ATW)

from a hold to sell on Tuesday.

The news was even worse for Diamond Offshore, with unconfirmed reports spreading through the media that Diamond's Ocean Saratoga rig in the Gulf of Mexico was leaking.

Businessinside.com

reported that a pilot who flew over the Diamond rig saw a plume of oil. Diamond referred calls to Taylor Energy, which leased the rig from Diamond, but there was no immediate comment on the pilot's report from the energy company.

Late on Tuesday afternoon, Taylor Energy issued a press release saying that the report was wrong. In fact, the leak in the well for which Taylor has been using the Diamond Offshore Saratoga rig dates back to Hurricane Ivan in 2004.

>>Oil Drilling Losers

Taylor Energy said its ongoing well intervention program using the Diamond Ocean Saratoga started when the platform was toppled by a subsurface mud slide triggered by storm surges with 100 foot waves for 16-18 second periods during the 2004 hurricane.

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Three subsurface containment domes and six well interventions have been part of the containment effort for years, Taylor Energy said.

Taylor Energy said the photos quoted in the press as proof of the oil spill were photos of boats involved in regularly scheduled subsea containment system drainage, and that tanks that were identified in press reports as chemical dispersants were, in fact, oil-storage tanks.

Diamond Offshore shares had been among the biggest losers in the market in the first half of Tuesday's trading, but by the end of the market, Diamond Offshore closed down less than 4% -- though on four times its average volume of shares traded.

Atwood Oceanic's loss on Tuesday was twice the loss in Diamond shares. At a larger level of the BP oil spill impact, both

BP

(BP) - Get Report

and

Transocean

(RIG) - Get Report

shares finished Tuesday down close to 6%.

BP Oil Spill Update

BP Oil Spill Update: Obama to Kick Ass

-- Reported by Eric Rosenbaum in New York.

RELATED STORIES:

>>Oil Spill in Pictures: Gulf of Mexico Impact

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