A glut of deepwater drilling rigs is dragging down share prices and threatening revenue for operators that are being forced to accept lower day rates.

The latest sign is the Ocean BlackRhino, one of Diamond Offshore Drilling Inc.’s most expensive new ships, which steamed out of the shipyard this year and took over an existing contract instead of starting a new job for the Houston-based company.

Rig contractors responded to rising demand in the past few years with the biggest batch of construction orders since the advent of deepwater drilling in the 1970s. Almost 100 vessels are on order for delivery before the end of 2017, according to IHS Energy. That’s more than the industry needs now.

“We feel the market is likely to have an over-supply of rigs throughout 2015 and into 2016,” CEO Marc Edwards told analysts and investors July 24 on a conference call.

The BlackRhino is displacing its 13-year-old sister rig, Ocean Confidence, according to a monthly fleet-status report filed July 23 after the market closed. The contract has a $550,000 day rate and can be converted to a three-year deal with a $485,000 day rate.

“The transfer of this backlog suggests that the BlackRhino could not secure its own contract,” J.B. Lowe, an analyst at Cowen & Co., wrote July 24 in a note to investors. “It serves as a reminder that the trend in ultra-deepwater day rates remains firmly down.”

If converted to the three-year term, the rate would be lower than some recent three-year contracts that ranged from $550,000 to $600,000 a day, he wrote. Two years ago, Ole Slorer, an analyst at Morgan Stanley, projected rates for ultra-deepwater rigs, which can drill in water more than two miles deep, climbing to as much as $714,000 that year.

Diamond Offshore fell as much as 8.2% July 24, the most intraday since August 2011.

The company is the worst performer this year among drillers in the Standard & Poor’s 500 Index. Five of the seven members of the S&P’s drilling subindex work offshore and have dropped an average of 12.5% this year, while the two land-based rig contractors have climbed an average of 56%.

Contractors are now dealing with the double blow of an oversupply of rigs and lower spending by customers, Steven Newman, CEO at Transocean Ltd., owner of the world’s largest offshore rig fleet, said last month in an interview at Bloomberg’s Houston office.

While spending by explorers and producers is expected to reach a record $682 billion in 2014, it’s growing at a slower pace than in recent years, according to Barclays.

Offshore