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Diamond Offshore Drilling, Inc. Announces Third Quarter 2010 Results

HOUSTON, Oct 21, 2010 (BUSINESS WIRE) -- Diamond Offshore Drilling, Inc. (NYSE:DO) today reported net income for the third quarter of 2010 of $198.5 million, or $1.43 per share on a diluted basis, compared with net income of $364.1 million, or $2.62 per share on a diluted basis, in the same period a year earlier. Revenue in the third quarter of 2010 was $799.7 million, compared with revenue of $908.4 million for the third quarter of 2009.

For the nine months ended September 30, 2010, the Company reported net income of $713.8 million, or $5.13 per share on a diluted basis, compared with net income of $1.1 billion, or $7.91 per share on a diluted basis, for the same period in 2009. Revenue for the nine months ended September 30, 2010 was $2.5 billion, compared with revenue of $2.7 billion for the first nine months of 2009.

Diamond Offshore President and Chief Executive Officer Larry Dickerson said: "Earnings for the quarter were negatively impacted by reserves taken in connection with a contractual force majeure dispute with a customer emanating from the drilling moratorium in the U.S. Gulf of Mexico; higher than normal downtime related to special surveys, shipyard maintenance, and acceptance testing; and the mobilization of rigs out of the U.S. Gulf. We anticipate that most of these rigs will be employed during the majority of the fourth quarter of 2010.

"While uncertainty persists in the U.S. Gulf, international markets for our rigs remain relatively stable, supported by higher oil prices and consistent demand," Dickerson said.

Diamond Offshore provides contract drilling services to the energy industry and is a leader in deepwater drilling. Additional information on Diamond Offshore and access to the Company's SEC filings is available on the Internet at http://www.diamondoffshore.com.

As previously announced, Diamond Offshore will provide a simulcast and rebroadcast of its third quarter 2010 earnings release conference call. The live broadcast of our quarterly conference call will be available online at http://www.diamondoffshore.com on October 21, 2010 beginning at 9:00 a.m. Central Daylight Time. The online replay will follow immediately and continue for the remainder of the calendar quarter after the original call. Please go to the web site at least 15 minutes before the broadcast to register, download and install any necessary audio software.

Statements contained in this press release which are not historical facts are "forward-looking statements" within the meaning of the federal securities laws. Forward-looking statements are inherently uncertain and subject to a variety of risks that could cause actual results to differ materially from those expected by management of the Company. A discussion of the important risk factors and other considerations that could materially impact these matters as well as the Company's overall business and financial performance can be found in the Company's reports filed with the Securities and Exchange Commission and readers of this release are urged to review those reports carefully when considering these forward-looking statements. Copies of these reports are available through the Company's website http://www.diamondoffshore.com. Given these risk factors, investors and analysts should not place undue reliance on forward-looking statements. Any such forward-looking statements speak only as of the date of this press release. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any forward-looking statement is based.

DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)

Three Months Ended
September 30,

Nine Months Ended
September 30,

2010 2009 2010

2009

Revenues:
Contract drilling $ 748,998 $ 885,281 $ 2,405,175 $ 2,664,447
Revenues related to reimbursable expenses 50,726 23,094 76,833 76,055
Total revenues 799,724 908,375 2,482,008 2,740,502
Operating expenses:
Contract drilling 348,507 304,146 1,002,605 906,746
Reimbursable expenses 50,313 22,873 75,397 75,019
Depreciation 99,117 86,485 297,265 256,978
General and administrative 16,999 15,628 50,502 48,109
Gain on disposition of assets (32,392 ) (217

)

(33,425 ) (365 )
Total operating expenses 482,544 428,915 1,392,344 1,286,487
Operating income 317,180 479,460 1,089,664 1,454,015
Other income (expense):
Interest income 395 1,879 2,154 3,645
Interest expense (22,567 ) (14,031

)

(66,221 ) (26,436 )
Foreign currency transaction gain (loss) 3,724 8,313 194 17,921
Other, net (166 ) (336

)

(287 ) 315
Income before income tax expense 298,566 475,285 1,025,504 1,449,460
Income tax expense (100,042 ) (111,151

)

(311,734 ) (349,305 )
Net Income $ 198,524 $ 364,134 $ 713,770 $ 1,100,155
Income per share:
Basic $ 1.43 $ 2.62 $ 5.13 $ 7.91
Diluted $ 1.43 $ 2.62 $ 5.13 $ 7.91
Weighted average shares outstanding:
Shares of common stock 139,027 139,005 139,026 139,003
Dilutive potential shares of common stock 10 98 55 80
Total weighted average shares outstanding 139,037 139,103 139,081 139,083

DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS
(Unaudited)
(In thousands)

Three Months Ended
September 30,

2010 2009
REVENUES
High Specification Floaters $ 305,335 $ 353,318
Intermediate Semisubmersibles 380,438 421,145
Jack-ups 63,133 110,818
Other 92 --
Total Contract Drilling Revenue $ 748,998 $ 885,281
Revenues Related to Reimbursable Expenses

$

50,726

$

23,094

CONTRACT DRILLING EXPENSE
High Specification Floaters $ 148,503 $ 103,258
Intermediate Semisubmersibles 153,683 142,156
Jack-ups 42,940 52,559
Other 3,381 6,173
Total Contract Drilling Expense $ 348,507 $ 304,146
Reimbursable Expenses $ 50,313 $ 22,873
OPERATING INCOME
High Specification Floaters $ 156,832 $ 250,060
Intermediate Semisubmersibles 226,755 278,989
Jack-ups 20,193 58,259
Other (3,289 ) (6,173 )
Reimbursable expenses, net 413 221
Depreciation (99,117 ) (86,485 )
General and administrative expense (16,999 ) (15,628 )
Gain on disposition of assets 32,392 217
Total Operating Income $ 317,180 $ 479,460
DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
September 30, December 31,
2010 2009
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 184,434 $ 376,417
Marketable securities 800,593 400,853
Accounts receivable, net of provision for bad debts 600,368 791,023
Prepaid expenses and other 185,264 155,077
Total current assets 1,770,659 1,723,370

Drilling and other property and equipment, net of accumulated depreciation

4,283,708 4,432,052
Long-term receivable 48,822 --
Other assets 397,500 108,839
Total assets $ 6,500,689 $ 6,264,261
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities 505,918 413,475
Long-term debt 1,495,538 1,495,375
Deferred tax liability 560,666 546,024
Other liabilities 200,853 178,745
Stockholders' equity 3,737,714 3,630,642
Total liabilities and stockholders' equity $ 6,500,689 $ 6,264,261

DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES
AVERAGE DAYRATES AND UTILIZATION

Third Quarter
2010
Second Quarter
2010
Third Quarter
2009
Dayrate Utilization Dayrate Utilization Dayrate Utilization
(Dayrate in thousands)
High Specification Floaters $364 56% $373 69% $389 75%
Intermediate Semis $280 76% $269 82% $278 84%
Jack-ups $82 60% $85 76% $117 65%

SOURCE: Diamond Offshore Drilling, Inc.

Diamond Offshore Drilling, Inc.
Director, Investor Relations
Les Van Dyke, 281-492-5370