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Diamond Offshore Announces Third Quarter 2011 Results

HOUSTON, Oct 20, 2011 (BUSINESS WIRE) -- Diamond Offshore Drilling, Inc. (NYSE:DO) today reported net income for the third quarter of 2011 of $256.9 million, or $1.85 per share on a diluted basis, compared with net income of $198.5 million, or $1.43 per share on a diluted basis, in the same period a year earlier. Revenues in the third quarter of 2011 were $878.2 million, compared with revenues of $799.7 million in the third quarter of 2010.

"We are pleased with our third quarter results, which reflect continued strength in the market," said Larry Dickerson, President and Chief Executive Officer of Diamond Offshore. "Since the second quarter, we have added 14 new contracts, totaling 18 rig years or $1.4 billion of revenue backlog."

"We continue to execute on initiatives to contain operating costs and minimize unplanned rig repair downtime," said Dickerson. "Additionally, results benefited from revenues related to the mobilization of a rig from Brazil to the Gulf of Mexico and a shift of some planned downtime into the fourth quarter."

CONFERENCE CALL

Diamond Offshore will host a conference call to discuss third quarter results on Thursday, October 20, 2011 beginning at 9:00 a.m. Central Daylight Time. A live webcast of the call will be available online on our Company's website, http://www.diamondoffshore.com. Those interested in participating in the question and answer session should dial 800-247-9979, or for international callers, 973-321-1100. The conference ID number is 13267272. An online replay will also be available on http://www.diamondoffshore.com following the call.

ABOUT DIAMOND OFFSHORE

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.

FORWARD-LOOKING STATEMENTS

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

Nine Months Ended

September 30,

September 30,

2011 2010 2011 2010
Revenues:
Contract drilling $ 861,511 $ 748,998 $ 2,520,030 $ 2,405,175
Revenues related to reimbursable expenses 16,666 50,726 54,032 76,833
Total revenues 878,177 799,724 2,574,062 2,482,008
Operating expenses:
Contract drilling, excluding depreciation 391,369 350,555 1,141,739 1,008,551
Reimbursable expenses 16,206 50,313 52,443 75,397
Depreciation 101,175 99,117 303,523 297,265
General and administrative 14,879 16,999 48,976 50,502
Bad debt expense (recovery) 4,734 (2,048 ) (5,413 ) (5,946 )
Gain on disposition of assets (463 ) (32,392 ) (4,344 ) (33,425 )
Total operating expenses 527,900 482,544 1,536,924 1,392,344
Operating income 350,277 317,180 1,037,138 1,089,664
Other income (expense):
Interest income 2,024 395 3,565 2,154
Interest expense (15,874 ) (22,567 ) (60,144 ) (66,221 )
Foreign currency transaction gain (loss) (1,442 ) 3,724 (4,603 ) 194
Other, net (136 ) (166 ) (232 ) (287 )
Income before income tax expense 334,849 298,566 975,724 1,025,504
Income tax expense (77,995 ) (100,042 ) (201,672 ) (311,734 )
Net Income $ 256,854 $ 198,524 $ 774,052 $ 713,770
Income per share:
Basic $ 1.85 $ 1.43 $ 5.57 $ 5.13
Diluted $ 1.85 $ 1.43 $ 5.57 $ 5.13
Weighted average shares outstanding:
Shares of common stock 139,027 139,027 139,027 139,026
Dilutive potential shares of common stock 14 10 21 55
Total weighted average shares outstanding 139,041 139,037 139,048 139,081

DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES

RESULTS OF OPERATIONS

(Unaudited)

(In thousands)

Three Months Ended
September 30,
2011 2010
REVENUES
High Specification Floaters $ 464,512 $ 305,335
Intermediate Semisubmersibles 350,409 380,438
Jack-ups 46,540 63,133
Other 50 92
Total Contract Drilling Revenue $ 861,511 $ 748,998
Revenues Related to Reimbursable Expenses

$

16,666

$

50,726

CONTRACT DRILLING EXPENSE
High Specification Floaters $ 188,071 $ 148,503
Intermediate Semisubmersibles 153,416 154,731
Jack-ups 43,281 43,940
Other 6,601 3,381
Total Contract Drilling Expense $ 391,369 $ 350,555
Reimbursable Expenses $ 16,206 $ 50,313
OPERATING INCOME
High Specification Floaters $ 276,441 $ 156,832
Intermediate Semisubmersibles 196,993 225,707
Jack-ups 3,259 19,193
Other (6,551 ) (3,289 )
Reimbursable expenses, net 460 413
Depreciation (101,175 ) (99,117 )
General and administrative expense (14,879 ) (16,999 )
Bad debt (expense) recovery (4,734 ) 2,048
Gain on disposition of assets 463 32,392
Total Operating Income $ 350,277 $ 317,180
DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
September 30, December 31,
2011 2010
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 348,003 $ 464,393
Marketable securities 801,931 612,346
Accounts receivable, net of allowance for bad debts 622,949 609,606
Prepaid expenses and other current assets 157,389 177,153
Total current assets 1,930,272 1,863,498

Drilling and other property and equipment, net of accumulated depreciation

4,605,748 4,283,792
Long-term receivable -- 35,361
Other assets 303,215 544,333
Total assets $ 6,839,235 $ 6,726,984
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 372,961 $ 626,288
Long-term debt 1,495,765 1,495,593
Deferred tax liability 519,980 542,258
Other liabilities 189,914 201,133
Stockholders' equity 4,260,615 3,861,712
Total liabilities and stockholders' equity $ 6,839,235 $ 6,726,984

DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES

AVERAGE DAYRATES AND UTILIZATION

Third Quarter Second Quarter Third Quarter
2011 2011 2010
Dayrate Utilization Dayrate Utilization Dayrate Utilization

(Dayrate in thousands)

High Specification Floaters $ 380 93 % $ 364 94 % $ 364 56 %
Intermediate Semis $ 268 68 % $ 266 76 % $ 280 76 %
Jack-ups $ 84 44 % $ 82 60 % $ 82 60 %

SOURCE: Diamond Offshore Drilling, Inc.

Diamond Offshore Drilling, Inc.
Darren Daugherty, 281-492-5370
Director, Investor Relations