Diamond Offshore Drilling, Inc. Announces Third Quarter 2009 Results

For the nine months ended September 30, 2009, the Company reported net income of $1.1 billion, or $7.91 per share on a diluted basis, compared with net income of $1.0 billion, or $7.31 per share on a diluted basis, for the same period in 2008. Revenue for the nine months ended September 30, 2009 was $2.7 billion, compared with $2.6 billion for the first nine months of 2008.

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 www.diamondoffshore.com.

As previously announced, Diamond Offshore will provide a simulcast and rebroadcast of its third quarter 2009 earnings release conference call. The live broadcast of our quarterly conference call will be available online at www.diamondoffshore.com on October 22, 2009 beginning at 9:00 a.m. Central 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 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,
                                              2009              2008              2009               2008
Revenues:
Contract drilling                         $   885,281       $   881,953       $   2,664,447      $   2,588,919
Revenues related to reimbursable expenses     23,094            18,423            76,055             51,931
Total revenues                                908,375           900,376           2,740,502          2,640,850
Operating expenses:
Contract drilling                             304,146           314,273           906,746            872,716
Reimbursable expenses                         22,873            18,126            75,019             50,660
Depreciation                                  86,485            72,155            256,978            212,150
General and administrative                    15,628            13,944            48,109             45,434
Gain on disposition of assets                 (217     )        (228     )        (365      )        (505      )
Casualty loss                                 --                6,281             --                 6,281
Total operating expenses                      428,915           424,551           1,286,487          1,186,736
Operating income                              479,460           475,825           1,454,015          1,454,114
Other income (expense):
Interest income                               1,879             3,055             3,645              10,369
Interest expense                              (14,031  )        (2,989   )        (26,436   )        (6,226    )
Foreign currency transaction gain             8,313             (29,047  )        17,921             (14,606   )
Other, net                                    (336     )        581               315                333
Income before income tax expense              475,285           447,425           1,449,460          1,443,984
Income tax expense                            (111,151 )        (136,892 )        (349,305  )        (426,780  )
Net Income                                $   364,134       $   310,533       $   1,100,155      $   1,017,204
Income per share:
Basic                                     $   2.62          $   2.23          $   7.91           $   7.32
Diluted                                   $   2.62          $   2.23          $   7.91           $   7.31
Weighted average shares outstanding:
Shares of common stock                        139,005           139,001           139,003            138,945
Dilutive potential shares of common stock     98                90                80                 131
Total weighted average shares outstanding     139,103           139,091           139,083            139,076

DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS
(Unaudited)
(In thousands)
                                           Three Months Ended
                                           September 30,
                                           2009             2008
REVENUES
High Specification Floaters                $     353,318    $     344,024
Intermediate Semisubmersibles                    421,145          401,891
Jack-ups                                         110,818          136,038
Total Contract Drilling Revenue            $     885,281    $     881,953
Revenues Related to Reimbursable Expenses  $     23,094     $     18,423
CONTRACT DRILLING EXPENSE
High Specification Floaters                $     103,258    $     94,713
Intermediate Semisubmersibles                    142,156          162,011
Jack-ups                                         52,559           58,159
Other                                            6,173            (610    )
Total Contract Drilling Expense            $     304,146    $     314,273
Reimbursable Expenses                      $     22,873     $     18,126
OPERATING INCOME
High Specification Floaters                $     250,060    $     249,311
Intermediate Semisubmersibles                    278,989          239,880
Jack-ups                                         58,259           77,879
Other                                            (6,173  )        610
Reimbursable expenses, net                       221              297
Depreciation                                     (86,485 )        (72,155 )
General and administrative expense               (15,628 )        (13,944 )
Gain on disposition of assets                    217              228
Casualty loss                                    --               (6,281  )
Total Operating Income                     $     479,460    $     475,825

DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
                                                                September 30,    December 31,
                                                                2009             2008
                                                                (unaudited)
ASSETS
Current assets:
Cash and cash equivalents                                     $ 250,821        $ 336,052
Marketable securities                                           880              400,592
Accounts receivable, net of provision for bad debts             764,639          574,842
Prepaid expenses and other                                      202,447          155,247
Total current assets                                            1,218,787        1,466,733
Drilling and other property and equipment, net of accumulated   4,402,130        3,414,373
depreciation
Other assets                                                    94,541           73,325
Total assets                                                  $ 5,715,458      $ 4,954,431
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities                                           $ 408,131        $ 509,087
Long-term debt                                                  998,603          503,280
Deferred tax liability                                          521,767          462,026
Other liabilities                                               154,175          118,553
Stockholders' equity                                            3,632,782        3,361,485
Total liabilities and stockholders' equity                    $ 5,715,458      $ 4,954,431

DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES
AVERAGE DAYRATES AND UTILIZATION
                            Third Quarter         Second Quarter        Third Quarter
                            2009                  2009                  2008
                            Dayrate  Utilization  Dayrate  Utilization  Dayrate  Utilization
                            (Dayrate in thousands)
High Specification Floaters $389     75%          $381     79%          $394     86%
Intermediate Semis          $278     84%          $286     93%          $288     79%
Jack-ups                    $117     65%          $146     63%          $112     89%

SOURCE: Diamond Offshore Drilling, Inc.

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