Diamond Offshore Drilling (DODRW) 10-Q 27 Oct 09 2009 Q3 Quarterly report Financial data

Document and Company Informatio

Document and Company Information (USD $)
	9 Months Ended Sep. 30, 2009	Oct. 23, 2009	Jun. 30, 2008
Document and Company Information [Abstract]
Entity Registrant Name	DIAMOND OFFSHORE DRILLING INC
Entity Central Index Key	0000949039
Document Type	10-Q
Document Period End Date	2009-09-30
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float			$9,584,683,667
Entity Common Stock, Shares Outstanding		139,010,857

Consolidated Balance Sheets (Un

Consolidated Balance Sheets (Unaudited) (USD $)
In Thousands	Sep. 30, 2009	Dec. 31, 2008
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 current assets	170,246	123,046
Assets held for sale	32,201	32,201
Total current assets	1,218,787	1,466,733
Drilling and other property and equipment, net of accumulated depreciation	4,402,130	3,414,373
Other assets	94,541	73,325
Total assets	5,715,458	4,954,431
Current liabilities:
Accounts payable	58,004	93,982
Accrued liabilities	298,238	329,526
Taxes payable	47,746	85,579
Current portion of long-term debt	4,143	0
Total 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
Total liabilities	2,082,676	1,592,946
Stockholders' equity:
Common stock (par value $0.01, 500,000,000 shares authorized, 143,926,385 shares issued and 139,009,585 shares outstanding at September 30, 2009 and 143,917,850 shares issued and 139,001,050 shares outstanding at December 31, 2008)	1,439	1,439
Additional paid-in capital	1,962,285	1,957,041
Retained earnings	1,779,697	1,516,908
Accumulated other comprehensive gain	3,774	510
Treasury stock, at cost (4,916,800 shares at September 30, 2009 and December 31, 2008)	(114,413)	(114,413)
Total stockholders' equity	3,632,782	3,361,485
Total liabilities and stockholders' equity	$5,715,458	$4,954,431

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) (Unaudited) (USD $)
	Sep. 30, 2009	Dec. 31, 2008
Stockholders' equity:
Common stock, par value	0.01	0.01
Common stock, shares authorized	500,000,000	500,000,000
Common stock, shares issued	143,926,385	143,917,850
Common stock, shares outstanding	139,009,585	139,001,050
Treasury stock, shares	4,916,800	4,916,800

Consolidated Statements of Oper

Consolidated Statements of Operations (Unaudited) (USD $)
In Thousands, except Per Share data	3 Months Ended Sep. 30, 2009	3 Months Ended Sep. 30, 2008	9 Months Ended Sep. 30, 2009	9 Months Ended Sep. 30, 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	0	6,281	0	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 (loss)	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

Consolidated Statements of Cash

Consolidated Statements of Cash Flows (Unaudited) (USD $)
In Thousands	9 Months Ended Sep. 30, 2009	9 Months Ended Sep. 30, 2008
Operating activities:
Net income	$1,100,155	$1,017,204
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	256,978	212,150
(Gain) on disposition of assets	(365)	(505)
Casualty loss	0	6,281
(Gain) on sale of marketable securities, net	(619)	(674)
(Gain) loss on foreign currency forward exchange contracts	(11,852)	7,920
Deferred tax provision	57,984	33,862
Accretion of discounts on marketable securities	(631)	(1,631)
Amortization/write-off of debt issuance costs	466	416
Amortization of debt discounts	211	181
Stock-based compensation expense	4,824	4,570
Excess tax benefits from stock-based payment arrangements	0	(1,392)
Deferred income, net	70,340	11,119
Deferred expenses, net	(21,195)	(21,842)
Other items, net	10,757	6,944
Proceeds from settlement of foreign currency forward exchange contracts designated as accounting hedges	3,046	0
Changes in operating assets and liabilities:
Accounts receivable	(198,131)	(184,300)
Prepaid expenses and other current assets	(15,524)	(17,085)
Accounts payable and accrued liabilities	(54,881)	(33,833)
Taxes payable	(65,131)	(60)
Net cash provided by operating activities	1,136,432	1,039,325
Investing activities:
Capital expenditures	(309,737)	(487,662)
Rig acquisitions	(950,024)	0
Proceeds from disposition of assets, net of disposal costs	1,391	2,802
Deposits received on sale of rig	6,000	0
Proceeds from sale and maturities of marketable securities	4,098,868	1,293,742
Purchases of marketable securities	(3,698,627)	(1,291,271)
(Cost of) proceeds from settlement of foreign currency forward exchange contracts not designated as accounting hedges	(28,772)	11,141
Net cash used in investing activities	(880,901)	(471,248)
Financing activities:
Issuance of 5.875% senior unsecured notes	499,255	0
Debt issuance costs and arrangement fees	(3,923)	0
Payment of dividends	(836,621)	(573,917)
Proceeds from stock plan exercises	527	2,002
Excess tax benefits from stock-based payment arrangements	0	1,392
Redemption of 1.5% debentures	0	(73)
Net cash used in financing activities	(340,762)	(570,596)
Net change in cash and cash equivalents	(85,231)	(2,519)
Cash and cash equivalents, beginning of period	336,052	637,961
Cash and cash equivalents, end of period	$250,821	$635,442

General Information

General Information
	9 Months Ended Sep. 30, 2009 USD / shares
General Information [Abstract]
General Information	1. General Information The unaudited consolidated financial statements of Diamond Offshore Drilling, Inc. and subsidiaries, which we refer to as Diamond Offshore, we, us or our, should be read in conjunction with our Annual Report on Form 10-K for the year ended December31, 2008 (File No. 1-13926). As of October23, 2009, Loews Corporation, or Loews, owned 50.4% of the outstanding shares of our common stock. Interim Financial Information The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the U.S., or GAAP, for interim financial information and with the instructions to Form 10-Q and Article10 of RegulationS-X of the Securities and Exchange Commission, or SEC. Accordingly, pursuant to such rules and regulations, they do not include all disclosures required by GAAP for complete financial statements. The consolidated financial information has not been audited but, in the opinion of management, includes all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of the consolidated balance sheets, statements of operations and statements of cash flows at the dates and for the periods indicated. Results of operations for interim periods are not necessarily indicative of results of operations for the respective full years. Our management has evaluated subsequent events through the time of our filing with the SEC on October27, 2009, the date on which we issued our financial statements. Accounting Standards Codification In June 2009, the Financial Accounting Standards Board, or FASB, issued Statement of Financial Accounting Standards No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles, or SFAS 168. SFAS 168 established the FASB Accounting Standards Codification, or FASB ASC, as the source of authoritative GAAP recognized by the FASB for non-governmental entities. All existing accounting standards have been superseded and accounting literature not included in the FASB ASC is considered non-authoritative. Subsequent issuances of new standards will be in the form of Accounting Standards Updates, or ASU, that will be included in the ASC. Generally, the FASB ASC is not expected to change GAAP. Pursuant to the adoption of SFAS 168 we have adjusted references to authoritative accounting literature in our financial statements. Adoption of FAS 168 had no effect our financial position, operating results or cash flows. Adoption of ASC 470-20 We adopted FASB ASC Topic 470-20, Debt with Conversion and Other Options, or ASC 470-20 (previously FASB Staff Position, or FSP, Accounting Principles Board No.14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash Upon Conversion (including Partial Cash Settlement)), on January 1, 2009. ASC 470-20 applies to convertible debt securities that may be settled by the issuer fully or partially in cash and requires that the statement be retrospectively applied to all past periods presented. For convertible debt securities falling within the scope of ASC 470-20, issuers must separate the sec

Earnings Per Share

Earnings Per Share
	9 Months Ended Sep. 30, 2009 USD / shares
Earnings Per Share [Abstract]
Earnings Per Share	2. Earnings Per Share A reconciliation of the numerators and the denominators of our basic and diluted per-share computations follows: Three Months Ended Nine Months Ended September 30, September 30, 2009 2008 2009 2008 (In thousands, except per share data) Net income basic (numerator): $ 364,134 $ 310,533 $ 1,100,155 $ 1,017,204 Effect of dilutive potential shares 1.5% Debentures 15 Zero Coupon Debentures 24 9 70 17 Net income including conversions diluted (numerator) $ 364,158 $ 310,542 $ 1,100,225 $ 1,017,236 Weighted average shares basic (denominator): 139,005 139,001 139,003 138,945 Effect of dilutive potential shares 1.5% Debentures 25 Zero Coupon Debentures 52 52 52 52 Stock options and SARs 46 38 28 54 Weighted average shares including conversions diluted (denominator) 139,103 139,091 139,083 139,076 Earnings per share: Basic $ 2.62 $ 2.23 $ 7.91 $ 7.32 Diluted $ 2.62 $ 2.23 $ 7.91 $ 7.31 Our computation of diluted earnings per share, or EPS, for the three months ended September30, 2009 excludes stock options representing 2,000 shares of common stock and 360,823 stock appreciation rights, or SARs. Our computation of EPS for the nine months ended September30, 2009 excludes stock options representing 11,086 shares of common stock and 430,575 SARs. The inclusion of such potentially dilutive shares in the computation of diluted EPS would have been antidilutive for the periods presented. Our computation of diluted EPS for the three and nine months ended September30, 2008 excludes 247,042 and 182,037 SARs, respectively. The inclusion of such potentially dilutive shares in the computation of diluted EPS would have been antidilutive for the periods presented.

Marketable Securities

Marketable Securities
	9 Months Ended Sep. 30, 2009 USD / shares
Marketable Securities [Abstract]
Marketable Securities	3. Marketable Securities We report our investments as current assets in our Consolidated Balance Sheets in Marketable securities, representing the investment of cash available for current operations. See Note 5. Our investments in marketable securities are classified as available for sale and are summarized as follows: September 30, 2009 Amortized Unrealized Market Cost Gain Value (In thousands) Mortgage-backed securities $ 816 $ 64 $ 880 December 31, 2008 Amortized Unrealized Market Cost Gain Value (In thousands) Due within one year $ 398,791 $ 758 $ 399,549 Mortgage-backed securities 1,016 27 1,043 Total $ 399,807 $ 785 $ 400,592 Proceeds from sales and maturities of marketable securities and gross realized gains and losses are summarized as follows: Three Months Ended Nine Months Ended September 30, September 30, 2009 2008 2009 2008 (In thousands) Proceeds from sales $ 100,039 $ 643,720 $ 2,548,868 $ 743,742 Proceeds from maturities 800,000 1,550,000 550,000 Gross realized gains 22 680 790 680 Gross realized losses (2 ) (3 ) (171 ) (6 )

Derivative Financial Instrument

Derivative Financial Instruments
	9 Months Ended Sep. 30, 2009 USD / shares
Derivative Financial Instruments [Abstract]
Derivative Financial Instruments	4. Derivative Financial Instruments Foreign Currency Forward Exchange Contracts Our international operations expose us to foreign exchange risk associated with our costs payable in foreign currencies for employee compensation, foreign income tax payments and purchases from foreign suppliers. We may utilize foreign currency forward exchange contracts to reduce our forward exchange risk. Our foreign currency forward exchange contracts may obligate us to exchange predetermined amounts of foreign currencies on specified dates or to net settle the spread between the contracted foreign currency exchange rate and the spot rate on the contract settlement date, which, for certain of our contracts, is the average spot rate for the contract period. We enter into foreign currency forward exchange contracts when we believe market conditions are favorable to purchase contracts for future settlement with the expectation that such contracts, when settled, will reduce our exposure to foreign currency gains/losses on foreign currency expenditures in the future. The amount and duration of such contracts is based on our monthly forecast of expenditures in the significant currencies in which we do business and for which there is a financial market (i.e., Australian dollars, Brazilian reais, British pounds sterling, Mexican pesos and Norwegian kroner). These forward contracts are derivatives as defined by ASC Topic 815, Derivatives and Hedging, or ASC 815 (previously Statement of Financial Accounting Standards, or SFAS, No.133, Accounting for Derivatives and Hedging Activities). ASC 815 requires that each derivative be stated in the balance sheet at its fair value with gains and losses reflected in the income statement except that, to the extent the derivative qualifies for hedge accounting, the gains and losses are reflected in income in the same period as offsetting losses and gains on the qualifying hedged positions. For derivative contracts entered into prior to May2009, we did not seek hedge accounting treatment under ASC 815. Accordingly, prior to May2009, all adjustments to record the carrying value of our derivative financial instruments at fair value were reported as Foreign currency transaction gain (loss) in our Consolidated Statements of Operations. Realized gains or losses upon settlement of the derivative contracts not designated as cash flow hedges are reported as Foreign currency transaction gain (loss) in our Consolidated Statements of Operations. Beginning in May2009, we began a hedging strategy and designated certain of our qualifying foreign currency forward exchange contracts as cash flow hedges pursuant to ASC 815. These hedges are expected to be highly effective, and therefore, adjustments to record the carrying value of the effective portion of our derivative financial instruments to their fair value is recorded as a component of Accumulated other comprehensive income, or AOCI, in our Consolidated Financial Statements. The effective portion of the cash flow hedge will remain in AOCI until it is reclassified into earnings in the period or periods during which the hedged transaction affects earnings or it is determined

Financial Instruments and Fair

Financial Instruments and Fair Value Disclosures
	9 Months Ended Sep. 30, 2009 USD / shares
Financial Instruments and Fair Value Disclosures [Abstract]
Financial Instruments and Fair Value Disclosures	5. Financial Instruments and Fair Value Disclosures Concentrations of Credit and Market Risk Financial instruments which potentially subject us to significant concentrations of credit or market risk consist primarily of periodic temporary investments of excess cash, trade accounts receivable and investments in debt securities, including mortgage-backed securities. We place our excess cash investments in high quality short-term money market instruments through several financial institutions. At times, such investments may be in excess of the insurable limit. We periodically evaluate the relative credit standing of these financial institutions as part of our investment strategy. Concentrations of credit risk with respect to our trade accounts receivable are limited primarily due to the entities comprising our customer base. Since the market for our services is the offshore oil and gas industry, this customer base consists primarily of major and independent oil and gas companies and government-owned oil companies. In general, before working for a customer with whom we have not had a prior business relationship and/or whose financial stability may appear uncertain to us, we perform a credit review on that company. Based on that analysis, we may require that the customer present a letter of credit, prepay or provide other credit enhancements. During the second quarter of 2009, one of our customers sought short-term financial relief with respect to an existing contractual agreement with us for a six-well, one-year minimum contract term, program that began in May2009. As a result, we agreed to amend our existing contract with this customer, and in consideration of this amendment, we are to receive a $20,000 per day increase in the total contractual operating dayrate, to a total of $560,000 per day, for a minimum of the first 240days of the initial one-year contract. Under the terms of the amended agreement, the customer is obligated to pay us $75,000 per day in accordance with our normal credit terms (due 30 days after receipt of invoice). The remainder of the dayrate for the six well program (minimum of 240days) will be paid through the conveyance of a 27% net profit interest, or NPI, in a minimum of five developmental oil-and-gas producing properties covering six wells owned by the customer. Based on the current production payout estimate, we anticipate that the first payment from the conveyance of the NPI will commence in early 2010. Payments of such amounts, and the timing of such payments, are contingent upon such production and upon energy sale prices. At September30, 2009, the $55.5million portion of this trade receivable that is expected to be paid from the NP, is presented as Accounts Receivable in our Consolidated Balance Sheets. In December2008, we recorded a $31.9million provision for bad debts to reserve the uncollected balance of one of our customers in the United Kingdom, or U.K., that has entered into administration (a U.K. insolvency proceeding similar to U.S. Chapter11 bankruptcy). We also provide allowances for potential credit losses when necessary. No additional allowances were deemed necessary for the per

Prepaid Expenses and Other Curr

Prepaid Expenses and Other Current Assets
	9 Months Ended Sep. 30, 2009 USD / shares
Prepaid Expenses and Other Current Assets [Abstract]
Prepaid Expenses and Other Current Assets	6. Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consist of the following: September 30, December 31, 2009 2008 (In thousands) Rig spare parts and supplies $ 50,285 $ 52,481 Deferred mobilization costs 31,632 28,924 Prepaid insurance 17,938 11,845 Deferred tax assets 9,350 9,350 Foreign currency forward exchange contracts 6,249 Deposits 4,369 3,846 Prepaid taxes 36,281 11,589 Other 14,142 5,011 Total $ 170,246 $ 123,046

Drilling and Other Property and

Drilling and Other Property and Equipment
	9 Months Ended Sep. 30, 2009 USD / shares
Drilling and Other Property and Equipment [Abstract]
Drilling and Other Property and Equipment	7. Drilling and Other Property and Equipment Cost and accumulated depreciation of drilling and other property and equipment are summarized as follows: September 30, December 31, 2009 2008 (In thousands) Drilling rigs and equipment $ 6,350,960 $ 5,600,306 Construction work-in-progress 490,024 Land and buildings 36,532 35,069 Office equipment and other 36,616 34,021 Cost 6,914,132 5,669,396 Less: accumulated depreciation (2,512,002 ) (2,255,023 ) Drilling and other property and equipment, net $ 4,402,130 $ 3,414,373 In June2009, we acquired the Ocean Courage, a newbuild, dynamically positioned, semisubmersible drilling rig, for $460.0million, exclusive of final commissioning and initial mobilization costs, drill string and other necessary capital spares. On September29, 2009, we acquired from PetroRig II Pte Ltd the construction contract to purchase from Jurong Shipyard Pte Ltd, or Jurong Shipyard, a newbuild, 7,500 foot, dynamically positioned, semisubmersible drilling rig. We funded the final payment to Jurong Shipyard on September30, 2009, and the purchase of the rig was completed on October1, 2009 in Singapore. The aggregate amount of the consideration paid to acquire the construction contract and the final payment to Jurong Shipyard under the construction contract was approximately $490.0million and has been presented in the table above as construction work-in-progress. The rig has been renamed the Ocean Valor.

Accrued Liabilities

Accrued Liabilities
	9 Months Ended Sep. 30, 2009 USD / shares
Accrued Liabilities [Abstract]
Accrued Liabilities	8. Accrued Liabilities Accrued liabilities consist of the following: September 30, December 31, 2009 2008 (In thousands) Accrued maintenance/capital projects $ 87,837 $ 106,135 Payroll and benefits 70,466 69,326 Deferred revenue 70,020 39,307 Rig operating expenses 24,664 30,056 Interest payable 16,115 10,385 Personal injury and other claims 9,988 10,489 Foreign currency forward exchange contracts 229 37,301 Hurricane related expenses 5,080 Other 18,919 21,447 Total $ 298,238 $ 329,526

Long Term Debt

Long Term Debt
	9 Months Ended Sep. 30, 2009 USD / shares
Long-Term Debt [Abstract]
Long-Term Debt	9. Long-Term Debt Long-term debt consists of the following: September 30, December 31, 2009 2008 (In thousands) Zero Coupon Debentures (due 2020) $ 4,143 $ 4,036 5.15% Senior Notes (due 2014) 249,667 249,623 4.875% Senior Notes (due 2015) 249,658 249,621 5.875% Senior Notes (due 2019) 499,278 1,002,746 503,280 Less: Current maturities 4,143 Total $ 998,603 $ 503,280 At September30, 2009, there was $6.0million aggregate principal amount at maturity, or $4.1million accreted, or carrying, value, of our Zero Coupon Debentures outstanding. On October8, 2009, we issued $500.0million aggregate principal amount of senior unsecured notes. See Note 13. 5.875% Senior Notes On May4, 2009, we issued $500.0million aggregate principal amount of our 5.875% Senior Notes due May1, 2019, or 5.875% Senior Notes, for general corporate purposes. The 5.875% Senior Notes were issued at an offering price of 99.851% of the principal and resulted in net proceeds to us of approximately $495.3million. The notes bear interest at 5.875% per year, payable semiannually in arrears on May 1 and November 1 of each year, beginning November1, 2009, and mature on May1, 2019. The 5.875% Senior Notes are unsecured and unsubordinated obligations of Diamond Offshore Drilling, Inc., or DODI, and rank equal in right of payment to existing and future unsecured and unsubordinated indebtedness of DODI. We have the right to redeem all or a portion of these notes for cash at any time or from time to time, on at least 15days but not more than 60days prior written notice, at the redemption price specified in the governing indenture plus accrued and unpaid interest to the date of redemption. As reflected in the table below, the holders of our outstanding Zero Coupon Debentures have the right to require us to purchase all or a portion of their outstanding debentures on June6, 2010. The aggregate maturities of long-term debt for each of the five years subsequent to September30, 2009 are as follows: (In thousands) 2010 $ 4,143 2011 2012 2013 2014 249,667 Thereafter 748,936 1,002,746 Less: Current maturities (4,143 ) Total $ 998,603

Commitments and Contingencies

Commitments and Contingencies
	9 Months Ended Sep. 30, 2009 USD / shares
Commitments and Contingencies [Abstract]
Commitments and Contingencies	10. Commitments and Contingencies Various claims have been filed against us in the ordinary course of business, including claims by offshore workers alleging personal injuries. In accordance with SFAS No.5, Accounting for Contingencies, or SFAS 5, we have assessed each claim or exposure to determine the likelihood that the resolution of the matter might ultimately result in an adverse effect on our financial condition, results of operations and cash flows. When we determine that an unfavorable resolution of a matter is probable and such amount of loss can be determined, we record a reserve for the estimated loss at the time that both of these criteria are met. Our management believes that we have established adequate reserves for any liabilities that may reasonably be expected to result from these claims. Litigation. During the second quarter of 2009, the U.S. District Court ruled in our favor and dismissed a lawsuit filed in January2005 by Total EP USA, Inc. and several oil companies against us alleging that our semisubmersible rig, the Ocean America, damaged a natural gas pipeline in the Gulf of Mexico during Hurricane Ivan. The plaintiffs have appealed the judgment. We are one of several unrelated defendants in lawsuits filed in the Circuit Courts of the State of Mississippi alleging that defendants manufactured, distributed or utilized drilling mud containing asbestos and, in our case, allowed such drilling mud to have been utilized aboard our offshore drilling rigs. The plaintiffs seek, among other things, an award of unspecified compensatory and punitive damages. We expect to receive complete defense and indemnity from Murphy Exploration Production Company pursuant to the terms of our 1992 asset purchase agreement with them. We are unable to estimate our potential exposure, if any, to these lawsuits at this time but do not believe that ultimate liability, if any, resulting from this litigation will have a material adverse effect on our financial condition, results of operations and cash flows. Various other claims have been filed against us in the ordinary course of business. In the opinion of our management, no pending or known threatened claims, actions or proceedings against us are expected to have a material adverse effect on our consolidated financial position, results of operations and cash flows. Personal Injury Claims. Our deductible for liability insurance coverage for personal injury claims, which primarily result from Jones Act liability in the Gulf of Mexico, is $5.0million per occurrence, with no aggregate deductible. The Jones Act is a federal law that permits seamen to seek compensation for certain injuries during the course of their employment on a vessel and governs the liability of vessel operators and marine employers for the work-related injury or death of an employee. We engage experts to assist us in estimating our aggregate reserve for personal injury claims based on our historical losses and utilizing various actuarial models. At September 30, 2009, our estimated liability for personal injury claims was $32.7million, of which $9.4 million and $23.3million were recorded in Accrued liabilities

Segments and Geographic Area An

Segments and Geographic Area Analysis
	9 Months Ended Sep. 30, 2009 USD / shares
Segments and Geographic Area Analysis [Abstract]
Segments and Geographic Area Analysis	11. Segments and Geographic Area Analysis Although we provide contract drilling services with different types of offshore drilling rigs and also provide such services in many geographic locations, we have aggregated these operations into one reportable segment based on the similarity of economic characteristics among all divisions and locations, including the nature of services provided and the type of customers of such services, in accordance with FASB ASC Topic 280, Segment Reporting (previously SFAS No.131, Disclosures about Segments of an Enterprise and Related Information). Revenues from contract drilling services by equipment-type are listed below: Three Months Ended Nine Months Ended September 30, September 30, 2009 2008 2009 2008 (In thousands) High Specification Floaters $ 353,318 $ 344,024 $ 999,979 $ 979,313 Intermediate Semisubmersibles 421,145 401,891 1,303,907 1,239,711 Jack-ups 110,818 136,038 360,561 369,895 Total contract drilling revenues 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 Geographic Areas At September30, 2009, our drilling rigs were located offshore thirteen countries in addition to the United States. As a result, we are exposed to the risk of changes in social, political and economic conditions inherent in international operations and our results of operations and the value of our international assets are affected by fluctuations in foreign currency exchange rates. Revenues by geographic area are presented by attributing revenues to the individual country or areas where the services were performed. Three Months Ended Nine Months Ended September 30, September 30, 2009 2008 2009 2008 (In thousands) United States $ 285,665 $ 369,410 $ 975,844 $ 1,088,971 International: Australia/Asia/Middle East 169,910 166,741 543,368 476,349 Europe/Africa/Mediterranean 179,588 131,999 490,390 386,767 South America 191,044 150,711 488,454 436,315 Mexico 82,168 81,515 242,446 252,448 Total revenues $ 908,375 $ 900,376 $ 2,740,502 $ 2,640,850

Income Taxes

Income Taxes
	9 Months Ended Sep. 30, 2009 USD / shares
Income Taxes [Abstract]
Income Taxes	12. Income Taxes Our income tax expense is a function of the mix between our domestic and international pre-tax earnings or losses, as well as the mix of international tax jurisdictions in which we operate. Certain of our international rigs are owned and operated, directly or indirectly, by Diamond Offshore International Limited, or DOIL, a Cayman Islands subsidiary which we wholly own. It is our intention to indefinitely reinvest future earnings of DOIL to finance foreign activities except to the extent that such earnings were immediately subject to U.S. federal income taxes and except for the earnings of Diamond East Asia Limited, or DEAL, a wholly-owned subsidiary of DOIL formed in December2008. Accordingly, U.S. income taxes have been provided on the earnings of DEAL. During the three months ended September30, 2009 we reached an agreement with the Internal Revenue Service to settle the audits of the tax years 2004 through 2006 for total additional income tax expense of $55,000. Return to provision adjustments made during the three months ended September30, 2009 that were associated with the filing of our 2008 tax returns in various jurisdictions resulted in additional tax expense of $11.0million. On March31, 2009, the statute of limitations relative to a 2003 uncertain tax position in Mexico expired. As a consequence we reversed $5.5million of previously accrued interest expense and $5.9million of previously accrued tax expense, $0.8million of which had been accrued for penalties.

Subsequent Event

Subsequent Event
	9 Months Ended Sep. 30, 2009 USD / shares
Subsequent Event [Abstract]
Subsequent Event	13. Subsequent Event On October8, 2009, we issued $500.0million aggregate principal amount of our 5.70% Senior Notes due 2039 for general corporate purposes. The notes were issued at an offering price of 99.344% of the principal and resulted in net proceeds to us of approximately $491.9million, exclusive of accrued issuance costs. The notes are unsecured and bear interest at 5.70% per year, payable semiannually in arrears on April15 and October15, and mature on October15, 2039.