Diamond Offshore Drilling (DODRW) 8-K Diamond Offshore Drilling, Inc. Announces Second Quarter 2010 Results

Exhibit 99.1
 

FOR IMMEDIATE RELEASE	CONTACT: Les Van Dyke
	Director, Investor Relations
	(281) 492-5370

DIAMOND OFFSHORE DRILLING, INC. ANNOUNCES
SECOND QUARTER 2010 RESULTS

Houston, Texas, July 22, 2010 — Diamond Offshore Drilling, Inc. (NYSE:DO) today reported net income for the second quarter of 2010 of $224.4 million, or $1.61 per share on a diluted basis, compared with net income of $387.4 million, or $2.79 per share on a diluted basis, in the same period a year earlier. Revenues in the second quarter of 2010 were $822.6 million, compared with revenues of $946.4 million for the second quarter of 2009.

For the six months ended June 30, 2010, the Company reported net income of $515.2 million, or $3.70 per share on a diluted basis, compared with net income of $736.0 million, or $5.29 per share on a diluted basis, for the same period in 2009. Revenue for the six months ended June 30, 2010 was $1.7 billion, compared with $1.8 billion for the first six months of 2009.

Larry Dickerson, President and CEO, stated, “The decline in renewal contract dayrates from peak levels is continuing to impact our results. In a related statement today, we announced a special quarterly dividend of $.75 per share, representing a reduction of $.625 per share from the previous special dividend, as well as our regular quarterly dividend of $.125 per share. The reduction in the special dividend reflects the lower revenue stream and the continuing uncertainty surrounding a drilling moratorium in the Gulf of Mexico. We believe that given the current and anticipated industry conditions, it is increasingly prudent at this time to retain cash to maintain the Company’s financial strength and strategic flexibility, as well as to position us for potential rig acquisition opportunities. We believe that our special dividend policy is an important part of our efforts to enhance shareholder value.”

Any decision by the Board to declare a special dividend, as well as the amount of any special dividend that may be declared, will be based on the Company’s financial position, earnings, earnings outlook, capital spending plans, and other relevant factors at that time.

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 atwww.diamondoffshore.com.

As previously announced, Diamond Offshore will provide a simulcast and rebroadcast of its second quarter 2010 earnings release conference call. The live broadcast of our quarterly conference call will be available online atwww.diamondoffshore.com on July

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22, 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 websitewww.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.

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

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2010			2009			2010			2009
Revenues:
Contract drilling	$	811,739		$	923,458		$	1,656,177		$	1,779,166
Revenues related to reimbursable expenses		10,864			22,949			26,107			52,961
Total revenues		822,603			946,407			1,682,284			1,832,127
Operating expenses:
Contract drilling		348,971			304,853			654,098			602,600
Reimbursable expenses		10,379			22,431			25,084			52,146
Depreciation		100,746			85,431			198,148			170,493
General and administrative		16,849			16,166			33,503			32,481
Gain on disposition of assets		(149	)		(93	)		(1,033	)		(148	)
Total operating expenses		476,796			428,788			909,800			857,572
Operating income		345,807			517,619			772,484			974,555
Other income (expense):
Interest income		477			1,190			1,759			1,766
Interest expense		(21,333	)		(11,288	)		(43,654	)		(12,405	)
Foreign currency transaction gain (loss)		(3,991	)		13,733			(3,530	)		9,608
Other, net		(34	)		(416	)		(121	)		651
Income before income tax expense		320,926			520,838			726,938			974,175
Income tax expense		(96,533	)		(133,398	)		(211,692	)		(238,154	)
Net Income	$	224,393		$	387,440		$	515,246		$	736,021
Income per share:
Basic	$	1.61		$	2.79		$	3.71		$	5.30
Diluted	$	1.61		$	2.79		$	3.70		$	5.29
Weighted average shares outstanding:
Shares of common stock		139,026			139,002			139,026			139,001
Dilutive potential shares of common stock		53			79			78			72
Total weighted average shares outstanding		139,079			139,081			139,104			139,073

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

	Three Months Ended
	June 30,
	2010			2009
REVENUES
High Specification Floaters	$	340,387		$	334,527
Intermediate Semisubmersibles		389,094			465,762
Jack-ups		82,223			123,169
Other		35			—
Total Contract Drilling Revenue	$	811,739		$	923,458
Revenues Related to Reimbursable Expenses	$	10,864		$	22,949
CONTRACT DRILLING EXPENSE
High Specification Floaters	$	134,500		$	98,991
Intermediate Semisubmersibles		157,446			132,696
Jack-ups		48,919			66,233
Other		8,106			6,933
Total Contract Drilling Expense	$	348,971		$	304,853
Reimbursable Expenses	$	10,379		$	22,431
OPERATING INCOME
High Specification Floaters	$	205,887		$	235,536
Intermediate Semisubmersibles		231,648			333,066
Jack-ups		33,304			56,936
Other		(8,071	)		(6,933	)
Reimbursable expenses, net		485			518
Depreciation		(100,746	)		(85,431	)
General and administrative expense		(16,849	)		(16,166	)
Gain on disposition of assets		149			93
Total Operating Income	$	345,807		$	517,619

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DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

	June 30,		December 31,
	2010		2009
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	525,119	$	376,417
Marketable securities		250,691		400,853
Accounts receivable, net of provision for bad debts		636,572		791,023
Prepaid expenses and other		170,819		155,077
Asset held for sale		152,280		—
Total current assets		1,735,481		1,723,370
Drilling and other property and equipment, net of accumulated depreciation		4,299,215		4,432,052
Long-term receivable		57,254		—
Other assets		423,015		108,839
Total assets	$	6,514,965	$	6,264,261
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities		584,583		413,475
Long-term debt		1,495,483		1,495,375
Deferred tax liability		555,786		546,024
Other liabilities		222,239		178,745
Stockholders’ equity		3,656,874		3,630,642
Total liabilities and stockholders’ equity	$	6,514,965	$	6,264,261

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

						First Quarter
	Second Quarter					2010					Second Quarter
	2010					Dayrate		Utilization			2009
	Dayrate		Utilization			(Dayrate in thousands)					Dayrate		Utilization
High Specification Floaters	$	373		69	%	$	400		79	%	$	381		79	%
Intermediate Semis	$	269		82	%	$	276		78	%	$	286		93	%
Jack-ups	$	85		76	%	$	100		63	%	$	146		63	%

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