Diamond Offshore Drilling 8K Announces Third Quarter 2005 Results | DODRW 26 Oct 05

Exhibit 99.1


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

DIAMOND OFFSHORE DRILLING, INC. ANNOUNCES
THIRD QUARTER 2005 RESULTS

Houston, Texas, October 26, 2005 — Diamond Offshore Drilling, Inc. (NYSE:DO) today reported net income of $82.0 million, or $0.60 per share on a diluted basis, for the third quarter of 2005, compared to net income of $2.9 million, or $0.02 per share on a diluted basis, in the same period a year earlier. Revenue for the third quarter of 2005 was $310.5 million, compared to revenue of $208.2 million for the third quarter of 2004.

For the nine months ended September 30, 2005, the Company reported net income of $153.4 million, or $1.14 per share on a diluted basis, compared to a net loss of $18.5 million, or $0.14 per share on a diluted basis for the same period in 2004. Revenue for the nine months ended September 30, 2005 was $852.7 million, compared to $577.3 million for the first nine months of 2004.

Results for the third quarter of 2005 reflect the impact of hurricanesKatrinaandRita.The Company recorded a third quarter after-tax gain of $21.8 million, or $0.16 per diluted share, related to insurance proceeds from the previously reported casualty loss of the 300-ft. jack-upOcean Warwick.Other damage to the fleet resulted in hurricane related after-tax costs of $2.6 million, or $0.02 per diluted share, which were reported within operating expenses. Exclusive of theWarwick, the Company experienced a total of 41.5 days of contractual downtime in the third quarter directly related to the two hurricanes and expects to experience approximately an additional 110 days of contractual downtime in the fourth quarter of 2005 for storm related repairs. At this time, all of the damaged rigs have returned to work at their drilling locations, with the exception of theOcean Star,which is expected to return to service in mid November. In addition, reactivation of theOcean New Erahas been delayed by approximately three weeks until mid December.

Larry Dickerson, President and Chief Operating Officer, said, “We are happy to report that all of our employees have been accounted for in the aftermath of the storms and feel fortunate to have suffered relatively minor damage to our fleet, with the exception of theWarwick. In addition, exclusive of the impacts of the two hurricanes, we are pleased with our improved operating results for the third quarter, which are indicative of the rising dayrates and continuing strength of the worldwide offshore drilling market. We remain confident in our market position, and believe that our current exposure to the increasingly under-supplied jack-up sector in the Gulf of Mexico, as well as to the global semisubmersible market in late 2006 and in 2007, will allow the Company to participate in any future market improvements.”

Diamond Offshore provides contract drilling services to the energy industry around the globe and is a leader in deepwater drilling.

As previously announced, Diamond Offshore will provide a simulcast and rebroadcast of its third quarter 2005 earnings release conference call. The live broadcast of the Diamond Offshore Drilling, Inc. quarterly conference call will be available online at www.diamondoffshore.com on October 26, 2005, beginning at 9:00 a.m. Central Time. The online replay will follow immediately and continue for the remainder of the fourth 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 in this press release contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements include, but are not limited to, statements concerning commitments for drilling work or contracts, future dayrates, future contract revenues, the term and start date of future contracts, entry into definitive agreements, consummation of awarded contracts, satisfaction of conditions precedent, future growth in demand for equipment types or in any region, future cash flows, and future contracts. Such statements are inherently subject to a variety of risks and uncertainties that could cause actual results to differ materially from those anticipated or projected, including, among others, the risk that a rig may not return to service within the timeframe anticipated for repair, the risk that a notification of contract award, letter of intent, or verbal contract commitment may not result in a binding contract, the risk that a binding contract could be terminated, the risk that the markets for the Company’s services will not continue to improve, the risk that full rig utilization may not be achieved during a contract period, or the risk that factors outside of the Company’s control may adversely impact the amount of profit realized from a contract. A discussion of additional risk factors that could impact these areas and the Company’s overall business and financial performance can be found in the Company’s reports and other filings with the Securities and Exchange Commission. These factors include, among others, general economic and business conditions, casualty losses, industry fleet capacity, changes in foreign and domestic oil and gas exploration and production activity, competition, changes in foreign, political, social and economic conditions, regulatory initiatives and compliance with governmental regulations, customer preferences and various other matters, many of which are beyond the Company’s control. Given these concerns, investors and analysts should not place undue reliance on forward-looking statements. Each forward-looking statement speaks 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						Nine Months Ended
	September 30,						September 30,
	2005			2004			2005			2004
Revenues:
Contract drilling	$	300,535		$	200,610		$	823,222		$	554,535
Revenues related to reimbursable expenses		9,987			7,588			29,457			22,807

Total revenues		310,522			208,198			852,679			577,342


Operating expenses:
Contract drilling		160,537			140,607			471,240			408,768
Reimbursable expenses		8,350			6,620			24,784			20,373
Depreciation		46,494			45,043			137,944			134,117
General and administrative		8,928			6,728			27,587			24,277
(Gain) loss on sale of assets		(761	)		1,536			(8,753	)		1,341
Casualty gain on Ocean Warwick		(33,605	)		—			(33,605	)		—

Total operating expenses		189,943			200,534			619,197			588,876


Operating income (loss)		120,579			7,664			233,482			(11,534	)

Other income (expense):
Interest income		6,078			2,899			17,974			7,581
Interest expense		(8,341	)		(7,657	)		(33,664	)		(20,384	)
Gain (loss) on sale of marketable securities		(12	)		(27	)		(1,209	)		231
Other, net		1,115			78			1,985			(333	)


Income (loss) before income tax (expense) benefit		119,419			2,957			218,568			(24,439	)

Income tax (expense) benefit		(37,380	)		(16	)		(65,129	)		5,913


Net Income (loss)	$	82,039		$	2,941		$	153,439		$	(18,526	)


Income (loss) per share:
Basic	$	0.64		$	0.02		$	1.19		$	(0.14	)

Diluted	$	0.60		$	0.02		$	1.14		$	(0.14	)


Weighted average shares outstanding:
Shares of common stock		128,748			128,899			128,638			129,180
Dilutive potential shares of common stock		9,819			42			9,551			—

Total weighted average shares outstanding		138,567			128,941			138,189			129,180

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


	Three Months Ended
	September 30,
	2005			2004
CONTRACT DRILLING REVENUE
High Specification Floaters	$	113,133		$	75,502
Other Semisubmersibles		118,293			79,357
Jack-ups		68,971			45,268
Other		138			483

Total Contract Drilling Revenue	$	300,535		$	200,610


Revenues Related to Reimbursable Expenses	$	9,987		$	7,588

CONTRACT DRILLING EXPENSE
High Specification Floaters	$	44,747		$	43,697
Other Semisubmersibles		82,888			62,185
Jack-ups		29,930			34,354
Other		2,972			371

Total Contract Drilling Expense	$	160,537		$	140,607


Reimbursable Expenses	$	8,350		$	6,620

OPERATING INCOME (LOSS)
High Specification Floaters	$	68,386		$	31,805
Other Semisubmersibles		35,405			17,172
Jack-ups		39,041			10,914
Other		(2,834	)		112
Reimbursable expenses, net		1,637			968
Depreciation		(46,494	)		(45,043	)
General and administrative expense		(8,928	)		(6,728	)
Gain (loss) on sale of assets		761			(1,536	)
Casualty gain onOcean Warwick		33,605			—

Total Operating Income	$	120,579		$	7,664

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


	September 30,		December 31,
	2005		2004
	(Unaudited)
ASSETS

Current assets:
Cash and cash equivalents	$	486,710	$	266,007
Investments and marketable securities		302,414		661,849
Accounts receivable		303,484		187,558
Rig inventory and supplies		47,733		47,590
Prepaid expenses and other		34,430		32,677

Total current assets		1,174,771		1,195,681
Drilling and other property and equipment, net of Accumulated depreciation		2,204,523		2,154,593
Other assets		24,285		29,112

Total assets	$	3,403,579	$	3,379,386


LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:
Current portion of long-term debt	$	12,818	$	484,102
Other current liabilities		168,695		129,805

Total current liabilities		181,513		613,907
Long-term debt:
4.875% Senior Notes Due 2015		249,475		—
Other long-term debt		727,995		709,413

Total long-term debt		977,470		709,413
Deferred tax liability		423,959		369,722
Other liabilities		66,321		60,516
Stockholders’ equity		1,754,316		1,625,828

Total liabilities and stockholders’ equity	$	3,403,579	$	3,379,386

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


	Third Quarter					Second Quarter					Third Quarter
	2005					2005					2004
	Dayrate		Utilization			Dayrate		Utilization			Dayrate		Utilization
						(Dayrate in thousands)
High Specification Floaters	$	148		85	%	$	122		88	%	$	92		89	%
Other Semisubmersibles	$	77		86	%	$	73		87	%	$	55		75	%
Jack-ups	$	58		94	%	$	52		92	%	$	40		89	%

Diamond Offshore Drilling (DODRW) 8-KDiamond Offshore Drilling, Inc. Announces Third Quarter 2005 Results