Diamond Offshore Drilling (DODRW) 8-K Diamond Offshore Drilling, Inc. Announces Second-quarter/first-half 2006 Results

Exhibit 99.1

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

DIAMOND OFFSHORE DRILLING, INC. ANNOUNCES
SECOND-QUARTER/FIRST-HALF 2006 RESULTS

Houston, Texas, July 26, 2006 — Diamond Offshore Drilling, Inc. (NYSE:DO) today reported net income for the second quarter of 2006 of $175.7 million, or $1.27 per share on a diluted basis, compared with net income of $41.3 million, or $0.31 per share on a diluted basis, in the same period a year earlier. Revenues for the second quarter of 2006 were $512.2 million, compared with revenues of $283.4 million for the second quarter of 2005.

For the six months ended June 30, 2006, the Company reported net income of $321.0 million, or $2.33 per share on a diluted basis, compared with net income of $71.4 million, or $0.53 per share on a diluted basis, for the same period in 2005. Revenue for the six months ended June 30, 2006 was $959.9 million, compared to $542.2 million for the first six months of 2005.

The improvement in operating results reflects continuing record-high average dayrates and rig utilization for the Company’s entire fleet. Currently, approximately 95% of our fleet’s available days are contracted or committed through the end of 2006, and about 67% of our fleet’s available days are contracted or committed through the end of 2007.

Diamond Offshore provides contract drilling services to the energy industry around the globe and is a leader in deepwater drilling. Commitments represent Letters of Intent that are subject to customary conditions, including the execution of a definitive agreement.

As previously announced, Diamond Offshore will provide a simulcast and rebroadcast of its second-quarter/first-half 2006 earnings release conference call. The live broadcast of our quarterly conference call will be available online atwww.diamondoffshore.com on July 26, 2006, beginning at 9:00 a.m. Central Daylight Savings Time. The online replay will follow immediately and continue for the remainder of the third 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 may 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 may include, but are not limited to, statements concerning existing contracts, commitments and backlog, fleet enhancements, access to new markets, future earnings, future cash flows, market conditions, future market improvements, future growth in demand for equipment types or in any region 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

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anticipated or projected, including, among others, the risk that full rig utilization may not be achieved during a contract period, the risk that the fleet’s available days may be reduced by unscheduled downtime, the risk that factors outside of the Company’s control may adversely impact the amount of profit realized from a contract, the risk that the markets for the Company’s services will not continue to improve, the risk that the Company’s market position may deteriorate, or the risk that the Company may not be able to participate fully in any future market improvements. 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						Six Months Ended
	June 30,						June 30,
	2006			2005			2006			2005
Revenues:
Contract drilling	$	498,390		$	272,665		$	933,043		$	522,687
Revenues related to reimbursable expenses		13,798			10,734			26,875			19,470
Total revenues		512,188			283,399			959,918			542,157
Operating expenses:
Contract drilling		200,182			162,489			374,388			310,703
Reimbursable expenses		11,810			9,099			23,101			16,434
Depreciation		49,519			45,978			99,101			91,450
General and administrative		9,886			9,186			19,827			18,659
Loss (gain) on sale of assets		2,696			(8,250	)		2,463			(7,992	)
Total operating expenses		274,093			218,502			518,880			429,254
Operating income		238,095			64,897			441,038			112,903
Other income (expense):
Interest income		8,431			6,128			16,806			11,896
Interest expense		(5,744	)		(15,756	)		(12,550	)		(25,323	)
(Loss) gain on sale of marketable securities		(8	)		77			(202	)		(1,197	)
Other, net		1,393			445			3,766			870
Income before income tax expense		242,167			55,791			448,858			99,149
Income tax expense		(66,446	)		(14,509	)		(127,816	)		(27,749	)
Net income	$	175,721		$	41,282		$	321,042		$	71,400
Income per share:
Basic	$	1.36		$	0.32		$	2.49		$	0.56
Diluted	$	1.27		$	0.31		$	2.33		$	0.53
Weighted average shares outstanding:
Shares of common stock		129,131			128,590			129,079			128,582
Dilutive potential shares of common stock		9,651			9,544			9,678			9,550
Total weighted average shares outstanding		138,782			138,134			138,757			138,132

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

	Three Months Ended
	June 30,
	2006			2005
REVENUES
High Specification Floaters	$	189,003		$	97,579
Intermediate Semisubmersibles		198,738			112,359
Jack-ups		110,649			63,160
Other		—			(433	)
Total Contract Drilling Revenue	$	498,390		$	272,665
Revenues Related to Reimbursable Expenses	$	13,798		$	10,734
CONTRACT DRILLING EXPENSE
High Specification Floaters	$	62,051		$	46,011
Intermediate Semisubmersibles		95,465			80,873
Jack-ups		39,872			32,751
Other		2,794			2,854
Total Contract Drilling Expense	$	200,182		$	162,489
Reimbursable Expenses	$	11,810		$	9,099
OPERATING INCOME
High Specification Floaters	$	126,952		$	51,568
Intermediate Semisubmersibles		103,273			31,486
Jack-ups		70,777			30,409
Other		(2,794	)		(3,287	)
Reimbursable Expenses, net		1,988			1,635
Depreciation		(49,519	)		(45,978	)
General and Administrative Expense		(9,886	)		(9,186	)
(Loss) Gain on Sale of Assets		(2,696	)		8,250
Total Operating Income	$	238,095		$	64,897

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

	June 30,		December 31,
	2006		2005
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	643,916	$	842,590
Marketable securities		2,040		2,281
Accounts receivable		462,239		357,104
Rig inventory and supplies		47,517		47,196
Prepaid expenses and other		69,242		32,707
Total current assets		1,224,954		1,281,878
Drilling and other property and equipment, net of accumulated depreciation		2,459,728		2,302,020
Other assets		22,286		23,024
Total assets	$	3,706,968	$	3,606,922
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities	$	256,565	$	268,986
Long-term debt		965,718		977,654
Deferred tax liability		451,263		445,094
Other liabilities		67,691		61,861
Stockholders’ equity		1,965,731		1,853,327
Total liabilities and stockholders’ equity	$	3,706,968	$	3,606,922

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DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES

AVERAGE DAYRATES AND UTILIZATION

	Second Quarter					First Quarter					Second Quarter
	2006					2006					2005
	Dayrate		Utilization			Dayrate		Utilization			Dayrate		Utilization
	(Dayrate in thousands)
High Specification Floaters	$	219		94	%	$	189		96	%	$	122		88	%
Intermediate Semisubmersibles	$	119		96	%	$	104		98	%	$	73		87	%
Jack-ups	$	103		89	%	$	85		96	%	$	52		92	%

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