Diamond Offshore Drilling (DODRW) 8-K Results of Operations and Financial Condition

Exhibit 99.1

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

DIAMOND OFFSHORE DRILLING, INC. ANNOUNCES
THIRD QUARTER 2008 RESULTS;
ALSO REPORTS NEW DEEPWATER CONTRACT

Houston, Texas, October 23, 2008 — Diamond Offshore Drilling, Inc. (NYSE:DO) today reported net income for the third quarter of 2008 of $310.7 million, or $2.23 per share on a diluted basis, compared with net income of $205.5 million, or $1.48 per share on a diluted basis, in the same period a year earlier. Revenue in the third quarter of 2008 was $900.0 million, compared with revenue of $644.0 million for the third quarter of 2007. Net income for the third quarter of 2008 was adversely impacted by $25.1 million related to losses on foreign currency forward exchange contracts primarily resulting from mark-to-market accounting and from a casualty loss of $6.3 million related to damages sustained from Hurricane Ike, primarily to the jack-up rigOcean Tower.

For the nine months ended September 30, 2008, the Company reported net income of $1,017.6 million, or $7.32 per share on a diluted basis, compared with net income of $681.6 million, or $4.93 per share on a diluted basis, for the same period in 2007. Revenue for the nine months ended September 30, 2008 was $2.6 billion, compared with $1.9 billion for the first nine months of 2007.

The Company also announced that it has signed a two-year contract with Total E&P Angola in Angola for the 4^th generation semisubmersibleOcean Valiantthat could earn maximum revenue, excluding mobilization fees, totaling approximately $452 million. The contract is convertible into either a 2-1/2 year or a three-year agreement at the option of the operator at dayrates that could earn maximum total revenue, excluding mobilization fees, totaling between $552 million and $646 million.

Diamond Offshore provides contract drilling services to the energy industry and is a leader in deepwater drilling. Maximum contract revenue as stated above assumes 100% rig utilization. Generally, rig utilization rates approach 95-98% during contracted periods; however, utilization rates can be adversely impacted by additional downtime due to unscheduled repairs, maintenance and weather, among other things. Additional information on Diamond Offshore Drilling, Inc. 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 2008 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 23, 2008, 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 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 future earnings, future cash flows, market conditions, conversion or extension of the Total E&P Angola contract, and future contract revenue. 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 dayrates for new contracts could decline materially; the risk that the pace of new contract signings could slow significantly; the risk that a contract could be canceled or renegotiated; 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 these and other 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,
	2008			2007			2008			2007
Revenues:
Contract drilling	$	881,953		$	628,246		$	2,588,919		$	1,854,085
Revenues related to reimbursable expenses		18,423			15,716			51,931			46,936
Total revenues		900,376			643,962			2,640,850			1,901,021
Operating expenses:
Contract drilling		314,273			280,226			872,716			714,624
Reimbursable expenses		18,126			15,458			50,660			45,435
Depreciation		72,014			57,565			211,725			171,605
General and administrative		13,944			13,105			45,434			37,245
Casualty loss		6,281			—			6,281			—
Gain on disposition of assets		(228	)		(363	)		(505	)		(5,418	)
Total operating expenses		424,410			365,991			1,186,311			963,491
Operating income		475,966			277,971			1,454,539			937,530
Other income (expense):
Interest income		3,055			8,735			10,369			26,127
Interest expense		(2,989	)		(2,334	)		(6,226	)		(16,959	)
Gain on sale of marketable securities		677			1,763			674			1,755
Other, net		(29,143	)		2,112			(14,947	)		2,517
Income before income tax expense		447,566			288,247			1,444,409			950,970
Income tax expense		(136,916	)		(82,724	)		(426,851	)		(269,370	)
Net Income	$	310,650		$	205,523		$	1,017,558		$	681,600
Income per share:
Basic	$	2.23		$	1.48		$	7.32		$	4.96
Diluted	$	2.23		$	1.48		$	7.32		$	4.93
Weighted average shares outstanding:
Shares of common stock		139,001			138,683			138,945			137,484
Dilutive potential shares of common stock		90			307			131			1,432
Total weighted average shares outstanding		139,091			138,990			139,076			138,916

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

	Three Months Ended
	September 30,
	2008			2007
REVENUES
High Specification Floaters	$	344,024		$	258,679
Intermediate Semisubmersibles		401,891			255,795
Jack-ups		136,038			113,772
Total Contract Drilling Revenue	$	881,953		$	628,246
Revenues Related to Reimbursable Expenses	$	18,423		$	15,716
CONTRACT DRILLING EXPENSE
High Specification Floaters	$	94,713		$	93,069
Intermediate Semisubmersibles		162,011			135,445
Jack-ups		58,159			47,077
Other		(610	)		4,635
Total Contract Drilling Expense	$	314,273		$	280,226
Reimbursable Expenses	$	18,126		$	15,458
OPERATING INCOME
High Specification Floaters	$	249,311		$	165,610
Intermediate Semisubmersibles		239,880			120,350
Jack-ups		77,879			66,695
Other		610			(4,635	)
Reimbursable expenses, net		297			258
Depreciation		(72,014	)		(57,565	)
General and administrative expense		(13,944	)		(13,105	)
Casualty loss		(6,281	)		—
Gain on disposition of assets		228			363
Total Operating Income	$	475,966		$	277,971

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

	September 30,		December 31,
	2008		2007
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	635,442	$	637,961
Marketable securities		1,138		1,301
Accounts receivable		708,108		522,808
Prepaid expenses and other		137,176		103,120
Total current assets		1,481,864		1,265,190
Drilling and other property and equipment, net of accumulated depreciation		3,321,529		3,040,063
Other assets		43,891		36,212
Total assets	$	4,847,284	$	4,341,465
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities	$	461,354	$	453,011
Long-term debt		503,219		503,071
Deferred tax liability		431,056		397,629
Other liabilities		119,596		110,687
Stockholders’ equity		3,332,059		2,877,067
Total liabilities and stockholders’ equity	$	4,847,284	$	4,341,465

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

	Third Quarter					Second Quarter					Third Quarter
	2008					2008					2007
	Dayrate		Utilization			Dayrate		Utilization			Dayrate		Utilization
						(Dayrate in thousands)
High Specification Floaters	$	394		86	%	$	385		92	%	$	302		85	%
Intermediate Semis	$	288		79	%	$	285		93	%	$	186		78	%
Jack-ups	$	112		89	%	$	103		92	%	$	112		81	%

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