EXHIBIT 99.1 FOR IMMEDIATE RELEASE CONTACT: LES VAN DYKE DIRECTOR, INVESTOR RELATIONS (281) 492-5370 DIAMOND OFFSHORE DRILLING, INC. ANNOUNCES THIRD QUARTER 2004 RESULTS Houston, Texas, October 19, 2004 -- Diamond Offshore Drilling, Inc. (NYSE:DO) today reported net income for the third quarter of 2004 of $2.9 million, or $0.02 per share on a diluted basis, compared with a net loss of $11.5 million, or $0.09 per share on a diluted basis, in the same period a year earlier. Revenues for the third quarter of 2004 were $208.2 million, compared with revenues of $183.9 million for the third quarter of 2003. Results for the period were negatively impacted by $.04 per share for the deductible portion of insurance claims made for damage caused by Hurricane Ivan. Additionally, the Ocean Alliance incurred 29 days of downtime during the quarter due to equipment repairs, which negatively impacted net income by $.02 per share. The Company also recorded a provision for potential labor cost increases in the U.K. related to mandated legislative benefits that negatively impacted net income by $.01 per share. In addition, the Company incurred reactivation costs to bring the jack-up Ocean Champion out of cold-stack and into the U.S. Gulf of Mexico ("GOM") market, which negatively impacted net income by $.01 per share. For the nine months ended September 30, 2004, the Company reported a net loss of $18.5 million, or $0.14 per share on a diluted basis compared with a net loss of $49.7 million or $0.38 per share on a diluted basis for the same period in 2003. Revenue for the nine months ended September 30, 2004 was $577.3 million, compared with $493.3 million for the first nine months of 2003. The Company has received contracts and Letters of Intent for nine of its semisubmersible units for work in the GOM and North Sea beginning in the fourth quarter of 2004 and early 2005 at rates substantially higher than average rates recorded for these units in the third quarter of 2004. Commitments for Diamond Offshore's fourth generation rigs have reached as high as $140,000 per day for GOM work beginning in 2005. Improving dayrates were a factor in the Company's decision to begin reactivation of the Ocean Voyager for the mid-water GOM market. The Voyager is expected to be ready to begin work by mid-December. Reactivation costs are estimated to be approximately $8 million. In the North Sea, the Ocean Vanguard recently arrived in Norway where it began an approximate 15 month series of contracts for a dayrate in the low $140,000s. Both the Ocean Guardian and Ocean Princess have one year extensions in the U.K. at $80,000 dayrates. The Ocean Nomad is in the process of mobilizing from West Africa to the U.K. where, following shipyard work, it will begin a one year contract at a dayrate of $80,000. As of September 30, 2004, there were 128.5 million shares of Diamond Offshore common stock outstanding. During the third quarter of 2004, the Company repurchased 782,200 shares of its common stock at an aggregate cost of $18.1 million, or $23.11 per share. Depending on market conditions, the Company may, from time to time, purchase shares of its outstanding common stock in the open market or otherwise. Diamond Offshore is a leader in deep water drilling. The Company's fleet of 45 offshore drilling rigs consists of 30 semisubmersibles, 14 jack-ups and one drillship. The fleet is located in the waters of six of the world's seven continents. As previously announced, Diamond Offshore will provide a simulcast and rebroadcast of its third quarter 2004 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 19, 2004, beginning at 9:00 a.m. Central Time. The online replay will follow immediately and continue for 5 days 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 include, but are not limited to, statements concerning commitments for drilling work or contracts, future dayrates, the timing and expense of the Ocean Voyager's reactivation, future contracts and share repurchases. 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. A discussion of the 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. #### DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES AVERAGE DAYRATES AND UTILIZATION <Table> <Caption> THIRD QUARTER SECOND QUARTER THIRD QUARTER 2004 2004 2003 --------------------- --------------------- --------------------- DAYRATE UTILIZATION DAYRATE UTILIZATION DAYRATE UTILIZATION ------- ----------- ------- ----------- ------- ----------- (Dayrate in thousands) HIGH SPECIFICATION FLOATERS $92 89% $98 66% $97 90% OTHER SEMISUBMERSIBLES $55 75% $55 71% $60 57% JACK-UPS $40 89% $37 90% $28 64% </Table> DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except per share data) <Table> <Caption> THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ---------------------- ---------------------- 2004 2003 2004 2003 --------- --------- --------- --------- REVENUES: Contract drilling .......................................... $ 200,610 $ 174,923 $ 554,535 $ 471,820 Revenues related to reimbursable expenses .................. 7,588 8,984 22,807 21,436 --------- --------- --------- --------- Total revenues ............................... 208,198 183,907 577,342 493,256 --------- --------- --------- --------- OPERATING EXPENSES: Contract drilling .......................................... 140,607 126,934 408,768 365,210 Reimbursable expenses ...................................... 6,620 8,208 20,373 19,471 Depreciation ............................................... 45,043 43,256 134,117 132,086 General and administrative ................................. 6,728 7,181 24,277 22,595 Loss on sale and disposal of assets ........................ 1,536 1,509 1,341 1,451 --------- --------- --------- --------- Total operating expenses ..................... 200,534 187,088 588,876 540,813 --------- --------- --------- --------- OPERATING INCOME (LOSS) .............................................. 7,664 (3,181) (11,534) (47,557) OTHER INCOME (EXPENSE): Interest income ............................................ 2,899 2,742 7,581 10,235 Interest expense ........................................... (7,657) (6,432) (20,384) (17,385) Gain (loss) on sale of marketable securities ............... (27) (6,179) 231 (7,310) Other, net ................................................. 78 (140) (333) 2,891 --------- --------- --------- --------- INCOME (LOSS) BEFORE INCOME TAX EXPENSE (BENEFIT) .................... 2,957 (13,190) (24,439) (59,126) INCOME TAX BENEFIT (EXPENSE) ......................................... (16) 1,727 5,913 9,410 --------- --------- --------- --------- NET INCOME (LOSS) .................................................... $ 2,941 $ (11,463) $ (18,526) $ (49,716) ========= ========= ========= ========= EARNINGS (LOSS) PER SHARE: BASIC ...................................................... $ 0.02 $ (0.09) $ (0.14) $ (0.38) ========= ========= ========= ========= DILUTED .................................................... $ 0.02 $ (0.09) $ (0.14) $ (0.38) ========= ========= ========= ========= WEIGHTED AVERAGE SHARES OUTSTANDING: Shares of common stock ..................................... 128,899 130,366 129,180 130,336 Dilutive potential shares of common stock .................. 42 -- -- -- --------- --------- --------- --------- Total weighted average shares outstanding .... 128,941 130,366 129,180 130,336 ======= ======= ======= ======= </Table> DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES RESULTS OF OPERATIONS (Unaudited) (In thousands) <Table> <Caption> THREE MONTHS ENDED SEPTEMBER 30, ---------------------- 2004 2003 --------- --------- CONTRACT DRILLING REVENUE High Specification Floaters .................... $ 75,502 $ 79,688 Other Semisubmersibles ......................... 79,357 72,588 Jack-ups ....................................... 45,268 23,006 Other .......................................... 483 (359) Eliminations ................................... -- -- --------- --------- TOTAL CONTRACT DRILLING REVENUE .................. $ 200,610 $ 174,923 ========= ========= REVENUES RELATED TO REIMBURSABLE EXPENSES ........ $ 7,588 $ 8,984 ========= ========= CONTRACT DRILLING EXPENSE High Specification Floaters .................... $ 43,697 $ 39,974 Other Semisubmersibles ......................... 62,185 62,494 Jack-ups ....................................... 34,354 23,677 Integrated Services ............................ -- (6) Other .......................................... 371 795 Eliminations ................................... -- -- --------- --------- TOTAL CONTRACT DRILLING EXPENSE .................. $ 140,607 $ 126,934 ========= ========= REIMBURSABLE EXPENSES .......................... $ 6,620 $ 8,208 ========= ========= OPERATING INCOME (LOSS) High Specification Floaters .................... $ 31,805 $ 39,714 Other Semisubmersibles ......................... 17,172 10,094 Jack-ups ....................................... 10,914 (671) Integrated Services ............................ -- 6 Other .......................................... 112 (1,154) Reimbursables, net ............................. 968 776 Depreciation Expense ........................... (45,043) (43,256) General and Administrative Expense ............. (6,728) (7,181) (Loss) on Sale and Disposal of Assets .......... (1,536) (1,509) --------- --------- TOTAL OPERATING INCOME (LOSS) .................... $ 7,664 $ (3,181) ========= ========= </Table> DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) <Table> <Caption> SEPTEMBER 30, DECEMBER 31, 2004 2003 ------------- ------------ (unaudited) ASSETS Current assets: Cash and cash equivalents ............................................. $ 213,875 $ 106,345 Investments and marketable securities ................................. 669,284 503,995 Accounts receivable ................................................... 153,952 154,124 Rig inventory and supplies ............................................ 48,099 48,035 Prepaid expenses and other ............................................ 34,144 22,764 ---------- ---------- Total current assets ........................ 1,119,354 835,263 Drilling and other property and equipment, net of accumulated depreciation ..... 2,190,616 2,257,876 Goodwill ....................................................................... 887 11,099 Other assets ................................................................... 30,719 30,781 ---------- ---------- Total assets ................................ $3,341,576 $3,135,019 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term debt ..................................... $ 479,190 $ 11,969 Other current liabilities ............................................. 104,646 88,031 ---------- ---------- Total current liabilities ................... 583,836 100,000 Long-term debt ................................................................. 722,220 928,030 Deferred tax liability ......................................................... 373,584 384,505 Other liabilities .............................................................. 42,111 42,004 Stockholders' equity ........................................................... 1,619,825 1,680,480 ---------- ---------- Total liabilities and stockholders' equity .. $3,341,576 $3,135,019 ========== ========== </Table>