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>