Diamond Offshore Drilling, Inc. Announces Second Quarter 2007 Results

Diamond Offshore Drilling, Inc. (NYSE:DO) today reported net income for the second quarter of 2007 of $251.9 million, or $1.81 per share on a diluted basis, compared with net income of $175.7 million, or $1.27 per share on a diluted basis, in the same period a year earlier. Revenue for the second quarter of 2007 was $648.9 million, compared with revenue of $512.2 million for the second quarter of 2006.

For the six months ended June 30, 2007, the Company reported net income of $476.1 million, or $3.46 per share on a diluted basis, compared with net income of $321.0 million, or $2.33 per share on a diluted basis, for the same period in 2006. Revenue for the six months ended June 30, 2007 was $1.3 billion, compared to $959.9 million for the first six months of 2006.

The international markets for Diamond Offshores floater and jack-up equipment remained strong during the second quarter of 2007. As a result, four of our semisubmersibles received commitments that will occupy the units into the early part of the next decade, and one of the Companys jack-up rigs also received a new term commitment. Among the recent highlights:

  • In late July, the Ocean Rover received a Letter of Award for a two-year commitment in Malaysia that is expected to extend that units work in the country until the first quarter of 2011.
  • The Ocean Patriot and the Ocean Epoch each received new contracts that are expected to extend their operation in Australia at least until mid-2010.
  • The Ocean Concord received notification of award for a five-year contract in Brazil that is expected to commence in the fourth quarter of 2007 and occupy the rig until late 2012. The Concord is currently operating in the U.S. Gulf of Mexico (GOM).
  • In the jack-up market, another of our GOM jack-up rigs moved to the international market. The Ocean King, departed for Croatia in early July, where, following a scheduled inspection and maintenance, the unit will commence a two-year bareboat charter that is expected to extend until the fourth quarter of 2009.
  • Following a two-year upgrade and commissioning, the 10,000-ft. water-depth capable semisubmersible Ocean Endeavor commenced operating under a four-year contract in the GOM.

Diamond Offshore provides contract drilling services to the energy industry around the globe and is a leader in deepwater drilling. Additional information on Diamond Offshore Drilling, Inc. and access to the Companys SEC filings is available on the Internet at www.diamondoffshore.com.

As previously announced, Diamond Offshore will provide a simulcast and rebroadcast of its second quarter 2007 earnings release conference call. The live broadcast of the Diamond Offshore quarterly conference call will be available online at www.diamondoffshore.com on July 26, 2007, beginning at 9:00 a.m. Central Daylight 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 anticipated or projected, including, among others, the risk that a commitment, Letter of Award or Letter of Intent will not be converted to a contract, the risk that full rig utilization may not be achieved during a contract period, the risk that the fleets available days may be reduced by unscheduled downtime, the risk that these and other factors outside of the Companys control may adversely impact the amount of profit realized from a contract, the risk that the markets for the Companys services will not continue to improve, the risk that the Companys 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 Companys 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 Companys 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

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share data)

Three Months EndedSix Months Ended
June 30,June 30,
2007200620072006
Revenues:
Contract drilling $ 635,927 $ 498,390 $ 1,225,839 $ 933,043
Revenues related to reimbursable expenses 12,948 13,798 31,220 26,875
Total revenues 648,875 512,188 1,257,059 959,918
Operating expenses:
Contract drilling 223,731 200,182 437,733 374,388
Reimbursable expenses 10,571 11,810 26,642 23,101
Depreciation 58,335 49,519 114,040 99,101
General and administrative 12,174 9,886 24,140 19,827
(Gain) loss on disposition of assets (3,553) 2,696 (5,055) 2,463
Total operating expenses 301,258 274,093 597,500 518,880
Operating income 347,617 238,095 659,559 441,038
Other income (expense):
Interest income 7,599 8,431 17,392 16,806
Interest expense (3,770) (5,744) (14,625) (12,550)
Loss on sale of marketable securities (5) (8) (8) (202)

Other, net

1,012 1,393 405 3,766
Income before income tax expense 352,453 242,167 662,723 448,858
Income tax expense (100,526) (66,446) (186,646) (127,816)
Net Income $ 251,927 $ 175,721 $ 476,077 $ 321,042
Income per share:
Basic $ 1.82 $ 1.36 $ 3.48 $ 2.49
Diluted $ 1.81 $ 1.27 $ 3.46 $ 2.33
Weighted-average shares outstanding:
Shares of common stock 138,447 129,131 136,875 129,079
Dilutive potential shares of common stock 481 9,651 2,004 9,678
Total weighted average shares outstanding 138,928 138,782 138,879 138,757
DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS
(Unaudited)
(In thousands)

Three Months Ended
June 30,
20072006
REVENUES
High Specification Floaters $ 264,027 $ 189,003
Intermediate Semisubmersibles 246,232 198,738
Jack-ups 125,668 110,649
Total Contract Drilling Revenue $ 635,927 $ 498,390
Revenues Related to Reimbursable Expenses $ 12,948 $ 13,798
CONTRACT DRILLING EXPENSE
High Specification Floaters $ 70,325 $ 62,051
Intermediate Semisubmersibles 108,847 95,465
Jack-ups 42,751 39,872
Other 1,808 2,794
Total Contract Drilling Expense $ 223,731 $ 200,182
Reimbursable Expenses $ 10,571 $ 11,810
OPERATING INCOME
High Specification Floaters $ 193,702 $ 126,952
Intermediate Semisubmersibles 137,385 103,273
Jack-ups 82,917 70,777
Other (1,808 ) (2,794 )
Reimbursable expenses, net 2,377 1,988
Depreciation (58,335 ) (49,519 )
General and administrative expense (12,174 ) (9,886 )
Gain (loss) on disposition of assets 3,553 (2,696 )
Total Operating Income $ 347,617 $ 238,095
DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
June 30,December 31,
20072006
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 616,737 $ 524,698
Marketable securities 1,569 301,159
Accounts receivable 505,269 567,474
Rig spare parts and supplies 50,638 48,801
Prepaid expenses and other 58,489 39,415
Total current assets 1,232,702 1,481,547
Drilling and other property and equipment, net of accumulated depreciation
2,707,154 2,628,453
Other assets 24,972 22,839
Total assets $ 3,964,828 $ 4,132,839
LIABILITIES AND STOCKHOLDERS EQUITY
Current liabilities $ 265,328 $ 333,509
Long-term debt 502,953 964,310
Deferred tax liability 403,290 448,227
Other liabilities 89,812 67,285
Stockholders equity:
Cumulative effect of FIN 48 adoption (28,422 ) --
Other stockholders equity 2,731,867 2,319,508
Total stockholders equity 2,703,445 2,319,508
Total liabilities and stockholders equity $ 3,964,828 $ 4,132,839
Second QuarterFirst QuarterSecond Quarter
200720072006
Dayrate

Utili-

zation

Dayrate

Utili-

zation

Dayrate

Utili-

zation

(Dayrate in thousands)
High Specification Floaters$30786% $280 98% $219 94%
Other Semisubmersibles$15790% $150 86% $119 96%
Jack-ups$10988% $112 90% $103 89%

Contacts:

Diamond Offshore Drilling, Inc., Houston
Les Van Dyke, 281-492-5370
Director, Investor Relations

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