Diamond Offshore Announces First Quarter 2012 Results

Diamond Offshore Drilling, Inc. (NYSE:DO) today reported net income for the first quarter of 2012 of $185.2 million, or $1.33 per share on a diluted basis, compared with net income of $250.6 million, or $1.80 per share on a diluted basis, in the same period a year earlier. Revenues in the first quarter of 2012 were $768.6 million, compared with revenues of $806.4 million for the first quarter of 2011. The sale of the jack-up rig Ocean Columbia was completed during the quarter, resulting in an after-tax gain of approximately $16 million, or $0.12 per share.

“Our ongoing efforts to control costs and maximize operating efficiency, expressed in terms of minimal rig downtime, enabled us to achieve favorable operating results for the quarter,” said Larry Dickerson, President and Chief Executive Officer of Diamond Offshore. “Our systems and employees continue to perform for our customers and shareholders.”

“Looking ahead, we are optimistic about future contracting opportunities for our fleet, given the continuing market strength in the offshore drilling industry,” noted Dickerson.

CONFERENCE CALL

Diamond Offshore will host a conference call to discuss first quarter results on Thursday, April 19, 2012 beginning at 9:00 a.m. CDT. A live webcast of the call will be available online on our Company’s website, www.diamondoffshore.com. Those interested in participating in the question and answer session should dial 800-247-9979, or 973-321-1100 for international callers. The conference ID number is 65195830. An online replay will also be available on www.diamondoffshore.com following the call.

ABOUT DIAMOND OFFSHORE

Diamond Offshore provides contract drilling services to the energy industry and is a leader in deepwater drilling. Diamond Offshore’s fleet of offshore drilling rigs consists of 32 semisubmersibles, 12 jack-ups, and one drillship, in addition to three ultra-deepwater drillships currently under construction. For additional information and access to SEC filings, please visit the Company’s website at www.diamondoffshore.com. Diamond Offshore is a 50.4% owned subsidiary of Loews Corporation (NYSE: L).

FORWARD-LOOKING STATEMENTS

Statements contained in this press release which are not historical facts are “forward-looking statements” within the meaning of the federal securities laws. Forward-looking statements are inherently uncertain and subject to a variety of risks that could cause actual results to differ materially from those expected by management of the Company. A discussion of the important risk factors and other considerations that could materially impact these matters as well as the Company’s overall business and financial performance can be found in the Company’s reports filed with the Securities and Exchange Commission and readers of this release are urged to review those reports carefully when considering these forward-looking statements. Copies of these reports are available through the Company’s website www.diamondoffshore.com. Given these risk factors, investors and analysts should not place undue reliance on forward-looking statements. Any such forward-looking statements speak 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 Ended
March 31,
20122011
Revenues:
Contract drilling $ 755,155 $ 788,873
Revenues related to reimbursable expenses 13,487 17,516
Total revenues 768,642 806,389
Operating expenses:
Contract drilling, excluding depreciation 397,102 362,364
Reimbursable expenses 13,151 16,950
Depreciation 101,393 101,173
General and administrative 17,586 17,725
Bad debt recovery (618) (8,447)
Gain on disposition of assets (25,382) (2,641)
Total operating expenses 503,232 487,124
Operating income 265,410 319,265
Other income (expense):
Interest income 1,783 450
Interest expense (15,329) (22,044)
Foreign currency transaction loss (104) (1,606)

Other, net

(325) 784
Income before income tax expense 251,435 296,849
Income tax expense (66,266) (46,237)
Net income $ 185,169 $ 250,612
Earnings per share:
Basic $ 1.33 $ 1.80
Diluted $ 1.33 $ 1.80
Weighted average shares outstanding:
Shares of common stock 139,028 139,027
Dilutive potential shares of common stock 12 26
Total weighted average shares outstanding 139,040 139,053
DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS

(Unaudited)

(In thousands)

Three Months Ended
Mar 31, Dec 31, Mar 31,
2012 2011 2011
REVENUES
Floaters:
Ultra-Deepwater $244,589 $ 189,148 $ 198,730
Deepwater 146,003 190,615 132,252
Mid-water 318,595 312,256 409,583
Total Floaters 709,187 692,019 740,565

Jack-ups

45,968 42,264 48,218

Other

-- -- 90
Total Contract Drilling Revenue$755,155 $ 734,283 $ 788,873
Revenues Related to Reimbursable Expenses

$

13,487

$

14,074

$

17,516

CONTRACT DRILLING EXPENSE
Floaters:
Ultra-Deepwater $139,961 $ 132,187 $ 108,645
Deepwater 58,594 52,843 58,109
Mid-water 162,779 169,481 152,020
Total Floaters 361,334 354,511 318,774
Jack-ups 31,443 45,597 42,100
Other 4,325 6,655 1,490
Total Contract Drilling Expense$397,102 $ 406,763 $ 362,364
Reimbursable Expenses$13,151 $ 13,609 $ 16,950
OPERATING INCOME
Floaters:
Ultra-Deepwater $104,628 $ 56,961 $ 90,085
Deepwater 87,409 137,772 74,143
Mid-water 155,816 142,775 257,563
Total Floaters 347,853 337,508 421,791
Jack-ups 14,525 (3,333 ) 6,118
Other (4,325) (6,655 ) (1,400 )
Reimbursable expenses, net 336 465 566
Depreciation (101,393) (95,089 ) (101,173 )
General and administrative expense (17,586) (16,334 ) (17,725 )
Bad debt recovery 618 1,300 8,447
Gain on disposition of assets 25,382 414 2,641
Total Operating Income $265,410 $ 218,276 $ 319,265
DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
March 31,December 31,
20122011
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 123,521 333,765
Marketable securities 1,276,592 902,414
Accounts receivable, net of allowance for bad debts 574,906 563,934
Prepaid expenses and other current assets 134,682 192,570
Assets held for sale 22,223 --
Total current assets 2,131,924 1,992,683

Drilling and other property and equipment, net of accumulated depreciation

4,611,233 4,667,469
Other assets 282,381 304,005
Total assets $ 7,025,538 $ 6,964,157
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities $ 409,694 $ 427,291
Long-term debt 1,495,883 1,495,823
Deferred tax liability 538,980 536,815
Other liabilities 178,432 171,165
Stockholders’ equity 4,402,549 4,333,063
Total liabilities and stockholders’ equity $ 7,025,538 $ 6,964,157
DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES
AVERAGE DAYRATES AND UTILIZATION

(Dayrate in thousands)

First QuarterFourth QuarterFirst Quarter
201220112011
DayrateUtilizationDayrateUtilizationDayrateUtilization
Ultra-Deepwater Floaters$36485% $356 70% $343 77%
Deepwater Floaters$35988% $422 97% $343 83%
Mid-Water Floaters$26665% $271 60% $275 81%
Jack-Ups$8744% $79 36% $82 47%

Contacts:

Diamond Offshore Drilling, Inc.
Darren Daugherty, 281-492-5370
Director, Investor Relations
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