Diamond Offshore Commissions Construction for Ultra-Deepwater Drillship

Diamond Offshore's subsidiary, Diamond Offshore Drilling Limited, has entered into a turnkey contract with Hyundai Heavy Industries Co., Ltd. for construction of a new ultra-deepwater drillship with delivery scheduled for late in the second quarter of 2013. Total cost, including commissioning, spares and project management, is expected to be approximately $590 million and will be paid out of available funds. Diamond Offshore has also obtained from Hyundai a fixed-price option for the purchase of a second drillship which the Company has the right to exercise at any time before the end of the first quarter of 2011.

The dynamically-positioned drillship will have a seven ram blow-out preventer, dual activity capability, five mud pumps and a maximum hook-load capacity of 1,250 tons. The unit will be designed for operations in up to 12,000 feet of water.

Diamond Offshore President and Chief Executive Officer Larry Dickerson said, "The addition of a new drillship to our fleet is part of a continuing effort to enhance our ultra-deepwater capabilities at attractive capital costs. Including our opportunistic acquisitions of the Ocean Courage and Ocean Valor in 2009, we have now purchased, ordered or upgraded six 10,000-foot ultra-deepwater units over the last four years. New drillship construction costs have declined substantially from peak pricing. As a result, we believe this new drillship will provide returns consistent with our long history of value creation for the Company and our stockholders."

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