Diamond Offshore Announces 4Q04/Year End 2004 Results



Diamond Offshore Drilling (NYSE:DO) reported net income for the fourth quarter of 2004 of $11.3 million, or $0.09 per share on a diluted basis, compared with net income of $1.3 million, or $0.01 per share on a diluted basis, in the same period a year earlier. Revenues for the fourth quarter of 2004 were $237.3 million, compared with revenues of $187.7 million for the fourth quarter of 2003.

Pretax results for the fourth quarter included other income of $11.4 million resulting from the settlement of a lawsuit against an equipment manufacturer. Significant items offsetting pretax income included revenue reductions of $7.2 million related to downtime from storm damage, $8.6 million in reactivation costs and operating expense to bring the mid-water semisubmersible Ocean Voyager out of cold-stack, and $3.4 million related to a combination of storm damage and higher operating costs due to the relocation of the Ocean Vanguard to Norway. The Company also recorded an additional charge to tax expense in the fourth quarter that was $3.8 million higher than the effective 27.7% tax rate experienced in the third quarter and anticipated for the fourth quarter of 2004. The increased charge resulted from a change in the mix between domestic and international earnings as well as a change in the mix of international tax jurisdictions during the quarter.

For the year ended Dec. 31, 2004, the Company reported a net loss of $7.2 million, or $0.06 per share on a diluted basis, compared with a net loss of $48.4 million, or $0.37 per share on a diluted basis, for the year ended Dec. 31, 2003. Revenue for the year ended Dec. 31, 2004 was $814.7 million, compared with $680.9 million for the year 2003.

The overall market for the Company's drilling rigs continued to improve in the fourth quarter of 2004 and early in 2005. Particular strength was evident in the Gulf of Mexico (GOM) and the Southeast Asia floater markets, where effective industry utilization is near 100%. In the GOM, the dayrate on one of our mid-water semisubmersibles has reached $110,000 for work beginning in early June 2005. In addition, dayrates for work commencing in the third quarter of 2005 on two of Diamond Offshore's 4th generation semisubmersibles located in the GOM are at $150,000 per day. The market for jack-up rigs in the GOM has also continued to improve, with dayrates for the Company's 300-ft. units in the high $40,000s to low $50,000s and dayrates for our 350-ft. jack-ups in the mid $50,000s. Additionally, as previously announced, the Company has signed two Letters of Intent (LOI) for contracts totaling approximately $243 million and covering a total of 1,315 days for the 5th generation semisubmersibles Ocean Baroness and Ocean Rover. Both contracts are expected to commence late in the third quarter or early in the fourth quarter of 2005. Under the LOIs, the Ocean Baroness is expected to relocate to the GOM, while the Ocean Rover would remain in Southeast Asia.

Larry Dickerson, president and chief operating officer, said, "We remain confident in the strength of our markets in 2005 and are encouraged as we begin to build backlog extending into 2006, 2007 and beyond."

Diamond Offshore provides contract drilling services to the energy industry around the globe and is a leader in deepwater drilling. The Company's fleet of 45 offshore drilling rigs consists of 30 semisubmersibles, 14 jack-ups and one drillship.
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