Decline in Renewal Contracts Impacts Diamond Offshore 2Q Results

Diamond Offshore reported net income for the second quarter of 2010 of $224.4 million, or $1.61 per share on a diluted basis, compared with net income of $387.4 million, or $2.79 per share on a diluted basis, in the same period a year earlier. Revenues in the second quarter of 2010 were $822.6 million, compared with revenues of $946.4 million for the second quarter of 2009.

For the six months ended June 30, 2010, the Company reported net income of $515.2 million, or $3.70 per share on a diluted basis, compared with net income of $736.0 million, or $5.29 per share on a diluted basis, for the same period in 2009. Revenue for the six months ended June 30, 2010 was $1.7 billion, compared with $1.8 billion for the first six months of 2009.

Larry Dickerson, President and CEO, stated, "The decline in renewal contract dayrates from peak levels is continuing to impact our results. In a related statement today, we announced a special quarterly dividend of $.75 per share, representing a reduction of $.625 per share from the previous special dividend, as well as our regular quarterly dividend of $.125 per share. The reduction in the special dividend reflects the lower revenue stream and the continuing uncertainty surrounding a drilling moratorium in the Gulf of Mexico. We believe that given the current and anticipated industry conditions, it is increasingly prudent at this time to retain cash to maintain the Company's financial strength and strategic flexibility, as well as to position us for potential rig acquisition opportunities. We believe that our special dividend policy is an important part of our efforts to enhance shareholder value."

Any decision by the Board to declare a special dividend, as well as the amount of any special dividend that may be declared, will be based on the Company's financial position, earnings, earnings outlook, capital spending plans, and other relevant factors at that time.

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