Diamond Announces Earnings And Fleet Upgrades



Diamond Offshore Drilling Inc. reported net income before extraordinary items for the second quarter of 2001 of $51.5 million, or $0.37 per share on a diluted basis, compared to net income for the prior year quarter of $3.6 million, or $0.03 per share on a diluted basis. Revenues for the second quarter of 2001 were $227.3 million compared to revenues of $143.3 million for the second quarter of 2000. Net income for the quarter ended June 30, 2001 was $43.8 million after extraordinary items related to the early retirement of debt, or $0.32 per share on a diluted basis.

For the six months ended June 30, 2001, the Company reported net income before extraordinary items of $88.3 million, or $0.64 per share on a diluted basis compared to net income of $33.1 million, or $0.24 per share on a diluted basis for the same period in 2000. Revenue for the six months ended June 30, 2001 were $432.6 million compared to revenues of $311.1 million for the first six months of 2000. Net income after extraordinary items related to the early retirement of debt was $80.6 million, or $0.59 per share on a diluted basis, for the six months ended June 30, 2001.

Diamond Offshore has received a letter of intent from Murphy Sabah Oil Co., Ltd., a subsidiary of Murphy Oil Corporation, to contract the Ocean Baroness to drill two wells, with options for additional wells, in deep waters off Southeast Asia. The Ocean Baroness is currently undergoing a Victory-class upgrade, which is already 70% complete. When the upgrades are complete the rig will have fifth-generation capability. The rig is scheduled for delivery at the end of the first quarter of 2002 at a cost expected to be less than the $180 million originally projected. The contract with Murphy Sabah Oil is to commence upon the completion of the semisubmersible's upgrade.

The board of directors has approved a commitment to upgrade the Ocean Rover to specifications similar to the enhanced Ocean Baroness. It is estimated that this upgrade will cost about $200 million and will take approximately 19 months to complete. This would be almost 18 months and $150 million less than required to build a new rig of equivalent specification.

Plans were also unveiled for upgrades to the jackup fleet. The company will spend approximately $100 million over the next 12-24 months for improvements on six of its jack-up rigs. The Ocean Titan and the Ocean Tower, both 350' independent-leg slot rigs, will be converted to 350' independent-leg cantilever rigs. The Ocean Spartan, the Ocean Spur, the Ocean Sovereign, and the Ocean Heritage, all 250' independent-leg cantilever rigs, will be upgraded to 300' independent-leg cantilever rigs.