Diamond Offshore to Build Two Jack-up Rigs

Diamond Offshore Drilling has entered into a letter of intent with Keppel FELS Limited in Singapore for construction of two high-performance premium jack-up rigs. The units, one to be constructed in Singapore, and the other in Brownsville, Texas, are expected to have an aggregate cost of approximately $300 million, including spares, commissioning, site supervision and other costs the Company may incur during the course of construction.

Both rigs will be 350-ft. KFELS MOD V B-Class (Super) design, capable of drilling depths of up to 35,000 ft. with a hook load capacity of 2 million pounds and a cantilever reach of 70 ft. Delivery of both units is anticipated in the first quarter of 2008. The letter of intent also provides an option for construction of a third jack-up rig at a later date. The transaction is subject to execution of a definitive construction contract.

Diamond Offshore President and Chief Operating Officer, Larry Dickerson, said, "The primary focus of the Company has been enhancing our deepwater rigs, while at the same time we have significantly modernized our jack-up fleet. Based on the strength of the market, we believe the construction of these premium jack-up units will augment our ability to offer a full range of services to our customers."

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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