DO Diamond Offshore Drilling Inc

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report: (Date of earliest event reported): November 2, 2015

 

 

Diamond Offshore Drilling, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware		1-13926		76-0321760
(State or other jurisdiction of incorporation)		(Commission file number)		(I.R.S. Employer Identification No.)

15415 Katy Freeway

Houston, Texas 77094

(Address of principal executive offices, including Zip Code)

(281) 492-5300

(Registrant’s telephone number, including area code)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

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Item 2.02. Results of Operations and Financial Condition

On November 2, 2015, Diamond Offshore Drilling, Inc. (the “Company”) issued a press release announcing its financial results for the fiscal quarter ended September 30, 2015. A copy of the press release is furnished herewith as Exhibit 99.1.

Item 7.01. Regulation FD Disclosure

A conference call to discuss the Company’s earnings results has been scheduled for 7:30 a.m. Central Time on November 2, 2015. The information for accessing the conference call is included in the press release.

The Company hereby incorporates by reference into this Item 7.01 the summary report of the status, as of November 2, 2015, of the Company’s offshore drilling rigs attached as Exhibit 99.2.

The information contained in Items 2.02 and 7.01 and Exhibits 99.1 and 99.2 to this report shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and shall not be incorporated by reference into any previous or future registration statement filed under the Securities Act of 1933, as amended (the “Securities Act”), unless specifically identified therein as being incorporated by reference.

Statements in the press release furnished as Exhibit 99.1 to this report and in the summary report furnished as Exhibit 99.2 to this report and statements made during the conference call described in this report that are not historical facts are “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Such statements include, but are not limited to, statements concerning drilling rig deliveries, operations and timing; contract effectiveness, effective dates and estimated duration; plans regarding retirement and scrapping of drilling rigs; future impairments; future dividends; expectations of future backlog, revenue, operating costs and performance; future liquidity, financial condition, market conditions, commodity prices and strategic opportunities; revenue expected to result from backlog; future credit ratings; future dayrates, future status, start and end dates and future contracts and availability; future contract opportunities and termination rights; contract noncompliance by customers and other third parties; letters of intent; utilization, surveys, downtime and other aspects of the Company’s drilling rigs; customer discussions and outcomes thereof and the impact of these and related events on the Company’s operations and revenues; rigs being upgraded or to be upgraded and rigs under construction; future impact of regulations; and other statements that are not of historical fact. Forward-looking statements are inherently uncertain and subject to a variety of assumptions, risks and uncertainties that could cause actual results to differ materially from those currently anticipated or expected by management of the Company. A discussion of the risk factors and other considerations that could materially impact these matters as well as the Company’s overall business and financial performance can be found in the Company’s reports filed with the Securities and Exchange Commission, and readers of this report are urged to review those reports carefully when considering these forward-looking statements. These risk factors include, among others, risks associated with worldwide demand for drilling services, level of activity in the oil and gas industry, renewing or replacing expired or terminated contracts, contract cancellations and terminations, maintenance and realization of backlog, competition and industry fleet capacity,

 

2

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impairments and retirements, declaration of dividends, operating risks, changes in tax laws and rates, regulatory initiatives and compliance with governmental regulations, construction of new builds, casualty losses and various other factors, many of which are beyond the Company’s control. Given these risk factors, investors and analysts should not place undue reliance on forward-looking statements. Each forward-looking statement speaks only as of the date of such statement, and the Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement to reflect any change in the Company’s expectations with regard thereto or any change in events, conditions or circumstances on which any forward-looking statement is based.

Item 9.01. Financial Statements and Exhibits

(a) Financial statements of businesses acquired.

Not applicable.

(b) Pro forma financial information.

Not applicable.

(c) Shell company transactions.

Not applicable.

(d) Exhibits.

 

Exhibit number		Description
99.1		Press Release dated November 2, 2015
99.2		Rig Status Report as of November 2, 2015

 

3

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: November 2, 2015				DIAMOND OFFSHORE DRILLING, INC.
				By:		/s/ DAVID L. ROLAND
						David L. Roland Senior Vice President, General Counsel and Secretary

 

4

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EXHIBIT INDEX

 

Exhibit Number		Description
99.1		Press Release dated November 2, 2015
99.2		Rig Status Report as of November 2, 2015

 

5

Exhibit 99.1

 

		Contact: Darren Daugherty Director, Investor Relations (281) 492-5370

Diamond Offshore Announces Third Quarter 2015 Results

•

Reports net income of $136 million, $0.99 per share

•

Confirms one-year contract for semisubmersible rig Ocean Guardian

•

Announces $333 million, 875-day backlog addition to semisubmersible rig Ocean Courage

•

Declares regular cash dividend of $0.125 per share

HOUSTON, November 2, 2015 — Diamond Offshore Drilling, Inc. (NYSE: DO) today reported net income of $136 million, or $0.99 per share, in the third quarter of 2015, compared to $53 million, or $0.38 per share, in the third quarter of 2014. Revenues in the third quarter of 2015 were $610 million, compared to revenues of $738 million in the third quarter of 2014.

“I am pleased with our solid third quarter results, which demonstrate Diamond Offshore’s ability to execute on managing our costs and controlling downtime,” said Marc Edwards, President and Chief Executive Officer. “During the quarter, our three newbuild drillships delivered operational efficiency of 99.3 percent, which directly benefits our topline and improves project economics for our clients.”

Diamond Offshore also confirmed the Ocean Guardian was awarded a contract for a one-year term in the UK North Sea beginning in March of 2016 at a rate of $220,000 per day.

The Company announced that it reached agreement with Petrobras for contracts on the semisubmersible rig Ocean Alliance and the drillship Ocean Clipper to be ended as of October 30, 2015, ahead of their original end dates, in return for an additional 875 days of contract term on the semisubmersible rig Ocean Courage. The additional term will be at a rate of $380,000 per day, representing revenue backlog of $333 million, and will extend the contract into mid-2020. After export from Brazil, the Ocean Alliance will be cold-stacked and the Ocean Clipper will be retired and scrapped. The terminated portions of the contracts represent a loss to revenue backlog of approximately $91 million.

Diamond Offshore also announced that it has declared a regular quarterly dividend of $0.125 per share, payable on December 1, 2015 to shareholders of record as of November 13, 2015.

CONFERENCE CALL

A conference call to discuss Diamond Offshore’s earnings results has been scheduled for 7:30 a.m. CST today. A live webcast of the call will be available online on the Company’s website, www.diamondoffshore.com. Those interested in participating in the question and answer session should dial 800-247-9979 or 973-321-1100, for international callers. The conference ID number is 60130700. An online replay will also be available on www.diamondoffshore.com following the call.

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ABOUT DIAMOND OFFSHORE

Diamond Offshore is a leader in offshore drilling, providing contract drilling services to the energy industry around the globe with a total fleet of 33 offshore drilling rigs, including one rig under construction. Diamond Offshore’s fleet consists of 23 semisubmersibles, one of which is under construction, four dynamically positioned drillships, and six jack-ups. Additional information about the Company and access to the Company’s SEC filings are available at www.diamondoffshore.com. Diamond Offshore is owned 53% by Loews Corporation (NYSE: L).

FORWARD-LOOKING STATEMENTS

Contract revenue as stated above assumes 100% rig utilization. Rig utilization rates vary depending on a variety of circumstances, many of which are beyond the Company’s control. Rig utilization rates generally approach 92-98% during contracted periods; however, utilization rates can be adversely impacted by additional downtime due to various operating factors, including, but not limited to, weather conditions and unscheduled repairs and maintenance. Additional information on the Company and access to the Company’s SEC filings is available at www.diamondoffshore.com.

Statements contained in this press release or made during the above conference call that are not historical facts are “forward-looking statements” within the meaning of the federal securities laws. Such statements include, but are not limited to, statements concerning drilling rig deliveries, operations and timing; contract effectiveness, effective dates and estimated duration; plans regarding retirement and scrapping of drilling rigs; future impairments; future dividends; expectations of future backlog, revenue, operating costs and performance; future liquidity, financial condition, market conditions, commodity prices and strategic opportunities; revenue expected to result from backlog; future credit ratings; future dayrates, future status, start and end dates and future contracts and availability; future contract opportunities and termination rights; contract noncompliance by customers and other third parties; utilization, surveys, downtime and other aspects of the Company’s drilling rigs; statements concerning customer discussions and outcomes thereof and the impact of these and related events on the Company’s operations and revenues; rigs being upgraded or to be upgraded and rigs under construction; and other statements that are not of historical fact. Forward-looking statements are inherently uncertain and subject to a variety of assumptions, risks and uncertainties that could cause actual results to differ materially from those anticipated or expected by management of the Company. A discussion of the important risk factors and other considerations that could materially impact these matters as well as the Company’s overall business and financial performance can be found in the Company’s reports filed with the Securities and Exchange Commission, and readers of this press release are urged to review those reports carefully when considering these forward-looking statements. Copies of these reports are available through the Company’s website at www.diamondoffshore.com. These risk factors include, among others, risks associated with worldwide demand for drilling services, level of activity in the oil and gas industry, renewing or replacing expired or terminated contracts, contract cancellations and terminations, maintenance and realization of backlog, competition and industry fleet capacity, impairments and retirements, declaration of dividends, operating risks, changes in tax laws and rates, regulatory initiatives and compliance with governmental regulations, construction of new builds, casualty losses, and various other factors, many of which are beyond the Company’s control. Given these risk factors, investors and analysts should not place undue reliance on forward-looking statements. Each forward-looking statement speaks only as of the date of this press release. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement to reflect any change in the Company’s expectations with regard thereto or any change in events, conditions or circumstances on which any forward-looking statement is based.

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DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share data)

 

		Three Months Ended September 30,								Nine Months Ended September 30,
		2015				2014				2015				2014
Revenues:
Contract drilling		$	599,036			$	727,888			$	1,816,055			$	2,062,750
Revenues related to reimbursable expenses			10,706				9,794				47,775				76,600
Total revenues			609,742				737,682				1,863,830				2,139,350
Operating expenses:
Contract drilling, excluding depreciation			277,944				399,802				971,471				1,164,968
Reimbursable expenses			10,476				9,437				46,904				75,393
Depreciation			118,086				108,854				378,714				324,771
General and administrative			16,888				18,604				50,888				61,909
Impairment of assets			2,546				109,462				361,074				109,462
Restructuring and separation costs			1,574				—				8,735				—
Loss (gain) on disposition of assets			794				1,107				19				(7,612	)
Total operating expenses			428,308				647,266				1,817,805				1,728,891
Operating income			181,434				90,416				46,025				410,459
Other income (expense):
Interest income			629				86				1,796				644
Interest expense			(21,350	)			(9,378	)			(70,800	)			(46,056	)
Foreign currency transaction gain (loss)			(1,163	)			425				954				(3,724	)
Other, net			217				90				702				598
Income (loss) before income tax expense			159,767				81,639				(21,323	)			361,921
Income tax expense			(23,345	)			(28,994	)			(7,578	)			(73,753	)
Net Income (loss)		$	136,422			$	52,645			$	(28,901	)		$	288,168
Income (loss) per share		$	0.99			$	0.38			$	(0.21	)		$	2.09
Weighted average shares outstanding:
Shares of common stock			137,159				137,146				137,156				137,582
Dilutive potential shares of common stock			44				1				—				3
Total weighted average shares outstanding			137,203				137,147				137,156				137,585

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DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES

RESULTS OF OPERATIONS

(Unaudited)

(In thousands)

 

		Three Months Ended
		September 30,				June 30,				September 30,
		2015				2015				2014
REVENUES
Floaters:
Ultra-Deepwater		$	376,195			$	315,670			$	313,124
Deepwater			136,668				181,104				111,372
Mid-water			69,500				96,926				258,028
Total Floaters			582,363				593,700				682,524
Jack-ups			16,673				23,742				45,364
Total Contract Drilling Revenue		$	599,036			$	617,442			$	727,888
Revenues Related to Reimbursable Expenses		$	10,706			$	16,590			$	9,794
CONTRACT DRILLING EXPENSE
Floaters:
Ultra-Deepwater		$	156,107			$	161,485			$	157,655
Deepwater			67,630				86,464				72,367
Mid-water			35,784				66,735				132,340
Total Floaters			259,521				314,684				362,362
Jack-ups			12,507				20,873				28,056
Other			5,916				7,312				9,384
Total Contract Drilling Expense		$	277,944			$	342,869			$	399,802
Reimbursable Expenses		$	10,476			$	16,336			$	9,437
OPERATING (LOSS) INCOME
Floaters:
Ultra-Deepwater		$	220,088			$	154,185			$	155,469
Deepwater			69,038				94,640				39,005
Mid-water			33,716				30,191				125,688
Total Floaters			322,842				279,016				320,162
Jack-ups			4,166				2,869				17,308
Other			(5,916	)			(7,312	)			(9,384	)
Reimbursable expenses, net			230				254				357
Depreciation			(118,086	)			(123,329	)			(108,854	)
General and administrative expense			(16,888	)			(16,548	)			(18,604	)
Gain (loss) on disposition of assets			(794	)			164				(1,107	)
Impairment of assets			(2,546	)			—				(109,462	)
Restructuring and separation costs			(1,574	)			(993	)			—
Total Operating Income		$	181,434			$	134,121			$	90,416

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DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands)

 

		September 30,				December 31,
		2015				2014
ASSETS
Current assets:
Cash and cash equivalents		$	141,131			$	233,623
Marketable securities			13,621				16,033
Accounts receivable, net of allowance for bad debts			515,754				463,862
Prepaid expenses and other current assets			163,871				185,541
Assets held for sale			6,700				—
			841,077				899,059
Drilling and other property and equipment, net of accumulated depreciation			6,888,248				6,945,953
Other assets			121,171				176,277
Total assets		$	7,850,496			$	8,021,289
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current portion of long-term debt		$	—			$	249,962
Short-term borrowings			492,996				—
Other current liabilities			397,421				606,684
Long-term debt			1,994,710				1,994,526
Deferred tax liability			417,621				530,394
Other liabilities			171,595				188,160
Stockholders’ equity			4,376,153				4,451,563
Total liabilities and stockholders’ equity		$	7,850,496			$	8,021,289

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DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES

AVERAGE DAYRATES AND UTILIZATION

(Dayrate in thousands)

 

		Third Quarter 2015												Second Quarter 2015												Third Quarter 2014
		Average Dayrate (1)				Utilization (2)				Operational Efficiency (3)				Average Dayrate (1)				Utilization (2)				Operational Efficiency (3)				Revised Average Dayrate (4)				Utilization (2)				Operational Efficiency (3)
Ultra-Deepwater Floaters		$	479				71	%			96.8	%		$	483				63	%			90.9	%		$	491				77	%			92.2	%
Deepwater Floaters		$	361				59	%			90.3	%		$	451				63	%			99.3	%		$	356				57	%			95.5	%
Mid-Water Floaters		$	289				31	%			97.5	%		$	278				32	%			99.7	%		$	265				59	%			94.1	%
Jack-ups		$	97				31	%			99.8	%		$	83				53	%			98.6	%		$	99				83	%			99.3	%
Fleet Total											95.5	%											95.9	%											94.7	%

 

(1)

Average dayrate is defined as contract drilling revenue for all of the specified rigs in our fleet per revenue earning day. A revenue earning day is defined as a 24-hour period during which a rig earns a dayrate after commencement of operations and excludes mobilization, demobilization and contract preparation days.

(2)

Utilization is calculated as the ratio of total revenue-earning days divided by the total calendar days in the period for all specified rigs in our fleet (including cold-stacked rigs, but excluding rigs under construction). As of September 30, 2015, our cold-stacked rigs included one ultra-deepwater semisubmersible, one deepwater semisubmersible, four mid-water semisubmersibles and five jack-up rigs.

(3)	Operational efficiency is calculated as the ratio of total revenue-earning days divided by the sum of total revenue-earning days plus the number of days (or portions thereof) associated with unanticipated equipment downtime.

(4)	Average dayrate reported in prior period has been revised to conform to current presentation.

Exhibit 99.2

 

		Diamond Offshore Drilling, Inc. Rig Status Report November 2, 2011 Updated information noted in bold print

RECENT COMMITMENTS (See Body of Report For Contract Details)

Ocean Guardian: 1-year term

Ocean Courage: 875-day term extension

 

Water 1 Depth

Year 3

Contract Dayrate

Estimated

Estimated

Planned Downtime 4 (For Periods Lasting >10 days)

Rig Name

(feet)

Type 2

Built

Location

Operator

(USD)

Start Date

End Date

Status

4Q15 E

Comments

Gulf of Mexico — U.S.

Total:

145

Ocean BlackHawk

12,000

DS 15K DP

2014

US GOM

Anadarko

495,000

late May 2014

mid Jun 2019

5-year term + unpriced option

Ocean BlackHornet

12,000

DS 15K DP

2014

US GOM

Anadarko

495,000

mid Apr 2015

mid Apr 2020

5-year term + unpriced option

Ocean BlackRhino(note 5)

12,000

DS 15K DP

2014

US GOM

Murphy

398,000

late May 2015

late Sep 2016

Extended term

US GOM

—

—

late Sep 2016

mid Dec 2016

Contract prep and customer acceptance

US GOM

Hess

400,000

mid Dec 2016

mid Dec 2019

3-year term

Ocean BlackLion

12,000

DS 15K DP

2015

US GOM

—

—

early Oct 2015

mid Dec 2015

Customer preparation and acceptance

75

US GOM

Hess

400,000

mid Dec 2015

mid Dec 2019

4-year term

Gulf of Mexico — Mexico

Ocean Scepter

350

JU 15K IC

2008

Mexico

Pemex

115,000

early Jan 2015

early Mar 2016

Remainder of 639-day term at revised rate

Ocean Ambassador

1,100

SS

1975

Mexico

Pemex

115,000

early May 2015

early Mar 2016

Remainder of 730-day term at revised rate

North Sea / Mediterranean / W. Africa

Ocean Guardian

1,500

SS 15K

1985

UK

Dana

220,000

early Mar 2016

early Mar 2017

1-year term

Ocean Patriot

3,000

SS 15K

1983

UK

Shell

400,511

late Oct 2014

late Oct 2017

3-year term

Ocean Valiant

5,500

SS 15K

1988

UK

Premier Oil

320,000

early Jun 2015

late Dec 2015

Two wells + 4 x 1-well options

Ocean Endeavor

10,000

SS 15K

2007

Black Sea

ExxonMobil

521,665

late Jun 2014

late Dec 2015

18-month term (dayrate incl. 50% of potential 6.6% bonus)

Ocean Confidence

10,000

SS 15K DP

2001

Canary Islands

—

—

—

—

Actively marketing

Australasia

Ocean Quest

4,000

SS 15K

1973

Malaysia

—

—

—

—

Actively marketing

60

Helideck upgrade

Ocean America

5,500

SS 15K

1988

Malaysia

—

—

—

—

Actively marketing

Ocean Apex

6,000

SS 15K

2014

Malaysia

—

—

—

—

Actively marketing

Australia

Woodside Energy

285,000

Jun 2016

Nov 2017

18-month term, convertible to 24-month @ $270k/day + 1 x 12-month + 2 x 6-month unpriced options

Ocean Rover

8,000

SS 15K

2003

Malaysia

Murphy

465,000

early Mar 2014

early Mar 2016

2-year term

Ocean Monarch

10,000

SS 15K

2008

Australia

Quadrant / Woodside

410,000

mid Jul 2015

early Oct 2016

15 months of 18-month term + 1 year option

Australia

Apache / Quadrant

350,000

early Oct 2016

early Jan 2017

3 months at reduced rate on 18-month term

South America

Ocean Victory

5,500

SS 15K

1997

Trinidad

BP

398,000

early May 2015

mid May 2017

2-year term + 1-year unpriced option

Ocean Onyx

6,000

SS 15K

2014

Trinidad

BG International

360,000

early Aug 2015

late Nov 2015

One well

Ocean Courage (note 6)

10,000

SS 15K DP

2009

Brazil

Petrobras

455,000

late Oct 2015

late Feb 2018

3-year extension

10

Maintenance

Brazil

Petrobras

380,000

late Feb 2018

late Jul 2020

Term extension

Ocean Valor

10,000

SS 15K DP

2009

Brazil

Petrobras

455,000

mid Oct 2015

mid Oct 2018

3-year extension

 

Please refer to accompanying disclaimer as well as Diamond Offshore’s 10-K and 10-Q filings with the SEC.		Page 1 of 3

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		Water 1 Depth						Year 3								Contract Dayrate				Estimated		Estimated				Planned Downtime 4 (For Periods Lasting >10 days)
Rig Name		(feet)				Type 2		Built				Location		Operator		(USD)				Start Date		End Date		Status		4Q15 E		Comments
UNDER CONSTRUCTION
Ocean GreatWhite			10,000			SS 15K DP			2016			S. Korea		—			—			Q3 2013		H2 2016		Hyundai shipyard; commissioning; mobe; acceptance
												Australia		BP			585,000*			H2 2016		H2 2019		3-year term + 2 x 1-year priced options (@ 585,000 + escalations); *Dayrate to increase for customer-requested equipment additions
COLD STACKED
Ocean Summit			300			JU IC			1972			US GOM		—			—			—		—		Stacked
Ocean King			300			JU IC			1973			US GOM		—			—			—		—		Stacked
Ocean Nugget			300			JU IC			1976			US GOM		—			—			—		—		Stacked
Ocean Spur			300			JU IC			1981			Malaysia		—			—			—		—		Stacked
Ocean Titan			350			JU 15K IC			1974			US GOM		—			—			—		—		Stacked
Ocean Nomad			1,200			SS			1975			UK		—			—			—		—		Stacked
Ocean Princess			1,500			SS 15K			1975			UK		—			—			—		—		Stacked
Ocean Vanguard			1,500			SS 15K			1982			UK		—			—			—		—		Stacked
Ocean General			3,000			SS			1976			Malaysia		—			—			—		—		Stacked
Ocean Alliance (note 6)			5,250			SS 15K DP			1988			Brazil / US GOM		—			—			—		—		Prep for exportation and cold stacking; Demobe to US GOM
Ocean Star			5,500			SS 15K			1997			US GOM		—			—			—		—		Stacked
Ocean Baroness			8,000			SS 15K			2002			US GOM		—			—			—		—		Stacked
RETIRED
Ocean Lexington			2,200			SS			1976			—		—			—			—		—		Sold in 3Q 2015
Ocean Clipper (note 6)			7,875			DS 15K DP			1997			Brazil		—			—			—		—		Prep for exportation, scrapping

NOTES

(1.) Water Depth refers to the rig’s rated operating water depth capability. Often, rigs are capable of drilling or have drilled in greater water depths.

(2.) Rig Type and capabilities: JU=Jack-up; SS=Semisubmersible; DS=Drillship; 15K=15,000 PSI Well-Control System; DP=Dynamically Positioned Rig; IC=Independent-Leg Cantilevered Rig.

(3.) Year Built represents when rig was (or is expected to be) built and originally placed in service or year redelivered with significant enhancements that enabled the rig to be classified within a different floater category than when originally constructed.

(4.) Planned Downtime only includes downtime periods that as of this report date are, or have been, planned and estimable and do not necessarily reflect actual downtime experienced. Additional downtime may be experienced in the form of possible mobes for new jobs not yet contracted, possible acceptance testing at new jobs, and unplanned maintenance and repairs. Survey start times may also be accelerated or delayed for various reasons.

(5.) Before December 1, 2015, Murphy can revert contract term on the Ocean BlackRhino to its previous 265-day duration and pay a lump sum “payback fee” based on a rate of $550,000 per day.

(6.) In October 2015, we reached agreement with Petrobras to terminate the drilling contracts on the Ocean Clipper and Ocean Alliance early, effective on October 30, 2015, and to add 875 days to the end of the current term of the drilling contract on the Ocean Courage at the rate of $380,000 per day. Petrobras has approved the agreement and we are in the process of completing the amendments to the drilling contracts.

General Notes

Average Utilization: Assume rates of 92% for DP units, 95% for conventionally moored rigs, and 97% for jack-ups. Rig utilization rates can be adversely impacted by additional downtime due to unscheduled repairs and maintenance, and other factors.

Options should be assumed to be unpriced unless otherwise indicated.

Dayrates exclude amortized revenue related to amounts earned for certain activities, such as mobe, demobe, contract preparation, etc.

Survey Costs: During surveys, normal operating expense will be incurred, plus additional costs.

US GOM=U.S. Gulf of Mexico

 

Please refer to accompanying disclaimer as well as Diamond Offshore’s 10-K and 10-Q filings with the SEC.		Page 2 of 3

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		Diamond Offshore Drilling, Inc. Rig Status Report

Forward-Looking Statements: This report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include, without limitation, any statement that may project, indicate or imply future results, events, performance or achievements, and may contain or be identified by the words “expect,” “intend,” “plan,” “predict,” “anticipate,” “estimate,” believe,” “should,” “could,” “may,” “might,” “will,” “will be,” “will continue,” “will likely result,” “project,” “budget,” “forecast,” and similar expressions. Statements by the Company in the rig status report that contain forward-looking statements include, but are not limited to, statements regarding the current term, future dayrates, future status, start and end dates, and comments concerning future contracts and availability, future contract opportunities and termination rights, letters of intent, utilization, surveys, downtime and other aspects of the Company’s drilling rigs, as well as statements concerning customer discussions and outcomes thereof, the impact of these and related events on our operations and revenues, rigs being upgraded or to be upgraded and rigs under construction. Such statements are inherently subject to a variety of assumptions, risks and uncertainties that could cause actual results to differ materially from those anticipated or projected. A discussion of the risk factors that could impact these areas and the Company’s overall business and financial performance can be found in the Company’s reports and other documents filed with the Securities and Exchange Commission. These factors include, among others, general economic and business conditions, contract cancellations, customer bankruptcy, operating risks, casualty losses, industry fleet capacity, changes in foreign and domestic oil and gas exploration and production activity, competition, changes in foreign, political, social and economic conditions, regulatory initiatives and compliance with governmental regulations, customer preferences and various other matters, many of which are beyond the Company’s control. Given these concerns, investors and analysts should not place undue reliance on forward-looking statements. Each forward-looking statement speaks only as of the date of the rig status report, and the Company undertakes no obligation to publicly update or revise any forward-looking statement.

 

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