October 16, 2003

Diamond Offshore reports third quarter loss

Diamond Offshore Drilling Inc. today reported a net loss for the third quarter of 2003 of $11.5 million, or $0.09 per share on a diluted basis, compared with net income of $21.7 million, or $0.16 per share on a diluted basis in the same period a year earlier. Revenues for the third quarter of 2003 were $183.9 million, compared with revenues of $180.2 million for the third quarter of 2002.

For the first nine months of 2003, the company reported a net loss of $49.7 million, or $0.38 per share on a diluted basis, compared with net income of $56.2 million, or $0.42 per share on a diluted basis for the same period in 2002. Revenues for the first nine months of 2003 were $493.3 million, compared with revenues of $569.5 million in the same period a year earlier.

Diamond Offshore President and Chief Operating Officer, Larry Dickerson, noted, "Results for the third quarter of 2003 were also impacted by non-operating factors. Lower interest rates yielded a decline in interest income in the quarter, while fixed income securities sales produced losses in the quarter versus gains in the third quarter of 2002.

"In addition, in order to help maintain the company's strong liquidity position in light of recent earnings declines, the Board of Directors has decided to reduce the company's quarterly cash dividend effective Dec. 1, 2003, for stockholders of record on Nov. 3, 2003. The new dividend rate will be $0.0625 per common share, compared with $0.125 per common share the previous quarter."

Dickerson also noted that, "Effective Sept. 30, 2003, the Company has retired two of its second generation semisubmersible drilling rigs, the Ocean Century and the Ocean Prospector. The rigs, which have been cold stacked in the Gulf of Mexico since July 1998 and October 1998, respectively, are being offered for sale and will not be returned to service as offshore drilling units. The company has been successful over the past few years in modernizing its fleet, and we recognize that the Century and Prospector are not future upgrade candidates in any likely market scenario."

As a result of the retirement of the two drilling units, Daimond Offshore has a fleet of 45 offshore drilling rigs consisting of 30 semisubmersibles, 14 jack-ups and one drillship. The fleet operates in the waters of six of the world's seven continents.

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