DIAMOND OFFSHORE DRILLING, INC. - FORM 8-K - EX-99.1 - August 13, 2010

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Exhibit 99.1
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DIAMOND OFFSHORE DRILLING, INC. RIG STATUS REPORT AS OF
AUGUST 13, 2010
RECENT COMMITMENTS — (See Body of Report For Contract Details/Date Changes and Other Information)
     
Ocean Spartan
  five short wells
 
    
Ocean Columbia
  two wells
 
    
Ocean Heritage
  six-month extension
 
    
Ocean Spur
  one-year extension
                                 
    Nominal                   Dayrate        
Rig Name   WD*   Location   Status   Operator   Current Term   ($000s)   Start Date   Est. End Date
Domestic Deepwater Semisubmersibles (2) (Note 1)              
Ocean Victory (Note 2)
   5,500’   GOM   BOP recertification   DODI           late July 2010   late Aug. 2010
 
       GOM   Actively Marketing   DODI   Gap in contract       late Aug. 2010   early Nov. 2010
 
       GOM   Contract Continuation   ATP   continue six-well minimum   low 560’s   early Nov. 2010   early Feb. 2011
 
       GOM   Actively Marketing   DODI   Gap in contract       early Feb. 2011   early June 2011
 
       GOM   Contract Continuation   ATP   balance 1-year term   low 540’s   early June 2011   mid Aug. 2011
Ocean Monarch (Note 3)
   10,000’   GOM   Resume Original Contract   Anadarko   cont. four-year term   low 440’s   early August 2010   mid March 2013
Domestic 2nd Generation Semisubmersibles (1) (Note 1)              
Ocean Saratoga
   2,200’   GOM   Current Contract   Taylor   one-year extension + unpriced option   200-210   mid July 2010   late June 2011
Note (1). On May 30, 2010, the U.S. government implemented a six-month moratorium on certain drilling activities in water deeper than 500 feet in the U.S. Gulf of Mexico (GOM) and subsequently implemented enhanced safety requirements applicable to all drilling activities in the GOM, including drilling activities in water shallower than 500 feet. On June 22, 2010, the U.S. District Court for the Eastern District of Louisiana granted a temporary injunction which immediately prohibited enforcement of the moratorium. The government appealed District Court’s decision and requested that the U.S. Court of Appeals for the Fifth Circuit stay the injunction pending appeal. The Fifth Circuit denied the government’s stay motion. While the appeal is pending, the government has rescinded the moratorium and ordered a new suspension through November 30, 2010, subject to modifications by the government under certain circumstances, of drilling activities using subsea blowout preventers (BOPs) or surface BOPs on floating facilities. Further proceedings with respect to the moratorium and the new suspension are pending. We currently have six rigs under contract in the GOM, three of which use subsea BOPs. We are not able to predict the outcome of these legal proceedings, whether enforcement of the moratorium will be permanently enjoined, whether the suspension will remain in place, or whether the government will seek to implement additional restrictions on or prohibitions of drilling activities in the GOM; and we are not able to predict the impact of these events on our operations. Our customers may seek to move rigs to locations outside of the GOM, perform activities permitted under the moratorium and the enhanced safety requirements, or attempt to terminate our contracts pursuant to their respective force majeure provisions. If an actual force majeure event occurs, as determined under the applicable contract, these agreements generally provide for a force majeure rate that extends for a specified period of time and varies from contract to contract. Several customers have either declared force majeure or indicated that they may declare force majeure under their relevant contracts. We are working closely with our customers to assess each situation.
Note (2). Victory — In regard solely to the ATP contract, for a minimum of the first 240 days of the initial one-year contract period, Contract Drilling Revenue is to be recognized under normal GAAP accrual accounting at $540,000 per day, and additional contract dayrate of $20,000 is to be recognized as interest income over applicable periods reflecting deferred payment plan. The contract calls for $75,000 per day of the $560,000 contract dayrate to be paid on a current basis and the remaining $485,000 per day to be paid pursuant to an overriding royalty interest structure, as discussed in the Company’s Form 8-K that was filed on June 3, 2009. Remaining days under the initial one-year contract period will be deferred until approximately the fourth quarter of 2011, when the contract provides that the rig will be utilized by the operator at a dayrate of $540,000 payable in cash.
Note (3). Monarch — We received notice from the operator claiming force majeure on the grounds that the moratorium implemented by the U.S. government and the regulations related to increased safety and information requirements prevents them from conducting operations under the drilling contract. We do not believe the events claimed by the operator come within the definition of force majeure under the drilling contract.

 

 

     
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DIAMOND OFFSHORE DRILLING, INC. RIG STATUS REPORT AS OF
AUGUST 13, 2010
                                 
    Nominal                   Dayrate        
Rig Name   WD*   Location   Status   Operator   Current Term   ($000s)   Start Date   Est. End Date
Domestic Jack-ups (3) (Note 1)                        
Ocean Columbia
  250’ IC   GOM   Current Contract   Chevron   two wells + unpriced option   high 40’s   late July 2010   late Sept. 2010
Ocean Spartan
  300’ IC   GOM   Current Contract   Nippon   five wells   low 50’s   late July 2010   late Aug. 2010
 
      GOM   Special Survey   DODI           late Oct. 2010   mid Dec. 2010
Ocean Titan (Note 4)
  350’ IC   GOM   Current Contract   Ankor Energy   3rd 90-day extension +
unpriced option 		  mid 60’s   mid March 2010   early Oct. 2010
 
      GOM   Intermediate Survey   DODI           early Dec. 2010   mid Dec. 2010
Note (4). Titan — On June 15, 2010, we entered into a contract amendment which provides for a special permit standby rate of zero dollars ($0) during periods when the operator is unable to continue operations while waiting on certain regulatory permits.

 

 

     
3 
DIAMOND OFFSHORE DRILLING, INC. RIG STATUS REPORT AS OF
AUGUST 13, 2010
                                     
    Nominal                   Dayrate        
Rig Name   WD*   Location   Status   Operator   Current Term   ($000s)   Start Date   Est. End Date
International Semisubmersibles (27)                        
Mexico
                                    
Ocean New Era
     1,500’     Mexico   Current Contract   Pemex   120-day extension   low 180’s   mid Feb. 2010   mid Aug. 2010
 
           GOM   Actively Marketing   DODI                
North Sea/Mediterranean
                                    
Ocean Nomad
     1,200’     North Sea   Current Contract   SPD/Nautical   one well   mid 240’s   mid Aug. 2010   early Sept. 2010
 
           North Sea   Future Contract   SPD/Xcite   one well + unpriced option   mid 240’s   early Sept. 2010   mid Oct. 2010
Ocean Guardian
     1,500’     Falkland Is.   Current Contract   AGR/Desire/Rockhopper   Seven firm wells plus three remaining optional wells   mid 240’s   mid Feb. 2010   early Dec. 2010
Ocean Princess
     1,500’     North Sea   Current Contract   Talisman   remainder Nomad contract   upper 330’s   late April 2010   early April 2011
 
           North Sea   Future Contract   Talisman   120-day additional term   mid 270’s   early April 2011   late July 2011
Ocean Vanguard
     1,500’     North Sea   Special Survey   DODI           mid May 2010   mid Aug. 2010
 
           North Sea   Resume current contract   Statoil   three-year term + unpriced option   high 340’s   mid Aug. 2010   mid June 2013
Ocean Endeavor (Note 5)
     10,000’     Mobe to Egypt   Current Contract   Burullus   one-year term + unpriced option   mid 220’s   mid July 2010   late June 2011
Ocean Confidence
     10,000’     Mobing   Mobe for Congo   DODI   interrupt contract       mid July 2010   mid Sept. 2010
 
           GOM   Future Contract   Murphy   interim contract for 90 days + unpriced option   low 390’s   mid Sept. 2010   mid Dec. 2010
 
               Mobe to GOM   DODI           mid Dec. 2010   mid Feb. 2011
 
           GOM   Future Contract   Murphy   resume interrupted contract + unpriced option   low 510’s   mid Feb. 2011   mid Feb. 2012
Ocean Valiant (Note 6)
     5,500’     Angola   Current Contract   Total   two-year term   low 620’s   late Sept. 2009   late Sept. 2011
Note (5). Endeavor — In connection with the relocation of this rig out of the GOM pursuant to this contract, the previous operator paid an early termination fee of $31 million in order to satisfy certain contractual obligations.
Note (6). Valiant — Dayrate subject to certain potential adjustments that are not expected to be material.

 

 

     
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DIAMOND OFFSHORE DRILLING, INC. RIG STATUS REPORT AS OF
AUGUST 13, 2010
                                     
    Nominal                   Dayrate        
Rig Name   WD*   Location   Status   Operator   Current Term   ($000s)   Start Date   Est. End Date
Australasia
                                    
Ocean Patriot
     1,500’     Australia   Current Contract   Apache   two-year term + unpriced option   between 380-420   late Jan. 2009   late Dec. 2010
Ocean America
     5,500’     Australia   Current Contract   Woodside   two-year term   mid 420’s   late June 2010   late May 2012
Ocean Epoch
     3,000’     Australia   Current Contract   BHPB   550-day term   low 350’s   late Feb. 2009   late Aug. 2010
 
           Australia   Future Contract   BHPB   90-day extension   low 280’s   late Aug. 2010   mid Dec. 2010
 
           Australia   Future Contract   Japan Energy   one well   mid 290’s   mid Dec. 2010   mid Jan. 2011
Ocean General
     3,000’     Vietnam   Current Contract   PVEP   Approx. two-year term   high 250’s   mid Oct. 2008   late Oct. 2010
Ocean Rover
     8,000’     Malaysia   Current Contract   Murphy   two-year term ext.   low 450’s   late Feb. 2009   early Oct. 2010
 
           Indonesia   Future Contract   Murphy   est. six months   high 380’s   early Oct. 2010   late March 2011
 
           Malaysia   Resume Current Contract   Murphy   resume two-year ext.   low 450’s   late March 2011   mid Aug. 2011

 

 

     
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DIAMOND OFFSHORE DRILLING, INC. RIG STATUS REPORT AS OF
AUGUST 13, 2010
                                     
    Nominal                   Dayrate        
Rig Name   WD*   Location   Status   Operator   Current Term   ($000s)   Start Date   Est. End Date
Brazil
                                  
Ocean Ambassador
   1,100’     Brazil   Current Contract   OGX   3-year term + unpriced option   low 260’s   mid Sept. 2009   mid Sept. 2012
Ocean Whittington
   1,650’     Brazil   Current Contract   Petrobras   5-year term (includes 50% of pot.15% bonus)   low 240’s   late Jan. 2009   late Aug. 2012
Ocean Concord
   2,300’     Brazil   Current Contract   Petrobras   5-year term (includes 50% of pot.15% bonus)   upper 240’s   early Jan. 2008   early Jan. 2013
Ocean Lexington
   2,200’     Brazil   Current Contract   OGX   3-year term + unpriced option   mid 330’s   early Feb. 2010   early Feb. 2013
Ocean Yorktown
   2,850’     Brazil   Current Contract   Petrobras   5-year term (includes 50% of pot.15% bonus)   low 250’s   mid Aug. 2008   mid Aug. 2013
Ocean Yatzy
   3,300’     Brazil   Current Contract   Petrobras   5-year term (includes 50% of pot.10% bonus)   mid 250’s   early Oct. 2009   early Oct. 2014
Ocean Quest
   4,000’     Brazil   Current Contract   OGX   2-year term + unpriced option   low 340’s   mid Feb. 2010   mid Feb. 2011
 
         Brazil   Resume Contract   OGX   2-year term + unpriced option   low 420’s   mid Feb. 2011   late Dec. 2011
Ocean Winner
   4,000’     Brazil   Special Survey   DODI       0   mid May 2010   late Sept. 2010
 
         Brazil   Resume Current Contract   Petrobras   5-year term (includes 50% of pot.10% bonus)   mid 280’s   late Sept. 2010   mid March 2015
Ocean Worker
   4,000’     Brazil   Current Contract   Petrobras   6-year term (includes 50% of pot.10% bonus)   mid 280’s   late Feb. 2009   late Feb. 2015
Ocean Alliance
   5,250’     Brazil   Current Contract   Petrobras   6-year term (includes 50% of pot.15% bonus)   mid 360’s   late July 2010   late June 2016
Ocean Star
   5,500’     Brazil   Current Contract   OGX   one year + unpriced option   low 340’s   mid Feb. 2010   mid Feb. 2011
Ocean Baroness
   7,000’     Mobing   Brazil prep, mobe, acceptance   DODI           mid March   late Aug. 2010
 
           Brazil   Future Contract   Petrobras   three-year term (includes 50% of pot. 5% bonus) + option to convert to 5 years during 1st year of operation   mid 280’s   late Aug. 2010   late Aug. 2013
Ocean Courage
   10,000’     Brazil   Current Contract   Petrobras   five-year term (includes 50% of pot. 6% bonus) + unpriced option   400 - 410   mid Feb. 2010   mid Feb. 2015

 

 

     
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DIAMOND OFFSHORE DRILLING, INC. RIG STATUS REPORT AS OF
AUGUST 13, 2010
                                     
    Nominal                   Dayrate        
Rig Name   WD*   Location   Status   Operator   Current Term   ($000s)   Start Date   Est. End Date
Brazil Cont.
                                    
Ocean Valor
     10,000’     Brazil   Acceptance test   DODI               late Aug. 2010
 
           Brazil   Future Contract   Petrobras   3-year term + option to convert to 5 years during 1st year   low 450’s   late Aug. 2010   late Aug. 2013
Drillship (1)
                                    
Ocean Clipper
     7,875’     Brazil   Current Contract   Petrobras   5-year term (includes 50% of pot.5% bonus)   mid 180’s   mid Dec. 2005   mid Dec. 2010
 
           Brazil   Future Contract   Petrobras   5-year term (includes 50% of pot. 5% bonus)   mid 310’s   mid Dec. 2010   early March 2011
 
           Brazil   Upgrade for Petrobras   DODI           early March 2011   mid May 2011
 
           Brazil   Resume Future Contract   Petrobras   5-year term (includes 50% of pot. 5% bonus)   mid 310’s   mid May 2011   mid Dec. 2015
International Jack-ups (7)
                                    
Ocean Nugget
   300’ IC     Mexico   Resume Current Contract   Pemex   849 day term   mid 130’s   early Feb. 2010   late July 2011
Ocean Summit
   300’ IC     Mexico   Current Contract   Pemex   476 day term   mid 130’s   late July 2009   mid Nov. 2010
Ocean Scepter
   350’ IC     Mobing   Brazil prep, mobe, acceptance   DODI           mid July 2010   early Dec. 2010
 
           Brazil   Future Contract   OGX   one-year term + unpriced option   mid 130’s   early Dec. 2010   early Dec. 2011
Ocean King
   300’ IC     Montenegro   Actively Marketing   DODI                
Ocean Sovereign
   300’ IC     Indonesia   Current Contract   Kodeco   five-month extension   mid 70’s   early May 2010   early Oct. 2010
Ocean Heritage
   300’ IC     Suez Gulf   Current Contract   SUCO   six-month extension   high 50’s   late July 2010   mid Jan. 2011
Ocean Spur
   300’ IC     Egypt   Special Survey   DODI           mid Aug. 2010   late Sept. 2010
 
           Egypt   Future Contract   WEPCO   one-year extension   mid 60’s   late Sept. 2010   late Sept. 2011
NOTES: Rig utilization rates can be adversely impacted by additional downtime due to unscheduled repairs and maintenance, weather conditions and other factors.
An LOI is subject to customary conditions, including the execution of a definitive agreement and as such may not result in a binding contract.
Options are un-priced and any extension of contract is subject to mutually agreeable terms & conditions unless otherwise indicated.
Mobe revenues (if any) and mobe expenses are deferred, and generally are amortized over the life of the contract. GOM = Gulf of Mexico.
*Nominal Water Depth — Nominal water depth (in feet) reflects the current operating water depth capability for each drilling unit. In many cases, individual rigs are capable of drilling, or have drilled, in greater water depths. In all cases, floating rigs are capable of working successfully at greater depths than their nominal depth. On a case by case basis, we may achieve a greater depth capacity by providing additional equipment.
On rig utilization, assume 95% for DP units, 96% for conventionally moored rigs, and 98% for jack-ups.

 

 

     
7 
DIAMOND OFFSHORE DRILLING, INC. RIG STATUS REPORT AS OF
AUGUST 13, 2010
EXPECTED 2010 DOWNTIME — 10 DAYS OR LONGER* (Subject to Change)
Total thru Q2 =1,152
# Days
                     
Rig      July Actual               Q3 Est            Comments
Shipyard — 5-Year Surveys/Maintenance
                    
New Era
     0       0     5-year survey, Q4 (est. 45 days)
Spartan
     0       0     5-year survey, Q4 (est. 50 days)
Spur
     0       39     5-year survey
Vanguard
     31       44     5-year survey
Winner
     31       87     5-year survey & steel replacement
Total 5-year Surveys
     62       170      
Intermediate Surveys/Maintenance
                    
Alliance
     24       24     Uwild and thruster changeout
Titan
     17       17     Maintenance; Uwild, Q4 (est. 10 days)
Total Intermediate Surveys
     41       41      
Contract Preparation/Mobe/Acceptance Testing
                    
Confidence
     31       67     5-year survey, prep, mobe for Congo
Baroness
     31       54     Cont. Brazil prep, mobe, accept. Test
Endeavor
     9       70     Mobe to Egypt
Scepter
     19       80     Contract prep, mobe for Brazil, Q4 (est. 62 days)
Total Contract Prep.
     90       271      
New Rig Commissioning/Contract Prep/Other Maintenance
                    
Worker
     18       18     Maintenance
Courage
     15       15     Maintenance
Valor
     31       62     Prep, mobe, accept. test for Brazil
Other Total
     64       95      
Total
     257       577      
 
* Does Not Include Cold or Hot Stacked Rigs (see following page for cold stacked units)
Survey Costs: During surveys, normal opex applies, plus additional costs.
Mobe Costs: Amortized mobe costs are generally offset by amortized mobe revenues.

 

 

     
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DIAMOND OFFSHORE DRILLING, INC. RIG STATUS REPORT AS OF
AUGUST 13, 2010
                 
COLD STACKED RIGS: 5 — (3 jack-ups, 2 semisubmersibles)
 
Ocean Crusader
   200’ MC   GOM   Stacked   DODI
 
Ocean Drake
   200’ MC   GOM   Stacked   DODI
 
Ocean Champion
   250’ MS   GOM   Stacked   DODI
 
Ocean Voyager
   3,200’   GOM   Stacked   DODI
 
Ocean Bounty
   1,500’   Malaysia   Stacked   DODI
 
Forward-Looking Statements: The rig status 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, letters of intent, utilization, surveys, downtime and other aspects of the Company’s drilling rigs, as well as statements concerning the moratorium on, or suspension of, certain drilling activities in the GOM and enhanced safety requirements implemented by the U.S. government, related legal proceedings and outcomes thereof, the impact of these and related events on our operations and revenues, the effects of claims of force majeure and the outcomes of discussions with operators with regard thereto, rigs being upgraded or to be upgraded and the revised Ocean Victory contract. 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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