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July 7, 2010

Ensco buys high-spec jack-up from Diamond Offshore

Diamond Offshore Drilling, Inc. (NYSE:DO) today announced the sale of the 350-ft. high-specification jack-up Ocean Shield to Ensco plc. Sale price of the rig is $186 million. The Shield is currently working for Apache Corp. in Australia under a term contract that Ensco will assume.

Larry Dickerson, Diamond Offshore president and CEO, noted, "This opportunistic transaction involving a single rig will further augment our funds for potential investment in deepwater assets, such as last year's purchase of the Ocean Valor and Ocean Courage."

The Shield is a sister rig to the Ocean Scepter, which is contracted to OGX for a one-year term in Brazil. The Scepter is not for sale.

Ensco plc (NYSE:ESV) said it would rename the Ocean Shield -- a KFELS Super B Class design, delivered in 2008 -- ENSCO 109.

Ensco said the jack-up's unique design includes two million pound hoisting capacity, a 15,000 psi high-pressure BOP and nearly 5,000 bbls of liquid mud capacity making it ideally suited to drill deep gas wells -- a high growth area in the premium jack-up market.

The design also permits drilling in water depths up to 350 ft to a total depth of 35,000 ft.

Industry-wide, Ensco noted, all of the KFELS Super B Class jackups are contracted.

Chairman, President and CEO Dan Rabun stated, "The Middle East and Southeast Asia, in particular, are regions where we believe customers will require more high-spec, deep-gas jack-up rigs. ENSCO 109 will address this growing need and is expected to command higher day rates than standard duty jack-ups."

Mr. Rabun added, "Purchasing ENSCO 109 is part of our long-established strategy of high-grading our fleet by investing in newer equipment. We will continue to look for opportunities to acquire premium offshore rigs that can generate favorable returns for our shareholders."

ENSCO 109 was purchased with available cash for approximately $186 million. The Company will assume the current drilling contract for the rig with Apache Corp. in Australia that extends through May 2011.

The rig was built in Keppel FELS shipyard in Singapore where Ensco's four remaining ENSCO 8500 Series ultra-deepwater semisubmersible drilling rigs are being constructed.


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