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July 13, 2010

Another deepwater rig leaves the GOM

Diamond Offshore Drilling, Inc. (NYSE:DO) has announced that a subsidiary has agreed to suspend a Gulf of Mexico (GOM) contract and has entered into a new multi-well international commitment with a subsidiary of Murphy Exploration and Production Company that will result in the relocation of the dynamically positioned, deepwater drilling rig Ocean Confidence to the Republic of Congo. The rig departed the GOM over the weekend and is expected to arrive on location offshore Africa within approximately 60 days.

Diamond Offshore President and CEO, Larry Dickerson, noted, "As the uncertainty about continued deepwater drilling in the GOM persists, we must consider alternatives that allow our deepwater assets to remain employed. The contract we suspended with Murphy has been restructured into a one-year commitment in the GOM that is expected to recommence when our customer is satisfied that it can obtain the necessary permits and can meet any new regulatory requirements."

The new international contract is a three-well commitment, plus an option for additional work, and includes an obligation for the customer to mobilize the rig to and from the Republic of Congo. The remaining one-year Gulf of Mexico commitment and new international commitment are expected to generate combined maximum total revenue of approximately $234 million.

Last week Diamond Offshore reported that that it had entered into a term contract ending June 30, 2011, plus option, with Burullus Gas Company S.A.E. under which it was mobilizing the Ocean Endeavor from the GOM to Egypt.


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