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Diamond Offshore Drilling Inc DO
Q2 2010 Earnings Call Transcript

Transcript Call Date 07/22/2010

Operator: Good morning. My name is Christy and I will be your conference operator today. At this time, I would like to welcome everyone to the Diamond Offshore Drilling Second Quarter 2010 Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session.

I would now introduce to you Les Van Dyke, Director of Investor Relations. Please go ahead, sir.

Les Van Dyke - Director, IR: Good morning, and thank you for joining us. With me on the call today are Larry Dickerson, President and Chief Executive Officer; Gary Krenek, Senior Vice President and Chief Financial Officer; and Bob Blair, Senior Vice President, Contracts and Marketing.

Before Larry begins his remarks, I should remind you that statements made during this conference call may constitute forward-looking statements and are inherently subject to a variety of risks and uncertainties that could cause actual results to differ materially from those projected.

Forward-looking statements include, but are not limited to discussions about future revenues and earnings, capital expenditures, industry conditions and competition, dates the drilling rigs will enter service, as well as management's plans and objectives for the future. 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 filed with the Securities and Exchange Commission.

Given these concerns, investors and analysts should not place undue reliance on forward-looking statements. The Company expressly disclaims any obligation to release publicly any updates to any forward-looking statements to reflect any changes in the Company's expectations or any changes in events, conditions or circumstances on which any forward-looking statement is based.

After we have discussed our results, we will have a question-and-answer session during which we ask that you please limit yourself to one question and one follow up, so that we can open the floor to as many people as possible.

With that, I'll turn the meeting over to Larry.

Lawrence R. Dickerson - President and CEO: Thank you, and good morning. I have several topics I'm going to talk about this morning first of which would be the moratorium and its ongoing continuing impact on Diamond Offshore. During the quarter, we have announced two relocations of rigs which, I believe, were for the – certainly, the Endeavor was first. I think, the Murphy was the second. There's also been other announcements of modifications of contracts and various things from other drilling contractors.

I think pretty much each company in each rig plays out differently depending upon its circumstances and situation. So I'll give you a little color behind ours. The Endeavor, which was our first rig that we announced is relocating to Egypt. It was under contract to Devon.

Devon sold all their offshore properties well in advance to the moratorium and while retained contract on the Ocean Endeavor, expected I believe to work at the farm-outs. They were very keen to assist us coming up with a plan that we can relocate the rig. Like we disclosed the terms of that, the general scheme was that between the day rate that we will receive from our contract in Egypt and the termination payment from Devon that we will be placed in the same economic position as if we'd stayed in the Gulf of Mexico, we believe that knowing we got that advantage of being able to preserve some U.S. jobs that we would also have a rig, a very good rig relocated to the Mediterranean, which is a good market and certainly has more certainty going forward than the U.S. market.

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