About Diamond Offshore Drilling

Diamond Offshore Drilling, Inc. provides contract drilling services to the energy industry around the globe. The company has a fleet of 14 offshore drilling rigs, consisting of four owned drillships, eight owned semisubmersible rigs and two managed rigs. The company’s fleet enables it to offer services in the floater market on a worldwide basis. A floater rig is a type of mobile offshore drilling rig that floats and does not rest on the seafloor. This asset class includes self-propelled drillships and semisubmersible rigs. Semisubmersible rigs are consisted of an upper working and living deck resting on vertical columns connected to lower hull members. Such rigs operate in a ‘semi-submerged’ position, remaining afloat, off bottom. Semisubmersibles hold position while drilling either by use of a set of small propulsion units or thrusters that provide dynamic positioning (DP) to keep the rig on location, or with anchors tethered to the seabed to moor the rig. Although DP semisubmersibles are generally self-propelled, such rigs may be moved long distances with the assistance of tug boats. Non-DP, or moored, semisubmersibles require tug boats or the use of a heavy lift vessel to move between locations. A drillship is an adaptation of a ship-shaped maritime vessel that is designed and constructed to carry out drilling operations by means of a derrick with a moon pool centrally located in the hull. Drillships are typically self-propelled and are positioned over a drill site through the use of a DP system. Markets The principal markets for the company’s offshore contract drilling services are the Gulf of Mexico, including the United States (U.S.), and Mexico; Canada; South America, principally offshore Brazil; Australia and Southeast Asia; Europe, principally offshore the United Kingdom (U.K.); East and West Africa; and the Mediterranean. The company actively markets its rigs worldwide. From time to time, the company’s fleet operates in various other markets throughout the world. Offshore Contract Drilling Services The company’s contracts to provide offshore drilling services vary in their terms and provisions. The company typically obtains its contracts through a competitive bid process, although it is not unusual for it to be awarded drilling contracts following direct negotiations. The company’s drilling contracts generally provide for a basic dayrate regardless of whether or not drilling results in a productive well. Drilling contracts generally also provide for reductions in rates during periods when the rig is being moved or when drilling operations are interrupted or restricted by equipment breakdowns, adverse weather conditions or other circumstances. Rig Management and Marketing Services In May 2021, the company entered into an arrangement with Aquadrill LLC (Aquadrill), an offshore drilling company, whereby it would provide management and marketing services for three rigs (the MMSA). Per the MMSA, the company earns a fixed daily fee for each rig, based on the status of the rig as either cold stacked, warm stacked, reactivation or operating. In addition, while a rig is under the MMSA, the company is entitled to reimbursement of direct costs incurred in accordance with the MMSA. When a rig is operating under contract, the MMSA also provides for the payment of a variable fee based on the gross margin attained by the rig, including a bonus/malice component dependent on the financial performance of the rig, plus a commission as a percentage of revenue related to marketing services. The company manages two drillships, the West Auriga and the West Vela, both of which were contracted as of December 31, 2022. The MMSA for a third rig, the West Capricorn, was terminated in the third quarter of 2022 due to the sale of the rig by its owner. Additionally, the company has entered into and is operating under charter hire agreements with Aquadrill (the Charters) for the West Auriga and West Vela for their contracts in the U.S. Gulf of Mexico. While the rigs are chartered, the MMSA is suspended and will resume upon termination of the Charters. Customers The company provides offshore drilling services to a customer base that includes major and independent oil and gas companies and government-owned oil companies. During 2022, the company performed services for seven different customers. For the year ended December 31, 2022, the company’s most significant customers were BP, Woodside, Petróleo Brasileiro S.A., Shell, and Occidental. History Diamond Offshore Drilling, Inc. was founded in 1953. The company was incorporated in Delaware in 1989.