10-Q

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☒ No ☐

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of August 5, 2024 Common stock, $0.0001 par value per share 103,213,055 shares.

The accompanying notes are an integral part of the condensed consolidated financial statements.

1. General Information

The unaudited condensed consolidated financial statements of Diamond Offshore Drilling, Inc. and subsidiaries, which we refer to as “Diamond Offshore,” “Company,” “we,” “us” or “our,” should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2023.

Planned Merger with Noble Corporation plc

On June 9, 2024, Diamond Offshore Drilling, Inc. (or DODI) entered into an Agreement and Plan of Merger (or the Merger Agreement) with Noble Corporation plc, a public limited company incorporated under the laws of England and Wales (or Noble), Dolphin Merger Sub 1, Inc., a Delaware corporation and indirect wholly owned subsidiary of Noble (or Merger Sub 1) and Dolphin Merger Sub 2, Inc., a Delaware corporation and indirect wholly owned subsidiary of Noble (or Merger Sub 2). The Merger Agreement provides that, among other things and subject to the terms and conditions of the Merger Agreement, (1) Merger Sub 1 will merge with and into DODI, with DODI surviving as a wholly-owned indirect subsidiary of Noble (or the First Merger and the effective time thereof, the
First Merger Effective Time), and subsequently DODI, as the surviving entity in the First Merger, will merge with and into Merger Sub 2, with Merger Sub 2 surviving as an indirect wholly-owned subsidiary of Noble (or the Second Merger and the effective thereof, the Effective Time; and the First Merger together with the Second Merger, the Merger) and (2) at the First Merger Effective Time, each outstanding share of common stock of DODI (other than any Cancelled Shares and any Appraisal Shares (each as defined in the Merger Agreement)) will be converted into the right to receive the following consideration (or collectively, the Merger Consideration): (i) $5.65 in cash, without interest, payable to the holders of the DODI common stock, (ii) 0.2316 (or the Exchange Ratio) ordinary shares of Noble and (iii) any cash in lieu of fractional ordinary shares of Noble. The completion of the transaction is subject to shareholder and regulatory approvals and other customary closing conditions.

Interim Financial Information

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (or GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission. Accordingly, pursuant to such rules and regulations, they do not include all disclosures required by GAAP for annual financial statements. The condensed consolidated financial information has not been audited but, in the opinion of management, includes all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of Diamond Offshore’s condensed consolidated balance sheets, statements of operations, statements of comprehensive income, statements of stockholders’ equity and statements of cash flows at the dates and for the periods indicated. Results of operations for interim periods are not necessarily indicative of results of operations for the respective full years.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimated.

Restricted Cash

We maintain a restricted cash bank account that is subject to restrictions pursuant to a management services agreement with an offshore drilling company. See Note 2 “Revenue from Contracts with Customers.”

We classify such restricted cash accounts in current assets if the restrictions are expected to expire or otherwise be resolved within one year or if such funds are considered to offset current liabilities. At June 30, 2024 and December 31, 2023, our restricted cash was considered to be current and was recorded in “Restricted cash” in our unaudited Condensed Consolidated Balance Sheets.

Asset Held for Sale

We reported the $1.0 million carrying value of the Ocean Valiant as “Asset held for sale” in our unaudited Condensed Consolidated Balance Sheets at June 30, 2024.

Accounting Principles Not Yet Adopted

In December 2023, the Financial Accounting Standards Board (or FASB) issued Accounting Standards Update (or ASU) No. 2023-09, Income Tax (Topic 740): Improvements to Income Tax Disclosures (or ASU 2023-09). ASU 2023-09 requires business entities on an annual basis to (i) disclose specific categories in the rate reconciliation and (ii) provide additional information for reconciling items that meet certain quantitative thresholds. The new guidance is effective for public business entities for annual periods beginning after December 15, 2024. Early adoption is permitted. We are in the process of evaluating the impact of adopting this new guidance on our consolidated financial statement disclosures.

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (or ASU 2023-07). ASU 2023-07 modifies the disclosure and presentation requirements of reportable segments and requires the disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit and loss. In addition, the new guidance enhances interim disclosure requirements, clarifies circumstances in which an entity can disclose multiple segment measures of profit or loss, provides new segment disclosure requirements for entities with a single reportable segment, and contains other disclosure requirements. ASU 2023-07 is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. We are in the process of evaluating the impact of adopting this new guidance on our consolidated financial statement disclosures.

2. Revenue from Contracts with Customers

Our contracts with customers provide for an offshore drilling rig and drilling services on a dayrate contract basis. The integrated services provided under our contracts primarily include (i) provision of an offshore drilling rig, the work crew and supplies of equipment and services necessary to operate the rig, (ii) mobilization and demobilization of the rig to and from the drill site and (iii) performance of rig preparation activities and/or modifications required for each contract.

We account for the integrated services provided within our drilling contracts as a single performance obligation satisfied over time, comprised of a series of distinct time increments in which we provide drilling services. The total transaction price is recognized for each drilling contract by estimating both fixed and variable consideration expected to be earned over the contract term.

Revenues Related to Managed Rigs

In 2021, we entered into an arrangement with an offshore drilling company whereby we agreed to provide management and marketing services (or the MMSA) for certain of their rigs. The MMSA provided for (i) a daily fixed fee, based on status of the drilling rig, (ii) marketing fees based on a percentage of the earned dayrate of a drilling contract secured by us on behalf of the rig owner, (iii) a variable management fee and (iv) reimbursement of direct costs incurred. The fixed and variable fees were recognized in “Contract drilling” revenue in our unaudited Condensed Consolidated Statements of Operations. Revenue related to the reimbursement of expenses incurred and billed to the rig owner were recorded as “Revenues related to reimbursable expenses” in our unaudited Condensed Consolidated Statements of Operations.

We may enter into certain drilling contracts directly with a customer. We are considered principal or agent under these transactions and recognize revenue under the terms of the contract. Such amounts are reported as “Contract drilling” revenue in our unaudited Condensed Consolidated Statements of Operations. In addition, we charter the related drilling rig from the rig owner to satisfy our performance obligation under the contract. We have determined that the arrangement to charter the rig is an operating lease, and the related charter fee has been reported as lease expense within "Contract drilling, excluding depreciation" in our unaudited Condensed Consolidated Statements of Operations.

The marketing arrangements for each of the managed rigs, the West Auriga and the West Vela, were terminated in 2023, and the management and charter agreements for the West Auriga were terminated in the first quarter of 2024. The West Auriga was returned to its owner at the end of February 2024. We also received notice of termination of the management agreement for the West Vela in April 2024, which became effective in July 2024. The termination of the management agreement had no effect on the bareboat charter agreement for the West Vela, which will continue in accordance with its terms until the completion of the rig’s existing drilling contract and any option periods.

Contract Balances

The following table provides information about receivables, contract assets and contract liabilities related to our contracts with customers (in thousands):


	June 30,			December 31,
	2024			2023
Trade receivables	$	197,169		$	253,367
Current contract assets (1)		3,638			2,575
Current contract liabilities (deferred revenue) (1)		(18,592	)		(12,634	)
Noncurrent contract liabilities (deferred revenue) (1)		(3,281	)		(3,947	)

(1)

Contract assets and contract liabilities may reflect balances which have been netted together on a contract basis. Net current contract asset and liability balances are included in “Prepaid expenses and other current assets” and “Accrued liabilities,” respectively, and net noncurrent contract liability balances are included in “Other liabilities” in our unaudited Condensed Consolidated Balance Sheets.

Changes in the contract assets and the contract liabilities balances during the period are as follows (in thousands):


	Contract			Contract
	Assets			Liabilities
Balance as of January 1, 2024	$	2,575		$	(16,581	)
Decrease due to amortization of revenue included in the beginning contract liability balance		—			5,596
Increase due to cash received, excluding amounts recognized as revenue during the period		—			(10,888	)
Increase due to revenue recognized during the period but contingent on future performance		1,464			—
Decrease due to transfer to receivables during the period		(323	)		—
Adjustments		(78	)		—
Balance as of June 30, 2024	$	3,638		$	(21,873	)

Transaction Price Allocated to Remaining Performance Obligations

The following table reflects revenue expected to be recognized in the future related to unsatisfied performance obligations as of June 30, 2024 (in thousands):


	For the Year Ending December 31,
	2024 (1)			2025			2026			2027			Total
Mobilization and contract preparation revenue	$	(2,707	)	$	(1,336	)	$	(1,336	)	$	(1,271	)	$	(6,650	)
Capital modification revenue		(2,324	)		—			—			—			(2,324	)
Blended rate/other revenue		(10,161	)		(2,738	)		—			—			(12,899	)
Total	$	(15,192	)	$	(4,074	)	$	(1,336	)	$	(1,271	)	$	(21,873	)

(1)

Represents the six-month period beginning July 1, 2024.

The revenue included above consists of expected fixed mobilization and upgrade revenue for both wholly and partially unsatisfied performance obligations, as well as expected variable mobilization and upgrade revenue for partially unsatisfied performance obligations, which has been estimated for purposes of allocating across the entire corresponding performance obligations. The actual timing of recognition of such amounts may vary due to factors outside of our control. We have applied the disclosure practical expedient in FASB ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), and its related amendments and have excluded estimated variable consideration related to wholly unsatisfied performance obligations or to distinct future time increments within our contracts, including dayrate revenue.

3. Supplemental Financial Information

Unaudited Condensed Consolidated Balance Sheets Information

Accounts receivable, net of allowance for credit losses, consist of the following (in thousands):


	June 30,			December 31,
	2024			2023
Trade receivables	$	197,169		$	253,367
Insurance claim receivable (1)		21,693			—
Value added tax receivables		6,744			5,256
Related party receivables		96			155
Other		681			1,346
		226,383			260,124
Allowance for credit losses (2)		(5,715	)		(5,801	)
Total	$	220,668		$	254,323

(1)

See Note 8 “Ocean GreatWhite Insurance Claim” for a discussion of an insurance claim associated with an equipment incident on one of our rigs.

(2)

The allowance for credit losses at June 30, 2024 and December 31, 2023 represents our estimate of credit losses associated with our “Trade receivables” and “Current contract assets.” See Note 4 “Financial Instruments and Fair Value Disclosures” for a discussion of our concentrations of credit risk and allowance for credit losses.

Prepaid expenses and other current assets consist of the following (in thousands):


	June 30,		December 31,
	2024		2023
Collateral deposit	$	13,735	$	11,857
Deferred contract costs		10,571		20,552
Prepaid taxes		9,951		10,868
Rig spare parts and supplies		8,527		4,694
Prepaid insurance		5,215		3,437
Current contract assets		3,638		2,575
Software maintenance agreements and subscriptions		2,237		1,408
Prepaid rig costs		1,463		3,668
Deferred survey costs		1,401		1,418
Other		4,862		2,935
Total	$	61,600	$	63,412

Accrued liabilities consist of the following (in thousands):


	June 30,		December 31,
	2024		2023
Rig operating costs	$	47,364	$	42,893
Contract advances		31,687		63,618
Payroll and benefits		29,972		35,215
Deferred revenue		18,592		12,634
Interest payable		11,700		13,013
Current operating lease liability		7,958		8,436
Accrued capital project/upgrade costs		6,221		10,766
Personal injury and other claims		5,487		7,391
Shorebase and administrative costs		4,890		5,699
Deposit for equipment sale		580		1,977
Other		276		1,694
Total	$	164,727	$	203,336

Unaudited Condensed Consolidated Statements of Cash Flows Information

Noncash operating, investing and financing activities excluded from the unaudited Condensed Consolidated Statements of Cash Flows and other supplemental cash flow information are as follows (in thousands):


	Six Months Ended June 30,
	2024		2023
Accrued but unpaid capital expenditures at period end	$	6,221	$	12,209
Common stock withheld for payroll tax obligations (1)		1,317		734
Cash interest payments		25,460		19,352
Cash income taxes paid, net of (refunds):
Foreign		3,223		3,147
U.S. Federal		2,472		(5,744	)
State		—		1

(1)

Represents the cost of 98,928 and 62,597 shares of common stock withheld to satisfy payroll tax obligations incurred as a result of the vesting of restricted stock and restricted stock units during the six-month periods ended June 30, 2024 and June 30, 2023, respectively, which is presented as a deduction from stockholders’ equity in “Treasury stock” in our unaudited Condensed Consolidated Balance Sheets.

4. Financial Instruments and Fair Value Disclosures

Concentrations of Credit Risk and Allowance for Credit Losses

Our credit risk arises primarily from trade receivables. The market for our services is the offshore oil and gas industry, and our customer base consists primarily of major and independent oil and gas companies, as well as government-owned oil companies. At June 30, 2024, we believed that we had potentially significant concentrations of credit risk due to the number of rigs we had contracted and our limited number of customers, as some of our customers have contracted for multiple rigs.

In general, before working for a customer with whom we have not had a prior business relationship and/or whose financial stability may be uncertain, we perform a credit review on that customer, including a review of its credit ratings and financial statements. Based on our credit review, we may require that the customer have a bank issue a letter of credit on its behalf, prepay for the services in advance or provide other credit enhancements. We currently have two customers for which prepayments are required and full payment is due prior to commencement of the contracts in the second half of 2024 and the beginning of 2025, respectively. At June 30, 2024, no amounts were owed by these two customers.

Pursuant to FASB ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments and its related amendments (or ASU 2016-13), we have reviewed our historical credit loss experience over a look-back period of ten years, which we deem to be representative of both up-turns and down-cycles in the offshore drilling industry. Based on this review, we developed a credit loss factor using a weighted-average ratio of our actual credit losses to revenues during the look-back period. We also considered current and future anticipated economic conditions in determining our credit loss factor, including crude oil prices and liquidity of credit markets. In applying the requirements of ASU 2016-13 and its related amendments (or collectively, CECL), we determined that it would be appropriate to segregate our trade receivables into three credit loss risk pools based on customer credit ratings, each of which represents a tier of increasing credit risk. We calculated a credit loss factor based on historical loss rate information and applied a multiple of our credit loss factor to each of these risk pools, considering the impact of current and future economic information and the level of risk associated with these pools, to calculate our current estimate of credit losses. Trade receivables that are fully covered by allowances for credit losses are excluded from these risk pools for purposes of calculating our current estimate of credit losses.

At June 30, 2024, $6.2 million in trade receivables were considered past due by 30 days or more, of which $5.5 million have been fully reserved. The remaining $0.7 million were less than a year past due and considered collectible. For purposes of calculating our current estimate of credit losses at June 30, 2024 and December 31, 2023, all trade receivables, except for those fully reserved, were deemed to be in a single risk pool based on their credit ratings at each respective period. Our total allowance for credit losses was $5.7 million and $5.8 million at June 30, 2024 and

December 31, 2023, respectively, including $0.3 million for each period related to our current estimate of credit losses under CECL. See Note 3 “Supplemental Financial Information — Unaudited Condensed Consolidated Balance Sheets Information.”

Fair Values

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy prescribed by GAAP requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

There are three levels of inputs that may be used to measure fair value:


Level 1	Quoted prices for identical instruments in active markets.
Level 2	Quoted market prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.
Level 3	Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. Level 3 assets and liabilities generally include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation or for which there is a lack of transparency as to the inputs used.

Certain of our assets and liabilities are required to be measured at fair value on a recurring basis in accordance with GAAP. In addition, certain assets and liabilities may be recorded at fair value on a nonrecurring basis. Generally, we record assets at fair value on a nonrecurring basis as a result of impairment charges.

Assets and liabilities measured at fair value are summarized below (in thousands).


	June 30, 2024
	Fair Value Measurements Using
	Level 1			Level 2		Level 3		Assets (Liabilities) at Fair Value			Total Losses for Six Months Ended (2)
Recurring fair value measurements:
Short-term investments (1)	$	79,866		$	—	$	—	$	79,866		$	—
Liability-classified restricted stock units (2)	$	(1,511	)	$	—	$	—	$	(1,511	)	$	(243	)


	December 31, 2023
	Fair Value Measurements Using
	Level 1			Level 2		Level 3		Assets (Liabilities) at Fair Value			Total Losses for Year Ended (2)
Recurring fair value measurements:
Short-term investments (1)	$	92,308		$	—	$	—	$	92,308		$	—
Liability-classified restricted stock units (2)	$	(1,259	)	$	—	$	—	$	(1,259	)	$	(252	)

(1)

Represents short-term investments, with original maturities of three months or less, in debt securities classified as available for sale.

(2)

The fair value of restricted stock units was estimated based on the quoted market price of our common stock at the respective balance sheet date. The total loss for the period or year includes an increase in stock compensation expense due to the “marking-to-market” of liability-classified restricted stock units granted to our non-employee directors on a recurring basis.

We believe that the carrying amounts of our other financial assets and liabilities (excluding our long-term debt), which are not measured at fair value in our unaudited Condensed Consolidated Balance Sheets, approximate fair value based on the following assumptions:

•

Cash and cash equivalents and restricted cash – The carrying amounts approximate fair value because of the short maturity of these instruments.

•

Accounts receivable and accounts payable – The carrying amounts approximate fair value based on the nature of the instruments.

Our long-term debt is not measured at fair value on a recurring basis; however, under the GAAP fair value hierarchy, such indebtedness would be considered Level 2 liabilities. The fair value of the instrument was derived using valuation specialists at June 30, 2024 and December 31, 2023.

Fair values and related carrying values of our Second Lien Notes (as defined below in Note 6 “Long-Term Debt”) are shown below (in millions).


	June 30, 2024				December 31, 2023
	Fair Value		Carrying Value		Fair Value		Carrying Value
Second Lien Notes	$	575.2	$	550.0	$	562.6	$	550.0

We have estimated the fair value amounts by using appropriate valuation methodologies and information available to management. Certain inputs and value drivers are observed and obtained in active markets from similar assets or liabilities while developing these estimates, and accordingly, no assurance can be given that the estimated values are indicative of the amounts that would be realized in a free market exchange.

6. Long-Term Debt

At June 30, 2024 and December 31, 2023, the carrying value of our long-term debt, net of unamortized debt issuance costs, was comprised as follows (in thousands):


	June 30,		December 31,
	2024		2023
$550 Million Senior Secured Second Lien Notes due 2030	$	534,480	$	533,514

Second Lien Notes

On September 21, 2023, Diamond Foreign Asset Company and Diamond Finance, LLC (collectively referred to as the Issuers) issued $550.0 million aggregate principal amount of 8.5% Senior Secured Second Lien Notes due October 2030 (or the Second Lien Notes) with interest payable semi-annually in arrears on April 1 and October 1 of each year, beginning on April 1, 2024. The Second Lien Notes are fully and unconditionally guaranteed, jointly and severally, on a senior secured basis by Diamond Offshore Drilling, Inc. (or DODI) and each of its existing restricted subsidiaries (other than the Issuers) and by certain of DODI’s future restricted subsidiaries (other than the Issuers).

The Second Lien Notes obligate DODI and its specified subsidiaries to comply with an indenture dated as of September 21, 2023 (or the Indenture) entered into by the Issuers, DODI and certain of its subsidiaries named therein and HSBC Bank USA, National Association. The Indenture contains covenants that, among other things, restrict DODI’s ability and the ability of certain of its subsidiaries to: (i) incur additional debt and issue certain preferred stock; (ii) incur or create liens; (iii) make certain dividends, distributions, investments and other restricted payments; (iv) sell or otherwise dispose of certain assets; (v) engage in certain transactions with affiliates; and (vi) merge, consolidate, amalgamate or sell, transfer, lease or otherwise dispose of all or substantially all of DODI’s assets. These covenants are subject to important exceptions and qualifications.

The Second Lien Notes were valued at par at issuance and were presented net of unamortized debt issuance costs of $15.5 million and $16.5 million, at June 30, 2024 and December 31, 2023, respectively. At June 30, 2024, the effective interest rate on the Second Lien Notes was 9.10%.

Revolving Credit Agreement

Our revolving credit agreement provides for a $300.0 million senior secured revolving credit facility (or RCF), which is scheduled to mature on April 22, 2026. Borrowings under the RCF may be used to finance capital expenditures, pay fees, commissions and expenses in connection with the loan transactions, and for working capital and other general corporate purposes. Availability of borrowings under the RCF is subject to the satisfaction of certain conditions, including restrictions on borrowings if, after giving effect to any such borrowings and the application of the proceeds thereof, (i) the aggregate amount of Available Cash (as defined in the RCF) would exceed $125.0 million, (ii) the RCF Collateral Coverage Ratio (as defined in the RCF) would be less than 2.00 to 1.00 or (iii) the Total Collateral Coverage Ratio (as defined in the RCF) would be less than 1.30 to 1.00.

At June 30, 2024 and August 5, 2024, we had no borrowings outstanding under the RCF. As of August 5, 2024, approximately $300.0 million was available for borrowings under the RCF subject to its terms and conditions.

There is no capacity for the issuance of new letters of credit under the RCF, but the RCF permits us to obtain up to $50.0 million in letters of credit outside the RCF. We have obtained a separate $25.0 million letter of credit facility; however, letters of credit thereunder must be cash collateralized. During the second quarter of 2024, we utilized $1.9 million of this facility for the issuance of a letter of credit, which will expire in May 2025.

At June 30, 2024, we were in compliance with all covenants under the Second Lien Notes and the RCF.

7. Commitments and Contingencies

Various claims have been filed against us in the ordinary course of business, including claims by offshore workers alleging personal injuries. With respect to each claim or exposure, we have made an assessment, in accordance with GAAP, of the probability that the resolution of the matter would ultimately result in a loss. When we determine that an unfavorable resolution of a matter is probable and such amount of loss can be determined, we record a liability for the amount of the estimated loss at the time that both of these criteria are met. Our management believes that we have recorded adequate accruals for any liabilities that may reasonably be expected to result from these claims.

Non-Income Tax and Related Claims. We have received assessments related to, or otherwise have exposure to, non-income tax items such as sales-and-use tax, value-added tax, ad valorem tax, custom duties, and other similar taxes in various taxing jurisdictions. We have determined that we have a probable loss for certain of these taxes and the related penalties and interest and, accordingly, have recorded a $10.9 million and $12.7 million liability at June 30, 2024 and December 31, 2023, respectively, in “Other liabilities” in our unaudited Condensed Consolidated Balance Sheets. We intend to defend these matters vigorously; however, the ultimate outcome of these assessments and exposures could result in additional taxes, interest and penalties for which the fully assessed amounts would have a material adverse effect on our financial condition, results of operations and cash flows.

Other Litigation. We have been named in various other claims, lawsuits or threatened actions that are incidental to the ordinary course of our business. We intend to defend these matters vigorously; however, litigation is inherently unpredictable, and the ultimate outcome or effect of any claim, lawsuit or action cannot be predicted with certainty. As a result, there can be no assurance as to the ultimate outcome of any litigation matter. Any claims against us, whether meritorious or not, could cause us to incur significant costs and expenses and require significant amounts of management and operational time and resources. In the opinion of our management, no such pending or known threatened claims, actions or proceedings against us are expected to have a material adverse effect on our consolidated financial position, results of operations or cash flows.

Personal Injury Claims. Under our current insurance policies, which renewed effective May 1, 2024, we generally self-insure $1.0 million to $2.5 million per occurrence, depending on jurisdiction, with respect to personal injury claims not related to named windstorms in the U.S. Gulf of Mexico, which primarily result from Jones Act liability in the U.S. Gulf of Mexico. Depending on the nature, severity, and frequency of claims that might arise during the policy year, if the aggregate level of claims exceeds certain thresholds, we may self-insure up to $100.0 million for each subsequent occurrence.

The Jones Act is a federal law that permits seamen to seek compensation for certain injuries during the course of their employment on a vessel and governs the liability of vessel operators and marine employers for the work-related injury or death of an employee. We engage outside consultants to assist us in estimating our aggregate liability for personal injury claims based on our historical losses and utilizing various actuarial models. We allocate a portion of the aggregate liability to “Accrued liabilities” based on an estimate of claims expected to be paid within the next twelve months with the residual recorded as “Other liabilities.” At June 30, 2024, our estimated liability for personal injury claims was $21.3 million, of which $15.9 million and $5.4 million were recorded in “Accrued liabilities” and “Other liabilities,” respectively, in our unaudited Condensed Consolidated Balance Sheets. At December 31, 2023, our estimated liability for personal injury claims was $14.6 million, of which $7.4 million and $7.2 million were recorded in “Accrued liabilities” and “Other liabilities,” respectively, in our unaudited Condensed Consolidated Balance Sheets. The eventual settlement or adjudication of these claims could differ materially from our estimated amounts due to uncertainties such as:

•

the severity of personal injuries claimed;

•

significant changes in the volume of personal injury claims;

•

the unpredictability of legal jurisdictions where the claims will ultimately be litigated;

•

inconsistent court decisions; and

•

the risks and lack of predictability inherent in personal injury litigation.

Purchase Obligations. At June 30, 2024, we had no purchase obligations for major rig upgrades or any other significant obligations, except for those related to our direct rig operations, which arise during the normal course of business.

Services Agreement. In February 2016, we entered into a ten-year agreement with a subsidiary of Baker Hughes Company (formerly named Baker Hughes, a GE company) to provide services with respect to certain blowout preventer and related well control equipment (or Well Control Equipment) on our drillships. Such services include management of maintenance, certification and reliability with respect to such equipment. Future commitments under the contractual services agreements are estimated to be approximately $25.8 million annually. Total future commitments are projected to be $82.0 million in the aggregate over the remaining term of the agreement, including a $37.0 million commitment for the purchase of consumables and capital spare parts owned and controlled by the vendor at the end of the service arrangement.

In addition, we lease Well Control Equipment for our drillships under ten-year finance leases that commenced in 2016 that also include an option to purchase the leased equipment at the end of the respective lease term.

Letters of Credit and Other. As of June 30, 2024, an aggregate of $12.8 million in bonds and letters of credit had been issued on our behalf in connection with certain customs, tax assessment and tenant security deposit requirements. The entire amount had been cash collateralized as of June 30, 2024.

9. Earnings Per Share

We compute basic earnings per share by dividing net income available to holders of our common stock by the weighted-average number of shares of our common stock outstanding during the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue our common stock (common stock equivalents) were exercised or converted into common stock. Basic and diluted earnings per share (or EPS) was calculated in accordance with the treasury stock method, and includes all potentially dilutive stock equivalents, including warrants, restricted stock unit awards and performance stock unit awards.

A reconciliation of the numerators and denominators of our basic and diluted EPS computations is summarized as follows (in thousands).


	Three Months Ended June 30,
	2024		2023
Net income – basic and diluted (numerator)	$	9,327	$	238,783
Weighted average shares – basic (denominator):		102,542		101,487
Dilutive effect of stock-based awards		2,546		2,749
Weighted average shares including conversions – diluted (denominator)		105,088		104,236


	Six Months Ended June 30,
	2024		2023
Net income – basic and diluted numerator	$	20,939	$	246,012
Weighted average shares – basic (denominator):		102,491		101,409
Dilutive effect of stock-based awards		2,436		2,682
Weighted average shares including conversions – diluted (denominator)		104,927		104,091

The computation of EPS for the three-month and six-month periods ended June 30, 2024 excluded non-vested stock-based awards of 335,614 shares and 309,798 shares, respectively, as the inclusion of such would have been antidilutive for the periods. The computation of EPS for the three-month and six-month periods ended June 30, 2023 excluded non-vested stock-based awards of 431,241 shares and 391,744 shares, respectively.

As of June 30, 2024, we had 7.5 million stock warrants outstanding (or Warrants) to purchase shares of our common stock that were exercisable for one share of common stock per Warrant at an exercise price of $29.22 (subject to adjustment). The Warrants are exercisable until they expire on April 23, 2026. The presumed exercise of these Warrants into shares of our common stock would have an antidilutive effect as the exercise price per warrant exceeded the average price of our common stock and they have been excluded from the computation of EPS for all periods presented.

10. Segments and Geographic Area Analysis

We provide contract drilling services with different types of offshore drilling rigs and also provide such services in many geographic locations. However, we have aggregated these operations into one reportable segment based on the similarity of economic characteristics due to the nature of the revenue-earning process as it relates to the offshore drilling industry over the operating lives of our drilling rigs and other qualitative factors such as (i) the nature of services provided (contract drilling), (ii) similarity in operations (interchangeable rig crews and shared management and marketing, engineering, marine and maintenance support), (iii) similar regulatory environment (depending on customer and/or location) and (iv) similar contractual arrangements with customers.

Our drilling rigs are highly mobile and may be moved to other markets throughout the world in response to market conditions or customer needs. At June 30, 2024, our active drilling rigs were located offshore four countries in addition to the United States. Revenues by geographic area are presented by attributing revenues to the individual country where the services were performed during the periods presented, which may not be indicative of where the rigs are currently located.

The following tables provide information about disaggregated revenue by country (in thousands):


	Three Months Ended June 30, 2024
	Total Contract Drilling Revenues		Revenues Related to Reimbursable Expenses		Total
United States	$	134,728	$	5,459	$	140,187
United Kingdom		34,535		1,833		36,368
Brazil		27,712		2,123		29,835
Senegal		23,388		—		23,388
Australia		19,866		3,242		23,108
Total	$	240,229	$	12,657	$	252,886


	Six Months Ended June 30, 2024
	Total Contract Drilling Revenues		Revenues Related to Reimbursable Expenses		Total
United States	$	281,203	$	12,787	$	293,990
United Kingdom		52,434		7,475		59,909
Brazil		49,958		—		49,958
Senegal		60,332		3,649		63,981
Australia		55,072		4,586		59,658
Total	$	498,999	$	28,497	$	527,496


	Three Months Ended June 30, 2023
	Total Contract Drilling Revenues		Revenues Related to Reimbursable Expenses		Total
United States	$	129,929	$	8,531	$	138,460
United Kingdom		59,841		4,592		64,433
Brazil		21,068		—		21,068
Senegal		53,864		2,527		56,391
Australia		288		923		1,211
Total	$	264,990	$	16,573	$	281,563


	Six Months Ended June 30, 2023
	Total Contract Drilling Revenues		Revenues Related to Reimbursable Expenses		Total
United States	$	234,510	$	21,089	$	255,599
United Kingdom		77,543		5,652		83,195
Brazil		41,728		—		41,728
Senegal		105,995		5,708		111,703
Australia		19,597		1,762		21,359
Total	$	479,373	$	34,211	$	513,584

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion should be read in conjunction with our unaudited condensed consolidated financial statements (including the notes thereto) included in Item 1 of Part I of this report, Item 1A, “Risk Factors”[1] included in our Annual Report on Form 10-K for the year ended December 31, 2023 and Part II, Item 1A, “Risk Factors” in this report. References to “Diamond Offshore,” “Company,” “we,” “us” or “our” mean Diamond Offshore Drilling, Inc., a Delaware corporation, and its subsidiaries.

We provide contract drilling services to the energy industry around the globe with a fleet of 12 floater rigs (four owned drillships, seven owned semisubmersibles, including one semisubmersible that is held for sale, and one managed rig). See “– Market Overview.”

Oil commodity prices remained elevated above their 5-year average during the second quarter of 2024, primarily as a result of continued OPEC+ supply restraint, muted production growth in the United States, moderate growth in oil demand and expanding manufacturing trends in the United States and China signaling global economic improvements. Oil and natural gas benchmark prices are expected to remain volatile for the near term as geopolitical uncertainty resulting from conflicts in Russia/Ukraine and the Middle East along with the global level of economic activity may continue to affect supply and demand. Brent crude prices reached the high $80-per-barrel range in mid-July 2024, which represents an approximate 11% increase since July 2023, according to pricing data published by the U.S. Energy Information Administration. Commodity prices are expected to remain at levels that are supportive of investment in deepwater exploration and development projects. As of mid-July 2024, dated Brent crude oil prices for the remainder of 2024 and 2025 were in the high $70 to low $80-per-barrel range according to industry data.

In the second quarter of 2024, growth in offshore upstream capital expenditures continued to be supported by strong cash flows realized by oil and gas companies, continued expectations for growing demand, and breakeven development and production costs well below current oil price forecasts. According to industry reports, analysts expect offshore upstream capital expenditures to increase approximately 5% annually, on average, from 2024 to 2027, rising to more than $250 billion by 2027, with greenfield projects growing to approximately 59% of the capital expenditure total.

During the second quarter of 2024, the positive dynamics of increased offshore spending, coupled with the growing trend in long-cycle developments, production capacity expansions and exploration and appraisal activities, continued to drive growth in demand for floating drilling rigs. According to data from S&P Global, outstanding demand from floating rig tenders was approximately 68 rig years in mid-July 2024, compared to 47 rig years a year earlier, marking an increase of more than 43%. Most of this demand is concentrated in the deepwater and ultra-deepwater regions of the Gulf of Mexico, Brazil and West Africa, which are areas where we currently operate a portion

of our fleet. The improvement in contracting activity has pushed dayrates for ultra-deepwater drilling rigs into the high $400,000 to low $500,000 per day range for term contracts.

During the same period, offshore spending demand in the UK sector softened due to the continuation of the Energy Profits Levy affecting production in the region along with political uncertainty associated with the parliamentary elections.

The current robust deepwater dayrate market, combined with anticipated growth in upstream capital spending, continues to drive further increases in rig demand and improves the economics for rig reactivations. However, supply chain constraints and inflationary pressures could limit the pace at which these additional rigs could return to the market. Some analysts estimate that the average time for rig reactivations is approximately 12 to 18 months, with costs approaching $100 million for idle rigs and $350 million for stranded rigs. The current inventory of idle rig capacity has decreased significantly, and the owners of this remaining capacity have so far exhibited capital discipline as it relates to reactivation investments; however, the market could be adversely affected by the re-entry of this limited idle capacity.

Despite policy tightening by major central banks and a moderating pace of world economic expansion, inflationary pressures have generally remained elevated in the industry sector, though recent trends indicate possible moderation in some areas. Continued inflation may result in upward pressure on operating expenses for offshore drillers.

In addition to market factors, during the second quarter of 2024, customer capital allocation decisions have continued to affect demand for our services. Customer investment mixes over time, coupled with energy demand and regulatory measures, could adversely impact demand for offshore drilling services in the long term. Notwithstanding this possibility, during the second quarter, global energy demand continued on pace and energy supply growth remained constrained. We expect increased investment in both traditional and renewable sources of energy to be required in the future, some of which we expect to be invested in finding and producing hydrocarbons in the offshore segment. Continued investment in renewable energy is resulting in this sector satisfying a growing percentage of total energy demand. Growth of renewable and other non-hydrocarbon energy sources may effect demand for our services over time. Industry experts continue to expect the world's demand for energy will increase and that hydrocarbons will continue to serve a major role in meeting the world's energy needs for the foreseeable future.

See “– Contract Drilling Backlog” for future commitments of our rigs during the remainder of 2024 through 2028.

We believe that our contract drilling backlog provides a useful indicator of our future revenue-earning opportunities. Our contract drilling backlog, as presented below, includes only firm commitments (typically represented by signed contracts) and is calculated by multiplying the contracted operating dayrate by the firm contract period. The contract period is based on the number of stated days for fixed-term contracts or an estimated duration (in days) for contracts based on a fixed number of wells. Our calculation also assumes full utilization of our drilling equipment for the contract period (excluding scheduled shipyard and survey days); however, the amount of actual revenue earned and the actual periods during which revenues are earned may be different than the amounts and periods shown in the tables below due to various factors. Our utilization rates, which generally have been in the range of 92-98% during contracted periods, can be adversely impacted due to various operating factors including unscheduled repairs and maintenance, weather conditions, and other factors. Contract drilling backlog excludes revenues for mobilization, demobilization, contract preparation and customer reimbursables. Revenue is generally not earned during periods of downtime for regulatory surveys; however, certain contracts may provide for reduced revenue during the survey period. Changes in our contract drilling backlog between periods are generally a function of the performance of work on term contracts, as well as the extension or modification of existing term contracts and the execution of additional contracts. In addition, under certain circumstances, our customers may seek to terminate or renegotiate our contracts, which could adversely affect our reported backlog.

The backlog information presented below does not, nor is it intended to, align with the disclosures regarding revenue expected to be recognized in the future related to unsatisfied performance obligations, which are presented in Note 2 “Revenue from Contracts with Customers” to our unaudited condensed consolidated financial statements included in Item 1 of Part I of this report. Contract drilling backlog includes only future dayrate revenue as described above, while the disclosure in Note 2 “Revenue from Contracts with Customers” excludes dayrate revenue and reflects expected future revenue for mobilization, demobilization and capital modifications to our rigs, which are related to non-distinct promises within our signed contracts. See “– Important Factors That May Impact Our Operating Results, Financial Condition or Cash Flows.”

The following table reflects our contract drilling backlog as of July 1, 2024 (based on information available at that time), January 1, 2024 (the date reported in our Annual Report on Form 10-K for the year ended December 31, 2023), and July 1, 2023 (the date reported in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2023) (in millions).

The following table reflects the amount of revenue related to our contract drilling backlog by year as of July 1, 2024 (in millions).

The following table reflects the percentage of rig days per year committed as of July 1, 2024. The percentage of rig days committed is calculated as the ratio of total days committed under contracts, as well as scheduled shipyard, survey and mobilization days for all rigs in our fleet, to total available days (number of rigs, including cold-stacked rigs and rigs held for sale, multiplied by the number of days in a particular year).

Important Factors That May Impact Our Operating Results, Financial Condition or Cash Flows

Regulatory Surveys and Planned Downtime. We perform certain regulatory inspections, which we refer to as a special survey, that are due every five years for most of our rigs and an intermediate survey, which is performed every two-and-one-half years, for our North Sea rigs. Our operating income is negatively impacted when we perform these required regulatory surveys due to planned downtime during the inspection period. Our operating income is also reduced by planned downtime for upgrades, contract preparation and mobilization of rigs; however, in some cases, we may be compensated for all or a portion of this downtime. During the remainder of 2024, we expect to incur approximately 150 days of planned downtime, including approximately (i) 100 days for a shipyard project, as well as mobilization and demobilization activities for the Ocean BlackRhino; (ii) 25 days for the Ocean Endeavor’s blowout preventer recertification; (iii) 20 days for the Ocean BlackHornet’s special survey; and (iv) five days for the Ocean GreatWhite’s lower marine riser package (or LMRP) recovery and recertification. During 2025, we expect to incur approximately 45 days of planned downtime, including approximately (i) 20 days for the Ocean Endeavor’s blowout preventer recertification, (ii) 20 days for the Ocean BlackLion’s special survey and (iii) 5 days for the Ocean Apex’s mobilization. We can provide no assurance as to the exact timing and/or duration of downtime associated with regulatory inspections, repairs, contract preparation, rig mobilizations and other shipyard projects. See “ — Contract Drilling Backlog.”

Physical Damage and Marine Liability Insurance. Under our primary insurance policies, which renewed effective May 1, 2024, we carry $50.0 million of U.S. Named Windstorm Coverage, as defined by the relevant insurance policy, for physical damage to our property and equipment with a $10.0 million deductible per accident or occurrence. We are self-insured for physical damage to rigs and equipment caused by named windstorms in the U.S. Gulf of Mexico in excess of $50.0 million. If a named windstorm in the U.S. Gulf of Mexico causes significant damage to our rigs or equipment, it could have a material adverse effect on our results of operations, financial condition, and cash flows. Under our current insurance policy, we carry physical damage insurance for certain losses other than those caused by named windstorms in the U.S. Gulf of Mexico for which our deductible for physical damage is $10.0 million per occurrence. In addition, we currently carry loss-of-hire insurance on certain of our owned rigs to cover a portion of lost cash flow when a rig is damaged, which is a recoverable claim under the physical damage insurance but excludes named windstorms in the U.S. Gulf of Mexico.

In addition, we carry marine liability insurance covering certain legal liabilities, including coverage for certain personal injury claims, collisions, and wreck removals, and generally covering liabilities arising out of or relating to pollution and/or environmental risk. We believe that the policy limit for our marine liability insurance is within the range that is customary for companies of our size in the offshore drilling industry and is appropriate for our business. Under these marine liability policies, we generally self-insure $1.0 million to $2.5 million per occurrence, depending on jurisdiction, but up to $25.0 million for liabilities arising out of named windstorms in the U.S. Gulf of Mexico. Depending on the nature, severity, and frequency of claims that might arise during the policy year, if the aggregate level of claims exceeds certain thresholds, we may self-insure up to $100.0 million for each subsequent occurrence.

Our significant accounting policies are discussed in Note 1 “General Information” of our notes to the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023.

We have elected to present a comparison of our results of operations for the current quarter with that of the immediately preceding quarter, as permitted under Item 303(c)(2)(ii) of Regulation S-K. We believe this comparison is more useful in identifying business trends and provides a more meaningful analysis of our business as our results are largely driven by market changes rather than seasonal business activity. We continue to present the required comparison of current year-to-date results with the same period of the prior year.

Our operating results for contract drilling services are dependent on three primary metrics or key performance indicators: revenue-earning (or R-E) days, rig utilization and average daily revenue. We believe that R-E days provide a comparative measurement of the activity level of our fleet, rig utilization is an indicator of our ability to secure work for and the operational efficiency of our fleet and average daily revenue provides a comparative measure for our revenue-earning performance. We utilize these performance indicators in the review of our business and operating results and believe these are useful metrics for investors to utilize in evaluating our performance. The tables presented below include these three key performance indicators and other comparative data relating to our revenues and operating expenses for the respective periods (in thousands, except days, daily amounts and percentages) for the three-month periods ended June 30, 2024 and March 31, 2024 and the six-month periods ended June 30, 2024 and June 30, 2023.

Contract Drilling Revenue. Contract drilling revenue decreased $18.5 million during the three months ended June 30, 2024 compared to the three months ended March 31, 2024, primarily due to a 93-day decrease in R-E days ($27.4 million), partially offset by higher average daily revenue earned ($8.9 million).

R-E days decreased during the second quarter of 2024, primarily due to termination of the managed services agreement and charter of the West Auriga (60 fewer R-E days) and downtime for repairs to the Ocean GreatWhite related to an equipment incident (30 fewer R-E days), both of which occurred in the first quarter of 2024, and additional warm stacked days between contracts for the Ocean Patriot (17 fewer R-E days). The decrease in R-E days was partially offset by an aggregate net increase in R-E days for the other rigs in our fleet (14 incremental R-E days).

The increase in average daily revenue during the second quarter of 2024, compared to the first quarter of 2024 was primarily due to performance bonuses earned by our operations in Senegal.

Contract drilling expense, excluding depreciation. Contract drilling expense, excluding depreciation, decreased $19.7 million during the second quarter of 2024, compared to the first quarter of 2024. The decrease was primarily due to the absence of costs for the West Auriga as a result of the termination of its charter in the first quarter of 2024 ($19.7 million) and non-recoverable expense (or a portion of an insurance deductible) in the first quarter of 2024 and the recovery of prior period expense, both of which related to the equipment incident on the Ocean GreatWhite ($18.7 million). The decrease in contract drilling expense, excluding depreciation, was partially offset by an aggregate net

increase in expense for the other rigs in our fleet ($18.7 million), which included higher costs for repairs and maintenance, equipment rentals and integrated services provided to our customers.

General and administrative. General and administrative expense for the second quarter of 2024 increased $4.6 million compared to the first quarter of 2024, primarily due to professional fees incurred in connection with the proposed Merger.

(Gain) Loss on disposition of assets. We recorded a net gain on disposition of assets that was $10.5 million higher for the second quarter of 2024, compared to the first quarter of 2024. In April 2024, we disposed of the Ocean Monarch and recognized a net gain on the sale ($6.4 million). Additionally, the increased net gain was due to the absence in the second quarter of 2024 of a loss on disposition of assets associated with the equipment incident on the Ocean GreatWhite recognized during the first quarter of 2024 ($3.4 million).

Income Tax Benefit. We estimate our annual effective tax rate (or AETR) for continuing operations in recording our interim quarterly income tax provision, considering the various jurisdictions in which we operate. We exclude discrete tax adjustments from the computation of the AETR and record such adjustments in the quarter in which they occur.

We recorded a net income tax expense of $7.5 million for the three months ended June 30, 2024. For the three months ended March 31, 2024, we recorded a net income tax benefit of $3.2 million, inclusive of a $12.2 million tax benefit resulting from the revaluation of unrecognized tax benefits denominated in the Egyptian pound. The higher effective tax rate for the three months ended June 30, 2024 reflects the mix of pre-tax income and loss across jurisdictions and increased profitability in the jurisdictions in which our rigs are currently operating. Additionally, the higher effective tax rate for the quarter ended June 30, 2024 reflects stabilization of the Egyptian pound.

Contract Drilling Revenue. Contract drilling revenue increased $19.6 million during the six months ended June 30, 2024 compared to the six months ended June 30, 2023, primarily due to higher average daily revenue earned ($40.8 million). The increase in revenue was partially offset by a 74-day decrease in R-E days ($21.2 million).

Average daily revenue for the six months ended June 30, 2024 increased, compared to the prior year period, primarily due to higher dayrates earned under new contracts that commenced in the fourth quarter of 2023 for several rigs. Additionally, the average daily revenue was favorably impacted by performance bonuses for our operations in Senegal earned during the six months ended June 30, 2024.

R-E days during the six months ended June 30, 2024 decreased, compared to the prior year period, primarily due to the termination of the management and charter agreement of the West Auriga in February 2024 (114 fewer R-E days), downtime for repairs to the Ocean GreatWhite (60 fewer R-E days), the stacking of rigs between contracts (34 fewer R-E days) and incremental unpaid nonproductive days across our fleet (37 fewer R-E days). The decrease in R-E days was partially offset by incremental operating days for the Ocean Apex and Ocean Endeavor (171 incremental R-E days), both of which completed shipyard projects in 2023.

Contract drilling expense, excluding depreciation. Contract drilling expense, excluding depreciation, decreased $37.8 million during the six months ended June 30, 2024, compared to the prior year period, primarily due to a reduction in contract drilling expense, including charter costs for the West Auriga ($36.5 million), as a result of the termination of the managed services agreement and rig charter, lower contract drilling expense across our fleet ($18.8 million), which reflected the absence of costs associated with the Ocean Apex’s shipyard in 2023 and lower costs for mobilization of rigs, and reduced costs associated with cold-stacked rigs ($4.1 million). The decrease in contract drilling expense during the six months ended June 30, 2024 was partially offset by the higher charter and operating expense for the West Vela ($14.0 million) and non-recoverable expense (or a portion of the insurance deductible) associated with the LMRP equipment incident on the Ocean GreatWhite ($7.6 million).

Depreciation expense. Depreciation expense increased $7.2 million during the six months ended June 30, 2024, compared to the prior year period, primarily due to a higher depreciable asset base in the first six months of 2024, compared to the prior year period.

General and administrative. General and administrative expense increased $5.4 million during the six months ended June 30, 2024, compared to the prior year period, primarily due to professional fees associated with the proposed Merger.

Interest Expense. Interest expense increased $5.6 million during the six months ended June 30, 2024, compared to the prior year period, primarily due to higher average debt outstanding compared to the prior year period. Interest expense for the first half of 2024 included $24.3 million in expense related to our $550.0 million aggregate principal amount of senior secured second lien notes (or the Second Lien Notes), which were issued in September 2023 and bear interest at 8.5%, and the amortization of associated debt issuance costs. Additionally, interest expense for the first half of 2024 included $4.2 million in interest related to finance leases. During the first half of 2023, we incurred interest expense of $19.9 million on weighted average debt outstanding of approximately $363.3 million at an average interest rate of 9.5%, in addition to amortization of associated debt issuance costs and debt premium. Additionally, interest expense for the first half of 2023 included $4.7 million related to finance leases.

Income Tax (Expense) Benefit. We recorded a net income tax expense of $4.2 million for the six months ended June 30, 2024, inclusive of a $12.5 million tax benefit on the revaluation of unrecognized tax benefits in Egypt due to the significant weakening of the Egyptian pound. For the six months ended June 30, 2023, we recorded a net income tax benefit of $268.8 million. The variation in the effective tax rate for the six months ended June 30, 2024 was the result of the mix of pre-tax income and loss across jurisdictions and increased profitability in jurisdictions in which rigs were operating.

We have available a revolving credit agreement, which provides for a $300.0 million senior secured revolving credit facility (or the RCF). The RCF is scheduled to mature on April 22, 2026. See Note 6 “Long-Term Debt” to our

unaudited condensed consolidated financial statements included in Item 1 of Part I of this report for a discussion of our RCF.

At August 5, 2024, we had no borrowings outstanding under the RCF and the entire $300.0 million was available for borrowings under the RCF subject to its terms and conditions. However, the availability of borrowings under the RCF is subject to the satisfaction of certain conditions as specified in our revolving credit agreement, including restrictions on borrowings.

There is no capacity for the issuance of letters of credit under the RCF, but the RCF permits us to obtain up to $50.0 million in letters of credit outside the RCF. We have obtained a separate $25.0 million letter of credit facility; however, letters of credit under the facility must be cash collateralized. As of August 5, 2024, we utilized $1.9 million of this facility for the issuance of a letter of credit, which is scheduled to expire in May 2025.

Historically, we have relied on our cash flows from operations and cash reserves to meet our liquidity needs, which primarily include funding of our working capital requirements and capital expenditures, as well as the servicing of our debt repayments and interest payments. As of August 5, 2024, all of our rigs, excluding our managed rig, are owned and operated, directly or indirectly, by Diamond Foreign Asset Company (or DFAC). Our management has determined that we will permanently reinvest foreign earnings, which restricts the ability to utilize cash flows of DFAC on a company-wide basis. To the extent possible, we expect to utilize the operating cash flows and cash reserves of DFAC and the operating cash flows available to and cash reserves of Diamond Offshore Drilling, Inc. to meet each respective entity's working capital requirements and capital commitments.

From time to time, based on market conditions and other factors, we may seek to repay, refinance or restructure all or a portion of our outstanding indebtedness or otherwise enter into transactions regarding our capital structure to obtain more favorable terms, enhance flexibility in conducting our business, increase liquidity or otherwise. We regularly evaluate capital markets to consider future opportunities for enhancements of our capital structure and may opportunistically pursue financing transactions to optimize our capital structure. Our ability to access the capital markets by issuing debt or equity securities will be dependent on the contractual restriction under the Noble Merger Agreement, our results of operations, our current financial condition, current credit ratings, current market conditions and other factors beyond our control, and there can be no assurance that we would be able to complete any such offering of securities.

As of July 1, 2024, our contractual backlog was approximately $2.0 billion. At June 30, 2024, we had cash of $178.0 million, including $12.4 million that is subject to restrictions.

For the six-month period ended June 30, 2024, our operating activities generated cash of $89.9 million. Cash receipts from contract drilling services ($569.1 million) were partially offset by cash expenditures for contract drilling, shorebase support, and general and administrative costs ($479.2 million).

Cash outlays for capital expenditures during the first half of 2024 aggregated $51.3 million, primarily related to long-lead items related to the Ocean BlackRhino’s managed pressure drilling upgrade planned for the fourth quarter of 2024 and our ongoing capital maintenance and improvement program. We also paid $8.9 million in connection with our finance lease obligations for well control equipment on our four owned drillships.

For the six-month period ended June 30, 2023, our operating activities generated cash of $10.7 million. Cash receipts from contract drilling services ($486.9 million) were partially offset by cash expenditures for contract drilling, shorebase support, and general and administrative costs ($476.2 million).

Cash outlays for capital expenditures during the first half of 2023 aggregated $59.0 million, primarily related to shipyard projects for the Ocean Endeavor, Ocean GreatWhite, Ocean Apex and Ocean BlackHawk. During the first six months of 2023, we borrowed a net $5.0 million under the RCF and made payments in connection with finance lease obligations aggregating $10.5 million related to well control equipment on our owned drillships.

On February 1, 2024, the Ocean GreatWhite, reported an equipment incident while located in the North Sea west of the Shetland Islands. The rig’s LMRP and deployed riser string unintentionally separated from the rig at the slip joint tensioner ring and the LMRP and riser dropped to the seabed. We have recovered the LMRP from the seabed and the Ocean GreatWhite resumed operations under the rig’s drilling contract in early July 2024.

We anticipate that the repairs and equipment replacement associated with the equipment incident will be covered by our hull & machinery insurance policy and that all incremental costs, less our $10.0 million deductible, will be reimbursable under that policy. In addition, we carry loss-of-hire insurance on the Ocean GreatWhite to cover a portion of lost cash flow under certain circumstances. After a 60-day waiting period, our loss-of-hire insurance provides $150,000 per day, for up to 180 days, for each day of lost revenue as a result of a covered property loss claim. As of the date of this report, we estimate that we will be entitled to approximately 90 days of loss-of-hire insurance recovery, none of which has been included in our financial results to date. Additionally, we estimate the cash flow impact of direct and incremental recovery, repairs and maintenance costs, and replacement capital expenditures, offset by loss-of-hire insurance, to be approximately $25.0 million to $30.0 million as of the date of this report. However, we cannot fully predict the extent of such insurance coverage or the timing of such claims.

We have historically invested a significant portion of our cash flows in the enhancement of our drilling fleet and our ongoing rig equipment replacement and capital maintenance programs. The amount of cash required to meet our capital commitments is determined by evaluating the need to upgrade our rigs to meet specific customer requirements and our rig equipment enhancement, maintenance and replacement programs. We make periodic assessments of our capital spending programs based on current and expected industry conditions and our cash flow forecast. As of the date of this report, we expect total capital expenditures for 2024 to be approximately $135.0 million to $145.0 million.

As of June 30, 2024, the amount of total net unrecognized tax benefits related to uncertain tax positions that could result in a future cash payment was $38.1 million. Due to the high degree of uncertainty regarding the timing of future cash outflows associated with the liabilities recognized in these balances, we are unable to make reasonably reliable estimates of the period of cash settlement with the respective taxing authorities.

See Note 7 “Commitments and Contingencies” to our unaudited condensed consolidated financial statements included in Item 1 of Part I of this report for a discussion of certain of our other commercial commitments.

We or our representatives may, from time to time, either in this report, in periodic press releases or otherwise, make or incorporate by reference certain written or oral statements that are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (or the Securities Act) and Section 21E of the Securities Exchange Act of 1934, as amended (or the Exchange Act). All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. 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,” “would,” “may,” “might,” “will,” “will be,” “will continue,” “will likely result,” “project,” “forecast,” “budget” and similar expressions. In addition, any statement concerning future financial performance (including, without limitation, future revenues, earnings or growth rates), ongoing business strategies or prospects, the proposed business combination between the Company and Noble pursuant to the Merger Agreement, and possible actions taken by or against us, which may be provided by management, are also forward-looking statements as so defined. Statements made by us in this report that contain forward-looking statements may include, but are not limited to, information concerning our possible or assumed future results of operations and statements about the following subjects:

These types of statements are based on current expectations about future events and inherently are subject to a variety of assumptions, risks and uncertainties, many of which are beyond our control, that could cause actual results to differ materially from those expected, projected or expressed in forward-looking statements. These risks and uncertainties include, among others, those described or referenced in Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023 and Part II, Item 1A, “Risk Factors” in this report.

The risks and uncertainties referenced above are not exhaustive. Other sections of this report and our other filings with the Securities and Exchange Commission include additional factors that could adversely affect our business,

results of operations and financial performance. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements. Forward-looking statements included in this report speak only as of the date of this report. We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement to reflect any change in our expectations or beliefs with regard to the statement or any change in events, conditions or circumstances on which any forward-looking statement is based. In addition, in certain places in this report, we may refer to reports published by third parties that purport to describe trends or developments in energy production or drilling and exploration activity. While we believe that these reports are reliable, we have not independently verified the information included in such reports. We specifically disclaim any responsibility for the accuracy and completeness of such information and undertake no obligation to update such information.

The information included in this Item 3 constitutes “forward-looking statements” for purposes of the statutory safe harbor provided in Section 27A of the Securities Act and Section 21E of the Exchange Act. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Forward-Looking Statements” in Item 2 of Part I of this report.

Interest Rate Risk. From time to time, we may have exposure to interest rate risk on our debt instruments that may arise from changes in the level or volatility of interest rates. As of June 30, 2024, we had no variable rate debt outstanding. Our Second Lien Notes have been issued at fixed rates, and as such, interest expense would not be impacted by interest rate shifts.

There were no other material changes in our market risk components for the six months ended June 30, 2024. See “Quantitative and Qualitative Disclosures About Market Risk” included in Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2023 for further information.

We maintain a system of disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the federal securities laws, including this report, is recorded, processed, summarized and reported on a timely basis. These disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed by us under the federal securities laws is accumulated and communicated to our management on a timely basis to allow decisions regarding required disclosure.

Our Chief Executive Officer (or CEO) and Chief Financial Officer (or CFO) participated in an evaluation by our management of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of June 30, 2024. Based on their participation in that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of June 30, 2024.

There were no changes in our internal control over financial reporting identified in connection with the foregoing evaluation that occurred during our second fiscal quarter of 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Information related to certain legal proceedings is included in Note 7 “Commitments and Contingencies” to our unaudited condensed consolidated financial statements included in Item 1 of Part I of this report, which is incorporated herein by reference.

Due to the announced Merger with Noble, there have been material changes to the risk factors included in Item 1A, “Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. For a complete discussion of the Company’s risk factors, refer to Item 1A, “Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 and the following additional risk factors relating to the Merger with Noble, the Merger Agreement, the transactions contemplated by the Merger Agreement and the Company’s related special meeting of stockholders (or, collectively, the transactions):

Failure to complete the transactions in a timely manner or at all could have adverse effects on the market value, trading price and/or the future business results and financial condition of the Company.

If the transactions are not completed, the ongoing business, financial condition, financial results and stock price of the Company may be adversely affected. Without realizing any of the benefits of having completed the transactions, we may be subject to a number of risks, including the following:

The materialization of any of these risks could adversely impact our ongoing business, financial condition, financial results and the price of our common stock. Similarly, delays in the completion of the transactions could, among other things, result in additional transaction costs, loss of revenue or other negative effects associated with uncertainty about completion of the transactions.

We are subject to business uncertainties and contractual restrictions while the proposed transactions are pending, which could adversely affect our business and operations.

In connection with the pendency of the transactions, it is possible that some customers, suppliers and other persons with whom we or Noble have a business relationship may delay or defer certain business decisions or might decide to seek to terminate, change or renegotiate their relationships with us or Noble as a result of the pendency of the transactions. In addition, the Merger Agreement restricts us and Noble, without the other’s consent, from making certain acquisitions and taking other specified actions until the transactions close or the Merger Agreement terminates. These restrictions may prevent us or Noble from pursuing otherwise attractive business opportunities and making other changes to our and their businesses before completion of the transactions or termination of the Merger Agreement.

Uncertainties associated with the transactions may cause a loss of management personnel and other key employees, and the Company and Noble may be unable to attract or retain management personnel and other key employees during the pendency of the transactions.

The Company and Noble are dependent on the experience and industry knowledge of their respective management personnel and other key employees to execute their business plans. The success of Noble after the completion of the transactions will depend in part upon the ability of Noble and the Company to attract, motivate and retain key management personnel and other key employees. In connection with the pending transactions, our and Noble’s current and prospective employees may experience uncertainty about their future roles with Noble following completion of the transactions, which may materially adversely affect our and Noble’s ability to attract, motivate and retain management personnel and other key employees during the pendency of the transactions. Furthermore, we and Noble may incur costs in our respective efforts to retain management personnel and other key employees prior to and after the completion of the transactions. Key employees may depart because of issues relating to the uncertainty and difficulty of integration or a desire not to remain with Noble following completion of the transactions. Accordingly, no assurance can be given that we and Noble will be able to retain management personnel and other key employees to the same extent that we and Noble have been able to in the past.

The combined company may not achieve the intended benefits and the transactions may disrupt Noble’s current plans or operations.

There can be no assurance that Noble will be able to successfully integrate our assets or otherwise realize the expected benefits of the transactions (including annual pre-tax cost synergies). Difficulties in integrating the Company into Noble may result in Noble performing differently than expected, in operational challenges or in the failure to realize anticipated synergies and efficiencies in the expected time frame or at all, including annual pre-tax cost synergies of approximately $100 million, in which case the transactions may not be accretive to earnings per share, may not improve Noble’s balance sheet position, may not enhance Noble’s ability to deliver and may not generate additional free cash flow. The integration of the two companies may result in material challenges, including the diversion of management’s attention from ongoing business concerns; retaining key management and other employees; retaining or attracting business and operational relationships; the possibility of faulty assumptions underlying expectations regarding the integration process and associated expenses; consolidating corporate and administrative infrastructures and eliminating duplicative operations; coordinating geographically separate organizations; unanticipated issues in integrating information technology, communications and other systems; as well as potential unknown liabilities, unforeseen expenses relating to integration, or delays associated with the acquisition.

Potential litigation against Noble and the Company could result in substantial costs, an injunction preventing the completion of the transactions and/or a judgment resulting in the payment of damages.

Securities class action lawsuits and derivative lawsuits are often brought against public companies that have entered into merger agreements. Even if such a lawsuit is unsuccessful, defending against these claims can result in substantial costs. An adverse judgment could result in monetary damages, which could have a negative impact on our liquidity and financial condition.

Stockholders of Diamond Offshore may file lawsuits against Diamond Offshore and/or the directors and officers of the Company in connection with the transactions. These lawsuits could prevent or delay the completion of the transactions and result in significant costs to us, including any costs associated with the indemnification of our directors and officers. There can be no assurance that any of the defendants will be successful in the outcome of any potential lawsuits.

Additionally, if a plaintiff is successful in obtaining an injunction prohibiting completion of the transactions, then that injunction may delay or prevent the transactions from being completed, or from being completed within the expected time frame, which may adversely affect our business, financial position and results of operations.

The Merger Agreement contains provisions that limit our ability to pursue alternatives to the transactions, which could discourage a potential competing acquirer from making a favorable alternative proposal.

The Merger Agreement contains certain provisions that restrict our ability to initiate, solicit, knowingly encourage or knowingly facilitate or, subject to certain exceptions, engage in, discussions or negotiations with respect to, or, subject to certain exceptions, approve or recommend, any alternative proposal. Further, even if the Diamond Offshore board withdraws or qualifies its recommendation with respect to the adoption of the Merger Agreement, unless the Merger Agreement has been terminated in accordance with its terms, we will still be required to hold the special meeting for the purpose of obtaining the Diamond Offshore stockholder approval.

The transactions are subject to conditions, some or all of which may not be satisfied or completed on a timely basis, or at all. The Merger Agreement may be terminated in accordance with its terms if such conditions are not completed.

The completion of the transactions is subject to a number of conditions, including, among others, (i) the receipt of the Diamond Offshore stockholder approval, (ii) the receipt of any regulatory approvals required to consummate the First Merger, (iii) the absence of any order or law prohibiting consummation of the transactions, (iv) the absence of any material adverse effect on Diamond Offshore or Noble since the date of the Merger Agreement, (v) the effectiveness of the registration statement of which the proxy statement for the Company’s special meeting of stockholders forms a part and (vi) the authorization for listing on the New York Stock Exchange of the Noble ordinary shares to be issued in connection with the First Merger. These conditions make the completion and timing of the transactions uncertain.

In addition, if the transactions are not completed by June 9, 2025, or, in certain instances, on or before June 9, 2026, either Noble or Diamond Offshore may choose not to proceed with the transactions by terminating the Merger Agreement, and the parties can mutually decide to terminate the Merger Agreement at any time. Further, either Noble or Diamond Offshore may elect to terminate the Merger Agreement in certain other circumstances.

The Exchange Ratio is fixed and will not be adjusted in the event of fluctuations in the market price of Noble ordinary shares or shares of Diamond Offshore common stock.

Upon completion of the First Merger, each share of Diamond Offshore common stock will be converted into the right to receive $5.65 in cash without interest, and 0.2316 of validly issued, fully paid and non-assessable Noble ordinary shares. This Exchange Ratio is fixed in the Merger Agreement and will not be adjusted for changes in the market price of either Noble ordinary shares or Diamond Offshore common stock between the date of the Merger Agreement and the First Merger Effective Time. Due to the fixed Exchange Ratio, fluctuations in the price of Noble ordinary shares will drive corresponding changes in the value of the Merger Consideration payable to each Diamond Offshore stockholder. As a result, changes in the price of Noble ordinary shares prior to the completion of the First Merger will affect the market value that Diamond Offshore stockholders will become entitled to receive at the First Merger Effective Time. Changes in the price of Noble ordinary shares or Diamond Offshore common stock could result from changes in the business, operations or prospects of Noble or Diamond Offshore prior to or following the completion of the First Merger, regulatory considerations, general market and economic conditions and other factors both within and beyond the control of Noble or Diamond Offshore, including, among other things, a decline in the price of oil or gas, a reduction in demand for oil and gas products, increased regulation of drilling and production and a number of other factors beyond the companies’ control.

The transactions are subject to regulatory approvals, and regulatory authorities may impose conditions that could delay, prevent or increase the costs associated with completion of the transactions.

The completion of the transactions is subject to a number of conditions, including, among others, (i) the receipt of Diamond Offshore stockholder approval, (ii) the receipt of any regulatory approvals required to consummate the First Merger, (iii) the absence of any order or law prohibiting consummation of the transactions, (iv) the absence of any material adverse effect on the Company or Noble since the date of the Merger Agreement, (v) the effectiveness of the registration statement of which this proxy statement/prospectus forms a part and (vi) the authorization for listing on the NYSE of the Noble ordinary shares to be issued in connection with the First Merger. These conditions make the completion and timing of the transactions uncertain.

In addition, if the transactions are not completed by June 9, 2025, or, in certain instances, on or before June 9, 2026, either Noble or the Company may choose not to proceed with the transactions by terminating the Merger Agreement, and the parties can mutually decide to terminate the Merger Agreement at any time. Further, either Noble or the Company may elect to terminate the Merger Agreement in certain other circumstances.

The Noble ordinary shares to be received by Diamond Offshore stockholders upon completion of the First Merger will have different rights from shares of Diamond Offshore common stock due to the difference between Delaware law and English law.

Upon completion of the First Merger, Diamond Offshore stockholders will no longer be stockholders of Diamond Offshore but will instead become shareholders of Noble, and their rights as Noble shareholders will be governed by English law, including the Companies Act 2006 of the United Kingdom and, the terms of Noble’s amended and restated memorandum and articles of association (“or Noble’s articles”). The terms of Noble’s articles are in some respects materially different than the terms of the Fourth Amended and Restated Certificate of Incorporation of Diamond Offshore and the Third Amended and Restated Bylaws of Diamond Offshore, which currently govern the rights of Diamond Offshore stockholders.

It may be difficult for shareholders of Noble (including former Diamond Offshore stockholders that become shareholders of Noble upon completion of the First Merger) to effect service of process on Noble or its directors or officers in the United States or to enforce in the United States judgments obtained in U.S. courts against Noble or its officers or directors based on the civil liability provisions of the U.S. securities laws or otherwise. Even if a shareholder of Noble is successful in bringing an action of this kind, English law (or any other applicable law) may render such shareholder of Noble unable to enforce a judgment against Noble’s assets or the assets of its directors and executive officers. In addition, it is doubtful whether English courts would enforce certain civil liabilities under U.S. securities laws in original actions or judgments of U.S. courts based upon these civil liability provisions. In addition, awards of punitive damages in actions brought in the United States or elsewhere may be unenforceable in the United Kingdom. An award for monetary damages under the U.S. securities laws would likely be considered punitive if it does not seek to compensate the claimant for loss or damage suffered and is intended to punish the defendant. The enforceability of any judgment in the United Kingdom will depend on the particular facts of the case as well as the laws and treaties in effect at the time. The United States and the United Kingdom do not currently have a treaty providing for recognition and enforcement of judgments (other than arbitration awards) in civil and commercial matters. As a result of the above, holders of Noble ordinary shares may have more difficulty in protecting their interest through actions against Noble’s management, directors or major shareholders than they would as stockholders of Diamond Offshore common stock.

(c) During the quarter ended June 30, 2024, no director or officer adopted or terminated any Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement, in each case as such terms are defined in Item 408 of Regulation S-K.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $0.0001 par value per share	DO	New York Stock Exchange


			PAGE NO.

COVER PAGE			1

TABLE OF CONTENTS			2

PART I. FINANCIAL INFORMATION			3

	ITEM 1.	Financial Statements (Unaudited)	3
		Condensed Consolidated Balance Sheets	3
		Condensed Consolidated Statements of Operations	4
		Condensed Consolidated Statements of Comprehensive Income	6
		Condensed Consolidated Statements of Stockholders’ Equity	7
		Condensed Consolidated Statements of Cash Flows	9
		Notes to Unaudited Condensed Consolidated Financial Statements	10

	ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23

	ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	35

	ITEM 4.	Controls and Procedures	35

PART II. OTHER INFORMATION			36

	ITEM 1.	Legal Proceedings	36
	ITEM 1A.	Risk Factors	36

	ITEM 5.	Other Information	39
	ITEM 6.	Exhibits	40

SIGNATURES			41


	June 30,			December 31,
	2024			2023
ASSETS
Current assets:
Cash and cash equivalents	$	165,536		$	124,457
Restricted cash		10,565			14,231
Accounts receivable		226,383			260,124
Less: allowance for credit losses		(5,715	)		(5,801	)
Accounts receivable, net		220,668			254,323
Prepaid expenses and other current assets		61,600			63,412
Asset held for sale		1,000			1,000
Total current assets		459,369			457,423
Drilling and other property and equipment, net of
accumulated depreciation		1,139,802			1,156,368
Other assets		84,392			98,762
Total assets	$	1,683,563		$	1,712,553
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	44,294		$	42,037
Accrued liabilities		164,727			203,336
Taxes payable		33,397			34,817
Current finance lease liabilities		16,525			15,960
Total current liabilities		258,943			296,150
Long-term debt		534,480			533,514
Noncurrent finance lease liabilities		103,742			113,201
Deferred tax liability		19,831			10,966
Other liabilities		95,221			113,871
Commitments and contingencies (Note 7)
Total liabilities		1,012,217			1,067,702
Stockholders’ equity:
Preferred stock (par value $0.0001, 50,000 shares authorized, none issued and outstanding at June 30, 2024 and December 31, 2023)		—			—
Common stock (par value $0.0001, 750,000 shares authorized; 103,562 shares issued and 102,596 shares outstanding at June 30, 2024 and 103,189 shares issued and 102,322 shares outstanding at December 31, 2023)		10			10
Additional paid-in capital		985,460			978,575
Treasury stock		(9,810	)		(8,493	)
Accumulated deficit		(304,322	)		(325,261	)
Accumulated other comprehensive income		8			20
Total stockholders’ equity		671,346			644,851
Total liabilities and stockholders’ equity	$	1,683,563		$	1,712,553


	Three Months Ended June 30,
	2024			2023
Revenues:
Contract drilling	$	240,229		$	264,990
Revenues related to reimbursable expenses		12,657			16,573
Total revenues		252,886			281,563
Operating expenses:
Contract drilling, excluding depreciation		164,461			212,947
Reimbursable expenses		12,333			15,579
Depreciation		31,698			27,906
General and administrative		23,219			16,824
Gain on disposition of assets		(7,106	)		(1,933	)
Total operating expenses		224,605			271,323
Operating income		28,281			10,240
Other income (expense):
Interest income		1,966			5
Interest expense, net of amounts capitalized		(15,061	)		(12,755	)
Foreign currency transaction loss		(13	)		(1,968	)
Other, net		1,605			136
Income (loss) before income tax (expense) benefit		16,778			(4,342	)
Income tax (expense) benefit		(7,451	)		243,125
Net income	$	9,327		$	238,783
Earnings per share
Basic	$	0.09		$	2.35
Diluted	$	0.09		$	2.29
Weighted-average shares outstanding
Basic		102,542			101,487
Diluted		105,088			104,236


	Six Months Ended June 30,
	2024			2023
Revenues:
Contract drilling	$	498,999		$	479,373
Revenues related to reimbursable expenses		28,497			34,211
Total revenues		527,496			513,584
Operating expenses:
Contract drilling, excluding depreciation		348,665			386,436
Reimbursable expenses		27,599			32,792
Depreciation		63,052			55,812
General and administrative		41,796			36,409
Gain on disposition of assets		(3,710	)		(3,146	)
Total operating expenses		477,402			508,303
Operating income		50,094			5,281
Other income (expense):
Interest income		3,740			12
Interest expense, net of amounts capitalized		(30,407	)		(24,795	)
Foreign currency transaction gain (loss)		218			(3,239	)
Other, net		1,534			(17	)
Income (loss) before income tax (expense) benefit		25,179			(22,758	)
Income tax (expense) benefit		(4,240	)		268,770
Net income	$	20,939		$	246,012
Earnings per share
Basic	$	0.20		$	2.43
Diluted	$	0.20		$	2.36
Weighted-average shares outstanding
Basic		102,491			101,409
Diluted		104,927			104,091


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐


	Three Months Ended June 30, 2024

										Accumulated
					Additional					Other							Total
	Common Stock				Paid-In		Accumulated			Comprehensive		Treasury Stock					Stockholders’
	Shares		Amount		Capital		Deficit			Income		Shares		Amount			Equity
April 1, 2024		102,479	$	10	$	982,098	$	(313,649	)	$	6		920	$	(9,154	)	$	659,311
Net income		—		—		—		9,327			—		—		—			9,327
Stock-based compensation, net of tax		117		—		3,194		—			—		45		(656	)		2,538
Unrealized gain on marketable securities, net of tax		—		—		—		—			2		—		—			2
Other		—		—		168		—			—		—		—			168
June 30, 2024		102,596	$	10	$	985,460	$	(304,322	)	$	8		965	$	(9,810	)	$	671,346


	Three Months Ended June 30, 2023

							Retained
					Additional		Earnings								Total
	Common Stock				Paid-In		(Accumulated			Treasury Stock					Stockholders’
	Shares		Amount		Capital		Deficit)			Shares		Amount			Equity
April 1, 2023		101,358	$	10	$	968,539	$	(273,326	)		575	$	(4,386	)	$	690,837
Net income		—		—		—		238,783			—		—			238,783
Stock-based compensation, net of tax		309		—		3,906		—			52		(600	)		3,306
June 30, 2023		101,667	$	10	$	972,445	$	(34,543	)		627	$	(4,986	)	$	932,926


	July 1, 2024(2)		January 1, 2024		July 1, 2023
Contract Drilling Backlog (1)	$	2,033	$	1,424	$	1,580


	Three Months Ended
	June 30,			March 31,
	2024			2024
Revenue-Earning Days (1)		756			849
Utilization (2)		69	%		68	%
Average daily revenue (3)	$	317,800		$	305,000

Revenues:
Contract drilling	$	240,229		$	258,770
Revenues related to reimbursable expenses		12,657			15,840
Total revenues		252,886			274,610
Operating expenses:
Contract drilling, excluding depreciation		164,461			184,205
Reimbursable expenses		12,333			15,266
Depreciation		31,698			31,354
General and administrative		23,219			18,576
(Gain) loss on disposition of assets		(7,106	)		3,396
Total operating expenses		224,605			252,797
Operating income		28,281			21,813
Other income (expense):
Interest income		1,966			1,774
Interest expense		(15,061	)		(15,346	)
Foreign currency transaction (loss) gain		(13	)		231
Other, net		1,605			(71	)
Income before income tax (expense) benefit		16,778			8,401
Income tax (expense) benefit		(7,451	)		3,211
Net income	$	9,327		$	11,612


	Six Months Ended
	June 30,			June 30,
	2024			2023
Revenue-Earning Days		1,602			1,676
Utilization		69	%		66	%
Average daily revenue	$	311,400		$	286,000

Revenues:
Contract drilling	$	498,999		$	479,373
Revenues related to reimbursable expenses		28,497			34,211
Total revenues		527,496			513,584
Operating expenses:
Contract drilling, excluding depreciation		348,665			386,436
Reimbursable expenses		27,599			32,792
Depreciation		63,052			55,812
General and administrative		41,796			36,409
Gain on disposition of assets		(3,710	)		(3,146	)
Total operating expenses		477,402			508,303
Operating income		50,094			5,281
Other income (expense):
Interest income		3,740			12
Interest expense		(30,407	)		(24,795	)
Foreign currency transaction gain (loss)		218			(3,239	)
Other, net		1,534			(17	)
Income (loss) before income tax (expense) benefit		25,179			(22,758	)
Income tax (expense) benefit		(4,240	)		268,770
Net income	$	20,939		$	246,012


Exhibit No.		Description of Exhibit

2.1*		Agreement and Plan of Merger, dated as of June 9, 2024, among Noble Corporation PLC, Dolphin Merger Sub 1, Inc., Dolphin Merger Sub 2, Inc. and Diamond Offshore Drilling, Inc. (incorporated by reference to Exhibit 2.1 to our Current Report on Form 8-K filed on June 10, 2024).

3.1		Fourth Amended and Restated Certificate of Incorporation of Diamond Offshore Drilling, Inc. (incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed on May 10, 2023).

3.2		Third Amended and Restated Bylaws of Diamond Offshore Drilling, Inc. (incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed on February 10, 2023).

31.1**		Rule 13a-14(a) Certification of the Chief Executive Officer.

31.2**		Rule 13a-14(a) Certification of the Chief Financial Officer.

32.1**		Section 1350 Certification of the Chief Executive Officer and Chief Financial Officer.

101.INS**		Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH**		Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Document.

104**		The cover page of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, formatted in Inline XBRL (included with the Exhibit 101 attachments).


	DIAMOND OFFSHORE DRILLING, INC.
	(Registrant)

Date August 7, 2024	By:	/s/ Dominic A. Savarino
		Dominic A. Savarino
		Senior Vice President and Chief Financial Officer