1. Diamond Offshore Drilling Inc. April 15, 2010 Gagan Bhatia Charlie Gambino Catherine Lien Phil Nguyen Jingyuan Xia

2. Agenda Company and Industry Overview Ratio Analysis Macro Factors Competitors and Multiple Valuation DCF and Valuation SWOT Correlation Recommendation 2

3. Company Overview 3 Geographic MarketsBasics Financial Performance Founded in 1989 Headquarters: Houston, TX Employees: 5,500 NYSE: DO 200920082007 Revenue3,631.33,544.12,567.7 Growth Over Prior Year 2.5%38.0%25.1% Net Income1,376.21,310.5844.5 Net Income Margin 37.9%37.0%32.9% EPS9.8959.4246.106 Gulf of Mexico South America, mostly Brazil Europe, mostly U.K. and Norway Mediterranean Basin Angola Australia and Asia, including Malaysia, Indonesia, and Vietnam Middle East, including Kuwait, Qatar, and Saudi Arabia Financial Data Provided by Capital IQ

4. Business Model Offshore contract drilling services to the energy industry Job is to drill and complete wells at the direction of customers Contract can range from one short well to several years ▫Dayrate drilling contracts Two Types of Wells ▫Exploratory ▫Development 4

5. Business Model 5

6. Fleet Semisubmersibles ▫Rig consisting of upper working and living deck resting on vertical columns connected to lower hull members ▫32 in fleet ▫Capable of working in water depths of 4,000+ 6

7. Fleet Drillship ▫Positioned over a drillsite and compete with semisubmersible rigs ▫One in fleet ▫Located offshore Brazil 7 The Ocean Clipper

8. Fleet Jack-ups ▫Mobile, self-elevating drilling platforms ▫Drilling in depths of 20 feet to 350 feet ▫14 in fleet 8

9. Management Lawrence Dickerson (President, CEO) ▫Firm tenure: 12 years John Vecchio (Executive Vice President) ▫Firm tenure: 8 years Gary Krenek (CFO) ▫Firm tenure: 12 years William Long (Senior VP) ▫Firm tenure: 11 years Beth Gordon (Controller, CAO) ▫Firm tenure: 10 years 9

10. ROA Breakdown 20062007200820092010E2011E2012E2013E2014E2015E Profitability36%34%38%39%36% Efficiency 0.5x0.6x0.7x0.6x0.5x ROA17%19%27%22%17% 10

11. 11 ROE Decomposition 20062007200820092010E2011E2012E2013E2014E2015E EBIT Margin % 47.4% 48.5% 55.1% 53.6% 54.8% 59.1% 60.5% 60.1% 60.8% 60.7% Total Asset Turnover0.5x0.6x0.7x0.6x0.5x0.6x 0.5x Leverage Ratio1.8x1.5x 1.7x1.8x1.7x1.6x1.5x1.4x Interest Burden103%101%97%98%97%98%99%100% 101% Tax Burden73%69%71%74%71% ROE30.47%29.42%39.15%37.91%33.47%39.49%40.59%35.19%33.72%30.55%

12. Macroeconomic Analysis Real GDP explains about 95% of demand for crude oil 12

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15. Oil/Drilling Regulation Energy Policy Act of 2005 ▫Aimed to increase U.S. energy self sufficiency ▫Expansion of Strategic Petroleum Reserve (SPR) to 1B (from 700MM) barrels 15

16. Competitors Transocean Ltd. (NYSE:RIG) Noble Corporation (NYSE: NE) Ensco PLC (NYSE: ESV) 16

17. Competitors Transocean Ltd. (NYSE:RIG) The world’s largest offshore drilling contractor. Incorporated in Switzerland, has 20,000 employees worldwide. Two business segments: Contract drilling services : Contracting on a day rate basis to drill oil and gas wells. Transocean Solutions: Unique in the marketplace. Offers a complete package for well construction and field development needs. FY 2009 Revenue=11.56B BP accounted for approximately 12 % of total operating revenues. 17

18. Competitors Noble Corporation (NYSE: NE) An offshore drilling contractor for the oil and gas industry. Two Business Segments: Contract Drilling Services (99% of revenue) Labor Contracts: Only provides the personnel necessary to manage and perform the drilling FY 2009 Revenue= $1.66B Pemex accounted for approximately 23%, Shell and its affiliates accounted for 12%. 18

19. Competitors Ensco plc (NYSE: ESV) Changed its name from Ensco International plc in March, 2010. One service: contract drilling Business Strategy: to focus on ultra-deepwater semisubmersible rig and premium jackup rig operations and de-emphasize other non- core operations and assets. FY 2009 Revenue =1.95B ConocoPhillips accounted for 13% and five largest customers accounted for 44% in the aggregate. 19

20. Rigs Comparison High- Specificatio n Floater Midwater Floater Jack-upsOtherTotalUnder Constructio n Transocean 46 (1) 26 (6) 65 (23) 3 (1) 140 (31) 3 Noble 17 (2) 2430 62 (2) 0 Ensco 80 42 (2) 1 (1) 51 (3) 4 Diamond Offshore 33 (1) 0 14 (3) 0 47 (4) 0 20 Data on April 13, 2010 ( ) indicates number of rigs that are cold stacked.

21. Key Ratio Comparison Net Profit Margin D/EROEROA Transocean 27.5%0.5716.77%8.85% Noble 46.1%0.1127.52%21.65% Ensco 40.1%0.0515.25%12.42% Diamond Offshore 37.9%0.4137.91%24.53% 21

22. Share Performance 22 Source: Yahoo! Finance

23. Multiples Valuation Trailing P/EForward P/EP/BP/STEV/EBITDA Transocean 8.699.041.342.386.14 Noble 6.497.811.582.944.38 Ensco 8.6211.611.223.444.91 Diamond Offshore 9.1710.443.47 5.96 23

24. Relative Value Trailing P/EForward P/EP/BP/STEV/EBITDA High86.01100.8341.2389.8993.65 Mean78.4882.3836.0176.3577.58 Low64.1967.8131.8062.2665.29 Range21.8233.029.4327.6328.36 24

25. SWOT Analysis 25 Strengths Key segments of fleet able to drill 4,000 feet or more Geographical repartition of assets Track record and crew Weaknesses High dependency on a few customers Two customers comprise 20% of revenues Five customers comprise 40% of revenues

26. SWOT Analysis 26 Opportunities Operating in a growing industry Lift of ban on oil drilling off most U.S. shores Technological progress will enable access to more oil reserves Threats Intense competition in the jack-up segment Energy prices sustainably low Oil companies increasing their own drilling capacity Environment friendly trends Severe weather in Gulf of Mexico region

27. Correlation with Holdings Portfolio HoldingsCorrelation with DO The Mosaic Company (MOS)0.86 McDonald’s (MCD)0.74 Jack Henry & Associates (JKHY)0.73 MEMC Electronic Materials (WFR)0.55 American Eagle Outfitters (AEO)-0.02 Walgreen Company (WAG)-0.30 27

28. Recommendation HOLD 50 shares of Diamond Offshore Share Price on April 14, 2010: $93.01 DCF Value: $88.86 Triangulation Value: $82.15 28