0000949039
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2009-12-31
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2009-03-31
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2008-12-31
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2010-03-31
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2009-12-31
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2009-01-01
2009-03-31
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2010-04-22
0000949039
2010-01-01
2010-03-31
iso4217:USD
xbrli:shares
xbrli:shares
iso4217:USD
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<div style="font-family: 'Times New Roman',Times,serif">
<div align="center" style="font-size: 10pt; margin-top: 0pt"><b></b>
</div>
<div align="left">
</div>
<div align="center" style="font-size: 10pt; margin-top: 0pt"><b></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>1. General Information</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     The unaudited consolidated financial statements of Diamond Offshore Drilling, Inc. and
subsidiaries, which we refer to as “Diamond Offshore,” “we,” “us” or “our,” should be read in
conjunction with our Annual Report on Form 10-K for the year ended December 31, 2009 (File No.
1-13926).
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     As of April 22, 2010, Loews Corporation, or Loews, owned 50.4% of the outstanding shares of
our common stock.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Interim Financial Information</i>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     The accompanying unaudited consolidated financial statements have been prepared in accordance
with generally accepted accounting principles in the U.S., 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 complete financial statements. The consolidated
financial information has not been audited but, in the opinion of management, includes all
adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of the
consolidated balance sheets, statements of operations 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.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Use of Estimates in the Preparation of Financial Statements</i>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     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.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Cash and Cash Equivalents, Marketable Securities</i>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     We consider short-term, highly liquid investments that have an original maturity of three
months or less and deposits in money market mutual funds that are readily convertible into cash to
be cash equivalents. See Note 5.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     We classify our investments in marketable securities as available for sale and they are stated
at fair value in our Consolidated Balance Sheets. Accordingly, any unrealized gains and losses,
net of taxes, are reported in our Consolidated Balance Sheets in “Accumulated other comprehensive
gain” until realized. The cost of debt securities is adjusted for amortization of premiums and
accretion of discounts to maturity and such adjustments are included in our Consolidated Statements
of Operations in “Interest income.” The sale and purchase of securities are recorded on the date of
the trade. The cost of debt securities sold is based on the specific identification method.
Realized gains or losses, as well as any declines in value that are judged to be other than
temporary, are reported in our Consolidated Statements of Operations in “Other income (expense).”
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Derivative Financial Instruments</i>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Our derivative financial instruments include foreign currency forward exchange, or FOREX,
contracts. See Notes 4 and 5.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Supplementary Cash Flow Information</i>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     We paid interest on long-term debt totaling $12.5 million in each of the three-month periods
ended March 31, 2010 and 2009. During the three months ended March 31, 2010, we paid $0.9 million
in interest on assessments from the Internal Revenue Service.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     We paid $0.5 million in U.S. federal income taxes during the three-month periods ended March
31, 2010. We paid $37.3 million and $47.8 million in foreign income taxes, net of foreign tax
refunds, during the three months
ended March 31, 2010 and 2009, respectively. We received a refund for state income taxes of
$0.1 million during the three months ended March 31, 2010.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Capital expenditures for the three months ended March 31, 2010 included $64.9 million that was
accrued but unpaid at December 31, 2009. Capital expenditures for the three months ended March 31,
2009 included $59.4 million that was accrued but unpaid at December 31, 2008. Capital expenditures
that were accrued but not paid as of March 31, 2010 totaled $37.0 million. We have included this
amount in “Accrued liabilities” in our Consolidated Balance Sheets at March 31, 2010.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     We recorded income tax benefits of $0.1 million related to employee stock plan exercises
during the three months ended March 31, 2009.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Comprehensive Income</i>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     A reconciliation of net income to comprehensive income is as follows:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="76%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7"><b>Three Months Ended</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>March 31,</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2009</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7"><b>(In thousands)</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Net income
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">290,853</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">348,581</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Other comprehensive gains (losses), net of tax:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">FOREX contracts:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Unrealized holding gain
</div></td>
<td> </td>
<td> </td>
<td align="right">137</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Reclassification adjustment for gain
included in net income
</div></td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">(1,085</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Investments in marketable securities:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Unrealized holding (loss) gain
</div></td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">(4</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">27</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Reclassification adjustment for gain
included in net income
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">(493</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" nowrap="nowrap" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Comprehensive income
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">289,901</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">348,115</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     The tax related to the change in unrealized holding gain on FOREX contracts for the three
months ended March 31, 2010 was approximately $74,000. The tax related to the reclassification
adjustment for FOREX contracts included in net income for the three months ended March 31, 2010 was
approximately $584,000.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     The tax related to the change in unrealized holding loss on investments was approximately
$2,000 for the three months ended March 31, 2010. The tax related to the change in unrealized
holding gain on investments for the three months ended March 31, 2009 was approximately $15,000.
The tax effect on the reclassification adjustment for net gains included in net income was
approximately $265,000 for the three months ended March 31, 2009.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Foreign Currency</i>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Our functional currency is the U.S. dollar. Foreign currency transaction gains and losses,
including gains and losses from the settlement of FOREX contracts not designated as accounting
hedges, are reported as “Foreign currency transaction gain (loss)” in our Consolidated Statements
of Operations. For the three-month periods ended March 31, 2010 and 2009, we recognized net
foreign currency exchange gains of $0.5 million and net foreign currency exchange losses of $4.1
million, respectively. See Note 4.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Revenue Recognition</i>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Revenue from our dayrate drilling contracts is recognized as services are performed. In
connection with such drilling contracts, we may receive fees (either lump-sum or dayrate) for the
mobilization of equipment. These fees are earned as services are performed over the initial term
of the related drilling contracts. We defer mobilization fees received, as well as direct and
incremental mobilization costs incurred, and amortize each, on a straight line basis, over the term
of the related drilling contracts (which is the period we estimate to be benefited from the
mobilization activity). Straight line amortization of mobilization revenues and related costs over
the initial term of the related drilling contracts (which generally range from two to 60 months) is
consistent with the timing of net cash
flows generated from the actual drilling services performed.
Absent a contract, mobilization costs are recognized as incurred.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     From time to time, we may receive fees from our customers for capital improvements to our rigs
(either lump-sum or dayrate). We defer such fees received in “Accrued liabilities” and “Other
liabilities” in our Consolidated Balance Sheets and recognize these fees into income on a
straight-line basis over the period of the related drilling contract. We capitalize the costs of
such capital improvements and depreciate them over the estimated useful life of the asset.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     We record reimbursements received for the purchase of supplies, equipment, personnel services
and other services provided at the request of our customers in accordance with a contract or
agreement, for the gross amount billed to the customer, as “Revenues related to reimbursable
expenses” in our Consolidated Statements of Operations.
</div>
</div>
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<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>2. Earnings Per Share</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     A reconciliation of the numerators and the denominators of our basic and diluted per-share
computations follows:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="76%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7"><b>Three Months Ended</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>March 31,</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2009</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td align="center" colspan="7" nowrap="nowrap"><b>(In thousands, except per share</b> <b>data)</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Net income — basic (numerator):
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">290,853</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">348,581</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Effect of dilutive potential shares
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:45px; text-indent:-15px">Zero Coupon Debentures
</div></td>
<td> </td>
<td> </td>
<td align="right">24</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">23</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Net income including conversions — diluted
(numerator)
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">290,877</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">348,604</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Weighted average shares — basic (denominator):
</div></td>
<td> </td>
<td> </td>
<td align="right">139,026</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">139,001</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Effect of dilutive potential shares
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:45px; text-indent:-15px">Zero Coupon Debentures
</div></td>
<td> </td>
<td> </td>
<td align="right">52</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">52</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:45px; text-indent:-15px">Stock options and SARs
</div></td>
<td> </td>
<td> </td>
<td align="right">51</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">11</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Weighted average shares including conversions
— diluted (denominator)
</div></td>
<td> </td>
<td> </td>
<td align="right">139,129</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">139,064</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Earnings per share:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:45px; text-indent:-15px">Basic
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">2.09</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">2.51</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:45px; text-indent:-15px">Diluted
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">2.09</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">2.51</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Our computation of diluted earnings per share, or EPS, for the three months ended March
31, 2010 excludes 441,037 stock appreciation rights, or SARs. The inclusion of such potentially
dilutive shares in the computation of diluted EPS would have been antidilutive for the period
presented.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Our computation of EPS for the three months ended March 31, 2009 excludes stock options
representing 23,493 shares of common stock and 482,588 SARs. The inclusion of such potentially
dilutive shares in the computation of diluted EPS would have been antidilutive for the period
presented.
</div>
</div>
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<!-- Begin Block Tagged Note 3 - us-gaap:MarketableSecuritiesTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>3. Marketable Securities</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     We report our investments as current assets in our Consolidated Balance Sheets in “Marketable
securities,” representing the investment of cash available for current operations.
</div>
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</div>
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<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 6pt">Our investments in marketable securities are classified as available for sale and are summarized as
follows:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="64%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="11" style="border-bottom: 1px solid #000000"><b>March 31, 2010</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Amortized</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Unrealized</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Market</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Cost</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>(Loss) Gain</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Value</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="11"><b>(In thousands)</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Due within one year
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">649,960</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="right">$</td>
<td align="right">(2</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="right">$</td>
<td align="right">649,958</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Mortgage-backed securities
</div></td>
<td> </td>
<td> </td>
<td align="right">738</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">60</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">798</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="11" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Total
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">650,698</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">58</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">650,756</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="11" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="64%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="11" style="border-bottom: 1px solid #000000"><b>December 31, 2009</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Amortized</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Unrealized</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Market</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Cost</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>(Loss) Gain</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Value</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="11"><b>(In thousands)</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Due within one year
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">399,997</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="right">$</td>
<td align="right">(1</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="right">$</td>
<td align="right">399,996</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Mortgage-backed securities
</div></td>
<td> </td>
<td> </td>
<td align="right">792</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">65</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">857</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="11" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Total
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">400,789</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">64</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">400,853</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="11" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Marketable securities at March 31, 2010 include $100.0 million in U.S. Treasury Bills
purchased on March 31, 2010 that did not settle until April 2010. The offsetting amount for this
transaction has been reported as a $100.0 million “Payable for purchase of marketable securities”
in our Consolidated Balance Sheets at March 31, 2010.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Proceeds from sales and maturities of marketable securities and gross realized gains and
losses are summarized as follows:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="76%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7"><b>Three Months Ended</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>March 31,</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2009</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7"><b>(In thousands)</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Proceeds from sales
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">53</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">1,448,943</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Proceeds from maturities
</div></td>
<td> </td>
<td> </td>
<td align="right">1,200,000</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Gross realized gains
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">732</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Gross realized losses
</div></td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">(1</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">(135</td>
<td nowrap="nowrap">)</td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Proceeds from sales of marketable securities for the three months ended March 31, 2009 include
$100.0 million in securities sold on March 31, 2009 that did not settle until April 2009.
</div>
</div>
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<!-- Begin Block Tagged Note 4 - us-gaap:DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>4. Derivative Financial Instruments</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt"><i>Foreign Currency Forward Exchange Contracts</i>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Our international operations expose us to foreign exchange risk associated with our costs
payable in foreign currencies for employee compensation, foreign income tax payments and purchases
from foreign suppliers. We may utilize FOREX contracts to reduce our foreign exchange risk. Our
FOREX contracts may obligate us to exchange predetermined amounts of foreign currencies on
specified dates or to net settle the spread between the contracted foreign currency exchange rate
and the spot rate on the contract settlement date, which, for most of our contracts, is the average
spot rate for the contract period.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     We enter into FOREX contracts when we believe market conditions are favorable to purchase
contracts for future settlement with the expectation that such contracts, when settled, will reduce
our exposure to foreign currency gains/losses on foreign currency expenditures in the future. The
amount and duration of such contracts is based on our monthly forecast of expenditures in the
significant currencies in which we do business and for which there is a financial market (<i>i.e.</i>,
Australian dollars, Brazilian reais, British pounds sterling, Mexican pesos and Norwegian kroner).
These forward contracts are derivatives as defined by GAAP.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     In accordance with GAAP, each derivative contract is stated in the balance sheet at its fair
value with gains and losses reflected in the income statement except that, to the extent the
derivative qualifies for, and is designated, as an accounting hedge, the gains and losses are
reflected in income in the same period as offsetting losses and gains on the qualifying hedged
positions.
</div>
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</div>
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<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Realized gains or losses upon settlement of derivative contracts not designated as cash flow
hedges are reported as “Foreign currency transaction gain (loss)” in our Consolidated Statements of
Operations.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     In May 2009, we began a hedging strategy and designated certain of our qualifying FOREX
contracts as cash flow hedges. These hedges are expected to be highly effective, and therefore,
adjustments to record the carrying value of the effective portion of our derivative financial
instruments to their fair value is recorded as a component of “Accumulated other comprehensive
gain,” or AOCG, in our Consolidated Financial Statements. The effective portion of the cash flow
hedge will remain in AOCG until it is reclassified into earnings in the period or periods during
which the hedged transaction affects earnings or it is determined that the hedged transaction will
not occur. Adjustments to record the carrying value of the ineffective portion of our derivative
financial instruments to fair value are recorded as “Foreign currency transaction gain (loss)” in
our Consolidated Statements of Operations.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Realized gains or losses upon settlement of derivative contracts designated as cash flow
hedges are reported as a component of “Contract drilling” expense in our Consolidated Statements of
Operations to offset the impact of foreign currency fluctuations in our expenditures in local
foreign currencies in the countries in which we operate.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     For derivative contracts entered into prior to May 2009, we did not seek hedge accounting
treatment under GAAP. Accordingly, prior to May 2009, all adjustments to record the carrying value
of our derivative financial instruments at fair value were reported as “Foreign currency
transaction gain (loss)” in our Consolidated Statements of Operations.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     During the three months ended March 31, 2010, we settled FOREX contracts with an aggregate
notional value of approximately $52.4 million, of which the entire aggregate amount was designated
as an accounting hedge.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     The following table presents the amounts recognized in our Consolidated Statements of
Operations related to our FOREX contracts designated as accounting hedges for the three-month
periods ended March 31, 2010 and 2009.
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="76%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>For the Three Months Ended March 31,</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 1px solid #000000"><b>Location of Gain Recognized in Income</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2009</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7"><b>(In thousands)</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Contract drilling expense
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">2,099</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">—</td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     The following table presents the amounts recognized in our Consolidated Statements of
Operations related to our FOREX contracts not designated as hedging instruments for the three
months ended March 31, 2010 and 2009.
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="76%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>For the Three Months Ended March 31,</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 1px solid #000000"><b>Location of Loss Recognized in Income</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2009</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7"><b>(In thousands)</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Foreign currency transaction loss
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="right">$</td>
<td align="right">(25</td>
<td nowrap="nowrap">)</td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     The amounts presented in the table above include net unrealized gains aggregating $24.8
million for the three months ended March 31, 2009 to record the carrying value of our derivative
financial instruments to their fair value. There were no gains or losses associated with FOREX
contracts not designated as accounting hedges during the three months ended March 31, 2010.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     As of March 31, 2010, we had FOREX contracts outstanding in the aggregate notional amount of
$77.6 million, consisting of $30.1 million in Australian dollars, $27.6 million in Brazilian reais,
$10.6 million in British pounds sterling, $4.0 million in Mexican pesos and $5.3 million in
Norwegian kroner. These contracts generally settle monthly through September 2010. As of March
31, 2010, all outstanding derivative contracts had been designated as cash flow hedges. See Note
5.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 6pt">     The following table presents the fair values of our derivative financial instruments at March
31, 2010.
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="46%"> </td>
<td width="2%"> </td>
<td width="13%"> </td>
<td width="13%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="6%"> </td>
<td width="6%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>Assets</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>Liabilities</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Balance Sheet</b></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Balance Sheet</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Location</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Fair Value</b></td>
<td style="border-bottom: 0px solid #000000"> </td>
<td style="border-bottom: 0px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Location</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Fair Value</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>(In</b></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>(In</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>thousands)</b></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>thousands)</b></td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Derivatives
designated as
hedging
instruments:</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">FOREX contracts
</div></td>
<td> </td>
<td colspan="3" align="center">Prepaid expenses and <br />
other current assets</td>
<td> </td>
<td align="left">$</td>
<td align="right">1,505</td>
<td> </td>
<td> </td>
<td colspan="3" nowrap="nowrap" align="center">Accrued liabilities</td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(560</td>
<td nowrap="nowrap">)</td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     The following table presents the fair values of our derivative financial instruments at
December 31, 2009.
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="46%"> </td>
<td width="2%"> </td>
<td width="13%"> </td>
<td width="13%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="6%"> </td>
<td width="6%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>Assets</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>Liabilities</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Balance Sheet</b></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Balance Sheet</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Location</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Fair Value</b></td>
<td style="border-bottom: 0px solid #000000"> </td>
<td style="border-bottom: 0px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Location</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Fair Value</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>(In</b></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>(In</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>thousands)</b></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>thousands)</b></td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Derivatives
designated as
hedging
instruments:</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">FOREX contracts
</div></td>
<td> </td>
<td colspan="3" align="center">Prepaid expenses and <br />
other current assets</td>
<td> </td>
<td align="left">$</td>
<td align="right">2,634</td>
<td> </td>
<td> </td>
<td colspan="3" nowrap="nowrap" align="center">Accrued liabilities</td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(230</td>
<td nowrap="nowrap">)</td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     The following table presents the amounts recognized in our Consolidated Balance Sheets and
Consolidated Statements of Operations related to our FOREX contracts designated as cash flow hedges
for the three months ended March 31, 2010.
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="16%"> </td>
<td width="5%"> </td>
<td width="16%"> </td>
<td width="5%"> </td>
<td width="16%"> </td>
<td width="5%"> </td>
<td width="16%"> </td>
<td width="5%"> </td>
<td width="16%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center"><b>Location of Gain</b></td>
<td> </td>
<td nowrap="nowrap" align="center"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="center"><b>Amount of</b></td>
<td> </td>
<td nowrap="nowrap" align="center"></td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center"><b>Recognized in Income</b></td>
<td> </td>
<td nowrap="nowrap" align="center"><b>Amount of Gain</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="center"><b>Pre-Tax Gain</b></td>
<td> </td>
<td nowrap="nowrap" align="center"><b>Location of</b></td>
<td> </td>
<td nowrap="nowrap" align="center"><b>Amount of</b></td>
<td> </td>
<td nowrap="nowrap" align="center"><b>on Derivative</b></td>
<td> </td>
<td nowrap="nowrap" align="center"><b>Recognized in Income on</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="center"><b>Recognized in</b></td>
<td> </td>
<td nowrap="nowrap" align="center"><b>Pre-Tax Gain</b></td>
<td> </td>
<td nowrap="nowrap" align="center"><b>Pre-Tax Gain</b></td>
<td> </td>
<td nowrap="nowrap" align="center"><b>(Ineffective Portion</b></td>
<td> </td>
<td nowrap="nowrap" align="center"><b>Derivative (Ineffective</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="center"><b>AOCG on</b></td>
<td> </td>
<td nowrap="nowrap" align="center"><b>Reclassified from</b></td>
<td> </td>
<td nowrap="nowrap" align="center"><b>Reclassified from</b></td>
<td> </td>
<td nowrap="nowrap" align="center"><b>and Amount Excluded</b></td>
<td> </td>
<td nowrap="nowrap" align="center"><b>Portion and Amount</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="center"><b>Derivative</b></td>
<td> </td>
<td nowrap="nowrap" align="center"><b>AOCG into Income</b></td>
<td> </td>
<td nowrap="nowrap" align="center"><b>AOCG into Income</b></td>
<td> </td>
<td nowrap="nowrap" align="center"><b>from Effectiveness</b></td>
<td> </td>
<td nowrap="nowrap" align="center"><b>Excluded from</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="center" style="border-bottom: 1px solid #000000"><b>(Effective Portion)</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" style="border-bottom: 1px solid #000000"><b> (Effective</b> <b>Portion)</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" style="border-bottom: 1px solid #000000"><b>(Effective Portion)</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" style="border-bottom: 1px solid #000000"><b>Testing)</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" style="border-bottom: 1px solid #000000"><b>Effectiveness Testing)</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="center"><b>(In thousands)</b></td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center"><b>(In thousands)</b></td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center"><b>(In thousands)</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom">
<td align="left" valign="top">
<div style="margin-left:45px; text-indent:-15px">$212
</div></td>
<td> </td>
<td align="center" valign="top">Contract drilling expense
</td>
<td> </td>
<td align="center" valign="top">$1,670
</td>
<td> </td>
<td align="center" valign="top">
<div style="margin-left:25px; text-indent:-25px">Foreign currency transaction gain
</div>
</td>
<td> </td>
<td align="center" valign="top">$—</td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     As of March 31, 2010, the estimated amount of net unrealized gains associated with our FOREX
contracts that will be reclassified to earnings during the next twelve months was $0.9 million.
The net unrealized gains associated with these derivative financial instruments will be
reclassified to contract drilling expense.
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 5 - us-gaap:FairValueDisclosuresTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>5. Financial Instruments and Fair Value Disclosures</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt"><i>Concentrations of Credit and Market Risk</i>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Financial instruments which potentially subject us to significant concentrations of credit or
market risk consist primarily of periodic temporary investments of excess cash, trade accounts
receivable and investments in debt securities, including residential mortgage-backed securities.
We place our excess cash investments in high quality short-term money market instruments through
several financial institutions. At times, such investments may be in excess of the insurable
limit. We periodically evaluate the relative credit standing of these financial institutions as
part of our investment strategy.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     A majority of our investments in debt securities are U.S. government securities with minimal
credit risk. However, we are exposed to market risk due to price volatility associated with
interest rate fluctuations.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Concentrations of credit risk with respect to our trade accounts receivable are limited
primarily due to the entities comprising our customer base. Since the market for our services is
the offshore oil and gas industry, this customer base consists primarily of major and independent
oil and gas companies and government-owned oil companies. 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 to us, we perform a credit review on that
company. Based on that analysis, we may require that the customer present a letter of credit,
prepay or provide other credit enhancements.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Our business has experienced negative effects of the current economic downturn such as
customer credit problems, customers attempting to renegotiate or terminate contracts, and one
customer seeking bankruptcy protection. We provide allowances for potential credit losses on a
specific customer basis when necessary; however, we have not historically experienced significant
losses on our trade receivables. At March 31, 2010 and December 31, 2009, our allowance for
doubtful accounts receivable was $40.6 million and $41.7 million, respectively, related to our
operations in Egypt and the insolvency of one of our customers in the United Kingdom. No
additional allowances were deemed necessary for the periods presented.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     During 2009, we amended an existing contractual agreement at a customer’s request to provide
short-term financial relief. The amended contract obligates the customer to pay us, over the term
of the six-well drilling program, $75,000 per day in accordance with our normal credit terms (due
30 days after receipt of invoice) and the remainder of the contractual dayrate, $485,000 per day,
through the conveyance of a 27% net profits interest, or NPI, in certain developmental oil-and-gas
producing properties. Based on the current production payout estimate, we anticipate that the
first payment from the conveyance of the NPI will commence in the second quarter of 2010. Payment
of such amounts, and the timing of such payments, are contingent upon such production and upon
energy sale prices.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     At March 31, 2010, the $94.5 million portion of this trade receivable payable from the NPI is
presented as “Accounts Receivable” in our Consolidated Balance Sheets. At March 31, 2010, we
believe that collectability of the amount owed pursuant to the NPI arrangement is reasonably
assured.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Fair Values</i>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     The amounts reported in our Consolidated Balance Sheets for cash and cash equivalents,
marketable securities, accounts receivable, forward exchange contracts and accounts payable
approximate fair value. Fair values and related carrying values of our debt instruments are shown
below.
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="52%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>March 31, 2010</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>December 31, 2009</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Fair Value</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Carrying Value</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Fair Value</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Carrying Value</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="15"><b>(In millions)</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Zero Coupon Debentures
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">4.6</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">4.2</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">5.1</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">4.2</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">4.875% Senior Notes
</div></td>
<td> </td>
<td> </td>
<td align="right">268.5</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">249.7</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">257.5</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">249.7</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">5.15% Senior Notes
</div></td>
<td> </td>
<td> </td>
<td align="right">269.6</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">249.7</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">263.3</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">249.7</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">5.70% Senior Notes
</div></td>
<td> </td>
<td> </td>
<td align="right">487.0</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">496.7</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">490.4</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">496.7</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">5.875% Senior Notes
</div></td>
<td> </td>
<td> </td>
<td align="right">539.2</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">499.3</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">530.6</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">499.3</td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     We have estimated the fair value amounts by using appropriate valuation methodologies and
information available to management as of March 31, 2010 and December 31, 2009, respectively.
Considerable judgment is required in 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. The following methods and assumptions were used to estimate the fair value of
each class of financial instrument for which it was practicable to estimate that value:
</div>
<div style="margin-top: 6pt">
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="4%" style="background: transparent"> </td>
<td width="3%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td><i>Cash and cash equivalents </i>— The carrying amounts approximate fair value because of
the short maturity of these instruments.</td>
</tr>
</table>
</div>
<div style="margin-top: 6pt">
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="4%" style="background: transparent"> </td>
<td width="3%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td><i>Marketable securities </i>— The fair values of the debt securities, including
residential mortgage-backed securities, available for sale were based on the quoted
closing market prices on March 31, 2010 and December 31, 2009, respectively.</td>
</tr>
</table>
</div>
<div style="margin-top: 6pt">
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="4%" style="background: transparent"> </td>
<td width="3%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td><i>Accounts receivable and accounts payable </i>— The carrying amounts approximate fair
value based on the nature of the instruments.</td>
</tr>
</table>
</div>
<div style="margin-top: 6pt">
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="4%" style="background: transparent"> </td>
<td width="3%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td><i>Forward exchange contracts — </i>The fair value of our FOREX contracts is based on both
quoted market prices and valuations derived from pricing models on March 31, 2010 and
December 31, 2009, respectively.</td>
</tr>
</table>
</div>
<div style="margin-top: 6pt">
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="4%" style="background: transparent"> </td>
<td width="3%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td><i>Long-term debt </i>— The fair value of our 5.70% Senior Notes due 2039, 5.875% Senior
Notes due 2019, 4.875% Senior Notes due July 1, 2015, and 5.15% Senior Notes due
September 1, 2014 was based on the quoted closing market price on March 31, 2010 and
December 31, 2009, respectively, from brokers of these instruments. The fair value of
our Zero Coupon Convertible Debentures due 2020, or Zero Coupon
Debentures, was based on the closing market price of our common stock on March 31, 2010
and December 31, 2009, respectively, and the stated conversion rate for these
debentures.</td>
</tr>
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Certain of our assets and liabilities are required to be measured at fair value in accordance
with GAAP. 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:
</div>
<div align="left" style="margin-top: 12pt">
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000; text-align: left">
<tr>
<td width="3%"></td>
<td width="1%"></td>
<td></td>
</tr>
<tr valign="top">
<td nowrap="nowrap" align="left">Level 1</td>
<td> </td>
<td>Quoted prices for identical instruments in active markets. Level 1
assets include short-term investments such as money market funds
and U.S. Treasury Bills. Our Level 1 assets at March 31, 2010
consisted of cash held in money market funds of $282.1 million and
investments in U.S. Treasury Bills of $650.0 million. Our Level 1
assets at December 31, 2009 consisted of cash held in money market
funds of $337.8 million and investments in U.S. Treasury Bills of
$400.0 million.</td>
</tr>
</table>
</div>
<div align="left" style="margin-top: 12pt">
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000; text-align: left">
<tr>
<td width="3%"></td>
<td width="1%"></td>
<td></td>
</tr>
<tr valign="top">
<td nowrap="nowrap" align="left">Level 2</td>
<td> </td>
<td>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 2 assets and liabilities include
residential mortgage-backed securities and over-the-counter
FOREX contracts. Our residential
mortgage-backed securities were valued using a model-derived
valuation technique based on the quoted closing market prices
received from a financial institution. Our FOREX contracts are
valued based on quoted market prices, which are derived from
observable inputs including current spot and forward rates, less
the contract rate multiplied by the notional amount. The inputs
used in our valuation are obtained from a Bloomberg curve
analysis which uses par coupon swap rates to calculate implied
forward rates so that projected floating rate cash flows can be
calculated. The valuation techniques underlying the models are
widely accepted in the financial services industry and do not
involve significant judgment.</td>
</tr>
</table>
</div>
<div align="left" style="margin-top: 12pt">
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000; text-align: left">
<tr>
<td width="3%"></td>
<td width="1%"></td>
<td></td>
</tr>
<tr valign="top">
<td nowrap="nowrap" align="left">Level 3</td>
<td> </td>
<td>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.</td>
</tr>
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Market conditions could cause an instrument to be reclassified from Level 1 to Level 2, or
from Level 2 to Level 3. Our policy regarding fair value measurements of financial instruments
transferred into and out of levels is to reflect the transfers as having occurred at the beginning
of the reporting period.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Assets measured at fair value on a recurring basis are summarized below:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="52%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="15" style="border-bottom: 1px solid #000000"><b>March 31, 2010</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="11" style="border-bottom: 1px solid #000000"><b>Fair Value Measurements Using</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Assets at Fair</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Level 1</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Level 2</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Level 3</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Value</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="15"><b>(In thousands)</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Assets:</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Short-term investments
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">932,090</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">932,090</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">FOREX contracts
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,505</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,505</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Mortgage-backed securities
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">798</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">798</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="15" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:45px; text-indent:-15px">Total assets
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">932,090</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">2,303</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">934,393</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="15" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Liabilities:</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr>
<td style="font-size:10pt"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">FOREX contracts
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="right">$</td>
<td align="right">(560</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="right">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="right">$</td>
<td align="right">(560</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="15" nowrap="nowrap" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="52%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="15" style="border-bottom: 1px solid #000000"><b>December 31, 2009</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="11" style="border-bottom: 1px solid #000000"><b>Fair Value Measurements Using</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Assets at Fair</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Level 1</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Level 2</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Level 3</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Value</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="15"><b>(In thousands)</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Assets:</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Short-term investments
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">737,830</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">737,830</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">FOREX contracts
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2,634</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2,634</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Mortgage-backed securities
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">857</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">857</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="15" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:45px; text-indent:-15px">Total assets
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">737,830</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">3,491</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">741,321</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="15" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Liabilities:</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">FOREX contracts
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="right">$</td>
<td align="right">(230</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="right">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="right">$</td>
<td align="right">(230</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="15" nowrap="nowrap" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 6 - us-gaap:DeferredCostsCapitalizedPrepaidAndOtherAssetsDisclosureTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>6. Prepaid Expenses and Other Current Assets</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Prepaid expenses and other current assets consist of the following:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="76%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>March 31,</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>December 31,</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2009</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7"><b>(In thousands)</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Rig spare parts and supplies
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">51,551</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">49,122</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Deferred mobilization costs
</div></td>
<td> </td>
<td> </td>
<td align="right">71,584</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">45,502</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Prepaid insurance
</div></td>
<td> </td>
<td> </td>
<td align="right">3,725</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">11,478</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Deferred tax assets
</div></td>
<td> </td>
<td> </td>
<td align="right">7,235</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">7,235</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Deposits
</div></td>
<td> </td>
<td> </td>
<td align="right">3,540</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">3,562</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Prepaid taxes
</div></td>
<td> </td>
<td> </td>
<td align="right">676</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">26,109</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">FOREX contracts
</div></td>
<td> </td>
<td> </td>
<td align="right">1,505</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2,634</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Other
</div></td>
<td> </td>
<td> </td>
<td align="right">7,097</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">9,435</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Total
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">146,913</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">155,077</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 7 - us-gaap:PropertyPlantAndEquipmentDisclosureTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>7. Drilling and Other Property and Equipment</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Cost and accumulated depreciation of drilling and other property and equipment are summarized
as follows:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="76%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>March 31,</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>December 31,</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2009</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7"><b>(In thousands)</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Drilling rigs and equipment
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">7,025,047</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">6,950,303</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Land and buildings
</div></td>
<td> </td>
<td> </td>
<td align="right">48,283</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">44,640</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Office equipment and other
</div></td>
<td> </td>
<td> </td>
<td align="right">39,554</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">38,203</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Cost
</div></td>
<td> </td>
<td> </td>
<td align="right">7,112,884</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">7,033,146</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Less: accumulated depreciation
</div></td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">(2,698,497</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">(2,601,094</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" nowrap="nowrap" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Drilling and other property and equipment, net
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">4,414,387</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">4,432,052</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 8 - us-gaap:AccountsPayableAndAccruedLiabilitiesDisclosureTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>8. Accrued Liabilities</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Accrued liabilities consist of the following:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="76%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>March 31,</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>December 31,</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2009</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7"><b>(In thousands)</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Accrued project/upgrade expenses
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">73,744</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">115,778</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Payroll and benefits
</div></td>
<td> </td>
<td> </td>
<td align="right">62,236</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">69,065</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Deferred revenue
</div></td>
<td> </td>
<td> </td>
<td align="right">74,625</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">46,666</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Rig operating expenses
</div></td>
<td> </td>
<td> </td>
<td align="right">32,462</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">29,141</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Interest payable
</div></td>
<td> </td>
<td> </td>
<td align="right">30,055</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">22,710</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Personal injury and other claims
</div></td>
<td> </td>
<td> </td>
<td align="right">11,814</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">10,018</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">FOREX contracts
</div></td>
<td> </td>
<td> </td>
<td align="right">560</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">230</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Other
</div></td>
<td> </td>
<td> </td>
<td align="right">7,148</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">8,263</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Total
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">292,644</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">301,871</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 9 - us-gaap:LongTermDebtTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>9. Long-Term Debt</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Long-term debt consists of the following:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="76%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>March 31,</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>December 31,</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2009</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7"><b>(In thousands)</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Zero Coupon Debentures (due 2020)
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">4,215</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">4,179</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">5.15% Senior Notes (due 2014)
</div></td>
<td> </td>
<td> </td>
<td align="right">249,697</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">249,682</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">4.875% Senior Notes (due 2015)
</div></td>
<td> </td>
<td> </td>
<td align="right">249,684</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">249,671</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">5.875% Senior Notes (due 2019)
</div></td>
<td> </td>
<td> </td>
<td align="right">499,307</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">499,292</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">5.70% Senior Notes (due 2039)
</div></td>
<td> </td>
<td> </td>
<td align="right">496,740</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">496,730</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td align="right">1,499,643</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,499,554</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Less: Current maturities
</div></td>
<td> </td>
<td> </td>
<td align="right">4,215</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">4,179</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Total
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">1,495,428</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">1,495,375</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     At March 31, 2010, there was $6.0 million aggregate principal amount at maturity, or $4.2
million accreted, or carrying value, of our Zero Coupon Debentures outstanding.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Certain of our long-term debt payments may be accelerated due to rights that the holders of
our debt securities have to put the securities to us. The holders of our outstanding Zero Coupon
Debentures have the right to require us to purchase all or a portion of their outstanding
debentures on June 6, 2010.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     The aggregate maturities of long-term debt for each of the five years subsequent to March 31,
2010, are as follows:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="88%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="center" colspan="4"><b>(Dollars in thousands)</b></td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">2010
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">4,215</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">2011
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">2012
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">2013
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">2014
</div></td>
<td> </td>
<td> </td>
<td align="right">249,697</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Thereafter
</div></td>
<td> </td>
<td> </td>
<td align="right">1,245,731</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td align="right">1,499,643</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Less: Current maturities
</div></td>
<td> </td>
<td> </td>
<td align="right">4,215</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Total
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">1,495,428</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 10 - us-gaap:CommitmentsAndContingenciesDisclosureTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>10. Commitments and Contingencies</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Various claims have been filed against us in the ordinary course of business, including claims
by offshore workers alleging personal injuries. We have assessed each claim or exposure to
determine the likelihood that the resolution of the matter might ultimately result in an adverse
effect on our financial condition, results of operations and cash flows. When we determine that an
unfavorable resolution of a matter is probable and such amount of loss can be determined, we record
a reserve for the estimated loss at the time that both of these criteria are met. Our management
believes that we have established adequate reserves for any liabilities that may reasonably be
expected to result from these claims.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     <i>Litigation</i>. We are one of several unrelated defendants in lawsuits filed in the Circuit
Courts of the State of Mississippi alleging that defendants manufactured, distributed or utilized
drilling mud containing asbestos and, in our case, allowed such drilling mud to have been utilized
aboard our offshore drilling rigs. The plaintiffs seek, among other things, an award of unspecified
compensatory and punitive damages. We expect to receive complete defense and indemnity from Murphy
Exploration & Production Company pursuant to the terms of our 1992 asset purchase agreement with
them. We are unable to estimate our potential exposure, if any, to these lawsuits at this time but
do not believe that ultimate liability, if any, resulting from this litigation will have a material
adverse effect on our financial condition, results of operations and cash flows.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Various other claims have been filed against us in the ordinary course of business. In the
opinion of our management, no 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 and cash flows.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 6pt">     We intend to defend these matters vigorously; however, we cannot predict with certainty the
outcome or effect of any litigation matters specifically described above or any other pending
litigation or claims. There can be no assurance as to the ultimate outcome of these lawsuits.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     <i>Personal Injury Claims</i>. Our deductible for liability coverage for personal injury claims,
which primarily result from Jones Act liability in the Gulf of Mexico, is currently $5.0 million per
occurrence, with no aggregate deductible. 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 reserve for
personal injury claims based on our historical losses and utilizing various actuarial models. At
March 31, 2010, our estimated liability for personal injury claims was $33.6 million, of which
$11.2 million and $22.4 million were recorded in “Accrued liabilities” and “Other liabilities,”
respectively, in our Consolidated Balance Sheets. At December 31, 2009, our estimated liability
for personal injury claims was $32.1 million, of which $9.2 million and $22.9 million were recorded
in “Accrued liabilities” and “Other liabilities,” respectively, in our Consolidated Balance Sheets.
The eventual settlement or adjudication of these claims could differ materially from our estimated
amounts due to uncertainties such as:
</div>
<div style="margin-top: 6pt">
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="4%" style="background: transparent"> </td>
<td width="3%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td>the severity of personal injuries claimed;</td>
</tr>
</table>
</div>
<div style="margin-top: 6pt">
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="4%" style="background: transparent"> </td>
<td width="3%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td>significant changes in the volume of personal injury claims;</td>
</tr>
</table>
</div>
<div style="margin-top: 6pt">
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="4%" style="background: transparent"> </td>
<td width="3%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td>the unpredictability of legal jurisdictions where the claims will ultimately be
litigated;</td>
</tr>
</table>
</div>
<div style="margin-top: 6pt">
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="4%" style="background: transparent"> </td>
<td width="3%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td>inconsistent court decisions; and</td>
</tr>
</table>
</div>
<div style="margin-top: 6pt">
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="4%" style="background: transparent"> </td>
<td width="3%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td>the risks and lack of predictability inherent in personal injury litigation.</td>
</tr>
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     <i>Purchase Obligations. </i>As of March 31, 2010 and December 31, 2009, 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.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     <i>Letters of Credit and Other. </i>We were contingently liable as of March 31, 2010 in the amount
of $171.6 million under certain performance, bid, supersedeas, tax appeal and custom bonds and
letters of credit, including $63.1 million in letters of credit issued under our $285 million,
syndicated, senior unsecured revolving credit facility. At March 31, 2010, we had purchased five
of our outstanding bonds, totaling $82.4 million, from a related party in previous years after
obtaining competitive quotes. Agreements relating to approximately $82.4 million of performance
bonds can require collateral at any time. As of March 31, 2010, we had not been required to make
any collateral deposits with respect to these agreements. The remaining agreements cannot require
collateral except in events of default. On our behalf, banks have issued letters of credit
securing certain of these bonds.
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 11 - us-gaap:SegmentReportingDisclosureTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>11. Segments and Geographic Area Analysis</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Although we provide contract drilling services with different types of offshore drilling rigs
and also provide such services in many geographic locations, we have aggregated these operations
into one reportable segment based on the similarity of economic characteristics among all divisions
and locations, including the nature of services provided and the type of customers of such
services, in accordance with Financial Accounting Standards Board Accounting Standards Codification
Topic 280, Segment Reporting.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Revenues from contract drilling services by equipment-type are listed below:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="76%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7"><b>Three Months Ended</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>March 31,</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2009</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7"><b>(In thousands)</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">High-Specification Floaters
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">383,788</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">312,134</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Intermediate Semisubmersibles
</div></td>
<td> </td>
<td> </td>
<td align="right">380,701</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">417,000</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Jack-ups
</div></td>
<td> </td>
<td> </td>
<td align="right">79,949</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">126,574</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Total contract drilling revenues
</div></td>
<td> </td>
<td> </td>
<td align="right">844,438</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">855,708</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Revenues related to reimbursable expenses
</div></td>
<td> </td>
<td> </td>
<td align="right">15,243</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">30,012</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:45px; text-indent:-15px">Total revenues
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">859,681</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">885,720</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Geographic Areas</i>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     At March 31, 2010, our drilling rigs were located offshore twelve countries in addition to the
United States. As a result, we are exposed to the risk of changes in social, political and
economic conditions inherent in international operations and our results of operations and the
value of our international assets are affected by fluctuations in foreign currency exchange rates.
Revenues by geographic area are presented below by attributing revenues to the individual country
or areas where the services were performed.
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="76%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7"><b>Three Months Ended</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>March 31,</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2009</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7"><b>(In thousands)</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">United States
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">238,547</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">356,315</td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">International:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">South America
</div></td>
<td> </td>
<td> </td>
<td align="right">283,115</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">124,701</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Australia/Asia/Middle East
</div></td>
<td> </td>
<td> </td>
<td align="right">158,929</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">174,225</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Europe/Africa/Mediterranean
</div></td>
<td> </td>
<td> </td>
<td align="right">136,606</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">149,832</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Mexico
</div></td>
<td> </td>
<td> </td>
<td align="right">42,484</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">80,647</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:45px; text-indent:-15px">Total revenues
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">859,681</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">885,720</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
</div>
false
--12-31
Q1
2010
2010-03-31
10-Q
0000949039
139026178
Yes
Large Accelerated Filer
5694071609
DIAMOND OFFSHORE DRILLING INC
No
Yes
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62228000
55063000
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1605000
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1965513000
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2625000
395000
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89000
113000
211000
6264261000
6724803000
1723370000
1901655000
400853000
650756000
336052000
509854000
376417000
306054000
173802000
-70363000
2
2
0.01
0.01
500000000
500000000
143942978
143942978
139026178
139026178
1439000
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305127000
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2.09
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453337000
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