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(Mark One)
þ		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the fiscal year ended December 31, 2004
OR
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the transition period from           to

Delaware		76-0321760
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

Title of Each Class		Name of Each Exchange on Which Registered
Common Stock, $0.01 par value per share		New York Stock Exchange

	State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold as of the last business day of the registrant’s most recently completed second fiscal quarter.

As of June 30, 2004				$1,411,161,008

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

As of February 24, 2005		Common Stock, $0.01 par value per share		128,575,920 shares

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				Page No.
Cover Page					1
Document Table of Contents					2
PART I
Item 1.		Business			3
Item 2.		Properties			10
Item 3.		Legal Proceedings			10
Item 4.		Submission of Matters to a Vote of Security Holders			10
PART II
Item 5.		Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities			12
Item 6.		Selected Financial Data			13
Item 7.		Management’s Discussion and Analysis of Financial Condition and Results of Operations			14
Item 7A.		Quantitative and Qualitative Disclosures About Market Risk			39
Item 8.		Financial Statements and Supplementary Data			41
		Consolidated Financial Statements			44
		Notes to Consolidated Financial Statements			49
Item 9.		Changes in and Disagreements with Accountants on Accounting and Financial Disclosure			77
Item 9A.		Controls and Procedures			77
Item 9B.		Other Information			77
PART III
		Information called for by Part III Items 10, 11, 12, 13 and 14 has been omitted as the Registrant intends to file with the Securities and Exchange Commission not later than 120 days after the end of its fiscal year a definitive Proxy Statement pursuant to Regulation 14A
PART IV
Item 15.		Exhibits and Financial Statement Schedules			78
Signatures					81
Exhibit Index					82
Statement re Computation of Ratios
List of Subsidiaries
Consent of Deloitte & Touche LLP
Powers of Attorney
Certification of CEO Pursuant to Rule 13a-14(a)
Certification of CFO Pursuant to Rule 13a-14(a)
Certification of CEO & CFO Pursuant to Section 1350

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Item 1.	Business.

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Nominal

Water Depth

Year Built/Latest

Current

Type and Name

Rating(a)

Attributes

Enhancement(b)

Location(c)

Customer(d)

High Specification Floaters

Semisubmersibles(9):

Ocean Confidence

7,500

DP; 15K; 4M

2001

GOM — U.S.

BP

Ocean Baroness

7,000

VC; 15K; 4M

1973/2002

Indonesia

Unocal

Ocean Rover

7,000

VC; 15K; 4M

1973/2003

Malaysia

Murphy

Ocean America

5,500

SP; 15K; 3M

1988/1999

GOM — U.S.

Mariner

Ocean Valiant

5,500

SP; 15K; 3M

1988/1999

GOM — U.S.

Kerr-McGee

Ocean Victory

5,500

VC; 15K; 3M

1972/1997

GOM — U.S.

Newfield

Ocean Star

5,500

VC; 15K; 3M

1974/1999

GOM — U.S.

Kerr-McGee

Ocean Alliance

5,000

DP; 15K; 3M

1988/1999

Brazil

Petrobras

Ocean Quest

3,500

VC; 15K; 3M

1973/1996

GOM — U.S.

Pogo Producing

Drillship(1):

Ocean Clipper

7,500

DP; 15K; 3M

1976/1999

Brazil

Petrobras

Under Construction(1)

Ocean Endeavor

2,000

VC

1975/1994

GOM — U.S.

Shipyard — Upgrade to 10,000

Other Semisubmersibles (20):

Ocean Winner

4,000

3M

1977/2004

Brazil

Petrobras

Ocean Worker

3,500

3M

1982/1992

Mexico

PEMEX

Ocean Yatzy

3,300

DP

1989/1998

Brazil

Petrobras

Ocean Voyager

3,200

VC

1973/1995

GOM — U.S.

Murphy

Ocean Patriot

3,000

15K; 3M

1982/2003

Australia

Bass Straits Oil & Gas

Ocean Yorktown

2,200

3M

1976/1996

Mexico

PEMEX

Ocean Concord

2,200

3M

1975/1999

GOM — U.S.

Kerr-McGee

Ocean Lexington

2,200

3M

1976/1995

GOM — U.S.

Walter Oil & Gas

Ocean Saratoga

2,200

3M

1976/1995

GOM — U.S.

Shipyard — Repairs

Ocean Epoch

1,640

3M

1977/2000

Australia

Santos

Ocean General

1,640

3M

1976/1999

Korea

KNOC

Ocean Bounty

1,500

VC; 3M

1977/1992

Australia

OMV

Ocean Guardian

1,500

3M

1985

North Sea

Shell

Ocean New Era

1,500

1974/1990

GOM — U.S.

Cold Stacked

Ocean Princess

1,500

15K; 3M

1977/1998

North Sea

Talisman

Ocean Whittington

1,500

3M

1974/1995

Mexico

PEMEX

Ocean Vanguard

1,500

15K; 3M

1982

North Sea

Shipyard — Repairs

Ocean Nomad

1,200

3M

1975/2001

North Sea

Talisman

Ocean Ambassador

1,100

3M

1975/1995

Mexico

PEMEX

Ocean Liberator

600

1974/1998

South Africa

Cold Stacked/Available for Sale

Jack-ups (14):

Ocean Titan

350

IC; 15K; 3M

1974/2004

GOM — U.S.

BHP Billiton

Ocean Tower

350

IC; 3M

1972/2003

GOM — U.S.

Chevron Texaco

Ocean King

300

IC; 3M

1973/1999

GOM — U.S.

El Paso

Ocean Nugget

300

IC

1976/1995

GOM — U.S.

ADTI/Mission

Ocean Summit

300

IC

1972/2003

GOM — U.S.

LLOG

Ocean Warwick

300

IC

1971/1998

GOM — U.S.

Newfield Exploration

Ocean Heritage

300

IC

1981/2002

India

Cairn Energy

Ocean Spartan

300

IC

1980/2003

GOM — U.S.

LLOG

Ocean Spur

300

IC

1981/2003

GOM — U.S.

Spinnaker

Ocean Sovereign

300

IC

1981/2003

Bangladesh

Cairn Energy

Ocean Champion

250

MS

1975/2004

GOM — U.S.

Hunt Oil

Ocean Columbia

250

IC

1978/1990

GOM — U.S.

Kerr-McGee

Ocean Crusader

200

MC

1982/1992

GOM — U.S.

Walter Oil & Gas

Ocean Drake

200

MC

1983/1986

GOM — U.S.

ADTI/Kerr-McGee

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(a)		Nominal water depth (in feet), as described above for semisubmersibles and drillships, reflects the current outfitting for each drilling unit. In many cases, individual rigs are capable of achieving, or have achieved, greater water depths. In all cases, floating rigs are capable of working successfully at greater depths than their nominal water depth. On a case by case basis, a greater depth capacity may be achieved by providing additional equipment.
(b)		Such enhancements may include the installation of top-drive drilling systems, water depth upgrades, mud pump additions and increases in deck load capacity. Top-drive drilling systems are included on all rigs included in the table above, except for the Ocean Liberator.
(c)		GOM means Gulf of Mexico.
(d)		For ease of presentation in this table, customer names have been shortened or abbreviated.

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Item 2.	Properties.

Item 3.	Legal Proceedings.

	Item 4.	Submission of Matters to a Vote of Security Holders.

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		Age as of
Name		January 31, 2005				Position
James S. Tisch			52			Chairman of the Board of Directors and Chief Executive Officer
Lawrence R. Dickerson			52			President, Chief Operating Officer and Director
David W. Williams			47			Executive Vice President
Rodney W. Eads			53			Senior Vice President — Worldwide Operations
John L. Gabriel, Jr.			51			Senior Vice President — Contracts & Marketing
John M. Vecchio			54			Senior Vice President — Technical Services
Gary T. Krenek			46			Vice President and Chief Financial Officer
Beth G. Gordon			49			Controller — Chief Accounting Officer
William C. Long			38			Vice President, General Counsel & Secretary

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Item 5.	Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

		Common Stock
		High				Low
2004
First Quarter		$	26.63			$	20.48
Second Quarter			24.53				21.55
Third Quarter			32.99				22.89
Fourth Quarter			40.29				32.06
2003
First Quarter		$	22.53			$	19.40
Second Quarter			23.62				18.64
Third Quarter			21.53				18.50
Fourth Quarter			20.70				17.15

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Item 6.	Selected Financial Data.

			2004				2003				2002				2001				2000
			(In thousands, except per share and ratio data)
Income Statement Data:
Total revenues			$	814,662			$	680,941			$	752,561			$	924,300			$	684,501
Operating income (loss)				3,928				(38,323	)			51,984				225,410				71,499
Net (loss) income				(7,243	)			(48,414	)			62,520				173,823				72,281
Net (loss) income per share:
	Basic			(0.06	)			(0.37	)			0.48				1.31				0.53
	Diluted			(0.06	)			(0.37	)			0.47				1.26				0.53
Balance Sheet Data:
Drilling and other property and equipment, net			$	2,154,593			$	2,257,876			$	2,164,627			$	2,002,873			$	1,931,182
Total assets				3,379,386				3,135,019				3,256,308				3,493,071				3,073,191
Long-term debt (excluding current maturities(1))				709,413				928,030				924,475				920,636				856,559
Other Financial Data:
Capital expenditures(2)			$	89,229			$	272,026			$	340,805			$	268,617			$	323,924
Cash dividends declared per share				0.25				0.438				0.50				0.50				0.50
Ratio of earnings to fixed charges(3)				N/A				N/A				4.51	x			9.87	x			4.97	x

(1)	The holders of the Company’s Zero Coupon Convertible Debentures Due 2020 have the right to require the Company to repurchase the debentures on June 6, 2005. The aggregate accreted value of these debentures of $471.3 million at December 31, 2004 is included as a current liability in the Company’s Consolidated Balance Sheet included in Item 8 of this report. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Requirements.”
(2)	In March 2003 the Company spent $65.0 million ($63.5 million capitalized to rig equipment and $1.5 million added to inventory) for the acquisition of the Ocean Patriot, a third-generation semisubmersible drilling rig. In December 2002 the Company spent $68.5 million ($67.0 million capitalized to rig equipment and $1.5 million added to inventory) for the acquisition of another third-generation semisubmersible drilling rig, the Ocean Vanguard.
(3)	The deficiency in the Company’s earnings available for fixed charges for the years ended December 31, 2004 and 2003 was approximately $2.3 million and $55.3 million, respectively. For all periods presented, the ratio of earnings to fixed charges has been computed on a total enterprise basis. Earnings represent income from continuing operations plus income taxes and fixed charges. Fixed charges include (i) interest, whether expensed or capitalized, (ii) amortization of debt issuance costs, whether expensed or capitalized, and (iii) a portion of rent expense, which the Company believes represents the interest factor attributable to rent.

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Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.

	Overview

	Results of Operations and Industry Conditions

	Improving Markets

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	General

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	Critical Accounting Estimates

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			Year Ended
			December 31,
											Favorable/
			2004				2003				(Unfavorable)
			(In thousands)
CONTRACT DRILLING REVENUE
	High Specification Floaters		$	281,866			$	290,844			$	(8,978	)
	Other Semisubmersibles			319,053				260,267				58,786
	Jack-ups			178,391				97,774				80,617
	Integrated Services			—				1,189				(1,189	)
	Other			3,095				2,257				838
	Eliminations			—				(233	)			233
	Total Contract Drilling Revenue		$	782,405			$	652,098			$	130,307
Revenues Related to Reimbursable Expenses			$	32,257			$	28,843			$	3,414
CONTRACT DRILLING EXPENSE
	High Specification Floaters		$	172,182			$	156,898			$	(15,284	)
	Other Semisubmersibles			277,728				229,811				(47,917	)
	Jack-ups			114,466				97,305				(17,161	)
	Integrated Services			—				1,665				1,665
	Other			4,252				2,393				(1,859	)
	Eliminations			—				(233	)			(233	)
	Total Contract Drilling Expense		$	568,628			$	487,839			$	(80,789	)
Reimbursable Expenses			$	28,899			$	26,050			$	(2,849	)
OPERATING (LOSS) INCOME
	High Specification Floaters		$	109,684			$	133,946			$	(24,262	)
	Other Semisubmersibles			41,325				30,456				10,869
	Jack-ups			63,925				469				63,456
	Integrated Services			—				(476	)			476
	Other			(1,157	)			(136	)			(1,021	)
	Reimbursables, net			3,358				2,793				565
	Depreciation			(178,835	)			(175,578	)			(3,257	)
	General and Administrative Expense			(32,759	)			(28,868	)			(3,891	)
	(Loss) Gain on Sale and Disposition of Assets			(1,613	)			(929	)			(684	)
	Total Operating Income (Loss)		$	3,928			$	(38,323	)		$	42,251

	High Specification Floaters.

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	•	the Ocean Alliance, which was off contract for most of the first half of 2004, including four months of downtime due to a series of sub-sea and electrical problems following approximately one month in a shipyard for a 5-year survey and sub-sea equipment upgrade;
	•	the Ocean Star, which was ready-stacked during the first five months of 2004;
	•	the Ocean Confidence, which had approximately three more weeks of unpaid downtime in 2004 than in 2003, for sub-sea repairs and an inspection in 2004; and
	•	the Ocean America, which spent 101 days in a shipyard undergoing a 5-year survey and upgrade which were completed late in the second quarter of 2004.

	•	operating costs for the Ocean Rover, which worked all of 2004 compared to 2003, when most of this rig’s costs were capitalized in connection with its upgrade;
	•	2004 costs for repairs to the Ocean Alliance due to a series of sub-sea and electrical problems and a 5-year survey; and
	•	costs associated with damages from Hurricane Ivan to the Ocean America and Ocean Star during the latter half of 2004.

	Other Semisubmersibles.

	•	the Ocean Whittington, Ocean Epoch and Ocean Princess, all of which worked a majority of 2004 but were ready-stacked for most of 2003;

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	•	the Ocean Ambassador, which worked throughout 2004 but was in a shipyard for approximately four months during 2003 for a 5-year survey and preparing for its contract in Mexico, which commenced in late July 2003;
	•	the Ocean Guardian, which worked most of 2004 but was stacked approximately three months during 2003;
	•	the Ocean Bounty, which worked all of 2004 compared to 2003 when this rig was in a shipyard for almost two months for a 5-year survey and related repairs; and
	•	the Ocean Yorktown, which operated offshore Brazil until July 2003 when it was relocated to the GOM. This rig began operation for PEMEX in the Mexican GOM in the mid-fourth quarter of 2003 and remained under contract throughout 2004.

	•	the Ocean Yatzy (from $118,600 to $84,900), which renewed its contract to operate offshore Brazil during the latter part of 2003 at a lower dayrate reflective of market conditions at the time; and
	•	the Ocean Yorktown (from $64,800 to $46,500), which worked offshore Brazil during the first half of 2003 but operated in the Mexican GOM during 2004.

	•	the Ocean Vanguard, which incurred higher operating expenses during 2004 compared to 2003 (when the rig operated under a bareboat charter to its previous owner at reduced operating costs), including costs associated with preparing the rig for work in the North Sea;
	•	the Ocean Voyager, which was reactivated from cold stack status during the fourth quarter of 2004;
	•	higher operating expenses associated with rigs working in the Mexican GOM throughout 2004, including additional equipment rental expense in connection with the rigs’ contracts with PEMEX, travel costs and costs associated with maintaining a Mexican shorebase, as compared to 2003 when two of these rigs operated in the U.S. GOM, and another rig was stacked in Africa for the first five months of the year;
	•	the Ocean Epoch, which incurred normal operating costs as it worked most of 2004 compared to reduced costs while it was ready-stacked during most of 2003;
	•	the Ocean Patriot, which incurred higher than normal operating costs during 2004 due to preparation for work in New Zealand and Australia, including mobilization of the rig from South Africa, compared to normal operating costs during the same period in 2003 following its March 2003 purchase; and
	•	the Ocean Guardian and Ocean Princess, both of which incurred higher labor costs in 2004 associated with mandated labor benefits legislated in the U.K.

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	•	lower 5-year survey, inspection and repair costs for the Ocean Bounty, Ocean Guardian and Ocean Princess in 2004 compared to 2003; and
	•	mobilization costs in 2003 associated with the four rigs operating in the Mexican GOM.

	Jack-Ups.

	•	the Ocean Tower and Ocean Titan in the U.S. GOM, and the Ocean Sovereign in Southeast Asia, which were in shipyards undergoing major upgrades during a significant portion of 2003, but were operating during most of 2004. Utilization for these rigs increased to 96% in 2004 compared to 39% in 2003;
	•	the Ocean Champion, which was reactivated from cold stack status during 2004; and
	•	the Ocean Heritage, Ocean Summit, Ocean Spartan, Ocean Columbia and Ocean Drake, all of which worked a majority of 2004 compared to each being stacked for periods ranging from two to five months in 2003. Utilization for these five rigs increased to 91% in 2004 as compared to 74% in 2003.

	•	the Ocean Nugget, which was stacked for almost two months during 2004 for a spud can inspection and related repair work compared to working most of 2003; and
	•	the Ocean Warwick, which was in a shipyard for all of the fourth quarter of 2004 undergoing repairs to damages caused by Hurricane Ivan, compared to working most of 2003.

	•	higher operating and mobilization costs for the Ocean Heritage during 2004, compared to reduced expenses during 2003 while this rig was stacked in a Singapore shipyard for six months;
	•	higher operating costs for the Ocean Sovereign, which was working in 2004 compared to 2003 when a majority of expenditures were capitalized as part of its upgrade;
	•	reactivation and operating costs for the Ocean Champion, compared to cold stack costs during 2003; and
	•	operating costs for the Ocean Titan during 2004, compared to 2003 when most of this rig’s costs were capitalized in connection with its cantilever upgrade.

	•	the Ocean Summit and Ocean Spartan, each of which was stacked for two and one-half months in 2003; and
	•	costs associated with the 5-year survey of the Ocean Drake in 2003.

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	Reimbursable expenses, net.

	Depreciation.

	•	the Ocean Rover, which completed its upgrade in July 2003;
	•	the Ocean Patriot, acquired in March 2003;
	•	upgrades to three jack-up rigs, two of which were completed during the second quarter of 2003 and one which was completed in early 2004; and
	•	capital expenditures in the third quarter 2003 related to contracts for four of the Company’s rigs in Mexico.

	General and Administrative Expense.

	Loss on Sale and Disposition of Assets.

	Interest Expense.

	Gain (Loss) on Sale of Marketable Securities.

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	Settlement of Litigation

	Other Income and Expense (Other, net).

	Income Tax (Expense) Benefit.

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			Year Ended
			December 31,
											Favorable/
			2003				2002				(Unfavorable)
			(In thousands)
CONTRACT DRILLING REVENUE
	High Specification Floaters		$	290,844			$	291,848			$	(1,004	)
	Other Semisubmersibles			260,267				317,342				(57,075	)
	Jack-ups			97,774				99,360				(1,586	)
	Integrated Services			1,189				14,068				(12,879	)
	Other			2,257				5,161				(2,904	)
	Eliminations			(233	)			(3,566	)			3,333
	Total Contract Drilling Revenue		$	652,098			$	724,213			$	(72,115	)
Revenues Related to Reimbursable Expenses			$	28,843			$	28,348			$	495
CONTRACT DRILLING EXPENSE
	High Specification Floaters		$	156,898			$	153,218			$	(3,680	)
	Other Semisubmersibles			229,811				213,391				(16,420	)
	Jack-ups			97,305				92,690				(4,615	)
	Integrated Services			1,665				14,666				13,001
	Other			2,393				(2,127	)			(4,520	)
	Eliminations			(233	)			(3,566	)			(3,333	)
	Total Contract Drilling Expense		$	487,839			$	468,272			$	(19,567	)
Reimbursable Expenses			$	26,050			$	25,885			$	(165	)
OPERATING (LOSS) INCOME
	High Specification Floaters		$	133,946			$	138,630			$	(4,684	)
	Other Semisubmersibles			30,456				103,951				(73,495	)
	Jack-ups			469				6,670				(6,201	)
	Integrated Services			(476	)			(598	)			122
	Other			(136	)			7,288				(7,424	)
	Reimbursables, net			2,793				2,463				330
	Depreciation			(175,578	)			(177,495	)			1,917
	General and Administrative Expense			(28,868	)			(29,009	)			141
	(Loss) Gain on Sale and Disposition of Assets			(929	)			84				(1,013	)
	Total Operating (Loss) Income		$	(38,323	)		$	51,984			$	(90,307	)

	High Specification Floaters.

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	Southeast Asia:

	•	the Ocean Baroness ($149,800 to $104,100);

	U.S. Gulf of Mexico:

	•	the Ocean Valiant ($81,400 to $52,600); and
	•	the Ocean Victory ($96,800 to $66,600).

	•	the Ocean America, which worked most of 2003 but was stacked for almost half of 2002;
	•	the Ocean Baroness, which worked most of 2003 but spent most of the first quarter of 2002 in a shipyard completing its upgrade to high specification capabilities; and
	•	the Ocean Star, which worked all of 2003 but was stacked four months during the same period in 2002.

	•	operating costs for the Ocean Baroness, which worked most of the current year compared to 2002 when the rig began operations late in the first quarter upon completion of its upgrade;
	•	operating costs associated with the Ocean Rover, which began operating in July 2003 compared to 2002, when most of this rig’s costs were capitalized in connection with its upgrade; and
	•	mobilization, 5-year survey and repair costs incurred by the Ocean Valiant during 2003.

	•	higher costs incurred during 2002 for the recovery of the Ocean Baroness’s marine riser, net of costs charged to an associated insurance claim; and
	•	5-year survey and repair costs for the Ocean Victory and the Ocean Star incurred during 2002.

	Other Semisubmersibles.

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	the North Sea:

	•	the Ocean Guardian ($90,300 to $53,700);
	•	the Ocean Princess ($72,700 to $40,900);
	•	the Ocean Nomad ($64,800 to $42,700); and

	Southeast Asia:

	•	the Ocean General ($75,100 to $54,200).

	•	the Ocean Epoch, which was stacked the majority of 2003 but worked most of 2002;
	•	the Ocean Guardian and the Ocean Yorktown, each of which was stacked approximately three months during 2003 compared to 2002 when both rigs worked most of the year; and
	•	the Ocean Liberator, which was cold stacked all of 2003 but worked approximately three months during 2002.

	•	the Ocean Worker, which worked most of 2003 but spent approximately three months in 2002 in a shipyard for its 5-year survey and repairs; and
	•	$12.7 million contributed by the Ocean Vanguard and the Ocean Patriot, which the Company acquired in December 2002 and March 2003, respectively.

	•	the Ocean Vanguard and the Ocean Patriot, which the Company acquired in December 2002 and March 2003, respectively;
	•	the mobilization of the Ocean Worker, Ocean Ambassador, Ocean Yorktown and Ocean Whittington to Mexico in 2003;
	•	the inspection of the Ocean Guardian; and
	•	the 5-year surveys of the Ocean Ambassador, Ocean Nomad and Ocean Bounty during 2003.

	Jack-Ups.

	•	the Ocean Sovereign, which spent most of 2003 in a shipyard completing its leg extension upgrade but operated offshore Indonesia all of 2002; and

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	•	the Ocean Titan, which was in a Gulf of Mexico shipyard from May 2003 through December 2003 for a cantilever conversion but worked almost all of the same period in 2002.

	•	the Ocean Spartan, Ocean Spur and Ocean Heritage, which operated during most of 2003 but were undergoing leg extension upgrades during 2002; and
	•	the Ocean Crusader, which worked almost all of 2003 but was stacked approximately three months in 2002.

	•	operating costs incurred in 2003 for the Ocean Spartan, Ocean Spur, Ocean Tower and Ocean Heritage compared to 2002 costs that were capitalized in connection with their leg extension upgrades; and
	•	costs associated with the 5-year surveys of the Ocean Drake and Ocean Warwick in 2003.

	•	reduced costs for the Ocean Champion, which was cold stacked all of 2003 but only part of 2002; and
	•	reduced costs for the Ocean Titan due to the capitalization of most costs during its cantilever upgrade, which began in the second quarter of 2003 and continued through its completion in January 2004.

	Integrated Services.

	Other.

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	Reimbursable expenses, net.

	Depreciation.

	(Loss) Gain on Sale and Disposition of Assets.

	Interest Income.

	(Loss) Gain on Sale of Marketable Securities.

	Other Income and Expense (Other, net).

	Income Tax Benefit (Expense).

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		Payments due by Period
						Less than				1 — 3				4 — 5				After 5
Contractual Obligations		Total				1 Year				Years				Years				Years
		(In thousands)
Long-term debt — principal		$	1,193,516			$	484,102			$	—			$	460,000			$	249,414
Long-term debt — interest			312,580				20,832				39,550				39,550				212,648
Operating leases			2,103				1,316				729				58				—
Benefits under pension plan			8,593				629				2,201				1,590				4,173
Total obligations		$	1,516,792			$	506,879			$	42,480			$	501,198			$	466,235

	5.15% Senior Notes.

	1.5% Debentures.

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	Zero Coupon Debentures.

	Letters of Credit.

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	Credit Ratings.

	Capital Expenditures.

	Off-Balance Sheet Arrangements.

	Net Cash Provided by Operating Activities.

		Year Ended December 31,
		2004				2003				Change
		(In thousands)
Net income (loss)		$	(7,243	)		$	(48,414	)		$	41,171
Net changes in operating assets and liabilities			22,385				(9,393	)			31,778
(Gain) loss on sale of marketable securities			(254	)			6,884				(7,138	)
Depreciation and other non-cash items, net			193,394				213,374				(19,980	)
		$	208,282			$	162,451			$	45,831

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	Net Cash Used in Investing Activities.

		Year Ended December 31,
		2004				2003				Change
		(In thousands)
Purchase of marketable securities		$	(4,606,400	)		$	(2,972,051	)		$	(1,634,349	)
Proceeds from sale of marketable securities			4,466,377				3,087,164				1,379,213
Capital expenditures (excluding rig acquisition)			(89,229	)			(208,526	)			119,297
Rig acquisition			—				(63,500	)			63,500
Purchases of Australian dollar time deposits			(45,456	)			—				(45,456	)
Proceeds from maturities of Australian dollar time deposits			34,120				—				34,120
Proceeds from sale of assets			6,900				2,270				4,630
Proceeds from settlement of forward contracts			—				2,492				(2,492	)
		$	(233,688	)		$	(152,151	)		$	(81,537	)

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	Net Cash Used in Financing Activities.

		Year Ended December 31,
		2004				2003				Change
		(In thousands)
Issuance of 5.15% Senior Notes		$	249,397			$	—			$	249,397
Debt issuance costs — 5.15% Senior Notes			(1,751	)			—				(1,751	)
Payment of dividends			(32,281	)			(57,022	)			24,741
Acquisition of treasury stock			(18,077	)			(18,211	)			134
Ocean Alliance lease-leaseback agreement			(11,969	)			(11,155	)			(814	)
Proceeds from stock options exercised			168				—				168
		$	185,487			$	(86,388	)		$	271,875

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	•	future market conditions and the effect of such conditions on the Company’s future results of operations (see “— Overview-Results of Operations and Industry Conditions”);
	•	future uses of and requirements for financial resources (see “— Liquidity and Capital Requirements” and “— Sources of Liquidity and Capital Resources”);
	•	interest rate and foreign exchange risk (see “— Liquidity and Capital Requirements-Credit Ratings” and “Quantitative and Qualitative Disclosures About Market Risk”);
	•	future contractual obligations (see “— Overview — Results of Operations and Industry Conditions,” “Business — Operations Outside the United States” and “— Liquidity and Capital Requirements”);
	•	future operations outside the United States including, without limitation, the Company’s operations in Mexico (see “— Overview — Results of Operations and Industry Conditions” and “Business — Operations Outside the United States”);
	•	business strategy;
	•	growth opportunities;
	•	competitive position;
	•	expected financial position;
	•	future cash flows;
	•	future dividends (see “Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities — Dividend Policy”);
	•	financing plans;

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	•	tax planning (See “— Overview — General — Critical Accounting Estimates — Income Taxes,” “— Years Ended December 31, 2004 and 2003 — Income Tax (Expense) Benefit” and “— Years Ended December 31, 2003 and 2002 — Income Tax Benefit (Expense)”);
	•	budgets for capital and other expenditures (see “— Liquidity and Capital Requirements”);
	•	timing and cost of completion of rig upgrades and other capital projects (see “— Liquidity and Capital Requirements”);
	•	delivery dates and drilling contracts related to rig conversion and upgrade projects (see “— Overview — Results of Operations and Industry Conditions” and “— Liquidity and Capital Requirements”);
	•	plans and objectives of management;
	•	performance of contracts (see “— Overview — Results of Operations and Industry Conditions” and “Business — Operations Outside the United States”);
	•	outcomes of legal proceedings;
	•	compliance with applicable laws; and
	•	adequacy of insurance or indemnification.

	•	general economic and business conditions;
	•	worldwide demand for oil and natural gas;
	•	changes in foreign and domestic oil and gas exploration, development and production activity;
	•	oil and natural gas price fluctuations and related market expectations;
	•	the ability of the Organization of Petroleum Exporting Countries, commonly called OPEC, to set and maintain production levels and pricing, and the level of production in non-OPEC countries;
	•	policies of the various governments regarding exploration and development of oil and gas reserves;
	•	advances in exploration and development technology;
	•	the political environment of oil-producing regions;
	•	casualty losses;
	•	operating hazards inherent in drilling for oil and gas offshore;
	•	industry fleet capacity;
	•	market conditions in the offshore contract drilling industry, including dayrates and utilization levels;
	•	competition;
	•	changes in foreign, political, social and economic conditions;
	•	risks of international operations, compliance with foreign laws and taxation policies and expropriation or nationalization of equipment and assets;
	•	risks of potential contractual liabilities pursuant to the Company’s various drilling contracts in effect from time to time;
	•	foreign exchange and currency fluctuations and regulations, and the inability to repatriate income or capital;

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	•	risks of war, military operations, other armed hostilities, terrorist acts and embargoes;
	•	changes in offshore drilling technology, which could require significant capital expenditures in order to maintain competitiveness;
	•	regulatory initiatives and compliance with governmental regulations;
	•	compliance with environmental laws and regulations;
	•	customer preferences;
	•	effects of litigation;
	•	cost, availability and adequacy of insurance;
	•	adequacy of the Company’s sources of liquidity;
	•	risks inherent in turnkey operations, including the risk of failure to complete a well and cost overruns;
	•	the availability of qualified personnel to operate and service the Company’s drilling rigs; and
	•	various other matters, many of which are beyond the Company’s control.

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Item 7A.	Quantitative and Qualitative Disclosures About Market Risk.

	Interest Rate Risk

	Foreign Exchange Risk

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			Fair Value Asset (Liability)								Market Risk
			December 31,								December 31,
Category of Risk Exposure:			2004				2003				2004				2003
			(In thousands)
Interest rate:
	Marketable securities		$	650,247	(a)		$	503,995	(a)		$	2,100	(c)		$	700	(c)
	Long-term debt			(1,213,820	)(b)			(909,100	)(b)			—				—
Foreign Exchange:
	Australian dollar time deposits			11,602	(d)			—				2,300	(d)			—

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Item 8.	Financial Statements and Supplementary Data.

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				December 31,
				2004				2003
				(In thousands, except share
				and per share data)
ASSETS
Current assets:
	Cash and cash equivalents			$	266,007			$	106,345
	Investments and marketable securities				661,849				503,995
	Accounts receivable				187,558				154,124
	Rig inventory and supplies				47,590				48,035
	Prepaid expenses and other				32,677				22,764
		Total current assets			1,195,681				835,263
Drilling and other property and equipment, net of accumulated depreciation					2,154,593				2,257,876
Goodwill					—				11,099
Other assets					29,112				30,781
		Total assets		$	3,379,386			$	3,135,019
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
	Current portion of long-term debt			$	484,102			$	11,969
	Accounts payable				27,530				15,653
	Accrued liabilities				87,614				65,617
	Taxes payable				14,661				6,761
		Total current liabilities			613,907				100,000
Long-term debt					709,413				928,030
Deferred tax liability					369,722				384,505
Other liabilities					60,516				42,004
		Total liabilities			1,753,558				1,454,539
Commitments and contingencies (Note 9)					—				—
Stockholders’ equity:
	Preferred stock (par value $0.01, 25,000,000 shares authorized, none issued and outstanding)				—				—
	Common stock (par value $0.01, 500,000,000 shares authorized; 133,483,820 shares issued and 128,567,020 shares outstanding at December 31, 2004; 133,457,055 shares issued and 129,322,455 shares outstanding at December 31, 2003)				1,335				1,335
	Additional paid-in capital				1,264,512				1,263,692
	Retained earnings				476,382				515,906
	Accumulated other comprehensive losses				(1,988	)			(4,117	)
	Treasury stock, at cost (4,916,800 and 4,134,600 shares at December 31, 2004 and 2003, respectively)				(114,413	)			(96,336	)
		Total stockholders’ equity			1,625,828				1,680,480
		Total liabilities and stockholders’ equity		$	3,379,386			$	3,135,019

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					Year Ended December 31,
					2004				2003				2002
					(In thousands, except per share data)
Revenues:
		Contract drilling			$	782,405			$	652,098			$	724,213
		Revenues related to reimbursable expenses				32,257				28,843				28,348
			Total revenues			814,662				680,941				752,561
Operating expenses:
		Contract drilling				568,628				487,839				468,272
		Reimbursable expenses				28,899				26,050				25,885
		Depreciation and amortization				178,835				175,578				177,495
		General and administrative				32,759				28,868				29,009
		Impairment of rigs				—				1,598				—
		Loss (gain) on disposition of assets				1,613				(669	)			(84	)
			Total operating expenses			810,734				719,264				700,577
Operating income (loss)						3,928				(38,323	)			51,984
Other income (expense):
		Interest income				12,205				12,007				29,767
		Interest expense				(30,257	)			(23,928	)			(23,583	)
		Gain (loss) gain on sale of marketable securities				254				(6,884	)			36,504
		Settlement of litigation				11,391				—				—
		Other, net				(1,054	)			2,891				1,502
Income (loss) before income tax expense						(3,533	)			(54,237	)			96,174
Income tax (expense) benefit						(3,710	)			5,823				(33,654	)
Net (loss) income					$	(7,243	)		$	(48,414	)		$	62,520
(Loss) earnings per share:
	Basic				$	(0.06	)		$	(0.37	)		$	0.48
	Diluted				$	(0.06	)		$	(0.37	)		$	0.47
Weighted-average shares outstanding:
		Shares of common stock				129,021				130,253				131,285
		Dilutive potential shares of common stock				—				—				9,428
	Total weighted-average shares outstanding assuming dilution					129,021				130,253				140,713

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																		Accumulated
		Common Stock								Additional								Other				Treasury Stock								Total
										Paid-In				Retained				Comprehensive												Stockholders’
		Shares				Amount				Capital				Earnings				Gains (Losses)				Shares				Amount				Equity
(In thousands, except number of shares)
January 1, 2002			133,457,055			$	1,335			$	1,267,952			$	624,507			$	(2,880	)			1,403,900			$	(37,768	)		$	1,853,146
Net income			—				—				—				62,520				—				—				—				62,520
Treasury stock purchase			—				—				—				—				—				1,716,700				(43,424	)			(43,424	)
Dividends to stockholders ($0.50 per share)			—				—				—				(65,685	)			—				—				—				(65,685	)
Put option premiums			—				—				(4,260	)			—				—				—				3,067				(1,193	)
Exchange rate changes, net			—				—				—				—				(678	)			—				—				(678	)
Gain on investments, net			—				—				—				—				68				—				—				68
Minimum pension adjustment			—				—				—				—				2,760				—				—				2,760
December 31, 2002			133,457,055				1,335				1,263,692				621,342				(730	)			3,120,600				(78,125	)			1,807,514
Net loss			—				—				—				(48,414	)			—				—				—				(48,414	)
Treasury stock purchase			—				—				—				—				—				1,014,000				(18,211	)			(18,211	)
Dividends to stockholders ($0.438 per share)			—				—				—				(57,022	)			—				—				—				(57,022	)
Exchange rate changes, net			—				—				—				—				(288	)			—				—				(288	)
Loss on investments, net			—				—				—				—				(3,099	)			—				—				(3,099	)
December 31, 2003			133,457,055				1,335				1,263,692				515,906				(4,117	)			4,134,600				(96,336	)			1,680,480
Net loss			—				—				—				(7,243	)			—				—				—				(7,243	)
Treasury stock purchase			—				—				—				—				—				782,200				(18,077	)			(18,077	)
Dividends to stockholders ($0.25 per share)			—				—				—				(32,281	)			—				—				—				(32,281	)
Stock options exercised			26,765				—				820				—				—				—				—				820
Exchange rate changes, net			—				—				—				—				1,649				—				—				1,649
Gain on investments, net			—				—				—				—				480				—				—				480
December 31, 2004			133,483,820			$	1,335			$	1,264,512			$	476,382			$	(1,988	)			4,916,800			$	(114,413	)		$	1,625,828

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				Year Ended December 31,
				2004				2003				2002
				(In thousands)
Net (loss) income				$	(7,243	)		$	(48,414	)		$	62,520
Other comprehensive (losses) gains, net of tax:
	Foreign currency translation gain (loss)				1,649				(288	)			(678	)
	Unrealized holding gain (loss) on investments				532				(311	)			2,708
	Reclassification adjustment for loss included in net income				(52	)			(2,788	)			(2,640	)
	Minimum pension liability adjustment				—				—				2,760
		Total other comprehensive (loss) gain			2,129				(3,387	)			2,150
Comprehensive (loss) income				$	(5,114	)		$	(51,801	)		$	64,670

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					Year Ended December 31,
					2004				2003				2002
					(In thousands)
Operating activities:
	Net (loss) income				$	(7,243	)		$	(48,414	)		$	62,520
	Adjustments to reconcile net (loss) income to net cash
		provided by operating activities:
		Depreciation and amortization				178,835				175,578				177,495
		Impairment of rigs				—				1,598				—
		Loss (gain) on disposition of assets				1,613				(669	)			(84	)
		(Gain) loss on sale of marketable securities, net				(254	)			6,884				(36,504	)
		Loss from early debt extinguishment				—				—				—
		Deferred tax provision				726				23,213				16,598
		Accretion of discounts on marketable securities				(4,979	)			(3,051	)			(4,603	)
		Amortization of debt issuance costs				1,126				1,181				1,302
		Accretion of discount on zero coupon convertible debentures				16,073				15,524				14,994
	Changes in operating assets and liabilities:
		Accounts receivable				(32,828	)			(7,167	)			46,696
		Rig inventory and supplies and other current assets				(8,366	)			5,111				13,896
		Other assets, non-current				2,309				3,706				1,176
		Accounts payable and accrued liabilities				33,801				(19,107	)			9,086
		Taxes payable				7,900				2,348				(8,381	)
		Other liabilities, non-current				17,326				8,939				(3,324	)
		Other items, net				2,243				(3,223	)			(2,231	)
			Net cash provided by operating activities			208,282				162,451				288,636
Investing activities:
		Capital expenditures (excluding rig acquisitions)				(89,229	)			(208,526	)			(273,805	)
		Rig acquisitions				—				(63,500	)			(67,000	)
		Proceeds from sale of assets				6,900				2,270				1,640
		Proceeds from sale and maturities of marketable securities				4,466,377				3,087,164				5,260,922
		Purchase of marketable securities				(4,606,400	)			(2,972,051	)			(5,098,320	)
		Securities (repurchased) sold under repurchase agreements				—				—				(199,062	)
		Purchases of Australian dollar time deposits				(45,456	)			—				—
		Proceeds from maturities of Australian dollar time deposits ...				34,120				—				—
		Proceeds from settlement of forward contracts				—				2,492				1,116
			Net cash used in investing activities			(233,688	)			(152,151	)			(374,509	)
Financing activities:
		Acquisition of treasury stock				(18,077	)			(18,211	)			(43,424	)
		Settlement of put options				—				—				(1,193	)
		Payment of dividends				(32,281	)			(57,022	)			(65,685	)
		Payments under lease-leaseback agreement				(11,969	)			(11,155	)			(10,426	)
		Issuance of 5.15% Senior Notes				249,397				—				—
		Debt issuance costs — 5.15% Senior Notes				(1,751	)			—				—
		Proceeds from stock options				168				—				—
			Net cash provided by (used in) financing activities			185,487				(86,388	)			(120,728	)
Effect of exchange rate changes on cash						(419	)			(20	)			(326	)
Net change in cash and cash equivalents						159,662				(76,108	)			(206,927	)
		Cash and cash equivalents, beginning of year				106,345				182,453				389,380
		Cash and cash equivalents, end of year			$	266,007			$	106,345			$	182,453

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1.	Summary of Significant Accounting Policies

	Organization and Business

	Principles of Consolidation

	Cash and Cash Equivalents and Marketable Securities and Other Investments

	Derivative Financial Instruments

	Supplementary Cash Flow Information

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	Rig Inventory and Supplies

	Drilling and Other Property and Equipment

	Capitalized Interest

			For the Year Ended December 31,
			2004				2003				2002
			(In thousands)
Total interest cost including amortization of debt issuance costs			$	30,257			$	26,129			$	26,461
Capitalized interest				—				(2,201	)			(2,878	)
	Total interest expense as reported		$	30,257			$	23,928			$	23,583

	Assets Held-For-Sale

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	Asset Retirement Obligations

	Impairment of Long-Lived Assets

	Goodwill

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	Fair Value of Financial Instruments

	Debt Issuance Costs

	Deferred Income Taxes

	Treasury Stock

	Stock-Based Compensation

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			Year Ended December 31,
			2004				2003				2002
			(In thousands except per share
			amounts)
Net income (loss) as reported			$	(7,243	)		$	(48,414	)		$	62,520
	Deduct: total stock-based employee compensation expense determined under fair value based method, net of tax			(1,080	)			(1,122	)			(925	)
Pro forma net (loss) income			$	(8,323	)		$	(49,536	)		$	61,595
Earnings (Loss) Per Share of Common Stock:
	As reported		$	(0.06	)		$	(0.37	)		$	0.48
	Pro forma		$	(0.06	)		$	(0.38	)		$	0.47
Earnings (Loss) Per Share of Common Stock — assuming dilution:
	As reported		$	(0.06	)		$	(0.37	)		$	0.47
	Pro forma		$	(0.06	)		$	(0.38	)		$	0.47

			Year Ended
			December 31,
			2004				2003				2002
Risk-free interest rate				3.93	%			3.40	%			3.71	%
Expected life of options
	Employees			7				7				6
	Directors			6				4				4
Expected volatility of the Company’s stock price				28	%			32	%			37	%
Expected dividend yield				0.77	%			2.09	%			2.29	%

	Comprehensive Income (Loss)

	Currency Translation

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	Revenue Recognition

	Changes in Accounting Estimates

	Use of Estimates in the Preparation of Financial Statements

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	Reclassifications

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2.	(Loss) Earnings Per Share

				Year Ended December 31,
				2004				2003				2002
				(In thousands, except per share data)
Net (loss) income– basic (numerator):				$	(7,243	)		$	(48,414	)		$	62,520
	Effect of dilutive potential shares
		Zero coupon convertible debentures			—				—				—
		1.5% debentures			—				—				4,164
Net (loss) income including conversions — diluted (numerator):				$	(7,243	)		$	(48,414	)		$	66,684
Weighted-average shares — basic (denominator):					129,021				130,253				131,285
	Effect of dilutive potential shares
		Zero coupon convertible debentures			—				—				—
		1.5% debentures			—				—				9,383
		Stock options			—				—				4
		Put options			—				—				41
Weighted-average shares including conversions — diluted (denominator):					129,021				130,253				140,713
(Loss) earnings per share:
Basic				$	(0.06	)		$	(0.37	)		$	0.48
Diluted				$	(0.06	)		$	(0.37	)		$	0.47

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3.	Investments and Marketable Securities

			December 31, 2004
							Unrealized				Market
			Cost				Gain (Loss)				Value
			(In thousands)
Debt securities issued by the U.S. Treasury and other U.S. government agencies:
	Due within one year		$	498,011			$	189			$	498,200
	Due within one year through five years			148,877				(119	)			148,758
	Mortgage-backed securities			3,221				68				3,289
	Total		$	650,109			$	138			$	650,247

			December 31, 2003
							Unrealized				Market
			Cost				(Loss)				Value
			(In thousands)
Debt securities issued by the U.S. Treasury and other U.S. government agencies:
	Due within one year		$	499,784			$	44			$	499,828
	Mortgage-backed securities			4,812				(645	)			4,167
	Total		$	504,596			$	(601	)		$	503,995

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		Year Ended December 31
		2004				2003				2002
		(In thousands)
Proceeds from maturities		$	1,520,000			$	2,075,000			$	500,000
Proceeds from sales			2,946,377				1,012,164				4,760,922
Gross realized gains			2,781				2,860				41,945
Gross realized losses			(2,527	)			(9,744	)			(5,441	)

4.	Derivative Financial Instruments

	Forward Exchange Contracts

	Contingent Interest

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5.	Drilling and Other Property and Equipment

			December 31,
			2004				2003
			(In thousands)
Drilling rigs and equipment			$	3,529,593			$	3,453,219
Construction work-in-progress				—				21,274
Land and buildings				15,770				15,220
Office equipment and other				22,895				22,080
	Cost			3,568,258				3,511,793
Less accumulated depreciation				(1,413,665	)			(1,253,917	)
	Drilling and other property and equipment, net		$	2,154,593			$	2,257,876

6.	Accrued Liabilities

			December 31,
			2004				2003
			(In thousands)
Payroll and benefits			$	26,221			$	31,058
Personal injury and other claims				8,076				7,455
Interest payable				5,938				1,537
Deferred revenue				6,514				3,068
Accrued project expenses				14,920				8,160
Other				25,945				14,339
	Total		$	87,614			$	65,617

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7.	Long-Term Debt

			December 31,
			2004				2003
			(In thousands)
Zero Coupon Debentures			$	471,284			$	455,212
1.5% Debentures				460,000				460,000
5.15% Senior Notes				249,413				—
Ocean Alliance lease-leaseback				12,818				24,787
				1,193,515				939,999
Less: Current maturities				(484,102	)			(11,969	)
	Total		$	709,413			$	928,030

			(Dollars in thousands)
2005			$	484,102
2006				—
2007				—
2008				460,000
2009				—
Thereafter				249,413
				1,193,515
Less: Current maturities				(484,102	)
	Total		$	709,413

	5.15% Senior Notes

	Zero Coupon Debentures

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	1.5% Debentures

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	Ocean Alliance Lease-Leaseback

8.	Other Comprehensive Income (Loss)

				Year Ended December 31, 2004
				Before Tax				Tax Effect				Net-of-Tax
				(In thousands)
Foreign currency translation gain				$	2,346			$	(697	)		$	1,649
Unrealized gain on investments:
	Gain arising during 2004				818				(286	)			532
	Reclassification adjustment				(80	)			28				(52	)
		Net unrealized gain			738				(258	)			480
Other comprehensive income				$	3,084			$	(955	)		$	2,129

				Year Ended December 31, 2003
				Before Tax				Tax Effect				Net-of-Tax
				(In thousands)
Foreign currency translation loss				$	(657	)		$	369			$	(288	)
	Unrealized loss on investments:
	Loss arising during 2003				(478	)			167				(311	)
	Reclassification adjustment				(4,289	)			1,501				(2,788	)
		Net unrealized loss			(4,767	)			1,668				(3,099	)
Other comprehensive loss				$	(5,424	)		$	2,037			$	(3,387	)

				Year Ended December 31, 2002
				Before Tax				Tax Effect				Net-of-Tax
				(In thousands)
Foreign currency translation loss				$	(1,043	)		$	365			$	(678	)
Minimum pension liability adjustment					4,246				(1,486	)			2,760
Unrealized gain on investments:
	Gain arising during 2002				4,166				(1,458	)			2,708
	Reclassification adjustment				(4,062	)			1,422				(2,640	)
		Net unrealized gain			104				(36	)			68
Other comprehensive gain				$	3,307			$	(1,157	)		$	2,150

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			Additional				Foreign
			Minimum				Currency				Unrealized				Total Other
			Pension				Translation				Gain (Loss) on				Comprehensive
			Liability				Adjustments				Investments				Income (Loss)
			(In thousands)
Balance at January 1, 2002			$	(2,760	)		$	(2,760	)		$	2,640			$	(2,880	)
	Other comprehensive gain (loss)			2,760				(678	)			68				2,150
Balance at December 31, 2002				—				(3,438	)			2,708				(730	)
	Other comprehensive loss			—				(288	)			(3,099	)			(3,387	)
Balance at December 31, 2003				—				(3,726	)			(391	)			(4,117	)
	Other comprehensive gain			—				1,649				480				2,129
Balance at December 31, 2004			$	—			$	(2,077	)		$	89			$	(1,988	)

9.	Commitments and Contingencies

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10.	Financial Instruments

	Concentrations of Credit and Market Risk

	Fair Values

		Year Ended December 31,
		2004								2003
		Fair Value				Carrying Value				Fair Value				Carrying Value
		(In millions)
Zero Coupon Debentures		$	473.6			$	471.3			$	461.6			$	455.2
1.5% Debentures			486.4				460.0				420.9				460.0
5.15% Senior Notes			240.6				249.4				—				—
Ocean Alliance Lease-leaseback			13.2				12.8				26.6				24.8

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11.	Related-Party Transactions

12.	Stock Option Plan

		2004								2003								2002
						Weighted —								Weighted-								Weighted —
						Average								Average								Average
		Options				Exercise Price				Options				Exercise Price				Options				Exercise Price
Outstanding, January 1			592,400			$	28.66				419,400			$	32.13				218,300			$	37.68
Granted			172,600				29.50				173,000				20.23				201,100				26.11
Exercised			(26,765	)			26.17				—				—				—				—
Outstanding, December 31			738,235			$	28.94				592,400			$	28.66				419,400			$	32.13
Exercisable, December 31			341,160			$	32.31				219,575			$	34.20				103,950			$	37.71

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		Options Outstanding												Options Exercisable
						Weighted-Average
Range of						Remaining				Weighted-Average								Weighted-Average
Exercise Prices		Number				Contractual Life				Exercise Price				Number				Exercise Price
$19.08-$24.60			364,420				8.2 years			$	21.44				112,720			$	21.55
$29.20-$33.51			186,877				8.2 years			$	31.05				90,427			$	30.87
$35.72-$43.03			186,938				7.1 years			$	41.46				138,013			$	42.05

13.	Income Taxes

			Year Ended December 31,
			2004				2003				2002
			(In thousands)
U.S. — current			$	(2,753	)		$	(36,377	)		$	214
Non-U.S. — current				5,737				7,341				16,842
	Total current			2,984				(29,036	)			17,056
U.S. — deferred				(3,611	)			10,071				2,983
U.S. — deferred to reduce goodwill				11,099				13,615				13,615
Non-U.S. — deferred				(6,762	)			(473	)			—
	Total deferred			726				23,213				16,598
	Total		$	3,710			$	(5,823	)		$	33,654

				Year Ended December 31,
				2004				2003				2002
				(In thousands)
Income (loss) before income tax expense (benefit):
	U.S.			$	16,770			$	(25,373	)		$	73,353
	Non — U.S.				(20,303	)			(28,864	)			22,821
	Worldwide			$	(3,533	)		$	(54,237	)		$	96,174
Expected income tax expense (benefit) at federal statutory rate				$	(1,237	)		$	(18,983	)		$	33,661
Foreign earnings indefinitely reinvested					13,640				8,678				(5,246	)
Revision of estimated tax balances					2,507				—				—
Valuation allowance — foreign tax credits					104				10,237				—
Norwegian tax settlement					—				—				5,853
Reduction of deferred tax liability related to Arethusa goodwill deduction					(5,175	)			(3,728	)			—
Reduction of deferred tax liability related to the Ocean Alliance lease-leaseback					(4,538	)			—				—
Amortization of deferred tax liability related to transfer of drilling rigs to different taxing jurisdictions					(1,748	)			(1,757	)			—
Other					157				(270	)			(614	)
		Income tax (benefit) expense		$	3,710			$	(5,823	)		$	33,654

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					December 31,
					2004				2003
					(In thousands)
Deferred tax assets:
	Net operating loss carryforwards				$	74,826			$	58,320
	Goodwill					19,939				13,116
	Alternative minimum tax credit carryforward					68				5,929
	Worker’s compensation and other current accruals(1)					13,710				8,879
	Foreign tax credits					49,362				48,434
	Other					5,043				11,216
		Total deferred tax assets				162,948				145,894
	Valuation allowance for foreign tax credits					(10,340	)			(10,237	)
		Net deferred tax assets				152,608				135,657
Deferred tax liabilities:
	Depreciation and amortization					(452,728	)			(435,600	)
	Undistributed earnings of non-U.S. subsidiaries					(24,287	)			(32,474	)
	Contingent interest					(32,452	)			(22,931	)
	Non-U.S. deferred taxes					(5,773	)			(12,535	)
	Other					(2,273	)			(7,743	)
		Total deferred tax liabilities				(517,513	)			(511,283	)
			Net deferred tax liability		$	(364,905	)		$	(375,626	)

(1)	$4,817 and $8,879 reflected in “Prepaid expenses and other” in the Company’s Consolidated Balance Sheets at December 31, 2004 and 2003, respectively.

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							Tax Benefit of
			Net Operating				Net Operating
Year			Losses				Losses
			(In millions)
2008			$	7.9			$	2.8
2009				11.2				3.9
2010				2.4				0.8
2023				90.7				31.8
2024				101.7				35.5
	Total		$	213.9			$	74.8

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14.	Employee Benefit Plans

	Defined Contribution Plans

	Deferred Compensation and Supplemental Executive Retirement Plan

	Pension Plan

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				September 30,
				2004				2003
				(In thousands)
Change in benefit obligation:
	Benefit obligation at beginning of year			$	16,603			$	14,935
	Interest cost				1,022				992
	Actuarial gain				608				1,217
	Benefits paid				(618	)			(541	)
	Benefit obligation at end of year			$	17,615			$	16,603
Change in plan assets:
	Fair value of plan assets at beginning of year			$	16,626			$	15,093
	Actual return (loss) on plan assets				1,527				1,624
	Contributions				200				450
	Benefits paid				(618	)			(541	)
	Fair value of plan assets at end of year			$	17,735			$	16,626
	Funded status			$	120			$	23
	Unrecognized net actuarial loss				7,534				7,572
		Net amount recognized		$	7,654			$	7,595

		September 30,
		2004				2003
		(In thousands)
Prepaid benefit cost		$	7,654			$	7,595

		September 30,
		2004				2003
		(In thousands)
Accumulated benefit obligation		$	17,615			$	16,603

		September 30,
		2004				2003
Discount rate			6.00	%			6.25	%
Expected long-term rate			7.25	%			8.50	%

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		September 30,
		2004				2003				2002
		(In thousands)
Interest cost		$	1,022			$	993			$	962
Expected return on plan assets			(1,187	)			(1,263	)			(1,159	)
Amortization of unrecognized loss			306				273				135
Net periodic pension benefit (income) loss		$	141			$	3			$	(62	)

		September 30,
		2004				2003				2002
Discount rate			6.25	%			6.75	%			7.00	%
Expected long-term rate			7.25	%			8.50	%			9.00	%

		September 30,
		2004				2003
Equity securities			47	%			42	%
Debt securities			24	%			24	%
Money market fund			29	%			34	%

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2005		$	629
2006			690
2007			743
2008			768
2009			795
2010-2014			4,968

15.	Segments and Geographic Area Analysis

	Similar Services

			Year Ended December 31,
			2004				2003				2002
			(In thousands)
High Specification Floaters			$	281,866			$	290,844			$	291,848
Other Semisubmersibles				319,053				260,267				317,342
Jack-ups				178,391				97,774				99,360
Integrated Services				—				1,189				14,068
Other				3,095				2,257				5,161
Eliminations				—				(233	)			(3,566	)
	Total Contract Drilling Revenues			782,405				652,098				724,213
Revenues Related to Reimbursable Expenses				32,257				28,843				28,348
	Total Revenues		$	814,662			$	680,941			$	752,561

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	Geographic Areas

					Year Ended December 31,
					2004				2003				2002
					(In thousands)
Revenues from unaffiliated customers:
	United States				$	358,741			$	329,535			$	334,696
	Foreign:
		Europe/ Africa				69,643				47,605				99,787
		South America				120,112				152,348				170,438
		Australia/ Southeast Asia				180,783				114,580				147,640
		Mexico				85,383				36,873				—
						455,921				351,406				417,865
			Total		$	814,662			$	680,941			$	752,561

		Year Ended
		December 31,
		2004				2003				2002
Brazil			12.5	%			22.4	%			22.7	%
Mexico			10.5	%			5.4	%			—
Indonesia			6.3	%			6.8	%			2.1	%
United Kingdom			5.5	%			5.2	%			9.9	%
Australia			5.3	%			3.8	%			6.4	%
Malaysia			5.2	%			2.7	%			4.7	%

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				December 31,
				2004				2003
				(In thousands)
Drilling and other property and equipment, net:
	United States			$	1,084,829			$	1,126,932
Foreign:
	South America				274,741				283,242
	Europe/ Africa				130,410				202,111
	Australia/ Southeast Asia				521,872				487,012
	Mexico				142,741				158,579
					1,069,764				1,130,944
		Total		$	2,154,593			$	2,257,876

	Major Customers

		Year Ended
		December 31,
Customer		2004				2003				2002
Petróleo Brasileiro S.A.			12.6	%			20.3	%			19.0	%
PEMEX — Exploración Y Producción			10.5	%			5.4	%			—
BP p.l.c.			8.3	%			11.9	%			18.9	%
Murphy Exploration & Production Company			3.9	%			6.3	%			10.4	%

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16.	Unaudited Quarterly Financial Data

			First				Second				Third				Fourth
			Quarter				Quarter				Quarter				Quarter
			(In thousands, except per share data)
2004
Revenues			$	184,198			$	184,946			$	208,198			$	237,320
Operating (loss) income				(9,698	)			(9,500	)			7,664				15,462
(Loss) income before income tax expense				(14,663	)			(12,733	)			2,957				20,906
Net (loss) income				(10,972	)			(10,495	)			2,941				11,283
Net (loss) income per share:
	Basic		$	(0.08	)		$	(0.08	)		$	0.02			$	0.09
	Diluted		$	(0.08	)		$	(0.08	)		$	0.02			$	0.09
2003
Revenues			$	146,149			$	163,200			$	183,907			$	187,685
Operating (loss) income				(27,735	)			(16,641	)			(3,181	)			9,234
(Loss) income before income tax expense				(27,473	)			(18,463	)			(13,190	)			4,889
Net (loss) income				(21,566	)			(16,687	)			(11,463	)			1,302
Net (loss) income per share:
	Basic		$	(0.17	)		$	(0.13	)		$	(0.09	)		$	0.01
	Diluted		$	(0.17	)		$	(0.13	)		$	(0.09	)		$	0.01

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Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

Item 9A.	Controls and Procedures

	Disclosure Controls and Procedures

	Internal Control Over Financial Reporting

Item 9B.	Other Information.

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Item 10.	Directors and Executive Officers of the Registrant.

Item 11.	Executive Compensation.

Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Item 13.	Certain Relationships and Related Transactions.

Item 14.	Principal Accountant Fees and Services.

Item 15.	Exhibits and Financial Statement Schedules.

	(1) Financial Statements

		Page
Report of Independent Registered Public Accounting Firm			41
Consolidated Balance Sheets			44
Consolidated Statements of Operations			45
Consolidated Statements of Stockholders’ Equity			46
Consolidated Statements of Comprehensive Income (Loss)			47
Consolidated Statements of Cash Flows			48
Notes to Consolidated Financial Statements			49

	(2) Financial Statement Schedules
	No schedules have been included herein because the information required to be submitted has been included in the Company’s Consolidated Financial Statements or the notes thereto or the required information is inapplicable.

(3)  Index of Exhibits			82

	See the Index of Exhibits for a list of those exhibits filed herewith, which index also includes and identifies management contracts or compensatory plans or arrangements required to be filed as exhibits to this Form 10-K by Item 601 of Regulation S-K.

Exhibit No.				Description
	3	.1		Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 of the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2003).
	3	.2		Amended and Restated By-laws of the Company (incorporated by reference to Exhibit 3.2 of the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2001).
	4	.1		Indenture, dated as of February 4, 1997, between the Company and The Chase Manhattan Bank, as Trustee (incorporated by reference to Exhibit 4.1 of the Annual Report on Form 10-K for the fiscal year ended December 31, 2001).

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Exhibit No.				Description
	4	.2		Second Supplemental Indenture, dated as of June 6, 2000, between the Company and The Chase Manhattan Bank, as Trustee (incorporated by reference to Exhibit 4.2 of the Company’s Quarterly Report on Form 10-Q/ A for the quarterly period ended June 30, 2000).
	4	.3		Third Supplemental Indenture, dated as of April 11, 2001, between the Company and The Chase Manhattan Bank, as Trustee (incorporated by reference to Exhibit 4.2 of the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2001).
	4	.4		Fourth Supplemental Indenture, dated as of August 27, 2004, between the Company and JPMorgan Chase Bank, as Trustee (incorporated by reference to Exhibit 4.2 of the Company’s Current Report on Form 8-K dated August 27, 2004).
	4	.5		Exchange and Registration Rights Agreement, dated August 27, 2004, between the Company and Goldman, Sachs & Co. (incorporated by reference to Exhibit 4.3 of the Company’s Current Report on Form 8-K dated August 27, 2004).
	10	.1		Registration Rights Agreement (the “Registration Rights Agreement”) dated October 16, 1995 between Loews and the Company (incorporated by reference to Exhibit 10.1 of the Annual Report on Form 10-K for the fiscal year ended December 31, 2001).
	10	.2		Amendment to the Registration Rights Agreement, dated September 16, 1997, between Loews and the Company (incorporated by reference to Exhibit 10.2 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1997) (SEC File No. 1-13926).
	10	.3		Services Agreement, dated October 16, 1995, between Loews and the Company (incorporated by reference to Exhibit 10.3 of the Annual Report on Form 10-K for the fiscal year ended December 31, 2001).
	10	.4+		Diamond Offshore Deferred Compensation and Supplemental Executive Retirement Plan effective December 17, 1996 (incorporated by reference to Exhibit 10.4 of the Annual Report on Form 10-K for the fiscal year ended December 31, 2001).
	10	.5+		First Amendment to Diamond Offshore Deferred Compensation and Supplemental Executive Retirement Plan dated March 18, 1998 (incorporated by reference to Exhibit 10.8 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1997) (SEC File No. 1-13926).
	10	.6+		Second Amendment to Diamond Offshore Deferred Compensation and Supplemental Executive Retirement Plan dated January 1, 2003 (incorporated by reference to Exhibit 10.6 of the Annual Report on Form 10-K for the fiscal year ended December 31, 2003).
	10	.7+		Diamond Offshore Management Bonus Program, as amended and restated, and dated as of December 31, 1997 (incorporated by reference to Exhibit 10.6 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1997) (SEC File No. 1-13926).
	10	.8+		Amended and Restated Diamond Offshore Drilling, Inc. 2000 Stock Option Plan (incorporated by reference to Exhibit 4.3 to the Company’s Registration Statement No. 333-117512 on Form S-8).
	10	.9+		Form of Stock Option Certificate for grants to executive officers, other employees and consultants pursuant to the Amended and Restated Diamond Offshore Drilling, Inc. 2000 Stock Option Plan (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K dated October  1, 2004).
	10	.10		Form of Stock Option Certificate for grants to non-employee directors pursuant to the Amended and Restated Diamond Offshore Drilling, Inc. 2000 Stock Option Plan (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K dated October 1, 2004).
	12	.1*		Statement re Computation of Ratios.
	21	.1*		List of Subsidiaries of the Company.
	23	.1*		Consent of Deloitte & Touche LLP.
	24	.1*		Powers of Attorney.
	31	.1*		Rule 13a-14(a) Certification of the Chief Executive Officer.
	31	.2*		Rule 13a-14(a) Certification of the Chief Financial Officer.

79

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Table of Contents

Exhibit No.				Description
	32	.1*		Section 1350 Certification of the Chief Executive Officer and Chief Financial Officer.

*	Filed or furnished herewith.

80

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Table of Contents

	DIAMOND OFFSHORE DRILLING, INC.

	By:	/s/ GARY T. KRENEK

	Gary T. Krenek
	Vice President and Chief Financial Officer

Signature				Title		Date
/s/ JAMES S. TISCH*   James S. Tisch				Chairman of the Board and Chief Executive Officer (Principal Executive Officer)		March 2, 2005
/s/ LAWRENCE R. DICKERSON*   Lawrence R. Dickerson				President, Chief Operating Officer and Director		March 2, 2005
/s/ GARY T. KRENEK*   Gary T. Krenek				Vice President and Chief Financial Officer (Principal Financial Officer)		March 2, 2005
/s/ BETH G. GORDON*   Beth G. Gordon				Controller (Principal Accounting Officer)		March 2, 2005
/s/ ALAN R. BATKIN*   Alan R. Batkin				Director		March 2, 2005
/s/ CHARLES L. FABRIKANT*   Charles L. Fabrikant				Director		March 2, 2005
/s/ PAUL G. GAFFNEY II*   Paul G. Gaffney II				Director		March 2, 2005
/s/ HERBERT C. HOFMANN*   Herbert C. Hofmann				Director		March 2, 2005
/s/ ARTHUR L. REBELL*   Arthur L. Rebell				Director		March 2, 2005
/s/ RAYMOND S. TROUBH*   Raymond S. Troubh				Director		March 2, 2005
*By:		/s/ WILLIAM C. LONG   William C. Long Attorney-in-fact

81

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Table of Contents

Exhibit No.				Description
	3	.1		Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 of the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2003).
	3	.2		Amended and Restated By-laws of the Company (incorporated by reference to Exhibit 3.2 of the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2001).
	4	.1		Indenture, dated as of February 4, 1997, between the Company and The Chase Manhattan Bank, as Trustee (incorporated by reference to Exhibit 4.1 of the Annual Report on Form 10-K for the fiscal year ended December 31, 2001).
	4	.2		Second Supplemental Indenture, dated as of June 6, 2000, between the Company and The Chase Manhattan Bank, as Trustee (incorporated by reference to Exhibit 4.2 of the Company’s Quarterly Report on Form 10-Q/A for the quarterly period ended June 30, 2000).
	4	.3		Third Supplemental Indenture, dated as of April 11, 2001, between the Company and The Chase Manhattan Bank, as Trustee (incorporated by reference to Exhibit 4.2 of the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2001).
	4	.4		Fourth Supplemental Indenture, dated as of August 27, 2004, between the Company and JPMorgan Chase Bank, as Trustee (incorporated by reference to Exhibit 4.2 of the Company’s Current Report on Form 8-K dated August 27, 2004).
	4	.5		Exchange and Registration Rights Agreement, dated August 27, 2004, between the Company and Goldman, Sachs & Co. (incorporated by reference to Exhibit 4.3 of the Company’s Current Report on Form 8-K dated August 27, 2004).
	10	.1		Registration Rights Agreement (the ‘Registration Rights Agreement”) dated October 16, 1995 between Loews and the Company (incorporated by reference to Exhibit 10.1 of the Annual Report on Form 10-K for the fiscal year ended December 31, 2001).
	10	.2		Amendment to the Registration Rights Agreement, dated September 16, 1997, between Loews and the Company (incorporated by reference to Exhibit 10.2 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1997) (SEC File No. 1-13926).
	10	.3		Services Agreement, dated October 16, 1995, between Loews and the Company (incorporated by reference to Exhibit 10.3 of the Annual Report on Form 10-K for the fiscal year ended December 31, 2001).
	10	.4+		Diamond Offshore Deferred Compensation and Supplemental Executive Retirement Plan effective December 17, 1996 (incorporated by reference to Exhibit 10.4 of the Annual Report on Form 10-K for the fiscal year ended December 31, 2001).
	10	.5+		First Amendment to Diamond Offshore Deferred Compensation and Supplemental Executive Retirement Plan dated March 18, 1998 (incorporated by reference to Exhibit 10.8 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1997) (SEC File No. 1-13926).
	10	.6+		Second Amendment to Diamond Offshore Deferred Compensation and Supplemental Executive Retirement Plan dated January 1, 2003 (incorporated by reference to Exhibit 10.6 of the Annual Report on Form 10-K for the fiscal year ended December 31, 2003).
	10	.7+		Diamond Offshore Management Bonus Program, as amended and restated, and dated as of December 31, 1997 (incorporated by reference to Exhibit 10.6 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1997) (SEC File No. 1-13926).
	10	.8+		Amended and Restated Diamond Offshore Drilling, Inc. 2000 Stock Option Plan (incorporated by reference to Exhibit 4.3 to the Company’s Registration Statement No. 333-117512 on Form S-8).
	10	.9+		Form of Stock Option Certificate for grants to executive officers, other employees and consultants pursuant to the Amended and Restated Diamond Offshore Drilling, Inc. 2000 Stock Option Plan (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K dated October 1, 2004).

82

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Table of Contents

Exhibit No.				Description
	10	.10+		Form of Stock Option Certificate for grants to non-employee directors pursuant to the Amended and Restated Diamond Offshore Drilling, Inc. 2000 Stock Option Plan (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K dated October 1, 2004).
	12	.1*		Statement re Computation of Ratios.
	21	.1*		List of Subsidiaries of the Company.
	23	.1*		Consent of Deloitte & Touche LLP.
	24	.1*		Powers of Attorney.
	31	.1*		Rule 13a-14(a) Certification of the Chief Executive Officer.
	31	.2*		Rule 13a-14(a) Certification of the Chief Financial Officer.
	32	.1*		Section 1350 Certification of the Chief Executive Officer and Chief Financial Officer.

*	Filed or furnished herewith.

83

                                                                    EXHIBIT 12.1

                         DIAMOND OFFSHORE DRILLING, INC.
                       STATEMENT RE COMPUTATION OF RATIOS
                             (THOUSANDS OF DOLLARS)

         RATIO OF EARNINGS TO FIXED CHARGES:



                                                                                     YEAR ENDED DECEMBER 31,
                                                                ----------------------------------------------------------------
                                                                 2004           2003          2002          2001          2000
                                                                --------      --------      --------      --------      --------
                                                                                                         
COMPUTATION OF EARNINGS:

Pretax (loss) income from continuing operations..............   $ (3,533)     $(54,237)     $ 96,174      $260,485      $110,867
Less:  Interest capitalized during the period and
       actual preferred dividend requirements of majority-
       owned subsidiaries and 50%-owned persons included
       in fixed charges but not deducted from pretax income
       from above............................................         --        (2,201)       (2,878)       (2,645)      (13,844)
Add:   Previously capitalized interest amortized during
       the period............................................      1,249         1,166         1,304         1,185           334
                                                                --------      --------      --------      --------      --------
Total (losses) earnings, before fixed charge addition........     (2,284)      (55,272)       94,600       259,025        97,357
                                                                --------      --------      --------      --------      --------

COMPUTATION OF FIXED CHARGES:

Interest, including interest capitalized.....................     30,330        26,737        26,933        29,191        24,500
                                                                --------      --------      --------      --------      --------
Total fixed charges..........................................     30,330        26,737        26,933        29,191        24,500
                                                                --------      --------      --------      --------      --------

TOTAL (LOSSES) EARNINGS AND FIXED CHARGES....................   $ 28,046      $(28,535)     $121,533      $288,216      $121,857
                                                                ========      ========      ========      ========      ========

RATIO OF (LOSSES) EARNINGS TO FIXED CHARGES (1)..............        N/A           N/A          4.51          9.87          4.97
                                                                ========      ========      ========      ========      ========


- -------------------
(1) The deficiency in the Company's earnings available for fixed charges for the
years ended December 31, 2004 and 2003 was approximately $2.3 million and $55.3
million, respectively.

                                                                               .
                                                                               .
                                                                               .

                                                                    EXHIBIT 21.1

                                  SUBSIDIARIES



               Subsidiary                                              Jurisdiction of Organization
               ----------                                              ----------------------------
                                                                    
Diamond Offshore Company                                                    Delaware
Diamond Offshore Team Solutions, Inc.                                       Delaware
Diamond Offshore General Company                                            Delaware
Diamond Offshore Services Company                                           Delaware
Arethusa Off-Shore Company                                                  Delaware
Diamond Offshore Finance Company                                            Delaware
Diamond Offshore Drilling Sdn. Bhd.                                         Malaysia
Arethusa/Zapata Off-Shore Brasil Ltda.                                      Brazil
Diamond Offshore Drilling (Nigeria) Limited                                 Nigeria
Z North Sea, Ltd.                                                           Delaware
Diamond Offshore Drilling (Netherlands) B.V.                                Netherlands
Afcons Arethusa Off-Shore Services Ltd.                                     India
Pt Aqza Dharma                                                              Indonesia
Diamond Offshore (Singapore) Pte. Ltd.                                      Singapore
Diamond Offshore Management Company                                         Delaware
Diamond M Corporation                                                       Texas
Diamond Offshore Development Company                                        Delaware
Diamond Offshore (USA) L.L.C.                                               Delaware
Storm Nigeria Limited                                                       Nigeria
Brasdril-Sociedade de Perfuracoes Ltda.                                     Brazil
Diamond Offshore Contract Services, S.A.                                    Panama
Diamond Offshore Drilling (Overseas) L.L.C.                                 Delaware
Diamond Offshore International Limited                                      Cayman Islands
Ensenada Internacional, S.A.                                                Panama
Diamond Offshore Netherlands B.V.                                           Netherlands
M-S Drilling S.A.                                                           Panama
Diamond Offshore (Bermuda) Limited                                          Bermuda
Diamond Offshore Limited                                                    England
Diamond Offshore Drilling (UK) Ltd.                                         England
Diamond Offshore Drilling (Bermuda) Limited                                 Bermuda
Diamond M Servicios , S.A.                                                  Venezuela
Diamond Offshore (Trinidad) L.L.C.                                          Delaware
Diamond Offshore Drilling Limited                                           Cayman Islands
Diamond Offshore Services Limited                                           Bermuda
Diamond Offshore (Brazil) L.L.C.                                            Delaware
Diamond Offshore Holding, L.L.C.                                            Delaware
Offshore Drilling Services (Netherlands) B.V.                               Netherlands
Mexdrill Offshore, S. de R.L. de C.V.                                       Mexico
Offshore Drilling Services of Mexico, S. de R.L. de C.V.                    Mexico
Diamond Offshore Leasing Ltd.                                               Malaysia
Mexdrill, L.L.C.                                                            Delaware
Diamond Offshore Drilling Company N.V.                                      Netherlands Antilles
Diamond Offshore (Australia) L.L.C.                                         Delaware

                                                                    EXHIBIT 23.1


            CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

       We consent to the incorporation by reference in Registration Statement
No. 333-19987 on Form S-3, Registration Statement No. 333-22745 on Form S-8,
Registration Statement No. 333-23547 on Form S-4, Registration Statement No.
333-63443 on Form S-3, Registration Statement No. 333-42930 on Form S-8,
Registration Statement No. 333-44960 on Form S-3, Registration Statement No.
333-63980 on Form S-3, Registration Statement No. 333-117512 on Form S-8 and
Registration Statement No. 333-121762 on Form S-4 of our reports dated March 2,
2005, relating to the consolidated financial statements of Diamond Offshore
Drilling, Inc. (the "Company") and to management's report on the effectiveness
of internal control over financial reporting appearing in this Annual Report on
Form 10-K of the Company for the year ended December 31, 2004.


DELOITTE & TOUCHE LLP


Houston, Texas
March 2, 2005

                                                                    EXHIBIT 24.1

                                POWER OF ATTORNEY

      James S. Tisch hereby designates and appoints William C. Long and Gary T.
Krenek and each of them (with full power to each of them to act alone) as his
attorney-in-fact, with full power of substitution and re-substitution (the
"Attorneys-in-Fact"), for him and in his name, place and stead, in any and all
capacities, to execute the Annual report on Form 10-K (the "Annual Report") to
be filed by Diamond Offshore Drilling, Inc. with the Securities and Exchange
Commission and any amendment(s) to the Annual Report, which amendment(s) may
make such changes in the Annual Report as either Attorney-in-Fact deems
appropriate, and to file the Annual Report and each such amendment to the Annual
Report together with all exhibits thereto and any and all documents in
connection therewith.

SIGNATURE                          TITLE                             DATE
- ---------                          -----                             ----

/s/ James S. Tisch         Chief Executive Officer             February 15, 2005
- ------------------         & Chairman of the Board
James S. Tisch



                                                                    EXHIBIT 24.1

                                POWER OF ATTORNEY

      Lawrence R. Dickerson hereby designates and appoints William C. Long and
Gary T. Krenek and each of them (with full power to each of them to act alone)
as his attorney-in-fact, with full power of substitution and re-substitution
(the "Attorneys-in-Fact"), for him and in his name, place and stead, in any and
all capacities, to execute the Annual report on Form 10-K (the "Annual Report")
to be filed by Diamond Offshore Drilling, Inc. with the Securities and Exchange
Commission and any amendment(s) to the Annual Report, which amendment(s) may
make such changes in the Annual Report as either Attorney-in-Fact deems
appropriate, and to file the Annual Report and each such amendment to the Annual
Report together with all exhibits thereto and any and all documents in
connection therewith.

SIGNATURE                             TITLE                          DATE
- ---------                             -----                          ----

/s/ Lawrence R. Dickerson      Director, President and         February 15, 2005
- -------------------------      Chief Operating Officer
Lawrence R. Dickerson



                                                                    EXHIBIT 24.1

                                POWER OF ATTORNEY

      Gary T. Krenek hereby designates and appoints William C. Long as his
attorney-in-fact, with full power of substitution and re-substitution (the
"Attorney-in-Fact"), for him and in his name, place and stead, in any and all
capacities, to execute the Annual report on Form 10-K (the "Annual Report") to
be filed by Diamond Offshore Drilling, Inc. with the Securities and Exchange
Commission and any amendment(s) to the Annual Report, which amendment(s) may
make such changes in the Annual Report as either Attorney-in-Fact deems
appropriate, and to file the Annual Report and each such amendment to the Annual
Report together with all exhibits thereto and any and all documents in
connection therewith.

SIGNATURE                             TITLE                          DATE
- ---------                             -----                          ----

/s/ Gary T. Krenek             Vice President and              February 15, 2005
- -------------------            Chief Financial Officer
Gary T. Krenek


                                                                    EXHIBIT 24.1

                                POWER OF ATTORNEY

      Beth G. Gordon hereby designates and appoints William C. Long and Gary T.
Krenek and each of them (with full power to each of them to act alone) as her
attorney-in-fact, with full power of substitution and re-substitution (the
"Attorneys-in-Fact"), for her and in her name, place and stead, in any and all
capacities, to execute the Annual report on Form 10-K (the "Annual Report") to
be filed by Diamond Offshore Drilling, Inc. with the Securities and Exchange
Commission and any amendment(s) to the Annual Report, which amendment(s) may
make such changes in the Annual Report as either Attorney-in-Fact deems
appropriate, and to file the Annual Report and each such amendment to the Annual
Report together with all exhibits thereto and any and all documents in
connection therewith.

SIGNATURE                                TITLE                      DATE
- ---------                                -----                      ----

/s/ Beth G. Gordon                     Controller              February 15, 2005
- -------------------
Beth G. Gordon



                                                                    EXHIBIT 24.1

                                POWER OF ATTORNEY

      Alan R. Batkin hereby designates and appoints William C. Long and Gary T.
Krenek and each of them (with full power to each of them to act alone) as his
attorney-in-fact, with full power of substitution and re-substitution (the
"Attorneys-in-Fact"), for him and in his name, place and stead, in any and all
capacities, to execute the Annual report on Form 10-K (the "Annual Report") to
be filed by Diamond Offshore Drilling, Inc. with the Securities and Exchange
Commission and any amendment(s) to the Annual Report, which amendment(s) may
make such changes in the Annual Report as either Attorney-in-Fact deems
appropriate, and to file the Annual Report and each such amendment to the Annual
Report together with all exhibits thereto and any and all documents in
connection therewith.

SIGNATURE                               TITLE                       DATE
- ---------                               -----                       ----

/s/ Alan R. Batkin                     Director                February 15, 2005
- ------------------
Alan R. Batkin



                                                                    EXHIBIT 24.1

                                POWER OF ATTORNEY

      Charles L. Fabrikant hereby designates and appoints William C. Long and
Gary T. Krenek and each of them (with full power to each of them to act alone)
as his attorney-in-fact, with full power of substitution and re-substitution
(the "Attorneys-in-Fact"), for him and in his name, place and stead, in any and
all capacities, to execute the Annual report on Form 10-K (the "Annual Report")
to be filed by Diamond Offshore Drilling, Inc. with the Securities and Exchange
Commission and any amendment(s) to the Annual Report, which amendment(s) may
make such changes in the Annual Report as either Attorney-in-Fact deems
appropriate, and to file the Annual Report and each such amendment to the Annual
Report together with all exhibits thereto and any and all documents in
connection therewith.

SIGNATURE                               TITLE                       DATE
- ---------                               -----                       ----

/s/ Charles L. Fabrikant               Director                February 15, 2005
- ------------------------
Charles L. Fabrikant



                                                                    EXHIBIT 24.1

                                POWER OF ATTORNEY

      Paul G. Gaffney II hereby designates and appoints William C. Long and Gary
T. Krenek and each of them (with full power to each of them to act alone) as her
attorney-in-fact, with full power of substitution and re-substitution (the
"Attorneys-in-Fact"), for her and in her name, place and stead, in any and all
capacities, to execute the Annual report on Form 10-K (the "Annual Report") to
be filed by Diamond Offshore Drilling, Inc. with the Securities and Exchange
Commission and any amendment(s) to the Annual Report, which amendment(s) may
make such changes in the Annual Report as either Attorney-in-Fact deems
appropriate, and to file the Annual Report and each such amendment to the Annual
Report together with all exhibits thereto and any and all documents in
connection therewith.

SIGNATURE                               TITLE                       DATE
- ---------                               -----                       ----

/s/ Paul G. Gaffney II                 Director               February 15, 2005
- ----------------------
Paul G. Gaffney II



                                                                    EXHIBIT 24.1

                                POWER OF ATTORNEY

      Herbert C. Hofmann hereby designates and appoints William C. Long and Gary
T. Krenek and each of them (with full power to each of them to act alone) as his
attorney-in-fact, with full power of substitution and re-substitution (the
"Attorneys-in-Fact"), for him and in his name, place and stead, in any and all
capacities, to execute the Annual report on Form 10-K (the "Annual Report") to
be filed by Diamond Offshore Drilling, Inc. with the Securities and Exchange
Commission and any amendment(s) to the Annual Report, which amendment(s) may
make such changes in the Annual Report as either Attorney-in-Fact deems
appropriate, and to file the Annual Report and each such amendment to the Annual
Report together with all exhibits thereto and any and all documents in
connection therewith.

SIGNATURE                               TITLE                        DATE
- ---------                               -----                        ----

/s/ Herbert C. Hofmann                 Director                February 15, 2005
- ----------------------
Herbert C. Hofmann



                                                                    EXHIBIT 24.1

                                POWER OF ATTORNEY

      Arthur L. Rebell hereby designates and appoints William C. Long and Gary
T. Krenek and each of them (with full power to each of them to act alone) as his
attorney-in-fact, with full power of substitution and re-substitution (the
"Attorneys-in-Fact"), for him and in his name, place and stead, in any and all
capacities, to execute the Annual report on Form 10-K (the "Annual Report") to
be filed by Diamond Offshore Drilling, Inc. with the Securities and Exchange
Commission and any amendment(s) to the Annual Report, which amendment(s) may
make such changes in the Annual Report as either Attorney-in-Fact deems
appropriate, and to file the Annual Report and each such amendment to the Annual
Report together with all exhibits thereto and any and all documents in
connection therewith.

SIGNATURE                               TITLE                        DATE
- ---------                               -----                        ----

/s/ Arthur L. Rebell                   Director                February 15, 2005
- ---------------------
Arthur L. Rebell



                                                                    EXHIBIT 24.1

                                POWER OF ATTORNEY

      Raymond S. Troubh hereby designates and appoints William C. Long and Gary
T. Krenek and each of them (with full power to each of them to act alone) as his
attorney-in-fact, with full power of substitution and re-substitution (the
"Attorneys-in-Fact"), for him and in his name, place and stead, in any and all
capacities, to execute the Annual report on Form 10-K (the "Annual Report") to
be filed by Diamond Offshore Drilling, Inc. with the Securities and Exchange
Commission and any amendment(s) to the Annual Report, which amendment(s) may
make such changes in the Annual Report as either Attorney-in-Fact deems
appropriate, and to file the Annual Report and each such amendment to the Annual
Report together with all exhibits thereto and any and all documents in
connection therewith.

SIGNATURE                               TITLE                        DATE
- ---------                               -----                        ----

/s/ Raymond S. Troubh                  Director                February 15, 2005
- ---------------------
Raymond S. Troubh

                                                                    EXHIBIT 31.1

I, James S. Tisch, certify that:

      1.    I have reviewed this Annual Report on Form 10-K for the fiscal year
            ended December 31, 2004 of Diamond Offshore Drilling, Inc.;

      2.    Based on my knowledge, this report does not contain any untrue
            statement of a material fact or omit to state a material fact
            necessary to make the statements made, in light of the circumstances
            under which such statements were made, not misleading with respect
            to the period covered by this report;

      3.    Based on my knowledge, the financial statements, and other financial
            information included in this report, fairly present in all material
            respects the financial condition, results of operations and cash
            flows of the registrant as of, and for, the periods presented in
            this report;

      4.    The registrant's other certifying officer(s) and I are responsible
            for establishing and maintaining disclosure controls and procedures
            (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
            internal control over financial reporting (as defined in Exchange
            Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

                  (a) Designed such disclosure controls and procedures, or
                  caused such disclosure controls and procedures to be designed
                  under our supervision, to ensure that material information
                  relating to the registrant, including its consolidated
                  subsidiaries, is made known to us by others within those
                  entities, particularly during the period in which this report
                  is being prepared;

                  (b) Designed such internal control over financial reporting,
                  or caused such internal control over financial reporting to be
                  designed under our supervision, to provide reasonable
                  assurance regarding the reliability of financial reporting and
                  the preparation of financial statements for external purposes
                  in accordance with generally accepted accounting principles;

                  (c) Evaluated the effectiveness of the registrant's disclosure
                  controls and procedures and presented in this report our
                  conclusions about the effectiveness of the disclosure controls
                  and procedures, as of the end of the period covered by this
                  report based on such evaluation; and

                  (d) Disclosed in this report any change in the registrant's
                  internal control over financial reporting that occurred during
                  the registrant's most recent fiscal quarter (the registrant's
                  fourth fiscal quarter in the case of an annual report) that
                  has materially affected, or is reasonably likely to materially
                  affect, the registrant's internal control over financial
                  reporting; and

      5.    The registrant's other certifying officer(s) and I have disclosed,
            based on our most recent evaluation of internal control over
            financial reporting, to the registrant's auditors and the audit
            committee of the registrant's board of directors (or persons
            performing the equivalent functions):

                  (a) All significant deficiencies and material weaknesses in
                  the design or operation of internal control over financial
                  reporting which are reasonably likely to adversely affect the
                  registrant's ability to record, process, summarize and report
                  financial information; and

                  (b) Any fraud, whether or not material, that involves
                  management or other employees who have a significant role in
                  the registrant's internal control over financial reporting.

Date: March 2, 2005
                                                         /s/ JAMES S. TISCH
                                                         -----------------------
                                                         James S. Tisch
                                                         Chief Executive Officer

                                                                    EXHIBIT 31.2

I, Gary T. Krenek, certify that:

      1.    I have reviewed this Annual Report on Form 10-K for the fiscal year
            ended December 31, 2004 of Diamond Offshore Drilling, Inc.;

      2.    Based on my knowledge, this report does not contain any untrue
            statement of a material fact or omit to state a material fact
            necessary to make the statements made, in light of the circumstances
            under which such statements were made, not misleading with respect
            to the period covered by this report;

      3.    Based on my knowledge, the financial statements, and other financial
            information included in this report, fairly present in all material
            respects the financial condition, results of operations and cash
            flows of the registrant as of, and for, the periods presented in
            this report;

      4.    The registrant's other certifying officer(s) and I are responsible
            for establishing and maintaining disclosure controls and procedures
            (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
            internal control over financial reporting (as defined in Exchange
            Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

                  (a) Designed such disclosure controls and procedures, or
                  caused such disclosure controls and procedures to be designed
                  under our supervision, to ensure that material information
                  relating to the registrant, including its consolidated
                  subsidiaries, is made known to us by others within those
                  entities, particularly during the period in which this report
                  is being prepared;

                  (b) Designed such internal control over financial reporting,
                  or caused such internal control over financial reporting to be
                  designed under our supervision, to provide reasonable
                  assurance regarding the reliability of financial reporting and
                  the preparation of financial statements for external purposes
                  in accordance with generally accepted accounting principles;

                  (c) Evaluated the effectiveness of the registrant's disclosure
                  controls and procedures and presented in this report our
                  conclusions about the effectiveness of the disclosure controls
                  and procedures, as of the end of the period covered by this
                  report based on such evaluation; and

                  (d) Disclosed in this report any change in the registrant's
                  internal control over financial reporting that occurred during
                  the registrant's most recent fiscal quarter (the registrant's
                  fourth fiscal quarter in the case of an annual report) that
                  has materially affected, or is reasonably likely to materially
                  affect, the registrant's internal control over financial
                  reporting; and

      5.    The registrant's other certifying officer(s) and I have disclosed,
            based on our most recent evaluation of internal control over
            financial reporting, to the registrant's auditors and the audit
            committee of the registrant's board of directors (or persons
            performing the equivalent functions):

                  (a) All significant deficiencies and material weaknesses in
                  the design or operation of internal control over financial
                  reporting which are reasonably likely to adversely affect the
                  registrant's ability to record, process, summarize and report
                  financial information; and

                  (b) Any fraud, whether or not material, that involves
                  management or other employees who have a significant role in
                  the registrant's internal control over financial reporting.

Date: March 2, 2005

                                                         /s/ GARY T. KRENEK
                                                         -----------------------
                                                         Gary T. Krenek
                                                         Chief Financial Officer

                                                                    EXHIBIT 32.1

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                            AS ADOPTED BY SECTION 906
                        OF THE SARBANES-OXLEY ACT OF 2002

      Each of the undersigned hereby certifies, pursuant to 18 U.S.C. Section
1350, in his capacity as an officer of Diamond Offshore Drilling, Inc. (the
"Company"), that, to his knowledge:

      (1) the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2004, as filed with the U.S. Securities and Exchange Commission on
the date hereof (the "Report"), fully complies with the requirements of Section
13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

      (2) the information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.

Dated:  March 2, 2005

/s/ JAMES S. TISCH
- --------------------------------------
James S. Tisch,
Chief Executive Officer of the Company

/s/ GARY T. KRENEK
- --------------------------------------
Gary T. Krenek,
Chief Financial Officer of the Company