Darren Daugherty - Director, IR Marc Edwards - President, CEO Gary Krenek - SVP, CFO Ron Woll - SVP and Chief Commercial Officer

Jud Bailey - Wells Fargo Ian Macpherson - Simmons Klayton Kovac - Tudor, Pickering & Holt Gregory Lewis - Credit Suisse AG Darren Gacicia - Guggenheim Securities Praveen Narra - Raymond James Jeffrey Campbell - Tuohy Brothers Investment Lukas Daul - ABG Sundal Collier J.B. Lowe - Cowen and Company Harry Mateer - Barclays Capital

Thank you, Maria. Good morning, everyone, and thank you for joining us.

With me on the call today are Marc Edwards, President and Chief Executive Officer; Gary Krenek, Senior Vice President and Chief Financial Officer; and Ron Woll, Senior Vice President and Chief Commercial Officer. Following our prepared remarks this morning, we will have a question-and-answer session.

Before we begin our remarks, I remind you that information reported on this call speaks only as of today and therefore you are advised that time-sensitive information may no longer be accurate at the time of any replay of this call. In addition, certain statements made during this call may constitute statements that are forward-looking in nature.

Such statements are based on our current expectations and include known and unknown risks, uncertainties and other factors, many of which we are unable to predict or control, that may cause our actual results or performance to differ materially from any future results or performance expressed or implied by the statements. These risks and uncertainties include the risk factors disclosed by the company from time to time in our filings with the SEC, including our annual report on Form 10-K and in our quarterly reports on Form 10-Q.

Forward-looking statements reflect circumstances at the time they are made, and the company expressly disclaims any obligation to update or revise any forward-looking statements. Furthermore, as we start this call, please refer to the disclosure regarding forward-looking statements incorporated in our press release issued earlier today, and please note that the contents of our call today are covered by that disclosure.

And now I'll turn the call over to Marc.

Thank you, Darren. Good morning, everyone and welcome to our fourth quarter conference call.

I'd like to start off by adding some context around our announcement today that our Board of Directors has declared a regular quarterly dividend of $0.125, but for the first time in 29 quarters, not declared a special quarterly dividend. As in prior quarters, the board arrived to this decision after careful consideration of our company's financial position, future earnings outlook, capital spending plans and future market conditions.

Since our earnings call in October market fundamentals in the oil and gas space have continued to deteriorate, leading many of our clients to announce significant cuts to their 2015 capital spending plans. We believe that our market will contract by over 20% year-on-year leaving little, if any opportunity for new industry fixtures to be announced.

This is driven by the continued decline in the pricing of commodity benchmarks such as Brent and WTI, which we all know are down by more than 50%, since last summer. The impact to the 2015 operating cash flows of our clients should not be underestimated especially as they were already under pressure to deliver enhanced shareholder value.

Many of our clients are seeking to sublet contracted drilling units, which are then competing in the market against rigs that become available. These would be both the newbuilds and those which naturally roll off contract at term completion.

In my previous calls, I had suggested that this would be a U shaped downturn. I believe, we are now well established in what could be a severe and protracted cycle and any green shoots of recovery are still a long way over the horizon.

It will get worse, before it gets better. Across the industry, there are already a significant number of rigs going idle including some recently delivered 6th generation drillships.

There remain over 30 uncontracted floaters that are yet to be launched and with the few potential contracting opportunities being pushed out and a lack of contracting opportunities for rollovers; we believe we could see a significant number of ultra-deepwater rigs idle without a contract by year-end. As we entered the downturn Diamond Offshore successfully re-secured fixtures for our last two ultra-deepwater newbuild drillships.

We now have all of our new drillships under contract with top tier clients through at least 2019. Additionally, our harsh environment semi, the Ocean GreatWhite is contracted on a 3-year fixture commencing upon a scheduled delivery in late 2016.

The GreatWhite's final yard payment in Q2, 2016 represents our last remaining significant newbuild capital obligation. Many offshore drilling contractors are highly levied and could face liquidity issues.

6th generation assets are expensive to stack and deck has to serviced, whether the asset is working or not, as the downturn continues we see the potential for an environment in which Diamond Offshore may buy assets at attractive prices. With our conservative capitalization strong liquidity position and the strong investment grade credit rating.

We believe the Diamond Offshore is well positioned to take advantage of any opportunities to acquire assets that may materialize, during this downturn. Therefore, we believe this is the right time to revisit our capital allocation strategy so that we're in a better position to take advantage of these opportunities.

To maximize capital flexibility, the Board of Directors has elected not to pay a special dividend for the foreseeable future and in so doing, for an additional $400 million per year that could be opportunistically deployed. As always, our Management and our Board remain committed to generating shareholder value and if the market conditions improve in a meaningful way, we will revisit our capital allocation options accordingly.

So now let me turn specifically to the last quarter. For the fourth quarter, we recorded earnings per share $0.72 versus $0.67 in the fourth quarter of last year.

The biggest operational driver versus the prior year quarter was that during 2014, we stacked or sold eight rigs. This was partially offset by the contributions of our new units, the Ocean BlackHawk and the Ocean Onyx, which went to work during 2014.

Gary will discuss results shortly in greater detail. In December, we took delivery of our second and third drillships.

The Ocean BlackHornet and Ocean BlackRhino which are now headed towards the US Gulf of Mexico for contract commencement. Also in December, we took delivery of our deepwater, semi the Ocean Apex, which has begun its inaugural assignment in Vietnam.

We plan to take the delivery of the Ocean BlackLion during the first quarter and she should begin working also in the Gulf of Mexico later this year. Our first newbuild drillship, the Ocean BlackHawk began its operation in the Gulf of Mexico in May, 2014 working for Anadarko and since then, the rigs crew has been able to deliver best in class metrics for a 6th generation drillship.

The Ocean BlackHawk completed the fourth quarter without any unpaid downtime and in the process, set a series of new drilling records for the client. Turning now, to our legacy mid-water.

We believe that unless market conditions improved unexpectedly some of the units in our legacy fleets maybe cold stacked during the year. We continue to expect that some of the newer generation rigs will compete down and that we will see more low-end mid-water units retired across the entire industry.

While there is no immediate solution to the supply demand in balance, such retirement should help accelerate a recovery in the current market cycle. I will now handover the call to Gary, to give further colour on the financials and then I'll make some closing remarks.

Gary?

Thanks Mark. As always, I'll give a little colour on this past quarter's results and then cover what's to be expected for the upcoming quarter.

In addition, as is our custom with our fourth quarter earnings call, I'll spend some time providing additional selective information on what we expect for the entire year of 2015, with regards to various line items on the income statement, expected capital expenditures, downtime etc. For the quarter just ended, we had after tax net income of $99 million or $0.72 per share, which is based on contract drilling revenues of $674 million.

This is an increase in EPS from $0.38 reported in our prior quarter's earnings primarily as a result of the $109 million pre-tax impairment write-down associated with retiring six mid-water rigs in Q3 of 2014. Despite the increase in EPS quarter-over-quarter contract drilling revenues decreased from $726 million reported in the previous quarter.

This was driven mainly by a number of rigs, which concluded contracts in Q4 or in the second half of Q3 and remained uncontracted at December, 31. These reductions were partially offset by the Ocean Patriot, which began its three year contract with Shell in the North Sea early in the fourth quarter following extended shipyard upgrade.

For more details concerning individual contract timings, I'd refer you to our rig status reports that we file on a monthly basis. I'll now address some of the additional line items on our fourth quarter income statement.

First of all, contract drilling expenses for the quarter came in at $359 million, which is $41 million less than the prior quarter and below our Q4 guidance of $390 million to $410 million. This favourable variance is a result of two items.

First, we recorded a fourth quarter accounting adjustment that reduced operating expense by about $19 million, these costs were capitalized during the quarter, thus reducing anticipated expense. While this first item was merely due to a change in an accounting convention during the quarter.

The remaining favourable variance and operating expense was a result of true cost savings. Responding to market conditions, we were able to de-manned some of our cold stacked rigs quicker than expected, thus reducing cost.

As I've stated in prior earning call, after safety, cost control and efficiency remain one of our top goals. Depreciation expense increased as expected quarter-over-quarter to $132 million, but slightly above our prior guidance of $118 million to $120 million.

A portion of this, is a result of depreciation associated with the additional $19 million capitalized as a result of Q4, change in an accounting convention that I previously mentioned. The remaining variance is due to the normal true up depreciation at year-end to reflect the exact timing of capital purchases made during the year.

G&A cost and interest expense for the fourth quarter of 2014 came within previous guidance ranges. Our effective tax rate of 35.5% was slightly above.

The higher tax rate was simply result of changes to our estimates in the geographies and the various foreign tax rates, where we earn our pre-tax income. And finally, we incurred a little over $1 billion in capital expenditures in the quarter.

The bulk of which relates to the final shipyard payments made on the delivery of the Ocean BlackHornet and Ocean BlackRhino both of which are currently en route to term contracts in the US Gulf of Mexico. Now, looking forward into 2015.

Some of the items that will affect our financial performance next quarter and for the coming full year. During 2014, we incurred a significant number of downtime days related to seven rigs being out of service for their 5-year special surveys.

For 2015, we were projecting only two rigs to undergo a regulatory surveys, with that associated downtime, those being the Ocean Lexington and the Ocean Guardian. In addition to survey downtime, we have a number of rigs that will be moving during the year and several that will incur downtime for it, for equipment upgrade, acceptance testing etc.

The exact number of down days expected in 2015 and the timing of these projects. I refer you to our rig status report that we filed just this morning.

Now turning to our guidance for the year ahead. I will give estimates for the first quarter and full year 2015 for individual line items from the income statement, with the exception being of contract drilling expense because of the uncertain industry outlook, it is difficult to predict longer term rig utilization and therefore I will only comment on operating expense for the first quarter of 2015.

For the first quarter, 2015 contract drilling expense not including reimbursable expense. It's expected to be in the range of $340 million to $360 million.

In addition to normal daily operating cost, this will now include operating cost for the Ocean Apex as she begins her contract with ExxonMobil in Vietnam after delivery from a shipyard. We're also expect to incur cost of $6 million to $8 million to move to Ocean Worker back to the US Gulf of Mexico.

Offsetting these items, we'll be operating cost savings as we continue to de-manned rigs that have recently come off contract. As always, I remind everyone that I've been talking about the line contract drilling expenses on the income statement, which does not include cost incurred in the line reimbursable expenses.

Depreciation expense for the full year 2015 is estimated to be in the range of $530 million to $550 million and the increase over 2014 DD&A primarily due to the delivery of our newbuild drillships. We expect Q1 depreciation cost to come in at $130 million to $140 million and remain in that range for the remaining quarters of the years.

G&A cost are expected to total $75 million to $85 million for the year with approximately $19 million to $22 million incurred during each quarter of 2015. Interest expense on our current debt and expected borrowings on our bank line of credit, to fund delivery of the Ocean BlackLion this year net of capitalized interest is rejected to total $105 million to $115 million or about $50 million above the total for 2014.

This increase is a result of lower capitalized interest in 2015, due to the delivery of our drillships. Net interest in the first two quarters of 2015 should run close to $30 million and then decreased to closer to $25 million in the final two quarters.

We're looking at an effective tax rate for the year to be in the range of 24% to 28%. As always, any changes in the geographic mix of the sources of our earnings as well as tax assessments or settlements or movements in exchange rates will impact our effective tax rate.

And finally, moving on to capital expenditure guidance. We believe that we will spend maintenance capital of approximately $340 million for the full year 2015, which is up slightly from our 2014 maintenance CapEx spend of $290 million.

This increase is mainly driven by equipment requirements associated with multiyear contracts beginning in 2015. I would note here, that these equipment upgrades which total about $68 million will be reimbursed by our customers in addition to any operating day rate, we disclose in our rig status report.

Newbuild CapEx for 2015 is expected to be $590 million which includes the final 70% shipyard payment for the BlackLion, along with oversight cost for the Ocean GreatWhite and the completion cost for the service life extension project on the Ocean Confidence. Together, maintenance and newbuild capital expenditures are expected to total approximately $930 million in 2015 and with that, I'll turn it back to Mark.

Thank you, Gary. As I said in my previous remarks, we expect that the market will have a significant oversupply of rigs through the remainder of the year and well into 2016.

Challenges lie ahead in the coming quarters, while clients revised their plans in response to the dramatic decline in oil prices. In a depressed markets, certain clients may seek to renegotiate or otherwise take advantage of negotiated terms to terminate a rig contract.

This is a possibility facing both ourselves and our competition. Diamond Offshore has cash on hand and borrowing capacity in place to complete our remaining newbuild projects and most importantly, all of these units are contracted with Tier 1 clients well into 2019 and beyond.

We will react to this downturn by continuing to focus on the things that we can control, such as safety, the quality of our operations, rationalizing cost and the efficient use of our capital. We are in a cyclical business and eventually market supply and demand will come into balance as our clients return to prioritize in production and reserve replacement.

We are hoping to have an opportunity to repeat what is being successful in the past that is we want to acquire very good assets at attractive prices. We cannot predict the timing of a market recovery.

As a result, we must position the company financially so that we're able to act decisively when opportunities appear. It is because of this strategy that we have delivered amongst the highest return on capital employed of our industry peers, whilst being able to pay substantial dividends.

When the market turns and eventually it will, we plan to have position the company accordingly and with that, I will now take your questions.

I've got a question, obviously thank you Marc for all the real estate commentary on the outlook, on the market and I'm just curious, you obviously painted a pretty realistic picture on asset utilization going forward and if I just kind of triangulate and things, you're not giving full year operating cost guidance. Do we take that to mean you're probably contemplating stacking quite a few more rigs as they roll off contracts or how should we think about the lack of annual operating cost guidance in a context of deteriorating market like, we're seeing today?

Jud thanks very much, very pertinent question there. Well, let me start by saying currently we have no plans to scrap any additional rigs in the near future.

We preannounced the scraping of the Ocean Winner in last earnings call and of course that still has a couple of months to run on its contract, but depending on market conditions moving forward. We are likely to see additional rigs in our fleet become cold stacked, but having said that at this time I'm not expecting these to be scrapped unless the markets further substantially turns down.

Every quarter, we look at the entire fleet and determine whether we should impair assets and in this quarter, we found we had no need to further do so. So we'll undertake the same review on a quarterly basis moving forward and obviously advice accordingly, but that's probably relevant to the lack of operational guidance moving forward.

Okay, alright. I appreciate that and then if I could, my follow-up, if I could ask you about a couple of specific regions Brazil and Mexico where you had some exposure and I think both NOC's in those region are going to be cutting, spending quite a bit.

I'd just wanted to see if I could give any colour or commentary, is what your customers down there are telling you?

Jud, good morning, this is Ron Woll. Those are two good markets where both NOC's have been rather public in their intentions to renegotiate and adjust their portfolio and Pemex really I think specifically so, we have five rigs with Pemex today and one more starting later this year and I would say that, we are in discussion with Pemex around our portfolio and what their ongoing needs are, for obvious reasons, we won't get into the detail, this morning on the discussions, but I would describe them as broadly collaborative and ongoing.

So I think, we continue to work that with Pemex. In the case of Petrobras like other operators, they have strong downward pressures on them right and they're certainly pulled back on new programs.

So that certainly is informing them pretty heavily on work going forward. So we continue to work with them on what needs they have, but their pressures also becomes our pressures.

Alright, thank you.

Marc, if your forecast of really no new fixtures signed this year comes to pass; can you describe with regard to your fleet exposure, which of your rigs are least likely to be cold stacked and may presumably the Apex and the Onyx? Of course because they're the newest that have contract rollover exposure.

Also the Valiant, which has received significant capital recently, I would assume that would be high on your list of keeping marketed. What else is that correct first of all and then what else would be on that list, possibly?

Ian, this is Ron Woll again here, you know the Valiant of course just we've picked up some work in the North Sea there and so as we look at the fact that there are relatively I think few new fixtures to talk about today or on the near horizon. Clearly the older rigs will have a difficult time competing going forward.

We are not announcing today any new plans, on who will be stacked and so we'll have to make that decision as the market, I think reveals itself, but clearly we look at the some of the rigs, where we've invested more recently like the Apex. We certainly will continue to work her in the marketplace, but we have to respect the fact that fixtures are what they are and we have to make those decisions going forward.

Okay. Gary, I don't know if I missed this in your comments before, what was the bad debt expense last quarter and is there, any concern that is, that canary in a coal mine with regards to the specific customer?

Last quarter, we had no bad debt expense. Last quarter, we had it in the third quarter of 2013, which was related to OGX.

$2.2 million in Q4, 2013 or that was maybe I have a bad printout here. I'll call you offline on that.

Okay.

Hey, Gary? Sorry, I'd correct myself I was looking in the wrong line there with your loss on disposition, so never mind on that.

I'll follow-up.

Yes, that was just miscellaneous equipment.

Got you. Thanks.

So when you said the market was down 20% year-over-year, is this just Q4 to Q4 working rig count or is this like full year average versus full year average? Also could you just describe how you're thinking about this a bit more for instance, is it being driven by specific region or customer?

Klay, when I said the market is going to be down 20%, that's really on a year-on-year basis. I think, if you look across our clients portfolio vis-à-vis what's being communicated to the external market, as it relates to that capital spending plans for 2015.

I think, that you see that significant reductions have taken place in terms of North America land and specifically in the unconventional arena and numbers that are being suggested are in the 30% plus range. I think in the international arena however, especially with our NOC's, much of the reduction in capital expenditure from 2015 perspective compared with 2014 is less than that.

So if you put everything into the melting pot, I think generally in the overseas market, there's less of contraction outside of the United States, but of course we play big in the Gulf of Mexico and overall, I think that the market, the offshore drill as it facing is about 20% reduction in capital year-over-year, so that's the basis for making that statement.

Okay, thank you. Then just as a follow-up in your prepared remarks you highlighted many clients seeking the sublet drilling units, could you further elaborate on this?

For instance, how many of your rigs specifically are being sublet and then do you have any idea, what customers are sort of bidding these your customers what they're bidding these rigs for?

Yes, as it's specifically right relates to the industry in general. With regard to our own fleet, we don't see too many of our own fleet out there being marketed on a sublet basis, but we do stay in touch with our clients around the world and I think that if you look at each specific client on individual basis, I don't think that there is one client and I'm speaking about from an industry perspective not just our own fleet, that does not have at least one rig available to sublet, specific to client Statoil, we know that they've got a number of units, so they're trying to sublet unsuccessfully as indeed, do companies like TOTAL and most of the major players.

So we got to be cognizant of the fact that, these sublets are competing in a market space for rigs that are coming out of the shipyards today and other rigs that are rolling off contract on a natural basis, as the term expires.

Okay, thank you. I'll turn it back over.

Marc, when the Ocean Confidence was put in the yard in the Canary Islands for maintenance, I think the plan was to move that rig potentially up to the North Sea, just given the slowdown in that market and just given the calibre of that rig, is that something where we could see that rig being as exactly market be swapped in for another contract as you've done in the past.

Thank you, Greg for that question. Yes the Confidence will be coming out of the shipyard in the Canary Isles and another couple of months.

It was a significant upgrade to the rig, it's a very capable unit, it wasn't really designed to go up to the North Sea, we're taking the Valiant up to the North Sea and of course that has secured work recently up there. The Confidence has more of a worldwide market in which it plays.

We were looking at an opportunity in India, we're looking an opportunity back here in the Gulf of Mexico and the end of the day, there is a possibility that we might consider a rig swap, in other words upgrade what might be a unit under contract already with the Confidence. In terms of relationship building with our clients.

Okay, great and then just Gary, you mentioned that the Guardian is expected to go into for special survey work. I mean, that rig doesn't after it rolls off contract mid-year, that rig does not, it doesn't look like it has any additional work post that, in the event that it doesn't have post work, is that a project where it could be delayed?

Yes, we'll take a look at that. We'd hope that we do find additional work and we go forward with that survey that's the plan right now and actually as I'm looking at it, we will do that survey because we have to do the survey in the second quarter it's coming to, then more likely than not that survey will go on regardless of what happens with the rig because we're going to have to finish the current contract, we're on.

Okay, great. Bye, guys.

Thanks.

I'm curious, on the high spec floaters, if they go idle and we're kind of warm stacking. What do you think we can bring the cost, the kind of cost down to and how quickly can it be done and how do you think about it even if it's for kind of gap period time and the rest.

Just if you could walk me through and how you're thinking about that'd be great.

Well, from a newbuild perspective the 6th generation drillships will be expensive to stack as it relates to Diamond Offshore, we don't have any that will be moving down that path because all of our newbuild drillships, of course are contracted through 2019 and beyond, but for those drillships that coming out of the yard without contracts. You're probably looking at about minimum $100,000 a day and then on top of that some of the other companies that are bringing now, also have to service that.

So it's not a cheap exercise, the other units in the fleet out there. The less high spec units actually lend themselves quite well to stacking because you can really take the cost out of these units, but these 6th generation drillships you go to find a deepwater port, you can't really drop an anchor down and let them swing around, they got to be maintained, they're high spec.

So there is a substantial cost to stacking these units.

Off the $100,000 is most of that fuel, kind of just running in DP or how do you breakdown $100,000 cost if you don't mind?

Well, you still got to keep these units quite well manned. You know you've got to run the DP system to a certain extent.

So it's a combination of everything. There is a lot of electronic gadgetry on these units and electronics don't lend themselves to idle time in a, let's say a corrosive seawater environment.

So you got to keep the unit basically running and you've got to cycle the stuff on the drill floor. It's a combination of everything really.

And okay, so if I could follow-up, I know that there is been a lot of turmoil down in Brazil. I'm trying to figure that, figure out the polite way to ask the question like how functional of an organization right now is Petrobras to really have negotiations with?

Petrobras, you're right, went through some changes over the last week or so, but I was actually down in Brazil and Rio last week and it's still a very functional organization. We had meetings with the appropriate people that are involved in the drilling space, so I don't really expect much of a change in what's already been telegraphed to the community, having said that, we do know that as it relates to perhaps the a ward of new fixtures moving forward.

You might see a delay in that, but in terms of what's already on the contract and their ability to deliver from a exploration and production perspective, I don't really see much change moving forward.

Is there something well there is a whole new process that have to be put in place in order to get contracts approved or is it something where, new management has to take hold and therefore you kind of restart those type of dialogs.

Well a bit of both, apart from the CEO which came in from the outside. Many of the positions on an interim basis being filled with people who are already in the organization.

So as I said earlier, yes there will be perhaps more diligence around the word of new contracts, but in terms of what's already in place. I think that it's likely to business as normal.

Okay, great. Thank you very much.

I guess based on your commentary, it's clear that you expect the market to get worse from here, but is there anything that you need to see before you get more comfortable that there is at least clarity into the market cycle to do M&A or would you just kind of dollar cost average down and do acquisitions over time through the downturn?

Well, we are in the early stages of what is likely to be a protected downturn for offshore drillers. We need to see more fixtures coming to the market.

Now just to clarify something that was brought up earlier in the Q&A sessions. We are not saying that there is going to be no fixtures awarded in 2015, it's just, it's going to be that's going to be limited number that are out there.

They're going to be pure and far between. In terms of timing to take advantage of the downturn, I do not want to create an expectation of a specific timeframe.

All but, we're even eager to pull a trigger in the near future. What is more important for us is that any opportunity we pursue needs to create long-term shareholder value.

So notwithstanding a sudden turnaround in the market. Let's say for geopolitical reasons or similar, we will be very patient in our approach moving forward.

Okay, I think that makes a lot of sense and then just in terms getting back to that contract signing in 2015, I guess could you clarify is that for work to begin in 2015 or your customers kind of approaching signing rigs for 2016 or is it are they at least engaging in some conversations for 2016?

Well, it's pretty arid out there. In terms of even dialog around any fixtures that may materialize there is no much chatter in the market.

From an offshore driller perspective, the fixture engine needs a while to spin up so to speak and so anything that people bring to the market place today, you're really looking at a 12 months to 18 months cycle before the bits start turning to the right and you saw generating revenue. So in terms of any, the timing of any uptick it's going to be a while before it happens.

There is the odd fixture that's out there, today that really is looking for a 6th generation drillship that's one here in the Gulf of Mexico for example, but there's going to be a lot of people chasing out. We're not in the market itself because all newbuild units are already on contract.

So let's not misunderstand the timing, that it takes to be on ticket from when the opportunity is first identified by our clients and as we've spoken to already on the call, there really isn't much chatter in the market at this moment in time.

Very helpful, commentary. Thank you very much.

You stressed earlier in the call, that in 2015 cold stacked rigs were not expected to be scrapped. With higher spec rigs moving down market and newbuilds coming to market, what gives you the confidence that cold stack mid-water rigs can eventually return to market?

Let me just clarify a point here. Every quarter, according to financial regulations we have to look at our fleet and decide what will be scrapped and what won't be scrapped and then we take the appropriate write-down.

So what I actually said was at this moment in time. We've taken a look at the fleet and established that there is nothing that needs to be cold stacked beyond what we did, earlier at the end of last year.

So I just want to clear on that. I'm not necessarily stating that we won't actually cold stack anything later in the year.

Depending on what happens in the market, but in terms of marketing rigs and how these rigs will come back. I'd just like to say one thing.

I specifically remember in March, 1999. Many on the street were worried that the old price had fallen by half and were predicting that we had another 50% decline moving forward.

Well, you know that's not similar to where we are at today, fallen by half and many people are suggesting it can go down by another half. Okay, decline slightly further from that point back in 1999, but actually what happened is that came back and over the years.

We ended up seeing oil increased from what was at the time $10 to $140 and so it's very difficult to say these many of our rigs will never work again. We're certainly not in that position.

I think the cure for low oil price as many have said is low oil prices and the market will rebound at that time, we will consider what we're doing with our fleet and I think you'll see many of the units that are out there today, that people who are suggesting don't value still have value moving forward. Before its horses for corpses, much of our fleet is cheap to operate and declining market, there may be an advantage around that.

Actually, that's very helpful kind of turning more optimistic scenario. You mentioned that one of your position for opportunities as they might come up and I'm just wondering if you could add a little more colour as to what your specific interest might be, for example newbuilds versus existing rigs and bearing in mind, what you said a little while ago about the cost, to warm stacked rates would be willing to buy a rig that you might have to warm stack?

The simple answer to that is, yes. We have done in the past and we have been successful in that.

I do believe this downturn will create opportunities for consolidation as indeed most downturn in the past share. History is not always, is not necessarily a good predictor of the future.

So we'll just have to see how things play out, but I would be willing to purchase assets that would be stacked for period of time, moving forward.

Okay, great. Thank you very much.

You mentioned, the discussion regarding a potential cancellation or contract renegotiations and I was wondering beside the notion of Pemex. If you have been approached or if you have discussed this with your clients and how do you see it sort of playing out in terms of one-sided terminations or was it going to be a mutual agreement?

This is Ron Woll, thanks for that question. I guess, the most I think obvious example sort of a one-sided act on contracts would be Statoil, which of course we have taken a very firm position on.

I say more broadly if you look at our overall customers, both in good markets and bad, customers do occasionally seek to adjust contract terms and there is no doubt, this market has provided some sharp motivation for operators to take that on more aggressively, so this topic is no doubt, this topic is real for us in 2015. I would say that at Diamond, we're generally open to what I call collaborative discussion with customers to make adjustments.

I would say, though that we do standby the integrity of our contracts. We are not open to what I'd call one-sided reductions of either rates or term, but we're open to solutions that are mutually beneficial.

So I think this market, I think serves up those conversations and it will be part of where our energy goes this year.

Okay and just going back on the 2015 fixed from activity, if there is on my count, roughly 110 floaters becoming available during the year including newbuilds and rigs rolling off contract, how many of them do you think will find work in 2015?

This is Ron again. I think it's' very safe to say that few of those are going to earn some new work here in 2015.

Operators from a capital standpoint are simply lockdown on new projects and even though, they have are certainly harshest scrutiny, so I think you're going to have to look in the lower end of that spectrum in terms of who will pick up new work.

Alright, thank you very much.

I just had a quick follow-up on potential acquisition target, so you guys are looking at would there be anything, any sort of equipment that you guys would rule out? I guess, what I mean by that is, would you guys look for to pick up assets that have similar characteristics as your current fleet in terms of the yard, where they were built or equipment on different rigs in order to better streamline the acquisition?

J.B., thanks for the question. Perhaps the best way of answering that is, to suggest that everything is on the table and nothing is off it.

Certainly, we will have a preference for higher spec assets. We will look at any and all options that materialize and only deploy capital to this end, if we are let's say comfortable with the long-term return profile of such assets.

For example, this could include purchasing individual assets doing an acquisition or even perhaps both, so the key here is really to look at it from a long-term shareholder value perspective.

Okay, fair enough and my other question was on the Apex and the Onyx. These are kind of unique rigs in the market place right now, just given how they've been refurbished.

I'm just curious is to how you see those rigs kind of fitting into for the global scenario right now, in terms of competing against newbuilds or competing against older assets. What types of projects are those kind of purpose build for and could potentially better against other for?

J.B., this is Ron. Appreciate the question.

Before the market loss so much ground, I think the Apex and Onyx both were rigs that were attracting a lot of attention and you think about, when the market does recover and I guess, we should emphasize although the news is tough these days, the market will recover. These are cycle that go through lows and highs and there will be a turn.

I think it's safe to say that those kinds of rigs will have, I think some good demand when the market does pick back up. You know, I'd also add that with all the high spec 6th gen assets coming in, some of these other rigs that we have of course are much less expensive and much more affordable to operate, so I think there are some advantages for operators to contemplate, when we think about budget constraint projects, but all that said I think the overall I think market force is still applied, there is not a lot of new work to talk about it and even the Apex, the Onyx, I think have a tough market road ahead, but those are rigs that there is no doubt in my mind, they have a good future and when the market picks back up, they'll go back to work.

Alright, thanks very much.

Just one question for you on the balance sheet. I know you have a maturity coming up in a few months, with the newbuilds you have, your cash and marketable securities have come down quite a bit in the past few months, what are your intentions for that maturity.

Is it something you'll just have to take down on your credit facility or do you think, you'll be looking at the bottom market?

That comes due on July 1, we certainly have the ability to cover that with the line of credit that we have in place and we will take a look at on July 1 and evaluate our options, evaluate interest rates and make a determination at that time.

I'll just add to that. A couple of quarters ago, we increased our revolver as you know to $1.5 billion that combined with our ability to issue debt at reasonable levels provides us ample dry powder to pursue opportunities as they arise.

The amount of debt that we have or we have access to, will be completely dependent on whatever opportunity materializes and at this moment in time, I'm very comfortable with our debt position and our ability to issue, while still remaining in investment grade.

Okay, thank you.

So gentlemen, thanks very much for attending the call. As we've stated earlier during our prepared remarks, we are entering a protracted downturn, with probably already well into the horizontal aspect of the view that I've been talking about, but we do know that we're in a very cyclical industry and as I mentioned earlier, the cure for low oil prices is low oil prices.

So we remain optimistic that the offshore drillers will have their day in the sun. Again moving along, so with thank you very much.

We will see on the Q1 quarter call.