When Diamond Offshore (NYSE:DO) released its consensus-beating first quarter earnings last week, investors across the offshore drilling sector breathed a sigh of relief.

There was much anticipation heading into the results as many Wall Street analysts have turned negative on the offshore drilling sector during recent months. Some analysts even commented that Diamond Offshore was in the midst of a 'flow blown meltdown '.

Still, Diamond's headline figures beat consensus estimates by almost 50% as the company reported a profit of $0.93 per share, compared to estimates of $0.65. The outperformance was mainly due to lower than expected costs.

Cutting costs, boosting profit
Diamond's operating expenditure fell across the board during the first quarter as contract drilling expenses declined to $370 million for the period, down from the $412 million expected by analysts and company guidance of $405 million to $425 million.

Declining operating costs within Diamond's deepwater drilling division were the main catalyst for the majority of operating cost declines. Deepwater drilling expenses came in at $72 million for the period vs a forecast of $90 million.

What's more, to appease investors, Diamond Offshore's management declared a $0.75 per share special dividend, and the company's quarterly filing showed that stock had been repurchased during the period, although these buybacks only boosted EPS by 0.4%.

However, many analysts consider Diamond Offshore's results to be an indicator of offshore drilling industry health as the company's drilling fleet has an average age of 25.7 years; a rig in service for more than 25 years is considered old. Analysts had expected Diamond to report poor results due to the state of the industry and the age of the company's fleet .

Indeed, older fleets are expected to suffer more from the upcoming industry slowdown, but, as of yet, Diamond is not reporting much change in demand for its services. For example, two of Diamond's 40-plus year old deepwater rigs are returning to work in the next two months, one of which is returning for a higher day rate than expected.

So, as Diamond's results beat consensus, there is a feeling that the industry slowdown might not be as severe as originally thought.

Unfortunately, while good for the most part, Diamond's earnings report did contain an element of caution. Specifically, Diamond's Chief Executive Marc Edwards warned on the conference call that:

"...[2014] could be a tough environment for offshore drillers..."

Not yet feeling the pain
Still, it would appear that the slowdown in the offshore oil and gas drilling market, which many analysts have been forecasting for some time now, is not yet starting to take hold. 

For example, in addition to Diamond Offshore's set of upbeat results just released, both Transocean (NYSE:RIG) and Rowan Companies (NYSE:RDC) have recently released their own fleet status reports, which reveal continued demand for drilling units and higher day rates for rigs.

Rowan's most recent fleet status report was issued on April 23rd, and it provided updates on six of its units. The first was the news that one of Rowan's new drillships had commenced its contract with Repsol in offshore West Africa at a day rate of $619,000. In addition, units Rowan Mississippi, Hank Boswell, and Scooter Yeargain all commenced new contracts with Saudi Aramco at day rates 15%, 40% and 40% above the previous rates reported, respectively. The other notable contract renegotiation was the Ralph Coffman, at an effective day rate of $243,000, above the previous effective day rate of $227,000.

It seems as if the demand for Rowan Companie's drilling units is surging and Transocean is reporting similar growth.

Specifically, Transocean's April fleet status report highlights that the Transocean Marianas was awarded a four-well contract offshore South Africa at a dayrate of $370,000 ($118 million estimated backlog). The rig was previously idle. Further, the Transocean Arctic was awarded a two-well contract in the Norwegian sector of the North Sea at a dayrate of $519,000 ($83 million estimated backlog). The rig's prior dayrate was $419,000.

Of course, we won't know for sure if Transocean and Rowan have outperformed expectations to the same degree as Diamond until they report first quarter results. Rowan and Transocean are expected to report first quarter figures on the 6th and 7th of May respectively.

Foolish summary
Overall, it would appear that the offshore drilling industry slowdown is not taking effect as quickly as many analysts suspected it would.

Nevertheless, Diamond's management remains cautious on the company's outlook and it may take several quarters for a slowdown to show through into Diamond's, or indeed any other drillers' results. With this in mind, investors need to keep an eye out over the next few months to see if there are any changes within the industry.

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Rupert Hargreaves owns shares of Rowan Companies. The Motley Fool owns shares of Transocean. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.