Despite quarterly results that, in virtually all respects, were solid, deepwater driller Diamond Offshore (NYSE: DO) saw its shares treated roughly Thursday, as concern increased about the industry's susceptibility to unprofitable equipment-related downtime.

For the quarter, Diamond, which is generally compared with Transocean (NYSE: RIG) and occasionally Noble (NYSE: NE) as the contract drillers most capable of working in today's increased depths, earned $266.6 million, or $1.92 per share, compared with $224.4 million, or $1.61 per share, for the second quarter of 2010. Revenue climbed to $889.5 million, versus $822.6 million in the comparable year-ago quarter.

The company's earnings therefore climbed 18.8%, while its revenues were 8.1% higher year over year. The analysts who follow the company had reached a consensus forecast of $1.89 on the per-share line, based on expected revenue of $871.8 million. The period's earnings improvement halts a string of four consecutive quarters of lower year-over-year results.

In addition to its having topped both expectations and its year-ago metrics, Diamond Offshore's board of directors also approved another $0.75-per-share special quarterly cash dividend for the quarter. The special dividend will be paid on Sept. 1, along with a regularly quarterly cash dividend of $0.125 per share.

So with the company's reported positives, you may be confused regarding the 3.5% slippage in its share price on Thursday. Quite simply, along with the positive financial results and dividend declaration, Diamond Offshore's management also increased its five-week-old expectation of 697 days of downtime this year and 694 days in 2012. It now anticipates that fleet downtime will increase to 1,004 days in 2011 and 869 days in 2012.

The increased downtime is frequently tied to inspection and maintenance of the rigs' blowout preventers (BOP), which are being scrutinized more closely since last-year's blowout, explosion, fire, and oil spill aboard Transocean's Deepwater Horizon rig that was being operated by BP (NYSE: BP) in the Gulf of Mexico. During that tragedy, the rig's giant BOP -- which had been designed and manufactured by Cameron International (NYSE: CAM) -- failed to function.

However, Diamond's quarter was also sound from the standpoint of backlog boosting, most of which occurred during a 45-day period in the quarter, is primarily tied to Brazil and Mexico, and will ultimately account for at least $1 billion in maximum total revenue for the company. For instance, Brazil's Petrobras (NYSE: PBR) converted contracts on two of the company's rigs from three years to five years each, potentially adding $500 million in ultimate revenues to Diamond Offshore.

From my perspective, then, the company's share-price improvement on Friday was more indicative of its current status than was its shellacking on Thursday. I suggest that Fools monitor this solid company closely, ideally benefitting from its addition to your individualized version of My Watchlist.

The Motley Fool owns shares of Diamond Offshore Drilling, Transocean, Noble, and Petrobras. Motley Fool newsletter services have recommended buying shares of Petrobras. Try any of our Foolish newsletter services free for 30 days.

We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.Fool contributor David Lee Smith doesn't own shares in any of the companies named in this article. The Motley Fool has a disclosure policy.