Diamond Offshore's (NYSE:DO) management should probably work on its timing. On Thursday, the company reported stellar results, but those results were rendered into the teeth of a take-no-prisoners market in the process of dropping more than 300 points, so the company's shares gave up 3.5% that day.

For the quarter, Diamond's earnings increased 43% to $251.9 million, from $175.7 million in the June 2006 quarter. Per-share diluted earnings improved by the same percentage to $1.81, from $1.27. The top line grew 27% to $648.9 million.

But just as important as those results was the company's information about the ongoing strength of the international markets for its floater and jack-up equipment, along with information on several new term contracts. The key word there is "term," as in "long-term."

The new work described by the company included new floater contracts that will occupy three of its big rigs until between 2010 and 2012. Those units will be working in Malaysia, Australia, and Brazil. Another semisubmersible, the 10,000-foot water depth-capable Ocean Endeavor, is working in the Gulf of Mexico under a new four-year contract. And one of the company's jack-ups has recently moved from the Gulf of Mexico and is on its way to Croatia, where it will be kept busy until late 2009.

I must confess to having toiled right out of graduate school at Diamond Offshore, which was then called Diamond M Company. (It's the only corporation I'm aware of that literally was named after a ranch.) At that time, all of our work was in the Gulf of Mexico, so it was considered a big deal when we received a contract to put a jack-up to work at the southern tip of Chile.

But, my goodness, how the world has changed. The need to work around the globe was clearly a reason for the merger that was announced this week between Transocean (NYSE:RIG) and GlobalSantaFe (NYSE:GSF). I wouldn't be at all surprised by additional driller combinations, perhaps involving the likes of Diamond Offshore, Ensco (NYSE:ESV), or Noble (NYSE:NE).

In the meantime, I think it's noteworthy that Diamond Offshore -- new term contracts and all -- is trading at about 14 times anticipated 2007 earnings. And if we jump ahead to expectations for 2008, that multiple plummets to 8.5 times, or within striking distance of half the multiple accorded the broad market. Given the quality of the company, it's awfully difficult for me to justify that discount.

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Fool contributor David Lee Smith doesn't own shares in any of the companies mentioned. He welcomes your communiques. The Motley Fool has a disclosure policy.