The company also said it would not pay a special dividend as it had been doing since 2006 to save cash to take advantage of opportunities in a distressed market.
"...This action saves the company about $415 million over the next year, potentially equivalent to the cost of an ultra-deepwater asset," Evercore ISI analyst
James West wrote in a note.
Diamond Offshore slashed its special dividend to 75 cents per share in 2010 following an oil price crash. (http://bit.ly/191QvcA)
Jefferies & Co analysts said they expected the company to reduce, not scrap the special dividend.
North American energy and services companies such as Canadian Oil Sands Ltd and LinnCo LLC have also cut their dividends over the past few months.
Diamond's smaller rivals Noble Corp more than halved its capital budget for 2015.
Diamond Offshore has 13 ultra-deepwater rigs, including the two which are yet to be delivered. There are more than 150 rigs in the market that can drill in over 7,500 feet of water.
Diamond Offshore said revenue fell 7 percent to $675.3 million in the fourth quarter.
The company said utilization rates fell for its ultra-deepwater, deepwater and mid-water floaters, which contributed about 94 percent of revenue during the quarter ended Dec. 31.
Utilization rates for its ultra-deepwater rigs, its biggest business, fell to 66 percent from 80 percent a year earlier.
"We expect that the market will have a significant oversupply of rigs through the remainder of the year and well into 2016," Chief Executive Marc Edwards said on a call.
The company earned 72 cents per share, above the analysts' average estimate of 66 cents, according to Thomson Reuters I/B/E/S, helped by a 4.7 percent drop in costs and higher day rates.
Diamond Offshore's shares were marginally down at $33.69 on the New York Stock Exchange. The stock has lost almost a third of its value since June. Oil slumped 50 percent in the same period.
(By Sneha Banerjee and Shubhankar Chakravorty; Editing by Don Sebastian)