Diamond Offshore Drilling has reported better-than-expected profits for the first quarter of the year, but lowered its special quarterly dividend due to weaker market conditions.

Diamond’s first-quarter net profit fell to $290.9m in Q1 2010 at $2.09 per share compared with $348.6m or $2.51 per share in Q1 2009.

The firm is expected to post a profit of $1.93 per share on revenues of $851.1m, according to Thomson Reuters estimates.

Revenues in the first quarter 2010 are $859.7m, down from $885.7m for the first quarter of 2009.

The firm is also preserving cash for potential rig acquisitions and is expected to maintain the $1.375 special quarterly dividend through 2010.