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Transocean Inc. Reports Second Quarter 2007 Financial Results

August 1, 2007

HOUSTON--(BUSINESS WIRE)--Aug. 1, 2007--Transocean Inc. (NYSE:RIG) today reported net income for the three months ended June 30, 2007 of $549 million, or $1.84 per diluted share, on record quarterly revenues of $1,434 million. The results compare to net income of $249 million, or $0.75 per diluted share, on revenues of $854 million, for the three months ended June 30, 2006. Net income for the second quarter of 2006 included after-tax gains of $110 million, or $0.33 per diluted share, resulting from the sales of the semisubmersible rig Transocean Explorer and drilling barge Searex XII.

For the six months ended June 30, 2007, net income totaled $1,102 million, or $3.67 per diluted share, on revenues of $2,762 million. For the same period last year, net income totaled $455 million, or $1.36 per diluted share, on revenues of $1,671 million. Net income for the first half of 2007 included an after-tax gain of $20 million, or $0.07 per diluted share, resulting primarily from the sale of the tender rig Charley Graves during the first quarter 2007. For the same period last year, net income included after-tax gains of $153 million, or $0.46 per diluted share, resulting from the sale of the Transocean Explorer, Searex XII, Peregrine III and a platform rig.

Operations Quarterly Review

Revenues for the three months ended June 30, 2007 increased eight percent to $1,434 million compared to revenues of $1,328 million during the three months ended March 31, 2007. The quarter-to-quarter increase in revenues was primarily due to a combination of a higher average dayrate, increased rig activity and decreased shipyard time. The second quarter 2007 average dayrate reached a record high $202,400, up two percent compared to $198,000 during the first quarter 2007. For the first time in Transocean's history, the fleet-wide quarterly average dayrate exceeded $200,000. Over the same period, rig utilization rose to 91 percent from 88 percent. Improved utilization was consistent across the company's fleet as six rigs came out of shipyard and commenced new contracts. In addition, the Jack Bates and Deepwater Expedition had increased activity levels compared to the first quarter of 2007 as the Jack Bates was in a shipyard through mid-May and the Deepwater Expedition mobilized from Brazil to Egypt to begin a new contract in January.

For the three months ended June 30, 2007, operating income before general and administrative expenses totaled $705 million, a three percent increase from $683 million reported for the first quarter. The $22 million increase in operating income before general and administrative expense was due to higher revenues, driven by increased dayrates and rig utilization. Partially offsetting the higher revenues relative to the first quarter 2007 were $59 million in increased operating and maintenance expenses, $20 million less in after-tax gains from the disposal of assets and a decrease in operating days related to the shipyard projects for the Sedco 700 and Trident 15. The increase in operating and maintenance expenses for the second quarter 2007 was primarily due to increased operating days on six rigs, an increased number of maintenance projects and scheduled pay increases. In addition to the Jack Bates and Deepwater Expedition, four other rigs had increased operating days in the second quarter, as the J.T. Angel, Randolph Yost and Trident 2 returned to service after shipyard projects in the first quarter, and the C. Kirk Rhein, Jr. mobilized to India in January 2007 to begin a new contract. Partially offsetting the increased operating days were second-quarter shipyard projects for the Sedco 700 and Trident 15.

Field operating income(1) (defined as revenues less operating and maintenance expenses) increased six percent to $807 million compared to $760 million over the prior three-month period. The increase in second quarter 2007 field operating income was due chiefly to strong revenue growth combined with stable operating margins.

Liquidity

Cash flow from operations totaled $607 million for the second quarter 2007 compared to $176 million for the second quarter of 2006. For the six months ended June 30, 2007, cash flow from operations increased to $1,261 million compared to $444 million for the same period last year. As of June 30, 2007, total debt was $3,064 million, down $420 million compared to $3,484 million as of March 31, 2007. Of the $420 million of debt reduction during the second quarter 2007, $230 million was repayment of term credit facilities and $190 million was reductions in the company's revolving credit facility.

Effective Tax Rate

The company's Annual Effective Tax Rate(2) for the three months ended June 30, 2007 was 16.1 percent, excluding various discrete items. The Effective Tax Rate(3) of 14.4 percent for the second quarter of 2007 reflects an $11 million favorable impact resulting from changes in estimates. The company currently expects the Annual Effective Tax Rate for the remainder of 2007 to be approximately 15.0 percent.

Conference Call Information

Transocean will conduct a teleconference call at 10:00 a.m. Eastern Time on August 1, 2007. To participate, dial 719-457-2693 and refer to confirmation code 7044890 approximately five to 10 minutes prior to the scheduled start time of the call.

In addition, the conference call will be simultaneously broadcast over the Internet in a listen-only mode and can be accessed by logging onto the company's website at www.deepwater.com and selecting "Investor Relations/News & Events/Webcasts & Presentations." A file containing four charts to be discussed during the conference call, titled "2Q07 Charts," has been posted to the company's website and can also be found by selecting "Investor Relations/News & Events/Webcasts & Presentations." The conference call may also be accessed via the Internet at www.CompanyBoardroom.com by typing in the company's New York Stock Exchange trading symbol, "RIG."

A telephonic replay of the conference call should be available after 1:00 p.m. Eastern Time on August 1, 2007 and can be accessed by dialing 719-457-0820 and referring to the passcode 7044890. Also, a replay will be available through the Internet and can be accessed by visiting either of the above-referenced Worldwide Web addresses.

Forward-Looking Disclaimer

Statements regarding our Annual Effective Tax Rate, as well as any other statements that are not historical facts in this release, are forward-looking statements that involve certain risks, uncertainties and assumptions. These include but are not limited to operating hazards and delays, risks associated with international operations, future financial results, actions by customers and other third parties, factors affecting the supply and demand of drilling rigs, including newbuilds, reactivations and the reallocation of current rigs, factors affecting the duration of contracts including well-in-progress provisions, the actual amount of downtime, factors resulting in reduced applicable dayrates, hurricanes and other weather conditions, the future price of oil and gas and other factors detailed in the company's most recent Form 10-K and other filings with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated.

Transocean Inc. is the world's largest offshore drilling contractor with a fleet of 82 mobile offshore drilling units. The company's mobile offshore drilling fleet, consisting of a large number of high-specification deepwater and harsh environment drilling units, is considered one of the most modern and versatile in the world due to its emphasis on technically demanding segments of the offshore drilling business. The company's fleet consists of 33 High-Specification Floaters (semisubmersibles and drillships), 20 Other Floaters, 25 Jackups and other assets utilized in the support of offshore drilling activities worldwide. With a current equity market capitalization in excess of $31 billion, Transocean Inc.'s ordinary shares are traded on the New York Stock Exchange under the symbol "RIG."

(1) For a reconciliation of operating income before general and administrative expense to field operating income, see the accompanying schedule entitled "Non-GAAP Financial Measures and Reconciliations - Operating Income Before General and Administrative Expense to Field Operating Income."

(2) Annual Effective Tax Rate is defined as income tax expense excluding various discrete items (such as changes in estimates and tax on items excluded from income before income taxes) divided by income before income taxes excluding gains on sales and similar items pursuant to Financial Accounting Standards Board Interpretation No. 18. See the accompanying schedule entitled "Effective Tax Rate Analysis."

(3) Effective Tax Rate is defined as income tax expense divided by income before income taxes. See the accompanying schedule entitled "Effective Tax Rate Analysis."

                   TRANSOCEAN INC. AND SUBSIDIARIES
           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                 (In millions, except per share data)
                             (Unaudited)

                               Three months ended   Six months ended
                                     June 30,            June 30,
                               ------------------- -------------------
                                 2007      2006      2007      2006
                               --------- --------- --------- ---------
Operating revenues
  Contract drilling revenues   $  1,360  $    828  $  2,633  $  1,607
  Other revenues                     74        26       129        64
----------------------------------------------------------------------
                                  1,434       854     2,762     1,671
----------------------------------------------------------------------
Costs and expenses
  Operating and maintenance         627       549     1,195     1,024
  Depreciation                      101       102       201       204
  General and administrative         29        25        55        45
----------------------------------------------------------------------
                                    757       676     1,451     1,273
----------------------------------------------------------------------
Gain (loss) from disposal of
 assets, net                         (1)      111        22       175
----------------------------------------------------------------------
Operating income                    676       289     1,333       573
----------------------------------------------------------------------

Other income (expense), net
  Interest income                     5         5        10        10
  Interest expense, net of
   amounts capitalized              (33)      (20)      (70)      (44)
  Other, net                         (5)        1         8         2
----------------------------------------------------------------------
                                    (33)      (14)      (52)      (32)
----------------------------------------------------------------------

Income before income taxes and
 minority interest                  643       275     1,281       541
Income tax expense                   93        26       178        86
Minority interest                     1         -         1         -
----------------------------------------------------------------------

Net income                     $    549  $    249  $  1,102  $    455
======================================================================

Earnings per share
   Basic                       $   1.91  $   0.77  $   3.81  $   1.40
   Diluted                     $   1.84  $   0.75  $   3.67  $   1.36
======================================================================

Weighted average shares
 outstanding
   Basic                            288       324       289       325
   Diluted                          300       336       301       337
======================================================================

                   TRANSOCEAN INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED BALANCE SHEETS
                   (In millions, except share data)

                                               June 30,   December 31,
                                                 2007         2006
                                             ------------ ------------
                                             (Unaudited)
                   ASSETS

Cash and cash equivalents                    $       445  $       467
Accounts receivable, net of allowance for
 doubtful accounts of $30 and $26 at June
 30, 2007 and December 31, 2006,
 respectively                                      1,184          946
Materials and supplies, net of allowance for
 obsolescence of $21 and $19 at June 30,
 2007 and December 31, 2006, respectively            177          160
Deferred income taxes, net                            20           16
Other current assets                                  67           67
----------------------------------------------------------------------
  Total current assets                             1,893        1,656
----------------------------------------------------------------------

Property and equipment                            11,152       10,539
Less accumulated depreciation                      3,392        3,213
----------------------------------------------------------------------
  Property and equipment, net                      7,760        7,326
----------------------------------------------------------------------

Goodwill                                           2,195        2,195
Other assets                                         301          299
----------------------------------------------------------------------
  Total assets                               $    12,149  $    11,476
======================================================================

    LIABILITIES AND SHAREHOLDERS' EQUITY

Accounts payable                             $       369  $       477
Accrued income taxes                                 132           98
Debt due within one year                              18           95
Other current liabilities                            475          369
----------------------------------------------------------------------
  Total current liabilities                          994        1,039
----------------------------------------------------------------------

Long-term debt                                     3,046        3,200
Deferred income taxes, net                            51           54
Other long-term liabilities                          579          343
----------------------------------------------------------------------
  Total long-term liabilities                      3,676        3,597
----------------------------------------------------------------------

Commitments and contingencies

Minority interest                                      1            4

Preference shares, $0.10 par value;
 50,000,000 shares authorized, none issued
 and outstanding                                       -            -
Ordinary shares, $0.01 par value;
 800,000,000 shares authorized, 289,280,582
 and 292,454,457 shares issued and
 outstanding at June 30, 2007 and December
 31, 2006, respectively                                3            3
Additional paid-in capital                         7,728        8,044
Accumulated other comprehensive loss                 (30)         (30)
Accumulated deficit                                 (223)      (1,181)
----------------------------------------------------------------------
  Total shareholders' equity                       7,478        6,836
----------------------------------------------------------------------
  Total liabilities and shareholders' equity $    12,149  $    11,476
======================================================================

                   TRANSOCEAN INC. AND SUBSIDIARIES
           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (In millions)
                             (Unaudited)

                               Three months ended   Six months ended
                                    June 30,            June 30,
                               ------------------- -------------------
                                 2007      2006      2007      2006
                               --------- --------- --------- ---------
Cash flows from operating
 activities
  Net income                   $    549  $    249  $  1,102  $    455
  Adjustments to reconcile net
   income to net cash provided
   by operating activities
    Depreciation                    101       102       201       204
    Share-based compensation
     expense                          9         5        19         8
    Deferred income taxes            (5)       (9)       (7)       25
    Equity in (earnings)
     losses of unconsolidated
     affiliates                       2        (3)        3        (3)
    (Gain) loss from disposal
     of assets, net                   1      (111)      (22)     (175)
    Deferred revenue, net             4        11        38        20
    Deferred expenses, net           (6)      (47)      (13)      (55)
    Tax benefit from exercise
     of stock options to
     purchase and vesting of
     ordinary shares under
     share-based compensation
     plans                            -        (8)        -        (8)
    Other long-term
     liabilities                      5        14        12        21
    Other, net                        3         3         1         4
    Changes in operating
     assets and liabilities
      Accounts receivable           (99)      (33)     (238)     (104)
      Other current assets          (28)      (50)      (32)      (51)
      Accounts payable and
       other current
       liabilities                   57        47       140        91
      Income taxes receivable/
       payable, net                  14         6        57        12
----------------------------------------------------------------------
Net cash provided by operating
 activities                         607       176     1,261       444
----------------------------------------------------------------------

Cash flows from investing
 activities
  Capital expenditures             (290)      (98)     (755)     (276)
  Proceeds from disposal of
   assets, net                        2       121        41       203
  Joint ventures and other
   investments, net                   -         -        (3)        -
----------------------------------------------------------------------
Net cash provided by (used in)
 investing activities              (288)       23      (717)      (73)
----------------------------------------------------------------------

Cash flows from financing
 activities
  Revolving Credit Facility,
   net                             (190)        -         -         -
  Repayments on the Term
   Credit Facility                 (230)        -      (230)        -
  Proceeds from issuance of
   ordinary shares under
   share-based compensation
   plans, net                        40        21        55        66
  Repurchase of ordinary
   shares                             -      (400)     (400)     (600)
  Other, net                          4         -         9         -
----------------------------------------------------------------------
Net cash used in financing
 activities                        (376)     (379)     (566)     (534)
----------------------------------------------------------------------

Net decrease in cash and cash
 equivalents                        (57)     (180)      (22)     (163)
----------------------------------------------------------------------
Cash and cash equivalents at
 beginning of period                502       462       467       445
----------------------------------------------------------------------
Cash and cash equivalents at
 end of period                 $    445  $    282  $    445  $    282
======================================================================

                           Transocean Inc.
                      Fleet Operating Statistics

                            Operating Revenues ($ Millions) (1)
                     -------------------------------------------------
                                                    Six months ended
                          Three months ended            June 30,
                     ----------------------------- -------------------
Transocean Drilling  June 30,  March 31, June 30,
 Segment:              2007      2007      2006      2007      2006
                     --------- --------- --------- --------- ---------
Contract Drilling
 Revenues
  High-Specification
   Floaters:
    Ultra Deepwater
     Floaters        $    336  $    340  $    228  $    676  $    453
    Other Deepwater
     Floaters        $    272  $    260  $    194  $    532  $    366
    Other High-
     Specification
     Floaters        $    103  $     85  $     62  $    188  $    113
  Total High-
   Specification
   Floaters          $    711  $    685  $    484  $  1,396  $    932
  Other Floaters     $    403  $    379  $    167  $    782  $    333
  Jackups            $    230  $    194  $    155  $    425  $    299
  Other Rigs         $     16  $     15  $     22  $     30  $     43
Subtotal             $  1,360  $  1,273  $    828  $  2,633  $  1,607
Other Revenues
  Client
   Reimbursable
   Revenues          $     29  $     30  $     22  $     59  $     47
  Integrated
   Services and
   Other             $     45  $     25  $      4  $     70  $     17
Subtotal             $     74  $     55  $     26  $    129  $     64
Total Company        $  1,434  $  1,328  $    854  $  2,762  $  1,671

                                   Average Dayrates (1)
                     -------------------------------------------------
                                                    Six months ended
                          Three months ended            June 30,
                     ----------------------------- -------------------
Transocean Drilling  June 30,  March 31, June 30,
 Segment:              2007      2007      2006        2007      2006
                     --------- --------- --------- --------- ---------
  High-Specification
   Floaters:
    Ultra Deepwater
     Floaters        $288,900  $301,400  $216,500  $295,100  $212,800
    Other Deepwater
     Floaters        $228,400  $235,800  $190,200  $232,000  $171,300
    Other High-
     Specification
     Floaters        $286,900  $238,800  $174,700  $263,000  $167,200
  Total High-
   Specification
   Floaters          $262,100  $264,800  $199,300  $263,400  $188,600
  Other Floaters     $226,300  $223,700  $118,200  $225,000  $114,000
  Jackups            $117,900  $104,600  $ 73,000  $111,400  $ 71,700
  Other Rigs         $ 57,200  $ 50,300  $ 47,500  $ 53,700  $ 47,400
Total Drilling Fleet $202,400  $198,000  $129,000  $200,200  $124,300

                                      Utilization (1)
                     -------------------------------------------------
                                                    Six months ended
                          Three months ended            June 30,
                     ----------------------------- -------------------
Transocean Drilling  June 30,  March 31, June 30,
 Segment:              2007      2007      2006        2007      2006
                     --------- --------- --------- --------- ---------
  High-Specification
   Floaters:
    Ultra Deepwater
     Floaters              98%       97%       89%       97%       91%
    Other Deepwater
     Floaters              82%       77%       70%       79%       75%
    Other High-
     Specification
     Floaters              99%       99%       98%       99%       94%
  Total High-
   Specification
   Floaters                90%       87%       81%       89%       84%
  Other Floaters           98%       94%       74%       96%       74%
  Jackups                  86%       83%       93%       84%       92%
  Other Rigs              100%      100%       62%      100%       60%
Total Drilling Fleet       91%       88%       81%       90%       81%

(1)    Average daily revenue is defined as contract drilling revenue
        earned per revenue earning day in the period. A revenue
        earning day is defined as a day for which a rig earns dayrate
        after commencement of operations. Utilization is defined as
        the total actual number of revenue earning days in the period
        as a percentage of the total number of calendar days in the
        period for all drilling rigs in our fleet.

                   Transocean Inc. and Subsidiaries
           Non-GAAP Financial Measures and Reconciliations

      Operating Income Before General and Administrative Expense
                      to Field Operating Income
                          (in US$ millions)


                             Three months ended      Six months ended
                         --------------------------- -----------------
                         June 30, March 31, June 30, June 30, June 30,
                           2007     2007      2006     2007     2006
                         -------- --------- -------- -------- --------


Operating revenue        $  1,434 $  1,328  $   854  $ 2,762  $ 1,671
Operating and
 maintenance expense          627      568      549    1,195    1,024
Depreciation                  101      100      102      201      204
(Gain) loss from
 disposal of assets, net        1      (23)    (111)     (22)    (175)
                         -------- --------- -------- -------- --------
Operating income before
 general and
 administrative expense       705      683      314    1,388      618
Add back (subtract):
           Depreciation       101      100      102      201      204
          (Gain) loss
           from disposal
           of assets,
           net                  1      (23)    (111)     (22)    (175)
                         -------- --------- -------- -------- --------
Field operating income   $    807 $    760  $   305  $ 1,567  $   647
                         -------- --------- -------- -------- --------


                   Transocean Inc. and Subsidiaries
                     Effective Tax Rate Analysis
                            (In millions)



                                                               Twelve
                                                 Six months     months
                        Three months ended           ended      ended
                    --------------------------- -------------- -------
                    June 30, March 31, June 30,    June 30,    Dec. 31
                      2007     2007      2006    2007    2006   2006
                    -------- --------- -------- ------- ------ -------
Income (Loss)
 before income
 taxes and minority
 interest             $ 643     $ 638    $ 275  $1,281  $ 541  $1,607
  Add back
   (subtract):
    (Gain) loss on
     disposal of
     assets, net          1       (23)    (110)    (22)  (175)   (410)
    Income from
     TODCO tax
     sharing
     agreement            -         -        -       -      -     (51)
                    -------- --------- -------- ------- ------ -------
Adjusted income
 before income
 taxes                $ 644     $ 615    $ 165  $1,259  $ 366  $1,146

Income tax expense    $  93     $  85    $  26  $  178  $  86  $  222
  Add back
   (subtract):
    (Gain) loss on
     disposal of
     assets, net          -        (3)       -      (3)   (22)    (24)
    Changes in
     estimates (1)       11         2        3      13      1      14
                    -------- --------- -------- ------- ------ -------
Adjusted income tax
 expense (2)          $ 104     $  84    $  29  $  188  $  65  $  212

Effective tax rate
 (3)                   14.4%     13.3%     9.4%   13.9%  15.9%   13.8%

Annual effective
 tax rate (4)          16.1%     13.7%    17.8%   14.9%  17.7%   18.5%


(1) Our estimates change as we file tax returns, settle disputes with
 tax authorities or become aware of other events and include changes
 in deferred taxes, valuation allowances on deferred taxes and other
 tax liabilities.
(2) The three months ended June 30, 2007 include $8 million of
 additional tax expense (benefit) reflecting the catch-up effect of an
 increase (decrease) in the annual effective tax rate.
(3) Effective Tax Rate is income tax expense divided by income before
 income taxes.
(4) Annual Effective Tax Rate is income tax expense excluding various
 discrete items (such as changes in estimates and tax on items
 excluded from income before income taxes) divided by income before
 income taxes excluding gains on sales and similar items pursuant to
 Financial Accounting Standards Board Interpretation No. 18.

CONTACT: Transocean Inc., Houston
Analyst Contact:
Gregory S. Panagos, 713-232-7551
or
Media Contact:
Guy A. Cantwell, 713-232-7647

SOURCE: Transocean Inc. Transocean Inc., Houston