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Transocean Inc. Reports Third Quarter 2007 Financial Results

October 31, 2007

HOUSTON--(BUSINESS WIRE)--Oct. 31, 2007--Transocean Inc. (NYSE:RIG) today reported net income for the three months ended September 30, 2007 of $973 million, or $3.24 per diluted share, on record quarterly revenues of $1,538 million. The results compare to net income of $309 million, or $0.96 per diluted share, on revenues of $1,025 million, for the three months ended September 30, 2006.

Third quarter 2007 results included after-tax income of $336 million, or $1.12 per diluted share, related to $276 million for the TODCO tax sharing agreement, $52 million for changes in estimated taxes, primarily foreign tax credits, and an $8 million gain resulting from the sale of the drilling barge Searex VI. For the quarter ended September 30, 2006, net income included $37 million, or $0.12 per diluted share, primarily from the sale of two tender-assist rigs.

For the nine months ended September 30, 2007, net income totaled $2,075 million, or $6.91 per diluted share, on revenues of $4,300 million. For the same period last year, net income totaled $764 million, or $2.31 per diluted share, on revenues of $2,696 million. Results for the first nine months of 2007 include $369 million, or $1.22 per diluted share, including $33 million recognized during the first half of 2007 from rig sales and discrete tax items plus the $336 million recognized during the third quarter as noted above. For the nine months ended September 30, 2006, net income included $191 million, or $0.57 per diluted share, primarily from the sale of six rigs.

Operations Quarterly Review

Revenues for the three months ended September 30, 2007 increased 7.3 percent to $1,538 million compared to revenues of $1,434 million during the three months ended June 30, 2007. The quarter-to-quarter increase in revenues was primarily due to a higher average dayrate, partially offset by a slight reduction in days in service. The third quarter 2007 average dayrate reached a record high of $219,700, up 8.5 percent, compared to $202,400 during the second quarter 2007. The increase in average dayrate was experienced across all rig categories, primarily as a result of rigs commencing new contracts at the higher prevailing current dayrates.

For the three months ended September 30, 2007, operating income before general and administrative expenses totaled $780 million, a 10.6 percent increase from $705 million reported for the second quarter 2007. The $75 million increase in operating income before general and administrative expense was due to higher revenues, driven by increased dayrates. Partially offsetting the higher third quarter 2007 revenues was $36 million in increased operating and maintenance expenses, primarily due to an increase in reimbursable costs and integrated service expenditures, as well as an increase in the number of maintenance projects.

Field operating income(1) (defined as revenues less operating and maintenance expenses) increased 8.4 percent to $875 million for the third quarter 2007, compared to $807 million for the prior three-month period. The increase in third quarter 2007 field operating income was due chiefly to strong revenue growth combined with stable operating margins.

Liquidity

Cash flow from operations totaled $897 million for the third quarter 2007 compared to $289 million for the third quarter 2006. For the nine months ended September 30, 2007, cash flow from operations increased to $2,158 million compared to $733 million for the same period last year. As of September 30, 2007, total debt was $2,593 million, down $471 million compared to $3,064 as of June 30, 2007. The $471 million of debt reduction during the third quarter 2007 reflects the repayment of the company's two-year term credit facility due August 2008.

Effective Tax Rate

The company's Annual Effective Tax Rate(2) for the three months ended September 30, 2007 was 14.0 percent, excluding various discrete items. The Effective Tax Rate(3) of 5.1 percent for the third quarter 2007 reflects a $52 million favorable impact resulting primarily from changes in estimated foreign tax credit. The company currently expects the Annual Effective Tax Rate for the remainder of 2007 to be 14.6 percent.

Conference Call Information

Transocean will conduct a teleconference call at 10:00 a.m. Eastern Time on October 31, 2007. To participate, dial 913-981-5542 and refer to confirmation code 1852427 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 "3Q07 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 October 31, 2007 and can be accessed by dialing 719-457-0820 and referring to the passcode 1852427. 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 34 High-Specification Floaters (semisubmersibles and drillships), 19 Other Floaters, 25 Jackups and other assets utilized in the support of offshore drilling activities worldwide. With a current equity market capitalization of $33.4 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 Nine months ended
                                   September 30,      September 30,
                                 ------------------ ------------------
                                   2007      2006     2007      2006
                                 --------- -------- --------- --------
Operating revenues
  Contract drilling revenues     $  1,455  $   991  $  4,088  $ 2,598
  Other revenues                       83       34       212       98
----------------------------------------------------------------------
                                    1,538    1,025     4,300    2,696
----------------------------------------------------------------------
Costs and expenses
  Operating and maintenance           663      561     1,858    1,585
  Depreciation                        103       99       304      303
  General and administrative           27       22        82       67
----------------------------------------------------------------------
                                      793      682     2,244    1,955
----------------------------------------------------------------------
Gain from disposal of assets,
 net                                    8       47        30      222
----------------------------------------------------------------------
Operating income                      753      390     2,086      963
----------------------------------------------------------------------

Other income (expense), net
  Interest income                       7        4        17       14
  Interest expense, net of
   amounts capitalized                (23)     (28)      (93)     (72)
  Other, net                          287        7       295        9
----------------------------------------------------------------------
                                      271      (17)      219      (49)
----------------------------------------------------------------------

Income before income taxes and
 minority interest                  1,024      373     2,305      914
Income tax expense                     52       64       230      150
Minority interest                      (1)       -         -        -
----------------------------------------------------------------------

Net income                       $    973  $   309  $  2,075  $   764
======================================================================

Earnings per share
  Basic                          $   3.36  $  0.99  $   7.17  $  2.39
  Diluted                        $   3.24  $  0.96  $   6.91  $  2.31
======================================================================

Weighted average shares
 outstanding
  Basic                               290      312       289      320
  Diluted                             300      323       301      332
======================================================================

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

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

Cash and cash equivalents                  $        618  $        467
Accounts receivable, net of allowance for
 doubtful accounts of $41 and $26 at
 September 30, 2007 and December 31, 2006,
 respectively                                     1,266           946
Materials and supplies, net of allowance
 for obsolescence of $21 and $19 at
 September 30, 2007 and December 31, 2006,
 respectively                                       179           160
Deferred income taxes, net                           28            16
Other current assets                                132            67
----------------------------------------------------------------------
  Total current assets                            2,223         1,656
----------------------------------------------------------------------

Property and equipment                           11,460        10,539
Less accumulated depreciation                     3,489         3,213
----------------------------------------------------------------------
  Property and equipment, net                     7,971         7,326
----------------------------------------------------------------------

Goodwill                                          2,187         2,195
Other assets                                        319           299
----------------------------------------------------------------------
  Total assets                             $     12,700  $     11,476
======================================================================

   LIABILITIES AND SHAREHOLDERS' EQUITY

Accounts payable                           $        406  $        477
Accrued income taxes                                156            98
Debt due within one year                          1,018            95
Other current liabilities                           419           369
----------------------------------------------------------------------
  Total current liabilities                       1,999         1,039
----------------------------------------------------------------------

Long-term debt                                    1,575         3,200
Deferred income taxes, net                           57            54
Other long-term liabilities                         566           343
----------------------------------------------------------------------
  Total long-term liabilities                     2,198         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,
 290,802,699 and 292,454,457 shares issued
 and outstanding at September 30, 2007 and
 December 31, 2006, respectively                      3             3
Additional paid-in capital                        7,780         8,044
Accumulated other comprehensive loss                (31)          (30)
Retained earnings (accumulated deficit)             750        (1,181)
----------------------------------------------------------------------
  Total shareholders' equity                      8,502         6,836
----------------------------------------------------------------------
  Total liabilities and shareholders'
   equity                                  $     12,700  $     11,476
======================================================================

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

                                Three months ended  Nine months ended
                                   September 30,      September 30,
                                ------------------- ------------------
                                  2007      2006      2007     2006
                                --------- --------- -------- ---------
Cash flows from operating
 activities
 Net income                     $    973  $    309  $ 2,075  $    764
 Adjustments to reconcile net
  income to net cash provided
  by operating activities
       Depreciation                  103        99      304       303
       Share-based compensation
        expense                       11         5       30        13
       Gain from disposal of
        assets, net                   (8)      (47)     (30)     (222)
       Deferred income taxes           9        (7)       2        18
       Deferred expenses, net         (4)      (40)     (17)      (95)
       Deferred revenues, net        (20)       12       18        32
       Other long-term
        liabilities                   19        (4)      31        17
       Other, net                     (7)       (7)      (3)      (14)
 Changes in operating assets
  and liabilities
    Accounts receivable              (82)     (169)    (320)     (273)
    Other current assets               3        15      (29)      (36)
    Accounts payable and other
     current liabilities             (75)       76       65       167
    Income taxes
     receivable/payable, net         (25)       47       32        59
----------------------------------------------------------------------
Net cash provided by operating
 activities                          897       289    2,158       733
----------------------------------------------------------------------

Cash flows from investing
 activities
  Capital expenditures              (305)     (434)  (1,060)     (710)
  Proceeds from disposal of
   assets, net                        21        95       62       298
  Joint ventures and other
   investments, net                    -         -       (3)        -
----------------------------------------------------------------------
Net cash used in investing
 activities                         (284)     (339)  (1,001)     (412)
----------------------------------------------------------------------

Cash flows from financing
 activities
  Borrowings under the
   Revolving Credit Facility,
   net                                 -       900        -       900
  Proceeds from issuance of
   debt, net                           -     1,000        -     1,000
  Repayment of borrowings under
   Term Credit Facility             (470)        -     (700)        -
  Release of escrow funds -
   Nautilus lease financing            -        30        -        30
  Repurchase of ordinary shares        -    (1,751)    (400)   (2,351)
  Proceeds from issuance of
   ordinary shares under share-
   based compensation plans,
   net                                 1         1       56        67
  Tax benefit from issuance of
   ordinary shares under share-
   based compensation plans           23         -       33         -
  Other, net                           6        (5)       5        (5)
----------------------------------------------------------------------
Net cash provided by (used in)
 financing activities               (440)      175   (1,006)     (359)
----------------------------------------------------------------------

Net increase (decrease) in cash
 and cash equivalents                173       125      151       (38)
----------------------------------------------------------------------
Cash and cash equivalents at
 beginning of period                 445       282      467       445
----------------------------------------------------------------------
Cash and cash equivalents at
 end of period                  $    618  $    407  $   618  $    407
======================================================================

                           Transocean Inc.
                      Fleet Operating Statistics

                          Operating Revenues (in millions) (1)
                   ---------------------------------------------------
                                                    Nine months ended
                         Three months ended             Sept 30,
                   ------------------------------- -------------------
                   September           September
                      30,    June 30,      30,
                     2007      2007       2006       2007      2006
                   --------- --------- ----------- --------- ---------
Contract Drilling
 Revenues
  High-
   Specification
   Floaters:
    Ultra
     Deepwater
     Floaters      $    381  $    336  $      257  $  1,057  $    711
    Other
     Deepwater
     Floaters           298       272         246       830       611
    Other High-
     Specification
     Floaters           101       103          62       290       176
  Total High-
   Specification
   Floaters             780       711         565     2,177     1,498
  Other Floaters        412       403         218     1,193       551
  Jackups               248       230         184       673       483
  Other Rigs             15        16          24        45        66
Subtotal              1,455     1,360         991     4,088     2,598
Other Revenues
  Client
   Reimbursable
   Revenues              32        29          30        92        77
  Integrated
   Services and
   Other                 51        45           4       120        21
Subtotal                 83        74          34       212        98
Total Company      $  1,538  $  1,434  $    1,025  $  4,300  $  2,696

                                  Average Dayrates (1)
                   ---------------------------------------------------
                                                    Nine months ended
                         Three months ended             Sept 30,
                   ------------------------------- -------------------
                   September           September
                      30,    June 30,      30,
                     2007      2007       2006         2007      2006
                   --------- --------- ----------- --------- ---------
  High-
   Specification
   Floaters:
    Ultra
     Deepwater
     Floaters      $323,200  $288,900  $  246,000  $304,600  $223,700
    Other
     Deepwater
     Floaters      $257,700  $228,400  $  222,300  $240,600  $188,700
    Other High-
     Specification
     Floaters      $316,400  $286,900  $  181,500  $279,500  $172,000
  Total High-
   Specification
   Floaters        $293,900  $262,100  $  226,700  $273,600  $201,400
  Other Floaters   $251,400  $226,300  $  136,800  $233,500  $122,000
  Jackups          $120,500  $117,900  $   83,400  $114,600  $ 75,800
  Other Rigs       $ 54,900  $ 57,200  $   52,400  $ 54,100  $ 49,100
Total Drilling
 Fleet             $219,700  $202,400  $  146,900  $206,800  $132,000

                                     Utilization (1)
                   ---------------------------------------------------
                                                    Nine months ended
                         Three months ended             Sept 30,
                   ------------------------------- -------------------
                   September           September
                      30,    June 30,      30,
                     2007      2007       2006         2007      2006
                   --------- --------- ----------- --------- ---------
  High-
   Specification
   Floaters:
    Ultra
     Deepwater
     Floaters            99%       98%         88%       98%       90%
    Other
     Deepwater
     Floaters            79%       82%         75%       79%       75%
    Other High-
     Specification
     Floaters            87%       99%         93%       95%       94%
  Total High-
   Specification
   Floaters              87%       90%         82%       88%       83%
  Other Floaters         89%       98%         86%       94%       78%
  Jackups                90%       86%         96%       86%       93%
  Other Rigs             98%      100%         76%       99%       64%
Total Drilling
 Fleet                   89%       91%         87%       89%       83%

(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 millions)



                                              Three months ended
                                         ----------------------------
                                         Sept 30, June 30,  Sept 30,
                                           2007     2007      2006
                                         -------- --------- --------


  Operating revenue                       $1,538    $1,434   $1,025
  Operating and maintenance expense          663       627      561
  Depreciation                               103       101       99
  (Gain) loss from disposal of assets,
   net                                        (8)        1      (47)
                                         -------- --------  --------
Operating income before general and
 administrative expense                      780       705      412
Add back (subtract):  Depreciation           103       101       99
                      (Gain) loss from
                       disposal of
                       assets, net            (8)        1      (47)
                                         -------- --------  --------
Field operating income                    $  875    $  807   $  464
                                         -------- --------  --------



                                                     Nine months ended
                                                     -----------------
                                                     Sept 30, Sept 30,
                                                       2007     2006
                                                     -------- --------


  Operating revenue                                   $4,300   $2,696
  Operating and maintenance expense                    1,858    1,585
  Depreciation                                           304      303
  (Gain) loss from disposal of assets, net               (30)    (222)
                                                     -------- --------
Operating income before general and administrative
 expense                                               2,168    1,030
Add back (subtract):  Depreciation                       304      303
                      (Gain) loss from disposal of
                       assets, net                       (30)    (222)
                                                     -------- --------
Field operating income                                $2,442   $1,111
                                                     -------- --------
                   Transocean Inc. and Subsidiaries
                     Effective Tax Rate Analysis
                            (In millions)



                                         Three months ended
                                -------------------------------------
                                September 30, June 30,  September 30,
                                    2007        2007        2006
                                ------------- --------- -------------
Income (Loss) before income
 taxes and minority interest          $1,024     $ 643         $ 373
  Add back (subtract):                $    -     $   -
    (Gain) loss on disposal of
     assets, net                          (9)        1           (44)
    Income from TODCO tax
     sharing agreement                  (276)        -             -
                                ------------- --------- -------------
Adjusted income before income
 taxes                                $  739     $ 644         $ 329

Income tax expense                    $   52     $  93         $  64
  Add back (subtract):
    (Gain) loss on disposal of
     assets, net                           -         -            (3)
    Changes in estimates (1)              52        11            (4)
                                ------------- --------- -------------
Adjusted income tax expense (2)       $  104     $ 104         $  57

Effective tax rate (3)                   5.1%     14.4%         17.1%

Annual effective tax rate (4)           14.0%     16.1%         17.3%



                              Nine months ended    Twelve months ended
                           ----------------------- -------------------
                                September 30,            Dec. 31
                               2007        2006           2006
                           ------------ ---------- -------------------
Income (Loss) before income
 taxes and minority
 interest                     $2,305        $ 914              $1,607
  Add back (subtract):
    (Gain) loss on disposal
     of assets, net              (31)        (219)               (410)
    Income from TODCO tax
     sharing agreement          (276)           -                 (51)
                           ------------ ---------- -------------------
Adjusted income before
 income taxes                 $1,998        $ 695              $1,146

Income tax expense            $  230        $ 150              $  222
  Add back (subtract):
    (Gain) loss on disposal
     of assets, net               (3)         (25)                (24)
    Changes in estimates
     (1)                          65           (3)                 14
                           ------------ ---------- -------------------
Adjusted income tax expense
 (2)                          $  292        $ 122              $  212

Effective tax rate (3)          10.0%        16.4%               13.8%

Annual effective tax rate
 (4)                            14.6%        17.5%               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 September 30, 2007 include $(4) 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.