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Transocean Inc. Reports Second Quarter 2008 Financial Results

August 6, 2008

HOUSTON--(BUSINESS WIRE)--Aug. 6, 2008--Transocean Inc. (NYSE:RIG) today reported net income for the three months ended June 30, 2008 of $1.107 billion, or $3.45 per diluted share, compared to net income of $549 million, or $2.63 per diluted share for the three months ended June 30, 2007. Revenues for the second quarter of 2008 were $3.102 billion compared to $1.434 billion for the second quarter of 2007.

For the six months ended June 30, 2008, net income totaled $2.296 billion, or $7.15 per diluted share, on revenues of $6.212 billion. For the same period last year, net income totaled $1.102 billion, or $5.24 per diluted share, on revenues of $2.762 billion. Net income for the first half of 2008 included after-tax charges of $31 million, or $0.10 per diluted share, resulting primarily from $25 million of discrete tax items, $3 million of merger-related costs and a $3 million loss from the early retirement of debt. For the same period last year, net income included after-tax gains of $33 million, or $0.15 per diluted share, resulting primarily from a $20 million gain on the sale of the tender rig Charley Graves and $13 million of discrete tax items during the first quarter 2007.

On November 27, 2007, Transocean Inc. merged with GlobalSantaFe Corporation and reclassified its ordinary shares into cash and shares (the "Reclassification"). Reported results for the second quarter and first half of 2008 include a full three and six months, respectively, from GlobalSantaFe's operations. Diluted earnings per share for the second quarter and first half of 2007 exclude GlobalSantaFe's operations and are based on a weighted average diluted share count of 210 million and 211 million shares, respectively, which includes the effect of restating the historical diluted share count for the Reclassification.

Operations Quarterly Review

Revenues for the three months ended June 30, 2008 were $3.102 billion compared to revenues of $3.110 billion during the three months ended March 31, 2008. The $8 million quarter-to-quarter decrease in total revenues included $53 million of lower contract drilling revenues reflecting an increase in out-of-service time for planned shipyards, which were partially offset by an increase in average dayrates, and $34 million of lower non-cash contract drilling intangible revenues. These net declines were offset by a $79 million increase in other revenues, primarily from non-drilling activities. The average dayrate for the fleet increased four percent from $229,000 in the first quarter to $238,600 in the second quarter, primarily as a result of rigs commencing new contracts at higher dayrates in the second quarter.

Operating and maintenance expenses for the three months ended June 30, 2008 were $1.364 billion compared to $1.157 billion for the prior three-month period. The $207 million increase in operating and maintenance expenses primarily reflects an increase in shipyard and maintenance projects as previously anticipated and scheduled pay increases.

Depreciation, depletion and amortization totaled $337 million in the second quarter of 2008, a decline of 8.2 percent compared to $367 million in the first quarter of 2008. The quarter-to-quarter decrease in depreciation, depletion and amortization is related to recently sold rigs and rigs classified as held for sale.

General and administrative expenses decreased 8.2 percent to $45 million in the second quarter of 2008 compared to $49 million in the prior three-month period. The decrease primarily reflects a reduction in merger-related compensation costs relative to the first quarter of 2008.

Interest Expense and Liquidity

Interest expense, net of amounts capitalized, for the second quarter of 2008 decreased to $111 million compared to $137 million for the first quarter of 2008. The decrease resulted primarily from a quarter-to-quarter reduction in total debt of approximately $1.316 billion. As of June 30, 2008, total debt was $15.279 billion compared to $16.6 billion as of March 31, 2008.

Cash flow from operating activities totaled $1.011 billion for the second quarter of 2008 compared to $1.482 billion for the first quarter of 2008. Lower quarter-to-quarter cash flow during the second quarter of 2008 primarily reflects an increase in working capital and deferred expenses, as well as lower net income.

Effective Tax Rate

The Annual Effective Tax Rate(1) for the second quarter and first half of 2008 was 11.4 percent and 12.5 percent, respectively. The Effective Tax Rate(2) for the first half of 2008 was 13.5 percent, which reflects the impact of various discrete tax items totaling $25 million, primarily related to changes in estimates. The Effective Tax Rate(2) for the second quarter of 2008 was 11.2 percent.

Conference Call Information

Transocean will conduct a teleconference call at 10:00 a.m. Eastern Time on August 6, 2008. To participate, dial 913-312-1439 and refer to confirmation code 2830174 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 "2Q08 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 6, 2008 and can be accessed by dialing 719-457-0820 and referring to the passcode 2830174. Also, a replay will be available through the Internet and can be accessed by visiting either of the above-referenced Worldwide Web addresses.

Transocean Inc. is the world's largest offshore drilling contractor and the leading provider of drilling management services worldwide. With a fleet of 137 mobile offshore drilling units plus 10 announced ultra-deepwater newbuild units, the company's fleet 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 owns or operates a contract drilling fleet of 39 High-Specification Floaters (Ultra-Deepwater, Deepwater and Harsh-Environment semisubmersibles and drillships), 29 Midwater Floaters, 10 High-Specification Jackups, 55 Standard Jackups and other assets utilized in the support of offshore drilling activities worldwide.

(1) 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 "Supplemental Effective Tax Rate Analysis."

(2) Effective Tax Rate is defined as income tax expense divided by income before income taxes. See the accompanying schedule entitled "Supplemental 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,
                           ---------------------  --------------------
                              2008       2007       2008       2007
                           ----------  ---------  ---------  ---------
Operating revenues
  Contract drilling
   revenues                 $  2,587    $ 1,360    $ 5,227    $ 2,633
  Contract drilling
   intangible revenues           190         --        414         --
  Other revenues                 325         74        571        129
----------------------------------------------------------------------
                               3,102      1,434      6,212      2,762
----------------------------------------------------------------------
Costs and expenses
  Operating and
   maintenance                 1,364        627      2,521      1,195
  Depreciation, depletion
   and amortization              337        101        704        201
  General and
   administrative                 45         29         94         55
----------------------------------------------------------------------
                               1,746        757      3,319      1,451
----------------------------------------------------------------------
Gain (loss) from disposal
 of assets, net                   (6)        (1)        (3)        22
----------------------------------------------------------------------
Operating income               1,350        676      2,890      1,333
----------------------------------------------------------------------

Other income (expense),
 net
  Interest income                 10          5         23         10
  Interest expense, net of
   amounts capitalized          (111)       (33)      (248)       (70)
  Other, net                      (3)        (5)       (11)         8
----------------------------------------------------------------------
                                (104)       (33)      (236)       (52)
----------------------------------------------------------------------

Income before income taxes
 and minority interest         1,246        643      2,654      1,281
Income tax expense               140         93        358        178
Minority interest                 (1)         1         --          1
----------------------------------------------------------------------

Net income                  $  1,107    $   549    $ 2,296    $ 1,102
======================================================================

Earnings per share
  Basic                     $   3.48    $  2.73    $  7.22    $  5.45
  Diluted                   $   3.45    $  2.63    $  7.15    $  5.24
======================================================================

Weighted average shares
 outstanding
  Basic                          318        202        318        202
  Diluted                        321        210        321        211
======================================================================
                   TRANSOCEAN INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED BALANCE SHEETS
                   (In millions, except share data)

                                            June 30,     December 31,
                                              2008           2007
                                         --------------  -------------
                                          (Unaudited)
                 ASSETS
Cash and cash equivalents                 $        976    $     1,241
Accounts receivable, net of allowance
 for doubtful accounts of $62 and $50 at
 June 30, 2008 and December 31, 2007,
 respectively                                    2,478          2,370
Materials and supplies, net of allowance
 for obsolescence of $23 and $22 at June
 30, 2008 and December 31, 2007,
 respectively                                      414            333
Deferred income taxes, net                          84            119
Assets held for sale                               567             --
Other current assets                               212            233
----------------------------------------------------------------------
     Total current assets                        4,731          4,296
----------------------------------------------------------------------

Property and equipment                          24,661         24,545
Less accumulated depreciation                    4,277          3,615
----------------------------------------------------------------------
     Property and equipment, net                20,384         20,930
----------------------------------------------------------------------
Goodwill                                         8,351          8,219
Other assets                                     1,011            919
----------------------------------------------------------------------
     Total assets                         $     34,477    $    34,364
======================================================================

  LIABILITIES AND SHAREHOLDERS' EQUITY

Accounts payable                          $        861    $       805
Accrued income taxes                               182             99
Debt due within one year                         2,145          6,172
Other current liabilities                          732            826
----------------------------------------------------------------------
     Total current liabilities                   3,920          7,902
----------------------------------------------------------------------

Long-term debt                                  13,134         11,085
Deferred income taxes, net                         734            681
Other long-term liabilities                      1,719          2,125
----------------------------------------------------------------------
     Total long-term liabilities                15,587         13,891
----------------------------------------------------------------------

Commitments and contingencies

Minority interest                                    5              5

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,
 319,044,814 and 317,222,909 shares
 issued and outstanding at June 30, 2008
 and December 31, 2007, respectively                 3              3
Additional paid-in capital                      10,907         10,799
Accumulated other comprehensive loss               (47)           (42)
Retained earnings                                4,102          1,806
----------------------------------------------------------------------
     Total shareholders' equity                 14,965         12,566
----------------------------------------------------------------------
     Total liabilities and shareholders'
      equity                              $     34,477    $    34,364
======================================================================
                   TRANSOCEAN INC. AND SUBSIDIARIES
           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (In millions)
                             (Unaudited)

                                 Three months ended  Six months ended
                                      June 30,           June 30,
                                 ------------------  -----------------
                                   2008      2007      2008     2007
                                 --------  --------  --------  -------
Cash flows from operating
 activities
  Net income                     $ 1,107   $   549   $ 2,296   $1,102
  Adjustments to reconcile net
   income to net cash provided
   by operating activities:
    Amortization of drilling
     contract intangibles           (190)       --      (414)      --
    Depreciation, depletion and
     amortization                    337       101       704      201
    Share-based compensation
     expense                          11         9        33       19
    (Gain) loss from disposal of
     assets, net                       6         1         3      (22)
    Deferred revenue, net              7         4        25       38
    Deferred expenses, net          (145)       (6)     (129)     (13)
    Deferred income taxes            (31)       (5)      (56)      (7)
    Other, net                        (6)        5       (18)       4
  Changes in operating assets
   and liabilities                   (85)      (51)       49      (61)
----------------------------------------------------------------------
Net cash provided by operating
 activities                        1,011       607     2,493    1,261
----------------------------------------------------------------------

Cash flows from investing
 activities
    Capital expenditures            (420)     (290)   (1,189)    (755)
    Proceeds from disposal of
     assets, net                      93         2       347       41
    Joint ventures and other
     investments, net                 --        --        (3)      (3)
----------------------------------------------------------------------
Net cash used in investing
 activities                         (327)     (288)     (845)    (717)
----------------------------------------------------------------------

Cash flows from financing
 activities
    Borrowings (repayments)
     under commercial paper
     program, net                   (171)       --     1,145       --
    Repayments under revolving
     credit facilities, net         (180)     (190)   (1,500)      --
    Proceeds from debt                75        --     2,051       --
    Repayments of debt            (1,040)     (230)   (3,673)    (230)
    Payments made upon exercise
     of warrants, net                 --        --        (4)      --
    Proceeds from issuance of
     ordinary shares under
     share-based compensation
     plans, net                       34        40        61       55
    Repurchase of ordinary
     shares                           --        --        --     (400)
    Tax benefit from issuance of
     ordinary shares under
     share-based compensation
     plans                             8         4        11        9
    Other, net                        (1)       --        (4)      --
----------------------------------------------------------------------
Net cash used in financing
 activities                       (1,275)     (376)   (1,913)    (566)
----------------------------------------------------------------------
Net decrease in cash and cash
 equivalents                        (591)      (57)     (265)     (22)
Cash and cash equivalents at
 beginning of period               1,567       502     1,241      467
----------------------------------------------------------------------
Cash and cash equivalents at end
 of period                       $   976   $   445   $   976   $  445
======================================================================
                           Transocean Inc.
                      Fleet Operating Statistics

                            Operating Revenues ($ Millions) (1)
                     -------------------------------------------------
                                                    Six months ended
                          Three months ended            June 30,
                     ----------------------------- -------------------
                     June 30,  March 31, June 30,
                       2008      2008      2007      2008      2007
                     --------- --------- --------- --------- ---------
Contract Drilling
 Revenues
  High-Specification
   Floaters:
    Ultra Deepwater
     Floaters        $    558  $    608  $    336  $  1,166  $    676
    Deepwater
     Floaters             377       325       256       702       498
    Harsh Environment
     Floaters             168       150       126       318       236
  Total High-
   Specification
   Floaters             1,103     1,083       718     2,186     1,410
  Midwater Floaters       650       675       396     1,325       768
  High-Specification
   Jackups                147       157        12       304        24
  Standard Jackups        674       711       218     1,385       401
  Other Rigs               13        14        16        27        30
Subtotal                2,587     2,640     1,360     5,227     2,633
Contract Intangible
 Revenue                  190       224         0       414         0
Other Revenues
  Client Reimbursable
   Revenues                51        47        29        98        59
  Integrated Services
   and Other               48       (52)       45        (4)       70
  Drilling Management
   Services               208       227         0       435         0
  Oil and Gas
   Properties              18        24         0        42         0
Subtotal                  325       246        74       571       129
Total Company        $  3,102  $  3,110  $  1,434  $  6,212  $  2,762

                                   Average Dayrates (1)
                     -------------------------------------------------
                                                    Six months ended
                          Three months ended            June 30,
                     ----------------------------- -------------------
                     June 30,  March 31, June 30,
                       2008      2008      2007      2008      2007
                     --------- --------- --------- --------- ---------
  High-Specification
   Floaters:
    Ultra Deepwater
     Floaters        $390,400  $380,800  $288,900  $385,300  $295,100
    Deepwater
     Floaters        $317,400  $284,100  $212,600  $301,100  $215,800
    Harsh Environment
     Floaters        $379,400  $344,000  $288,500  $361,900  $267,300
  Total High-
   Specification
   Floaters          $360,500  $340,900  $256,100  $350,500  $257,200
  Midwater Floaters  $299,300  $292,300  $234,400  $295,700  $233,300
  High-Specification
   Jackups           $178,000  $173,800  $130,400  $175,800  $131,900
  Standard Jackups   $149,400  $146,200  $117,300  $147,700  $110,400
  Other Rigs         $ 48,400  $ 49,700  $ 57,200  $ 49,000  $ 53,700
Total Drilling Fleet $238,600  $229,000  $202,400  $233,700  $200,200

                                      Utilization (1)
                     -------------------------------------------------
                                                    Six months ended
                          Three months ended            June 30,
                     ----------------------------- -------------------
                     June 30,  March 31, June 30,
                       2008      2008      2007      2008      2007
                     --------- --------- --------- --------- ---------
  High-Specification
   Floaters:
    Ultra Deepwater
     Floaters              87%       98%       98%       92%       97%
    Deepwater
     Floaters              81%       79%       83%       80%       80%
    Harsh Environment
     Floaters              98%       96%       96%       97%       98%
  Total High-
   Specification
   Floaters                86%       90%       91%       88%       89%
  Midwater Floaters        82%       88%       98%       85%       96%
  High-Specification
   Jackups                 91%       99%      100%       95%      100%
  Standard Jackups         89%       93%       85%       91%       84%
  Other Rigs              100%      100%      100%      100%      100%
Total Drilling Fleet       87%       91%       91%       89%       90%
(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      Six months ended
                         --------------------------- -----------------
                         June 30, March 31, June 30, June 30, June 30,
                           2008     2008      2007     2008     2007
                         -------- --------- -------- -------- --------


  Operating revenue      $  3,102 $  3,110  $  1,434 $  6,212 $ 2,762
  Operating and
   maintenance expense      1,364    1,157       627    2,521   1,195
  Depreciation,
   depletion and
   amortization               337      367       101      704     201
  (Gain) loss from
   disposal of assets,
   net                          6       (3)        1        3     (22)
                         -------- --------- -------- -------- --------
Operating income before
 general and
 administrative expense     1,395    1,589       705    2,984   1,388
Add back (subtract):
       Depreciation,
        depletion and
        amortization          337      367       101      704     201
       (Gain) loss from
        disposal of
        assets, net             6       (3)        1        3     (22)
                         -------- --------- -------- -------- --------
Field operating income   $  1,738 $  1,953  $    807 $  3,691 $ 1,567
                         ======== ========= ======== ======== ========
                  Transocean Inc. and Subsidiaries
              Supplemental Effective Tax Rate Analysis
                            (In millions)


                          Three months ended       Six months ended
                      ---------------------------  -----------------
                      June 30, March 31, June 30,  June 30, June 30,
                        2008     2008      2007      2008     2007
                      ---------------------------  -----------------
Income (Loss) before
 income taxes and
 minority interest    $ 1,246  $  1,408  $   643   $ 2,654  $ 1,281
  Add back
   (subtract):
    (Gain) loss on
     disposal of
     assets, net            -         -        1         -      (22)
    Income from TODCO
     tax sharing
     agreement              -         -        -         -        -
        Loss on
         retirement
         of debt            1         2        -         3        -
        GSF Merger
         related
         costs              3         1        -         4        -
                      ---------------------------  -----------------

Adjusted income
 before income taxes    1,250     1,411      644     2,661    1,259

Income tax expense        140       218       93       358      178
  Add back
   (subtract):
    (Gain) loss on
     disposal of
     assets, net            -         -        -         -       (3)
        GSF Merger
         related
         costs              -         -        -                  -
    Changes in
     estimates (1)          2       (27)      11       (25)      13
                      ---------------------------  -----------------
Adjusted income tax
 expense (2)          $   142  $    191  $   104   $   333  $   188
                      ===========================  =================

Effective Tax Rate
 (3)                     11.2%     15.5%    14.4%     13.5%    13.9%

Annual Effective Tax
 Rate (4)                11.4%     13.5%    16.1%     12.5%    14.9%



                                                Years ended Dec. 31,
                                                ---------------------

                                                   2007       2006
                                                ---------------------
Income (Loss) before income taxes and minority
 interest                                       $   3,384  $   1,607
  Add back (subtract):
    (Gain) loss on disposal of assets, net           (264)      (410)
    Income from TODCO tax sharing agreement          (277)       (51)
        Loss on retirement of debt                      8          -
        GSF Merger related costs                       82          -
                                                ---------------------

Adjusted income before income taxes                 2,933      1,146

Income tax expense                                    253        222
  Add back (subtract):
    (Gain) loss on disposal of assets, net             (3)       (24)
        GSF Merger related costs                       15          -
    Changes in estimates (1)                          101         14
                                                ---------------------
Adjusted income tax expense (2)                 $     366  $     212
                                                =====================

Effective Tax Rate (3)                                7.5%      13.8%

Annual Effective Tax Rate (4)                        12.5%      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 June 30, 2008 include $ (30) million of
     additional tax expense (benefit) reflecting the catch-up effect
     of an increase (decrease) in the annual effective tax rate from
     the previous quarter estimate.

(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.