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Transocean Inc. Reports Third Quarter 2008 Financial Results

November 5, 2008

HOUSTON--(BUSINESS WIRE)--Nov. 5, 2008--Transocean Inc. (NYSE:RIG) today reported net income for the three months ended September 30, 2008 of $1.106 billion, or $3.44 per diluted share, compared to net income of $973 million, or $4.63 per diluted share for the three months ended September 30, 2007. Revenues for the third quarter of 2008 were $3.192 billion compared to $1.538 billion for the third quarter of 2007.

For the nine months ended September 30, 2008, net income totaled $3.402 billion, or $10.59 per diluted share, on revenues of $9.404 billion. For the same period in 2007, net income totaled $2.075 billion, or $9.87 per diluted share, on revenues of $4.300 billion. Net income for the nine months ended September 30, 2008 included after-tax charges of $16 million, or $0.05 per diluted share, resulting primarily from a $14 million loss on short-term investments, $10 million of discrete tax items, $3 million of merger-related costs and a $3 million loss from the early retirement of debt. These charges were offset by income of $14 million from the TODCO tax sharing agreement. For the same period last year, net income included after-tax gains of $369 million, or $1.75 per diluted share, from the TODCO tax sharing agreement, rig sales and discrete tax items.

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 third quarter and first nine months of 2008 include a full three and nine months, respectively, from GlobalSantaFe's operations. Diluted earnings per share for the third quarter and first nine months 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 September 30, 2008 were $3.192 billion compared to revenues of $3.102 billion during the three months ended June 30, 2008. The $90 million quarter-to-quarter increase in total revenues included $112 million of higher contract drilling revenues reflecting a decrease in out-of-service time for planned shipyards, an increase in average dayrates and a $25 million increase in other revenues primarily from increases in integrated services and non-drilling activities. A $47 million decline in contract drilling intangible revenues partially offset these increases. The average dayrate for the fleet increased two percent from $238,600 in the second quarter to $242,200 in the third quarter, primarily as a result of rigs commencing new contracts at higher dayrates in the third quarter.

Operating and maintenance expenses for the three months ended September 30, 2008 were $1.426 billion compared to $1.364 billion for the prior three-month period. The $62 million increase in operating and maintenance expenses primarily reflects estimated expenses of $44 million related to dropped riser and an increase in maintenance and non-drilling and integrated services costs compared to the second quarter of 2008, partially offset by reduced shipyard costs.

Interest Expense and Liquidity

Interest expense, net of amounts capitalized, for the third quarter of 2008 decreased to $100 million compared to $111 million for the second quarter of 2008. The decrease resulted primarily from a quarter-to-quarter reduction in total debt of approximately $496 million. As of September 30, 2008, total debt was $14.783 billion compared to $15.279 billion as of June 30, 2008.

Cash flow from operating activities totaled $1.270 billion for the third quarter of 2008 compared to $1.011 billion for the second quarter of 2008. Higher quarter-to-quarter cash flow during the third quarter primarily reflects increases in net income, decreases in deferred expenses and deferred taxes, partially offset by an increase in working capital.

Effective Tax Rate

The Annual Effective Tax Rate(1) for each of the third quarter and first nine months of 2008 was 15.1 percent and 13.3 percent, respectively. The Effective Tax Rate(2) for first nine months of 2008 was 13.6 percent, which reflects the impact of various discrete tax items totaling $7 million, primarily related to changes in estimates. The Effective Tax Rate(2) for the third quarter of 2008 was 13.7 percent.

Conference Call Information

Transocean will conduct a teleconference call at 10:00 a.m. Eastern Time on November 5, 2008. To participate, dial 913-981-5568 and refer to confirmation code 7057401 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 "3Q08 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 November 5, 2008 and can be accessed by dialing 719-457-0820 and referring to the passcode 7057401. 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 136 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, 54 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    Nine months ended
                                 September 30,        September 30,
                              -------------------  -------------------
                                2008      2007       2008      2007
                              --------- ---------  --------- ---------
Operating revenues
   Contract drilling revenues  $ 2,699   $ 1,455    $ 7,926   $ 4,088
   Contract drilling
    intangible revenues            143        --        557        --
   Other revenues                  350        83        921       212
----------------------------------------------------------------------
                                 3,192     1,538      9,404     4,300
----------------------------------------------------------------------
Costs and expenses
   Operating and maintenance     1,426       663      3,947     1,858
   Depreciation, depletion
    and amortization               336       103      1,040       304
   General and administrative       46        27        140        82
----------------------------------------------------------------------
                                 1,808       793      5,127     2,244
----------------------------------------------------------------------
Gain (loss) from disposal of
 assets, net                        (1)        8         (4)       30
----------------------------------------------------------------------
Operating income                 1,383       753      4,273     2,086
----------------------------------------------------------------------

Other income (expense), net
   Interest income                   7         7         30        17
   Interest expense, net of
    amounts capitalized           (100)      (23)      (348)      (93)
   Other, net                      (12)      287        (23)      295
----------------------------------------------------------------------
                                  (105)      271       (341)      219
----------------------------------------------------------------------

Income before income taxes
 and minority interest           1,278     1,024      3,932     2,305
Income tax expense                 175        52        533       230
Minority interest                   (3)       (1)        (3)       --
----------------------------------------------------------------------

Net income                     $ 1,106   $   973    $ 3,402   $ 2,075
======================================================================

Earnings per share
   Basic                       $  3.47   $  4.80    $ 10.69   $ 10.25
   Diluted                     $  3.44   $  4.63    $ 10.59   $  9.87
======================================================================

Weighted average shares
 outstanding
   Basic                           319       203        318       202
   Diluted                         321       210        321       211
======================================================================
                   TRANSOCEAN INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED BALANCE SHEETS
                   (In millions, except share data)

                                           September 30,  December 31,
                                               2008           2007
                                           -------------  ------------
                                            (Unaudited)
                  ASSETS
Cash and cash equivalents                   $       829    $    1,241
Short-term investments                              392            --
Accounts receivable, net of allowance for
 doubtful accounts of $65 and $50 at
 September 30, 2008 and December 31, 2007,
 respectively                                     2,783         2,370
Materials and supplies, net of allowance
 for obsolescence of $28 and $22 at
 September 30, 2008 and December 31, 2007,
 respectively                                       429           333
Deferred income taxes, net                           55           119
Assets held for sale                                564            --
Other current assets                                236           233
----------------------------------------------------------------------
     Total current assets                         5,288         4,296
----------------------------------------------------------------------

Property and equipment                           25,152        24,545
Less accumulated depreciation                     4,597         3,615
----------------------------------------------------------------------
     Property and equipment, net                 20,555        20,930
----------------------------------------------------------------------
Goodwill                                          8,346         8,219
Other assets                                        976           919
----------------------------------------------------------------------
     Total assets                           $    35,165    $   34,364
======================================================================

   LIABILITIES AND SHAREHOLDERS' EQUITY

Accounts payable                            $       934    $      805
Accrued income taxes                                234            99
Debt due within one year                            932         6,172
Other current liabilities                           853           826
----------------------------------------------------------------------
     Total current liabilities                    2,953         7,902
----------------------------------------------------------------------

Long-term debt                                   13,851        11,085
Deferred income taxes, net                          755           681
Other long-term liabilities                       1,528         2,125
----------------------------------------------------------------------
     Total long-term liabilities                 16,134        13,891
----------------------------------------------------------------------

Commitments and contingencies

Minority interest                                     3             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,
 319,068,820 and 317,222,909 shares issued
 and outstanding at September 30, 2008 and
 December 31, 2007, respectively                      3             3
Additional paid-in capital                       10,911        10,799
Accumulated other comprehensive loss                (46)          (42)
Retained earnings                                 5,207         1,806
----------------------------------------------------------------------
     Total shareholders' equity                  16,075        12,566
----------------------------------------------------------------------
     Total liabilities and shareholders'
      equity                                $    35,165    $   34,364
======================================================================
                   TRANSOCEAN INC. AND SUBSIDIARIES
           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (In millions)
                             (Unaudited)

                           Three months ended      Nine months ended
                              September 30,          September 30,
                          ---------------------  ---------------------
                             2008       2007        2008       2007
                          ---------- ----------  ---------- ----------
Cash flows from operating
 activities
  Net income               $  1,106   $    973    $  3,402   $  2,075
  Adjustments to
   reconcile net income
   to net cash provided
   by operating
   activities:
    Amortization of
     drilling contract
     intangibles               (143)        --        (557)        --
    Depreciation,
     depletion and
     amortization               336        103       1,040        304
    Share-based
     compensation expense        16         11          49         30
    (Gain) loss from
     disposal of assets,
     net                          1         (8)          4        (30)
    Impairment of short-
     term investments            16         --          16         --
    Deferred revenue, net        (3)       (20)         22         18
    Deferred expenses,
     net                         (3)        (4)       (132)       (17)
    Deferred income taxes        60          9           4          2
    Other, net                   (6)         2           3          6
  Changes in operating
   assets and liabilities      (110)      (169)        (88)      (230)
----------------------------------------------------------------------
Net cash provided by
 operating activities         1,270        897       3,763      2,158
----------------------------------------------------------------------

Cash flows from investing
 activities
    Capital expenditures       (514)      (305)     (1,703)    (1,060)
    Proceeds from
     disposal of assets,
     net                          5         21         352         62
    Proceeds from sale of
     investments                 14         --          14         --
    Short-term
     investments               (408)        --        (408)        --
    Joint ventures and
     other investments,
     net                         --         --          (3)        (3)
----------------------------------------------------------------------
Net cash used in
 investing activities          (903)      (284)     (1,748)    (1,001)
----------------------------------------------------------------------

Cash flows from financing
 activities
    Borrowings
     (repayments) under
     commercial paper
     program, net              (213)        --         932         --
    Borrowings
     (repayments) under
     revolving credit
     facilities, net            415         --      (1,085)        --
    Proceeds from debt          303         --       2,354         --
    Repayments of debt       (1,000)      (470)     (4,673)      (700)
    Repurchase of
     ordinary shares             --         --          --       (400)
    Proceeds from
     (payments made upon)
     exercise of
     warrants, net               --         16          (4)        16
    Proceeds from (taxes
     paid for) issuance
     of ordinary shares
     under share-based
     compensation plans,
     net                        (12)         1          49         56
    Excess tax benefit
     from issuance of
     ordinary shares
     under share-based
     compensation plans          --         23          11         33
    Other, net                   (7)       (10)        (11)       (11)
----------------------------------------------------------------------
Net cash used in
 financing activities          (514)      (440)     (2,427)    (1,006)
----------------------------------------------------------------------
Net increase (decrease)
 in cash and cash
 equivalents                   (147)       173        (412)       151
Cash and cash equivalents
 at beginning of period         976        445       1,241        467
----------------------------------------------------------------------
Cash and cash equivalents
 at end of period          $    829   $    618    $    829   $    618
======================================================================
                           Transocean Inc.
                      Fleet Operating Statistics

                            Operating Revenues ($ Millions) (1)
                     -------------------------------------------------
                                                    Nine months ended
                          Three months ended          September 30,
                     ----------------------------- -------------------
                     September           September
                        30,    June 30,     30,
                       2008      2008      2007      2008      2007
                     --------- --------- --------- --------- ---------
Contract Drilling
 Revenues
  High-Specification
   Floaters:
    Ultra Deepwater
     Floaters        $    617  $    558  $    381  $  1,783  $  1,057
    Deepwater
     Floaters             323       377       280     1,025       778
    Harsh Environment
     Floaters             163       168       122       481       358
  Total High-
   Specification
   Floaters             1,103     1,103       783     3,289     2,193
  Midwater Floaters       690       650       409     2,015     1,177
  High-Specification
   Jackups                144       147        12       448        36
  Standard Jackups        749       674       236     2,134       637
  Other Rigs               13        13        15        40        45
Subtotal                2,699     2,587     1,455     7,926     4,088
Contract Intangible
 Revenue                  143       190         0       557         0
Other Revenues
  Client Reimbursable
   Revenues                55        51        32       152        91
  Integrated Services
   and Other               12        48        51         8       121
  Drilling Management
   Services               257       208         0       693         0
  Oil and Gas
   Properties              26        18         0        68         0
Subtotal                  350       325        83       921       212
Total Company        $  3,192  $  3,102  $  1,538  $  9,404  $  4,300

                                   Average Dayrates (1)
                     -------------------------------------------------
                                                    Nine months ended
                          Three months ended          September 30,
                     ----------------------------- -------------------
                     September           September
                        30,    June 30,     30,
                       2008      2008      2007      2008      2007
                     --------- --------- --------- --------- ---------
  High-Specification
   Floaters:
    Ultra Deepwater
     Floaters        $401,300  $390,400  $323,200  $390,700  $304,600
    Deepwater
     Floaters        $322,700  $317,400  $251,600  $307,600  $227,400
    Harsh Environment
     Floaters        $363,500  $379,400  $312,300  $362,400  $281,100
  Total High-
   Specification
   Floaters          $369,300  $360,500  $291,900  $356,600  $268,600
  Midwater Floaters  $292,900  $299,300  $254,000  $294,800  $240,100
  High-Specification
   Jackups           $178,500  $178,000  $131,600  $176,700  $131,800
  Standard Jackups   $158,700  $149,400  $120,000  $151,400  $113,800
  Other Rigs         $ 48,900  $ 48,400  $ 54,800  $ 49,000  $ 54,100
Total Drilling Fleet $242,200  $238,600  $219,700  $236,500  $206,800

                                      Utilization (1)
                     -------------------------------------------------
                                                    Nine months ended
                          Three months ended          September 30,
                     ----------------------------- -------------------
                     September           September
                        30,    June 30,     30,
                       2008      2008      2007      2008      2007
                     --------- --------- --------- --------- ---------
  High-Specification
   Floaters:
    Ultra Deepwater
     Floaters              93%       87%       99%       93%       98%
    Deepwater
     Floaters              68%       81%       76%       76%       78%
    Harsh Environment
     Floaters              98%       98%       85%       97%       93%
  Total High-
   Specification
   Floaters                83%       86%       86%       86%       88%
  Midwater Floaters        88%       82%       92%       86%       95%
  High-Specification
   Jackups                 87%       91%      100%       93%      100%
  Standard Jackups         93%       89%       89%       92%       85%
  Other Rigs              100%      100%       98%      100%       99%
Total Drilling Fleet       89%       87%       89%       89%       89%
(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
               Supplemental Effective Tax Rate Analysis
                            (In millions)

                                          Nine months    Years ended
                    Three months ended        ended        Dec. 31,
                   --------------------- -------------- --------------
                   Sept.   June  Sept.   Sept.  Sept.
                     30,    30,    30,     30,    30,
                    2008   2008   2007    2008   2007    2007   2006
                   --------------------- -------------- --------------
Income (Loss)
 before income
 taxes and
 minority interest $1,278 $1,246 $1,024  $3,932 $2,305  $3,384 $1,607
  Add back
   (subtract):
    (Gain) loss on
     disposal of
     assets, net        -      -     (9)      -    (31)   (264)  (410)
    Income from
     TODCO tax
     sharing
     agreement        (14)     -   (276)    (14)  (276)   (277)   (51)
       Loss on The
        Reserve
        Funds          16      -      -      16      -       -      -
       (Gain) loss
        on
        retirement
        of debt         -      1      -       3      -       8      -
       GSF Merger
        related
        costs           1      3      -       5      -      82      -
                   --------------------- -------------- --------------

Adjusted income
 before income
 taxes              1,281  1,250    739   3,942  1,998   2,933  1,146

Income tax expense    175    140     52     533    230     253    222
  Add back
   (subtract):
    (Gain) loss on
     disposal of
     assets, net        -      -      -       -     (3)     (3)   (24)
       Loss on The
        Reserve
        Funds           2      -      -       2      -       -      -
       GSF Merger
        related
        costs           1      -      -       1      -      15      -
    Changes in
     estimates (1)     15      2     52     (10)    65     101     14
                   --------------------- -------------- --------------
Adjusted income
 tax expense (2)   $  193 $  142 $  104  $  526 $  292  $  366 $  212
                   ===================== ============== ==============

Effective Tax Rate
 (3)                 13.7%  11.2%   5.1%   13.6%  10.0%    7.5%  13.8%

Annual Effective
 Tax Rate (4)        15.1%  11.4%  14.0%   13.3%  14.6%   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 Sept. 30, 2008 include $21 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
                   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       Nine months ended
                      ---------------------------- -------------------
                      September June 30, September September September
                       30, 2008   2008    30, 2007  30, 2008  30, 2007
                      --------- -------- --------- --------- ---------

  Operating revenue   $   3,192 $  3,102 $  1,538  $   9,404 $  4,300
  Operating and
   maintenance
   expense                1,426    1,364      663      3,947    1,858
  Depreciation,
   depletion and
   amortization             336      337      103      1,040      304
  (Gain) loss from
   disposal of
   assets, net                1        6       (8)         4      (30)
                      --------- -------- --------- --------- ---------
Operating income
 before general and
 administrative
 expense                  1,429    1,395      780      4,413    2,168
Add back (subtract):
  Depreciation,
   depletion and
   amortization             336      337      103      1,040      304
  (Gain) loss from
   disposal of
   assets, net                1        6       (8)         4      (30)
                      --------- -------- --------- --------- ---------
Field operating
 income               $   1,766 $  1,738 $    875  $   5,457 $  2,442
                      --------- -------- --------- --------- ---------

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

SOURCE: Transocean Inc.