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Transocean Inc. Reports Second Quarter 2002 Results

July 30, 2002
HOUSTON, Jul 30, 2002 (BUSINESS WIRE) -- Transocean Inc. (NYSE:RIG) today announced that net income for the three months ended June 30, 2002 was $80.0 million, or $0.25 per diluted share, on revenues of $646.2 million. During the corresponding three months in 2001, net income was $68.5 million, or $0.21 per diluted share, on revenues of $752.2 million. Results for the prior year period include a net extraordinary loss of $17.3 million, or $0.05 per diluted share, relating to the early retirement of debt and goodwill amortization of $41.4 million, or $0.13 per diluted share. Excluding the net extraordinary loss and goodwill amortization, net income for the three months ended June 30, 2001 was $127.2 million, or $0.39 per diluted share.

For the six months ended June 30, 2002, the company reported a net loss of $1,206.4 million, or $3.73 per diluted share, on revenues of $1,314.1 million. Results for the first six months of 2002 included a non-cash charge of $1,363.7 million, or $4.22 per diluted share, pertaining to the adoption in January 2002 of Statement of Financial Accounting Standards 142, Goodwill and Other Intangible Assets. Excluding the non-cash charge, net income for the six months ended June 30, 2002 was $157.3 million, or $0.49 per diluted share. During the corresponding six months in 2001, net income totaled $99.0 million, or $0.32 per diluted share, on revenues of $1,302.3 million. Results for the prior year period include the previously mentioned $17.3 million, or $0.06 per diluted share, net extraordinary after-tax loss and goodwill amortization of $71.6 million, or $0.23 per diluted share, partially offset by a $15.9 million, or $0.05 per diluted share, gain resulting from the sale of a semisubmersible rig owned by a joint venture in which the company has a 25% equity interest. Excluding the net extraordinary loss, goodwill amortization and gain from the rig sale, net income for the six months ended June 30, 2001 was $172.0 million, or $0.56 per diluted share.

Transocean Inc. completed a merger transaction with R&B Falcon Corporation on January 31, 2001. Consequently, results for the six months ended June 30, 2001 reflect only five months of operating results of R&B Falcon Corporation.

The company's International and U.S. Floater Contract Drilling Services segment experienced a 2% decline in operating revenues during the three months ended June 30, 2002 to $609.1 million from $623.2 million reported during the first quarter of 2002. Operating income, before depreciation and general and administrative expenses, also declined 2% to $289.0 million from $294.5 million over the same comparative period. Segment fleet utilization declined to 78% during the three months ended June 30, 2002, from 82% during the three months ended March 31, 2002.

Operating revenues from the company's Gulf of Mexico Shallow and Inland Water segment totaled $37.1 million during the three months ended June 30, 2002 compared to $44.7 million during the first three months of 2002. Although a modest improvement in utilization was seen in the segment's jackup and submersible rig fleet during the second quarter of 2002, utilization of the drilling barge fleet did not improve until late in the quarter, resulting in a decline in segment utilization to 27% and an operating loss, before depreciation and general and administrative expenses, for the three months ended June 30, 2002 of $8.4 million. The results compare to utilization of 31% and an operating loss of $7.6 million during the three months ended March 31, 2002.

The company's net debt (defined as long-term debt plus debt due within one year, less cash and cash equivalents) at June 30, 2002 was $3,871 million, down $300 million and $827 million from net debt at December 31, 2001 and June 30, 2001, respectively. For the six months ended June 30, 2002, net cash generated by operating activities totaled $381 million.

J. Michael Talbert, Chief Executive Officer of Transocean Inc., commented, "A weak conventional semisubmersible rig market in the U.S. Gulf of Mexico, West Africa and Norway, combined with idle time on several of our international jackup rigs, due in part to planned shipyard programs and inter-country rig mobilizations, resulted in a 3% decline in second quarter 2002 operating revenues from levels experienced during the first quarter of 2002. However, reductions in operating and maintenance costs, general and administrative expenses and net interest expense resulted in a 3% improvement in net income, before cumulative effect of a change in accounting principle during the quarter, compared to the first quarter of 2002. Although operating and maintenance expenses have been significantly reduced over the preceding six months, current expense levels are expected to trend higher during the balance of the year due to the expected improvement in fleet utilization and execution of discretionary fleet maintenance programs."

Talbert described a mixed demand outlook for global offshore drilling over the remaining months of 2002, stating, "With the exception of the North Sea, jackup rig markets around the world reflect stable to improved demand. Jackup rig and inland drilling barge demand in the U.S. Gulf of Mexico is currently expected to remain stable to modestly higher. In the floater rig market, demand for semisubmersibles and drillships possessing intermediate water depth drilling capabilities, defined as up to 3,500 feet, is expected to remain weak in most regions, with a pronounced reduction in demand expected in the U.K. and Norwegian sectors of the North Sea. Finally, demand for rigs possessing deepwater drilling capabilities is expected to be stable or improve in most markets, as development drilling programs commence in areas such as Angola and Nigeria and new exploration opportunities emerge in other areas, such as India. Deepwater drilling rigs, such as our Enterprise- and Pathfinder-class drillships and Express-class semisubmersibles, are demonstrating enhanced efficiencies in well construction while recognizing improved operating performance, and are increasingly a preferred choice by our customers for deepwater drilling programs."

Statements regarding the outlook for drilling activity, rig demand, drilling opportunities, future utilization, drilling market conditions, expected operating and maintenance expense, expected drilling programs, 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 the future price of oil and gas, demand for rigs, operating hazards and delays, risks associated with international operations, actions by customers and other third parties, competition, risks of drilling, contract terminations or suspensions and other factors detailed in the company's most recent Form 10-K for the year ended December 31, 2001 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.

    Conference Call Information
The company will conduct a teleconference call at 10:00 a.m. EDT on July 30, 2002. Individuals who wish to participate in the teleconference call may dial 719/457-2657 and refer to confirmation code 669928. It is recommended that participants dial in five to 10 minutes prior to the scheduled start time of the call.

In addition, the conference call will be simulcast through a listen-only broadcast over the Internet and can be accessed by logging onto the company's Worldwide Web address at www.deepwater.com and selecting "Investor Relations." It may also be accessed via the Worldwide Web at www.CompanyBoardroom.com by typing in the company's NYSE trading symbol, "RIG."

A telephonic replay of the conference call should be available after 1:00 p.m. EDT on July 30 and can be accessed by dialing 719/457-0820 and referring to the passcode 669928. Also, a replay will be available through the Internet and can be accessed by visiting either of the above-referenced Worldwide Web addresses. Both replay options will be available for approximately 30 days.

    Monthly Fleet Update Information
Drilling rig status and contract information on Transocean Inc.'s offshore drilling fleet has been condensed into two reports titled "Monthly Fleet Update" and "Monthly Fleet Update - Jackups and Barges," which are available through the company's Website at www.deepwater.com. The reports are located in the "Investor Relations/Financial Reports" section of the Website. By subscribing to the Transocean Financial Report Alert, you will be immediately notified when new postings are made to this page by an automated e-mail, which will provide a link directly to the page that has been updated. We invite you to sign up for this service.

Transocean Inc. is the world's largest offshore drilling contractor with more than 150 full or partially owned and managed mobile offshore drilling units, inland drilling barges and other assets utilized in the support of offshore drilling activities worldwide. The company's mobile offshore drilling fleet is considered one of the most modern and versatile in the world with 31 high-specification semisubmersibles and drillships ("floaters"), 29 other floaters and 52 jackup drilling rigs. Transocean Inc. specializes in technically demanding segments of the offshore drilling business, including industry-leading positions in deepwater and harsh environment drilling services. With a current equity market capitalization in excess of $7 billion, the company's ordinary shares are traded on the New York Stock Exchange under the symbol "RIG."

                   TRANSOCEAN INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF OPERATIONS
                 (In millions, except per share data)
                              (Unaudited)
                            Three Months Ended     Six Months Ended
                                  June 30,              June 30,
                           --------------------  --------------------
                              2002       2001       2002       2001
                           ---------  ---------  ---------  ---------
Operating Revenues            $646.2     $752.2   $1,314.1   $1,302.3
Costs and Expenses
  Operating and
   maintenance                 365.6      394.3      746.6      745.2
  Depreciation                 124.3      123.7      249.9      223.1
  Goodwill amortization           --       41.4         --       71.6
  General and
   administrative               16.0       14.6       35.8       29.4
                               505.9      574.0    1,032.3    1,069.3
Impairment Loss on Long-
 Lived Assets                     --         --       (1.1)        --
Gain (Loss) from Sale of
 Assets, net                    (1.3)        --        0.6       19.6
Operating Income               139.0      178.2      281.3      252.6
Other Income (Expense), net
  Equity in earnings of
   joint ventures                2.5        4.0        4.4        5.7
  Interest income                5.7        4.7        9.9        8.3
  Interest expense, net
   of amounts capitalized      (52.5)     (66.8)    (108.4)    (104.0)
  Other, net                    (0.4)      (1.0)      (1.1)      (1.5)
                               (44.7)     (59.1)     (95.2)     (91.5)
Income Before Income
 Taxes, Minority Interest,
 Extraordinary Item and
 Cumulative Effect of a
 Change in Accounting
 Principle                      94.3      119.1      186.1      161.1
Income Tax Expense              13.9       32.2       27.7       42.3
Minority Interest                0.4        1.1        1.1        2.5
Net Income Before
 Extraordinary Item and
 Cumulative Effect of a
 Change in Accounting
 Principle                      80.0       85.8      157.3      116.3
Loss on Extraordinary
 Item, Net of Tax                 --      (17.3)        --      (17.3)
Cumulative Effect of a
 Change in Accounting
 Principle                        --         --   (1,363.7)        --
Net Income (Loss)              $80.0      $68.5  $(1,206.4)     $99.0
Basic Earnings (Loss)
 Per Share
  Income Before
   Extraordinary Item
   and Cumulative Effect
   of a Change in
   Accounting Principle        $0.25      $0.27      $0.49      $0.39
  Loss on Extraordinary
   Item, Net of Tax               --      (0.05)        --      (0.06)
  Loss on Cumulative
   Effect of a Change in
   Accounting Principle           --         --      (4.27)        --
  Net Income (Loss)            $0.25      $0.22     $(3.78)     $0.33
Diluted Earnings (Loss)
 Per Share
  Income Before
   Extraordinary Item
   and Cumulative Effect
   of a Change in
   Accounting Principle        $0.25      $0.26      $0.49      $0.38
  Loss on Extraordinary
   Item, Net of Tax               --      (0.05)        --      (0.06)
  Loss on Cumulative
   Effect of a Change in
   Accounting Principle           --         --      (4.22)        --
  Net Income (Loss)            $0.25      $0.21     $(3.73)     $0.32
Weighted Average Shares
 Outstanding
  Basic                        319.1      318.2      319.1      299.5
  Diluted                      323.9      325.0      323.6      305.3
On January 31, 2001, the Company completed a merger transaction with
R&B Falcon Corporation. As a result of the merger, R&B Falcon
Corporation became an indirect wholly owned subsidiary of the Company.
The Company accounted for the merger using the purchase method of
accounting with the Company treated as the accounting acquiror. The
above Consolidated Statements of Operations for the six months ended
June 30, 2001 includes five months of operating results of R&B Falcon
Corporation.
                   TRANSOCEAN INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED BALANCE SHEETS
                   (In millions, except share data)
                                                 June 30,    Dec. 31,
                                                ----------------------
                                                   2002         2001
                                                ----------- ----------
                                                (Unaudited)
                                ASSETS
Cash and Cash Equivalents                          $ 755.9    $ 853.4
Accounts Receivable
   Trade                                             509.9      602.9
   Other                                              81.6       72.8
Materials and Supplies                               169.3      158.8
Deferred Income Taxes                                 21.3       21.0
Other Current Assets                                  40.4       27.9
 Total Current Assets                              1,578.4    1,736.8
Property and Equipment                            10,045.4   10,081.4
Less Accumulated Depreciation                      1,930.6    1,713.3
 Property and Equipment, net                       8,114.8    8,368.1
Goodwill, net                                      5,103.0    6,466.7
Investments in and Advances to Joint Ventures        114.3      107.1
Other Assets                                         393.6      341.1
   Total Assets                                  $15,304.1  $17,019.8
                 LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts Payable                                   $ 133.3    $ 188.4
Accrued Income Taxes                                 210.5      188.2
Debt Due Within One Year                             924.7      484.4
Other Current Liabilities                            236.4      283.4
   Total Current Liabilities                       1,504.9    1,144.4
Long-Term Debt                                     3,702.6    4,539.4
Deferred Income Taxes                                279.1      317.1
Other Long-Term Liabilities                          120.0      108.6
   Total Long-Term Liabilities                     4,101.7    4,965.1
Commitments and Contingencies
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,
 319,207,590 and 318,816,035 shares
 issued and outstanding at June 30,
 2002 and December 31, 2001,
 respectively                                          3.2        3.2
Additional Paid-in Capital                        10,622.4   10,611.7
Accumulated Other Comprehensive Income                (0.2)      (2.3)
Retained Earnings (Deficit)                         (927.9)     297.7
   Total Shareholders' Equity                      9,697.5   10,910.3
   Total Liabilities and Shareholders' Equity    $15,304.1  $17,019.8
                   TRANSOCEAN INC. AND SUBSIDIARIES
           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (In millions)
                             (Unaudited)
                                                    Six Months Ended
                                                         June 30,
                                                    -----------------
                                                      2002      2001
                                                    --------  -------
Cash Flows from Operating Activities
   Net income (loss)                               $(1,206.4)  $ 99.0
   Adjustments to reconcile net income
    (loss) to net cash provided by
    operating activities
     Depreciation                                      249.9    223.1
     Goodwill amortization                                --     71.6
     Cumulative effect of a change
      in accounting principle -
      goodwill impairment                            1,363.7       --
     Deferred income taxes                             (38.3)   (33.8)
     Equity in earnings of joint ventures               (4.4)    (5.7)
     Net (gain) loss from disposal of assets             2.3    (18.4)
     Impairment on long-lived assets                     1.1       --
     Loss on sale of securities                           --      1.8
     Amortization of debt-related
      discounts/premiums, fair value
      adjustments and issue costs, net                   2.9    (11.3)
     Deferred income, net                               (6.0)   (30.0)
     Deferred expenses, net                              7.0    (27.6)
     Extraordinary loss on debt extinguishment,
      net of tax                                          --     17.3
     Other, net                                          9.7      6.9
     Changes in operating assets and liabilities,
      net of effects from the R&B Falcon merger
       Accounts receivable                              84.1   (162.6)
       Accounts payable and other current
        liabilities                                    (84.7)   (95.6)
       Income taxes receivable/payable, net             22.3     30.3
       Other current assets                            (22.7)   (13.8)
Net Cash Provided by Operating Activities              380.5     51.2
Cash Flows from Investing Activities
 Capital expenditures                                  (81.2)  (371.8)
 Proceeds from sale of securities                         --     16.8
 Proceeds from disposal of assets, net                  65.0     29.2
 Merger costs paid                                        --    (24.5)
 Cash acquired in merger, net of cash paid                --    264.7
 Joint ventures and other investments, net                --      2.7
Net Cash Used in Investing Activities                  (16.2)   (82.9)
Cash Flows from Financing Activities
Net borrowings (repayments) on revolving credit
 agreements                                               --   (180.1)
Net borrowings (repayments) under commercial paper
 program                                              (326.4)    60.3
Repayments on debt obligations                        (119.6)   (20.3)
Net proceeds from other debt                              --  1,693.5
Early repayments of debt instruments                      -- (1,457.9)
Proceeds from interest rate swaps                         --      4.1
Net proceeds from issuance of ordinary
 shares under stock-based compensation plans            10.3     28.8
Proceeds from issuance of ordinary shares upon
 exercise of warrants                                     --     10.6
Dividends paid                                         (19.1)   (19.1)
Financing costs                                         (8.1)   (15.5)
Other, net                                               1.1      1.5
Net Cash Provided by (Used in) Financing Activities   (461.8)   105.9
Net Increase (Decrease) in Cash and Cash
 Equivalents                                           (97.5)    74.2
Cash and Cash Equivalents at Beginning of Period       853.4     34.5
Cash and Cash Equivalents at End of Period           $ 755.9  $ 108.7
                           Transocean Inc.
                      Fleet Operating Statistics
                              Operating Revenues ($ Millions)
                     -------------------------------------------------
                                                    Six Months Ended
                          Three Months Ended            June 30,
                     ----------------------------- -------------------
International and
 U.S. Floater
 Contract Drilling   June 30,   March 31,  June 30,
 Services Segment:     2002       2002       2001(2)  2002    2001(1)(2)
                     ---------- --------- --------- --------- --------
    High-
     Specification
     Floaters          $335.1    $309.9    $325.3    $645.0    $593.2
    Other Floaters     $143.2    $164.2    $152.6    $307.4    $273.7
    Jackups - Non-
     U.S.              $107.3    $124.1     $81.8    $231.4    $146.9
    Other               $23.5     $25.0     $38.9     $48.5    $133.4
Segment Total          $609.1    $623.2    $598.6  $1,232.3  $1,147.2
Gulf of Mexico
 Shallow and Inland
 Water Segment:
    Jackups and
     Submersibles       $17.3     $13.4     $89.0     $30.7    $169.2
    Inland Barges       $13.5     $21.7     $47.3     $35.2     $86.0
    Other                $6.3      $9.6     $17.3     $15.9     $25.7
Segment Total           $37.1     $44.7    $153.6     $81.8    $280.9
Total Company          $646.2    $667.9    $752.2  $1,314.1  $1,428.1
                                     Average Dayrates (3)
                     -------------------------------------------------
                                                    Six Months Ended
                          Three Months Ended            June 30,
                     ----------------------------- -------------------
International and
 U.S. Floater
 Contract Drilling    June 30, March 31,  June 30,
 Services Segment:     2002      2002      2001      2002      2001(1)
                     --------- --------- --------- --------- ---------
    High-
     Specification
     Floaters        $150,200  $145,500  $141,600  $147,900  $138,000
    Other Floaters    $76,800   $77,300   $62,600   $77,100   $60,900
    Jackups - Non-
     U.S.             $57,700   $58,800   $44,100   $58,300   $41,400
    Other             $43,700   $43,900   $37,000   $43,800   $37,800
Segment Total         $94,600   $91,000   $82,000   $92,800   $79,300
Gulf of Mexico
 Shallow and Inland
 Water Segment:
    Jackups and
     Submersibles     $21,100   $22,200   $39,800   $21,600   $37,600
    Inland Barges     $20,200   $19,200   $23,100   $19,600   $21,100
Segment Total         $20,700   $20,300   $31,800   $20,500   $29,700
Total Mobile Offshore
 Drilling Fleet       $80,700   $76,600   $62,900   $78,600   $59,800
                                        Utilization (3)
                     -------------------------------------------------
                                                    Six Months Ended
                          Three Months Ended            June 30,
                     ----------------------------- -------------------
International and
 U.S. Floater
 Contract Drilling    June 30, March 31,  June 30,
 Services Segment:     2002      2002      2001      2002      2001(1)
                     --------- --------- --------- --------- ---------
    High-
     Specification
     Floaters              85%       82%       86%       83%       84%
    Other Floaters         73%       82%       84%       77%       77%
    Jackups - Non-
     U.S.                  82%       90%       85%       86%       82%
    Other                  60%       57%       53%       58%       52%
Segment Total              78%       82%       82%       80%       78%
Gulf of Mexico
 Shallow and Inland
 Water Segment:
    Jackups and
     Submersibles          29%       22%       72%       25%       73%
    Inland Barges          24%       41%       71%       32%       69%
Segment Total              27%       31%       71%       29%       71%
Total Mobile Offshore
 Drilling Fleet            57%       61%       78%       59%       75%
(1) Transocean completed a merger transaction with R&B Falcon on
    January 31, 2001. Therefore, operating revenues, average dayrates
    and utilization for the six months ended June 30, 2001 are stated
    as pro forma results based on the combined fleet of Transocean and
    R&B Falcon.
(2) Certain reclassifications have been made to prior periods to
    conform to current quarter presentation.
(3) Average dayrates and utilization for core assets only, defined as
    31 high-specification drillships and semisubmersibles
    ("floaters"), 29 other floaters, 52 jackup rigs, 35 drilling
    barges, 4 tenders and 3 submersible drilling rigs.
CONTACT:          Transocean Inc., Houston
                  Analyst Contact: Jeffrey L. Chastain, 713/232-7551
                  or
                  Media Contact: Guy A. Cantwell, 713/232-7647