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Transocean Inc. Reports Third Quarter 2004 Results

October 26, 2004

HOUSTON--(BUSINESS WIRE)--Oct. 26, 2004--Transocean Inc. (NYSE:RIG) today reported net income for the three months ended September 30, 2004 of $154.9 million, or $0.48 per diluted share, on revenues of $651.8 million. The results compare to net income of $11.0 million, or $0.03 per diluted share, on revenues of $622.9 million, for the corresponding three months in 2003. Net income adjusted(1) for the September 2004 TODCO secondary offering was $25.5 million, or $0.08 per diluted share, for the three months ended September 30, 2004. This result compares to net income of $19.0 million, or $0.06 per diluted share, for the corresponding three months in 2003, after adjusting for initial public offering (IPO)-related costs associated with TODCO.

For the nine months ended September 30, 2004, net income totaled $225.6 million, or $0.70 per diluted share, on revenues of $1,937.0 million, compared to net income of $13.7 million, or $0.04 per diluted share, on revenues of $1,842.8 million during the corresponding nine months in 2003. Net income adjusted(1) for the TODCO offerings, the sale of semisubmersible rig Sedco 602, early retirement of debt and TODCO IPO-related costs was $101.4 million, or $0.31 per diluted share, for the nine months ended September 30, 2004. For the nine months ended September 30, 2003, net income adjusted(1) for asset impairment charges, early retirement of debt, TODCO IPO-related charges and a favorable resolution of a non-U.S. income tax liability was $47.5 million, or $0.15 per diluted share.

Transocean Drilling Segment - Revenues for the three months ended September 30, 2004 were $558.7 million, compared to revenues of $552.5 million during the three months ended June 30, 2004. The slight improvement was due chiefly to improved performance of the company's High-Specification Floaters (semisubmersibles and drillships), as both average utilization and dayrates increased from the preceding three months, partially offset by the Trident 20 incident, which reduced revenues in the quarter by approximately $8 million. Revenues would have been an estimated $13 million higher, absent the Norwegian labor strike, which affected three rigs in the company's fleet. The Transocean Arctic, which returned to work in Norway on August 30 following 30 months of being idle, contributed to the improved utilization while higher average dayrates were driven in part by contract signings on the deepwater semisubmersible rig Cajun Express and drillships Deepwater Pathfinder and Deepwater Millennium. Operating income before general and administrative expenses,(2) including the gain on the TODCO secondary offering, was $218.1 million and field operating income (defined as revenue less operating and maintenance expenses) was $198.2 million for the three months ended September 30, 2004. The figures compared to operating income before general and administrative expense and field operating income of $127.2 million and $214.4 million, respectively, for the three months ended June 30, 2004. Operating and maintenance costs during the third quarter of 2004 increased 6.6% from levels in the preceding quarter due primarily to increased activity from semisubmersibles Transocean Arctic, Sedco 600 and Sovereign Explorer, as well as costs of approximately $7.0 million associated with repairs to the jackup rig Trident 20. Utilization of the segment's 94-rig fleet for the three months ended September 30, 2004 was 67%, including 81% utilization among the High-Specification Floaters compared to utilization of 68% for the segment and 79% for the High-Specification Floaters for the preceding three months in 2004. Average dayrates for the segment's 94-rig fleet improved to $90,700, including an average dayrate of $142,200 for the High-Specification Floaters for the three months ended September 30, 2004 compared to average dayrates of $89,100 and $141,100, respectively, for the preceding three months in 2004.

Customer demand for offshore drilling units continues to improve in several offshore drilling regions, providing contract opportunities generally of longer durations and increasing dayrates, a trend the company believes should continue into 2005. This trend is most pronounced in the company's High-Specification Floaters fleet, as customers address their 2005 deepwater exploration and development drilling requirements with what the company believes is a preference toward the enhanced efficiency of Fifth-Generation units. In August, the company signed the deepwater semisubmersible rig Sedco Express to a three-year contract in Angola and has recently received a contract for the drillship Deepwater Millennium for six months plus three, six-month options. Also, the drillship Deepwater Pathfinder will mobilize from the U.S. Gulf of Mexico to Nigeria for an anticipated multi-well, term project to commence during the fourth quarter of 2004. One of the company's Other Deepwater units, the semisubmersible rig Transocean Rather, is currently en route to the North Sea from West Africa to commence an expected drilling project during early-2005 in the North Atlantic. Although the current outlook for the industry's 24 Fifth-Generation Floaters is excellent, with the possibility of demand for these units exceeding supply during 2005, certain Transocean Fifth-Generation rigs are at risk of limited periods of downtime in the near-term, as they transition between contracts. Presently, the drillship Deepwater Millennium is idle in the U.S. Gulf of Mexico following completion of a contract. The rig is expected to commence its new contract on December 1, 2004.

The company's Other Floaters fleet has experienced significant under-utilization during 2004; however, improved business conditions are evident in certain regions like the U.K. sector of the North Sea and U.S. Gulf of Mexico. The company has recently received two contracts and a contract extension on three of its semisubmersibles in the U.K. sector of the North Sea and, as a result of increased customer demand, is in the process of reactivating two previously stacked semisubmersibles for drilling programs that are expected to commence during the first quarter of 2005. The two contract signings, on the semisubmersible rigs Sedco 704 and Transocean John Shaw, are at dayrates of $91,000 and $85,000, respectively, which are evidence of the improving drilling environment. The company is also reviewing opportunities to reactivate one or two of its idle semisubmersibles in the U.S. Gulf of Mexico.

Customer demand for international jackup rigs remains steady, especially in the Far East and Middle East regions, with utilization and dayrates expected to remain firm to modestly higher through 2005. The company has completed the previously announced mobilizations of jackup rigs Trident VI and J.T. Angel to India and Indonesia, respectively, with both units expected to commence new contracts during the fourth quarter of 2004. Mobilization of the jackup rig Shelf Explorer to Indonesia is in progress, with the rig expected to commence a new contract by late-fourth quarter 2004.

The company remains exposed to certain events during the fourth quarter of 2004 which could reduce profitability over the final three months of the year. These events include the Norwegian labor strike, which has entered its 16th week, affecting the semisubmersible rigs Transocean Leader, Transocean Searcher and Polar Pioneer, and ongoing repairs to the semisubmersible rig Jim Cunningham and jackup rig Trident 20 following operational incidents. The two rigs are expected to be out of service for the majority of the quarter with repair, crew and other costs in the quarter estimated to be in a range of $20 million to $25 million. Also, downtime will be incurred on the drillship Deepwater Pathfinder and semisubmersible rig Transocean Rather as the units mobilize to Nigeria and the North Sea, respectively. Finally, the drillship Deepwater Millennium could be idle for approximately 45 days as it transitions between contracts.

Effective Tax Rate(3) - Tax expense for the third quarter of 2004 totaled $6.3 million, or 3.9% of pretax income for the quarter. The company's estimated effective tax rate for the fourth quarter and full year is expected to be approximately 44%. This rate includes nearly 7 percentage points associated with an increase in the valuation allowance established at the time of the TODCO IPO. The estimated effective tax rate is subject to change and could vary significantly from current expectations.

TODCO Segment - Revenues for the three months ended September 30, 2004 were $93.1 million. The segment reported an operating loss before general and administrative expenses(2) of $2.4 million and field operating income(2) of $20.7 million for the three months ended September 30, 2004.

Liquidity - Cash flow from operations totaled $506.6 million for the nine months ended September 30, 2004. Total debt at September 30, 2004 was $3,061.4 million. Net debt(4) was $2,285.6 million at September 30, 2004, down 28% from $3,184.1 million at December 31, 2003. On October 25, 2004, the company completed the redemption of its $342.3 million face value, 6.75% Senior Notes due April 2005. A loss on redemption of $3.3 million will be recognized in the fourth quarter of 2004.

Conference Call Information

Transocean will conduct a teleconference call at 10:00 a.m. ET on October 26, 2004. To participate, dial 303-262-2075 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." It 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. ET on October 26 and can be accessed by dialing 303-590-3000 and referring to the passcode 11011131. Also, a replay will be available through the Internet and can be accessed by visiting either of the above-referenced Worldwide Web addresses.

TODCO, a publicly traded company in which Transocean owns a majority voting interest, will also conduct a teleconference call at 9:00 a.m. ET on October 26, 2004. To participate, dial 800-967-7141 approximately five to 10 minutes prior to the scheduled start time of the call. TODCO's conference call will be simultaneously broadcast over the Internet in a listen-only mode and can be accessed by logging onto the TODCO website at www.theoffshoredrillingcompany.com. For more information, see TODCO's website.

Monthly Fleet Update Information

Drilling rig status and contract information on Transocean Inc.'s offshore drilling fleet has been condensed into a report titled "Monthly Fleet Update," which is available through the company's website at www.deepwater.com. The report is 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 that will provide a link directly to the page that has been updated. Shareholders and other interested parties are invited to sign up for this service.

Forward-Looking Disclaimer

Statements regarding future opportunities and outlook for the company, including the company's Transocean Drilling business segment, dayrates, contract duration, rig utilization, commencement dates, downtime, business conditions, reactivation of rigs, drilling activity, contract opportunities, revenues, profitability, the duration and financial impact of a labor strike in Norway, rig mobilizations, the Jim Cunningham and Trident 20 repair time, costs and contract status, the 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, effect of strike and other labor relations issues, effect of fire, future financial results, actions by customers and other third parties, 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 94 mobile offshore drilling units, excluding the 70-rig fleet of TODCO, a publicly traded drilling company in which Transocean Inc. has a majority voting interest. 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 32 High-Specification Floaters (semisubmersibles and drillships), 25 Other Floaters, 26 Jackup Rigs and other assets utilized in the support of offshore drilling activities worldwide. With a current equity market capitalization in excess of $11 billion, Transocean Inc.'s ordinary shares are traded on the New York Stock Exchange under the symbol "RIG."

(1) Net income adjusted for certain items, a non-GAAP measure, is computed by subtracting from or adding to net income, a GAAP measure, items that occurred during the three and nine months ended September 30, 2004 and 2003 and are considered by management to be outside the normal course of operations. A reconciliation for the periods reported may be found in the accompanying schedule titled Non-GAAP Financial Measures and Reconciliations - Adjusted Net Income and Diluted Earnings Per Share.

(2) For a reconciliation of segment operating income before general and administrative expense to field operating income, see the accompanying schedule titled Non-GAAP Financial Measures and Reconciliations - Operating Income (Loss) Before General and Administrative Expense to Field Operating Income (Loss) by Segment.

(3) For the analysis of the effective tax rate, see the accompanying schedule titled Effective Tax Rate Analysis.

(4) Net Debt is a non-GAAP measure defined as total debt less cash and cash equivalents. A reconciliation for the periods reported may be found in the accompanying schedule titled Non-GAAP Financial Measures and Reconciliations - Total Debt to Net Debt Reconciliations.


                   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,
                                ------------------ -------------------
                                   2004     2003      2004      2003
                                --------- -------- --------- ---------
Operating Revenues
 Contract drilling revenues       $607.1   $597.0  $1,789.5  $1,759.2
 Other revenues                     44.7     25.9     147.5      83.6
                                   651.8    622.9   1,937.0   1,842.8
Costs and Expenses
  Operating and maintenance        432.9    403.0   1,251.5   1,203.6
  Depreciation                     133.9    126.8     398.4     381.1
  General and administrative        15.2     21.2      44.3      50.0
  Impairment loss on long-lived
   assets                              -        -         -      16.8
  Gain from sale of assets, net     (1.3)    (0.9)    (28.9)     (2.9)
  Gain from TODCO offerings       (129.4)       -    (168.8)        -
                                   451.3    550.1   1,496.5   1,648.6

Operating Income                   200.5     72.8     440.5     194.2

Other Income (Expense), net
  Equity in earnings of joint
   ventures                          1.7      1.9       7.7       7.3
  Interest income                    2.5      3.0       6.5      15.7
  Interest expense                 (42.6)   (49.0)   (132.6)   (154.4)
  Loss on retirement of debt           -        -     (28.1)    (15.7)
  Impairment loss on note
   receivable from related party       -        -         -     (21.3)
  Other, net                         0.1     (0.2)      0.4      (3.5)
                                   (38.3)   (44.3)   (146.1)   (171.9)

Income Before Income Taxes and
 Minority Interest                 162.2     28.5     294.4      22.3

Income Tax Expense                   6.3     17.3      74.2       8.3
Minority Interest                    1.0      0.2      (5.4)      0.3
Net Income                        $154.9    $11.0    $225.6     $13.7

Earnings Per Share
  Basic and Diluted                $0.48    $0.03     $0.70     $0.04

Weighted Average Shares
 Outstanding
   Basic                           320.9    319.9     320.7     319.8
   Diluted                         325.3    321.1     324.5     321.4


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

                                           September 30, December 31,
                                           ------------- -------------
                                               2004          2003
                                           ------------- -------------
                                            (Unaudited)
                       ASSETS

Cash and Cash Equivalents                        $775.8        $474.0
Accounts Receivable, net
   Trade                                          483.9         435.3
   Other                                           19.7          45.0
Materials and Supplies, net                       150.1         152.0
Deferred Income Taxes                              35.6          41.0
Other Current Assets                               41.7          31.6
   Total Current Assets                         1,506.8       1,178.9

Property and Equipment                         10,672.3      10,673.0
Less Accumulated Depreciation                   2,988.9       2,663.4
   Property and Equipment, net                  7,683.4       8,009.6

Goodwill                                        2,257.1       2,230.8
Investments in and Advances to Joint
 Ventures                                           4.1           5.5
Deferred Income Taxes, net                         30.0          28.2
Other Assets                                      222.6         209.6
   Total Assets                               $11,704.0     $11,662.6

       LIABILITIES AND SHAREHOLDERS' EQUITY

Accounts Payable                                 $180.2        $146.1
Accrued Income Taxes                               48.3          57.2
Debt Due Within One Year                          386.7          45.8
Other Current Liabilities                         295.8         262.0
   Total Current Liabilities                      911.0         511.1

Long-Term Debt                                  2,674.7       3,612.3
Deferred Income Taxes                              85.5          42.8
Other Long-Term Liabilities                       320.5         299.4
   Total Long-Term Liabilities                  3,080.7       3,954.5

Commitments and Contingencies

Minority Interest                                 263.7           4.4

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,
 321,071,783 and 319,926,500 shares issued
 and outstanding at September 30, 2004
 and December 31, 2003, respectively                3.2           3.2
Additional Paid-in Capital                     10,673.9      10,643.8
Accumulated Other Comprehensive Loss              (19.9)        (20.2)
Retained Deficit                               (3,208.6)     (3,434.2)
   Total Shareholders' Equity                   7,448.6       7,192.6
   Total Liabilities and Shareholders'
    Equity                                    $11,704.0     $11,662.6


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

                                       Three Months     Nine Months
                                           Ended           Ended
                                       September 30,   September 30,
                                      --------------- ----------------
                                        2004    2003    2004     2003
                                      ------- ------- ------- --------
Cash Flows from Operating Activities
  Net income                          $154.9   $11.0  $225.6    $13.7
  Adjustments to reconcile net income
   to net cash provided by operating
   activities
   Depreciation                        133.9   126.8   398.4    381.1
   Stock-based compensation expense      4.2     1.4    17.7      4.3
   Deferred income taxes                (7.6)   19.1    20.4    (40.4)
   Equity in earnings of joint
    ventures                            (1.7)   (1.9)   (7.7)    (7.3)
   Net (gain)/loss from disposal of
    assets                               1.4     4.4   (23.6)    12.2
   Gain from TODCO offerings          (129.4)      -  (168.8)       -
   Loss on retirement of debt              -       -    28.1     15.7
   Impairment loss on long-lived
    assets                                 -       -       -     16.8
   Impairment loss on note receivable
    from related party                     -       -       -     21.3
   Amortization of debt-related
    discounts/premiums, fair value
    adjustments and issue costs, net    (5.1)   (8.2)  (17.6)   (16.1)
   Deferred income, net                  1.0    (5.3)   15.1     (6.9)
   Deferred expenses, net               (5.8)   (5.1)  (18.5)    (2.4)
   Other long-term liabilities          (1.5)    0.2     5.4     13.7
   Other, net                            3.7     6.7    (0.6)    11.8
 Changes in operating assets and
  liabilities
     Accounts receivable                 8.6   (44.0)  (23.2)     7.6
     Accounts payable and other
      current liabilities               61.0    48.2    61.1     46.6
     Income taxes receivable/payable,
      net                                3.4    (8.0)    5.4      1.6
     Other current assets                5.0    14.3   (10.6)    (9.0)
Net Cash Provided by Operating
 Activities                            226.0   159.6   506.6    464.3

Cash Flows from Investing Activities
 Capital expenditures                  (45.1)  (22.4)  (99.8)   (72.6)
 Note issued to related party, net of
  repayments                               -     1.1       -    (44.2)
 Proceeds from disposal of assets, net   4.3     0.9    46.3      4.1
 Deepwater Drilling II L.L.C.'s cash
  acquired, net of cash paid               -       -       -     18.1
 Proceeds from TODCO offerings         269.9       -   425.6        -
 Joint ventures and other investments,
  net                                    4.3     0.5     9.0      2.7
Net Cash Provided by (Used in)
 Investing Activities                  233.4   (19.9)  381.1    (91.9)

Cash Flows from Financing Activities
 Repayments on revolving credit
  agreements                               -       -  (200.0)       -
 Repayments on other debt instruments  (11.8)  (48.0) (407.0)  (967.2)
 Cash from termination of interest
  rate swaps                               -       -       -    173.5
 Net proceeds from issuance of
  ordinary shares under
  stock-based compensation plans         5.0     0.6    20.0     12.3
 Other, net                              1.1       -     1.1      1.1
Net Cash Used in Financing Activities   (5.7)  (47.4) (585.9)  (780.3)

Net Increase (Decrease) in Cash and
 Cash Equivalents                      453.7    92.3   301.8   (407.9)
Cash and Cash Equivalents at Beginning
 of Period                             322.1   714.0   474.0  1,214.2
Cash and Cash Equivalents at End of
 Period                               $775.8  $806.3  $775.8   $806.3


                            Transocean Inc.
                      Fleet Operating Statistics

                            Operating Revenues ($ Millions) (1)
                     -------------------------------------------------
                                                    Nine Months Ended
                          Three Months Ended          September 30,
                     ----------------------------- -------------------
Transocean Drilling  Sept. 30, June 30,  Sept. 30,
 Segment:              2004      2004      2003      2004      2003
                     --------- --------- --------- --------- ---------
Contract Drilling
 Revenues
  High-Specification
   Floaters:
    Fifth-Generation
     Deepwater
     Floaters          $192.8    $189.0    $188.7    $590.3    $532.9
    Other Deepwater
     Floaters          $112.5    $103.3    $113.2    $323.9    $335.4
    Other High-
     Specification
     Floaters           $34.2     $31.5     $32.1     $96.3     $96.6
  Total High-
   Specification
   Floaters            $339.5    $323.8    $334.0  $1,010.5    $964.9
  Other Floaters        $67.0     $66.3     $74.3    $196.0    $238.8
  Jackups              $101.4    $106.6    $110.4    $309.5    $342.3
  Other Rigs            $20.1     $19.9     $24.2     $64.1     $59.5
Subtotal               $528.0    $516.6    $542.9  $1,580.1  $1,605.5
Other Revenues
  Client Reimbursable
   Revenues             $17.6     $21.4     $20.0     $55.6     $64.6
  Integrated Services
   and Other            $13.1     $14.5      $1.5     $53.7      $5.5
Subtotal                $30.7     $35.9     $21.5    $109.3     $70.1
Segment Total          $558.7    $552.5    $564.4  $1,689.4  $1,675.6

TODCO Segment
Contract Drilling
 Revenues               $79.1     $68.3     $54.1    $209.4    $153.7
Other Revenues
  Client Reimbursable
   Revenues              $5.6      $5.6      $4.4     $16.2     $13.5
  Delta Towing and
   Other                 $8.4      $6.8        $-     $22.0        $-
Subtotal                $14.0     $12.4      $4.4     $38.2     $13.5
Segment Total           $93.1     $80.7     $58.5    $247.6    $167.2

Total Company          $651.8    $633.2    $622.9  $1,937.0  $1,842.8

                                 Average Dayrates  (1)(2)
                     -------------------------------------------------
                                                    Nine Months Ended
                          Three Months Ended          September 30,
                     ----------------------------- -------------------
Transocean Drilling   Sept. 30, June 30, Sept. 30,
 Segment:              2004      2004      2003      2004      2003
                     --------- --------- --------- --------- ---------
  High-Specification
   Floaters:
    Fifth-Generation
     Deepwater
     Floaters        $193,400  $177,800  $176,600  $187,600  $181,600
    Other Deepwater
     Floaters        $103,900  $107,800  $112,500  $104,200  $112,600
    Other High-
     Specification
     Floaters        $111,200  $115,500  $117,200  $113,800  $118,300
  Total High-
   Specification
   Floaters          $142,200  $141,100  $142,200  $142,300  $143,400
  Other Floaters      $65,400   $65,000   $60,600   $64,400   $64,100
  Jackups             $52,500   $52,700   $54,400   $52,200   $56,200
  Other Rigs          $41,900   $43,300   $48,800   $43,200   $44,700
Segment Total         $90,700   $89,100   $89,000   $90,000   $89,800

TODCO Segment         $27,800   $26,200   $19,300   $26,600   $18,400

Total Drilling Fleet  $70,100   $69,600   $67,000   $70,400   $67,100

                                       Utilization (1)(2)
                         ---------------------------------------------
                                                     Nine Months Ended
                            Three Months Ended          September 30,
                         --------------------------- -----------------
Transocean Drilling      Sept. 30, June 30, Sept. 30,
 Segment:                  2004      2004     2003      2004    2003
                         --------- -------- --------- -------- -------
  High-Specification
   Floaters:
    Fifth-Generation
     Deepwater Floaters    83%       90%       97%       88%       94%
    Other Deepwater
     Floaters              78%       70%       73%       76%       73%
    Other High-
     Specification
     Floaters              84%       75%       74%       77%       75%
  Total High-
   Specification
   Floaters                81%       79%       82%       81%       81%
  Other Floaters           45%       45%       51%       44%       51%
  Jackups                  81%       85%       85%       83%       86%
  Other Rigs               47%       46%       49%       49%       42%
Segment Total              67%       68%       71%       68%       69%

TODCO Segment              44%       41%       44%       41%       41%

Total Drilling Fleet       57%       56%       59%       56%       57%

(1) Certain reclassifications have been made to prior periods to
    conform to current quarter presentation.

(2) Average dayrates are defined as contract drilling revenue earned
    per revenue earning day in the period and 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.

                   Transocean Inc. and Subsidiaries
                      Effective Tax Rate Analysis
                           (in US$ millions)

                                     Three Months Ended
                         -----------------------------------------
                         September 30,   June 30,   September 30,
                             2004         2004          2003
                         ------------- ------------ --------------
Income before Income
 Taxes and Minority
 Interest                      $162.2        $65.7          $28.5
  Add back (subtract):
    TODCO IPO date stock
     option vesting                 -            -              -
    Transocean IPO date
     stock option
     vesting                        -            -              -
    Nigeria benefit plan
     restructuring                  -            -           (2.0)
    Impairment loss on
     note receivable
     from related party             -            -              -
    Impairment loss on
     long-lived assets              -            -              -
    Loss on retirement
     of debt                        -            -              -
    IPO-related costs               -            -            8.0
    Gain on sale of
     Sedco 602                      -        (21.6)             -
    Gain on TODCO
     offerings                 (129.4)           -              -
                         ------------- ------------ --------------
Adjusted Income before
 Income Taxes and
 Minority Interest              $32.8        $44.1          $34.5

Income Tax Expense               $6.3        $19.9          $17.3
  Add back (subtract):
    Valuation allowance
     related to TODCO
     offerings                   13.7            -              -
    Other                        (0.9)           -              -
    Changes in estimates
     of prior years
     taxes                        5.5(1)         -              -
    Nigeria benefit plan
     restructuring                  -            -            0.1
    Impairment loss on
     note receivable
     from related party             -            -              -
    Impairment loss on
     long-lived assets              -            -              -
    Loss on retirement
     of debt                        -            -              -
                         ------------- ------------ --------------
Adjusted Income Tax
 Expense                        $24.6(2)     $19.9(2)       $17.4(2)

Effective Tax Rate                3.9%        30.3%          60.7%

Effective Tax Rate
 Adjusted                        75.1%        45.1%          50.4%


                                            Nine Months Ended
                                       ---------------------------
                                              September 30,
                                           2004          2003
                                       -------------- ------------
Income before Income Taxes and Minority
 Interest                                     $294.4        $22.3
  Add back (subtract):
    TODCO IPO date stock option vesting          5.6            -
    Transocean IPO date stock option
     vesting                                     1.5            -
    Nigeria benefit plan restructuring             -          0.6
    Impairment loss on note receivable
     from related party                            -         21.3
    Impairment loss on long-lived
     assets                                        -         16.8
    Loss on retirement of debt                  28.1         15.7
    IPO-related costs                              -          8.0
    Gain on sale of Sedco 602                  (21.6)           -
    Gain on TODCO offerings                   (168.8)           -
                                       -------------- ------------
Adjusted Income before Income Taxes and
 Minority Interest                            $139.2        $84.7

Income Tax Expense                             $74.2         $8.3
  Add back (subtract):
    Valuation allowance related to
     TODCO offerings                           (17.3)           -
    Other                                       (0.9)           -
    Changes in estimates of prior years
     taxes                                       5.5         14.6
    Nigeria benefit plan restructuring             -            -
    Impairment loss on note receivable
     from related party                            -          7.5
    Impairment loss on long-lived
     assets                                        -          4.0
    Loss on retirement of debt                     -          1.9
                                       -------------- ------------
Adjusted Income Tax Expense                    $61.5        $36.3

Effective Tax Rate                              25.2%        37.2%

Effective Tax Rate Adjusted                     44.2%(3)     42.8%


(1) Our estimates of prior year taxes change as we file tax returns,
    settle disputes with tax authorities or become aware of other
    events.

(2) The three months ended September 30, 2004, June 30, 2004 and
    September 30, 2003 include $10.1 million, $4.6 million and $2.6
    million, respectively, of additional tax expense reflecting the
    catch-up effect of the increase in the annual effective tax rate.

(3) Includes 6.9 percentage points associated with an increase in the
    valuation allowance established at the time of the TODCO IPO


                   Transocean Inc. and Subsidiaries
           Non-GAAP Financial Measures and Reconciliations
          Adjusted Net Income and Diluted Earnings Per Share
                          (in US$ millions)

                                         Three Months Ended
                              ----------------------------------------
                              September 30,   June 30,   September 30,
                                  2004         2004          2003
                              ------------- ------------ -------------

Adjusted Net Income

Net income as reported              $154.9        $48.0         $11.0
  Add back (subtract):
    After-tax gain from sale
     of Sedco 602                        -        (21.6)            -
    After-tax gain from TODCO
     Offerings                      (129.4)           -             -
    Tax valuation allowance
     related to TODCO IPO                -            -             -
    After-tax loss on
     retirement of debt                  -            -             -
    Stock option vesting
     resulting from the TODCO
     IPO                                 -            -             -
    After-tax IPO costs                  -            -           8.0
    After-tax impairment loss
     on long-lived assets                -            -             -
    After-tax impairment loss
     on note receivable from
     related party                       -            -             -
    Favorable resolution of a
     non-U.S. income tax
     liability                           -            -             -
                              ------------- ------------ -------------
Net income as adjusted               $25.5        $26.4         $19.0
                              ------------- ------------ -------------

Diluted Earnings Per Share:

Net income as reported               $0.48        $0.15         $0.03
  Add back (subtract):
    After-tax gain from sale
     of Sedco 602                        -        (0.07)            -
    After-tax gain from TODCO
     Offerings                       (0.40)           -             -
    Tax valuation allowance
     related to TODCO IPO                -            -             -
    After-tax loss on
     retirement of debt                  -            -             -
    Stock option vesting
     resulting from the TODCO
     IPO                                 -            -             -
    After-tax IPO costs                  -            -          0.03
    After-tax impairment loss
     on long-lived assets                -            -             -
    After-tax impairment loss
     on note receivable from
     related party                       -            -             -
    Favorable resolution of a
     non-U.S. income tax
     liability                           -            -             -
                              ------------- ------------ -------------
Net income as adjusted               $0.08        $0.08         $0.06
                              ------------- ------------ -------------


                                                Nine Months Ended
                                           ---------------------------
                                                  September 30,
                                               2004          2003
                                           ------------- -------------

Adjusted Net Income

Net income as reported                           $225.6         $13.7
  Add back (subtract):
    After-tax gain from sale of Sedco 602         (21.6)            -
    After-tax gain from TODCO Offerings          (168.8)            -
    Tax valuation allowance related to
     TODCO IPO                                     31.0             -
    After-tax loss on retirement of debt           28.1          13.8
    Stock option vesting resulting from the
     TODCO IPO                                      7.1             -
    After-tax IPO costs                               -           8.0
    After-tax impairment loss on long-lived
     assets                                           -          12.8
    After-tax impairment loss on note
     receivable from related party                    -          13.8
    Favorable resolution of a non-U.S.
     income tax liability                             -         (14.6)
                                           ------------- -------------
Net income as adjusted                           $101.4         $47.5
                                           ------------- -------------

Diluted Earnings Per Share:

Net income as reported                            $0.70         $0.04
  Add back (subtract):
    After-tax gain from sale of Sedco 602         (0.07)            -
    After-tax gain from TODCO Offerings           (0.52)            -
    Tax valuation allowance related to
     TODCO IPO                                     0.09             -
    After-tax loss on retirement of debt           0.09          0.04
    Stock option vesting resulting from the
     TODCO IPO                                     0.02             -
    After-tax IPO costs                               -          0.03
    After-tax impairment loss on long-lived
     assets                                           -          0.04
    After-tax impairment loss on note
     receivable from related party                    -          0.04
    Favorable resolution of a non-U.S.
     income tax liability                             -         (0.04)
                                           ------------- -------------
Net income as adjusted                            $0.31         $0.15
                                           ------------- -------------


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

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

                                         Three Months Ended
                              ----------------------------------------
                              September 30,   June 30,   September 30,
                                  2004         2004          2003
                              ------------- ------------ -------------

Transocean Drilling Segment
  Operating revenue                 $558.7       $552.5        $564.4
  Operating and maintenance
   expense                           360.5        338.1         342.4
  Depreciation                       110.0        109.1         103.9
  Impairment loss on long-
   lived assets                          -            -             -
  Gain from sale of assets,
   net                                (0.5)       (21.9)         (0.8)
  Gain from TODCO Offerings         (129.4)           -             -
                              ------------- ------------ -------------
Operating income before
 general and administrative
 expense                             218.1        127.2         118.9
Add back:     Depreciation           110.0        109.1         103.9
              Impairment loss
               on long-lived
               assets                    -            -             -
              Gain from sale
               of assets, net         (0.5)       (21.9)         (0.8)
              Gain from TODCO
               Offerings            (129.4)           -             -
                              ------------- ------------ -------------
Field operating income              $198.2       $214.4        $222.0
                              ------------- ------------ -------------

TODCO Segment
  Operating revenue                  $93.1        $80.7         $58.5
  Operating and maintenance
   expense(a)                         72.4         68.1          60.6
  Depreciation                        23.9         23.9          22.9
  Impairment loss on long-
   lived assets                          -            -             -
  Gain from sale of assets,
   net                                (0.8)        (1.9)         (0.1)
                              ------------- ------------ -------------
Operating loss before general
 and administrative expense           (2.4)        (9.4)        (24.9)
Add back:     Depreciation            23.9         23.9          22.9
              Impairment loss
               on long-lived
               assets                    -            -             -
              Gain from sale
               of assets, net         (0.8)        (1.9)         (0.1)
                              ------------- ------------ -------------
Field operating income (loss)        $20.7        $12.6         $(2.1)
                              ------------- ------------ -------------


                                                Nine Months Ended
                                            --------------------------
                                                  September 30,
                                                2004         2003
                                            ------------- ------------

Transocean Drilling Segment
  Operating revenue                             $1,689.4     $1,675.6
  Operating and maintenance expense              1,031.8      1,013.8
  Depreciation                                     326.4        311.9
  Impairment loss on long-lived assets                 -          5.2
  Gain from sale of assets, net                    (23.5)        (2.4)
  Gain from TODCO Offerings                       (168.8)           -
                                            ------------- ------------
Operating income before general and
 administrative expense                            523.5        347.1
Add back:     Depreciation                         326.4        311.9
              Impairment loss on long-lived
               assets                                  -          5.2
              Gain from sale of assets, net        (23.5)        (2.4)
              Gain from TODCO Offerings           (168.8)           -
                                            ------------- ------------
Field operating income                            $657.6       $661.8
                                            ------------- ------------

TODCO Segment
  Operating revenue                               $247.6       $167.2
  Operating and maintenance expense(a)             219.7        189.8
  Depreciation                                      72.0         69.2
  Impairment loss on long-lived assets                 -         11.6
  Gain from sale of assets, net                     (5.4)        (0.5)
                                            ------------- ------------
Operating loss before general and
 administrative expense                            (38.7)      (102.9)
Add back:     Depreciation                          72.0         69.2
              Impairment loss on long-lived
               assets                                  -         11.6
              Gain from sale of assets, net         (5.4)        (0.5)
                                            ------------- ------------
Field operating income (loss)                      $27.9       $(22.6)
                                            ------------- ------------

(a) Q3 04, Q2 04, Q3 03, YTD Q3 04, and YTD Q3 03 include $6.9
    million, $7.1 million, $3.9 million, $26.3 million, and $11.2
    million, respectively, of operating and maintenance expense that
    TODCO classifies as general and administrative expense.


                   Transocean Inc. and Subsidiaries
            Non-GAAP Financial Measures and Reconciliations
                Total Debt to Net Debt Reconciliations
                           (in US$ millions)

                                            As of           As of
                                        -------------- ---------------
                                           9/30/04        12/31/03
                                        -------------- ---------------
Total Debt to Net Debt Reconciliation
Total Debt                                   $3,061.4        $3,658.1
Deduct: Cash and Cash Equivalents               775.8           474.0
                                        -------------- ---------------
Net Debt                                     $2,285.6        $3,184.1
                                        -------------- ---------------


    CONTACT: Transocean Inc., Houston
             Analyst Contact:
             Jeffrey L. Chastain, 713-232-7551
             or
             Media Contact:
             Guy A. Cantwell, 713-232-7647

    SOURCE: Transocean Inc.