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Transocean Inc. Reports Strong Growth in Third Quarter 2006 Revenue and Net Income; Announces Repurchase of $2.0 Billion of Shares

November 2, 2006

HOUSTON--(BUSINESS WIRE)--Nov. 2, 2006--Transocean Inc. (NYSE:RIG) today reported net income for the three months ended September 30, 2006 of $309.0 million, or $0.96 per diluted share, on record quarterly revenues of $1,025.7 million. The results compare to net income of $170.4 million, or $0.50 per diluted share, on revenues of $762.6 million for the corresponding three months in 2005. Net income for the three months ended September 30, 2006 included after-tax gains of $40.8 million, or $0.13 per diluted share, resulting primarily from the sale of two tender-assist drilling rigs, the W.D. Kent and the Searex X.

For the nine months ended September 30, 2006, net income was $764.2 million, or $2.31 per diluted share, on revenues of $2,696.3 million, compared to net income for the nine months ended September 30, 2005 of $564.0 million, or $1.68 per diluted share, on revenues of $2,120.5 million. Net income for the nine months ended September 30, 2006 included after-tax gains totaling $194.4 million, or $0.58 per diluted share, resulting from the sale of non-strategic assets, including the two above-mentioned rigs. Net income for the nine months ended September 30, 2005 included a gain of $165.0 million, or $0.49 per diluted share, resulting from the sale of TODCO common stock, after-tax gains of $27.9 million, or $0.08 per diluted share, resulting from the sale of three rigs, and a loss of $6.7 million, or $0.02 per diluted share, resulting from the early retirement of debt.

During the three months ended September 30, 2006, the company repurchased $1.75 billion of its ordinary shares, or 24.4 million shares, at an average price of $71.67 per share, pursuant to the share repurchase program that was initially authorized by its Board of Directors in October 2005 at $2.0 billion and increased in May 2006 to $4.0 billion. During October 2006, the company repurchased an additional $250.0 million of its ordinary shares under the program, or 3.5 million shares, at an average price of $71.79 per share. At October 31, 2006, the company had repurchased a total of $3.0 billion of its ordinary shares under the program, or 41.7 million shares, at an average price of $71.87 per share and still had the authority to repurchase up to an additional $1.0 billion of its ordinary shares under the terms of the share repurchase program. Ordinary shares issued and outstanding at October 27, 2006 were approximately 292.4 million.

Robert L. Long, Chief Executive Officer of Transocean Inc., stated, "The company achieved record quarterly revenues and near-record quarterly net income, after adjusting for gains resulting from asset sales, during the third quarter of 2006. Revenue growth from the second quarter of 2006 was due primarily to higher average dayrates and improved utilization on a number of rigs. Operating costs for the quarter were below the high end of our expectations due in part to the postponement of rig maintenance and shipyard programs until the final quarter of the year. Although the postponement of shipyards may cause operating and maintenance costs in the fourth quarter to exceed our previous guidance of $515 million to $535 million, aggregate costs for the second half of 2006 are expected to be within our previously stated expectations.

"As we near the completion of 2006 and look to 2007, the company's record contract backlog, which has grown to an estimated $20.2 billion at October 31, 2006, should support prospects for further quarterly financial improvement. We remain optimistic regarding the prospects for our business, as rig demand continues to outpace supply, especially in the deepwater sector. New rig construction opportunities with multi-year contract durations support our belief that the deepwater sector should remain strong well into the future."

Operations Quarterly Review

Revenues for the three months ended September 30, 2006 increased 20% to $1,025.7 million compared to revenues of $853.3 million during the three months ended June 30, 2006. The revenue increase was due primarily to an improvement in average daily revenue, which rose 14% to $146,900 from $129,000 over the same comparative period. This improvement was consistent across the company's fleet as several rigs commenced new contracts with dayrates that reflect the strong business environment prevalent since mid-2004. In addition, third quarter 2006 revenues were enhanced by reduced out-of-service time, as rigs like the drillship Deepwater Frontier and semisubmersible rig Transocean Richardson, both down for much of the second quarter of 2006, experienced higher utilization following the completion of maintenance programs and, in the case of the Deepwater Frontier, a mobilization from Brazil to India. Finally, increased activity was seen during the third quarter of 2006 as the semisubmersible rigs Transocean Winner and Transocean Prospect commenced contracts following lengthy reactivation programs. The return to active service of these two reactivated rigs helped to drive the average third quarter 2006 fleet utilization to 87%, up from 81% during the second quarter of 2006.

For the three months ended September 30, 2006, operating income before general and administrative expenses totaled $413.2 million, a 32% improvement from $312.6 million reported during the second quarter of 2006. Field operating income (defined as revenues less operating and maintenance expenses) improved 53% to $464.8 million compared to $304.0 million over the same comparative period. The improved third quarter 2006 results were due chiefly to the strong revenue growth, partially offset by a 2% increase in operating and maintenance expenses, which totaled $560.9 million during the third quarter of 2006 compared to $549.3 million during the previous quarter in 2006. The increase in operating and maintenance expenses was due primarily to higher rig activity following the return of the Transocean Winner and Transocean Prospect to active status and fewer shipyard programs and mobilizations. Third quarter 2006 operating and maintenance expenses included $31.4 million pertaining to the reactivation of the Winner, Prospect and C.K. Rhein, Jr., compared to $39.2 million in the second quarter of 2006. Completion of the C.K. Rhein, Jr. reactivation project is expected during January 2007, while the commencement of a two-year contract is expected in February 2007 following mobilization of the rig to India.

Liquidity

Cash flow from operations increased to $732.2 million for the nine months ended September 30, 2006. The company reported an increase in total debt of approximately $1.9 billion, to $3,495.4 million at September 30, 2006 compared to total debt at June 30, 2006 of $1,596.0 million, resulting from the issuance in September 2006 of $1.0 billion principal amount of two-year floating rate notes and $900 million drawn on an up to $1.0 billion multi-draw term credit facility. During October 2006, the company drew a final $100 million available on the term credit facility. Net proceeds from the debt issuance were used to completely repay $640 million of the outstanding borrowings under the company's existing $1.0 billion, five-year revolving credit facility and the repurchase of company ordinary shares.

Conference Call Information

Transocean will conduct a teleconference call at 10:00 a.m. Eastern on November 2, 2006. To participate, dial 913-981-5591 and refer to confirmation code 4658614 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/Presentations." A file containing four charts to be discussed during the conference call, titled "3Q06 Charts," has been posted to the company's website and can also be found by selecting "Investor Relations/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 on November 2, 2006 and can be accessed by dialing 719-457-0820 and referring to the passcode 4658614. Also, a replay will be available through the Internet and can be accessed by visiting either of the above-referenced Worldwide Web addresses.

Forward-Looking Disclaimer

Statements regarding financial results, operating revenues, operating and maintenance expenses, prospects for our business, new rig opportunities, as well as any other statements that are not historical facts in this release, are forward-looking statements that involve certain risks, uncertainties and assumptions. These include but are not limited to operating hazards and delays, risks associated with international operations, future financial results, actions by customers and other third parties, factors affecting the supply and demand of drilling rigs, including newbuilds, reactivations and the reallocation of current rigs, factors affecting the duration of contracts including well-in-progress provisions, the actual amount of downtime, factors resulting in reduced applicable dayrates, hurricanes and other weather conditions, the future price of oil and gas and other factors detailed in the company's most recent Form 10-K and other filings with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated.

Transocean Inc. is the world's largest offshore drilling contractor with a fleet of 82 mobile offshore drilling units. The company's mobile offshore drilling fleet, consisting of a large number of high-specification deepwater and harsh environment drilling units, is considered one of the most modern and versatile in the world due to its emphasis on technically demanding segments of the offshore drilling business. The company's fleet consists of 33 High-Specification Floaters (semisubmersibles and drillships), 20 Other Floaters, 25 Jackups and other assets utilized in the support of offshore drilling activities worldwide. With a current equity market capitalization in excess of $20 billion, Transocean Inc.'s ordinary shares are traded on the New York Stock Exchange under the symbol "RIG."

(1) 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 Before General and Administrative Expense to Field Operating Income by Segment.

                   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,
                               ------------------- -------------------
                                 2006      2005      2006      2005
                               --------- --------- --------- ---------
Operating Revenues
  Contract drilling revenues     $991.3    $735.6  $2,598.3  $2,018.3
  Other revenues                   34.4      27.0      98.0     102.2
----------------------------------------------------------------------
                                1,025.7     762.6   2,696.3   2,120.5
----------------------------------------------------------------------
Costs and Expenses
  Operating and maintenance       560.9     438.3   1,585.2   1,263.6
  Depreciation                     99.2     102.1     302.8     304.0
  General and administrative       22.5      19.4      67.3      55.5
----------------------------------------------------------------------
                                  682.6     559.8   1,955.3   1,623.1
----------------------------------------------------------------------
Gain from disposal of assets,
 net                               47.6       0.7     222.3      34.2
----------------------------------------------------------------------
Operating Income                  390.7     203.5     963.3     531.6
----------------------------------------------------------------------

Other Income (Expense), net
  Equity in earnings of
   unconsolidated affiliates        4.6       1.8       7.5       8.3
  Interest income                   3.3       5.2      13.8      14.0
  Interest expense, net of
   amounts capitalized            (27.2)    (24.5)    (71.5)    (87.4)
  Gain from TODCO stock sales         -         -         -     165.0
  Loss on retirement of debt          -      (0.6)        -      (7.3)
  Other, net                        1.4       9.7       1.2       5.6
----------------------------------------------------------------------
                                  (17.9)     (8.4)    (49.0)     98.2
----------------------------------------------------------------------

Income Before Income Taxes and
 Minority Interest                372.8     195.1     914.3     629.8
Income Tax Expense                 63.8      24.7     150.1      65.8
Minority Interest                     -         -         -         -
----------------------------------------------------------------------

Net Income                       $309.0    $170.4    $764.2    $564.0
======================================================================

Earnings Per Share
   Basic                          $0.99     $0.52     $2.39     $1.73
   Diluted                        $0.96     $0.50     $2.31     $1.68
======================================================================

Weighted Average Shares
 Outstanding
   Basic                          312.0     328.9     320.3     326.2
----------------------------------------------------------------------
   Diluted                        323.4     340.8     332.3     338.5
----------------------------------------------------------------------
                   TRANSOCEAN INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED BALANCE SHEETS
                   (In millions, except share data)

                                           September 30, December 31,
                                               2006          2005
                                           ------------- -------------
                                            (Unaudited)
                  ASSETS

Cash and Cash Equivalents                        $407.1        $445.4
 Accounts Receivable, net of allowance for
  doubtful accounts of $34.8 and $15.3 at
  September 30, 2006 and December 31,
  2005, respectively                              872.2         599.7
 Materials and Supplies, net of allowance
  for obsolescence of $16.2 and $19.1 at
  September 30, 2006 and December 31,
  2005, respectively                              161.0         156.2
Deferred Income Taxes, net                         27.0          23.4
Other Current Assets                               79.4          54.4
----------------------------------------------------------------------
    Total Current Assets                        1,546.7       1,279.1
----------------------------------------------------------------------

Property and Equipment                         10,270.9       9,791.0
Less Accumulated Depreciation                   3,138.0       3,042.8
----------------------------------------------------------------------
    Property and Equipment, net                 7,132.9       6,748.2
----------------------------------------------------------------------

Goodwill                                        2,209.0       2,208.9
 Investments in and Advances to
  Unconsolidated Affiliates                        11.6           8.1
Other Assets                                      278.1         212.9
----------------------------------------------------------------------
    Total Assets                              $11,178.3     $10,457.2
======================================================================

   LIABILITIES AND SHAREHOLDERS' EQUITY

Accounts Payable                                 $351.2        $254.0
Accrued Income Taxes                               45.1          27.5
Debt Due Within One Year                           95.4         400.0
Other Current Liabilities                         379.6         242.1
----------------------------------------------------------------------
    Total Current Liabilities                     871.3         923.6
----------------------------------------------------------------------

Long-Term Debt                                  3,400.0       1,197.1
Deferred Income Taxes, net                        104.5          65.0
Other Long-Term Liabilities                       332.6         286.2
----------------------------------------------------------------------
    Total Long-Term Liabilities                 3,837.1       1,548.3
----------------------------------------------------------------------

Commitments and Contingencies

Minority Interest                                   3.8           3.6

 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,
  295,871,463 and 324,750,166 shares
  issued and outstanding at September 30,
  2006 and December 31, 2005, respectively          3.0           3.2
Additional Paid-in Capital                      8,285.9      10,565.3
Accumulated Other Comprehensive Loss              (20.6)        (20.4)
Retained Deficit                               (1,802.2)     (2,566.4)
----------------------------------------------------------------------
    Total Shareholders' Equity                  6,466.1       7,981.7
----------------------------------------------------------------------
    Total Liabilities and Shareholders'
     Equity                                   $11,178.3     $10,457.2
======================================================================
                   TRANSOCEAN INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (In millions)
                             (Unaudited)

                              Three Months Ended   Nine Months Ended
                                 September 30,       September 30,
                              ------------------- -------------------
                                2006      2005      2006      2005
                              --------- --------- --------- ---------
Cash Flows from Operating
 Activities
  Net income                    $309.0    $170.4    $764.2    $564.0
  Adjustments to reconcile net
   income to net cash provided
   by operating activities
    Depreciation                  99.3     102.1     302.8     304.0
    Stock-based compensation
     expense                       4.8       6.2      12.8      12.1
    Deferred income taxes         (7.1)     (8.8)     18.3      (6.6)
    Equity in earnings of
     unconsolidated affiliates    (4.6)     (1.8)     (7.5)     (8.3)
    Net gain from disposal of
     assets                      (47.6)     (0.7)   (222.3)    (34.2)
    Gain from TODCO stock
     sales                           -         -         -    (165.0)
    Loss on retirement of debt       -       0.6         -       7.3
    Amortization of debt-
     related
     discounts/premiums, fair
     value adjustments and
     issue costs, net             (0.1)     (0.8)     (0.7)     (6.3)
    Deferred income, net          11.5     (22.0)     31.5      (9.9)
    Deferred expenses, net       (40.2)     18.0     (94.7)     27.1
    Tax benefit from exercise
     of stock options to
     purchase and vesting of
     ordinary shares under
     stock-based compensation
     plans                        (2.0)     15.2      (9.9)     20.1
    Other long-term
     liabilities                  (4.0)      5.5      16.7      18.0
    Other, net                     0.2     (15.6)      4.5     (14.4)
    Changes in operating
     assets and liabilities
       Accounts receivable      (168.7)    (27.1)   (272.5)   (146.7)
       Accounts payable and
        other current
        liabilities               76.0      14.5     166.5      85.6
       Income taxes
        receivable/payable,
        net                       47.3     (20.1)     58.9     (13.0)
       Other current assets       14.6       2.0     (36.4)    (18.1)
---------------------------------------------------------------------
 Net Cash Provided by
  Operating Activities           288.4     237.6     732.2     615.7
---------------------------------------------------------------------

 Cash Flows from Investing
  Activities
  Capital expenditures          (434.2)    (35.3)   (709.8)   (144.9)
  Proceeds from disposal of
   assets, net                    94.7       2.3     297.7      60.3
  Proceeds from TODCO stock
   sales, net                        -         -         -     271.9

  Joint ventures and other
   investments, net                0.5         -       0.5       4.5
---------------------------------------------------------------------
 Net Cash Provided by (Used
  in) Investing Activities      (339.0)    (33.0)   (411.6)    191.8
---------------------------------------------------------------------

 Cash Flows from Financing
  Activities
  Net proceeds from issuance
   of debt and borrowings
   under credit facilities     1,900.0         -   1,900.0         -
  Repayments of debt                 -    (592.4)        -    (880.2)
  Net proceeds from issuance
   of ordinary shares under
   stock-based compensation
   plans                           0.7      36.7      66.8     196.1
  Proceeds from issuance of
   ordinary shares upon
   exercise of warrants              -       6.0         -      10.6
  Repurchase of ordinary
   shares                     (1,750.4)        -  (2,350.5)        -
  Release of escrow funds -
   Nautilus lease financing       29.6         -      29.6         -
  Decrease in cash dedicated
   to debt service                   -         -         -      12.0
  Other, net                      (4.4)     (0.6)     (4.8)     (0.5)
---------------------------------------------------------------------
 Net Cash Provided by (Used
  in) Financing Activities       175.5    (550.3)   (358.9)   (662.0)
---------------------------------------------------------------------

 Net Increase (Decrease) in
  Cash and Cash Equivalents      124.9    (345.7)    (38.3)    145.5
---------------------------------------------------------------------
 Cash and Cash Equivalents at
  Beginning of Period            282.2     942.5     445.4     451.3
---------------------------------------------------------------------
 Cash and Cash Equivalents at
  End of Period                 $407.1    $596.8    $407.1    $596.8
=====================================================================

                           Transocean Inc.
                      Fleet Operating Statistics

                            Operating Revenues ($ Millions) (1)
                     -------------------------------------------------
                                                    Nine Months Ended
                          Three Months Ended            Sept 30,
                     ----------------------------- -------------------
Transocean Drilling  Sept 30,  June 30,  Sept 30,
 Segment:              2006      2006      2005      2006      2005
                     --------- --------- --------- --------- ---------
Contract Drilling
 Revenues
  High-Specification
   Floaters:
    Fifth-Generation
     Deepwater
     Floaters          $257.5    $227.8    $220.9    $710.9    $627.0
    Other Deepwater
     Floaters          $246.0    $193.8    $161.8    $611.5    $432.8
    Other High-
     Specification
     Floaters           $62.0     $62.5     $60.8    $175.5    $167.0
  Total High-
   Specification
   Floaters            $565.5    $484.1    $443.5  $1,497.9  $1,226.8
  Other Floaters       $217.9    $167.4    $136.1    $551.3    $338.5
  Jackups              $184.1    $155.1    $133.2    $482.9    $387.9
  Other Rigs            $23.8     $21.5     $22.8     $66.3     $65.1
Subtotal               $991.3    $828.1    $735.6  $2,598.4  $2,018.3
Other Revenues
  Client Reimbursable
   Revenues             $30.1     $21.8     $19.8     $76.5     $63.7
  Integrated Services
   and Other             $4.3      $3.4      $7.2     $21.4     $38.5
Subtotal                $34.4     $25.2     $27.0     $97.9    $102.2
Total Company        $1,025.7    $853.3    $762.6  $2,696.3  $2,120.5

                                   Average Dayrates (1)
                     -------------------------------------------------
                                                    Nine Months Ended
                          Three Months Ended            Sept 30,
                     ----------------------------- -------------------
Transocean Drilling  Sept 30,  June 30,  Sept 30,
 Segment:              2006      2006      2005      2006      2005
                     --------- --------- --------- --------- ---------
  High-Specification
   Floaters:
    Fifth-Generation
     Deepwater
     Floaters        $246,000  $216,500  $197,100  $223,700  $192,300
    Other Deepwater
     Floaters        $222,300  $190,200  $141,700  $188,700  $133,300
    Other High-
     Specification
     Floaters        $181,500  $174,700  $166,300  $172,000  $163,400
  Total High-
   Specification
   Floaters          $226,700  $199,300  $168,800  $201,400  $163,000
  Other Floaters     $136,800  $118,200   $90,400  $122,000   $82,000
  Jackups             $83,400   $73,000   $58,900   $75,800   $58,200
  Other Rigs          $52,400   $47,500   $48,000   $49,100   $47,000
Total Drilling Fleet $146,900  $129,000  $107,100  $132,000  $102,400
                                      Utilization (1)
                     -------------------------------------------------
                                                    Nine Months Ended
                          Three Months Ended            Sept 30,
                     ----------------------------- -------------------
Transocean Drilling  Sept 30,  June 30,  Sept 30,
 Segment:              2006      2006      2005      2006      2005
                     --------- --------- --------- --------- ---------
  High-Specification
   Floaters:
    Fifth-Generation
     Deepwater
     Floaters           88%       89%       94%       90%       92%
    Other Deepwater
     Floaters           75%       70%       83%       75%       79%
    Other High-
     Specification
     Floaters           93%       98%       99%       94%       94%
  Total High-
   Specification
   Floaters             82%       81%       89%       83%       86%
  Other Floaters        86%       74%       68%       78%       63%
  Jackups               96%       93%       98%       93%       96%
  Other Rigs            76%       62%       51%       64%       51%
Total Drilling Fleet    87%       81%       82%       83%       79%

(1) Average daily revenue is defined as contract drilling revenue
    earned per revenue earning day in the period. A revenue earning
    day is defined as a day for which a rig earns dayrate after
    commencement of operations. Utilization is defined as the total
    actual number of revenue earning days in the period as a
    percentage of the total number of calendar days in the period for
    all drilling rigs in our fleet.
                   Transocean Inc. and Subsidiaries
           Non-GAAP Financial Measures and Reconciliations

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

                            Three Months Ended      Nine Months Ended
                         ------------------------- -------------------

                           Sept.    June    Sept.    Sept.     Sept.
                            30,      30,     30,      30,       30,
                           2006     2006    2005     2006      2005
                         --------- ------- ------- --------- ---------

Transocean Drilling
 Segment
  Operating revenue      $1,025.7  $853.3  $762.6  $2,696.3  $2,120.5
  Operating and
   maintenance expense
   (1)                      560.9   549.3   439.8   1,585.2   1,267.3
  Depreciation               99.2   102.0   102.1     302.8     304.0
  Gain from disposal of
   assets, net              (47.6) (110.6)   (2.2)   (222.3)    (37.9)
                         --------- ------- ------- --------- ---------
Operating income before
 general and
 administrative expense     413.2   312.6   222.9   1,030.6     587.1
Add back
 (subtract): Depreciation    99.2   102.0   102.1     302.8     304.0
             Gain from
              disposal of
              assets, net
              (1)           (47.6) (110.6)   (2.2)   (222.3)    (37.9)
                         --------- ------- ------- --------- ---------
Field operating income     $464.8  $304.0  $322.8  $1,111.1    $853.2
                         --------- ------- ------- --------- ---------

(1) Loss on retirement for Q3 05 and YTD Q3 05 of $1.5 million and
    $3.7 million, respectively, was reclassed out of operating and
    maintenance expense and into gain from disposal of assets, net.

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

SOURCE: Transocean Inc.