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Transocean Inc. Reports Fourth Quarter and Full-Year 2006 Results

February 14, 2007

HOUSTON--(BUSINESS WIRE)--Feb. 14, 2007--Transocean Inc. (NYSE:RIG) today reported net income for the three months ended December 31, 2006 of $621 million, or $2.05 per diluted share, on record quarterly revenues of $1,186 million. The results compare to net income of $152 million, or $0.45 per diluted share, on revenues of $771 million, for the three months ended December 31, 2005. Net income for the three months ended December 31, 2006 included after-tax gains of $192 million, or $0.63 per diluted share, resulting primarily from the sale of two rigs, the Transocean Wildcat and the Searex IX, and other income of $51 million, or $0.17 per share, that we recognized from our tax sharing agreement with TODCO in 2006.

For the 12 months ended December 31, 2006, net income totaled $1,385 million, or $4.28 per diluted share, on revenues of $3,882 million, compared to net income of $716 million, or $2.13 per diluted share, on revenues of $2,892 million for the corresponding 12 months in 2005. Net income for the 12 months ended December 31, 2006 included after-tax gains totaling $437 million, or $1.34 per share, resulting from the sale of non-strategic assets, including the two above-mentioned rigs, and income that we recognized from the tax sharing agreement with TODCO in 2006. Net income for the 12 months ended December 31, 2005 included a gain of $165 million, or $0.49 per diluted share, resulting from the sale of TODCO common stock, after-tax gains of $28 million, or $0.08 per diluted share, resulting from the sale of three rigs, other income of $11 million, or $0.03 per diluted share, earned from our tax sharing agreement with TODCO, and a loss of $7 million, or $0.02 per diluted share, resulting from the early retirement of debt.

Robert L. Long, Chief Executive Officer of Transocean Inc., stated, "We had a good quarter with revenues up 16% breaking the prior quarter's record revenues and with costs up less than 2% from the prior quarter. We are entering 2007 with a record contract backlog and a continuation of the excellent market conditions that we saw in 2006."

Operations Quarterly Review

Revenues for the three months ended December 31, 2006 increased to $1,186 million compared to revenues of $1,025 million during the three months ended September 30, 2006. The increase was primarily due to an improvement in average daily revenue, which rose 17% to $171,700 from $146,900 during the three months ended September 30, 2006. 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, fourth quarter 2006 revenues were enhanced by the return to operation of the semisubmersible rig Sedco 709 and the drillship Deepwater Discovery which were both idle for maintenance programs during the third quarter of 2006 and by a full quarter of activity of the semisubmersible rigs Transocean Winner and Transocean Prospect after they completed their reactivation programs in the third quarter of 2006.

For the three months ended December 31, 2006, operating income before general and administrative expenses totaled $701 million, a 70% improvement from $412 million reported for the third quarter of 2006. Field operating income(1) (defined as revenues less operating and maintenance expenses) improved 33% to $616 million compared to $464 million over the same comparative period. These improved fourth quarter 2006 results were due chiefly to the strong revenue growth, partially offset by an increase in operating and maintenance expenses, which totaled $570 million during the fourth quarter of 2006 compared to $561 million during the previous quarter in 2006. The increase in operating and maintenance activity was due primarily to the increased number of maintenance projects completed on our operating rigs during the quarter and higher labor costs related to ongoing recruitment efforts and the continued inflationary pressure on wages. This increase was partially offset by a decrease in shipyard expenditures following the return to activity of the Sedco 709, Deepwater Discovery, Transocean Winner and Transocean Prospect during the third and fourth quarter.

Liquidity

Cash flow from operations increased to $1,237 million for the 12 months ended December 31, 2006. The company reported a decrease in total debt of approximately $200 million, to $3,295 million at December 31, 2006 compared to total debt at September 30, 2006 of $3,495 million, resulting from a draw of $100 million on the $1.0 billion multi-draw term credit facility and net of repayments of $300 million in the fourth quarter of 2006.

Effective Tax Rate

The company's Annual Effective Tax Rate(2) for the 12 months ended December 31, 2006 was 18.5%, excluding the previously mentioned impact on income before income tax related to the gains from the rig sales and the TODCO tax sharing agreement as well as excluding from income tax expense various discrete tax items. The Effective Tax Rate(3) of 10.4% for the fourth quarter of 2006 reflects the impact of the previously mentioned rig sales and TODCO tax sharing income in addition to a $17 million favorable impact resulting from changes in estimates and resolution of prior years' tax disputes in various jurisdictions.

Share Buyback

In May 2006, the company's board of directors authorized an increase in the overall amount of ordinary shares which may be repurchased under the company's share repurchase program from $2.0 billion to $4.0 billion. During the three months ended December 31, 2006, the company purchased and retired $250 million of its ordinary shares, which amounted to approximately 3.5 million ordinary shares at an average purchase price of $71.79 per share. As of January 31, 2007, the company had repurchased and retired a total of $3.0 billion of its ordinary shares under the program, which amounted to approximately 42 million ordinary shares at an average purchase price of $71.87 per share, and the company retained the authority to repurchase the remaining $1.0 billion of its ordinary shares under the program.

Conference Call Information

Transocean will conduct a teleconference call at 10:00 a.m. Eastern on February 14, 2007. To participate, dial 913-981-5522 and refer to confirmation code 2410660 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 "4Q06 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 February 14, 2007 and can be accessed by dialing 719-457-0820 and referring to the passcode 2410660. 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 our backlog, market conditions, rig demand, our share repurchase plan, prospects for our business, 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 $22 billion, Transocean Inc.'s ordinary shares are traded on the New York Stock Exchange under the symbol "RIG."

1 For a reconciliation of 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.

2 Annual Effective Tax Rate is income tax expense excluding various discrete items (such as changes in estimates and tax on items excluded from income before income taxes) divided by income before income taxes excluding gains on sales and similar items pursuant to Financial Accounting Standards Board Interpretation No. 18. See accompanying schedule titled Effective Tax Rate Analysis.

3 Effective Tax Rate is income tax expense divided by income before income taxes. See accompanying schedule titled Effective Tax Rate Analysis.

                   TRANSOCEAN INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF OPERATIONS
                 (In millions, except per share data)
                             (Unaudited)

                               Three Months Ended      Years Ended
                                   December 31,       December 31,
                               ------------------- -------------------
                                 2006      2005      2006      2005
                               --------- --------- --------- ---------

Operating Revenues
   Contract drilling revenues    $1,147      $739    $3,745    $2,757
   Other revenues                    39        32       137       135
                               --------- --------- --------- ---------
                                  1,186       771     3,882     2,892
Costs and Expenses
   Operating and maintenance        570       457     2,155     1,720
   Depreciation                      98       102       401       406
   General and administrative        23        19        90        75
                               --------- --------- --------- ---------
                                    691       578     2,646     2,201
Gain (loss) from disposal of
 assets, net                        183        (5)      405        29
                               --------- --------- --------- ---------
Operating Income                    678       188     1,641       720
                               --------- --------- --------- ---------

Other Income (Expense), net
   Interest income                    7         6        21        19
   Interest expense, net of
    amounts capitalized             (43)      (24)     (115)     (111)
   Gain from TODCO Stock Sales        -         -         -       165
   Loss on retirement of debt         -         -         -        (7)
   Other, net                        51         3        60        17
                               --------- --------- --------- ---------
                                     15       (15)      (34)       83
                               --------- --------- --------- ---------

Income Before Income Taxes          693       173     1,607       803
   Income Tax Expense                72        21       222        87
                               --------- --------- --------- ---------
Net Income                         $621      $152    $1,385      $716
                               ========= ========= ========= =========

Earnings Per Share
   Basic                          $2.13     $0.46     $4.42     $2.19
                               --------- --------- --------- ---------
   Diluted                        $2.05     $0.45     $4.28     $2.13
                               --------- --------- --------- ---------

Weighted Average Shares
 Outstanding
   Basic                            292       330       313       327
                               --------- --------- --------- ---------
   Diluted                          304       336       325       339
                               --------- --------- --------- ---------

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

                                                      December 31,
                                                   -------------------
                                                     2006      2005
                                                   --------- ---------
                      ASSETS
Cash and Cash Equivalents                              $467      $445
Accounts Receivable, net
  Trade                                                 929       583
  Other                                                  17        17
Materials and Supplies, net                             160       156
Deferred Income Taxes, net                               16        23
Other Current Assets                                     67        55
                                                   --------- ---------
     Total Current Assets                             1,656     1,279
                                                   --------- ---------

Property and Equipment                               10,539     9,791
Less Accumulated Depreciation                         3,213     3,043
                                                   --------- ---------
  Property and Equipment, net                         7,326     6,748
                                                   --------- ---------
Goodwill                                              2,195     2,209
Other Assets                                            299       221
                                                   --------- ---------
     Total Assets                                   $11,476   $10,457
                                                   ========= =========

       LIABILITIES AND SHAREHOLDERS' EQUITY

Accounts Payable                                       $477      $254
Accrued Income Taxes                                     98        27
Debt Due Within One Year                                 95       400
Other Current Liabilities                               369       242
                                                   --------- ---------
     Total Current Liabilities                        1,039       923
                                                   --------- ---------

Long-Term Debt                                        3,200     1,197
Deferred Income Taxes, net                               54        65
Other Long-Term Liabilities                             343       286
                                                   --------- ---------
     Total Long-Term Liabilities                      3,597     1,548
                                                   --------- ---------

Commitments and Contingencies

Minority Interest                                         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, 292,454,457 and 324,750,166
 shares issued and outstanding at December 31, 2006
 and 2005, respectively                                   3         3
Additional Paid-in Capital                            8,044    10,565
Accumulated Other Comprehensive Loss                    (30)      (20)
Accumulated Deficit                                  (1,181)   (2,566)
                                                   --------- ---------
     Total Shareholders' Equity                       6,836     7,982
                                                   --------- ---------
     Total Liabilities and Shareholders' Equity     $11,476   $10,457
                                                   ========= =========

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

                               Three Months Ended     Years Ended
                                  December 31,        December 31,
                               ------------------- -------------------
                                 2006      2005      2006      2005
                               --------- --------- --------- ---------

Cash Flows from Operating
 Activities
  Net income                       $621      $152    $1,385      $716
  Adjustments to reconcile net
   income to net cash provided
   by operating activities
    Depreciation                     98       102       401       406
    Stock-based compensation
     expense                          7         4        20        16
    Deferred income taxes           (41)       34       (23)       27
    Equity in (earnings)
     losses of unconsolidated
     affiliates                       3        (2)       (5)      (10)
    Net (gain) loss from
     disposal of assets            (183)        5      (405)      (29)
    Gain from TODCO Stock
     Sales                            -         -         -      (165)
    Loss on retirement of debt        -         -         -         7
    Amortization of debt-
     related
     discounts/premiums, fair
     value adjustments and
     issue costs, net                 1         -         -        (7)
    Deferred income, net             20         3        52        (7)
    Deferred expenses, net          (14)      (10)     (109)       18
    Tax benefit from exercise
     of stock options to
     purchase and vesting of
     ordinary shares under
     stock-based compensation
     plans                            -         2       (10)       22
    Other long-term
     liabilities                      1         5        18        23
    Other, net                       (5)       (3)        -       (17)
    Changes in operating
     assets and liabilities
      Accounts receivable           (74)       (3)     (347)     (150)
      Accounts payable and
       other current
       liabilities                    1         1       168        87
      Income taxes
       receivable/payable, net       65       (38)      124       (51)
      Other current assets            4        (4)      (32)      (22)
----------------------------------------------------------------------
Net Cash Provided by Operating
 Activities                         504       248     1,237       864
----------------------------------------------------------------------

Cash Flows from Investing
 Activities
  Capital expenditures             (166)      (37)     (876)     (182)
  Proceeds from disposal of
   assets, net                      163        14       461        74
  Proceeds from TODCO Stock
   Sales, net                         -         -         -       272
  Joint ventures and other
   investments, net                   -         -         -         5
----------------------------------------------------------------------
Net Cash Provided by (Used In)
 Investing Activities                (3)      (23)     (415)      169
----------------------------------------------------------------------

Cash Flows from Financing
 Activities
    Net proceeds from issuance
     of debt and borrowings
     under the Term Credit
     Facility                       100         -     2,000         -
    Repayments of debt             (300)        -      (300)     (880)
    Net proceeds from issuance
     of ordinary shares under
     stock-based compensation
     plans                            2        23        69       219
    Proceeds from issuance of
     ordinary shares upon
     exercise of warrants             -         -         -        11
    Repurchase of ordinary
     shares                        (250)     (400)   (2,601)     (400)
    Decrease in cash dedicated
     to debt service                  -         -         -        12
    Release of escrow funds -
     Nautilus lease financing         -         -        30         -
    Tax benefit from issuance
     of ordinary shares under
     stock-based compensation
     plans                            7         -         7         -
    Other, net                        -         -        (5)       (1)
----------------------------------------------------------------------
Net Cash Used in Financing
 Activities                        (441)     (377)     (800)   (1,039)
----------------------------------------------------------------------

Net Increase (Decrease) in
 Cash and Cash Equivalents           60      (152)       22        (6)
----------------------------------------------------------------------
Cash and Cash Equivalents at
 Beginning of Period                407       597       445       451
----------------------------------------------------------------------
Cash and Cash Equivalents at
 End of Period                     $467      $445      $467      $445
======================================================================

                           Transocean Inc.
                      Fleet Operating Statistics

                           Operating Revenues (in millions) (1)
                     -------------------------------------------------
                                                       Years Ended
                          Three Months Ended          December 31,
                     ----------------------------- -------------------
Transocean Drilling  Dec. 31,  Sept. 30, Dec. 31,
 Segment:              2006      2006      2005      2006      2005
                     --------- --------- --------- --------- ---------
Contract Drilling
 Revenues
  High-Specification
   Floaters:
    Fifth-Generation
     Deepwater
     Floaters            $304      $258      $221    $1,015      $848
    Other Deepwater
     Floaters             264       246       150       875       583
    Other High-
     Specification
     Floaters              66        62        60       242       227
  Total High-
   Specification
   Floaters               634       566       431     2,132     1,658
  Other Floaters          296       218       153       847       492
  Jackups                 199       184       133       682       521
  Other Rigs               18        23        22        84        86
Subtotal                1,147       991       739     3,745     2,757
Other Revenues
  Client Reimbursable
   Revenues                32        30        21       108        85
  Integrated Services
   and Other                7         4        11        29        50
Subtotal                   39        34        32       137       135
Total Company          $1,186    $1,025      $771    $3,882    $2,892

                                   Average Dayrates (1)
                     -------------------------------------------------
                                                       Years Ended
                          Three Months Ended          December 31,
                     ----------------------------- -------------------
Transocean Drilling  Dec. 31,  Sept. 30, Dec. 31,
 Segment:              2006      2006      2005      2006      2005
                     --------- --------- --------- --------- ---------
  High-Specification
   Floaters:
    Fifth-Generation
     Deepwater
     Floaters        $275,300  $246,000  $215,800  $237,000  $198,000
    Other Deepwater
     Floaters        $230,400  $222,300  $138,800  $199,600  $134,700
    Other High-
     Specification
     Floaters        $187,400  $181,500  $161,700  $176,000  $162,900
  Total High-
   Specification
   Floaters          $243,600  $226,700  $174,100  $212,300  $165,700
  Other Floaters     $178,400  $136,800   $98,500  $137,200   $86,500
  Jackups             $97,000   $83,400   $64,900   $81,000   $59,800
  Other Rigs          $48,200   $52,400   $48,500   $48,900   $47,300
Total Drilling Fleet $171,700  $146,900  $113,300  $142,100  $105,100

                                      Utilization (1)
                     -------------------------------------------------
                                                       Years Ended
                          Three Months Ended          December 31,
                     ----------------------------- -------------------
Transocean Drilling  Dec. 31,  Sept. 30, Dec. 31,
 Segment:              2006      2006      2005      2006      2005
                     --------- --------- --------- --------- ---------
  High-Specification
   Floaters:
    Fifth-Generation
     Deepwater
     Floaters           92%       88%       86%       90%       90%
    Other Deepwater
     Floaters           78%       75%       79%       76%       79%
    Other High-
     Specification
     Floaters           97%       93%      100%       94%       95%
  Total High-
   Specification
   Floaters             86%       82%       84%       84%       86%
  Other Floaters        90%       86%       71%       81%       65%
  Jackups               89%       96%       89%       92%       94%
  Other Rigs            99%       76%       49%       70%       50%
Total Drilling Fleet    89%       87%       78%       84%       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
                            (in millions)

                                  Three Months Ended     Years Ended
                                 --------------------- ---------------
                                  Dec.   Sept.   Dec.   Dec.    Dec.
                                   31,     30,    31,    31,     31,
                                  2006    2006   2005   2006    2005
                                 ------- ------- ----- ------- -------

Transocean Drilling Segment
  Operating revenue              $1,186  $1,025  $771  $3,882  $2,892
  Operating and maintenance
   expense (1)                      570     561   457   2,155   1,720
  Depreciation                       98      99   102     401     406
  (Gain) loss from disposal of
   assets, net                     (183)    (47)    5    (405)    (29)
                                 ------- ------- ----- ------- -------
Operating income before general
 and administrative expense         701     412   207   1,731     795
Add back
 (subtract):  Depreciation           98      99   102     401     406
              (Gain) loss from
               disposal of
               assets, net (1)     (183)    (47)    5    (405)    (29)
                                 ------- ------- ----- ------- -------
Field operating income             $616    $464  $314  $1,727  $1,172
                                 ------- ------- ----- ------- -------

(1)Loss on retirement for Q4 05 of $7 million was reclassed out of
 Operating and maintenance expense and into (Gain) loss from disposal
 of assets, net.

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

                                 Three Months Ended       Years Ended
                            ---------------------------- -------------
                            Dec. 31,  Sept. 30, Dec. 31,   Dec. 31,
                              2006      2006     2005     2006   2005
                            --------- --------- -------- ------- -----
Income (Loss) before Income
 Taxes and Minority Interest    $693      $373     $173  $1,607  $803
  Add back (subtract):
    Loss on retirement of
     debt                          -         -        -       -     7
    Gain on sale of assets      (191)      (44)       -    (410)  (33)
    Gain on TODCO stock
     sales                         -         -        -       -  (165)
    Income from TODCO tax
     sharing agreement           (51)        -       (1)    (51)  (11)
                            --------- --------- -------- ------- -----
Adjusted Income before
 Income Taxes                   $451      $329     $172  $1,146  $601

Income Tax Expense               $72       $64      $21    $222   $87
  Add back (subtract):
    Gain on sale of assets         1        (3)       -     (24)   (5)
    Changes in estimates (1)      17        (4)       5      14    19
                            --------- --------- -------- ------- -----
Adjusted Income Tax Expense
 (2)                             $90       $57      $26    $212  $101

Effective Tax Rate (3)          10.4%     17.1%    12.2%   13.8% 10.8%

Annual Effective Tax Rate
 (4)                            20.0%     17.3%    15.1%   18.5% 16.8%

(1) Our estimates change as we file tax returns, settle disputes with
 tax authorities or become aware of other events and include changes
 in deferred taxes, valuation allowances on deferred taxes and other
 tax liabilities.
(2) The three months ended December 31, 2006, September 30, 2006 and
 December 31, 2005 include $7 million, $(1) million and $(3) million,
 respectively, of additional tax expense (benefit) reflecting the
 catch-up effect of an increase (decrease) in the Annual Effective Tax
 Rate.
(3) Effective Tax Rate is income tax expense divided by income before
 income taxes.
(4) Annual Effective Tax Rate is income tax expense excluding various
 discrete items (such as changes in estimates and tax on items
 excluded from income before income taxes) divided by income before
 income taxes excluding gains on sales and similar items pursuant to
 Financial Accounting Standards Board Interpretation No. 18.

CONTACT: Transocean Inc., Houston
Analyst Contact:
John Briscoe, 713-232-7551
or
Media Contact:
Guy A. Cantwell, 713-232-7647

SOURCE: Transocean Inc.