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Transocean Inc. Reports First Quarter 2007 Financial Results

May 2, 2007
HOUSTON, May 02, 2007 (BUSINESS WIRE) -- Transocean Inc. (NYSE:RIG) today reported net income for the three months ended March 31, 2007 of $553 million, or $1.84 per diluted share, on record quarterly revenues of $1,328 million. The results compare to net income of $206 million, or $0.61 per diluted share, on revenues of $817 million, for the three months ended March 31, 2006. Net income for the three months ended March 31, 2007 included an after-tax gain of $20 million, or $0.07 per diluted share, resulting primarily from the sale of the tender rig Charley Graves. The results for the corresponding three months in 2006 included after-tax gains totaling $43 million, or $0.12 per diluted share, resulting from the sale of two rigs.

Robert L. Long, Chief Executive Officer of Transocean Inc., stated, "Demand for deepwater drilling rigs continues to be strong and we continue to benefit from the significant backlog we have built and the ongoing rollover of contracts to higher and higher dayrates. The exceptional results realized in the first quarter can be attributed in large part to great execution by our people in achieving significantly improved revenue efficiency fleet wide while continuing to improve our safety performance as we strive for incident-free operations."

Operations Quarterly Review

Revenues for the three months ended March 31, 2007 increased 12% to $1,328 million compared to revenues of $1,186 million during the three months ended December 31, 2006. This increase in revenues was primarily due to an improvement in average daily revenue, which rose 15% to $198,000 from $171,700 during the three months ended December 31, 2006, and increases in rig revenue efficiency. 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, first quarter 2007 revenues were enhanced by increased activity as the semisubmersible rig C.K. Rhein, Jr. commenced operations following the completion of its reactivation project.

For the three months ended March 31, 2007, operating income before general and administrative expenses totaled $683 million, a 3% decline from $701 million reported for the fourth quarter of 2006. This decline was due to gains of only $23 million on rig sales recognized in the first quarter of 2007 compared to gains on rig sales of $183 million recognized in the fourth quarter of 2006. Field operating income(1) (defined as revenues less operating and maintenance expenses) improved 23% to $760 million compared to $616 million over the prior three-month period. The improvement in first quarter 2007 field operating income was due chiefly to the strong revenue growth and also benefited from stable operating and maintenance expenses, which totaled $568 million during the first quarter of 2007 compared to $570 million during the previous quarter in 2006.

Effective Tax Rate

The company's Annual Effective Tax Rate(2) for the three months ended March 31, 2007 was 13.7%, excluding the previously mentioned impact on income before income tax related to the gain from the rig sale as well as excluding from income tax expense on various discrete items. The Effective Tax Rate(3) of 13.3% for the first quarter of 2007 reflects the impact of the previously mentioned rig sale and a $2 million favorable impact resulting from changes in estimates and the resolution of prior years' tax disputes in various jurisdictions. The company currently expects the effective tax rate for the remainder of 2007 to be approximately 14%, excluding the previously mentioned effects on income before tax related to the gain from the rig sale and excluding various discrete tax items.

Share Buyback

During the three months ended March 31, 2007, the company repurchased and retired $400 million of its ordinary shares, which amounted to approximately 5.2 million ordinary shares at an average purchase price of $77.39 per share. As of April 30, 2007, the company had repurchased and retired a total of $3.4 billion of its ordinary shares under the program, which amounted to approximately 47 million ordinary shares at an average purchase price of $72.48 per share. The company has authority remaining to repurchase $600 million of its ordinary shares under the program.

Conference Call Information

Transocean will conduct a teleconference call at 10:00 a.m. Eastern Time on May 2, 2007. To participate, dial 913-312-1297 and refer to confirmation code 6204914 approximately five to 10 minutes prior to the scheduled start time of the call.

In addition, the conference call will be simultaneously broadcast over the Internet in a listen-only mode and can be accessed by logging onto the company's website at www.deepwater.com and selecting "Investor Relations/News & Events/Webcasts & Presentations." A file containing four charts to be discussed during the conference call, titled "1Q07 Charts," has been posted to the company's website and can also be found by selecting "Investor Relations/News & Events/Webcasts & Presentations." The conference call may also be accessed via the Internet at www.CompanyBoardroom.com by typing in the company's New York Stock Exchange trading symbol, "RIG."

A telephonic replay of the conference call should be available after 1:00 p.m. Eastern Time on May 2, 2007 and can be accessed by dialing 719-457-0820 and referring to the passcode 6204914. 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 $24 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 entitled "Non-GAAP Financial Measures and Reconciliations - Operating Income Before General and Administrative Expense to Field Operating Income."

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

3 Effective Tax Rate is defined as income tax expense divided by income before income taxes. See the accompanying schedule entitled "Effective Tax Rate Analysis."

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


                                        Three months ended March 31,
                                        -----------------------------
                                            2007           2006
                                        -------------- --------------
Operating Revenues
  Contract drilling revenues                   $1,273           $779
  Other revenues                                   55             38
---------------------------------------------------------------------
                                                1,328            817
---------------------------------------------------------------------
Costs and Expenses
  Operating and maintenance                       568            475
  Depreciation                                    100            102
  General and administrative                       26             20
---------------------------------------------------------------------
                                                  694            597
---------------------------------------------------------------------
Gain from disposal of assets, net                  23             64
---------------------------------------------------------------------
Operating Income                                  657            284
---------------------------------------------------------------------

Other Income (Expense), net
  Interest income                                   5              5
  Interest expense, net of amounts
   capitalized                                    (37)           (24)
  Other, net                                       13              1
---------------------------------------------------------------------
                                                  (19)           (18)
---------------------------------------------------------------------

Income Before Income Taxes                        638            266
  Income Tax Expense                               85             60
---------------------------------------------------------------------

Net Income                                       $553           $206
=====================================================================

Earnings Per Share
   Basic                                        $1.90          $0.63
   Diluted                                      $1.84          $0.61
=====================================================================

Weighted Average Shares Outstanding
   Basic                                          290            325
---------------------------------------------------------------------
   Diluted                                        302            337
---------------------------------------------------------------------

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


                                          March 31,     December 31,
                                            2007           2006
                                        -------------- --------------
                                         (Unaudited)
                 ASSETS

Cash and Cash Equivalents                        $502           $467
Accounts Receivable, net of allowance
 for doubtful accounts of $24 and $26 at
 March 31, 2007 and December 31, 2006,
 respectively                                   1,085            946
Materials and Supplies, net of allowance
 for obsolescence of $21 and $19 at
 March 31, 2007 and December 31, 2006,
 respectively                                     168            160
Deferred Income Taxes, net                         16             16
Other Current Assets                               48             67
---------------------------------------------------------------------
  Total Current Assets                          1,819          1,656
---------------------------------------------------------------------

Property and Equipment                         10,866         10,539
Less Accumulated Depreciation                   3,298          3,213
---------------------------------------------------------------------
  Property and Equipment, net                   7,568          7,326
---------------------------------------------------------------------

Goodwill                                        2,195          2,195
Other Assets                                      301            299
---------------------------------------------------------------------
  Total Assets                                $11,883        $11,476
=====================================================================

  LIABILITIES AND SHAREHOLDERS' EQUITY

Accounts Payable                                 $354           $477
Accrued Income Taxes                              136             98
Debt Due Within One Year                            -             95
Other Current Liabilities                         469            369
---------------------------------------------------------------------
  Total Current Liabilities                       959          1,039
---------------------------------------------------------------------

Long-Term Debt                                  3,484          3,200
Deferred Income Taxes, net                         52             54
Other Long-Term Liabilities                       508            343
---------------------------------------------------------------------
  Total Long-Term Liabilities                   4,044          3,597
---------------------------------------------------------------------

Commitments and Contingencies

Minority Interest                                   2              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,
 288,053,348 and 292,454,457 shares
 issued and outstanding at March 31,
 2007 and December 31, 2006,
 respectively                                       3              3
Additional Paid-in Capital                      7,675          8,044
Accumulated Other Comprehensive Loss              (30)           (30)
Accumulated Deficit                              (770)        (1,181)
---------------------------------------------------------------------
  Total Shareholders' Equity                    6,878          6,836
---------------------------------------------------------------------
  Total Liabilities and Shareholders'
   Equity                                     $11,883        $11,476
=====================================================================

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


                                        Three months ended March 31,
                                        ----------------------------
                                            2007           2006
                                        -------------- -------------
Cash Flows from Operating Activities
  Net income                                     $553          $206
  Adjustments to reconcile net income to
   net cash provided by operating
   activities
    Depreciation                                  100           102
    Share-based compensation expense               10             3
    Deferred income taxes                          (2)           34
    Net gain from disposal of assets              (23)          (64)
    Deferred income, net                           34             9
    Deferred expenses, net                         (7)           (8)
    Other long-term liabilities                     7             7
    Other, net                                     (1)            1
    Changes in operating assets and
     liabilities
      Accounts receivable                        (139)          (71)
      Accounts payable and other current
       liabilities                                 83            44
      Income taxes receivable/payable,
       net                                         43             6
      Other current assets                         (4)           (1)
--------------------------------------------------------------------
Net Cash Provided by Operating
 Activities                                       654           268
--------------------------------------------------------------------

Cash Flows from Investing Activities
  Capital expenditures                           (465)         (178)
  Proceeds from disposal of assets, net            39            82
  Joint ventures and other investments,
   net                                             (3)            -
--------------------------------------------------------------------
Net Cash Used in Investing Activities            (429)          (96)
--------------------------------------------------------------------

Cash Flows from Financing Activities
  Borrowings under the Revolving Credit
   Facility, net                                  190             -
  Net proceeds from issuance of ordinary
   shares under share-based compensation
   plans                                           15            45
  Repurchase of ordinary shares                  (400)         (200)
  Other, net                                        5             -
--------------------------------------------------------------------
Net Cash Used in Financing Activities            (190)         (155)
--------------------------------------------------------------------

Net Increase in Cash and Cash
 Equivalents                                       35            17
--------------------------------------------------------------------
Cash and Cash Equivalents at Beginning
 of Period                                        467           445
--------------------------------------------------------------------
Cash and Cash Equivalents at End of
 Period                                          $502          $462
====================================================================

                   Transocean Inc. and Subsidiaries
                      Fleet Operating Statistics


                             Operating Revenues (in millions) (1)
                         --------------------------------------------
                                      Three months ended
                         --------------------------------------------
Transocean Drilling        March 31,     December 31,    March 31,
 Segment:                     2007           2006           2006
                         -------------- -------------- --------------
Contract Drilling
 Revenues
  High-Specification
   Floaters:
    Ultra-Deepwater
     Floaters                     $340           $304           $225
    Other Deepwater
     Floaters                      260            264            172
    Other High-
     Specification
     Floaters                       85             66             51
  Total High-
   Specification Floaters          685            634            448
  Other Floaters                   379            296            166
  Jackups                          194            199            143
  Other Rigs                        15             18             21
Subtotal                         1,273          1,147            778
Other Revenues
  Client Reimbursable
   Revenues                         38             32             25
  Integrated Services and
   Other                            17              7             14
Subtotal                            55             39             39
Total Company                   $1,328         $1,186           $817


                                     Average Dayrates (1)
                         --------------------------------------------
                                      Three months ended
                         --------------------------------------------
Transocean Drilling        March 31,     December 31,    March 31,
 Segment:                     2007           2006           2006
                         -------------- -------------- --------------
  High-Specification
   Floaters:
    Ultra-Deepwater
     Floaters                 $301,400       $275,300       $209,000
    Other Deepwater
     Floaters                 $235,800       $230,400       $154,000
    Other High-
     Specification
     Floaters                 $238,800       $187,400       $158,800
  Total High-
   Specification Floaters     $264,800       $243,600       $178,200
  Other Floaters              $223,700       $178,400       $110,000
  Jackups                     $104,600        $97,000        $70,300
  Other Rigs                   $50,300        $48,200        $47,300
Total Drilling Fleet          $198,000       $171,700       $119,600

                                       Utilization (1)
                         --------------------------------------------
                                      Three Months Ended
                         --------------------------------------------
                           March 31,     December 31,    March 31,
                              2007           2006           2006
                         -------------- -------------- --------------
Transocean Drilling
 Segment:
  High-Specification
   Floaters:
    Ultra Deepwater
     Floaters                       97%            92%            92%
    Other Deepwater
     Floaters                       77%            78%            83%
    Other High-
     Specification
     Floaters                       99%            97%            89%
  Total High-
   Specification Floaters           87%            86%            87%
  Other Floaters                    94%            90%            73%
  Jackups                           83%            89%            91%
  Other Rigs                       100%            99%            58%
Total Drilling Fleet                88%            89%            82%


(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
                               --------------------------------------
                                March 31,   December 31,   March 31,
                                  2007         2006          2006
                               ----------- -------------- -----------

Transocean
 Drilling
 Segment
    Operating
     revenue                       $1,328         $1,186        $817
    Operating and maintenance
     expense                          568            570         475
    Depreciation                      100             98         102
    (Gain) loss from disposal
     of assets, net                   (23)          (183)        (64)
                               ----------- -------------- -----------
  Operating income before
   general and administrative
   expense                            683            701         304
  Add back
   (subtract):  Depreciation          100             98         102
                (Gain) loss
                 from disposal
                 of assets,
                 net                  (23)          (183)        (64)
                               ----------- -------------- -----------
  Field
   operating
   income                            $760           $616        $342
                               ----------- -------------- -----------


                   Transocean Inc. and Subsidiaries
                     Effective Tax Rate Analysis
                            (In millions)



                                                             Twelve
                                                             Months
                                   Three Months Ended         Ended
                              ----------------------------- ---------
                              March 31,  Dec. 31  March 31,  Dec. 31
                                2007      2006      2006      2006
                              --------- --------- --------- ---------
Income (Loss) before Income
 Taxes and Minority Interest      $638      $693      $266    $1,607
  Add back (subtract):
    Gain on sale of assets         (23)     (191)      (65)     (410)
    Income from TODCO tax
     sharing agreement               -       (51)        -       (51)
                              --------- --------- --------- ---------
Adjusted Income before Income
 Taxes                            $615      $451      $201    $1,146

Income Tax Expense                 $85       $72       $60      $222
  Add back (subtract):
    Gain on sale of assets          (3)        1       (22)      (24)
    Changes in estimates (1)         2        17        (3)       14
                              --------- --------- --------- ---------
Adjusted Income Tax Expense
 (2)                               $84       $90       $35      $212

Effective Tax Rate (3)            13.3%     10.4%     22.7%     13.8%

Annual Effective Tax Rate (4)     13.7%     20.0%     17.6%     18.5%


(1) Our estimates change as we file tax returns, settle disputes with
 tax authorities or become aware of other events and include changes
 in deferred taxes, valuation allowances on deferred taxes and other
 tax liabilities.

(2) The three months ended December 31, 2006 include $7 million 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.

SOURCE: Transocean Inc.

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