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Transocean Inc. Reports Second Quarter 2007 Financial Results

August 1, 2007

HOUSTON--(BUSINESS WIRE)--Aug. 1, 2007--Transocean Inc. (NYSE:RIG)today reported net income for the three months ended June 30, 2007 of$549 million, or $1.84 per diluted share, on record quarterly revenuesof $1,434 million. The results compare to net income of $249 million,or $0.75 per diluted share, on revenues of $854 million, for the threemonths ended June 30, 2006. Net income for the second quarter of 2006included after-tax gains of $110 million, or $0.33 per diluted share,resulting from the sales of the semisubmersible rig TransoceanExplorer and drilling barge Searex XII.

For the six months ended June 30, 2007, net income totaled $1,102million, or $3.67 per diluted share, on revenues of $2,762 million.For the same period last year, net income totaled $455 million, or$1.36 per diluted share, on revenues of $1,671 million. Net income forthe first half of 2007 included an after-tax gain of $20 million, or$0.07 per diluted share, resulting primarily from the sale of thetender rig Charley Graves during the first quarter 2007. For the sameperiod last year, net income included after-tax gains of $153 million,or $0.46 per diluted share, resulting from the sale of the TransoceanExplorer, Searex XII, Peregrine III and a platform rig.

Operations Quarterly Review

Revenues for the three months ended June 30, 2007 increased eightpercent to $1,434 million compared to revenues of $1,328 millionduring the three months ended March 31, 2007. The quarter-to-quarterincrease in revenues was primarily due to a combination of a higheraverage dayrate, increased rig activity and decreased shipyard time.The second quarter 2007 average dayrate reached a record high$202,400, up two percent compared to $198,000 during the first quarter2007. For the first time in Transocean's history, the fleet-widequarterly average dayrate exceeded $200,000. Over the same period, rigutilization rose to 91 percent from 88 percent. Improved utilizationwas consistent across the company's fleet as six rigs came out ofshipyard and commenced new contracts. In addition, the Jack Bates andDeepwater Expedition had increased activity levels compared to thefirst quarter of 2007 as the Jack Bates was in a shipyard throughmid-May and the Deepwater Expedition mobilized from Brazil to Egypt tobegin a new contract in January.

For the three months ended June 30, 2007, operating income beforegeneral and administrative expenses totaled $705 million, a threepercent increase from $683 million reported for the first quarter. The$22 million increase in operating income before general andadministrative expense was due to higher revenues, driven by increaseddayrates and rig utilization. Partially offsetting the higher revenuesrelative to the first quarter 2007 were $59 million in increasedoperating and maintenance expenses, $20 million less in after-taxgains from the disposal of assets and a decrease in operating daysrelated to the shipyard projects for the Sedco 700 and Trident 15. Theincrease in operating and maintenance expenses for the second quarter2007 was primarily due to increased operating days on six rigs, anincreased number of maintenance projects and scheduled pay increases.In addition to the Jack Bates and Deepwater Expedition, four otherrigs had increased operating days in the second quarter, as the J.T.Angel, Randolph Yost and Trident 2 returned to service after shipyardprojects in the first quarter, and the C. Kirk Rhein, Jr. mobilized toIndia in January 2007 to begin a new contract. Partially offsettingthe increased operating days were second-quarter shipyard projects forthe Sedco 700 and Trident 15.

Field operating income(1) (defined as revenues less operating andmaintenance expenses) increased six percent to $807 million comparedto $760 million over the prior three-month period. The increase insecond quarter 2007 field operating income was due chiefly to strongrevenue growth combined with stable operating margins.

Liquidity

Cash flow from operations totaled $607 million for the secondquarter 2007 compared to $176 million for the second quarter of 2006.For the six months ended June 30, 2007, cash flow from operationsincreased to $1,261 million compared to $444 million for the sameperiod last year. As of June 30, 2007, total debt was $3,064 million,down $420 million compared to $3,484 million as of March 31, 2007. Ofthe $420 million of debt reduction during the second quarter 2007,$230 million was repayment of term credit facilities and $190 millionwas reductions in the company's revolving credit facility.

Effective Tax Rate

The company's Annual Effective Tax Rate(2) for the three monthsended June 30, 2007 was 16.1 percent, excluding various discreteitems. The Effective Tax Rate(3) of 14.4 percent for the secondquarter of 2007 reflects an $11 million favorable impact resultingfrom changes in estimates. The company currently expects the AnnualEffective Tax Rate for the remainder of 2007 to be approximately 15.0percent.

Conference Call Information

Transocean will conduct a teleconference call at 10:00 a.m.Eastern Time on August 1, 2007. To participate, dial 719-457-2693 andrefer to confirmation code 7044890 approximately five to 10 minutesprior to the scheduled start time of the call.

In addition, the conference call will be simultaneously broadcastover the Internet in a listen-only mode and can be accessed by loggingonto the company's website at www.deepwater.com and selecting\"Investor Relations/News & Events/Webcasts & Presentations.\" A filecontaining four charts to be discussed during the conference call,titled \"2Q07 Charts,\" has been posted to the company's website and canalso be found by selecting \"Investor Relations/News & Events/Webcasts& Presentations.\" The conference call may also be accessed via theInternet at www.CompanyBoardroom.com by typing in the company's NewYork Stock Exchange trading symbol, \"RIG.\"

A telephonic replay of the conference call should be availableafter 1:00 p.m. Eastern Time on August 1, 2007 and can be accessed bydialing 719-457-0820 and referring to the passcode 7044890. Also, areplay will be available through the Internet and can be accessed byvisiting either of the above-referenced Worldwide Web addresses.

Forward-Looking Disclaimer

Statements regarding our Annual Effective Tax Rate, as well as anyother statements that are not historical facts in this release, areforward-looking statements that involve certain risks, uncertaintiesand assumptions. These include but are not limited to operatinghazards and delays, risks associated with international operations,future financial results, actions by customers and other thirdparties, factors affecting the supply and demand of drilling rigs,including newbuilds, reactivations and the reallocation of currentrigs, factors affecting the duration of contracts includingwell-in-progress provisions, the actual amount of downtime, factorsresulting in reduced applicable dayrates, hurricanes and other weatherconditions, the future price of oil and gas and other factors detailedin the company's most recent Form 10-K and other filings with theSecurities and Exchange Commission. Should one or more of these risksor uncertainties materialize, or should underlying assumptions proveincorrect, actual results may vary materially from those indicated.

Transocean Inc. is the world's largest offshore drillingcontractor with a fleet of 82 mobile offshore drilling units. Thecompany's mobile offshore drilling fleet, consisting of a large numberof high-specification deepwater and harsh environment drilling units,is considered one of the most modern and versatile in the world due toits emphasis on technically demanding segments of the offshoredrilling business. The company's fleet consists of 33High-Specification Floaters (semisubmersibles and drillships), 20Other Floaters, 25 Jackups and other assets utilized in the support ofoffshore drilling activities worldwide. With a current equity marketcapitalization in excess of $31 billion, Transocean Inc.'s ordinaryshares are traded on the New York Stock Exchange under the symbol\"RIG.\"

(1) For a reconciliation of operating income before general andadministrative expense to field operating income, see the accompanyingschedule entitled \"Non-GAAP Financial Measures and Reconciliations -Operating Income Before General and Administrative Expense to FieldOperating Income.\"

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

(3) Effective Tax Rate is defined as income tax expense divided byincome 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   Six months ended                                     June 30,            June 30,                               ------------------- -------------------                                 2007      2006      2007      2006                               --------- --------- --------- ---------Operating revenues  Contract drilling revenues   $  1,360  $    828  $  2,633  $  1,607  Other revenues                     74        26       129        64----------------------------------------------------------------------                                  1,434       854     2,762     1,671----------------------------------------------------------------------Costs and expenses  Operating and maintenance         627       549     1,195     1,024  Depreciation                      101       102       201       204  General and administrative         29        25        55        45----------------------------------------------------------------------                                    757       676     1,451     1,273----------------------------------------------------------------------Gain (loss) from disposal of assets, net                         (1)      111        22       175----------------------------------------------------------------------Operating income                    676       289     1,333       573----------------------------------------------------------------------Other income (expense), net  Interest income                     5         5        10        10  Interest expense, net of   amounts capitalized              (33)      (20)      (70)      (44)  Other, net                         (5)        1         8         2----------------------------------------------------------------------                                    (33)      (14)      (52)      (32)----------------------------------------------------------------------Income before income taxes and minority interest                  643       275     1,281       541Income tax expense                   93        26       178        86Minority interest                     1         -         1         -----------------------------------------------------------------------Net income                     $    549  $    249  $  1,102  $    455======================================================================Earnings per share   Basic                       $   1.91  $   0.77  $   3.81  $   1.40   Diluted                     $   1.84  $   0.75  $   3.67  $   1.36======================================================================Weighted average shares outstanding   Basic                            288       324       289       325   Diluted                          300       336       301       337======================================================================
                   TRANSOCEAN INC. AND SUBSIDIARIES                CONDENSED CONSOLIDATED BALANCE SHEETS                   (In millions, except share data)                                               June 30,   December 31,                                                 2007         2006                                             ------------ ------------                                             (Unaudited)                   ASSETSCash and cash equivalents                    $       445  $       467Accounts receivable, net of allowance for doubtful accounts of $30 and $26 at June 30, 2007 and December 31, 2006, respectively                                      1,184          946Materials and supplies, net of allowance for obsolescence of $21 and $19 at June 30, 2007 and December 31, 2006, respectively            177          160Deferred income taxes, net                            20           16Other current assets                                  67           67----------------------------------------------------------------------  Total current assets                             1,893        1,656----------------------------------------------------------------------Property and equipment                            11,152       10,539Less accumulated depreciation                      3,392        3,213----------------------------------------------------------------------  Property and equipment, net                      7,760        7,326----------------------------------------------------------------------Goodwill                                           2,195        2,195Other assets                                         301          299----------------------------------------------------------------------  Total assets                               $    12,149  $    11,476======================================================================    LIABILITIES AND SHAREHOLDERS' EQUITYAccounts payable                             $       369  $       477Accrued income taxes                                 132           98Debt due within one year                              18           95Other current liabilities                            475          369----------------------------------------------------------------------  Total current liabilities                          994        1,039----------------------------------------------------------------------Long-term debt                                     3,046        3,200Deferred income taxes, net                            51           54Other long-term liabilities                          579          343----------------------------------------------------------------------  Total long-term liabilities                      3,676        3,597----------------------------------------------------------------------Commitments and contingenciesMinority interest                                      1            4Preference 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, 289,280,582 and 292,454,457 shares issued and outstanding at June 30, 2007 and December 31, 2006, respectively                                3            3Additional paid-in capital                         7,728        8,044Accumulated other comprehensive loss                 (30)         (30)Accumulated deficit                                 (223)      (1,181)----------------------------------------------------------------------  Total shareholders' equity                       7,478        6,836----------------------------------------------------------------------  Total liabilities and shareholders' equity $    12,149  $    11,476======================================================================
                   TRANSOCEAN INC. AND SUBSIDIARIES           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                            (In millions)                             (Unaudited)                               Three months ended   Six months ended                                    June 30,            June 30,                               ------------------- -------------------                                 2007      2006      2007      2006                               --------- --------- --------- ---------Cash flows from operating activities  Net income                   $    549  $    249  $  1,102  $    455  Adjustments to reconcile net   income to net cash provided   by operating activities    Depreciation                    101       102       201       204    Share-based compensation     expense                          9         5        19         8    Deferred income taxes            (5)       (9)       (7)       25    Equity in (earnings)     losses of unconsolidated     affiliates                       2        (3)        3        (3)    (Gain) loss from disposal     of assets, net                   1      (111)      (22)     (175)    Deferred revenue, net             4        11        38        20    Deferred expenses, net           (6)      (47)      (13)      (55)    Tax benefit from exercise     of stock options to     purchase and vesting of     ordinary shares under     share-based compensation     plans                            -        (8)        -        (8)    Other long-term     liabilities                      5        14        12        21    Other, net                        3         3         1         4    Changes in operating     assets and liabilities      Accounts receivable           (99)      (33)     (238)     (104)      Other current assets          (28)      (50)      (32)      (51)      Accounts payable and       other current       liabilities                   57        47       140        91      Income taxes receivable/       payable, net                  14         6        57        12----------------------------------------------------------------------Net cash provided by operating activities                         607       176     1,261       444----------------------------------------------------------------------Cash flows from investing activities  Capital expenditures             (290)      (98)     (755)     (276)  Proceeds from disposal of   assets, net                        2       121        41       203  Joint ventures and other   investments, net                   -         -        (3)        -----------------------------------------------------------------------Net cash provided by (used in) investing activities              (288)       23      (717)      (73)----------------------------------------------------------------------Cash flows from financing activities  Revolving Credit Facility,   net                             (190)        -         -         -  Repayments on the Term   Credit Facility                 (230)        -      (230)        -  Proceeds from issuance of   ordinary shares under   share-based compensation   plans, net                        40        21        55        66  Repurchase of ordinary   shares                             -      (400)     (400)     (600)  Other, net                          4         -         9         -----------------------------------------------------------------------Net cash used in financing activities                        (376)     (379)     (566)     (534)----------------------------------------------------------------------Net decrease in cash and cash equivalents                        (57)     (180)      (22)     (163)----------------------------------------------------------------------Cash and cash equivalents at beginning of period                502       462       467       445----------------------------------------------------------------------Cash and cash equivalents at end of period                 $    445  $    282  $    445  $    282======================================================================
                           Transocean Inc.                      Fleet Operating Statistics                            Operating Revenues ($ Millions) (1)                     -------------------------------------------------                                                    Six months ended                          Three months ended            June 30,                     ----------------------------- -------------------Transocean Drilling  June 30,  March 31, June 30, Segment:              2007      2007      2006      2007      2006                     --------- --------- --------- --------- ---------Contract Drilling Revenues  High-Specification   Floaters:    Ultra Deepwater     Floaters        $    336  $    340  $    228  $    676  $    453    Other Deepwater     Floaters        $    272  $    260  $    194  $    532  $    366    Other High-     Specification     Floaters        $    103  $     85  $     62  $    188  $    113  Total High-   Specification   Floaters          $    711  $    685  $    484  $  1,396  $    932  Other Floaters     $    403  $    379  $    167  $    782  $    333  Jackups            $    230  $    194  $    155  $    425  $    299  Other Rigs         $     16  $     15  $     22  $     30  $     43Subtotal             $  1,360  $  1,273  $    828  $  2,633  $  1,607Other Revenues  Client   Reimbursable   Revenues          $     29  $     30  $     22  $     59  $     47  Integrated   Services and   Other             $     45  $     25  $      4  $     70  $     17Subtotal             $     74  $     55  $     26  $    129  $     64Total Company        $  1,434  $  1,328  $    854  $  2,762  $  1,671                                   Average Dayrates (1)                     -------------------------------------------------                                                    Six months ended                          Three months ended            June 30,                     ----------------------------- -------------------Transocean Drilling  June 30,  March 31, June 30, Segment:              2007      2007      2006        2007      2006                     --------- --------- --------- --------- ---------  High-Specification   Floaters:    Ultra Deepwater     Floaters        $288,900  $301,400  $216,500  $295,100  $212,800    Other Deepwater     Floaters        $228,400  $235,800  $190,200  $232,000  $171,300    Other High-     Specification     Floaters        $286,900  $238,800  $174,700  $263,000  $167,200  Total High-   Specification   Floaters          $262,100  $264,800  $199,300  $263,400  $188,600  Other Floaters     $226,300  $223,700  $118,200  $225,000  $114,000  Jackups            $117,900  $104,600  $ 73,000  $111,400  $ 71,700  Other Rigs         $ 57,200  $ 50,300  $ 47,500  $ 53,700  $ 47,400Total Drilling Fleet $202,400  $198,000  $129,000  $200,200  $124,300                                      Utilization (1)                     -------------------------------------------------                                                    Six months ended                          Three months ended            June 30,                     ----------------------------- -------------------Transocean Drilling  June 30,  March 31, June 30, Segment:              2007      2007      2006        2007      2006                     --------- --------- --------- --------- ---------  High-Specification   Floaters:    Ultra Deepwater     Floaters              98%       97%       89%       97%       91%    Other Deepwater     Floaters              82%       77%       70%       79%       75%    Other High-     Specification     Floaters              99%       99%       98%       99%       94%  Total High-   Specification   Floaters                90%       87%       81%       89%       84%  Other Floaters           98%       94%       74%       96%       74%  Jackups                  86%       83%       93%       84%       92%  Other Rigs              100%      100%       62%      100%       60%Total Drilling Fleet       91%       88%       81%       90%       81%
(1)    Average daily revenue is defined as contract drilling revenue        earned per revenue earning day in the period. A revenue        earning day is defined as a day for which a rig earns dayrate        after commencement of operations. Utilization is defined as        the total actual number of revenue earning days in the period        as a percentage of the total number of calendar days in the        period for all drilling rigs in our fleet.
                   Transocean Inc. and Subsidiaries           Non-GAAP Financial Measures and Reconciliations      Operating Income Before General and Administrative Expense                      to Field Operating Income                          (in US$ millions)                             Three months ended      Six months ended                         --------------------------- -----------------                         June 30, March 31, June 30, June 30, June 30,                           2007     2007      2006     2007     2006                         -------- --------- -------- -------- --------Operating revenue        $  1,434 $  1,328  $   854  $ 2,762  $ 1,671Operating and maintenance expense          627      568      549    1,195    1,024Depreciation                  101      100      102      201      204(Gain) loss from disposal of assets, net        1      (23)    (111)     (22)    (175)                         -------- --------- -------- -------- --------Operating income before general and administrative expense       705      683      314    1,388      618Add back (subtract):           Depreciation       101      100      102      201      204          (Gain) loss           from disposal           of assets,           net                  1      (23)    (111)     (22)    (175)                         -------- --------- -------- -------- --------Field operating income   $    807 $    760  $   305  $ 1,567  $   647                         -------- --------- -------- -------- --------
                   Transocean Inc. and Subsidiaries                     Effective Tax Rate Analysis                            (In millions)                                                               Twelve                                                 Six months     months                        Three months ended           ended      ended                    --------------------------- -------------- -------                    June 30, March 31, June 30,    June 30,    Dec. 31                      2007     2007      2006    2007    2006   2006                    -------- --------- -------- ------- ------ -------Income (Loss) before income taxes and minority interest             $ 643     $ 638    $ 275  $1,281  $ 541  $1,607  Add back   (subtract):    (Gain) loss on     disposal of     assets, net          1       (23)    (110)    (22)  (175)   (410)    Income from     TODCO tax     sharing     agreement            -         -        -       -      -     (51)                    -------- --------- -------- ------- ------ -------Adjusted income before income taxes                $ 644     $ 615    $ 165  $1,259  $ 366  $1,146Income tax expense    $  93     $  85    $  26  $  178  $  86  $  222  Add back   (subtract):    (Gain) loss on     disposal of     assets, net          -        (3)       -      (3)   (22)    (24)    Changes in     estimates (1)       11         2        3      13      1      14                    -------- --------- -------- ------- ------ -------Adjusted income tax expense (2)          $ 104     $  84    $  29  $  188  $  65  $  212Effective tax rate (3)                   14.4%     13.3%     9.4%   13.9%  15.9%   13.8%Annual effective tax rate (4)          16.1%     13.7%    17.8%   14.9%  17.7%   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 June 30, 2007 include $8 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.

CONTACT: Transocean Inc., Houston
Analyst Contact:
Gregory S. Panagos, 713-232-7551
or
Media Contact:
Guy A. Cantwell, 713-232-7647

SOURCE: Transocean Inc. Transocean Inc., Houston