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Transocean Inc. Reports Third Quarter 2007 Financial Results

October 31, 2007

HOUSTON--(BUSINESS WIRE)--Oct. 31, 2007--Transocean Inc.(NYSE:RIG) today reported net income for the three months endedSeptember 30, 2007 of $973 million, or $3.24 per diluted share, onrecord quarterly revenues of $1,538 million. The results compare tonet income of $309 million, or $0.96 per diluted share, on revenues of$1,025 million, for the three months ended September 30, 2006.

Third quarter 2007 results included after-tax income of $336million, or $1.12 per diluted share, related to $276 million for theTODCO tax sharing agreement, $52 million for changes in estimatedtaxes, primarily foreign tax credits, and an $8 million gain resultingfrom the sale of the drilling barge Searex VI. For the quarter endedSeptember 30, 2006, net income included $37 million, or $0.12 perdiluted share, primarily from the sale of two tender-assist rigs.

For the nine months ended September 30, 2007, net income totaled$2,075 million, or $6.91 per diluted share, on revenues of $4,300million. For the same period last year, net income totaled $764million, or $2.31 per diluted share, on revenues of $2,696 million.Results for the first nine months of 2007 include $369 million, or$1.22 per diluted share, including $33 million recognized during thefirst half of 2007 from rig sales and discrete tax items plus the $336million recognized during the third quarter as noted above. For thenine months ended September 30, 2006, net income included $191million, or $0.57 per diluted share, primarily from the sale of sixrigs.

Operations Quarterly Review

Revenues for the three months ended September 30, 2007 increased7.3 percent to $1,538 million compared to revenues of $1,434 millionduring the three months ended June 30, 2007. The quarter-to-quarterincrease in revenues was primarily due to a higher average dayrate,partially offset by a slight reduction in days in service. The thirdquarter 2007 average dayrate reached a record high of $219,700, up 8.5percent, compared to $202,400 during the second quarter 2007. Theincrease in average dayrate was experienced across all rig categories,primarily as a result of rigs commencing new contracts at the higherprevailing current dayrates.

For the three months ended September 30, 2007, operating incomebefore general and administrative expenses totaled $780 million, a10.6 percent increase from $705 million reported for the secondquarter 2007. The $75 million increase in operating income beforegeneral and administrative expense was due to higher revenues, drivenby increased dayrates. Partially offsetting the higher third quarter2007 revenues was $36 million in increased operating and maintenanceexpenses, primarily due to an increase in reimbursable costs andintegrated service expenditures, as well as an increase in the numberof maintenance projects.

Field operating income(1) (defined as revenues less operating andmaintenance expenses) increased 8.4 percent to $875 million for thethird quarter 2007, compared to $807 million for the prior three-monthperiod. The increase in third quarter 2007 field operating income wasdue chiefly to strong revenue growth combined with stable operatingmargins.

Liquidity

Cash flow from operations totaled $897 million for the thirdquarter 2007 compared to $289 million for the third quarter 2006. Forthe nine months ended September 30, 2007, cash flow from operationsincreased to $2,158 million compared to $733 million for the sameperiod last year. As of September 30, 2007, total debt was $2,593million, down $471 million compared to $3,064 as of June 30, 2007. The$471 million of debt reduction during the third quarter 2007 reflectsthe repayment of the company's two-year term credit facility dueAugust 2008.

Effective Tax Rate

The company's Annual Effective Tax Rate(2) for the three monthsended September 30, 2007 was 14.0 percent, excluding various discreteitems. The Effective Tax Rate(3) of 5.1 percent for the third quarter2007 reflects a $52 million favorable impact resulting primarily fromchanges in estimated foreign tax credit. The company currently expectsthe Annual Effective Tax Rate for the remainder of 2007 to be 14.6percent.

Conference Call Information

Transocean will conduct a teleconference call at 10:00 a.m.Eastern Time on October 31, 2007. To participate, dial 913-981-5542and refer to confirmation code 1852427 approximately five to 10minutes prior 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 \"3Q07 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 October 31, 2007 and can be accessedby dialing 719-457-0820 and referring to the passcode 1852427. 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 34High-Specification Floaters (semisubmersibles and drillships), 19Other Floaters, 25 Jackups and other assets utilized in the support ofoffshore drilling activities worldwide. With a current equity marketcapitalization of $33.4 billion, Transocean Inc.'s ordinary shares aretraded 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 Nine months ended                                   September 30,      September 30,                                 ------------------ ------------------                                   2007      2006     2007      2006                                 --------- -------- --------- --------Operating revenues  Contract drilling revenues     $  1,455  $   991  $  4,088  $ 2,598  Other revenues                       83       34       212       98----------------------------------------------------------------------                                    1,538    1,025     4,300    2,696----------------------------------------------------------------------Costs and expenses  Operating and maintenance           663      561     1,858    1,585  Depreciation                        103       99       304      303  General and administrative           27       22        82       67----------------------------------------------------------------------                                      793      682     2,244    1,955----------------------------------------------------------------------Gain from disposal of assets, net                                    8       47        30      222----------------------------------------------------------------------Operating income                      753      390     2,086      963----------------------------------------------------------------------Other income (expense), net  Interest income                       7        4        17       14  Interest expense, net of   amounts capitalized                (23)     (28)      (93)     (72)  Other, net                          287        7       295        9----------------------------------------------------------------------                                      271      (17)      219      (49)----------------------------------------------------------------------Income before income taxes and minority interest                  1,024      373     2,305      914Income tax expense                     52       64       230      150Minority interest                      (1)       -         -        -----------------------------------------------------------------------Net income                       $    973  $   309  $  2,075  $   764======================================================================Earnings per share  Basic                          $   3.36  $  0.99  $   7.17  $  2.39  Diluted                        $   3.24  $  0.96  $   6.91  $  2.31======================================================================Weighted average shares outstanding  Basic                               290      312       289      320  Diluted                             300      323       301      332======================================================================
                   TRANSOCEAN INC. AND SUBSIDIARIES                CONDENSED CONSOLIDATED BALANCE SHEETS                   (In millions, except share data)                                           September 30, December 31,                                               2007          2006                                           ------------- -------------                                            (Unaudited)                  ASSETSCash and cash equivalents                  $        618  $        467Accounts receivable, net of allowance for doubtful accounts of $41 and $26 at September 30, 2007 and December 31, 2006, respectively                                     1,266           946Materials and supplies, net of allowance for obsolescence of $21 and $19 at September 30, 2007 and December 31, 2006, respectively                                       179           160Deferred income taxes, net                           28            16Other current assets                                132            67----------------------------------------------------------------------  Total current assets                            2,223         1,656----------------------------------------------------------------------Property and equipment                           11,460        10,539Less accumulated depreciation                     3,489         3,213----------------------------------------------------------------------  Property and equipment, net                     7,971         7,326----------------------------------------------------------------------Goodwill                                          2,187         2,195Other assets                                        319           299----------------------------------------------------------------------  Total assets                             $     12,700  $     11,476======================================================================   LIABILITIES AND SHAREHOLDERS' EQUITYAccounts payable                           $        406  $        477Accrued income taxes                                156            98Debt due within one year                          1,018            95Other current liabilities                           419           369----------------------------------------------------------------------  Total current liabilities                       1,999         1,039----------------------------------------------------------------------Long-term debt                                    1,575         3,200Deferred income taxes, net                           57            54Other long-term liabilities                         566           343----------------------------------------------------------------------  Total long-term liabilities                     2,198         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, 290,802,699 and 292,454,457 shares issued and outstanding at September 30, 2007 and December 31, 2006, respectively                      3             3Additional paid-in capital                        7,780         8,044Accumulated other comprehensive loss                (31)          (30)Retained earnings (accumulated deficit)             750        (1,181)----------------------------------------------------------------------  Total shareholders' equity                      8,502         6,836----------------------------------------------------------------------  Total liabilities and shareholders'   equity                                  $     12,700  $     11,476======================================================================
                   TRANSOCEAN INC. AND SUBSIDIARIES           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                            (In millions)                             (Unaudited)                                Three months ended  Nine months ended                                   September 30,      September 30,                                ------------------- ------------------                                  2007      2006      2007     2006                                --------- --------- -------- ---------Cash flows from operating activities Net income                     $    973  $    309  $ 2,075  $    764 Adjustments to reconcile net  income to net cash provided  by operating activities       Depreciation                  103        99      304       303       Share-based compensation        expense                       11         5       30        13       Gain from disposal of        assets, net                   (8)      (47)     (30)     (222)       Deferred income taxes           9        (7)       2        18       Deferred expenses, net         (4)      (40)     (17)      (95)       Deferred revenues, net        (20)       12       18        32       Other long-term        liabilities                   19        (4)      31        17       Other, net                     (7)       (7)      (3)      (14) Changes in operating assets  and liabilities    Accounts receivable              (82)     (169)    (320)     (273)    Other current assets               3        15      (29)      (36)    Accounts payable and other     current liabilities             (75)       76       65       167    Income taxes     receivable/payable, net         (25)       47       32        59----------------------------------------------------------------------Net cash provided by operating activities                          897       289    2,158       733----------------------------------------------------------------------Cash flows from investing activities  Capital expenditures              (305)     (434)  (1,060)     (710)  Proceeds from disposal of   assets, net                        21        95       62       298  Joint ventures and other   investments, net                    -         -       (3)        -----------------------------------------------------------------------Net cash used in investing activities                         (284)     (339)  (1,001)     (412)----------------------------------------------------------------------Cash flows from financing activities  Borrowings under the   Revolving Credit Facility,   net                                 -       900        -       900  Proceeds from issuance of   debt, net                           -     1,000        -     1,000  Repayment of borrowings under   Term Credit Facility             (470)        -     (700)        -  Release of escrow funds -   Nautilus lease financing            -        30        -        30  Repurchase of ordinary shares        -    (1,751)    (400)   (2,351)  Proceeds from issuance of   ordinary shares under share-   based compensation plans,   net                                 1         1       56        67  Tax benefit from issuance of   ordinary shares under share-   based compensation plans           23         -       33         -  Other, net                           6        (5)       5        (5)----------------------------------------------------------------------Net cash provided by (used in) financing activities               (440)      175   (1,006)     (359)----------------------------------------------------------------------Net increase (decrease) in cash and cash equivalents                173       125      151       (38)----------------------------------------------------------------------Cash and cash equivalents at beginning of period                 445       282      467       445----------------------------------------------------------------------Cash and cash equivalents at end of period                  $    618  $    407  $   618  $    407======================================================================
                           Transocean Inc.                      Fleet Operating Statistics                          Operating Revenues (in millions) (1)                   ---------------------------------------------------                                                    Nine months ended                         Three months ended             Sept 30,                   ------------------------------- -------------------                   September           September                      30,    June 30,      30,                     2007      2007       2006       2007      2006                   --------- --------- ----------- --------- ---------Contract Drilling Revenues  High-   Specification   Floaters:    Ultra     Deepwater     Floaters      $    381  $    336  $      257  $  1,057  $    711    Other     Deepwater     Floaters           298       272         246       830       611    Other High-     Specification     Floaters           101       103          62       290       176  Total High-   Specification   Floaters             780       711         565     2,177     1,498  Other Floaters        412       403         218     1,193       551  Jackups               248       230         184       673       483  Other Rigs             15        16          24        45        66Subtotal              1,455     1,360         991     4,088     2,598Other Revenues  Client   Reimbursable   Revenues              32        29          30        92        77  Integrated   Services and   Other                 51        45           4       120        21Subtotal                 83        74          34       212        98Total Company      $  1,538  $  1,434  $    1,025  $  4,300  $  2,696                                  Average Dayrates (1)                   ---------------------------------------------------                                                    Nine months ended                         Three months ended             Sept 30,                   ------------------------------- -------------------                   September           September                      30,    June 30,      30,                     2007      2007       2006         2007      2006                   --------- --------- ----------- --------- ---------  High-   Specification   Floaters:    Ultra     Deepwater     Floaters      $323,200  $288,900  $  246,000  $304,600  $223,700    Other     Deepwater     Floaters      $257,700  $228,400  $  222,300  $240,600  $188,700    Other High-     Specification     Floaters      $316,400  $286,900  $  181,500  $279,500  $172,000  Total High-   Specification   Floaters        $293,900  $262,100  $  226,700  $273,600  $201,400  Other Floaters   $251,400  $226,300  $  136,800  $233,500  $122,000  Jackups          $120,500  $117,900  $   83,400  $114,600  $ 75,800  Other Rigs       $ 54,900  $ 57,200  $   52,400  $ 54,100  $ 49,100Total Drilling Fleet             $219,700  $202,400  $  146,900  $206,800  $132,000                                     Utilization (1)                   ---------------------------------------------------                                                    Nine months ended                         Three months ended             Sept 30,                   ------------------------------- -------------------                   September           September                      30,    June 30,      30,                     2007      2007       2006         2007      2006                   --------- --------- ----------- --------- ---------  High-   Specification   Floaters:    Ultra     Deepwater     Floaters            99%       98%         88%       98%       90%    Other     Deepwater     Floaters            79%       82%         75%       79%       75%    Other High-     Specification     Floaters            87%       99%         93%       95%       94%  Total High-   Specification   Floaters              87%       90%         82%       88%       83%  Other Floaters         89%       98%         86%       94%       78%  Jackups                90%       86%         96%       86%       93%  Other Rigs             98%      100%         76%       99%       64%Total Drilling Fleet                   89%       91%         87%       89%       83%
(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                                         ----------------------------                                         Sept 30, June 30,  Sept 30,                                           2007     2007      2006                                         -------- --------- --------  Operating revenue                       $1,538    $1,434   $1,025  Operating and maintenance expense          663       627      561  Depreciation                               103       101       99  (Gain) loss from disposal of assets,   net                                        (8)        1      (47)                                         -------- --------  --------Operating income before general and administrative expense                      780       705      412Add back (subtract):  Depreciation           103       101       99                      (Gain) loss from                       disposal of                       assets, net            (8)        1      (47)                                         -------- --------  --------Field operating income                    $  875    $  807   $  464                                         -------- --------  --------                                                     Nine months ended                                                     -----------------                                                     Sept 30, Sept 30,                                                       2007     2006                                                     -------- --------  Operating revenue                                   $4,300   $2,696  Operating and maintenance expense                    1,858    1,585  Depreciation                                           304      303  (Gain) loss from disposal of assets, net               (30)    (222)                                                     -------- --------Operating income before general and administrative expense                                               2,168    1,030Add back (subtract):  Depreciation                       304      303                      (Gain) loss from disposal of                       assets, net                       (30)    (222)                                                     -------- --------Field operating income                                $2,442   $1,111                                                     -------- --------
                   Transocean Inc. and Subsidiaries                     Effective Tax Rate Analysis                            (In millions)                                         Three months ended                                -------------------------------------                                September 30, June 30,  September 30,                                    2007        2007        2006                                ------------- --------- -------------Income (Loss) before income taxes and minority interest          $1,024     $ 643         $ 373  Add back (subtract):                $    -     $   -    (Gain) loss on disposal of     assets, net                          (9)        1           (44)    Income from TODCO tax     sharing agreement                  (276)        -             -                                ------------- --------- -------------Adjusted income before income taxes                                $  739     $ 644         $ 329Income tax expense                    $   52     $  93         $  64  Add back (subtract):    (Gain) loss on disposal of     assets, net                           -         -            (3)    Changes in estimates (1)              52        11            (4)                                ------------- --------- -------------Adjusted income tax expense (2)       $  104     $ 104         $  57Effective tax rate (3)                   5.1%     14.4%         17.1%Annual effective tax rate (4)           14.0%     16.1%         17.3%                              Nine months ended    Twelve months ended                           ----------------------- -------------------                                September 30,            Dec. 31                               2007        2006           2006                           ------------ ---------- -------------------Income (Loss) before income taxes and minority interest                     $2,305        $ 914              $1,607  Add back (subtract):    (Gain) loss on disposal     of assets, net              (31)        (219)               (410)    Income from TODCO tax     sharing agreement          (276)           -                 (51)                           ------------ ---------- -------------------Adjusted income before income taxes                 $1,998        $ 695              $1,146Income tax expense            $  230        $ 150              $  222  Add back (subtract):    (Gain) loss on disposal     of assets, net               (3)         (25)                (24)    Changes in estimates     (1)                          65           (3)                 14                           ------------ ---------- -------------------Adjusted income tax expense (2)                          $  292        $ 122              $  212Effective tax rate (3)          10.0%        16.4%               13.8%Annual effective tax rate (4)                            14.6%        17.5%               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 September 30, 2007 include $(4) 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.