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Transocean Inc. Reports First Quarter 2008 Financial Results

May 7, 2008

HOUSTON--(BUSINESS WIRE)--May 7, 2008--Transocean Inc. (NYSE:RIG)today reported net income for the three months ended March 31, 2008 of$1,189 million, or $3.71 per diluted share, compared to net income of$553 million, or $2.62 per diluted share for the three months endedMarch 31, 2007. Revenues for the first quarter of 2008 were $3,110million compared to $1,328 million for the first quarter of 2007.

On November 27, 2007, Transocean Inc. merged with GlobalSantaFeCorporation (the \"Merger\") and reclassified its ordinary shares intocash and shares (the \"Reclassification\"). Reported results for thefirst quarter of 2008 include a full three months from GlobalSantaFe'soperations. Diluted earnings per share for the first quarter of 2007excludes GlobalSantaFe's operations and is based on a weighted averagediluted share count of 212 million shares, which includes the effectof restating the historical diluted share count for theReclassification. Results for the fourth quarter of 2007 includeapproximately one month of GlobalSantaFe's operations.

First quarter 2008 results included after-tax charges of $30million, or $0.09 per diluted share, related to $27 million fordiscrete tax items, $1 million for Merger-related costs and a $2million loss resulting from the retirement of debt. Net income for thequarter ended March 31, 2007 included after-tax gains of $22 million,or $0.10 per diluted share, resulting from the sale of a tender-assistrig and a tax benefit on discrete items.

Operations Quarterly Review

Revenues for the three months ended March 31, 2008 increased 49.7percent to $3,110 million compared to revenues of $2,077 millionduring the three months ended December 31, 2007. Of the $1,033 millionquarter-to-quarter increase, $919 million reflected the addition of afull quarter of GlobalSantaFe revenues, including an increase of $136million in non-cash contract intangible revenue. The remainingincrease was primarily due to a higher average dayrate for theTransocean fleet as well as a decrease in shipyards and maintenancetime. The increase in average dayrate was experienced across all rigcategories, primarily as a result of rigs commencing new contracts atthe higher prevailing current dayrates. First quarter of 2008 resultsbenefited from the postponement of several shipyard projects to laterin the year.

Operating and maintenance expenses for the three months endedMarch 31, 2008 were $1,157 million compared to $923 million for theprior three-month period, an increase of $234 million or 25.4 percent.The addition of GlobalSantaFe's operations accounted for an increaseof $332 million, which was partially offset by a decrease in costs forshipyards and major maintenance projects. Costs for the first quarterof 2008 benefited from the postponement of several shipyard and majormaintenance projects to later in the year.

Depreciation, depletion and amortization increased to $367 millionin the first quarter of 2008, an increase of 88.2 percent compared to$195 million in the fourth quarter of 2007. Property and equipment andcertain intangible assets acquired in the Merger accounted for themajority of this increase.

General and administrative expenses decreased 18.3 percent to $49million in the first quarter of 2008 compared to $60 million in theprior three-month period. The decrease primarily reflects a reductionin Merger-related compensation costs compared to the fourth quarter of2007.

Interest Expense and Liquidity

Interest expense, net of amounts capitalized, for the firstquarter of 2008 increased to $137 million compared to $79 million forthe fourth quarter of 2007. The increase primarily resulted frominterest on the borrowings incurred in conjunction with the Merger andReclassification.

Cash flow from operating activities totaled $1,482 million for thefirst quarter of 2008 compared to $915 million for the fourth quarterof 2007. As of March 31, 2008, total debt was $16.6 billion, down $0.7billion from $17.3 billion as of December 31, 2007.

Effective Tax Rate

The reported Effective Tax Rate(1) of 15.5 percent for the firstquarter of 2008 reflects the unfavorable impact of various discretetax items of $27 million resulting from changes in estimates.Excluding these various discrete tax items, the Annual Effective TaxRate(2) for the first quarter of 2008 was 13.5 percent.

Conference Call Information

Transocean will conduct a teleconference call at 10:00 a.m.Eastern Time on May 7, 2008. To participate, dial 913-312-0968 andrefer to confirmation code 9574214 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 \"1Q08 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 May 7, 2008 and can be accessed bydialing 719-457-0820 and referring to the passcode 9574214. Also, areplay will be available through the Internet and can be accessed byvisiting either of the above-referenced Worldwide Web addresses.

Transocean Inc. is the world's largest offshore drillingcontractor and the leading provider of drilling management servicesworldwide. With a fleet of 138 mobile offshore drilling units plusnine announced ultra-deepwater newbuild units, the company's fleet isconsidered one of the most modern and versatile in the world due toits emphasis on technically demanding segments of the offshoredrilling business. The company owns or operates a contract drillingfleet of 39 High-Specification Floaters (Ultra-Deepwater, Deepwaterand Harsh-Environment semisubmersibles and drillships), 29 MidwaterFloaters, 10 High-Specification Jackups, 56 Standard Jackups and otherassets utilized in the support of offshore drilling activitiesworldwide.

(1) Effective Tax Rate is defined as income tax expense divided by     income before income taxes. See the accompanying schedule     entitled \"Supplemental Effective Tax Rate Analysis.\"(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 \"Supplemental 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,                                          ----------------------------                                              2008           2007                                          -------------  -------------Operating revenues  Contract drilling revenues                 $   2,640      $   1,273  Contract intangible revenues                     224             --  Other revenues                                   246             55----------------------------------------------------------------------                                                 3,110          1,328----------------------------------------------------------------------Costs and expenses  Operating and maintenance                      1,157            568  Depreciation, depletion and   amortization                                    367            100  General and administrative                        49             26----------------------------------------------------------------------                                                 1,573            694----------------------------------------------------------------------Gain from disposal of assets, net                    3             23----------------------------------------------------------------------Operating income                                 1,540            657----------------------------------------------------------------------Other income (expense), net  Interest income                                   13              5  Interest expense, net of amounts   capitalized                                    (137)           (37)  Other, net                                        (8)            13----------------------------------------------------------------------                                                  (132)           (19)----------------------------------------------------------------------Income before income taxes and minority interest                                        1,408            638Income tax expense                                 218             85Minority interest                                    1             ------------------------------------------------------------------------Net income                                   $   1,189      $     553======================================================================Earnings per share   Basic                                     $    3.75      $    2.72   Diluted                                   $    3.71      $    2.62======================================================================Weighted average shares outstanding   Basic                                           317            203   Diluted                                         321            212======================================================================
                   TRANSOCEAN INC. AND SUBSIDIARIES                CONDENSED CONSOLIDATED BALANCE SHEETS                   (In millions, except share data)                                             March 31,   December 31,                                               2008          2007                                           ------------- -------------                                            (Unaudited)                  ASSETSCash and cash equivalents                    $    1,567    $    1,241Accounts receivable, net of allowance for doubtful accounts of $61 and $50 at March 31, 2008 and December 31, 2007, respectively                                     2,357         2,370Materials and supplies, net of allowance for obsolescence of $20 and $22 at March 31, 2008 and December 31, 2007, respectively                                       367           333Deferred income taxes, net                           96           119Assets held for sale                                666            --Other current assets                                177           233----------------------------------------------------------------------   Total current assets                           5,230         4,296----------------------------------------------------------------------Property and equipment                           24,237        24,545Less accumulated depreciation                     3,949         3,615----------------------------------------------------------------------   Property and equipment, net                   20,288        20,930----------------------------------------------------------------------Goodwill                                          8,424         8,219Other assets                                        920           919----------------------------------------------------------------------   Total assets                              $   34,862    $   34,364======================================================================   LIABILITIES AND SHAREHOLDERS' EQUITYAccounts payable                             $      722    $      805Accrued income taxes                                238            99Debt due within one year                          3,356         6,172Other current liabilities                           772           826----------------------------------------------------------------------   Total current liabilities                      5,088         7,902----------------------------------------------------------------------Long-term debt                                   13,239        11,085Deferred income taxes, net                          814           681Other long-term liabilities                       1,928         2,125----------------------------------------------------------------------   Total long-term liabilities                   15,981        13,891----------------------------------------------------------------------Commitments and contingenciesMinority interest                                     6             5Preference 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, 318,217,122 and 317,222,909 shares issued and outstanding at March 31, 2008 and December 31, 2007, respectively                      3             3Additional paid-in capital                       10,853        10,799Accumulated other comprehensive loss                (64)          (42)Retained earnings                                 2,995         1,806----------------------------------------------------------------------   Total shareholders' equity                    13,787        12,566----------------------------------------------------------------------   Total liabilities and shareholders'    equity                                   $   34,862    $   34,364======================================================================
                   TRANSOCEAN INC. AND SUBSIDIARIES           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                            (In millions)                             (Unaudited)                                         Three months ended March 31,                                         -----------------------------                                              2008           2007                                         --------------  -------------Cash flows from operating activities  Net income                               $     1,189     $      553  Adjustments to reconcile net income to   net cash provided by operating   activities    Amortization of drilling contract     intangibles                                  (224)            --    Depreciation, depletion and     amortization                                  367            100    Share-based compensation expense                22             10    Gain from disposal of assets, net               (3)           (23)    Deferred revenue, net                           18             34    Deferred expenses, net                          16             (7)    Deferred income taxes                          (25)            (2)    Other, net                                     (12)            (1)    Changes in operating assets and     liabilities                                   134            (10)----------------------------------------------------------------------Net cash provided by operating activities                                      1,482            654----------------------------------------------------------------------Cash flows from investing activities  Capital expenditures                            (769)          (465)  Proceeds from disposal of assets, net            254             39  Joint ventures and other investments,   net                                              (3)            (3)----------------------------------------------------------------------Net cash used in investing activities             (518)          (429)----------------------------------------------------------------------Cash flows from financing activities  Borrowings under commercial paper   program, net                                  1,316             --  Borrowings under Five-Year Revolving   Credit Facility                                 180             --  Repayments under 364-Day Revolving   Credit Facility                              (1,500)            --  Proceeds from debt                             1,976            190  Repayments of debt                            (2,633)            --  Financing costs                                   (3)            --  Payments made upon exercise of   warrants, net                                    (4)            --  Proceeds from issuance of ordinary   shares under share-based compensation   plans, net                                       27             15  Repurchase of ordinary shares                     --           (400)  Other, net                                         3              5----------------------------------------------------------------------Net cash used in financing activities             (638)          (190)----------------------------------------------------------------------Net increase in cash and cash equivalents                                       326             35Cash and cash equivalents at beginning of period                                       1,241            467----------------------------------------------------------------------Cash and cash equivalents at end of period                                    $     1,567     $      502======================================================================
                           Transocean Inc.                      Fleet Operating Statistics                                  Operating Revenues ($ Millions) (1)                                 -------------------------------------                                          Three months ended                                 -------------------------------------                                  March 31,   December 31,  March 31,                                     2008         2007        2007                                 ------------ ------------ -----------Contract Drilling Revenues  High-Specification Floaters:    Ultra Deepwater Floaters       $     608    $     453    $    340    Deepwater Floaters                   325          290         260    Harsh Environment Floaters           150          120          85  Total High-Specification   Floaters                            1,083          863         685  Midwater Floaters                      675          534         379  High-Specification Jackups             157           64          12  Standard Jackups                       711          386         182  Other Rigs                              14           13          15Subtotal                               2,640        1,860       1,273Contract Intangible Revenue              224           88           0Other Revenues  Client Reimbursable Revenues            47           32          30  Integrated Services and Other           36           52          25  Drilling Management Services           139           36           0  Oil and Gas Properties                  24            9           0Subtotal                                 246          129          55Total Company                      $   3,110    $   2,077    $  1,328                                         Average Dayrates (1)                                          Three months ended                                 -------------------------------------                                  March 31,   December 31,  March 31,                                     2008         2007        2007                                 ------------ ------------ -----------  High-Specification Floaters:    Ultra Deepwater Floaters       $ 380,800    $ 346,100    $301,400    Deepwater Floaters             $ 284,100    $ 265,300    $235,800    Harsh Environment Floaters     $ 344,000    $ 326,300    $238,800  Total High-Specification   Floaters                        $ 340,900    $ 311,600    $264,800  Midwater Floaters                $ 292,300    $ 274,600    $223,700  High-Specification Jackups       $ 173,800    $ 173,400    $133,400  Standard Jackups                 $ 146,200    $ 130,800    $103,200  Other Rigs                       $  49,700    $  48,600    $ 50,300Total Drilling Fleet               $ 229,000    $ 224,000    $198,000                                            Utilization (1)                                 -------------------------------------                                          Three Months Ended                                 -------------------------------------                                  March 31,   December 31,  March 31,                                     2008         2007        2007                                 ------------ ------------ -----------  High-Specification Floaters:    Ultra Deepwater Floaters              98%          97%         97%    Deepwater Floaters                    79%          75%         77%    Harsh Environment Floaters            96%          80%         99%  Total High-Specification   Floaters                               90%          85%         87%  Midwater Floaters                       88%          95%         94%  High-Specification Jackups              99%         100%        100%  Standard Jackups                        93%          91%         82%  Other Rigs                             100%          97%        100%Total Drilling Fleet                      91%          90%         88%
(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                                               -----------------------                                               Mar 31, Dec 31, Mar 31,                                                2008    2007    2007                                               ------- ------- -------  Operating revenue                            $3,110  $2,077  $1,328  Operating and maintenance expense             1,157     923     568  Depreciation, depletion and amortization        367     195     100  (Gain) loss from disposal of assets, net         (3)   (254)    (23)                                               ------- ------- -------Operating income before general and administrative expense                         1,589   1,213     683Add back (subtract): Depreciation, depletion                      and amortization            367     195     100                     (Gain) loss from disposal                      of assets, net               (3)   (254)    (23)                                               ------- ------- -------Field operating income                         $1,953  $1,154  $  760                                               ------- ------- -------
                   Transocean Inc. and Subsidiaries               Supplemental Effective Tax Rate Analysis                            (In millions)                             Three months ended   Years ended Dec. 31,                           ---------------------- --------------------                           March    Dec.   March                             31,     31,     31,                            2008    2007    2007      2007      2006                           ------- -------------- ------------ -------Income (Loss) before income taxes and minority interest                  $1,408  $1,079  $ 638       $3,384  $1,607  Add back (subtract):    (Gain) loss on     disposal of assets,     net                        -    (233)   (23)        (264)   (410)    Income from TODCO tax     sharing agreement          -      (1)     -         (277)    (51)    (Gain) loss on     retirement of debt         2       8      -            8       -    GSF Merger related     costs                      1      82      -           82       -                           -------------------------------------------Adjusted income before income taxes               1,411     935    615        2,933   1,146Income tax expense            218      23     85          253     222  Add back (subtract):    (Gain) loss on     disposal of assets,     net                        -       -     (3)          (3)    (24)    GSF Merger related     costs                      -      15      -           15       -    Changes in estimates     (1)                      (27)     36      2          101      14                           -------------------------------------------Adjusted income tax expense (2)               $  191  $   74  $  84       $  366  $  212                           ===========================================Effective Tax Rate (3)       15.5%    2.1%  13.3%         7.5%   13.8%Annual Effective Tax Rate (4)                         13.5%    7.9%  13.7%        12.5%   18.5%
(1) Our estimates change as we file tax returns, settle disputes with     tax authorities or become aware of other events impacting our     liabilities for income taxes. Changes in estimates include     changes in deferred taxes, valuation allowances on deferred taxes     or other tax liabilities and the impact of changes in currency     exchange rates.(2) The three months ended December 31, 2007 included $ (43) million     of additional tax expense (benefit) reflecting the catch-up     effect of an increase (decrease) in the annual effective tax rate     and included $17 million related to customer identification that     is also reflected as a reduction of revenue.(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.