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Transocean Inc. Reports Third Quarter 2008 Financial Results

November 5, 2008

HOUSTON--(BUSINESS WIRE)--Nov. 5, 2008--Transocean Inc. (NYSE:RIG)today reported net income for the three months ended September 30,2008 of $1.106 billion, or $3.44 per diluted share, compared to netincome of $973 million, or $4.63 per diluted share for the threemonths ended September 30, 2007. Revenues for the third quarter of2008 were $3.192 billion compared to $1.538 billion for the thirdquarter of 2007.

For the nine months ended September 30, 2008, net income totaled$3.402 billion, or $10.59 per diluted share, on revenues of $9.404billion. For the same period in 2007, net income totaled $2.075billion, or $9.87 per diluted share, on revenues of $4.300 billion.Net income for the nine months ended September 30, 2008 includedafter-tax charges of $16 million, or $0.05 per diluted share,resulting primarily from a $14 million loss on short-term investments,$10 million of discrete tax items, $3 million of merger-related costsand a $3 million loss from the early retirement of debt. These chargeswere offset by income of $14 million from the TODCO tax sharingagreement. For the same period last year, net income includedafter-tax gains of $369 million, or $1.75 per diluted share, from theTODCO tax sharing agreement, rig sales and discrete tax items.

On November 27, 2007, Transocean Inc. merged with GlobalSantaFeCorporation and reclassified its ordinary shares into cash and shares(the \"Reclassification\"). Reported results for the third quarter andfirst nine months of 2008 include a full three and nine months,respectively, from GlobalSantaFe's operations. Diluted earnings pershare for the third quarter and first nine months of 2007 excludeGlobalSantaFe's operations and are based on a weighted average dilutedshare count of 210 million and 211 million shares, respectively, whichincludes the effect of restating the historical diluted share countfor the Reclassification.

Operations Quarterly Review

Revenues for the three months ended September 30, 2008 were $3.192billion compared to revenues of $3.102 billion during the three monthsended June 30, 2008. The $90 million quarter-to-quarter increase intotal revenues included $112 million of higher contract drillingrevenues reflecting a decrease in out-of-service time for plannedshipyards, an increase in average dayrates and a $25 million increasein other revenues primarily from increases in integrated services andnon-drilling activities. A $47 million decline in contract drillingintangible revenues partially offset these increases. The averagedayrate for the fleet increased two percent from $238,600 in thesecond quarter to $242,200 in the third quarter, primarily as a resultof rigs commencing new contracts at higher dayrates in the thirdquarter.

Operating and maintenance expenses for the three months endedSeptember 30, 2008 were $1.426 billion compared to $1.364 billion forthe prior three-month period. The $62 million increase in operatingand maintenance expenses primarily reflects estimated expenses of $44million related to dropped riser and an increase in maintenance andnon-drilling and integrated services costs compared to the secondquarter of 2008, partially offset by reduced shipyard costs.

Interest Expense and Liquidity

Interest expense, net of amounts capitalized, for the thirdquarter of 2008 decreased to $100 million compared to $111 million forthe second quarter of 2008. The decrease resulted primarily from aquarter-to-quarter reduction in total debt of approximately $496million. As of September 30, 2008, total debt was $14.783 billioncompared to $15.279 billion as of June 30, 2008.

Cash flow from operating activities totaled $1.270 billion for thethird quarter of 2008 compared to $1.011 billion for the secondquarter of 2008. Higher quarter-to-quarter cash flow during the thirdquarter primarily reflects increases in net income, decreases indeferred expenses and deferred taxes, partially offset by an increasein working capital.

Effective Tax Rate

The Annual Effective Tax Rate(1) for each of the third quarter andfirst nine months of 2008 was 15.1 percent and 13.3 percent,respectively. The Effective Tax Rate(2) for first nine months of 2008was 13.6 percent, which reflects the impact of various discrete taxitems totaling $7 million, primarily related to changes in estimates.The Effective Tax Rate(2) for the third quarter of 2008 was 13.7percent.

Conference Call Information

Transocean will conduct a teleconference call at 10:00 a.m.Eastern Time on November 5, 2008. To participate, dial 913-981-5568and refer to confirmation code 7057401 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 \"3Q08 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 November 5, 2008 and can be accessedby dialing 719-457-0820 and referring to the passcode 7057401. 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 136 mobile offshore drilling units plus 10announced 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, 54 Standard Jackups and otherassets utilized in the support of offshore drilling activitiesworldwide.

(1) 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 \"Supplemental Effective TaxRate Analysis.\"

(2) Effective Tax Rate is defined as income tax expense divided byincome before income taxes. 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    Nine months ended                                 September 30,        September 30,                              -------------------  -------------------                                2008      2007       2008      2007                              --------- ---------  --------- ---------Operating revenues   Contract drilling revenues  $ 2,699   $ 1,455    $ 7,926   $ 4,088   Contract drilling    intangible revenues            143        --        557        --   Other revenues                  350        83        921       212----------------------------------------------------------------------                                 3,192     1,538      9,404     4,300----------------------------------------------------------------------Costs and expenses   Operating and maintenance     1,426       663      3,947     1,858   Depreciation, depletion    and amortization               336       103      1,040       304   General and administrative       46        27        140        82----------------------------------------------------------------------                                 1,808       793      5,127     2,244----------------------------------------------------------------------Gain (loss) from disposal of assets, net                        (1)        8         (4)       30----------------------------------------------------------------------Operating income                 1,383       753      4,273     2,086----------------------------------------------------------------------Other income (expense), net   Interest income                   7         7         30        17   Interest expense, net of    amounts capitalized           (100)      (23)      (348)      (93)   Other, net                      (12)      287        (23)      295----------------------------------------------------------------------                                  (105)      271       (341)      219----------------------------------------------------------------------Income before income taxes and minority interest           1,278     1,024      3,932     2,305Income tax expense                 175        52        533       230Minority interest                   (3)       (1)        (3)       ------------------------------------------------------------------------Net income                     $ 1,106   $   973    $ 3,402   $ 2,075======================================================================Earnings per share   Basic                       $  3.47   $  4.80    $ 10.69   $ 10.25   Diluted                     $  3.44   $  4.63    $ 10.59   $  9.87======================================================================Weighted average shares outstanding   Basic                           319       203        318       202   Diluted                         321       210        321       211======================================================================
                   TRANSOCEAN INC. AND SUBSIDIARIES                CONDENSED CONSOLIDATED BALANCE SHEETS                   (In millions, except share data)                                           September 30,  December 31,                                               2008           2007                                           -------------  ------------                                            (Unaudited)                  ASSETSCash and cash equivalents                   $       829    $    1,241Short-term investments                              392            --Accounts receivable, net of allowance for doubtful accounts of $65 and $50 at September 30, 2008 and December 31, 2007, respectively                                     2,783         2,370Materials and supplies, net of allowance for obsolescence of $28 and $22 at September 30, 2008 and December 31, 2007, respectively                                       429           333Deferred income taxes, net                           55           119Assets held for sale                                564            --Other current assets                                236           233----------------------------------------------------------------------     Total current assets                         5,288         4,296----------------------------------------------------------------------Property and equipment                           25,152        24,545Less accumulated depreciation                     4,597         3,615----------------------------------------------------------------------     Property and equipment, net                 20,555        20,930----------------------------------------------------------------------Goodwill                                          8,346         8,219Other assets                                        976           919----------------------------------------------------------------------     Total assets                           $    35,165    $   34,364======================================================================   LIABILITIES AND SHAREHOLDERS' EQUITYAccounts payable                            $       934    $      805Accrued income taxes                                234            99Debt due within one year                            932         6,172Other current liabilities                           853           826----------------------------------------------------------------------     Total current liabilities                    2,953         7,902----------------------------------------------------------------------Long-term debt                                   13,851        11,085Deferred income taxes, net                          755           681Other long-term liabilities                       1,528         2,125----------------------------------------------------------------------     Total long-term liabilities                 16,134        13,891----------------------------------------------------------------------Commitments and contingenciesMinority interest                                     3             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, 319,068,820 and 317,222,909 shares issued and outstanding at September 30, 2008 and December 31, 2007, respectively                      3             3Additional paid-in capital                       10,911        10,799Accumulated other comprehensive loss                (46)          (42)Retained earnings                                 5,207         1,806----------------------------------------------------------------------     Total shareholders' equity                  16,075        12,566----------------------------------------------------------------------     Total liabilities and shareholders'      equity                                $    35,165    $   34,364======================================================================
                   TRANSOCEAN INC. AND SUBSIDIARIES           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                            (In millions)                             (Unaudited)                           Three months ended      Nine months ended                              September 30,          September 30,                          ---------------------  ---------------------                             2008       2007        2008       2007                          ---------- ----------  ---------- ----------Cash flows from operating activities  Net income               $  1,106   $    973    $  3,402   $  2,075  Adjustments to   reconcile net income   to net cash provided   by operating   activities:    Amortization of     drilling contract     intangibles               (143)        --        (557)        --    Depreciation,     depletion and     amortization               336        103       1,040        304    Share-based     compensation expense        16         11          49         30    (Gain) loss from     disposal of assets,     net                          1         (8)          4        (30)    Impairment of short-     term investments            16         --          16         --    Deferred revenue, net        (3)       (20)         22         18    Deferred expenses,     net                         (3)        (4)       (132)       (17)    Deferred income taxes        60          9           4          2    Other, net                   (6)         2           3          6  Changes in operating   assets and liabilities      (110)      (169)        (88)      (230)----------------------------------------------------------------------Net cash provided by operating activities         1,270        897       3,763      2,158----------------------------------------------------------------------Cash flows from investing activities    Capital expenditures       (514)      (305)     (1,703)    (1,060)    Proceeds from     disposal of assets,     net                          5         21         352         62    Proceeds from sale of     investments                 14         --          14         --    Short-term     investments               (408)        --        (408)        --    Joint ventures and     other investments,     net                         --         --          (3)        (3)----------------------------------------------------------------------Net cash used in investing activities          (903)      (284)     (1,748)    (1,001)----------------------------------------------------------------------Cash flows from financing activities    Borrowings     (repayments) under     commercial paper     program, net              (213)        --         932         --    Borrowings     (repayments) under     revolving credit     facilities, net            415         --      (1,085)        --    Proceeds from debt          303         --       2,354         --    Repayments of debt       (1,000)      (470)     (4,673)      (700)    Repurchase of     ordinary shares             --         --          --       (400)    Proceeds from     (payments made upon)     exercise of     warrants, net               --         16          (4)        16    Proceeds from (taxes     paid for) issuance     of ordinary shares     under share-based     compensation plans,     net                        (12)         1          49         56    Excess tax benefit     from issuance of     ordinary shares     under share-based     compensation plans          --         23          11         33    Other, net                   (7)       (10)        (11)       (11)----------------------------------------------------------------------Net cash used in financing activities          (514)      (440)     (2,427)    (1,006)----------------------------------------------------------------------Net increase (decrease) in cash and cash equivalents                   (147)       173        (412)       151Cash and cash equivalents at beginning of period         976        445       1,241        467----------------------------------------------------------------------Cash and cash equivalents at end of period          $    829   $    618    $    829   $    618======================================================================
                           Transocean Inc.                      Fleet Operating Statistics                            Operating Revenues ($ Millions) (1)                     -------------------------------------------------                                                    Nine months ended                          Three months ended          September 30,                     ----------------------------- -------------------                     September           September                        30,    June 30,     30,                       2008      2008      2007      2008      2007                     --------- --------- --------- --------- ---------Contract Drilling Revenues  High-Specification   Floaters:    Ultra Deepwater     Floaters        $    617  $    558  $    381  $  1,783  $  1,057    Deepwater     Floaters             323       377       280     1,025       778    Harsh Environment     Floaters             163       168       122       481       358  Total High-   Specification   Floaters             1,103     1,103       783     3,289     2,193  Midwater Floaters       690       650       409     2,015     1,177  High-Specification   Jackups                144       147        12       448        36  Standard Jackups        749       674       236     2,134       637  Other Rigs               13        13        15        40        45Subtotal                2,699     2,587     1,455     7,926     4,088Contract Intangible Revenue                  143       190         0       557         0Other Revenues  Client Reimbursable   Revenues                55        51        32       152        91  Integrated Services   and Other               12        48        51         8       121  Drilling Management   Services               257       208         0       693         0  Oil and Gas   Properties              26        18         0        68         0Subtotal                  350       325        83       921       212Total Company        $  3,192  $  3,102  $  1,538  $  9,404  $  4,300                                   Average Dayrates (1)                     -------------------------------------------------                                                    Nine months ended                          Three months ended          September 30,                     ----------------------------- -------------------                     September           September                        30,    June 30,     30,                       2008      2008      2007      2008      2007                     --------- --------- --------- --------- ---------  High-Specification   Floaters:    Ultra Deepwater     Floaters        $401,300  $390,400  $323,200  $390,700  $304,600    Deepwater     Floaters        $322,700  $317,400  $251,600  $307,600  $227,400    Harsh Environment     Floaters        $363,500  $379,400  $312,300  $362,400  $281,100  Total High-   Specification   Floaters          $369,300  $360,500  $291,900  $356,600  $268,600  Midwater Floaters  $292,900  $299,300  $254,000  $294,800  $240,100  High-Specification   Jackups           $178,500  $178,000  $131,600  $176,700  $131,800  Standard Jackups   $158,700  $149,400  $120,000  $151,400  $113,800  Other Rigs         $ 48,900  $ 48,400  $ 54,800  $ 49,000  $ 54,100Total Drilling Fleet $242,200  $238,600  $219,700  $236,500  $206,800                                      Utilization (1)                     -------------------------------------------------                                                    Nine months ended                          Three months ended          September 30,                     ----------------------------- -------------------                     September           September                        30,    June 30,     30,                       2008      2008      2007      2008      2007                     --------- --------- --------- --------- ---------  High-Specification   Floaters:    Ultra Deepwater     Floaters              93%       87%       99%       93%       98%    Deepwater     Floaters              68%       81%       76%       76%       78%    Harsh Environment     Floaters              98%       98%       85%       97%       93%  Total High-   Specification   Floaters                83%       86%       86%       86%       88%  Midwater Floaters        88%       82%       92%       86%       95%  High-Specification   Jackups                 87%       91%      100%       93%      100%  Standard Jackups         93%       89%       89%       92%       85%  Other Rigs              100%      100%       98%      100%       99%Total Drilling Fleet       89%       87%       89%       89%       89%
(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               Supplemental Effective Tax Rate Analysis                            (In millions)                                          Nine months    Years ended                    Three months ended        ended        Dec. 31,                   --------------------- -------------- --------------                   Sept.   June  Sept.   Sept.  Sept.                     30,    30,    30,     30,    30,                    2008   2008   2007    2008   2007    2007   2006                   --------------------- -------------- --------------Income (Loss) before income taxes and minority interest $1,278 $1,246 $1,024  $3,932 $2,305  $3,384 $1,607  Add back   (subtract):    (Gain) loss on     disposal of     assets, net        -      -     (9)      -    (31)   (264)  (410)    Income from     TODCO tax     sharing     agreement        (14)     -   (276)    (14)  (276)   (277)   (51)       Loss on The        Reserve        Funds          16      -      -      16      -       -      -       (Gain) loss        on        retirement        of debt         -      1      -       3      -       8      -       GSF Merger        related        costs           1      3      -       5      -      82      -                   --------------------- -------------- --------------Adjusted income before income taxes              1,281  1,250    739   3,942  1,998   2,933  1,146Income tax expense    175    140     52     533    230     253    222  Add back   (subtract):    (Gain) loss on     disposal of     assets, net        -      -      -       -     (3)     (3)   (24)       Loss on The        Reserve        Funds           2      -      -       2      -       -      -       GSF Merger        related        costs           1      -      -       1      -      15      -    Changes in     estimates (1)     15      2     52     (10)    65     101     14                   --------------------- -------------- --------------Adjusted income tax expense (2)   $  193 $  142 $  104  $  526 $  292  $  366 $  212                   ===================== ============== ==============Effective Tax Rate (3)                 13.7%  11.2%   5.1%   13.6%  10.0%    7.5%  13.8%Annual Effective Tax Rate (4)        15.1%  11.4%  14.0%   13.3%  14.6%   12.5%  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 Sept. 30, 2008 include $21 million of     additional tax expense (benefit) reflecting the catch-up effect     of an increase (decrease) in the annual effective tax rate from     the previous quarter estimate.(3) Effective Tax Rate is income tax expense divided by income before     income taxes.(4) Annual Effective Tax Rate is income tax expense excluding various     discrete items (such as changes in estimates and tax on items     excluded from income before income taxes) divided by income     before income taxes excluding gains on sales and similar items     pursuant to Financial
                   Transocean Inc. and Subsidiaries           Non-GAAP Financial Measures and Reconciliations      Operating Income Before General and Administrative Expense                      to Field Operating Income                          (in US$ millions)                           Three months ended       Nine months ended                      ---------------------------- -------------------                      September June 30, September September September                       30, 2008   2008    30, 2007  30, 2008  30, 2007                      --------- -------- --------- --------- ---------  Operating revenue   $   3,192 $  3,102 $  1,538  $   9,404 $  4,300  Operating and   maintenance   expense                1,426    1,364      663      3,947    1,858  Depreciation,   depletion and   amortization             336      337      103      1,040      304  (Gain) loss from   disposal of   assets, net                1        6       (8)         4      (30)                      --------- -------- --------- --------- ---------Operating income before general and administrative expense                  1,429    1,395      780      4,413    2,168Add back (subtract):  Depreciation,   depletion and   amortization             336      337      103      1,040      304  (Gain) loss from   disposal of   assets, net                1        6       (8)         4      (30)                      --------- -------- --------- --------- ---------Field operating income               $   1,766 $  1,738 $    875  $   5,457 $  2,442                      --------- -------- --------- --------- ---------

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

SOURCE: Transocean Inc.