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Transocean Ltd. Reports Third Quarter 2010 Results

November 3, 2010

ZUG, SWITZERLAND, Nov 03, 2010 (MARKETWIRE via COMTEX) --

Transocean Ltd. (NYSE: RIG) (SIX: RIGN) today reported net incomeattributable to controlling interest for the three months endedSeptember 30, 2010 of $368 million, or $1.15 per diluted share, onrevenues of $2.309 billion. The results compare to net incomeattributable to controlling interest of $710 million, or $2.19 perdiluted share, on revenues of $2.823 billion, for the three monthsended September 30, 2009.

Third quarter 2010 results included increased expenses associatedwith the Macondo well incident of $27 million, or $22 million aftertax, calculated using our Annual Effective Tax Rate. These expensesinclude legal costs, internal investigation costs, professional feesand increased insurance premiums.

In addition, third quarter 2010 results were adversely impacted by$43 million of after tax items, as follows:

    -- A $22 million loss on retirement of debt associated with       repurchases of a portion of our convertible senior notes,    -- $14 million of additional charges related to legal matters       not related to the Macondo well incident, and    -- $7 million related to discrete tax items.

Third quarter 2009 results were adversely impacted by certain netcharges, after tax, totaling $148 million, or $0.46 per diluted share.These charges were related to various litigation matters, theimpairment of intangible assets, the retirement of debt and certainmerger-related costs, partially offset by income related to discretetax items and gains on settlements of certain tax matters.

Operations Quarterly Review

Revenues for the three months ended September 30, 2010 were $2.309billion compared to $2.505 billion for the three months ended June 30,2010. The $196 million decline was primarily due to $223 millionresulting from the U.S. Gulf of Mexico moratorium, $34 millionresulting from the stacking of rigs and $24 million of other minorvariances, partially offset by increases of $85 million resultingfrom reduced shipyard activity.

Operating and maintenance expenses totaled $1.213 billion for thethird quarter 2010, down approximately 11 percent compared to $1.358billion for the prior quarter. The $145 million reduction inoperating and maintenance costs was primarily due to $96 millionresulting from reduced activity related to the U.S. Gulf of Mexicodrilling moratorium, a $65 million charge in the prior quarter forinsurance deductibles from the Macondo well incident and $24 millionin cost reductions primarily from the stacking of rigs. These costreductions were partially offset by $27 million of increased costsassociated with the Macondo well incident and $17 million resultingfrom increased maintenance costs associated with our drillingoperations.

General and administrative expenses were $59 million for the thirdquarter 2010, compared to $58 million in the second quarter 2010.

Liquidity and Interest Expense

Interest expense, net of amounts capitalized in the third quarter2010, totaled $142 million, compared to $141 million in the priorquarter. As of September 30, 2010, total debt was $12.840 billion,compared to $11.426 billion as of June 30, 2010, an increase of$1.414 billion. The quarter-to-quarter increase in total debtprimarily reflects proceeds from a new offering of senior notes, netof repurchases of our convertible senior notes.

Cash flow from operating activities totaled $709 million for thethird quarter of 2010, down from $1.269 billion for the second quarterof 2010.

As of September 30, 2010, cash and cash equivalents were $4.636billion, compared to $2.888 billion at June 30, 2010. The increase wasprincipally due to net proceeds from our issuance of the senior notesand cash flows from operations, partially offset by our repurchasesof convertible senior notes and capital expenditures.

Effective Tax Rate

Transocean's reported Effective Tax Rate(1) for the third quarter2010 was 23.8 percent. The higher Effective Tax Rate was due to theredeployment of certain rigs between various tax jurisdictions andincluded $7 million of discrete tax items. Excluding these discreteitems the Annual Effective Tax Rate(2) for the third quarter was 20.8percent.

Macondo Well Incident

Our Quarterly Report on Form 10-Q filed with the Securities andExchange Commission includes updated information on the Macondo wellincident. To view the Form 10-Q filing, please use the followinglink: http://www.deepwater.com/fw/main/SEC-Filings-57.html.

Conference Call Information

Transocean will conduct a teleconference call at 10:00 a.m. EDT (3:00p.m. CET) on Thursday, November 4, 2010. Individuals who wish toparticipate in the teleconference call should dial +1 719-325-2298and refer to confirmation code 4130334 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 bylogging onto Transocean's website at www.deepwater.com and selecting\"Investor Relations.\" A file containing four charts to be discussedduring the conference call, titled \"3Q10 Charts,\" has been posted toTransocean's website and can be found by selecting \"InvestorRelations/Quarterly Toolkit.\" The conference call may also be accessedvia the Internet at www.CompanyBoardroom.com by typing inTransocean's New York Stock Exchange trading symbol, \"RIG.\"

A telephonic replay of the conference call should be available after1:00 p.m. EDT (6:00 p.m. CET) on November 4, 2010, and can be accessedby dialing +1 719-457-0820 or +1 888-203-1112 and referring to thepasscode 4130334. Also, a replay will be available through theInternet and can be accessed by visiting either of theabove-referenced Worldwide Web addresses. Both replay options will beavailable for approximately 30 days.

Transocean is the world's largest offshore drilling contractor andthe leading provider of drilling management services worldwide. With afleet of 139 mobile offshore drilling units plus threeultra-deepwater newbuild drillships under construction, Transocean'sfleet is considered one of the most modern and versatile in the worlddue to its emphasis on technically demanding segments of the offshoredrilling business. Transocean owns or operates a contract drillingfleet of 45 High-Specification Floaters (Ultra-Deepwater, Deepwaterand Harsh-Environment semisubmersibles and drillships), 26 MidwaterFloaters, 10 High-Specification Jackups, 55 Standard Jackups andother assets utilized in the support of offshore drilling activitiesworldwide.

(1) Effective Tax Rate is defined as income tax expense divided byincome before income taxes. See the accompanying schedule entitled\"Supplemental Effective Tax Rate Analysis.\"

(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 tax expense) divided byincome before income tax expense excluding gains on sales and similaritems pursuant to the accounting standards for income taxes andestimating the annual effective tax rate. See the accompanyingschedule entitled \"Supplemental Effective Tax Rate Analysis.\"

                     TRANSOCEAN LTD. AND SUBSIDIARIES             CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS                   (In millions, except per share data)                               (Unaudited)                                      Three months ended  Nine months ended                                          September 30,     September 30,                                        ----------------  ----------------                                          2010     2009     2010     2009                                        -------  -------  -------  -------Operating revenues  Contract drilling revenues            $ 2,204  $ 2,602  $ 6,935  $ 8,061  Contract drilling intangible revenues      23       58       85      237  Other revenues                             82      163      396      525                                        -------  -------  -------  -------                                          2,309    2,823    7,416    8,823                                        -------  -------  -------  -------Costs and expenses  Operating and maintenance               1,213    1,396    3,767    3,844  Depreciation, depletion and   amortization                             394      367    1,195    1,082  General and administrative                 59       54      180      163                                        -------  -------  -------  -------                                          1,666    1,817    5,142    5,089                                        -------  -------  -------  -------Loss on impairment                           --      (46)      (2)    (334)Gain (loss) on disposal of assets, net        2       (3)     256       (3)                                        -------  -------  -------  -------Operating income                            645      957    2,528    3,397                                        -------  -------  -------  -------Other income (expense), net  Interest income                             7       --       17        2  Interest expense, net of amounts   capitalized                             (142)    (115)    (415)    (365)  Loss on retirement of debt                (22)      (7)     (20)     (17)  Other, net                                  8        9       18        9                                        -------  -------  -------  -------                                           (149)    (113)    (400)    (371)                                        -------  -------  -------  -------Income before income tax expense            496      844    2,128    3,026Income tax expense                          118      138      345      573                                        -------  -------  -------  -------Net income                                  378      706    1,783    2,453Net income (loss) attributable to noncontrolling interest                     10       (4)      23       (5)                                        -------  -------  -------  -------Net income attributable to controlling interest                               $   368  $   710  $ 1,760  $ 2,458                                        =======  =======  =======  =======Earnings per share  Basic                                 $  1.15  $  2.20  $  5.47  $  7.63  Diluted                               $  1.15  $  2.19  $  5.47  $  7.61Weighted average shares outstanding  Basic                                     319      321      320      320  Diluted                                   319      322      320      321                     TRANSOCEAN LTD. AND SUBSIDIARIES                  CONDENSED CONSOLIDATED BALANCE SHEETS                     (In millions, except share data)                                                September 30,  December 31,                                                      2010         2009                                                  -----------  -----------                                                  (Unaudited)AssetsCash and cash equivalents                         $     4,636  $     1,130Accounts receivable, net of allowance for doubtful accounts of $39 and $65 at September 30, 2010 and December 31, 2009, respectively               2,299        2,385Materials and supplies, net of allowance for obsolescence of $69 and $66 at September 30, 2010 and December 31, 2009, respectively                 501          462Deferred income taxes, net                                100          104Assets held for sale                                       --          186Other current assets                                      234          209                                                  -----------  -----------      Total current assets                              7,770        4,476                                                  -----------  -----------Property and equipment                                 27,644       27,383Property and equipment of consolidated variable interest entities                                      2,192        1,968Less accumulated depreciation                           7,423        6,333                                                  -----------  -----------   Property and equipment, net                         22,413       23,018                                                  -----------  -----------Goodwill                                                8,132        8,134Other assets                                            1,015          808                                                  -----------  -----------      Total assets                                $    39,330  $    36,436                                                  ===========  ===========Liabilities and equityAccounts payable                                  $       791  $       780Accrued income taxes                                      226          240Debt due within one year                                1,635        1,568Debt of consolidated variable interest entities due within one year                                       82          300Other current liabilities                               2,030          730                                                  -----------  -----------      Total current liabilities                         4,764        3,618                                                  -----------  -----------Long-term debt                                         10,237        8,966Long-term debt of consolidated variable interest entities                                                 886          883Deferred income taxes, net                                652          726Other long-term liabilities                             1,752        1,684                                                  -----------  -----------      Total long-term liabilities                      13,527       12,259                                                  -----------  -----------Commitments and contingenciesShares, CHF 15.00 par value, 502,852,947 authorized, 167,617,649 conditionally authorized, 335,235,298 issued at September 30, 2010 and December 31, 2009; 319,017,904 and 321,223,882 outstanding at September 30, 2010 and December 31, 2009, respectively                    4,481        4,472Additional paid-in capital                              6,354        7,407Treasury shares, at cost, 2,863,267 and none held at September 30, 2010 and December 31, 2009, respectively                                            (240)          --Retained earnings                                      10,768        9,008Accumulated other comprehensive loss                     (327)        (335)                                                  -----------  -----------   Total controlling interest shareholders'    equity                                             21,036       20,552                                                  -----------  -----------   Noncontrolling interest                                  3            7                                                  -----------  -----------      Total equity                                     21,039       20,559                                                  -----------  -----------      Total liabilities and equity                $    39,330  $    36,436                                                  ===========  ===========                     TRANSOCEAN LTD. AND SUBSIDIARIES             CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                     (In millions, except share data)                                       Three months ended Nine months ended                                          September 30,     September 30,                                        ----------------  ----------------                                          2010     2009     2010     2009                                        -------  -------  -------  -------Cash flows from operating activitiesNet income                              $   378  $   706  $ 1,783  $ 2,453Adjustments to reconcile net income to net cash provided by operating activities  Amortization of drilling contract   intangibles                              (23)     (58)     (85)    (237)  Depreciation, depletion and   amortization                             394      367    1,195    1,082  Share-based compensation expense           26       23       79       66  Excess tax benefit from share-based   compensation plans                        --       (9)      (1)     (10)  (Gain) loss on disposal of assets,   net                                       (2)       3     (256)       3  Loss on impairment                         --       46        2      334  Loss on retirement of debt                 22        7       20       17  Amortization of debt issue costs,   discounts and premiums, net               48       51      148      160  Deferred income taxes                     (40)      24      (74)      50  Other, net                                  2        7        1       30  Deferred revenue, net                      47       29      205       72  Deferred expenses, net                    (18)      (3)     (55)     (38)  Changes in operating assets and   liabilities                             (125)     213      188      441                                        -------  -------  -------  -------Net cash provided by operating activities                                 709    1,406    3,150    4,423                                        -------  -------  -------  -------Cash flows from investing activities  Capital expenditures                     (304)    (540)    (983)  (2,195)  Proceeds from disposal of assets, net      --        2       51       10  Proceeds from insurance recoveries   for loss of drilling unit                 --       --      560       --  Proceeds from payments on notes   receivable                                10       --       31       --  Proceeds from short-term investments       --       29        5      422  Purchases of short-term investments        --      (34)      --     (268)  Joint ventures and other investments,   net                                       (4)       5       (5)       5                                        -------  -------  -------  -------Net cash used in investing activities      (298)    (538)    (341)  (2,026)                                        -------  -------  -------  -------Cash flows from financing activities  Change in short-term borrowings, net       46      254     (131)    (246)  Proceeds from debt                      2,000       26    2,054      345  Repayments of debt                       (691)  (1,173)    (966)  (2,583)  Purchases of shares held in treasury       --       --     (240)      --  Financing costs                           (15)      --      (15)      (2)  Proceeds from (taxes paid for)   share-based compensation plans, net       (2)      (6)      (3)      16  Excess tax benefit from share-based   compensation plans                        --        9        1       10  Other, net                                 (1)       1       (3)     (14)                                        -------  -------  -------  -------Net cash provided by (used in) financing activities                     1,337     (889)     697   (2,474)                                        -------  -------  -------  -------Net increase (decrease) in cash and cash equivalents                         1,748      (21)   3,506      (77)Cash and cash equivalents at beginning of period                                2,888      907    1,130      963                                        -------  -------  -------  -------Cash and cash equivalents at end of period                                 $ 4,636  $   886  $ 4,636  $   886                                        =======  =======  =======  =======                              TRANSOCEAN LTD.                        FLEET OPERATING STATISTICS                                Operating Revenues ($ Millions) (1)                          ------------------------------------------------                                                         Nine months ended                               Three months ended          September 30,                          ----------------------------  ------------------                         September  June 30,  September                          30, 2010    2010    30, 2009    2010      2009                          --------  --------  --------  --------  --------Contract Drilling Revenues  High-Specification   Floaters:    Ultra Deepwater     Floaters             $    720  $    809  $    732  $  2,430  $  2,107    Deepwater Floaters         350       382       463     1,122     1,282    Harsh Environment     Floaters                  178       166       141       520       458  Total High-Specification   Floaters                  1,248     1,357     1,336     4,072     3,847  Midwater Floaters            572       521       618     1,616     1,971  High-Specification   Jackups                      78        93       104       264       383  Standard Jackups             298       312       537       963     1,835  Other Rigs                     8         7         7        20        25Subtotal                     2,204     2,290     2,602     6,935     8,061Contract Intangible Revenue                        23        29        58        85       237Other Revenues  Client Reimbursable   Revenues                     40        38        49       118       148  Integrated Services and   Other                        10        11        53        52       158  Drilling Management   Services                     25       129        54       204       198  Oil and Gas Properties         7         8         7        22        21Subtotal                        82       186       163       396       525Total Company             $  2,309  $  2,505  $  2,823  $  7,416  $  8,823                                     Average Daily Revenue (1)                          ------------------------------------------------                                                         Nine months ended                               Three months ended          September 30,                          ----------------------------  ------------------                         September  June 30,  September                          30, 2010    2010    30, 2009    2010      2009                          --------  --------  --------  --------  --------  High-Specification   Floaters:    Ultra Deepwater     Floaters             $422,800  $482,100  $458,500  $464,200  $453,400    Deepwater Floaters    $365,600  $395,800  $355,600  $381,800  $344,300    Harsh Environment     Floaters             $414,100  $428,500  $386,000  $413,600  $369,400  Total High-Specification   Floaters               $403,900  $447,800  $409,300  $431,800  $400,300  Midwater Floaters       $328,400  $319,000  $355,800  $326,300  $322,200  High-Specification   Jackups                $138,100  $146,100  $161,000  $149,900  $164,400  Standard Jackups        $113,200  $117,100  $156,200  $121,100  $153,800  Other Rigs              $ 72,900  $ 72,000  $ 73,300  $ 72,600  $ 51,400Total Drilling Fleet      $271,200  $284,200  $283,800  $284,600  $264,500                                          Utilization (1)                          ------------------------------------------------                                                         Nine months ended                               Three months ended          September 30,                          ----------------------------  ------------------                         September  June 30,  September                          30, 2010    2010    30, 2009    2010      2009                          --------  --------  --------  --------  --------  High-Specification   Floaters:    Ultra Deepwater     Floaters                   77%       76%       90%       80%       93%    Deepwater Floaters          65%       66%       89%       67%       85%    Harsh Environment     Floaters                   93%       85%       80%       92%       91%  Total High-Specification   Floaters                     75%       74%       88%       77%       89%  Midwater Floaters             73%       69%       72%       70%       82%  High-Specification   Jackups                      61%       70%       70%       65%       85%  Standard Jackups              52%       53%       68%       53%       79%  Other Rigs                    50%       50%       42%       50%       70%Total Drilling Fleet            64%       64%       75%       65%       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 Ltd. and Subsidiaries                 Supplemental Effective Tax Rate Analysis                              (In millions)                                   Three months ended     Nine months ended                               -------------------------  ----------------                               Sept 30, June 30, Sept 30, Sept 30, Sept 30,                                 2010     2010     2009     2010     2009                               -------  -------  -------  -------  -------Income before income taxes     $   497  $   818  $   844  $ 2,129  $ 3,026 Add back (subtract):    Litigation matters              14       12      132       26      132    Gain on loss of Deepwater     Horizon                         -     (267)       -     (267)       -    Loss on disposal of other     assets, net                     -        -       (1)      14        2    Loss on impairment of     goodwill and intangible     assets                          -        -       46        2      334    Loss on impairment of     other assets                    -        -        -       21        -    (Gain) loss on retirement     of debt                        22        -        7       20       17    GSF merger related costs     and other, net                  -        -        4        6       12    Income from TODCO tax     sharing agreement               -        -      (11)       -      (11)                               -------  -------  -------  -------  -------Adjusted income before income taxes                             533      563    1,021    1,951    3,512Income tax expense                 118       98      138      345      573 Add back (subtract):    Loss on impairment of     other assets                    -        -        -        7        -    GSF merger related costs         -        -        1        1        2    Tax effect of the Patient     Protection and Affordable     Care Act                        -        -        -       (2)       -    Changes in estimates(1)         (7)      (6)      28      (20)     (24)                               -------  -------  -------  -------  -------Adjusted income tax expense(2) $   111  $    92  $   167  $   331  $   551                               =======  =======  =======  =======  =======Effective Tax Rate(3)             23.8%    12.0%    16.4%    16.2%    18.9%Annual Effective Tax Rate(4)      20.8%    16.3%    16.4%    17.0%    15.7%(1) Our estimates change as we file tax returns, settle disputes with tax    authorities or become aware of other events and include changes in (a)    deferred taxes, (b) valuation allowances on deferred taxes and (c)    other tax liabilities.(2) The three months ended September 30, 2010 includes $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 and losses on sales and similar items pursuant to the    accounting standards for income taxes and estimating the annual    effective tax rate.

SOURCE: Transocean Ltd.