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Transocean Sedco Forex Reports First Quarter 2002 Results

April 30, 2002
HOUSTON, Apr 30, 2002 (BUSINESS WIRE) -- Transocean Sedco Forex Inc. (NYSE:RIG)today announced that net income for the three months ended March 31, 2002,before the cumulative effect of a change in accounting principle, was $77.3million, or $0.24 per diluted share on revenues of $667.9 million. Including thecumulative effect of the change in accounting principle resulting from thecompany's January 1, 2002 adoption of Statement of Financial AccountingStandards (SFAS) 142, Goodwill and Other Intangible Assets, the company reporteda net loss of $1,286.4 million, or $3.98 per diluted share.

During the first quarter of 2002, the company performed its initial test ofimpairment for goodwill on its two reporting units, \"Gulf of Mexico Shallow andInland Water\" and \"International and U.S. Floater Contract Drilling Services.\"The test, which was applied utilizing the fair value of the reporting units atJanuary 1, 2002, resulted in a non-cash charge of $1,363.7 million, or $4.22 perdiluted share, to reflect the impairment of goodwill associated with the Gulf ofMexico Shallow and Inland Water reporting unit. There was no goodwill impairmentcharge in the International and U.S. Floater Contract Drilling Servicesreporting unit. In accordance with SFAS 142, the company has discontinued theamortization of goodwill as of January 1, 2002. The company's goodwill balance,after giving effect to the goodwill write down, is $5.1 billion.

During the three months ended March 31, 2001, the company reported net income of$30.5 million, or $0.11 per diluted share, on revenues of $550.1 million. Theresults included a $15.9 million, or $0.06 per diluted share, net after-tax gainpertaining to the sale of a semisubmersible rig owned by a joint venture inwhich the company has a 25% equity interest. Goodwill amortization for the threemonths ended March 31, 2001 totaled $30.2 million, or $0.11 per diluted share.Adjusting for the net after-tax gain and excluding goodwill amortizationexpense, net income for the three months ended March 31, 2001 was $44.8 million,or $0.16 per diluted share.

Transocean Sedco Forex completed a merger transaction with R&B FalconCorporation on January 31, 2001. Therefore, results for the three months endedMarch 31, 2001 reflect only two months of operating results of R&B FalconCorporation. Pro forma utilization measures noted below have been calculatedbased on the combined fleet of Transocean Sedco Forex and R&B Falcon for thethree months ended March 31, 2001.

Operating revenues from the company's International and U.S. Floater ContractDrilling Services business segment totaled $623.2 million during the threemonths ended March 31, 2002, an 8% decline from operating segment revenues of$678.4 million during the three months ended December 31, 2001. Revenues fromthis segment accounted for 93% of total operating revenues during the firstquarter of 2002. Operating income, defined as operating revenues less operatingand maintenance expenses, declined 4% to $294.5 million during the three monthsended March 31, 2002, compared to $305.4 million during the three months endedDecember 31, 2001. Segment fleet utilization declined to 82% during the threemonths ended March 31, 2002, from 86% during the three months ended December 31,2001.

Operating revenues from the company's Gulf of Mexico Shallow and Inland Waterbusiness segment declined 35% during the three months ended March 31, 2002, to$44.7 million compared to segment operating revenues of $69.2 million during thethree months ended December 31, 2001. The further weakening operatingenvironment that has persisted since mid-2001 resulted in a $7.6 million segmentoperating loss during the three months ended March 31, 2002, compared to anoperating profit of $2.4 million during the three months ended December 31,2001. Segment utilization declined to 31% during the three months ended March31, 2002, from 38% during the fourth quarter of 2001.

As of March 31, 2002, net debt (defined as long-term debt plus debt due withinone year, less cash and cash equivalents) was $4,009 million, down $161 millionfrom net debt of $4,170 million as of December 31, 2001 and down $599 millionfrom net debt of $4,608 million as of March 31, 2001.

J. Michael Talbert, Chief Executive Officer of Transocean Sedco Forex Inc.,stated, \"Declining drilling activity in the North America floater market sector,the Norwegian sector of the North Sea and the Gulf of Mexico Shallow and InlandWater segment, combined with the mobilization of two high-specification rigs,contributed substantially to an 11% decline in operating revenues during thefirst quarter of 2002, compared to the final three months of 2001. The uncertainduration of lower activity resulted in decisions to immediately cold-stackseveral rigs in each of our two business segments following the conclusion ofcontract commitments. These decisions, coupled with the deferral of somediscretionary rig maintenance projects to later periods in 2002, helped toreduce operating and maintenance expenses by $58.8 million during the quarter,or 13% compared to levels experienced during the three months ended December 31,2001.\"

In commenting on the company's adoption of SFAS 142, Talbert explained, \"Thenon-cash goodwill impairment charge reflects the highly cyclical nature of theshallow and inland water business in the U.S. Gulf of Mexico. An initial $1.8billion of unamortized goodwill was allocated to the business segment at January31, 2001, based on fair value assumptions when the business was progressingtoward a cyclical peak. Our initial test for goodwill impairment was required tobe performed 11 months later, when the segment had deteriorated to a cyclicallow.\"

In closing, Talbert stated, \"The outlook for 2002 drilling activity remainsuncertain. Reduced rig demand in Norway has materialized as expected, whileseveral market sectors for conventional semisubmersible rigs are noticeablyweaker today than 90 days ago, in particular the U.S. Gulf of Mexico and WestAfrica. Globally, the international deepwater drilling market is essentially inbalance, with opportunities emerging offshore India. The U.S. Gulf of Mexicodeepwater market sector is currently oversupplied, but is expected to see higherrig utilization during the second half of 2002 or early 2003, driven by agreater mix of development drilling projects and by rig mobilizations to other,currently more active deepwater regions. Our jackup rig fleet in the U.S. Gulfof Mexico is experiencing a modest improvement in customer interest, resultingin one previously stacked 200 foot, mat-cantilever unit returning to work on anestimated 120-day drilling program. Two to three other units in our jackup rigfleet that are currently stacked could return to work in the next 30 to 60days.\"

Statements regarding future deferral of rig maintenance projects, outlook fordrilling activity, rig demand, drilling opportunities, future utilization,future activity for stacked rigs, drilling market conditions, as well as anyother statements that are not historical facts in this release, areforward-looking statements that involve certain risks, uncertainties andassumptions. These include but are not limited to the future price of oil andgas, demand for rigs, operating hazards and delays, risks associated withinternational operations, actions by customers and other third parties,competition, risks of drilling, contract terminations or suspensions and otherfactors detailed in the company's most recent Form 10-K for the year endedDecember 31, 2001 and other filings with the Securities and Exchange Commission.Should one or more of these risks or uncertainties materialize, or shouldunderlying assumptions prove incorrect, actual results may vary materially fromthose indicated.

    Conference Call Information
The company will conduct a teleconference call at 10:00 a.m. EDT on April 30,2002. Individuals who wish to participate in the teleconference call may dial719/457-2641 and refer to confirmation code 324325. It is recommended thatparticipants dial in five to 10 minutes prior to the scheduled start time of thecall.

In addition, the conference call will be simulcast through a listen-onlybroadcast over the Internet and can be accessed by logging onto the company'sWorldwide Web address at www.deepwater.com and selecting \"Investor Relations.\"It may also be accessed via the Worldwide Web at www.CompanyBoardroom.com bytyping in the company's NYSE trading symbol, \"RIG.\"

A telephonic replay of the conference call should be available after 1:00 p.m.EDT on April 30 and can be accessed by dialing 719/457-0820 and referring to thepasscode 324325. Also, a replay will be available through the Internet and canbe accessed by visiting either of the above-referenced Worldwide Web addresses.Both replay options will be available for approximately 30 days.

    Monthly Fleet Update Information
Drilling rig status and contract information on Transocean Sedco Forex'soffshore drilling fleet has been condensed into two reports titled \"MonthlyFleet Update\" and \"Monthly Fleet Update - Jackups and Barges,\" which areavailable through the company's Website at www.deepwater.com. The reports arelocated in the \"Investor Relations/Financial Reports\" section of the Website. Bysubscribing to the Transocean Sedco Forex Financial Report Alert, you will beimmediately notified when new postings are made to this page by an automatede-mail, which will provide a link directly to the page that has been updated. Weinvite you to sign up for this service.

Transocean Sedco Forex Inc. is the world's largest offshore drilling contractorwith more than 150 full or partially owned and managed mobile offshore drillingunits, inland drilling barges and other assets utilized in the support ofoffshore drilling activities worldwide. The company's mobile offshore drillingfleet is considered one of the most modern and versatile in the world with 31high-specification semisubmersibles and drillships, 28 other semisubmersiblesand one drillship, and 54 jackup drilling rigs. Transocean Sedco Forex Inc.specializes in technically demanding segments of the offshore drilling business,including industry-leading positions in deepwater and harsh environment drillingservices. With a current equity market capitalization in excess of $10.5billion, the company's ordinary shares are traded on the New York Stock Exchangeunder the symbol \"RIG.\"

             TRANSOCEAN SEDCO FOREX INC. AND SUBSIDIARIES                 CONSOLIDATED STATEMENTS OF OPERATIONS                 (In millions, except per share data)                              (Unaudited)                                               Three Months Ended                                                    March 31,                                            -----------------------                                               2002          2001                                            ---------     ---------Operating Revenues                             $667.9        $550.1Costs and Expenses  Operating and maintenance                     381.0         351.0  Depreciation                                  125.6          99.3  Goodwill amortization                            --          30.2  General and administrative                     19.8          14.7                                                526.4         495.2Impairment Loss on Long-Lived Assets             (1.1)           --Gain from Sale of Assets, net                     1.9          19.6Operating Income                                142.3          74.5Other Income (Expense), net  Equity in earnings of joint ventures            1.9           1.7  Interest income                                 4.2           3.6  Interest expense, net of amounts   capitalized                                  (55.9)        (37.2)  Other, net                                     (0.7)         (0.6)                                                (50.5)        (32.5)Income Before Income Taxes, Minority Interest and Cumulative Effect of Change in Accounting Principle                  91.8          42.0Income Tax Expense                               13.8          10.2Minority Interest                                 0.7           1.3Net Income Before Cumulative Effect of Change in Accounting Principle               77.3          30.5Cumulative Effect of Change in Accounting Principle                        (1,363.7)           --Net Income (Loss)                           $(1,286.4)        $30.5Basic Earnings (Loss) Per Share  Income Before Cumulative Effect of   Change in Accounting Principle               $0.24         $0.11  Loss on Cumulative Effect of Change   in Accounting Principle                      (4.27)           --  Net Income (Loss)                            $(4.03)        $0.11Diluted Earnings (Loss) Per Share  Income Before Cumulative Effect of   Change in Accounting Principle               $0.24         $0.11  Loss on Cumulative Effect of Change   in Accounting Principle                      (4.22)           --  Net Income (Loss)                            $(3.98)        $0.11Weighted Average Shares Outstanding  Basic                                         319.1         280.6  Diluted                                       323.1         285.5    On January 31, 2001, the company completed a merger transactionwith R&B Falcon Corporation. As a result of the merger, R&B FalconCorporation became an indirect wholly owned subsidiary of the company.The company accounted for the merger using the purchase method ofaccounting with the company treated as the accounting acquiror. Theabove Consolidated Statement of Operations for the three months endedMarch 31, 2001 includes two months of operating results of R&B FalconCorporation.             TRANSOCEAN SEDCO FOREX INC. AND SUBSIDIARIES                      CONSOLIDATED BALANCE SHEETS                   (In millions, except share data)                                            March 31,      Dec. 31,                                            -----------------------                                               2002          2001                                            ---------     ---------    ASSETS                                 (Unaudited)Cash and Cash Equivalents                      $588.1        $853.4Accounts Receivable  Trade                                         617.4         602.9  Other                                          67.1          72.8Materials and Supplies                          167.3         158.8Deferred Income Taxes                            22.2          21.0Other Current Assets                             48.0          27.9  Total Current Assets                        1,510.1       1,736.8Property and Equipment                       10,058.0      10,081.4Less Accumulated Depreciation                 1,817.2       1,713.3  Property and Equipment, net                 8,240.8       8,368.1Goodwill, net                                 5,103.0       6,466.7Investments in and Advances to Joint Ventures                                 116.0         107.1Other Assets                                    334.5         341.1  Total Assets                              $15,304.4     $17,019.8    LIABILITIES AND SHAREHOLDERS' EQUITYAccounts Payable                               $155.0        $188.4Accrued Income Taxes                            203.9         188.2Debt Due Within One Year                        151.8         484.4Other Current Liabilities                       297.3         283.4  Total Current Liabilities                     808.0       1,144.4Long-Term Debt                                4,444.9       4,539.4Deferred Income Taxes                           295.0         317.1Other Long-Term Liabilities                     129.8         108.6  Total Long-Term Liabilities                 4,869.7       4,965.1Commitments and ContingenciesSHAREHOLDERS' EQUITYPreference 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, 319,140,615 and 318,816,035 shares issued and outstanding at March 31, 2002 and December 31, 2001, respectively                                     3.2           3.2Additional Paid-in Capital                   10,621.0      10,611.7Accumulated Other Comprehensive Income            0.8          (2.3)Retained Earnings (Deficit)                    (998.3)        297.7  Total Shareholders' Equity                  9,626.7      10,910.3  Total Liabilities and   Shareholders' Equity                     $15,304.4     $17,019.8             TRANSOCEAN SEDCO FOREX INC. AND SUBSIDIARIES            CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                             (In millions)                              (Unaudited)                                               Three Months Ended                                                   March 31,                                            -----------------------                                               2002          2001                                            ---------     ---------Cash Flows from Operating Activities  Net income (Loss)                         $(1,286.4)        $30.5  Adjustments to reconcile net income   to net cash provided by operating   activities    Depreciation                                125.6          99.3    Goodwill amortization                          --          30.2    Cumulative effect of change in     accounting principle - Goodwill     impairment                               1,363.7            --    Deferred income taxes                       (23.3)         (7.2)    Equity in earnings of joint ventures         (1.9)         (1.7)    Net gain from disposal of assets               --         (19.5)    Loss on sale of securities                     --           0.8    Impairment on long-lived assets               1.1            --    Amortization of debt-related     discounts/premiums, fair value     Adjustments and issue costs, net             1.3          (4.9)    Deferred income, net                         (5.4)        (19.6)    Deferred expenses, net                        7.4         (11.3)    Other, net                                    5.2          11.2    Changes in operating assets and     liabilities, net of effects from     the R&B Falcon merger      Accounts receivable                        (8.9)        (26.9)      Accounts payable and other current       liabilities                               (4.6)        (32.9)      Income taxes receivable/payable,       net                                       15.8          12.3      Other current assets                      (27.6)        (14.6)Net Cash Provided by Operating Activities       162.0          45.7Cash Flows from Investing Activities  Capital expenditures                          (47.7)       (255.8)  Other proceeds from disposal of   assets, net                                   43.4           4.7  Merger costs paid                                --         (24.6)  Cash acquired in merger, net of   cash paid                                       --         264.7  Joint ventures and other   investments, net                              (3.6)          1.6Net Cash Used in Investing Activities            (7.9)         (9.4)Cash Flows from Financing Activities  Net borrowings on revolving credit   agreements                                      --         180.9  Net borrowings (repayments) under   commercial paper program                    (326.4)         15.0  Repayments on debt obligations                (85.0)        (12.9)  Net proceeds from issuance of   ordinary shares under    stock-based compensation plans                9.1          11.5  Proceeds from issuance of ordinary   shares upon exercise of warrants                --           8.3  Dividends paid                                 (9.6)         (9.5)  Financing costs                                (8.2)           --  Other, net                                      0.7           1.5  Net Cash Provided by (Used in)   Financing Activities                        (419.4)        194.8  Net Increase (Decrease) in Cash and   Cash Equivalents                            (265.3)        231.1  Cash and Cash Equivalents at   Beginning of Period                          853.4          34.5  Cash and Cash Equivalents at   End of Period                               $588.1        $265.6                      Transocean Sedco Forex Inc.                      Fleet Operating Statistics                                    Operating Revenues ($ Millions)                                  -----------------------------------                                          Three Months EndedInternational and U.S.            ----------------------------------- Floater Contract Drilling        March 31,     Dec. 31,     March 31, Services Segment:                   2002       2001(2)     2001(1)(2)                                  ---------    ---------    ---------  High-Specification Floaters        $309.9       $354.7       $267.8  Other Floaters                     $164.2       $176.9       $121.1  Jackups - Non-U.S.                 $124.1       $112.5        $65.1  Other                               $25.0        $34.3        $94.7Segment Total                        $623.2       $678.4       $548.7Gulf of Mexico Shallow and Inland Water Segment:  Jackups and Submersibles            $13.4        $24.4        $80.2  Inland Barges                       $21.7        $32.0        $38.7  Other                                $9.6        $12.8         $8.4Segment Total                         $44.7        $69.2       $127.3Total Company                        $667.9       $747.6       $676.0                                          Average Dayrates (3)                                  -----------------------------------                                          Three Months EndedInternational and U.S.            ----------------------------------- Floater Contract Drilling        March 31,     Dec. 31,    March 31, Services Segment:                   2002         2001       2001(1)                                  ---------    ---------    ---------  High-Specification Floaters      $145,500     $145,000     $134,000  Other Floaters                    $77,300      $71,100      $59,000  Jackups - Non-U.S.                $58,800      $52,800      $38,400  Other                             $43,900      $41,300      $38,700Segment Total                       $91,000      $88,200      $76,300Gulf of Mexico Shallow and Inland Water Segment:  Jackups and Submersibles          $22,200      $30,600      $35,400  Inland Barges                     $19,200      $22,800      $19,100Segment Total                       $20,300      $25,600      $27,700Total Mobile Offshore Drilling Fleet                     $76,600      $74,000      $56,300                                            Utilization (3)                                  -----------------------------------                                          Three Months EndedInternational and U.S.            ----------------------------------- Floater Contract Drilling        March 31,     Dec. 31,    March 31, Services Segment:                   2002         2001       2001(1)                                  ---------    ---------    ---------  High-Specification Floaters           82%          90%          83%  Other Floaters                        82%          89%          70%  Jackups - Non-U.S.                    90%          89%          79%  Other                                 57%          54%          51%Segment Total                           82%          86%          74%Gulf of Mexico Shallow and Inland Water Segment:  Jackups and Submersibles              22%          27%          74%  Inland Barges                         41%          49%          67%Segment Total                           31%          38%          71%Total Mobile Offshore Drilling Fleet                         61%          67%          73%(1) Transocean Sedco Forex completed a merger transaction with R&B    Falcon on January 31, 2001. Therefore, operating revenues, average    dayrates and utilization for the three months ended March 31, 2001    are stated as pro forma results based on the combined fleet of    Transocean Sedco Forex and R&B Falcon.(2) Certain reclassifications have been made to prior periods to    conform to current quarter presentation.(3) Average dayrates and utilization for core assets only.
CONTACT:          Transocean Sedco Forex Inc., Houston                  Analyst Contact:                  Jeffrey L. Chastain, 713/232-7551                  or                  Media Contact:                  Guy A. Cantwell, 713/232-7647