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Transocean Inc. Reports Second Quarter 2002 Results

July 30, 2002
HOUSTON, Jul 30, 2002 (BUSINESS WIRE) -- Transocean Inc. (NYSE:RIG) todayannounced that net income for the three months ended June 30, 2002 was $80.0million, or $0.25 per diluted share, on revenues of $646.2 million. During thecorresponding three months in 2001, net income was $68.5 million, or $0.21 perdiluted share, on revenues of $752.2 million. Results for the prior year periodinclude a net extraordinary loss of $17.3 million, or $0.05 per diluted share,relating to the early retirement of debt and goodwill amortization of $41.4million, or $0.13 per diluted share. Excluding the net extraordinary loss andgoodwill amortization, net income for the three months ended June 30, 2001 was$127.2 million, or $0.39 per diluted share.

For the six months ended June 30, 2002, the company reported a net loss of$1,206.4 million, or $3.73 per diluted share, on revenues of $1,314.1 million.Results for the first six months of 2002 included a non-cash charge of $1,363.7million, or $4.22 per diluted share, pertaining to the adoption in January 2002of Statement of Financial Accounting Standards 142, Goodwill and OtherIntangible Assets. Excluding the non-cash charge, net income for the six monthsended June 30, 2002 was $157.3 million, or $0.49 per diluted share. During thecorresponding six months in 2001, net income totaled $99.0 million, or $0.32 perdiluted share, on revenues of $1,302.3 million. Results for the prior yearperiod include the previously mentioned $17.3 million, or $0.06 per dilutedshare, net extraordinary after-tax loss and goodwill amortization of $71.6million, or $0.23 per diluted share, partially offset by a $15.9 million, or$0.05 per diluted share, gain resulting from the sale of a semisubmersible rigowned by a joint venture in which the company has a 25% equity interest.Excluding the net extraordinary loss, goodwill amortization and gain from therig sale, net income for the six months ended June 30, 2001 was $172.0 million,or $0.56 per diluted share.

Transocean Inc. completed a merger transaction with R&B Falcon Corporation onJanuary 31, 2001. Consequently, results for the six months ended June 30, 2001reflect only five months of operating results of R&B Falcon Corporation.

The company's International and U.S. Floater Contract Drilling Services segmentexperienced a 2% decline in operating revenues during the three months endedJune 30, 2002 to $609.1 million from $623.2 million reported during the firstquarter of 2002. Operating income, before depreciation and general andadministrative expenses, also declined 2% to $289.0 million from $294.5 millionover the same comparative period. Segment fleet utilization declined to 78%during the three months ended June 30, 2002, from 82% during the three monthsended March 31, 2002.

Operating revenues from the company's Gulf of Mexico Shallow and Inland Watersegment totaled $37.1 million during the three months ended June 30, 2002compared to $44.7 million during the first three months of 2002. Although amodest improvement in utilization was seen in the segment's jackup andsubmersible rig fleet during the second quarter of 2002, utilization of thedrilling barge fleet did not improve until late in the quarter, resulting in adecline in segment utilization to 27% and an operating loss, before depreciationand general and administrative expenses, for the three months ended June 30,2002 of $8.4 million. The results compare to utilization of 31% and an operatingloss of $7.6 million during the three months ended March 31, 2002.

The company's net debt (defined as long-term debt plus debt due within one year,less cash and cash equivalents) at June 30, 2002 was $3,871 million, down $300million and $827 million from net debt at December 31, 2001 and June 30, 2001,respectively. For the six months ended June 30, 2002, net cash generated byoperating activities totaled $381 million.

J. Michael Talbert, Chief Executive Officer of Transocean Inc., commented, \"Aweak conventional semisubmersible rig market in the U.S. Gulf of Mexico, WestAfrica and Norway, combined with idle time on several of our internationaljackup rigs, due in part to planned shipyard programs and inter-country rigmobilizations, resulted in a 3% decline in second quarter 2002 operatingrevenues from levels experienced during the first quarter of 2002. However,reductions in operating and maintenance costs, general and administrativeexpenses and net interest expense resulted in a 3% improvement in net income,before cumulative effect of a change in accounting principle during the quarter,compared to the first quarter of 2002. Although operating and maintenanceexpenses have been significantly reduced over the preceding six months, currentexpense levels are expected to trend higher during the balance of the year dueto the expected improvement in fleet utilization and execution of discretionaryfleet maintenance programs.\"

Talbert described a mixed demand outlook for global offshore drilling over theremaining months of 2002, stating, \"With the exception of the North Sea, jackuprig markets around the world reflect stable to improved demand. Jackup rig andinland drilling barge demand in the U.S. Gulf of Mexico is currently expected toremain stable to modestly higher. In the floater rig market, demand forsemisubmersibles and drillships possessing intermediate water depth drillingcapabilities, defined as up to 3,500 feet, is expected to remain weak in mostregions, with a pronounced reduction in demand expected in the U.K. andNorwegian sectors of the North Sea. Finally, demand for rigs possessingdeepwater drilling capabilities is expected to be stable or improve in mostmarkets, as development drilling programs commence in areas such as Angola andNigeria and new exploration opportunities emerge in other areas, such as India.Deepwater drilling rigs, such as our Enterprise- and Pathfinder-class drillshipsand Express-class semisubmersibles, are demonstrating enhanced efficiencies inwell construction while recognizing improved operating performance, and areincreasingly a preferred choice by our customers for deepwater drillingprograms.\"

Statements regarding the outlook for drilling activity, rig demand, drillingopportunities, future utilization, drilling market conditions, expectedoperating and maintenance expense, expected drilling programs, 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 July 30,2002. Individuals who wish to participate in the teleconference call may dial719/457-2657 and refer to confirmation code 669928. 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 July 30 and can be accessed by dialing 719/457-0820 and referring to thepasscode 669928. 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 Inc.'s offshoredrilling fleet has been condensed into two reports titled \"Monthly Fleet Update\"and \"Monthly Fleet Update - Jackups and Barges,\" which are available through thecompany's Website at www.deepwater.com. The reports are located in the \"InvestorRelations/Financial Reports\" section of the Website. By subscribing to theTransocean Financial Report Alert, you will be immediately notified when newpostings are made to this page by an automated e-mail, which will provide a linkdirectly to the page that has been updated. We invite you to sign up for thisservice.

Transocean Inc. is the world's largest offshore drilling contractor with morethan 150 full or partially owned and managed mobile offshore drilling units,inland drilling barges and other assets utilized in the support of offshoredrilling activities worldwide. The company's mobile offshore drilling fleet isconsidered one of the most modern and versatile in the world with 31high-specification semisubmersibles and drillships (\"floaters\"), 29 otherfloaters and 52 jackup drilling rigs. Transocean Inc. specializes in technicallydemanding segments of the offshore drilling business, including industry-leadingpositions in deepwater and harsh environment drilling services. With a currentequity market capitalization in excess of $7 billion, the company's ordinaryshares are traded on the New York Stock Exchange under the symbol \"RIG.\"

                   TRANSOCEAN INC. AND SUBSIDIARIES                 CONSOLIDATED STATEMENTS OF OPERATIONS                 (In millions, except per share data)                              (Unaudited)                            Three Months Ended     Six Months Ended                                  June 30,              June 30,                           --------------------  --------------------                              2002       2001       2002       2001                           ---------  ---------  ---------  ---------Operating Revenues            $646.2     $752.2   $1,314.1   $1,302.3Costs and Expenses  Operating and   maintenance                 365.6      394.3      746.6      745.2  Depreciation                 124.3      123.7      249.9      223.1  Goodwill amortization           --       41.4         --       71.6  General and   administrative               16.0       14.6       35.8       29.4                               505.9      574.0    1,032.3    1,069.3Impairment Loss on Long- Lived Assets                     --         --       (1.1)        --Gain (Loss) from Sale of Assets, net                    (1.3)        --        0.6       19.6Operating Income               139.0      178.2      281.3      252.6Other Income (Expense), net  Equity in earnings of   joint ventures                2.5        4.0        4.4        5.7  Interest income                5.7        4.7        9.9        8.3  Interest expense, net   of amounts capitalized      (52.5)     (66.8)    (108.4)    (104.0)  Other, net                    (0.4)      (1.0)      (1.1)      (1.5)                               (44.7)     (59.1)     (95.2)     (91.5)Income Before Income Taxes, Minority Interest, Extraordinary Item and Cumulative Effect of a Change in Accounting Principle                      94.3      119.1      186.1      161.1Income Tax Expense              13.9       32.2       27.7       42.3Minority Interest                0.4        1.1        1.1        2.5Net Income Before Extraordinary Item and Cumulative Effect of a Change in Accounting Principle                      80.0       85.8      157.3      116.3Loss on Extraordinary Item, Net of Tax                 --      (17.3)        --      (17.3)Cumulative Effect of a Change in Accounting Principle                        --         --   (1,363.7)        --Net Income (Loss)              $80.0      $68.5  $(1,206.4)     $99.0Basic Earnings (Loss) Per Share  Income Before   Extraordinary Item   and Cumulative Effect   of a Change in   Accounting Principle        $0.25      $0.27      $0.49      $0.39  Loss on Extraordinary   Item, Net of Tax               --      (0.05)        --      (0.06)  Loss on Cumulative   Effect of a Change in   Accounting Principle           --         --      (4.27)        --  Net Income (Loss)            $0.25      $0.22     $(3.78)     $0.33Diluted Earnings (Loss) Per Share  Income Before   Extraordinary Item   and Cumulative Effect   of a Change in   Accounting Principle        $0.25      $0.26      $0.49      $0.38  Loss on Extraordinary   Item, Net of Tax               --      (0.05)        --      (0.06)  Loss on Cumulative   Effect of a Change in   Accounting Principle           --         --      (4.22)        --  Net Income (Loss)            $0.25      $0.21     $(3.73)     $0.32Weighted Average Shares Outstanding  Basic                        319.1      318.2      319.1      299.5  Diluted                      323.9      325.0      323.6      305.3On January 31, 2001, the Company completed a merger transaction withR&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 Statements of Operations for the six months endedJune 30, 2001 includes five months of operating results of R&B FalconCorporation.                   TRANSOCEAN INC. AND SUBSIDIARIES                CONDENSED CONSOLIDATED BALANCE SHEETS                   (In millions, except share data)                                                 June 30,    Dec. 31,                                                ----------------------                                                   2002         2001                                                ----------- ----------                                                (Unaudited)                                ASSETSCash and Cash Equivalents                          $ 755.9    $ 853.4Accounts Receivable   Trade                                             509.9      602.9   Other                                              81.6       72.8Materials and Supplies                               169.3      158.8Deferred Income Taxes                                 21.3       21.0Other Current Assets                                  40.4       27.9 Total Current Assets                              1,578.4    1,736.8Property and Equipment                            10,045.4   10,081.4Less Accumulated Depreciation                      1,930.6    1,713.3 Property and Equipment, net                       8,114.8    8,368.1Goodwill, net                                      5,103.0    6,466.7Investments in and Advances to Joint Ventures        114.3      107.1Other Assets                                         393.6      341.1   Total Assets                                  $15,304.1  $17,019.8                 LIABILITIES AND SHAREHOLDERS' EQUITYAccounts Payable                                   $ 133.3    $ 188.4Accrued Income Taxes                                 210.5      188.2Debt Due Within One Year                             924.7      484.4Other Current Liabilities                            236.4      283.4   Total Current Liabilities                       1,504.9    1,144.4Long-Term Debt                                     3,702.6    4,539.4Deferred Income Taxes                                279.1      317.1Other Long-Term Liabilities                          120.0      108.6   Total Long-Term Liabilities                     4,101.7    4,965.1Commitments and ContingenciesPreference 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, 319,207,590 and 318,816,035 shares issued and outstanding at June 30, 2002 and December 31, 2001, respectively                                          3.2        3.2Additional Paid-in Capital                        10,622.4   10,611.7Accumulated Other Comprehensive Income                (0.2)      (2.3)Retained Earnings (Deficit)                         (927.9)     297.7   Total Shareholders' Equity                      9,697.5   10,910.3   Total Liabilities and Shareholders' Equity    $15,304.1  $17,019.8                   TRANSOCEAN INC. AND SUBSIDIARIES           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                            (In millions)                             (Unaudited)                                                    Six Months Ended                                                         June 30,                                                    -----------------                                                      2002      2001                                                    --------  -------Cash Flows from Operating Activities   Net income (loss)                               $(1,206.4)  $ 99.0   Adjustments to reconcile net income    (loss) to net cash provided by    operating activities     Depreciation                                      249.9    223.1     Goodwill amortization                                --     71.6     Cumulative effect of a change      in accounting principle -      goodwill impairment                            1,363.7       --     Deferred income taxes                             (38.3)   (33.8)     Equity in earnings of joint ventures               (4.4)    (5.7)     Net (gain) loss from disposal of assets             2.3    (18.4)     Impairment on long-lived assets                     1.1       --     Loss on sale of securities                           --      1.8     Amortization of debt-related      discounts/premiums, fair value      adjustments and issue costs, net                   2.9    (11.3)     Deferred income, net                               (6.0)   (30.0)     Deferred expenses, net                              7.0    (27.6)     Extraordinary loss on debt extinguishment,      net of tax                                          --     17.3     Other, net                                          9.7      6.9     Changes in operating assets and liabilities,      net of effects from the R&B Falcon merger       Accounts receivable                              84.1   (162.6)       Accounts payable and other current        liabilities                                    (84.7)   (95.6)       Income taxes receivable/payable, net             22.3     30.3       Other current assets                            (22.7)   (13.8)Net Cash Provided by Operating Activities              380.5     51.2Cash Flows from Investing Activities Capital expenditures                                  (81.2)  (371.8) Proceeds from sale of securities                         --     16.8 Proceeds from disposal of assets, net                  65.0     29.2 Merger costs paid                                        --    (24.5) Cash acquired in merger, net of cash paid                --    264.7 Joint ventures and other investments, net                --      2.7Net Cash Used in Investing Activities                  (16.2)   (82.9)Cash Flows from Financing ActivitiesNet borrowings (repayments) on revolving credit agreements                                               --   (180.1)Net borrowings (repayments) under commercial paper program                                              (326.4)    60.3Repayments on debt obligations                        (119.6)   (20.3)Net proceeds from other debt                              --  1,693.5Early repayments of debt instruments                      -- (1,457.9)Proceeds from interest rate swaps                         --      4.1Net proceeds from issuance of ordinary shares under stock-based compensation plans            10.3     28.8Proceeds from issuance of ordinary shares upon exercise of warrants                                     --     10.6Dividends paid                                         (19.1)   (19.1)Financing costs                                         (8.1)   (15.5)Other, net                                               1.1      1.5Net Cash Provided by (Used in) Financing Activities   (461.8)   105.9Net Increase (Decrease) in Cash and Cash Equivalents                                           (97.5)    74.2Cash and Cash Equivalents at Beginning of Period       853.4     34.5Cash and Cash Equivalents at End of Period           $ 755.9  $ 108.7                           Transocean Inc.                      Fleet Operating Statistics                              Operating Revenues ($ Millions)                     -------------------------------------------------                                                    Six Months Ended                          Three Months Ended            June 30,                     ----------------------------- -------------------International and U.S. Floater Contract Drilling   June 30,   March 31,  June 30, Services Segment:     2002       2002       2001(2)  2002    2001(1)(2)                     ---------- --------- --------- --------- --------    High-     Specification     Floaters          $335.1    $309.9    $325.3    $645.0    $593.2    Other Floaters     $143.2    $164.2    $152.6    $307.4    $273.7    Jackups - Non-     U.S.              $107.3    $124.1     $81.8    $231.4    $146.9    Other               $23.5     $25.0     $38.9     $48.5    $133.4Segment Total          $609.1    $623.2    $598.6  $1,232.3  $1,147.2Gulf of Mexico Shallow and Inland Water Segment:    Jackups and     Submersibles       $17.3     $13.4     $89.0     $30.7    $169.2    Inland Barges       $13.5     $21.7     $47.3     $35.2     $86.0    Other                $6.3      $9.6     $17.3     $15.9     $25.7Segment Total           $37.1     $44.7    $153.6     $81.8    $280.9Total Company          $646.2    $667.9    $752.2  $1,314.1  $1,428.1                                     Average Dayrates (3)                     -------------------------------------------------                                                    Six Months Ended                          Three Months Ended            June 30,                     ----------------------------- -------------------International and U.S. Floater Contract Drilling    June 30, March 31,  June 30, Services Segment:     2002      2002      2001      2002      2001(1)                     --------- --------- --------- --------- ---------    High-     Specification     Floaters        $150,200  $145,500  $141,600  $147,900  $138,000    Other Floaters    $76,800   $77,300   $62,600   $77,100   $60,900    Jackups - Non-     U.S.             $57,700   $58,800   $44,100   $58,300   $41,400    Other             $43,700   $43,900   $37,000   $43,800   $37,800Segment Total         $94,600   $91,000   $82,000   $92,800   $79,300Gulf of Mexico Shallow and Inland Water Segment:    Jackups and     Submersibles     $21,100   $22,200   $39,800   $21,600   $37,600    Inland Barges     $20,200   $19,200   $23,100   $19,600   $21,100Segment Total         $20,700   $20,300   $31,800   $20,500   $29,700Total Mobile Offshore Drilling Fleet       $80,700   $76,600   $62,900   $78,600   $59,800                                        Utilization (3)                     -------------------------------------------------                                                    Six Months Ended                          Three Months Ended            June 30,                     ----------------------------- -------------------International and U.S. Floater Contract Drilling    June 30, March 31,  June 30, Services Segment:     2002      2002      2001      2002      2001(1)                     --------- --------- --------- --------- ---------    High-     Specification     Floaters              85%       82%       86%       83%       84%    Other Floaters         73%       82%       84%       77%       77%    Jackups - Non-     U.S.                  82%       90%       85%       86%       82%    Other                  60%       57%       53%       58%       52%Segment Total              78%       82%       82%       80%       78%Gulf of Mexico Shallow and Inland Water Segment:    Jackups and     Submersibles          29%       22%       72%       25%       73%    Inland Barges          24%       41%       71%       32%       69%Segment Total              27%       31%       71%       29%       71%Total Mobile Offshore Drilling Fleet            57%       61%       78%       59%       75%(1) Transocean completed a merger transaction with R&B Falcon on    January 31, 2001. Therefore, operating revenues, average dayrates    and utilization for the six months ended June 30, 2001 are stated    as pro forma results based on the combined fleet of Transocean 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, defined as    31 high-specification drillships and semisubmersibles    (\"floaters\"), 29 other floaters, 52 jackup rigs, 35 drilling    barges, 4 tenders and 3 submersible drilling rigs.
CONTACT:          Transocean Inc., Houston                  Analyst Contact: Jeffrey L. Chastain, 713/232-7551                  or                  Media Contact: Guy A. Cantwell, 713/232-7647