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Transocean Inc. Reports Fourth Quarter and Full-Year 2006 Results

February 14, 2007

HOUSTON--(BUSINESS WIRE)--Feb. 14, 2007--Transocean Inc.(NYSE:RIG) today reported net income for the three months endedDecember 31, 2006 of $621 million, or $2.05 per diluted share, onrecord quarterly revenues of $1,186 million. The results compare tonet income of $152 million, or $0.45 per diluted share, on revenues of$771 million, for the three months ended December 31, 2005. Net incomefor the three months ended December 31, 2006 included after-tax gainsof $192 million, or $0.63 per diluted share, resulting primarily fromthe sale of two rigs, the Transocean Wildcat and the Searex IX, andother income of $51 million, or $0.17 per share, that we recognizedfrom our tax sharing agreement with TODCO in 2006.

For the 12 months ended December 31, 2006, net income totaled$1,385 million, or $4.28 per diluted share, on revenues of $3,882million, compared to net income of $716 million, or $2.13 per dilutedshare, on revenues of $2,892 million for the corresponding 12 monthsin 2005. Net income for the 12 months ended December 31, 2006 includedafter-tax gains totaling $437 million, or $1.34 per share, resultingfrom the sale of non-strategic assets, including the twoabove-mentioned rigs, and income that we recognized from the taxsharing agreement with TODCO in 2006. Net income for the 12 monthsended December 31, 2005 included a gain of $165 million, or $0.49 perdiluted share, resulting from the sale of TODCO common stock,after-tax gains of $28 million, or $0.08 per diluted share, resultingfrom the sale of three rigs, other income of $11 million, or $0.03 perdiluted share, earned from our tax sharing agreement with TODCO, and aloss of $7 million, or $0.02 per diluted share, resulting from theearly retirement of debt.

Robert L. Long, Chief Executive Officer of Transocean Inc.,stated, \"We had a good quarter with revenues up 16% breaking the priorquarter's record revenues and with costs up less than 2% from theprior quarter. We are entering 2007 with a record contract backlog anda continuation of the excellent market conditions that we saw in2006.\"

Operations Quarterly Review

Revenues for the three months ended December 31, 2006 increased to$1,186 million compared to revenues of $1,025 million during the threemonths ended September 30, 2006. The increase was primarily due to animprovement in average daily revenue, which rose 17% to $171,700 from$146,900 during the three months ended September 30, 2006. Thisimprovement was consistent across the company's fleet as several rigscommenced new contracts with dayrates that reflect the strong businessenvironment prevalent since mid-2004. In addition, fourth quarter 2006revenues were enhanced by the return to operation of thesemisubmersible rig Sedco 709 and the drillship Deepwater Discoverywhich were both idle for maintenance programs during the third quarterof 2006 and by a full quarter of activity of the semisubmersible rigsTransocean Winner and Transocean Prospect after they completed theirreactivation programs in the third quarter of 2006.

For the three months ended December 31, 2006, operating incomebefore general and administrative expenses totaled $701 million, a 70%improvement from $412 million reported for the third quarter of 2006.Field operating income(1) (defined as revenues less operating andmaintenance expenses) improved 33% to $616 million compared to $464million over the same comparative period. These improved fourthquarter 2006 results were due chiefly to the strong revenue growth,partially offset by an increase in operating and maintenance expenses,which totaled $570 million during the fourth quarter of 2006 comparedto $561 million during the previous quarter in 2006. The increase inoperating and maintenance activity was due primarily to the increasednumber of maintenance projects completed on our operating rigs duringthe quarter and higher labor costs related to ongoing recruitmentefforts and the continued inflationary pressure on wages. Thisincrease was partially offset by a decrease in shipyard expendituresfollowing the return to activity of the Sedco 709, DeepwaterDiscovery, Transocean Winner and Transocean Prospect during the thirdand fourth quarter.

Liquidity

Cash flow from operations increased to $1,237 million for the 12months ended December 31, 2006. The company reported a decrease intotal debt of approximately $200 million, to $3,295 million atDecember 31, 2006 compared to total debt at September 30, 2006 of$3,495 million, resulting from a draw of $100 million on the $1.0billion multi-draw term credit facility and net of repayments of $300million in the fourth quarter of 2006.

Effective Tax Rate

The company's Annual Effective Tax Rate(2) for the 12 months endedDecember 31, 2006 was 18.5%, excluding the previously mentioned impacton income before income tax related to the gains from the rig salesand the TODCO tax sharing agreement as well as excluding from incometax expense various discrete tax items. The Effective Tax Rate(3) of10.4% for the fourth quarter of 2006 reflects the impact of thepreviously mentioned rig sales and TODCO tax sharing income inaddition to a $17 million favorable impact resulting from changes inestimates and resolution of prior years' tax disputes in variousjurisdictions.

Share Buyback

In May 2006, the company's board of directors authorized anincrease in the overall amount of ordinary shares which may berepurchased under the company's share repurchase program from $2.0billion to $4.0 billion. During the three months ended December 31,2006, the company purchased and retired $250 million of its ordinaryshares, which amounted to approximately 3.5 million ordinary shares atan average purchase price of $71.79 per share. As of January 31, 2007,the company had repurchased and retired a total of $3.0 billion of itsordinary shares under the program, which amounted to approximately 42million ordinary shares at an average purchase price of $71.87 pershare, and the company retained the authority to repurchase theremaining $1.0 billion of its ordinary shares under the program.

Conference Call Information

Transocean will conduct a teleconference call at 10:00 a.m.Eastern on February 14, 2007. To participate, dial 913-981-5522 andrefer to confirmation code 2410660 approximately five to 10 minutesprior to the scheduled start time of the call.

In addition, the conference call will be simultaneously broadcastover the Internet in a listen-only mode and can be accessed by loggingonto the company's website at www.deepwater.com and selecting\"Investor Relations/Presentations.\" A file containing four charts tobe discussed during the conference call, titled \"4Q06 Charts,\" hasbeen posted to the company's website and can also be found byselecting \"Investor Relations/Presentations.\" The conference call mayalso be accessed via the Internet at www.CompanyBoardroom.com bytyping in the company's New York Stock Exchange trading symbol, \"RIG.\"

A telephonic replay of the conference call should be availableafter 1:00 p.m. Eastern on February 14, 2007 and can be accessed bydialing 719-457-0820 and referring to the passcode 2410660. Also, areplay will be available through the Internet and can be accessed byvisiting either of the above-referenced Worldwide Web addresses.

Forward-Looking Disclaimer

Statements regarding our backlog, market conditions, rig demand,our share repurchase plan, prospects for our business, as well as anyother statements that are not historical facts in this release, areforward-looking statements that involve certain risks, uncertaintiesand assumptions. These include but are not limited to operatinghazards and delays, risks associated with international operations,future financial results, actions by customers and other thirdparties, factors affecting the supply and demand of drilling rigs,including newbuilds, reactivations and the reallocation of currentrigs, factors affecting the duration of contracts includingwell-in-progress provisions, the actual amount of downtime, factorsresulting in reduced applicable dayrates, hurricanes and other weatherconditions, the future price of oil and gas and other factors detailedin the company's most recent Form 10-K and other filings with theSecurities and Exchange Commission. Should one or more of these risksor uncertainties materialize, or should underlying assumptions proveincorrect, actual results may vary materially from those indicated.

Transocean Inc. is the world's largest offshore drillingcontractor with a fleet of 82 mobile offshore drilling units. Thecompany's mobile offshore drilling fleet, consisting of a large numberof high-specification deepwater and harsh environment drilling units,is considered one of the most modern and versatile in the world due toits emphasis on technically demanding segments of the offshoredrilling business. The company's fleet consists of 33High-Specification Floaters (semisubmersibles and drillships), 20Other Floaters, 25 Jackups and other assets utilized in the support ofoffshore drilling activities worldwide. With a current equity marketcapitalization in excess of $22 billion, Transocean Inc.'s ordinaryshares are traded on the New York Stock Exchange under the symbol\"RIG.\"

1 For a reconciliation of operating income before general andadministrative expense to field operating income, see the accompanyingschedule titled Non-GAAP Financial Measures and Reconciliations -Operating Income Before General and Administrative Expense to FieldOperating Income.

2 Annual Effective Tax Rate is income tax expense excludingvarious discrete items (such as changes in estimates and tax on itemsexcluded from income before income taxes) divided by income beforeincome taxes excluding gains on sales and similar items pursuant toFinancial Accounting Standards Board Interpretation No. 18. Seeaccompanying schedule titled Effective Tax Rate Analysis.

3 Effective Tax Rate is income tax expense divided by incomebefore income taxes. See accompanying schedule titled Effective TaxRate Analysis.

                   TRANSOCEAN INC. AND SUBSIDIARIES                CONSOLIDATED STATEMENTS OF OPERATIONS                 (In millions, except per share data)                             (Unaudited)                               Three Months Ended      Years Ended                                   December 31,       December 31,                               ------------------- -------------------                                 2006      2005      2006      2005                               --------- --------- --------- ---------Operating Revenues   Contract drilling revenues    $1,147      $739    $3,745    $2,757   Other revenues                    39        32       137       135                               --------- --------- --------- ---------                                  1,186       771     3,882     2,892Costs and Expenses   Operating and maintenance        570       457     2,155     1,720   Depreciation                      98       102       401       406   General and administrative        23        19        90        75                               --------- --------- --------- ---------                                    691       578     2,646     2,201Gain (loss) from disposal of assets, net                        183        (5)      405        29                               --------- --------- --------- ---------Operating Income                    678       188     1,641       720                               --------- --------- --------- ---------Other Income (Expense), net   Interest income                    7         6        21        19   Interest expense, net of    amounts capitalized             (43)      (24)     (115)     (111)   Gain from TODCO Stock Sales        -         -         -       165   Loss on retirement of debt         -         -         -        (7)   Other, net                        51         3        60        17                               --------- --------- --------- ---------                                     15       (15)      (34)       83                               --------- --------- --------- ---------Income Before Income Taxes          693       173     1,607       803   Income Tax Expense                72        21       222        87                               --------- --------- --------- ---------Net Income                         $621      $152    $1,385      $716                               ========= ========= ========= =========Earnings Per Share   Basic                          $2.13     $0.46     $4.42     $2.19                               --------- --------- --------- ---------   Diluted                        $2.05     $0.45     $4.28     $2.13                               --------- --------- --------- ---------Weighted Average Shares Outstanding   Basic                            292       330       313       327                               --------- --------- --------- ---------   Diluted                          304       336       325       339                               --------- --------- --------- ---------
                   TRANSOCEAN INC. AND SUBSIDIARIES                     CONSOLIDATED BALANCE SHEETS                   (In millions, except share data)                             (Unaudited)                                                      December 31,                                                   -------------------                                                     2006      2005                                                   --------- ---------                      ASSETSCash and Cash Equivalents                              $467      $445Accounts Receivable, net  Trade                                                 929       583  Other                                                  17        17Materials and Supplies, net                             160       156Deferred Income Taxes, net                               16        23Other Current Assets                                     67        55                                                   --------- ---------     Total Current Assets                             1,656     1,279                                                   --------- ---------Property and Equipment                               10,539     9,791Less Accumulated Depreciation                         3,213     3,043                                                   --------- ---------  Property and Equipment, net                         7,326     6,748                                                   --------- ---------Goodwill                                              2,195     2,209Other Assets                                            299       221                                                   --------- ---------     Total Assets                                   $11,476   $10,457                                                   ========= =========       LIABILITIES AND SHAREHOLDERS' EQUITYAccounts Payable                                       $477      $254Accrued Income Taxes                                     98        27Debt Due Within One Year                                 95       400Other Current Liabilities                               369       242                                                   --------- ---------     Total Current Liabilities                        1,039       923                                                   --------- ---------Long-Term Debt                                        3,200     1,197Deferred Income Taxes, net                               54        65Other Long-Term Liabilities                             343       286                                                   --------- ---------     Total Long-Term Liabilities                      3,597     1,548                                                   --------- ---------Commitments and ContingenciesMinority Interest                                         4         4Preference 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, 292,454,457 and 324,750,166 shares issued and outstanding at December 31, 2006 and 2005, respectively                                   3         3Additional Paid-in Capital                            8,044    10,565Accumulated Other Comprehensive Loss                    (30)      (20)Accumulated Deficit                                  (1,181)   (2,566)                                                   --------- ---------     Total Shareholders' Equity                       6,836     7,982                                                   --------- ---------     Total Liabilities and Shareholders' Equity     $11,476   $10,457                                                   ========= =========
                   TRANSOCEAN INC. AND SUBSIDIARIES                CONSOLIDATED STATEMENTS OF CASH FLOWS                            (In millions)                             (Unaudited)                               Three Months Ended     Years Ended                                  December 31,        December 31,                               ------------------- -------------------                                 2006      2005      2006      2005                               --------- --------- --------- ---------Cash Flows from Operating Activities  Net income                       $621      $152    $1,385      $716  Adjustments to reconcile net   income to net cash provided   by operating activities    Depreciation                     98       102       401       406    Stock-based compensation     expense                          7         4        20        16    Deferred income taxes           (41)       34       (23)       27    Equity in (earnings)     losses of unconsolidated     affiliates                       3        (2)       (5)      (10)    Net (gain) loss from     disposal of assets            (183)        5      (405)      (29)    Gain from TODCO Stock     Sales                            -         -         -      (165)    Loss on retirement of debt        -         -         -         7    Amortization of debt-     related     discounts/premiums, fair     value adjustments and     issue costs, net                 1         -         -        (7)    Deferred income, net             20         3        52        (7)    Deferred expenses, net          (14)      (10)     (109)       18    Tax benefit from exercise     of stock options to     purchase and vesting of     ordinary shares under     stock-based compensation     plans                            -         2       (10)       22    Other long-term     liabilities                      1         5        18        23    Other, net                       (5)       (3)        -       (17)    Changes in operating     assets and liabilities      Accounts receivable           (74)       (3)     (347)     (150)      Accounts payable and       other current       liabilities                    1         1       168        87      Income taxes       receivable/payable, net       65       (38)      124       (51)      Other current assets            4        (4)      (32)      (22)----------------------------------------------------------------------Net Cash Provided by Operating Activities                         504       248     1,237       864----------------------------------------------------------------------Cash Flows from Investing Activities  Capital expenditures             (166)      (37)     (876)     (182)  Proceeds from disposal of   assets, net                      163        14       461        74  Proceeds from TODCO Stock   Sales, net                         -         -         -       272  Joint ventures and other   investments, net                   -         -         -         5----------------------------------------------------------------------Net Cash Provided by (Used In) Investing Activities                (3)      (23)     (415)      169----------------------------------------------------------------------Cash Flows from Financing Activities    Net proceeds from issuance     of debt and borrowings     under the Term Credit     Facility                       100         -     2,000         -    Repayments of debt             (300)        -      (300)     (880)    Net proceeds from issuance     of ordinary shares under     stock-based compensation     plans                            2        23        69       219    Proceeds from issuance of     ordinary shares upon     exercise of warrants             -         -         -        11    Repurchase of ordinary     shares                        (250)     (400)   (2,601)     (400)    Decrease in cash dedicated     to debt service                  -         -         -        12    Release of escrow funds -     Nautilus lease financing         -         -        30         -    Tax benefit from issuance     of ordinary shares under     stock-based compensation     plans                            7         -         7         -    Other, net                        -         -        (5)       (1)----------------------------------------------------------------------Net Cash Used in Financing Activities                        (441)     (377)     (800)   (1,039)----------------------------------------------------------------------Net Increase (Decrease) in Cash and Cash Equivalents           60      (152)       22        (6)----------------------------------------------------------------------Cash and Cash Equivalents at Beginning of Period                407       597       445       451----------------------------------------------------------------------Cash and Cash Equivalents at End of Period                     $467      $445      $467      $445======================================================================
                           Transocean Inc.                      Fleet Operating Statistics                           Operating Revenues (in millions) (1)                     -------------------------------------------------                                                       Years Ended                          Three Months Ended          December 31,                     ----------------------------- -------------------Transocean Drilling  Dec. 31,  Sept. 30, Dec. 31, Segment:              2006      2006      2005      2006      2005                     --------- --------- --------- --------- ---------Contract Drilling Revenues  High-Specification   Floaters:    Fifth-Generation     Deepwater     Floaters            $304      $258      $221    $1,015      $848    Other Deepwater     Floaters             264       246       150       875       583    Other High-     Specification     Floaters              66        62        60       242       227  Total High-   Specification   Floaters               634       566       431     2,132     1,658  Other Floaters          296       218       153       847       492  Jackups                 199       184       133       682       521  Other Rigs               18        23        22        84        86Subtotal                1,147       991       739     3,745     2,757Other Revenues  Client Reimbursable   Revenues                32        30        21       108        85  Integrated Services   and Other                7         4        11        29        50Subtotal                   39        34        32       137       135Total Company          $1,186    $1,025      $771    $3,882    $2,892                                   Average Dayrates (1)                     -------------------------------------------------                                                       Years Ended                          Three Months Ended          December 31,                     ----------------------------- -------------------Transocean Drilling  Dec. 31,  Sept. 30, Dec. 31, Segment:              2006      2006      2005      2006      2005                     --------- --------- --------- --------- ---------  High-Specification   Floaters:    Fifth-Generation     Deepwater     Floaters        $275,300  $246,000  $215,800  $237,000  $198,000    Other Deepwater     Floaters        $230,400  $222,300  $138,800  $199,600  $134,700    Other High-     Specification     Floaters        $187,400  $181,500  $161,700  $176,000  $162,900  Total High-   Specification   Floaters          $243,600  $226,700  $174,100  $212,300  $165,700  Other Floaters     $178,400  $136,800   $98,500  $137,200   $86,500  Jackups             $97,000   $83,400   $64,900   $81,000   $59,800  Other Rigs          $48,200   $52,400   $48,500   $48,900   $47,300Total Drilling Fleet $171,700  $146,900  $113,300  $142,100  $105,100
                                      Utilization (1)                     -------------------------------------------------                                                       Years Ended                          Three Months Ended          December 31,                     ----------------------------- -------------------Transocean Drilling  Dec. 31,  Sept. 30, Dec. 31, Segment:              2006      2006      2005      2006      2005                     --------- --------- --------- --------- ---------  High-Specification   Floaters:    Fifth-Generation     Deepwater     Floaters           92%       88%       86%       90%       90%    Other Deepwater     Floaters           78%       75%       79%       76%       79%    Other High-     Specification     Floaters           97%       93%      100%       94%       95%  Total High-   Specification   Floaters             86%       82%       84%       84%       86%  Other Floaters        90%       86%       71%       81%       65%  Jackups               89%       96%       89%       92%       94%  Other Rigs            99%       76%       49%       70%       50%Total Drilling Fleet    89%       87%       78%       84%       79%(1) Average daily revenue is defined as contract drilling revenue earned per revenue earning day in the period.  A revenue earning day is defined as a day for which a rig earns dayrate after commencement of operations.  Utilization is defined as the total actual number of revenue earning days in the period as a percentage of the total number of calendar days in the period for all drilling rigs in our fleet.
                   Transocean Inc. and Subsidiaries           Non-GAAP Financial Measures and Reconciliations      Operating Income Before General and Administrative Expense                      to Field Operating Income                            (in millions)                                  Three Months Ended     Years Ended                                 --------------------- ---------------                                  Dec.   Sept.   Dec.   Dec.    Dec.                                   31,     30,    31,    31,     31,                                  2006    2006   2005   2006    2005                                 ------- ------- ----- ------- -------Transocean Drilling Segment  Operating revenue              $1,186  $1,025  $771  $3,882  $2,892  Operating and maintenance   expense (1)                      570     561   457   2,155   1,720  Depreciation                       98      99   102     401     406  (Gain) loss from disposal of   assets, net                     (183)    (47)    5    (405)    (29)                                 ------- ------- ----- ------- -------Operating income before general and administrative expense         701     412   207   1,731     795Add back (subtract):  Depreciation           98      99   102     401     406              (Gain) loss from               disposal of               assets, net (1)     (183)    (47)    5    (405)    (29)                                 ------- ------- ----- ------- -------Field operating income             $616    $464  $314  $1,727  $1,172                                 ------- ------- ----- ------- -------(1)Loss on retirement for Q4 05 of $7 million was reclassed out of Operating and maintenance expense and into (Gain) loss from disposal of assets, net.
                   Transocean Inc. and Subsidiaries                     Effective Tax Rate Analysis                          (in US$ millions)                                 Three Months Ended       Years Ended                            ---------------------------- -------------                            Dec. 31,  Sept. 30, Dec. 31,   Dec. 31,                              2006      2006     2005     2006   2005                            --------- --------- -------- ------- -----Income (Loss) before Income Taxes and Minority Interest    $693      $373     $173  $1,607  $803  Add back (subtract):    Loss on retirement of     debt                          -         -        -       -     7    Gain on sale of assets      (191)      (44)       -    (410)  (33)    Gain on TODCO stock     sales                         -         -        -       -  (165)    Income from TODCO tax     sharing agreement           (51)        -       (1)    (51)  (11)                            --------- --------- -------- ------- -----Adjusted Income before Income Taxes                   $451      $329     $172  $1,146  $601Income Tax Expense               $72       $64      $21    $222   $87  Add back (subtract):    Gain on sale of assets         1        (3)       -     (24)   (5)    Changes in estimates (1)      17        (4)       5      14    19                            --------- --------- -------- ------- -----Adjusted Income Tax Expense (2)                             $90       $57      $26    $212  $101Effective Tax Rate (3)          10.4%     17.1%    12.2%   13.8% 10.8%Annual Effective Tax Rate (4)                            20.0%     17.3%    15.1%   18.5% 16.8%(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 December 31, 2006, September 30, 2006 and December 31, 2005 include $7 million, $(1) million and $(3) million, respectively, of additional tax expense (benefit) reflecting the catch-up effect of an increase (decrease) in the Annual Effective Tax Rate.(3) Effective Tax Rate is income tax expense divided by income before income taxes.(4) Annual Effective Tax Rate is income tax expense excluding various discrete items (such as changes in estimates and tax on items excluded from income before income taxes) divided by income before income taxes excluding gains on sales and similar items pursuant to Financial Accounting Standards Board Interpretation No. 18.

CONTACT: Transocean Inc., Houston
Analyst Contact:
John Briscoe, 713-232-7551
or
Media Contact:
Guy A. Cantwell, 713-232-7647

SOURCE: Transocean Inc.