Transocean Inc. Reports Fourth Quarter and Full-Year 2007 Results

Business Wire, Feb 20, 2008

HOUSTON -- Transocean Inc. (NYSE:RIG) today reported net income for the three months ended December 31, 2007 of $1,056 million, or $4.17 per diluted share, on record quarterly revenues of $2,077 million. The results compare to net income of $621 million, or $2.92 per diluted share, on revenues of $1,186 million, for the three months ended December 31, 2006.

On November 27, 2007, Transocean Inc. merged with GlobalSantaFe Corporation (the "Merger") and reclassified our ordinary shares into cash and shares (the "Reclassification"). Reported results for the fourth quarter and full year 2007 included approximately one month from GlobalSantaFe's operations and the impact of recording GlobalSantaFe's assets and liabilities at fair market value as required by generally accepted accounting principles.

Fourth quarter 2007 results include after-tax income of $194 million, or $0.77 per diluted share, comprised of the following:

* $233 million gain resulting from the sale of the Peregrine I drillship;

* $36 million benefit for discrete tax items;

* $8 million loss resulting from the retirement of debt; and

* $67 million of Merger-related compensation costs.

Diluted earnings per share for the fourth quarter 2007 is based on a weighted average diluted share count of 254 million shares, which included the effect of restating the historical share count for the Reclassification. The weighted average diluted share count for the quarter without restatement would have been 309(1) million shares. Net income for the three months ended December 31, 2006 included after-tax gains of $260 million, or $1.22 per diluted share, resulting primarily from the sale of two rigs, other income recognized from the tax sharing agreement with TODCO and a tax benefit for discrete items. Diluted earnings per share for the fourth quarter 2006 is based on a weighted average diluted share count of 213 million shares, which includes the effect of restating the historical diluted share count for the Reclassification.

For the year ended December 31, 2007, net income totaled $3,131 million, or $14.14 per diluted share, on revenues of $6,377 million. For 2006, net income was $1,385 million, or $6.10 per diluted share, on revenues of $3,882 million. Results for 2007 included after-tax income of $563 million, or $2.54 per diluted share, including $369 million recognized during the first nine months of 2007 relating to payments received under the TODCO tax sharing agreement, rig sales and discrete tax items plus the $194 million recognized during the fourth quarter. Net income for the year ended December 31, 2006 included after-tax income totaling $451 million, or $1.97 per share, resulting from the sale of eight rigs and the TODCO tax sharing agreement and discrete tax items. Diluted earnings per share for the full year 2007 is based on a weighted average diluted share count of 222 million shares which includes the effect of restating the historical share count for the Reclassification. The weighted average diluted share count for 2007 without restatement would have been 303(1) million shares.

Robert L. Long, Chief Executive Officer of Transocean Inc., stated, "This past year was historic for Transocean. It was a record year in terms of financial, operational and safety performance, and we entered 2008 with a record-high revenue backlog. By merging with GlobalSantaFe, we transformed the company and now have a larger global footprint and more extensive technical capabilities. We also recapitalized the company and returned $15.0 billion in cash to Transocean and GlobalSantaFe shareholders."

Operations Quarterly Review

Revenues for the three months ended December 31, 2007 increased 35.1 percent to $2,077 million, compared to revenues of $1,538 million during the three months ended September 30, 2007. Of the $539 million quarter-to-quarter increase, $481 million was related to the inclusion of one month's revenues from GlobalSantaFe including $88 million of non-cash contract intangible revenue. The remaining $58 million of the total increase was primarily due to a higher average dayrate for Transocean, which rose 2.0 percent to $224,000 from $219,700 for the prior quarter. The increase in average dayrate was experienced across all rig categories, primarily as a result of rigs commencing new contracts at the higher prevailing current dayrates.

Operating and maintenance expenses were $923 million compared to $663 million for the prior quarter, an increase of $260 million. GlobalSantaFe's operations represented $151 million of the increase. Of the remaining $109 million increase, $59 million was for merger-related compensation costs and $28 million was for planned shipyards, maintenance and fleet-wide compensation increases and the remainder for discrete unplanned major projects and the impact of the weakening U.S. dollar.

Depreciation, depletion and amortization increased to $195 million versus $103 million in the third quarter of 2007. GlobalSanteFe's operations accounted for all of this increase.