Transocean (RIG) 8-K Third Quarter 2009 Financial Results

		Transocean Ltd. Investor Relations and Communications Dept.
Analyst Contact:	Gregory S. Panagos + 1 713-232-7551	News Release
Media Contact:	Guy A. Cantwell +1 713-232-7647	FOR RELEASE: November 4, 2009

TRANSOCEAN LTD. REPORTS

THIRD QUARTER 2009 FINANCIAL RESULTS

ZUG, SWITZERLAND—Transocean Ltd. (NYSE: RIG) today reported net income attributable to controlling interest for the three months ended September 30, 2009 of $710 million, or $2.19 per diluted share, compared to net income attributable to controlling interest of $1.063 billion, or $3.30 per diluted share for the three months ended September 30, 2008. Revenues for the third quarter of 2009 were $2.823 billion compared to $3.192 billion for the third quarter 2008.

Third quarter 2009 results were adversely impacted by certain net charges, after tax, totaling $148 million, or $0.46 per diluted share, as follows:

• $132 million related to various litigation matters,

• $46 million for impairment of intangible assets related to drilling management services,

• $10 million primarily related to the retirement of debt and expenses associated with the GlobalSantaFe merger,

• partially offset by $40 million of income related to discrete tax items and gains on settlements of certain tax matters.

Operations Quarterly Review

Revenues for the three months ended September 30, 2009 decreased slightly to $2.823 billion, compared to revenues of $2.882 billion during the three months ended June 30, 2009. The decrease was primarily due to a $164 million reduction in revenue resulting from the stacking of rigs and decreased activity, partially offset by a $108 million increase in revenue due to the commencement of operations of two of our newbuild drillships and improvements in dayrates and revenue efficiency.

Operating and maintenance expenses for three months ended September 30, 2009 were $1.396 billion, compared to $1.277 billion for the prior three-month period, an increase of $119 million or 9.3 percent. The quarter-to-quarter increase in operating and maintenance costs primarily consisted of $137 million related to various litigation matters and increased shipyard expenditures, partially offset by the cost benefits resulting from the stacking of rigs.

General and administrative expenses of $54 million for the third quarter of 2009 were essentially unchanged, compared to the second quarter of 2009.

Interest Expense and Liquidity

Interest expense, net of amounts capitalized, for the third quarter of 2009 totaled $115 million, compared to $114 million for the second quarter of 2009.

As of September 30, 2009, total debt was $11.922 billion, compared to total debt of $12.053 billion as of June 30, 2009, a decrease of $131 million. During the third quarter 2009, the company repaid approximately $1.2 billion of debt. This was offset by an increase of debt of $1.1 billion, including $716 million associated with thePetrobras 10000 capital lease and $353 million of other borrowings.

Cash flow from operating activities totaled $1.406 billion for the third quarter of 2009, compared to $1.576 billion for the second quarter 2009.

Effective Tax Rate

Transocean’s reported Effective Tax Rate⁽¹⁾ of 16.4 percent for the third quarter of 2009 reflects a benefit from various discrete tax items of $29 million which primarily resulted from changes in estimates. Excluding these items as well as the adverse charges detailed above, the Annual Effective Tax Rate⁽²⁾ for the third quarter of 2009 was 16.4 percent versus 15.7 percent in the second quarter of 2009.

Conference Call Information

Transocean will conduct a teleconference call at 10:00 a.m. Eastern time, 4:00 p.m. Swiss time, today. To participate, dial +1 (913) 312-1305 and refer to confirmation code 4209411 approximately five to 10 minutes prior to the scheduled start time of the call. In addition, the conference call will be simultaneously broadcast in a listen-only mode over the Internet and can be accessed by logging onto the company’s Web address atwww.deepwater.com and selecting “Investor Relations.” It may also be accessed atwww.CompanyBoardroom.com by typing in Transocean’s New York Stock Exchange trading symbol, “RIG.” A file containing five charts to be discussed during the conference call, titled “3Q09 Charts,” has been posted to Transocean’s Web site and can be found by selecting “Investor Relations.”

A telephonic replay of the conference call should be available after 1:00 p.m. Eastern time, 7:00 p.m. Swiss time, on November 4, 2009 and can be accessed by dialing +1 (719) 457-0820 and referring to the passcode 4209411. Also, a replay will be available through the Internet and can be accessed by visiting either of the above-referenced Worldwide Web addresses. Both replay options will be available for approximately 30 days.

Transocean is the world’s largest offshore drilling contractor and the leading provider of drilling management services worldwide. With a fleet of 136 mobile offshore drilling units plus seven announced ultra-deepwater newbuild units, Transocean’s fleet is considered one of the most modern and versatile in the world due to its emphasis on technically demanding segments of the offshore drilling business. Transocean owns or operates a contract drilling fleet of 42 High-Specification Floaters (Ultra-Deepwater, Deepwater and Harsh-Environment semisubmersibles and drillships), 26 Midwater Floaters, 10 High-Specification Jackups, 55 Standard Jackups and other assets utilized in the support of offshore drilling activities worldwide.

⁽¹⁾ Effective Tax Rate is defined as income tax expense divided by income before income taxes. See the accompanying schedule entitled “Supplemental Effective Tax Rate Analysis.”

⁽²⁾ Annual Effective Tax Rate is defined as 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 the accounting standard for income taxes and estimating the annual effective tax rate. See the accompanying schedule entitled “Supplemental Effective Tax Rate Analysis.”

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TRANSOCEAN LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share data)

(Unaudited)

	Three months ended September 30,						Nine months ended September 30,
	2009			2008			2009			2008
				(As adjusted)						(As adjusted)
Operating revenues
Contract drilling revenues	$	2,602		$	2,699		$	8,061		$	7,926
Contract drilling intangible revenues		58			143			237			557
Other revenues		163			350			525			921
		2,823			3,192			8,823			9,404
Costs and expenses
Operating and maintenance		1,396			1,426			3,844			3,947
Depreciation, depletion and amortization		367			336			1,082			1,040
General and administrative		54			46			163			140
		1,817			1,808			5,089			5,127
Impairment loss		(46	)		—			(334	)		—
Loss from disposal of assets, net		(3	)		(1	)		(3	)		(4	)
Operating income		957			1,383			3,397			4,273
Other income (expense), net
Interest income		—			7			2			30
Interest expense, net of amounts capitalized		(115	)		(143	)		(365	)		(473	)
Loss on retirement of debt		(7	)		—			(17	)		(3	)
Other, net		9			(12	)		9			(20	)
		(113	)		(148	)		(371	)		(466	)
Income before income tax expense		844			1,235			3,026			3,807
Income tax expense		138			175			573			533
Net income		706			1,060			2,453			3,274
Net loss attributable to noncontrolling interest		(4	)		(3	)		(5	)		(3	)
Net income attributable to controlling interest	$	710		$	1,063		$	2,458		$	3,277
Earnings per share
Basic	$	2.20		$	3.32		$	7.63		$	10.27
Diluted	$	2.19		$	3.30		$	7.61		$	10.19
Weighted average shares outstanding
Basic		321			319			320			318
Diluted		322			321			321			321

TRANSOCEAN LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except share data)

(Unaudited)

	September 30, 2009			December 31, 2008
				(As adjusted)
Assets
Cash and cash equivalents	$	886		$	963
Short-term investments		180			333
Accounts receivable, net of allowance for doubtful accounts of $76 and $114 at September 30, 2009 and December 31, 2008, respectively		2,614			2,864
Materials and supplies, net of allowance for obsolescence of $57 and $49 at September 30, 2009 and December 31, 2008, respectively		457			432
Deferred income taxes, net		87			63
Assets held for sale		186			464
Other current assets		193			230
Total current assets		4,603			5,349
Property and equipment		28,513			25,836
Less accumulated depreciation		5,983			4,975
Property and equipment, net		22,530			20,861
Goodwill		8,134			8,128
Other assets		751			844
Total assets	$	36,018		$	35,182
Liabilities and equity
Accounts payable	$	827		$	914
Accrued income taxes		136			317
Debt due within one year		702			664
Other current liabilities		919			806
Total current liabilities		2,584			2,701
Long-term debt		11,220			12,893
Deferred income taxes, net		772			666
Other long-term liabilities		1,736			1,755
Total long-term liabilities		13,728			15,314
Commitments and contingencies
Shares, CHF 15.00 par value, 502,852,947 authorized, 167,617,649 contingently authorized, 335,235,298 issued and 321,139,451 outstanding at September 30, 2009; 502,852,947 authorized, 167,617,649 contingently authorized, 335,235,298 issued and 319,262,113 outstanding at December 31, 2008		4,470			4,444
Additional paid-in capital		7,394			7,313
Retained earnings		8,285			5,827
Accumulated other comprehensive loss		(442	)		(420	)
Total controlling interest shareholders’ equity		19,707			17,164
Noncontrolling interest		(1	)		3
Total equity		19,706			17,167
Total liabilities and equity	$	36,018		$	35,182

TRANSOCEAN LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

	Three months ended September 30,						Nine months ended September 30,
	2009			2008			2009			2008
				(As adjusted)						(As adjusted)
Cash flows from operating activities
Net income	$	706		$	1,060		$	2,453		$	3,274
Adjustments to reconcile net income to net cash provided by operating activities
Amortization of drilling contract intangibles		(58	)		(143	)		(237	)		(557	)
Depreciation, depletion and amortization		367			336			1,082			1,040
Share-based compensation expense		23			16			66			49
Excess tax benefit from share-based compensation plans		(9	)		—			(10	)		(11	)
Impairment loss		46			16			334			16
Loss from disposal of assets, net		3			1			3			4
Loss on retirement of debt		7			—			17			3
Amortization of debt issue costs, discounts and premiums, net		51			44			160			129
Deferred revenue, net		29			(3	)		72			22
Deferred expenses, net		(3	)		(3	)		(38	)		(132	)
Deferred income taxes		24			60			50			4
Other, net		7			7			30			(1	)
Changes in operating assets and liabilities		213			(121	)		441			(77	)
Net cash provided by operating activities		1,406			1,270			4,423			3,763
Cash flows from investing activities
Capital expenditures		(540	)		(514	)		(2,195	)		(1,703	)
Proceeds from disposal of assets, net		2			5			10			352
Proceeds from short-term investments		29			14			422			14
Purchases of short-term investments		(34	)		(408	)		(268	)		(408	)
Joint ventures and other investments, net		5			—			5			(3	)
Net cash used in investing activities		(538	)		(903	)		(2,026	)		(1,748	)
Cash flows from financing activities
Change in short-term borrowings, net		254			202			(246	)		(153	)
Proceeds from debt		26			303			345			2,354
Repayments of debt		(1,173	)		(1,000	)		(2,583	)		(4,673	)
Payments for warrant exercises, net		—			—			(13	)		(4	)
Proceeds from (taxes paid for) share-based compensation plans, net		(6	)		(12	)		16			49
Excess tax benefit from share-based compensation plans		9			—			10			11
Other, net		1			(7	)		(3	)		(11	)
Net cash used in financing activities		(889	)		(514	)		(2,474	)		(2,427	)
Net decrease in cash and cash equivalents		(21	)		(147	)		(77	)		(412	)
Cash and cash equivalents at beginning of period		907			976			963			1,241
Cash and cash equivalents at end of period	$	886		$	829		$	886		$	829

TRANSOCEAN LTD.

FLEET OPERATING STATISTICS

	Operating Revenues ($ Millions)(1)
	Three months ended									Nine months ended September 30,
	September 30, 2009			June 30, 2009			September 30, 2008			2009			2008
Contract Drilling Revenues
High-Specification Floaters:
Ultra Deepwater Floaters	$	732		$	673		$	617		$	2,107		$	1,783
Deepwater Floaters		463			406			323			1,282			1,025
Harsh Environment Floaters		141			159			163			458			481
Total High-Specification Floaters		1,336			1,238			1,103			3,847			3,289
Midwater Floaters		618			644			690			1,971			2,015
High-Specification Jackups		104			128			144			383			448
Standard Jackups		537			608			749			1,835			2,134
Other Rigs		6			7			13			25			40
Subtotal		2,602			2,625			2,699			8,061			7,926
Contract Intangible Revenue		58			75			143			237			557
Other Revenues
Client Reimbursable Revenues		49			48			55			148			152
Integrated Services and Other		53			52			12			158			8
Drilling Management Services		54			74			257			198			693
Oil and Gas Properties		7			8			26			21			68
Subtotal		163			182			350			525			921
Total Company	$	2,823		$	2,882		$	3,192		$	8,823		$	9,404
	Average Dayrates(1)
	Three months ended									Nine months ended September 30,
	September 30, 2009			June 30, 2009			September 30, 2008			2009			2008
High-Specification Floaters:
Ultra Deepwater Floaters	$	458,500		$	450,500		$	401,300		$	453,400		$	390,700
Deepwater Floaters	$	355,600		$	339,600		$	322,700		$	344,300		$	307,600
Harsh Environment Floaters	$	386,000		$	374,500		$	363,500		$	369,400		$	362,400
Total High-Specification Floaters	$	409,300		$	397,600		$	369,300		$	400,300		$	356,600
Midwater Floaters	$	355,800		$	302,700		$	292,900		$	322,200		$	294,800
High-Specification Jackups	$	161,000		$	161,400		$	178,500		$	164,400		$	176,700
Standard Jackups	$	156,200		$	149,200		$	158,700		$	153,800		$	151,400
Other Rigs	$	73,300		$	48,300		$	48,900		$	51,400		$	49,000
Total Drilling Fleet	$	283,800		$	255,900		$	242,200		$	264,500		$	236,500
	Utilization(1)
	Three months ended									Nine months ended September 30,
	September 30, 2009			June 30, 2009			September 30, 2008			2009			2008
High-Specification Floaters:
Ultra Deepwater Floaters		90	%		91	%		93	%		93	%		93	%
Deepwater Floaters		89	%		82	%		68	%		85	%		76	%
Harsh Environment Floaters		80	%		93	%		98	%		91	%		97	%
Total High-Specification Floaters		88	%		88	%		83	%		89	%		86	%
Midwater Floaters		72	%		84	%		88	%		82	%		86	%
High-Specification Jackups		70	%		87	%		87	%		85	%		93	%
Standard Jackups		68	%		82	%		93	%		79	%		92	%
Other Rigs		42	%		59	%		100	%		70	%		100	%
Total Drilling Fleet		75	%		84	%		89	%		83	%		89	%

⁽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, 2009			June 30, 2009			Sept 30, 2008			Sept 30, 2009			Sept 30, 2008
							(As adjusted)						(As adjusted)
Income before income taxes and minority interest	$	844		$	992		$	1,235		$	3,026		$	3,807
Add back (subtract):
Litigation matters		132			—			—			132			—
GSF merger related costs		4			2			1			12			5
Impairment loss		46			67			16			334			16
Loss on sale of CDC interest		—			4			—			4			—
Gain on sale ofSedco 135-D		(1	)		(1	)		—			(2	)		—
Loss on retirement of debt		7			8			—			17			3
Income from TODCO tax sharing agreement		(11	)		—			(14	)		(11	)		(14	)
Adjusted income before income tax expense		1,021		��	1,072			1,238			3,512			3,817
Income tax expense		138			184			175			573			533
Add back (subtract):
GSF merger related costs		1			—			1			2			1
Impairment loss		—			—			2			—			2
Changes in estimates (1)		28			(16	)		15			(24	)		(10	)
Adjusted income tax expense (2)	$	167		$	168		$	193		$	551		$	526
Effective Tax Rate (3)		16.4	%		18.5	%		14.2	%		18.9	%		14.0	%
Annual Effective Tax Rate (4)		16.4	%		15.7	%		15.6	%		15.7	%		13.8	%

(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 September 30, 2009 include $7 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 tax expense.

(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 tax expense) divided by income before income tax expense excluding gains and losses on sales and similar items pursuant to the accounting standards for income taxes and estimating the annual effective tax rate.