UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): November 4, 2009 (November 4, 2009)

 

 

TRANSOCEAN LTD.

(Exact name of registrant as specified in its charter)

 

 

 

Switzerland		000-53533		98-0599916
(State or other jurisdiction of incorporation or organization)		(Commission File Number)		(I.R.S. Employer Identification No.)

 

Blandonnet International Business Center Building F, 7th Floor Chemin de Blandonnet 2 Vernier, Switzerland		CH-1214
(Address of principal executive offices)		(zip code)

Registrant’s telephone number, including area code: +41 (22) 930-9000

 

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

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Item 2.02.

Results of Operations and Financial Condition.

Our news release dated November 4, 2009, concerning third quarter 2009 financial results, furnished as Exhibit 99.1 to this report, is incorporated by reference herein.

 

Item 7.01.

Regulation FD Disclosure.

Slide Presentation

On November 4, 2009, we are posting the slide presentation furnished as Exhibit 99.2 to this report on our website at www.deepwater.com. Exhibit 99.2 is incorporated in this Item 7.01 by reference.

Statements contained within the slide presentation that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements include but are not limited to projections relating to out-of-service forecasts, operating and maintenance costs trends, contract backlog, and other statements that are not historical facts. Such statements are subject to numerous risks, uncertainties and assumptions, including but not limited to, uncertainties relating to the level of activity in offshore oil and gas exploration and development, exploration success by producers, oil and gas prices, rig demand and capacity, drilling industry market conditions, possible delays or cancellation of drilling contracts, work stoppages, operational or other downtime, the Company’s ability to enter into and the terms of future contracts, the availability of qualified personnel, labor relations, future financial results, operating hazards, political and other uncertainties inherent in non-U.S. operations (including exchange and currency fluctuations), war, terrorism, natural disaster and cancellation or unavailability of insurance coverage, the impact of governmental laws and regulations, the adequacy of sources of liquidity, the effect of litigation and contingencies and other factors discussed in the Company’s Form 10-K for the year ended December 31, 2008, and in the Company’s other filings with the Securities and Exchange Commission (“SEC”), which are available free of charge on the SEC’s website at www.sec.gov. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated. We caution investors not to place undue reliance on forward-looking statements. Each forward-looking statement speaks only as of the date of the particular statement, and we undertake no obligation to publicly update or revise any forward-looking statements, except as required by law.

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Item 9.01.

Financial Statements and Exhibits.

(d) Exhibits.

The exhibits to this report furnished pursuant to items 2.02, and 7.01 are as follows:

 

Exhibit No.		Description
99.1		Transocean Ltd. Release Reporting Third Quarter 2009 Financial Results
99.2		Slide Presentation

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

		TRANSOCEAN LTD.
Date: November 4, 2009		By		/S/    MARGARET C. FITZGERALD
				Margaret C. Fitzgerald
				Associate General Counsel

 

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Index to Exhibits

 

Exhibit Number		Description
99.1		Transocean Ltd. Release Reporting Third Quarter 2009 Financial Results
99.2		Slide Presentation

						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 the Petrobras 10000 capital lease and $353 million of other borrowings.

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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 at www.deepwater.com and selecting “Investor Relations.” It may also be accessed at www.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.”

 

		###		09-36

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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

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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

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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

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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.

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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 of Sedco 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.

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