1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 SCHEDULE 14A PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES AND EXCHANGE ACT OF 1934 Filed by the Registrant [X] Filed by a Party other than the Registrant [ ] Check the appropriate box: [ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) [ ] Definitive Proxy Statement [X] Definitive Additional Materials [ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12 TRANSOCEAN OFFSHORE INC. (Name of Registrant as Specified in Its Charter) - ------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if Other Than the Registrant) Payment of filing fee (Check the appropriate box): [X] No Fee Required. [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. 1. Title of each class of securities to which transaction applies: 2. Aggregate number of securities to which transaction applies: 3. Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): 4. Proposed maximum aggregate value of transaction: 5. Total Fee Paid: [ ] Fee paid previously with preliminary materials. [ ] Check box if any part of the fee is offset as provided in Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. 1. Amount Previously Paid: 2. Form, Schedule or Registration Statement No.: 3. Filing Party: 4. Date Filed:
2 Transocean Sedco Forex November 1999 The World's Leading Offshore Driller [Photograph of the drillship Discoverer Enterprise] [Photograph of the Sedco Express-class semisubmersible Sedco Express] Victor E. Grijalva, Chairman J. Michael Talbert, President and Chief Executive Officer Robert L. Long, Executive Vice President and Chief Financial Officer SLIDE - 1
3 Disclosure Statement =============================================================================== Transocean Offshore has filed a registration statement with the U.S. Securities and Exchange Commission relating to the proposed merger with Sedco Forex and the Transocean Offshore ordinary shares to be issued in the merger. The registration statement contains a proxy statement/prospectus dated October 27, 1999 that was first mailed to shareholders on or about November 8, 1999. This presentation is qualified by reference to that joint proxy statement/prospectus of Transocean Offshore and Schlumberger. This presentation does not contain all the information that is important to you in deciding how to vote with respect to the matters covered by the joint proxy statement/prospectus. All shareholders should read the joint proxy statement/prospectus, the materials that are incorporated by reference and the other public filings of Transocean Offshore and Schlumberger, before making and voting decisions with regard to the proposed merger and other matters covered by the joint proxy statement/prospectus. The registration statement, the joint proxy statement/prospectus and other public filings of Transocean Offshore and Schlumberger are available free of charge at the SEC's website at www.sec.gov. In addition, copies of Transocean's publicly filed materials are available free of charge by contacting Jeff Chastain, Transocean's Director of Investor Relations and Communications, at 713-232-7551. This presentation is not an offer to sell or the solicitation of an offer to buy any securities of Transocean Offshore. Transocean Sedco Forex SLIDE - 2
4 Disclosure Statement =============================================================================== During the course of this presentation, certain forward-looking statements will be made regarding such matters as the prospects for the company, the profile of the company following the proposed merger with Sedco Forex, financial performance, capital expenditures, debt levels and other balance sheet information, rig utilization, contract backlog, dayrates and other statements that are not historical facts. It is inherently difficult to make predictions in a cyclical industry. In addition, these forward looking statements are based upon certain assumptions and subject to certain risks and uncertainties, such as the prices of crude oil and natural gas, the level of exploration and production activity by our customers, the closing of the proposed merger with Sedco Forex, the completion of construction projects and other risks and uncertainties identified in our Form 10-Ks and other filings with the Securities Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated. The company undertakes no obligation to release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Please refer to the "Disclosure Regarding Forward-looking Statements" section of the joint proxy statement/prospectus (page 31) and "Sedco Forex Management's Discussion and Analysis of Financial Condition and Results of Operations" of that document (page 94) for a fuller discussion of the factors that could cause actual results to differ from expectations. Please also refer to the "Risk Factors" section of the joint proxy statement/prospectus at page 33 for a discussion of Risk Factors that should be considered in connection with a vote on the matters covered by the joint proxy statement/prospectus. Transocean Sedco Forex SLIDE - 3
5 Transocean And Sedco Forex Have Agreed To A Merger Of Equals =============================================================================== RIG Shares Issued To SLB Shareholders ..........109 Million (52% Of Post-Transaction Shares) Pro Forma Equity Market Cap At $31/Share ..........$6.5 Billion Debt Assumed At Closing (12/31/99) ................$435 Million, Subject To Adjustments Accounting Treatment .......Purchase Accounting Acquiror ........Sedco Forex Surviving Legal Entity .....Transocean (Cayman Islands Corporation) Tax Treatment ..............Tax-Free Reorganization Listing ....................RIG Will Continue To Trade On NYSE Board Representation .......Five Designated by Schlumberger Five Designated By Transocean Estimated Closing ..........December 31, 1999 Schlumberger Will Have No Ongoing Ownership Interest In Transocean Sedco Forex Transocean Sedco Forex SLIDE - 4
6 Senior management of Transocean Sedco Forex =============================================================================== Board Of Directors Victor E. Grijalva Chairman | J. Michael Talbert President And Chief Executive Officer | _______________________________________________________________________________________________________________ | | | | | | | | Dennis Heagney | Jean Cahuzac | Robert Long | Jon Cole Donald Ray Executive Vice President | Executive Vice President,| Executive Vice President | Executive Vice President, Senior Vice President, Operations | Operations | And Chief Financial Officer | Marketing Technical Services (Asia And The Americas) | (Europe, ME And Africa) | | | | | | | | ---------------- ----------------------- --------------- Eric Brown Barbara Koucouthakis David Mullen Vice President, Vice President, Vice President, General Counsel Information Systems And Human Resources And Secretary Comm. Tech. Transocean Sedco Forex SLIDE - 5
7 Schlumberger's Spin-Off of Sedco Forex The Rationale =============================================================================== *Continuation of a long-term strategy -focus on the reservoir via advanced integrated solutions Integrated } -Reservoir evaluation Reservoir optimization } -Reservoir development } -Reservoir management -value-added growth through internal R&D programs ($400 M/year) and through acquisitions *Participate in the creation of the largest offshore drilling contractor -a drilling powerhouse -SLB shareholders to benefit -allows for development of proprietary technology *Transocean Offshore - a unique merger partner -seen as best in business -similar business focus -strategic fit -fleet, technical and geographical Transocean Sedco Forex SLIDE - 6
8 Business Rationale [Photograph of the drillship Discoverer Enterprise] [Photograph of the semisubmersible Transocean Richardson] [Photograph of the semisubmersible Sedco 710] [Photograph of the semisubmersible Sovereign Explorer] Transocean Sedco Forex SLIDE - 7
9 Business Rationale For the Merger =============================================================================== *We are Creating: -The Largest Offshore Driller - Number Of Offshore Rigs, Floating Rigs, Deepwater Rigs Transocean Sedco Forex SLIDE - 8
10 Merger Creates Clear World Leader In Offshore Mobile Units =============================================================================== [THE FOLLOWING TABLE WAS REPRESENTED AS A BAR CHART ON THIS SLIDE] Company Floaters Jackups Other Total - ------- -------- ------- ----- ----- Transocean Sedco Forex 53 17 4 74 R&B Falcon 23 42 8 73 Noble Drilling 12 32 3 47 ENSCO 1 37 9 47 Diamond Offshore 31 15 0 46 Pride International 9 18 13 40 Global Marine 11 23 1 35 Santa Fe Drilling 3 23 0 26 Rowan Companies 1 23 0 24 Source: ODS Transocean Sedco Forex SLIDE - 9
11 . . . Particularly In Deepwater =============================================================================== [THE FOLLOWING TABLE WAS REPRESENTED AS A BAR CHART ON THIS SLIDE] Number of Deepwater Rigs By Water Depth Capability Company 3,000'-4,999' 5,000'-6,999' 7,000'+ - ------- ------------- ------------- ------- Transocean Sedco Forex 10 3 9 R&B Falcon 4 2 10 Diamond Offshore 7 4 2 Noble Drilling 2 7 1 Pride International 5 0 2 Global Marine 1 1 3 Source: ODS Transocean Sedco Forex SLIDE - 10
12 Worldwide Deepwater Discoveries Water Depth Greater Than 3,000 Feet =============================================================================== [THE FOLLOWING TABLE WAS REPRESENTED AS A BAR CHART ON THIS SLIDE] Billion Barrels Of Equivalent (in approximate numbers) .26 .46 1.60 .26 .74 .33 .51 .08 .38 1.67 .24 2.82 ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 3.11 3.33 4.34 ---- ---- ---- 1997 1998 1999 Transocean Sedco Forex SLIDE - 11
13 Business Rationale For The Merger =============================================================================== * We Are Creating: -The Largest Offshore Driller - Number Of Offshore Rigs, Floating Rigs, Deepwater Rigs -With Worldwide Market Presence - U.K., Norway, GOM, Brazil, Africa, Asia, Middle East/FSU Transocean Sedco Forex SLIDE - 12
14 Worldwide Market Presence =============================================================================== [WORLD MAP WITH THE FOLLOWING TEXTUAL PRESENTATIONS SUPERIMPOSED: U.S. Gulf - 12 Rigs U.K. And Europe - 16 Rigs Norway - 6 Rigs - ------------------- ------------------------- --------------- 8 Semis 14 Semis 6 Semis 4 Drillships 2 Jackups Caspian - 1 Rig Southeast Asia - 12 Rigs India - 2 Rigs - --------------- ------------------------ -------------- 1 Jackup 4 Semis 1 Drillship 1 Drillship 1 Jackup 5 Jackups 2 Tenders Egypt, Mid East, Med - 5 Rigs South And West Africa - 13 Rigs - ----------------------------- ------------------------------- 1 Semi 7 Semis 4 Jackups 4 Jackups 2 Tenders Brazil - 6 Rigs Australia - 1 Rig - --------------- ----------------- 5 Semis 1 Semi 1 Drillship] #1 or #2 Floater Contractor In All Operating Regions #1 MODU Contractor In 5 Out Of 7 Operating Regions Transocean Sedco Forex SLIDE - 13
15 Worldwide Market Presence =============================================================================== [WORLDWIDE MAP WITH THE FOLLOWING LOCATIONS NOTED: St. Johns, Houston, Brazil, Spain, Paris, Brest, Nigeria, U.K., Norway, Egypt, Cameroon, Congo, Angola, Denmark, S. Africa, Germany, Holland, Azerbaijan, Dubai, India, Malaysia, Singapore, Indonesia, Thailand, Vietnam, Australia, Brunei] Transocean Sedco Forex SLIDE - 14
16 Business Rationale For The Merger =============================================================================== *We Are Creating: -The Largest Offshore Driller - Number Of Offshore Rigs, Floating Rigs, Deepwater Rigs -With Worldwide Market Presence - U.K., Norway, GOM, Brazil, Africa, Asia, Middle East/FSU -A History Of Technical Leadership - Engineering Innovation and Deepwater Operating Expertise Transocean Sedco Forex SLIDE - 15
17 History Of Engineering Innovation =============================================================================== *Transocean -First Offshore Jackup Drilling Rig -First Turret-Moored Drillship -First Fourth Generation Semisubmersible -First Dual Activity Drilling Rig *Sedco Forex -First Semisubmersible Drilling Rig -First Dynamically Positioned Drillship, Designed For Exploration -First Dynamically Positioned Semisubmersible -First Sedco Express-Class 5th Generation Semisubmersible Transocean Sedco Forex SLIDE - 16
18 . . . And Ultra-Deepwater Expertise =============================================================================== [THE FOLLOWING TABLE WAS REPRESENTED AS A BAR CHART ON THIS SLIDE] Wells Drilled Company 5,000'-6,000' 6,000'-7,000' Greater than 7,000' - ------- ------------- ------------- ------------------- Transocean Sedco Forex 34 24 4 Noble Drilling 5 1 2 Diamond Offshore 5 2 1 Global Marine 2 0 1 R&B Falcon 2 0 1 Other 1 1 0 Source: Offshore Data Services, results through September 1999 Transocean Sedco Forex SLIDE - 17
19 Business Rationale For The Merger =============================================================================== *We Are Creating: -The Largest Offshore Driller - Number Of Offshore Rigs, Floating Rigs, Deepwater Rigs -With Worldwide Market Presence - U.K., Norway, GOM, Brazil, Africa, Asia, Middle East/FSU -A History Of Technical Leadership - Engineering Innovation and Deepwater Operating Expertise - Unmatched Financial Strength - Balance Sheet, Cash Flow Generation Capacity Transocean Sedco Forex SLIDE - 18
20 Financial Strength =============================================================================== *Strong Balance Sheet -Debt To Total Capitalization Projected To Be Approximately 25% After The Merger -Reduced Cost Of Capital -Flexibility To Initiate And Control Future Acquisition And Expansion Opportunities *High Cash Flow Generation Capability -Combined Proforma 1998 EBITDA Of $1.1 Billion Transocean Sedco Forex SLIDE - 19
21 Business Rationale For The Merger =============================================================================== *We Are Creating: -The largest Offshore Driller - Number Of Offshore Rigs, Floating Rigs, Deepwater Rigs -With Worldwide Market Presence - U.K., Norway, GOM, Brazil, Africa, Asia, Middle East/FSU -A History Of Technical Leadership - Engineering Innovation and Deepwater Operating Expertise -Unmatched Financial Strength - Balance Sheet, Cash Flow Generation Capacity -A Unique Investment Vehicle - Superior Trading Liquidity, Tremendous Operating Leverage Transocean Sedco Forex SLIDE - 20
22 Public Float Will Be Much Greater Than Other Contract Drillers =============================================================================== [THE FOLLOWING TABLE WAS REPRESENTED AS A BAR CHART ON THIS SLIDE] Market Equity Capitalization At November 19, 1999 Company Billions of Dollars - ------- ------------------- Transocean Sedco Forex 6.5 Diamond Offshore 4.8 Noble Drilling 3.8 ENSCO 3.2 Global Marine 2.9 Santa Fe Drilling 2.8 R&B Falcon 2.7 Rowan Companies 1.6 Marine Drilling 1.0 Pride International 0.9 [THE FOLLOWING TABLE WAS REPRESENTED AS A BAR CHART ON THIS SLIDE] Public Float at November 19, 1999 Company Billions of Dollars - ------- ------------------- Transocean Sedco Forex 6.3 Diamond Offshore 2.2 Noble Drilling 3.7 ENSCO 3.0 Global Marine 2.8 Santa Fe Drilling 1.3 R&B Falcon 2.6 Rowan Companies 1.6 Marine Drilling 1.0 Pride International 0.7 Transocean Sedco Forex SLIDE - 21
23 Merger Creates Fourth Largest Oil Service Company ================================================================================ [THE FOLLOWING TABLE WAS REPRESENTED AS A BAR CHART ON THIS SLIDE] Equity Market Capitalization At November 19, 1999 Company Billions of Dollars - ------- ------------------- Schlumberger 36.3 Halliburton 18.6 Baker Hughes 8.9 Transocean Sedco Forex 6.5 Diamond Offshore 4.8 Weatherford 3.9 Noble 3.8 Nabors 3.2 Transocean 3.1 Global Marine 2.9 Transocean Sedco Forex SLIDE - 22
24 Offshore Drillers Significantly Outperformed "Large Caps" When Market Tightened ================================================================================ [LINE GRAPH DISPLAYING A COMPARISON OF SHARE PRICE PERFORMANCE MEASURED FROM JANUARY 1, 1994 OF (1) AN INDEX COMPOSED OF BAKER HUGHES, HALLIBURTON AND SCHLUMBERGER, (2) AN INDEX COMPOSED OF OFFSHORE DRILLING COMPANIES COMPILED BY SIMMONS & COMPANY INTERNATIONAL AND (3) TRANSOCEAN OFFSHORE INC.] Transocean Sedco Forex SLIDE - 23
25 Merger Creates A Unique Investment Vehicle ================================================================================ [THE FOLLOWING TABLES WERE REPRESENTED AS BAR CHARTS ON THIS SLIDE] 1998 EBITDA Company Millions Of Dollars - ------- ------------------- Schlumberger(1) 1,803 Halliburton 1,770 Transocean Sedco Forex(2) 1,079 Baker Hughes 1,058 1998 Net Income Company Millions Of Dollars - ------- ------------------- Schlumberger(1) 1,053 Halliburton 965 Transocean Sedco Forex(2) 662 Baker Hughes 138 1998 Cash Flow Company Millions Of Dollars - ------- ------------------- Schlumberger(1) 2,064 Halliburton 1,552 Transocean Sedco Forex(2) 943 Baker Hughes 896 - ------------- (1) Schlumberger results exclude Sedco Forex. (2) Proforma. Transocean Sedco Forex SLIDE - 24
26 Merger Creates A Unique Investment Vehicle ================================================================================ o Significantly Greater Float Than Other Offshore Drillers o Greater Operating Leverage Than Other Large Cap Oil Service Companies o Solid Investment Grade Rating o Tax - Advantaged Structure The Transocean Sedco Forex Merger Creates A Unique Risk/Reward Opportunity In The Oil Field Services Sector Transocean Sedco Forex SLIDE - 25
27 Business Rationale Summary ================================================================================ Transocean Sedco Forex's Goal Is To Be The Offshore Drilling Contractor Of First Choice: - For Customers - For Investors - For Employees Transocean Sedco Forex SLIDE - 26
28 Why Own Transocean Sedco Forex Today? ================================================================================ o Worldwide Hydrocarbon Demand Growth Is Accelerating o Worldwide Depletion Rates Continue To Erode The Production Base o Non-OPEC Supply Response Has Been Minimal Due To Decline In E&P Capital Spending o OPEC Quota Discipline Appears Strong o Worldwide Inventories Approaching Low Levels o Technology Advances Have Created Spending Treadmill o Strong Rebound In E&P Cash Flows o E&P Capital Spending Expected To Be Up Next Year Transocean Sedco Forex SLIDE - 27
29 Financial Review ================================================================================ [Photograph of the drillship Discoverer Enterprise] [Photograph of the semisubmersible Transocean Richardson] [Photograph of the semisubmersible Sedco 710] [Photograph of the semisubmersible Sovereign Explorer] SLIDE - 28
30 Financial Overview =============================================================================== o Combined Pro Forma Financials - Starting Balance Sheet - Pro Forma Results For 1998/1999 Through June o Expectations - Guiding Wall Street o Near-term Outlook - Contract Status - Contracted Backlog - Capex Program - Resulting Debt Transocean Sedco Forex SLIDE - 29
31 Forecast Combined Balance Sheet(1) (At December 31, 1999) ================================================================================ Dollar Amounts In Millions ----------- Current Assets $ 480 Net PP&E 4,400 Deferred Charges And Other 130 Goodwill 1,140 ----------- Total Assets $ 6,150 =========== Current Liabilities $ 430 Total Debt 1,320 Deferred Credits And Taxes 510 Shareholders' Equity 3,890 ----------- Total Liabilities And Equity $ 6,150 =========== Debt/Total Capitalization 25% (1) Please refer to the disclosure statement presented on page 2 of the presentation. A number of risks could materialize that could cause actual balance sheet figures to differ materially from this forecast, including the amount of capital expenditures actually incurred prior to year-end, working capital variations as a result of changes in rig activity levels and the other information presented in "Disclosure Regarding Forward - Looking Statements" (page 31), "Risk Factors" (page 33) and elsewhere in the joint proxy statement/prospectus and the documents incorporated by reference therein. Transocean Sedco Forex SLIDE - 30
32 Forecast Debt Structure - Post Merger (At December 31, 1999) ================================================================================ Interest Rate ------------- o $400 Million Term Loan L + 55 BPS o $90 Million Trident Leases 7.55% o $200 Million 30-Year Debentures 8.00% o $100 Million 30-Year/Put 10 Notes 7.45% o $30 Million Senior Notes ($21 Million O/S) 6.90% o $540 Million Revolver ($282 Million O/S) L + 25 BPS o $227 Million Lease Securitization Facility 7.25% Total Forecast Debt Outstanding: $1,320 Million Transocean Sedco Forex SLIDE - 31
33 Summary Pro Forma Combined Cash Flows And Earnings ================================================================================ (Dollar amounts in millions, except per share amounts) 6 Months Pro Forma Transocean Ended Sedco Forex 1998 6/30/99 -------------------------------- ---- -------- Revenue $2,180 $ 894 EBITDA 1,079 364 Earnings From Operations 798 220 ------ ----- Net Income $ 662 $ 176 ====== ===== Cash Flow $ 943 $ 320 ====== ===== Earnings Per Share $ 3.15 $0.84 ====== ===== Transocean Sedco Forex SLIDE - 32
34 Summary Pro Forma Combined Cash Flows And Earnings ================================================================================ (Dollar amounts in millions, except per share amounts) 6 Months Pro Forma Transocean Ended Sedco Forex 1998 6/30/99 - ---------------------------------------------------- ---------- ---------- Revenue $ 2,180 $ 894 EBITDA 1,079 364 Earnings From Operations 798 220 ---------- ---------- Net Income $ 662 $ 176 ========== ========== Cash Flow $ 943 $ 320 ========== ========== Earnings Per Share $ 3.15 $ 0.84 ========== ========== Adjustments Related Party Transaction Elimination (Insurance) $ 55 $ 18 Sedco Forex Depreciation Adjustment 62 30 Provisions and Writedowns (after tax) 20 33 Income Taxes On Adjustments (assumes 10% tax rate) (12) (5) ---------- ---------- Total 125 76 Adjusted Net Income $ 788 $ 252 ========== ========== Adjusted Cash Flow $ 1,048 $ 363 ========== ========== Adjusted EPS $ 3.75 $ 1.21 ========== ========== Transocean EPS (Diluted) $ 3.41 $ 1.41 ========== ========== Transocean Sedco Forex SLIDE - 33
35 Other Financial Considerations =============================================================================== o No Significant Consolidation Savings in 2000 -Integration Process *IT Infrastructure *Accounting And Purchasing Systems *Engineering Support For Construction Program *Schlumberger Transition Services *Movement Of Personnel o Will Change Estimated Lives On Sedco Rigs o Pro Forma Combined Effective Tax Rate Transocean Sedco Forex SLIDE - 34
36 Financial Reporting ================================================================================ o 1999 Reported Results - Income Statement: * TSF = Sedco Forex, Not Transocean Offshore * Not Sedco Forex And Transocean Offshore * Transocean Offshore Alone Will Not Be Published - Balance Sheet: * TSF Will Equal Sedco Forex And Transocean Offshore o Historic Comparisons Will Have Little Meaning - Quarter to Quarter - Year to Year Transocean Sedco Forex SLIDE - 35
37 Wall Street Expectations TSF Reported Results ================================================================================ RIG Historic Results Will Disappear Post-Merger. [BAR CHART DEPICTS TRANSOCEAN OFFSHORE INC. HISTORICAL EARNINGS PER SHARE FOR THE FIRST THREE QUARTERS OF 1999 AND THE FIRST CALL ESTIMATE(1) OF PROJECTED FOURTH QUARTER AND FULL YEAR 1999 EARNINGS PER SHARE ($0.30 AND $2.17, RESPECTIVELY). THE HISTORICAL INFORMATION IS SHOWN AS CROSSED-THROUGH TO INDICATE THAT RIG HISTORIC RESULTS WILL DISAPPEAR POST-MERGER] (1) Represents a consensus view of analysts' estimates prepared by third parties for which RIG assumes no responsibility. RIG undertakes no obligation to review or confirm this or other analysts' expectations or estimates regarding RIG or the combined Transocean Sedco Forex company. Transocean Sedco Forex SLIDE - 36
38 Wall Street Expectations ================================================================================ [TWO BAR CHARTS ARE PRESENTED: (1) THE FIRST BAR CHART DEPICTS TRANSOCEAN OFFSHORE INC. HISTORICAL EARNINGS PER SHARE FOR THE FIRST THREE QUARTERS OF 1999 AND THE FIRST CALL ESTIMATE(1) OF PROJECTED FOURTH QUARTER AND FULL YEAR 1999 EARNINGS PER SHARE ($0.30 AND $2.17, RESPECTIVELY). THE HISTORICAL INFORMATION IS SHOWN AS CROSSED-THROUGH TO INDICATE THAT RIG HISTORIC RESULTS WILL DISAPPEAR POST-MERGER (2) THE SECOND BAR CHART DEPICTS SEDCO FOREX HISTORICAL UNAUDITED EARNINGS PER SHARE FOR THE FIRST SIX MONTHS OF 1999 DIVIDED BY AN ASSUMED MERGER EXCHANGE RATIO OF 0.2, WHICH WILL BECOME THE HISTORICAL EARNINGS PER SHARE OF TRANSOCEAN SEDCO FOREX AFTER THE MERGER, AND ILLUSTRATES THE LACK OF A FIRST CALL ESTIMATE FOR TRANSOCEAN SEDCO FOREX FOR FOURTH QUARTER AND FULL YEAR 1999] o 1999 reported results will have little value - historic comparisons meaningless - significant adjustments to normalize - merger related costs will distort numbers o Focus on future of new TSF Transocean Sedco Forex SLIDE - 37
39 Long-Term Contracts In Place ================================================================================ [THE FOLLOWING TABLE WAS REPRESENTED AS A BAR CHART ON THIS SLIDE] Under Contract Until (approximate quarter) ------------------------------------------ Enterprise Commencing 4Q 1999, terminating 4Q 2004 Spirit Commencing 2Q 2000, terminating 1Q 2005 Express Commencing 2Q 2000, terminating 1Q 2003 Energy Commencing 2Q 2000, terminating 1Q 2005 Cajun Express Commencing 3Q 2000, terminating 3Q 2003 Deep Seas Commencing 4Q 2000, terminating 4Q 2005 Marianas In place, terminating 4Q 2004 Searcher In place, terminating 3Q 2003 Winner In place, terminating 3Q 2003 Sedco 707 In place, terminating year-end 2002 Sedco 709 In place, terminating 2Q 2002 Sedco 706 In place, terminating 2Q 2002 Seven Seas In place, terminating 1Q 2002 Arctic In place, terminating 1Q 2002 P. Pioneer In place, terminating 3Q 2001 Wildcat In place, terminating 3Q 2001 Amirante In place, terminating 1Q 2001 Firm Contracts in Place Total $3.2 Billion in Revenues Transocean Sedco Forex SLIDE - 38
40 Operating Leverage Is Substantial ================================================================================ [THE FOLLOWING TABLE WAS REPRESENTED AS A BAR CHART ON THIS SLIDE] Impact Of $10,000/Day Rate Increase(1) Operating Income EPS(2) ---------------- ------ Jackups $ 47 $0.17 Floaters $123 $0.45 Total $169 $0.62 (1) 80% Utilization Assumption (2) 22.5% Tax Rate Assumption Transocean Sedco Forex SLIDE - 39
41 Newbuild Delivery Schedule ================================================================================ Estimated Cost(1) Contract Estimated Newbuild Project Customer ($ Millions) Terms Delivery - ---------------- -------- ------------ -------- --------- Discoverer Spirit Unocal $358 5 Years 2Q 2000 Discoverer Deep Seas Chevron $355 5 Years 3Q 2000 Sedco Express Elf $298 3 Years 1Q/2Q 2000 Cajun Express Marathon $264 3 Years 2Q/3Q 2000 Sedco Energy Texaco $307 5 Years 1Q/2Q 2000 Trident 20 Mobil $132 5 Years 4Q 2000 (1) Factors such as the availability of qualified shipyard personnel, the delay of ordered materials and equipment and other factors presented in "Disclosure Regarding Forward-Looking Statements" (page 31), "Sedco Forex MD&A" (page 94) and elsewhere in the joint proxy statement/prospectus and the documents incorporated by reference therein could contribute to cost variations. Transocean Sedco Forex SLIDE - 40
42 Sedco Newbuild Contracts ================================================================================ o Cajun Express o Sedco Express - Customer is Marathon - Customer is Elf - Contract term - 3 years - Contract term - 3 years - Cancellation provisions - Cancellation provisions * late delivery March 31, 2001 * late delivery May 28, 2000 o Sedco Energy o Trident 20 - Customer is Texaco - Customer is Mobil - Contract term - 5 years - Contract term - 3 to 5 years - Cancellation provisions - Late delivery February 12, 2002 * late delivery of more than two months reduces contract term * no cancellation provision Transocean Sedco Forex SLIDE - 41
43 Capital Expenditures (Dollar amounts in millions) ================================================================================ [THE FOLLOWING TABLE WAS REPRESENTED AS A BAR CHART IN THIS SLIDE] $59 $19 $213 $406 $520 $570 $450 - ------- ------- ------- ------- ------- ----------- ----------- 1994(1) 1995(1) 1996(1) 1997(1) 1998(1) 1999P(1)(2) 2000P(2)(3) Estimated Combined Annual Maintenance Capital Expenditures: $110 Million (1) Amounts for Transocean. (2) Denotes presently planned/estimated capital expenditure levels. Actual levels may vary materially and will be subject largely to future contract requirements, the need to replace equipment on existing drilling units and other future capital needs which are beyond the control of the Company. Please refer to the joint proxy statement/prospectus for a fuller discussion of the factors that could cause actual expenditures to differ from planned/estimated levels. (3) Amounts for Transocean Sedco Forex. Transocean Sedco Forex SLIDE - 42
44 Total Debt ================================================================================ [THE FOLLOWING TABLE WAS REPRESENTED AS A BAR CHART IN THIS SLIDE. SUPERIMPOSED ACROSS THE CHART IS A LINEAR GRAPH DEPICTING THE PERCENTAGE THAT TOTAL DEBT REPRESENTS OF TOTAL CAPITALIZATION. THE DATA IS DERIVED FROM TRANSOCEAN OFFSHORE INC. HISTORICAL BALANCE SHEET INFORMATION THROUGH 1998 AND A PROJECTED BALANCE SHEET FOR THE COMBINED COMPANIES AT YEAR-END 1999] Year Debt (Dollar Amounts in Millions) Debt/Total Capitalization ---- --------------------------------- 1994(1) $30 8.6% 1995(1) $30 7.6% 1996(1) $420 20.5% 1997(1) $733 31.1% 1998(1) $833 29.6% 1999P(2) $1,320 25.5% (1) Amounts for Transocean. (2) Amounts for Transocean Sedco Forex. Transocean Sedco Forex SLIDE - 43
45 Financial Summary =============================================================================== o Transocean Sedco Forex Will Have Exceptional Financial Strength - Low Debt To Total Capitalization - Substantial Contract Backlog - Effective Access To Equity Markets - Solid Investment - Grade Debt Rating - Efficient Tax Structure o Tremendous Operating Leverage Combined With... - Deepwater Operating Expertise And Experience - Best High Specification Fleet o Transocean Sedco Forex Is The Contractor Of Choice - For Customers - For Employees - For Investors Transocean Sedco Forex SLIDE - 44
46 Transocean Sedco Forex November 1999 The World's Leading Offshore Driller [Photograph of the drillship Discoverer Enterprise] [Photograph of the Sedco Express-class semisubmersible Sedco Express] Victor E. Grijalva, Chairman J. Michael Talbert, President and Chief Executive Officer Robert L. Long, Executive Vice President and Chief Financial Officer SLIDE - 45