Transocean Proxy Statement and 2010 Annual Report

Integrated Services
From time to time, we provide well and logistics services in addition to our normal drilling services through third party contractors
and our employees. We refer to these other services as integrated services, which are generally subject to individual contractual
agreements executed to meet specific customer needs and may be provided on either a dayrate, cost plus or fixed-price basis, depending
on the daily activity. As of February 10, 2011, we were only performing such services in India. These integrated services revenues
represented less than one percent of our consolidated revenues for the year ended December 31, 2010.
Oil and Gas Properties
We conduct oil and gas exploration, development and production activities through our oil and gas subsidiaries. We acquire
interests in oil and gas properties principally in order to facilitate the awarding of turnkey contracts for our drilling management services
operations. Our oil and gas activities are conducted through Challenger Minerals Inc. and Challenger Minerals (North Sea) Limited
(together, “CMI”), which hold property interests primarily in the U.S. offshore Louisiana and Texas and in the U.K. sector of the North Sea.
The oil and gas properties revenues represented less than one percent of our consolidated revenues for the year ended December 31,
2010.
Joint Venture, Agency and Sponsorship Relationships and Other Investments
In some areas of the world, local customs and practice or governmental requirements necessitate the formation of joint ventures
with local participation, which we may or may not control. We are an active participant in several joint venture drilling companies,
principally in Angola, India, Indonesia, Malaysia and Nigeria. Local laws or customs in some areas of the world also effectively mandate
establishment of a relationship with a local agent or sponsor. When appropriate in these areas, we enter into agency or sponsorship
agreements.
We hold a 50 percent interest in Transocean Pacific Drilling Inc. (“TPDI”), a consolidated British Virgin Islands joint venture
company formed by us and Pacific Drilling Limited (“Pacific Drilling”), a Liberian company, to own and operate two ultra-deepwater
drillships named Dhirubhai Deepwater KG1 and Dhirubhai Deepwater KG2. Under a management services agreement with TPDI, we
provide operating management services for Dhirubhai Deepwater KG1 and Dhirubhai Deepwater KG2. Effective October 18, 2010, Pacific
Drilling has the unilateral right to exchange its interest in the joint venture for our shares or cash, at an amount based on an appraisal of
the fair value of the drillships, subject to certain adjustments.
We hold a 65 percent interest in Angola Deepwater Drilling Company Limited (“ADDCL”), a consolidated Cayman Islands joint
venture company formed to own and operate Discoverer Luanda. Angco Cayman Limited, a Cayman Islands company, holds the
remaining 35 percent interest in ADDCL. Under a management services agreement with ADDCL, we provide operating management
services for Discoverer Luanda. Beginning January 31, 2016, Angco Cayman Limited will have the right to exchange its interest in the joint
venture for cash at an amount based on an appraisal of the fair value of the drillship, subject to certain adjustments.
We hold a 50 percent interest in Overseas Drilling Limited (“ODL”), an unconsolidated Cayman Islands joint venture company,
which owns and operates Joides Resolution. Siem Offshore Invest AS owns the other 50 percent interest in ODL. Under a management
services agreement with ODL, we provide certain operational and management services.
See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Related Party
Transactions.”
Significant Customers
We engage in offshore drilling services for most of the leading international oil companies (or their affiliates), as well as for many
government-controlled and independent oil companies. Our most significant customer in 2010 was BP plc (together with its affiliates,
“BP”), accounting for approximately 10 percent of our operating revenues. The loss of this significant customer could, at least in the short
term, have a material adverse effect on our results of operations. No other customer accounted for 10 percent or more of our 2010
operating revenues.
Employees
We require highly skilled personnel to operate our drilling units. We conduct extensive personnel recruiting, training and safety
programs. At December 31, 2010, we had approximately 18,050 employees, including approximately 1,950 persons engaged through
contract labor providers. Some of our employees working in Angola, the U.K., Norway and Australia, are represented by, and some of our
contracted labor work under, collective bargaining agreements. Many of these represented individuals are working under agreements that
are subject to annual salary negotiation. These negotiations could result in higher personnel expenses, other increased costs or increased
operational restrictions as the outcome of such negotiations apply to all offshore employees not just the union members.
Additionally, the unions in the U.K. sought an interpretation of the application of the Working Time Regulations to the offshore
sector. Although the Employment Tribunal endorsed the unions’ position that offshore workers are entitled to 28 days of annual leave, at
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