Transocean Proxy Statement and 2010 Annual Report

In addition, we have extended our industry-leading list of technical ‘‘firsts,’’ by:
• Building on our dual gradient drilling technology, Continuous Annular Pressure Management
(CAPM�), to broaden the application of Managed Pressure Drilling (MPD) offshore with the
first application of MPD from our dynamically positioned drillship, the GSF Explorer,
working for MSEC (a Marathon led consortium) offshore Indonesia.
• Deploying our dual activity drilling capability for the first time in Angola with the ultradeepwater
drillship Discoverer Luanda and in Egypt with the ultra-deepwater drillship
Discoverer Americas.
• Drilling the first offshore well in the history of Timor-Leste. The ultra-deepwater drillship
Deepwater Frontier constructed this well for Reliance Industries.
2011: A Vision for the Future
Despite the tragedy of Macondo, we enter 2011 in a strong position. We remain the leader in
every asset class in which we operate; oil prices are strong at over US$90 per barrel; customer
activity is increasing; and our stock has rebounded to about the same price as this time last year.
As of February 10, 2011, our contract revenue backlog was approximately US$24.0 billion, or
about 2.7 times our 2010 contract drilling revenues, providing continuing financial stability and
flexibility.
Certainly, there are challenges ahead. Regulatory uncertainty and permitting delays in the U.S. Gulf
of Mexico continue to impact our customers’ ability to drill there. However, the majority of our 12
rigs which are contracted and operating in the U.S. Gulf of Mexico are compliant with current
regulations and are prepared to resume work when our customers are able. We expect that the
remaining few rigs will achieve compliance in the coming weeks. Furthermore, we have preserved
our contract backlog in the U.S. Gulf of Mexico and continue to enhance the productive and
meaningful relationships with our customers.
Outside of the United States, market conditions are also changing. Improving oil prices and our
customers’ increased capital expenditure budgets bode well for our business.
The jackup market continues to evolve as customers increase demand for high-specification
jackups. While overall demand for jackups is increasing, utilization of standard jackups remains
flat. We are responding to this shift in market conditions by evaluating additional opportunities to
expand our high-spec jackup fleet while considering options for divesting older assets. In
February, we announced five-year drilling contracts for two newbuild high-specification jackup rigs
for operations in Thailand for a subsidiary of Chevron Corporation. The rigs will be capable of
operating in water depths up to 350 feet and constructing wells 35,000 feet deep.
We expect the midwater and conventional deepwater rig markets to be stable in 2011, although
near term supply overhang from the ultra-deepwater fleet could have some downward pressure
on these markets. As 2011 progresses, we expect that the ultra-deepwater market will tighten.
Some traditional drilling contractors are responding by speculatively pursuing ultra-deepwater
newbuilds. Transocean is committed to disciplined reinvestment, and we believe incremental,
speculative capacity is not good for the industry. We will not build ultra-deepwater rigs without a
contract. We will continue to work with our customers to meet their needs for ultra-deepwater
capacity and have contracted all but one of our ultra-deepwater rigs through 2011.