Transocean CC excerpts

Shallow water
"We currently have 18 jackups idle or stacked, plus one that is just about to come off contract and will stack making it 19. That is up from nine at our last call and three at our year-end call. As I think I mentioned last time, we expect to see more stacked before the year is out resulting in as many as 25 or 26 jackups stacked by year-end and maybe a bit more."

Midwater
"In the midwater market and conventional deepwater markets, we have seen a slowdown in bid activity. We had four midwater floaters stacked at the end of the quarter and a fifth has just come down as moving to a stacking location. We have another three midwater rigs coming available shortly and could see some of those stack also. I will let Terry Bonno give you some thoughts on the prospects for these rigs and on the two deepwater rigs we have coming available in 2009; Sedco 709 and the Rather."

Deepwater
"The good news is the continuing strength of the ultra-deepwater market. We remain very optimistic about both the near-term and long-term outlook for this market. You saw our announcement of the contract with Petrobras for the Cajun Express, an 8500 foot capable rig, at over $500,000 per day starting early next year for three years. We have eight other ultra-deepwater rigs coming available between now and the first quarter of 2012 and we are already in discussions with customers on opportunities for most of these rigs."

"We continue to generate significant cash flow supported by our $33.7 billion of revenue backlog as shown on chart four."
"This backlog represents roughly $17 billion of free cash flow backlog versus almost $12.6 billion of face value of our debt."

We continue to be optimistic on the deepwater opportunity in the near and long-term with Petrobras leading the charge as they continue to contract deepwater units to meet their immediate demand. The Cajun Express contract for three years convertible to five years strengthens our position and relationship with Petrobras in Brazil and it is further evidence of the long-term strength of the deepwater market. We expect to see more contracts for existing rigs executed in Brazil over the next several months.

We are already in discussions with multiple clients about the units that come available in 2010 and '11. West Africa tendering has been very active with a total of 36 rig years of actual tenders and pre-qualification with start dates commencing in 2010 and '11. Additionally, ONGC has come to tender with another deepwater rig need in 12,000 foot water depths with a recently closed 10,000 foot tender yet to be awarded. With the relative stability of the oil price since our last conference call we have seen some optimism on the part of our customers and the conversations we are having with them regarding our available ultra-deepwater unit in '10 and '11 are gaining momentum.

Unfortunately, we have experienced a gap in demand for capable units in 5,000 foot water depth. As the majority of the current deepwater tenders have requirements greater than 5,000 feet.

"So, I suspect it is going to be difficult for us to be successful in acquiring some of those current newbuilds that are deepwater capable because it seems like everybody is just as optimistic about the outlook for that market as we are. Hence, there doesn't seem to be a lot of appetite to discount the prices very much."

"The jackup prices, as we said, we are going to get into a market where there will be significant discounts on the jackups."

"Nobody has really built any midwater rigs other than a couple that I think that are targeted for Norway, and I don't expect anybody to build any midwater rigs in the future.

So, if the oil prices stabilize at $70, $75, $80 or more, my guess is, most of what people were drilling for in the midwater a year ago when demand was high, is likely to come back."

"We've been working on our Arctic design for a couple of years now. We've progressed it quite far. We are in fairly substantive discussions with the shipyard and with the equipment suppliers in order to finalize the design, and hopefully get to a point where we have economics that we can go back to our customer with. At the same time we are having very substantive conversations with customers about interest in that design and interest in pursuing Arctic drilling opportunities."

Conference Call(audio) and Transcript

The jackup market looks mighty depressed into the foreseeable future.