Marine Log

September 2, 2006

Transocean to build third drillship

Transocean Inc. (NYSE:RIG) says that Chevron Corporation (NYSE:CVX ) has awarded it a drilling contract for the construction of an enhanced Enterprise-class drillship, the third such contract award for Transocean in 2006 and the second contract award from Chevron, following a five-year contract for the construction of the Discoverer Clear Leader announced in March 2006.

Chevron has awarded Transocean a five-year contract, but has the right to convert the contract to a duration of three years if declared by September 2007.

The contract is expected to commence during the first quarter of 2010, following shipyard construction, sea trials, mobilization to the U.S. Gulf of Mexico and customer acceptance.

The contract commencement date is contingent on vendor performance and other factors.

Revenues which could be generated over a five-year contract period are approximately $862 million, or approximately $609 million should the contract be converted to a duration of three years.

Estimated contract revenues exclude revenues for mobilization, demobilization, customer reimbursables and adjustments for the escalation of operating costs at contract commencement and semi-annually thereafter.

Construction of the dynamically positioned, double-hull drillship is scheduled to take place at the Daewoo Shipbuilding and Marine Engineering Co., Ltd. yard in Okpo, South Korea, where the two previously announced enhanced Enterprise-class drillships will be constructed.

The estimated total capital expenditure for the unit is approximately $670 million, excluding capitalized interest. The rig will feature Transocean's patented dual-activity drilling technology, allowing for parallel drilling operations designed to save time and money in deepwater well construction, compared with conventional rigs. The dual-activity technology, along with a new and enhanced top drive system, an expanded high-pressure mud-pump system, expanded completions capabilities and other unique features of the drillship target the drilling of wells up to 40,000 feet of total depth.

The rig will have a variable deckload of more than 20,000 metric tons while having the capability of drilling in water depths of up to 12,000 feet.