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GlobalSantaFe Reports 2004 Results

Maritime Activity Reports, Inc.

January 26, 2005

Worldwide oil and gas drilling contractor GlobalSantaFe Corporation (NYSE: GSF) today reported a net loss for the quarter ended December 31, 2004, of $7.6 million, or $0.03 per diluted share, on revenues of $498.3 million. The 2004 fourth quarter included a primarily non-cash tax charge of $42.5 million, or $0.18 per diluted share, related to a realignment of the company's subsidiary structure. Excluding this charge, the company had income of $34.9 million, or $0.15 per diluted share for the fourth quarter of 2004. For the year ended December 31, 2004, the company reported net income of $143.7 million, or $0.61 per diluted share, on revenues of $1.7 billion.

In the fourth quarter of 2004, the company completed a transaction to create separate international and U.S. holding companies and transfer ownership of certain rigs between its U.S. and international subsidiaries. This realignment will provide improved flexibility in managing subsidiary operations and allow for movement of cash throughout the organization in a more tax efficient manner. The transaction was taxable in the U.S., but was offset by U.S. net operating loss carryforwards, resulting in a charge of $42.5 million in the fourth quarter, of which $37.4 million was non-cash.

Jon Marshall, GlobalSantaFe President and CEO, said, "Taken as a whole, 2004 was a year of substantial progress for us. Our people worked hard to significantly reduce operating costs and to improve our customer focus, all while achieving the best safety record in the history of our company. After a slow start in the first half of the year, market conditions clearly reached an inflection point around mid-year, and average utilization and dayrates for our fleet have improved since then. We are very optimistic about continued strength in 2005 in virtually every major market in which we operate, and feel we are very well positioned both to serve our customers and to benefit from improving market conditions. The delivery of our two new ultra-deepwater semisubmersibles, both of which are under long-term contracts, will substantially enhance our earnings. While our drilling management services segment had a difficult year in 2004, it was partially offset by improved profits from our oil and gas segment, and we expect both segments to have higher operating profits in 2005."

Fourth-Quarter 2004 Analysis

Excluding the impact of the subsidiary realignment charge, the company had income of $34.9 million, or $0.15 per diluted share, on revenues of $498.3 million for the fourth quarter of 2004 compared with net income of $24.5 million, or $0.10 per diluted share, on revenues of $480.8 million in the same prior-year period.

Fourth-quarter 2004 income from continuing operations benefited from a 165% increase in contract drilling operating income to $57.0 million on revenues of $331.2 million from $21.5 million on revenues of $305.5 million in the fourth quarter of 2003. The higher operating income from contract drilling for the fourth quarter of 2004 was attributable largely to higher revenues and lower operating expenses. Higher revenues resulted from higher dayrates and utilization for the company's North Sea, South America and deepwater drilling fleets, improved dayrates for its jackup fleets in the U.S. Gulf of Mexico, Middle East and Far East, and increased utilization for its jackup rig in Canada, compared with the same period in 2003. The gains were partially offset by comparatively lower dayrates and utilization for the fleet in West Africa and lower utilization for its drilling rigs in the Middle East and Far East compared with the same period in 2003.

The company's drilling management services segments reported operating income of $1.8 million on revenues of $161.2 million in the fourth quarter of 2004, compared with operating income of $20.3 million on revenues of $173.0 million in the same quarter of 2003. The lower operating income reflects decreased turnkey margins and fewer projects during the fourth quarter of 2004. The decreased turnkey margins resulted from an increased number of unprofitable turnkey projects compared to the same period in 2003.

The company's oil and gas segment reported operating income of $9.7 million on revenues of $13.8 million in the fourth quarter of 2004, compared with operating income of $1.5 million on revenues of $4.0 million in the same quarter of 2003. The higher operating income reflects higher oil production following the initiation of production from the Broom Field in the North Sea, and higher oil and gas prices.

Full-Year 2004 Analysis

The company's net income of $143.7 million, or $0.61 per diluted share, on revenues of $1.7 billion in 2004 compares with net income of $129.4 million, or $0.55 per diluted share, in 2003 on revenues of $1.8 billion.

Net income for 2004 included income from discontinued operations of $112.3 million, or $0.48 per diluted share, due primarily to a $113.1 million after-tax gain on the sale of the company's land rig assets in the second quarter, and income from continuing operations of $31.4 million, or $0.13 per diluted share. Income from continuing operations included net charges of $25.8 million related to: (i) the second-quarter charge on early retirement of debt ($21.0 million); (ii) the insurance gain related to the third-quarter loss of the jackup rig GSF Adriatic IV ($24.0 million); (iii) the third- quarter gain on the sale of a portion of the company's interest in the Broom Field ($13.7 million); and (iv) the fourth-quarter subsidiary realignment charge ($42.5 million) discussed above.

Net income for 2003 included income of $15.2 million, or $0.06 per diluted share, from the company's discontinued land rig operations. Income from continuing operations in 2003 was $114.2 million, or $0.49 per diluted share, and included $22.3 million, or $0.09 per diluted share, from the settlement of claims filed in 2003 with the United Nations Compensation Commission.

Excluding the net charge of $25.8 million in 2004 and the $22.3 million U.N. settlement in 2003, the company had income from continuing operations of $57.2 million, or $0.24 per diluted share, for 2004, compared with $91.9 million, or $0.39 per diluted share, for 2003. Income from continuing operations in 2004 was impacted by a decline in operating income in the contract drilling and drilling management services segments compared with 2003.

The company's contract drilling segment reported operating income of $119.1 million on revenues of $1.2 billion in 2004 compared with operating income of $138.0 million, on revenues of $1.3 billion in 2003. The 13.7% decline in operating income was primarily due to lower revenues, partially offset by lower operating expenses. Lower revenues resulted from lower dayrates and utilization for the company's deepwater and West Africa fleets, decreased dayrates for its rigs in Canada, and decreased utilization for its fleet in the Middle East, partially offset by higher dayrates and utilization for its jackup fleets in the U.S. Gulf of Mexico and Far East, and higher dayrates and utilization for its fleets in South America and the North Sea.

The company's drilling management services segment reported 2004 operating income of $6.7 million on revenues of $531.5 million, compared with operating income of $31.7 million on revenues of $528.4 million in 2003. The decline in operating income resulted from an increase in the number of unprofitable turnkey projects in 2004 as compared to 2003. During 2004, the drilling management services segment reported a total of 119 turnkey projects, compared with 116 in 2003.

The company's oil and gas segment reported 2004 operating income of $19.4 million on revenues of $31.6 million, compared with operating income of $12.0 million on revenues of $20.9 million in 2003. The increase in operating income resulted from higher oil production and higher oil and gas prices in 2004. During 2004, the oil and gas segment reported production of 796 thousand barrels of oil equivalent (MBOE), compared to 643 MBOE in 2003.

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