Transocean Offshore Inc News

Transocean Sedco Forex Inc announced that net income for the three months ended March 31, 2000 was $32.5 million on revenues of $300.8 million. The results include a cash settlement of $25.1 million, relating to the previously reported agreement with BP Amoco to cancel the remaining 14 months of firm contract time on the semisubmersible Transocean Amirante. Net income for the corresponding three months in 1999 was $11.3 million on revenues of $189.2 million. Operating and maintenance expense for the first quarter of 1999 included charges for severance costs and provisions for potential legal claims totaling $42 million. The December 1999 merger of Transocean Offshore Inc.

W&O Supply has secured contractual agreements with Transocean Offshore, Inc. and Teekay Shipping, two recognized leaders in the offshore exploration and marine shipping industries. The general service agreements designate W&O Supply as primary provider of marine valves and related products for Teekay Shipping’s fleet and Transocean’s offshore drilling rigs. W&O Supply’s reputation for distributing quality marine products quickly and efficiently were major factors in the company being awarded both contracts. Valves, pipe and fittings are critical components of ships and offshore rigs and their failure can lead to costly interruptions in operations.

Transocean Sedco Forex is a leading international provider of deepwater and harsh environment contract drilling services for oil and gas wells. The company’s active fleet consists of 12 high-specification semisubmersibles, 29 second- and third-generation semisubmersibles, two Discoverer Enterprise-class drillships, four other drillships, 17 jackup rigs and three tenders. The company has under construction one Discoverer Enterprise-class drillship and three Sedco Express- class semisubmersibles. In addition, the fleet includes one mobile offshore production unit, six swamp barges and two land drilling rigs. In January 2001, the company completed the acquisition of R&B Falcon Corp., which operates a fleet of 139 marine-based drilling rigs. On Feb.

Transocean Offshore Inc.'s drillship Discoverer Enterprise has been accepted by BP Amoco and has begun work under a five-year contract with BP Amoco valued at more than $360 million. Dynamically positioned Discoverer Enterprise is the first of a new class of advanced, ultra-deepwater drillships employing the company's proprietary dual-activity drilling system. The vessel has completed equipment appraisal and testing in more than 6,100 ft. of water at BP Amoco's Neptune location in the U.S. Gulf of Mexico. It is currently completing plug-and-abandonment work, and after that, it is expected to begin drilling an appraisal well in the Crazy Horse field.

Moody's Investors Service upgraded the senior unsecured debt ratings of Transocean Offshore, Inc. to A3 from Baa1 to reflect the significant benefits that the company will likely derive from its pending merger with Sedco Forex Holdings Limited (Sedco). The rating action ends a review of Transocean's ratings initiated on July 12 in response to the company's announcement that it had signed a definitive agreement under which Sedco, the offshore contract drilling business of Schlumberger Limited, will be spun off and combined promptly with Transocean through the issuance of approximately $3.2 billion of Transocean stock and the assumption of about $435 million of debt. The combined company will be known as Transocean Sedco Forex.

Transocean Offshore Inc. posted earnings for the second quarter that just beat expectations as low oil prices early in the year caused continued depressed exploration and production spending worldwide. Transocean reported net income for the second quarter of $56.4 million on revenues of $235.6 million. For the corresponding three months in 1998, Transocean reported net income of $69.7 million. Transocean Chairman and CEO J. Michael Talbert said although crude oil prices improved better than 30 percent during the second quarter of 1999, relative to average levels experienced during the initial three months of the year, the dayrates for its rigs fell in the second quarter.

Transocean Offshore Inc. announced one of its operating subsidiaries has been awarded a 30-month contract commitment by Petróleo Brasilerio S.A. (Petrobras), the state oil company of Brazil, for deepwater, dynamically positioned drillship Discoverer Seven Seas. The contract is expected to commence during August 1999, following the completion of the rig's current drilling assignment in the U.S. Gulf of Mexico and an estimated 40-day mobilization period to Brazil. Revenues expected to be generated over the 30-month contract period are $90 million. In addition, the contract commitment provides for a daily earned bonus opportunity of up to five percent of the base revenue expectation.

Schlumberger Limited and Transocean Offshore Inc. have signed a definitive merger agreement under which the offshore contract drilling business of Schlumberger (Sedco Forex Offshore) will be spun off and promptly combined with Transocean Offshore in a merger of equals. The resulting company, Transocean Sedco Forex, will be the world's largest offshore drilling company and is projected to become the fourth largest oilfield service company in terms of market capitalization. The transaction, which should close by December 31, 1999, is anticipated to be modestly dilutive to Transocean Offshore's current earnings expectations for 2000 and accretive thereafter.

Transocean Offshore Inc. announced one of its operating subsidiaries has been awarded a 30-month contract commitment by Petróleo Brasilerio S.A. (Petrobras), the state oil company of Brazil, for deepwater, dynamically positioned drillship Discoverer Seven Seas. The contract is expected to commence during August 1999, following the completion of the rig's current drilling assignment in the U.S. Gulf of Mexico and an estimated 40-day mobilization period to Brazil. Revenues expected to be generated over the 30-month contract period are $90 million. In addition, the contract commitment provides for a daily earned bonus opportunity of up to five percent of the base revenue expectation.

Transocean Offshore Inc. announced that one of its subsidiaries was awarded an 18-month contract from Norsk Hydro, on behalf of the Troll License Group, for the fourth generation semisubmersible, Polar Pioneer. The Polar Pioneer is one of seven fourth generation semisubmersibles in the Transocean fleet. Reportedly, the company expects to generate approximately $63 million in revenues, as a result of the contract. The 18-month period could be extended by up to six optional periods, for as long as six months for each period, providing Transocean is notified approximately six months in advance. According to Transocean, revenues associated with the six optional periods will depend on prevailing market conditions and present day-rates. The contract is expected to commence in late February 2000.

The Offshore Pioneers Gala, sponsored by the Offshore Energy Center (OEC) Society, showcased the 1999 class of offshore petroleum industry pioneers inducted into the OEC Hall of Fame. Robert F. Bauer, former president of Global Marine, for his developments in the technology of offshore drilling from floating drilling rigs. Herman Brown and George R. Brown, founders of Brown & Root in 1919, created a premier design and construction company, producing offshore platforms and pipelines. Ralph Thomas McDermott began J. Ray McDermott & Co. when he took a contract to build 50 wooden derricks in Luling, Texas. Lad Handelman and D. Michael Hughes co-founded Oceaneering International, Inc., in 1969. Together, they oversaw several major innovations in underwater technology.

Despite the announcement of a large offshore drilling merger this summer, the fragmented industry may have missed its chance for further consolidation due to a recent swift cyclical upswing, according to analysts. Shlumberger Ltd.'s announcement in July that it would merge its offshore drilling unit, Sedco Forex, with Transocean Offshore Inc., to form the world's largest offshore driller, was expected to set off a wave of consolidation in the industry, matching some of the activity among oil majors. But analysts now say a rebound in crude oil prices has closed the window of opportunity by prompting companies to hold out for wider operating margins.

To say the Gulf of Mexico maritime business had a down year would be a major understatement. But rags-to-riches-to-rags experience of the past has resulted in a consolidated, resourceful group of companies poised to pounce on the next market upturn … which should be very soon. The business trends of consolidation and globalization that have largely defined the late 1990s have touched every level of business in the U.S., including the Gulf of Mexico maritime industry. Companies that had largely depended on "business as usual" are generally out of business today. The result: a resilient industrial base that is poised to prosper in good times and bad. "Business is bad right now, as the oilfield is our primary source of business," said Ralston P.

Oilfield service companies were not nearly as lucky as their oil producing counterparts. While net income in the oil producing industry was up over the 1998 third-quarter, oilfield service companies were still feeling the pain of the low oil prices from earlier in the year. While the stock market - the global business measuring stick - has generally been positive on the offshore oilfield sector throughout much of the year, there has been a relapse of sorts in October, as uncertainty surrounding OPEC output quotas has largely dampened the year's progress. In fact, a major tracker of offshore industry stocks, Warburg Dillon Read, in mid-October cut its ratings of four oilfield equipment and services companies.

Transocean Offshore Inc. has completed its merger with Sedco Forex, which was spun-off from Schlumberger Limited. The resulting company, Transocean Sedco Forex Inc., is now the world's largest offshore drilling contractor and third-largest oilfield services company in terms of equity market capitalization, based on closing market prices on Dec. 30. In the merger, approximately 109.6 million ordinary shares of Transocean Offshore are being issued to stockholders of Schlumberger. The number of new shares issued is equivalent to 0.1936 shares of Transocean Sedco Forex for each outstanding Schlumberger share. Following the merger, Schlumberger stockholders hold about 52% of the approximately 210.1 million outstanding shares of Transocean Sedco Forex.

Standard & Poor's raised its ratings for Transocean Offshore Inc., renamed Transocean Sedco Forex Inc. (See chart page 2, related story page 8) At the same time, Standard & Poor's assigned to the company an 'A-1' short-term corporate credit rating, an 'A-1' rating for its $500 million commercial paper program, and a single-'A' rating for its $400 million term loan maturing December 2004. The company's ratings are removed from CreditWatch with positive implications, where they were placed on July 12, 1999, upon the announcement that un-rated Schlumberger Ltd. would spin off its marine drilling unit and combine it with Transocean. That merger was completed on Dec. 31, 1999. The outlook is stable.

Moody's Investors Service upgraded the senior unsecured debt ratings of Transocean Offshore, Inc. to A3 from Baa1 to reflect the significant benefits that the company will likely derive from its pending merger with Sedco Forex Holdings Limited (Sedco). The rating action ends a review of Transocean's ratings initiated on July 12, 1999 in response to the company's announcement that it had signed a definitive agreement under which Sedco, the offshore contract drilling business of Schlumberger Limited, will be spun off and combined promptly with Transocean through the issuance of approximately $3.2 billion of Transocean stock and the assumption of about $435 million of debt. The combined company will be known as Transocean Sedco Forex.

Standard & Poor’s raised its ratings for Transocean Offshore Inc., renamed Transocean Sedco Forex Inc. (See chart page 2, related story page 8) At the same time, Standard & Poor’s assigned to the company an ‘A-1’ short-term corporate credit rating, an ‘A-1’ rating for its $500 million commercial paper program, and a single-’A’ rating for its $400 million term loan maturing December 2004. The company’s ratings are removed from CreditWatch with positive implications, where they were placed on July 12, 1999, upon the announcement that un-rated Schlumberger Ltd. would spin off its marine drilling unit and combine it with Transocean. That merger was completed on Dec. 31, 1999. The outlook is stable.

Once again, quarter and year-end earnings reported in the offshore market reflected a familiar trend: oil majors saw gains - sometimes significant; while oilfield service companies continued to struggle, compared to the year-earlier marks. Unocal Corporation reported fourth quarter 1999 preliminary unaudited net earnings of $97 million and adjusted net earnings (excluding special items) of $77 million. The fourth quarter results compare with a reported loss of $29 million for the same period a year ago. Adjusted net earnings for the fourth quarter 1998 were $28 million. The fourth quarter earnings reflect higher oil and gas prices, offset partially by lower net oil and gas sales volumes and a higher international tax rate.