Transocean to Upgrade Sedco 700-Series Rig Following Commitment from Shell

Transocean has entered into an agreement with an affiliate of Royal Dutch Petroleum (Shell) for the upgrade of one of Transocean's Sedco 700-series semisubmersible rigs. Under the terms of the agreement, Shell has committed to a firm period of three years under a drilling contract to be finalized by the parties based upon stated drilling contract principles. Shell is entitled to extend the term of the contract by any period up to a maximum of two years by exercising an extension option. The rig is expected to complete the necessary shipyard work in approximately May 2007 and is scheduled to commence drilling operations following rig commissioning and customer acceptance. Shell reserves the right to terminate the contract should the shipyard work not be completed by February 15, 2008. The Sedco 700-series semisubmersible will be selected from Transocean's fleet of Other Floaters. Revenues of approximately $385 million could be generated over the firm three-year contract duration, excluding revenues for mobilization, de-mobilization and client reimburseables. Revenues which could be generated during the option period are subject to mutually agreed dayrates.

The upgrade of the Sedco 700-series unit is expected to commence in early 2006 at a shipyard to be determined. The estimated cost of the upgrade, which includes dynamic positioning station keeping and water depth drilling capability up to a maximum of 6,000 feet, is $300 million depending on final unit technical specifications and other factors.

Once completed, the upgraded Sedco 700-series unit will increase the company's High-Specification Floaters fleet to 33 units, with 29 of the units capable of operating in water depths of 4,500 feet and greater.

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