Transocean's affiliate, Transocean Offshore International Ventures Limited, has entered into an agreement with Pacific Drilling Limited, providing Transocean with the exclusive marketing right for two currently unnamed deepwater drillships under construction, as well as an option to purchase a 50% interest in a joint venture company through which Transocean and Pacific Drilling would own the drillships. The two Samsung 10000 designed drillships are currently under construction in Korea with expected delivery dates in 2009. Transocean anticipates providing construction advisory services during the period of the option, construction management services upon exercise of the option and operating management services once the drillships begin operations.
The exclusive marketing right and purchase option granted to Transocean by Pacific Drilling will terminate on November 30, 2007, but can be extended by four months. Transocean may elect to exercise the option in its sole discretion and anticipates exercising the option once it has secured a drilling contract or contracts of sufficient value. The purchase price for the 50% joint venture interest is 50% of the documented costs at the time of exercise. The closing of the transaction is conditioned on the satisfaction of customary closing conditions and the negotiation of definitive joint venture documents. The agreement with Pacific Drilling contemplates that, beginning three years after the closing, Pacific Drilling will have the right to exchange its interest in the joint venture for Transocean ordinary shares or cash.
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