Transocean to Build New Drillship for Chevron

Transocean has been awarded a contract for the construction of an enhanced Enterprise-class drillship plus multi-year contract extensions for two of the company's fifth-generation deepwater floaters, the drillship Discoverer Deep Seas and semisubmersible rig Cajun Express by Chevron. Combined revenues possible from the three agreements total approximately $1.7 billion over 10.5 years.

The enhanced Enterprise-class drillship, to be named the Discoverer Clear Leader, is being designed to include the most advanced drilling capabilities in the offshore drilling industry, building on Transocean's successful Enterprise-class drillship design and the company's industry-leading position in the ownership and operation of High-Specification mobile offshore drilling units for deepwater and harsh environment drilling applications. Chevron has awarded the company a five-year contract, which is expected to commence during the second quarter of 2009, after an estimated 30-month shipyard construction phase, followed by 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. During the first three years of the contract, revenues of approximately $493 million are possible. The last two years of the contract are linked to the standard West Texas Intermediate oil price with a floor of $40 per barrel and a ceiling of $70 per barrel that could result in potential revenues between $292 million and $365 million over that period.

Construction of the dynamically positioned, double-hull drillship Discoverer Clear Leader is scheduled to take place at the Daewoo Shipbuilding and Marine Engineering Co., Ltd. yard in Okpo, South Korea, with an estimated total capital expenditure of approximately $650 million. The Discoverer Clear Leader 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 and will be capable of drilling in water depths of up to 12,000 feet. The Discoverer Clear Leader will be an enhanced version of Transocean's three predecessor Enterprise-class drillships, which have set deepwater drilling records in recent years, including the world water-depth drilling record of 10,011 feet held by the Discoverer Deep Seas.

In addition to the five-year contract on the Discoverer Clear Leader, Chevron has exercised a final one-year priced option on the Fifth-Generation Deepwater drillship Discoverer Deep Seas, which is expected to commence in January 2008 following an estimated 20-day out-of-service period for maintenance. Simultaneously, Chevron has awarded a two-year contract extension for the rig with an expected commencement date of January 2009. Revenues of approximately $116 million are possible over the one-year priced option period, while the two-year contract extension could generate revenues of approximately $354 million.

Also, the fifth-generation deepwater semisubmersible rig Cajun Express has been awarded a 2.5-year contract extension by Chevron with an expected commencement date of July 2007, in direct continuation of the rig's current contract assignment with Chevron in the U.S. Gulf of Mexico. Revenues of approximately $420 million are possible over the 2.5-year contract period.

Estimated contract revenues exclude revenues for mobilization, demobilization, contract preparation and client reimbursables.

The Discoverer Deep Seas and Cajun Express are two of Transocean's 32 high-specification deepwater floaters, 13 of which are fifth-generation deepwater floaters capable of operating in water depths of 7,500 feet and greater. Both units entered service in 2001 following construction programs in El Ferrol, Spain, and Corpus Christi, Texas and Singapore.

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