Aug 01, 2012 (Marketwire via COMTEX) 

ZUG, SWITZERLAND--(August 1, 2012) - Transocean Ltd. (NYSE: RIG) (SIX: RIGN)

• Second quarter 2012 revenues were $2.575 billion compared with $2.337 billion in the first quarter 2012;
• Excluding an additional $750 million for estimated loss contingencies associated with the Macondo well incident, second quarter 2012 operating and maintenance expenses were $1.607 billion compared with $1.463 billion in the first quarter 2012;
• Second quarter 2012 net loss attributable to controlling interest was $304 million, which included $560 million of net unfavorable items. This compares with the first quarter 2012 net income attributable to controlling interest of $10 million, which included $181 million of net unfavorable items;
• Revenue efficiency⁽¹⁾ was 92.5 percent in the second quarter, compared with 90.6 percent in the first quarter 2012;
• Fleet utilization⁽²⁾ was 66 percent in the second quarter, compared with 61 percent in the first quarter 2012;
• Cash flows from operating activities were $459 million in the second quarter, which compares with $540 million in the first quarter 2012;
• Second quarter 2012 Annual Effective Tax Rate⁽³⁾ was 31.1 percent compared with 27.6 percent in the first quarter 2012;
• New contracts totaling $4.7 billion were secured in the Fleet Status Report periods April 18, 2012 through July 18, 2012. Backlog at July 18^th was $22.9 billion, a net increase of $2.3 billion. Since July 18, 2012, additional contracts totaling $144 million were secured; and
• Prior period consolidated financial statements have been adjusted to correct for an error primarily related to the recognition of assets for insurance recoveries for legal and other costs associated with the Macondo well incident. These corrections, described in Appendix A to this release, are immaterial to the prior period consolidated financial statements.

Transocean Ltd. (NYSE: RIG) (SIX: RIGN) today reported a net loss attributable to controlling interest of $304 million, or $0.86 per diluted share, for the three months ended June 30, 2012. Second quarter 2012 results included net unfavorable items of $560 million, or $1.58 per diluted share. The results compare with net income attributable to controlling interest of $124 million, or $0.39 per diluted share, for the three months ended June 30, 2011. Second quarter 2011 results included net unfavorable items of $36 million, or $0.11 per diluted share, primarily associated with impairment losses on three standard jackups and charges related to unfavorable discrete tax items.

Net unfavorable items, after tax, impacting the second quarter of 2012 included the following:

• $750 million, or $2.12 per diluted share, for estimated loss contingencies associated with the Macondo well incident that the company believes is probable and for which a reasonable estimate can be made at this time. This estimate will be adjusted to reflect new information and future developments as they become known;
• $145 million, or $0.41 per diluted share, associated with discrete tax benefits;
• $64 million, or $0.18 per diluted share, net gain on the sale of Transocean Nordic, Transocean Shelf Explorer, Roger W. Mowell, and GSF Adriatic II;
• $14 million, or $0.04 per diluted share, loss associated with Quantum's exchange of its 50 percent interest in Transocean Pacific Drilling Inc. for Transocean Ltd.'s shares;
• $12 million, or $0.03 per diluted share, in impairments of long-lived assets classified as held for sale; and
• $7 million, or $0.02 per diluted share, primarily associated with a gain on disposal of the discontinued operations of Challenger Minerals Inc.

Operations Quarterly Review

Revenues for the three months ended June 30, 2012 were $2.575 billion, compared with revenues of $2.337 billion during the three months ended March 31, 2012. Contract drilling revenues increased $170 million mainly due to fewer shipyard days and higher revenue efficiency⁽¹⁾ primarily on High Specification Floaters. Total fleet revenue efficiency⁽¹⁾ was 92.5 percent for the second quarter, compared with 90.6 percent in the first quarter 2012. Other revenues increased $68 million to $185 million for the second quarter 2012, compared with $117 million in the prior quarter, primarily due to increased activity levels in the company's drilling management services reporting unit outside the U.S. GOM.

Excluding $750 million for estimated loss contingencies associated with the Macondo well incident, operating and maintenance expenses totaled $1.607 billion for the second quarter 2012. This compares with $1.463 billion in the first quarter 2012. The increase in operating and maintenance expenses was partly due to approximately $82 million in higher costs incurred on rigs undergoing shipyard, maintenance, survey and repair projects. In addition, drilling management services activity levels outside the U.S. GOM increased operating and maintenance costs by $62 million. 

General and administrative expenses were $79 million for the second quarter 2012 compared with $69 million in the previous quarter. The increase was primarily due to transaction costs associated with the Quantum exchange.

Correction of Prior Period Consolidated Financial Statements

Please note that previously reported consolidated financial statements have been adjusted to reflect prior period corrections primarily related to the recognition of assets for insurance recoveries for legal and other costs associated with the Macondo well incident. These corrections are immaterial to the prior year consolidated financial statements. 

For the three months ended March 31, 2012, the corrections reduced income from continuing operations by $55 million and net income attributable to controlling interest by $32 million. For the three months ended June 30, 2011, the corrections reduced income from continuing operations by $31 million, and net income attributable to controlling interest by $31 million. Additional details of these corrections, as well as required reconciliations, are provided in Appendix A.

Income Taxes

Transocean's second quarter Effective Tax Rate⁽⁴⁾ was 8.6 percent compared with 47.2 percent in the first quarter 2012. The decrease in the Effective Tax Rate⁽⁴⁾ was due to favorable changes in estimates mainly for settlement of prior year's tax liabilities. Transocean's Annual Effective Tax Rate⁽³⁾ for the second quarter 2012, which excludes various favorable discrete items totaling $145 million, was 31.1 percent. This compares with 27.6 percent for the prior quarter. The increase was primarily due to changes in the blend of income that is taxed based on gross revenues versus pre-tax income and rig movements between taxing jurisdictions, among other things. Second quarter 2012 income tax expense included an adjustment of $5 million, or $0.01 per diluted share, required to reflect an increase in the Annual Effective Tax Rate⁽³⁾ to 29.6 percent for the six months ended June 30, 2012, from 27.6 percent for the first quarter of 2012.

Other Items

For the second quarter, interest expense, net of amounts capitalized, was $183 million, compared with $180 million in the first quarter 2012. Capitalized interest for the second quarter 2012 was $12 million compared with $13 million in the prior quarter. Interest income decreased to $13 million in the second quarter, compared with $15 million in the first quarter 2012.

Cash flows from operating activities were $459 million for the second quarter compared with $540 million for the first quarter 2012. Capital expenditures decreased to $236 million for the second quarter compared with $260 million in the first quarter of 2012. The lower capital expenditures were primarily due to timing of shipyard milestone payments associated with the company's newbuild program.

Forward-Looking Statements

Statements included in this news release, including those regarding estimates of Transocean's goodwill or long-lived asset impairments and the estimated loss contingencies associated with the Macondo well incident, are forward-looking statements that involve certain assumptions. These statements are based on currently available competitive, financial, and economic data along with our current operating plans and involve risks and uncertainties including, but not limited to, market conditions, Transocean's results of operations, the effect and results of litigation, assessments and contingencies, and other factors detailed in "Risk Factors" and elsewhere in Transocean's filings with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize (or the other consequences of such a development worsen), or should underlying assumptions prove incorrect, actual outcomes may vary materially from those forecasted or expected. Transocean disclaims any intention or obligation to update publicly or revise such statements, whether as a result of new information, future events or otherwise.

Conference Call Information

Transocean will conduct a teleconference call at 10:00 a.m. EDT, 4:00 p.m. CEST, on Thursday, August 2, 2012. To participate, dial +1 719-325-4929 and refer to confirmation code 4582389 approximately 10 minutes prior to the scheduled start time of the call.

In addition, the conference call will be simultaneously broadcast over the Internet in a listen-only mode and can be accessed by logging onto Transocean's website at http://www.deepwater.com/ and selecting "Investor Relations." A file containing four charts that may be discussed during the conference call, titled "2Q12 Charts," has been posted to Transocean's website and can also be found by selecting "Investor Relations/Quarterly Toolkit." The conference call may also be accessed via the Internet at http://www.companyboardroom.com/ by typing in Transocean's New York Stock Exchange trading symbol, "RIG."

A telephonic replay of the conference call should be available after 1:00 p.m. EDT, 7:00 p.m. CEST, on August 2, 2012, and can be accessed by dialing +1 719-457-0820 or +1 888-203-1112 and referring to the confirmation code 4582389. Also, a replay will be available through the Internet and can be accessed by visiting either of the above-referenced internet addresses. Both replay options will be available for approximately 30 days.

About Transocean

Transocean is a leading international provider of offshore contract drilling services for oil and gas wells. We own or have partial ownership interests in and operate a fleet of 128 mobile offshore drilling units consisting of 49 High-Specification Floaters (Ultra-Deepwater, Deepwater and Harsh-Environment semisubmersibles and drillships), 25 Midwater Floaters, 10 High-Specification Jackups, 43 Standard Jackups and one swamp barge. In addition, we have two Ultra-Deepwater Drillships and three High-Specification Jackups under construction. The company specializes in technically demanding sectors of the global offshore drilling business with a particular focus on deepwater and harsh environment drilling services, and believes that it operates one of the most versatile offshore drilling fleets in the world. 

(1) Revenue efficiency is defined as actual revenue divided by the highest amount of total revenue which could have been earned during the relevant period(s). See the accompanying schedule entitled "Revenue Efficiency."

(2) Utilization is defined as the total actual number of revenue earning days in the period as a percentage of the total number of calendar days in the period for all drilling rigs in the company's fleet. See the accompanying schedule entitled "Utilization."

(3) Annual Effective Tax Rate is defined as income tax expense from continuing operations excluding various discrete items (such as changes in estimates and tax on items excluded from income before income tax expense) divided by income from continuing operations before income tax expense excluding gains on sales and similar items pursuant to the accounting standards for income taxes. See the accompanying schedule entitled "Supplemental Effective Tax Rate Analysis."

(4) Effective Tax Rate is defined as income tax expense from continuing operations divided by income from continuing operations before income taxes. See the accompanying schedule entitled "Supplemental Effective Tax Rate Analysis."

For more information about Transocean, please visit the website at http://www.deepwater.com/.

TRANSOCEAN LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share data)
(Unaudited)
			Three months ended June 30,								Six months ended June 30,
			2012				2011				2012				2011
Operating revenues
	Contract drilling revenues		$	2,390			$	2,096			$	4,610			$	4,056
	Other revenues			185				238				302				422
				2,575				2,334				4,912				4,478
Costs and expenses
	Operating and maintenance			2,357				1,528				3,820				2,905
	Depreciation and amortization			345				359				700				713
	General and administrative			79				66				148				133
				2,781				1,953				4,668				3,751
Loss on impairment				(12	)			(25	)			(239	)			(25	)
Gain (loss) on disposal of assets, net				55				(1	)			51				7
Operating income (loss)				(163	)			355				56				709
Other income (expense), net
	Interest income			13				5				28				20
	Interest expense, net of amounts capitalized			(183	)			(147	)			(363	)			(292	)
	Other, net			(6	)			(5	)			(24	)			(2	)
				(176	)			(147	)			(359	)			(274	)
Income (loss) from continuing operations before income tax expense				(339	)			208				(303	)			435
Income tax (benefit) expense				(29	)			77				(12	)			143
Income (loss) from continuing operations				(310	)			131				(291	)			292
Income (loss) from discontinued operations, net of tax				7				2				6				174
Net income (loss)				(303	)			133				(285	)			466
Net income (loss) attributable to noncontrolling interest				1				9				9				23
Net income (loss) attributable to controlling interest			$	(304	)		$	124			$	(294	)		$	443
Earnings (loss) per share-basic
	Earnings (loss) from continuing operations		$	(0.88	)		$	0.38			$	(0.85	)		$	0.84
	Earnings (loss) from discontinued operations			0.02				0.01				0.02				0.54
	Earnings (loss) per share		$	(0.86	)		$	0.39			$	(0.83	)		$	1.38
Earnings (loss) per share-diluted
	Earnings (loss) from continuing operations		$	(0.88	)		$	0.38			$	(0.85	)		$	0.84
	Earnings (loss) from discontinued operations			0.02				0.01				0.02				0.54
	Earnings (loss) per share		$	(0.86	)		$	0.39			$	(0.83	)		$	1.38
Weighted-average shares outstanding
	Basic			353				320				352				319
	Diluted			353				320				352				320

TRANSOCEAN LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except share data)
(Unaudited)
				June 30, 2012				December 31, 2011
Assets
Cash and cash equivalents				$	3,964			$	4,017
Accounts receivable, net of allowance for doubtful accounts of $28 at June 30, 2012 and December 31, 2011					2,124				2,176
Materials and supplies, net of allowance for obsolescence of $81 and $73 at June 30, 2012 and December 31, 2011, respectively					676				627
Deferred income taxes, net					142				142
Assets held for sale					9				26
Other current assets					452				537
		Total current assets			7,367				7,525
Property and equipment					30,559				29,037
Property and equipment of consolidated variable interest entities					813				2,252
Less accumulated depreciation					9,165				8,756
	Property and equipment, net				22,207				22,533
Goodwill					3,099				3,217
Other assets					1,769				1,757
		Total assets		$	34,442			$	35,032
Liabilities and equity
Accounts payable				$	917			$	880
Accrued income taxes					121				89
Debt due within one year					2,772				1,942
Debt of consolidated variable interest entities due within one year					28				245
Other current liabilities					2,888				2,372
		Total current liabilities			6,726				5,528
Long-term debt					9,862				10,756
Long-term debt of consolidated variable interest entities					177				593
Deferred income taxes, net					487				519
Other long-term liabilities					1,581				1,893
		Total long-term liabilities			12,107				13,761
Commitments and contingencies
Redeemable noncontrolling interest					--				116
Shares, CHF 15.00 par value, 402,282,355 authorized, 167,617,649 conditionally authorized, and 373,830,649 and 365,135,298 issued at June 30, 2012 and December 31, 2011, respectively; 359,284,907 and 349,805,793 outstanding at June 30, 2012 and December 31, 2011, respectively					5,127				4,982
Additional paid-in capital					7,472				7,211
Treasury shares, at cost, 2,863,267 held at June 30, 2012 and December 31, 2011					(240	)			(240	)
Retained earnings					3,780				4,180
Accumulated other comprehensive loss					(516	)			(496	)
	Total controlling interest shareholders' equity				15,623				15,637
	Noncontrolling interest				(14	)			(10	)
		Total equity			15,609				15,627
		Total liabilities and equity		$	34,442			$	35,032

TRANSOCEAN LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW
(In millions)
(Unaudited)
				Three months ended June 30,								Six months ended June 30,
				2012				2011				2012				2011
Cash flows from operating activities
	Net income (loss)			$	(303	)		$	133			$	(285	)		$	466
	Adjustments to reconcile to net cash provided by operating activities
		Amortization of drilling contract intangibles			(12	)			(10	)			(23	)			(20	)
		Depreciation and amortization			345				359				700				713
		Share-based compensation expense			25				27				48				54
		Loss on impairment			12				25				239				25
		(Gain) loss on disposal of assets, net			(55	)			1				(51	)			(7	)
		(Gain) loss on disposal of discontinued operations, net			(10	)			--				(10	)			(169	)
		Amortization of debt issue costs, discounts and premiums, net			17				36				35				62
		Deferred income taxes			(26	)			12				(43	)			36
		Other, net			20				14				41				11
		Changes in deferred revenue, net			7				(3	)			(5	)			43
		Changes in deferred expenses, net			28				(48	)			(21	)			(84	)
		Changes in operating assets and liabilities			411				(206	)			374				(400	)
Net cash provided by operating activities					459				340				999				730
Cash flows from investing activities
	Capital expenditures				(236	)			(293	)			(496	)			(533	)
	Proceeds from disposal of assets, net				144				5				185				18
	Proceeds from disposal of discontinued operations, net				17				--				17				259
	Other, net				13				(27	)			25				(33	)
Net cash used in investing activities					(62	)			(315	)			(269	)			(289	)
Cash flows from financing activities
	Changes in short-term borrowings, net				(260	)			5				(260	)			56
	Proceeds from debt				--				--				--				5
	Repayments of debt				(173	)			(202	)			(320	)			(249	)
	Proceeds from restricted cash investments				84				--				192				--
	Deposits to restricted cash investments				(74	)			--				(116	)			--
	Distribution of qualifying additional paid-in capital				--				(254	)			(278	)			(254	)
	Other, net				8				3				(1	)			(4	)
Net cash used in financing activities					(415	)			(448	)			(783	)			(446	)
Net decrease in cash and cash equivalents					(18	)			(423	)			(53	)			(5	)
Cash and cash equivalents at beginning of period					3,982				3,772				4,017				3,354
Cash and cash equivalents at end of period				$	3,964			$	3,349			$	3,964			$	3,349

TRANSOCEAN LTD. AND SUBSIDIARIES
FLEET OPERATING STATISTICS
				Operating Revenues (in millions) (1)
				Three months ended									Six months ended June 30,
				June 30, 2012			March 31, 2012			June 30, 2011			2012			2011
Contract Drilling Revenues
	High-Specification Floaters:
		Ultra Deepwater Floaters		$	1,141		$	1,092		$	1,005		$	2,233		$	1,849
		Deepwater Floaters			328			242			238			570			528
		Harsh Environment Floaters			264			255			181			519			331
	Total High-Specification Floaters				1,733			1,589			1,424			3,322			2,708
	Midwater Floaters				337			347			376			684			776
	Jackups:
		High-Specification Jackups			102			78			48			180			79
		Standard Jackups			200			189			230			389			459
	Total Jackups				302			267			278			569			538
	Other Rigs				7			6			8			13			14
Total Contract Drilling Revenues					2,379			2,209			2,086			4,588			4,036
Contract Intangible Revenue					11			11			10			22			20
Other Revenues
	Client Reimbursable Revenues				41			48			40			89			77
	Integrated Services and Other				6			-			15			6			30
	Drilling Management Services				138			69			183			207			315
Total Other Revenues					185			117			238			302			422
Total Company				$	2,575		$	2,337		$	2,334		$	4,912		$	4,478
				Average Daily Revenue (1)
				Three months ended									Six months ended June 30,
				June 30, 2012			March 31, 2012			June 30, 2011			2012			2011
	High-Specification Floaters:
		Ultra Deepwater Floaters		$	537,000		$	534,900		$	516,600		$	536,000		$	493,100
		Deepwater Floaters			379,200			357,800			396,400			369,800			396,200
		Harsh Environment Floaters			433,200			478,600			430,100			454,400			417,100
	Total High-Specification Floaters				481,600			488,800			479,900			485,000			460,800
	Midwater Floaters				295,800			275,600			333,000			285,200			322,400
	High-Specification Jackups				138,400			116,900			110,300			128,200			108,700
	Standard Jackups				89,900			91,200			111,700			90,500			110,400
	Other Rigs				77,800			73,300			76,400			75,600			74,900
Total Drilling Fleet				$	305,400		$	301,100		$	312,100		$	303,300		$	302,400
	(1) Average daily revenue is defined as contract drilling revenue earned per revenue earning day in the period. A revenue earning day is defined as a day for which a rig earns dayrate after commencement of operations.

TRANSOCEAN LTD. AND SUBSIDIARIES
FLEET OPERATING STATISTICS (continued)
				Utilization (2)
				Three months ended						Six months ended June 30,
				June 30, 2012		March 31, 2012		June 30, 2011		2012		2011
	High-Specification Floaters:
		Ultra Deepwater Floaters		87%		83%		80%		85%		79%
		Deepwater Floaters		59%		47%		41%		53%		46%
		Harsh Environment Floaters		96%		84%		93%		90%		88%
	Total High-Specification Floaters			79%		71%		69%		75%		69%
	Midwater Floaters			52%		56%		54%		54%		57%
	High-Specification Jackups			84%		81%		56%		83%		48%
	Standard Jackups			55%		47%		43%		51%		43%
	Other Rigs			100%		98%		50%		99%		50%
Total Drilling Fleet				66%		61%		55%		64%		55%
	(2) Utilization is defined as the total actual number of revenue earning days in the period as a percentage of the total number of calendar days in the period for all drilling rigs in our fleet.

			Revenue Efficiency(3)
			Trailing Five Quarters and Historical Data
			2Q 2012		1Q 2012		4Q 2011		3Q 2011		2Q 2011		FY 2011		FY 2010
Ultra Deepwater			92.2%		89.4%		89.5%		86.4%		89.3%		87.7%		88.6%
Deepwater			92.1%		83.2%		88.1%		87.7%		93.9%		89.4%		90.3%
Harsh Environment Floaters			98.1%		97.8%		98.0%		94.4%		98.4%		97.4%		96.0%
Midwater Floaters			87.4%		90.8%		94.2%		90.8%		91.9%		92.6%		92.5%
High Specification Jackups			95.1%		93.4%		94.3%		97.3%		95.6%		95.6%		95.3%
Standard Jackups			97.3%		97.8%		96.4%		98.2%		98.4%		97.7%		97.3%
Others			99.4%		97.3%		98.6%		99.5%		97.6%		98.7%		98.4%
Total Fleet			92.5%		90.6%		91.9%		89.5%		92.1%		90.9%		91.7%
	(3) Revenue efficiency is defined as actual revenue divided by the highest amount of total revenue which could have been earned during the relevant period(s).

TRANSOCEAN LTD. AND SUBSIDIARIES
SUPPLEMENTAL EFFECTIVE TAX RATE ANALYSIS
(In US$ millions, except percentages)
			Three months ended												Six months ended
			June 30, 2012				March 31, 2012				June 31, 2011				June 30, 2012				June 30, 2011
Income (loss) from continuing operations before income taxes			$	(339	)		$	36			$	208			$	(303	)		$	435
	Add back (subtract):
	Litigation matters			750				--				--				750				--
	Gain on disposal of other assets, net			(64	)			--				--				(64	)			(9	)
	Loss on impairment of goodwill and other assets			12				227				25				239				25
	Loss on redeemed noncontrolling interest			14				11				--				25				--
	Other, net			--				1				--				1				5
Adjusted income from continuing operations before income taxes				373				275				233				648				456
Income tax (benefit) expense from continuing operations				(29	)			17				77				(12	)			143
	Add back (subtract):
	Loss on impairment			--				30				--				30				--
	Changes in estimates (1)			145				29				(13	)			174				(33	)
	Other, net			--				--				--				--				2
Adjusted income tax expense from continuing operations (2)			$	116			$	76			$	64			$	192			$	112
Effective Tax Rate (3)				8.6	%			47.2	%			37.0	%			4.0	%			32.9	%
Annual Effective Tax Rate (4)				31.1	%			27.6	%			27.5	%			29.6	%			24.6	%

(1)		Our estimates change as we file tax returns, settle disputes with tax authorities or become aware of other events and include changes in (a) deferred taxes, (b) valuation allowances on deferred taxes and (c) other tax liabilities.
(2)		The three and six months ended June 30, 2012 includes $5 million of additional tax expense (benefit) reflecting the catch-up effect of an increase (decrease) in the annual effective tax rate from the previous quarter estimate.
(3)		Effective Tax Rate is income tax expense divided by income before income taxes.
(4)		Annual Effective Tax Rate is income tax expense excluding various discrete items (such as changes in estimates and tax on items excluded from income before income taxes) divided by income before income taxes excluding gains and losses on sales and similar items pursuant to the accounting standards for income taxes and estimating the annual effective tax rate.

TRANSOCEAN LTD. AND SUBSIDIARIES
APPENDIX A

Correction of Errors in Previously Reported Consolidated Financial Statements

We perform assessments of our contingencies and corresponding assets for insurance recoveries on an ongoing basis to evaluate the appropriateness of our balances and disclosures for such contingencies and insurance recoveries. We establish liabilities for estimated loss contingencies when we believe a loss is probable and the amount of the probable loss can be reasonably estimated. We recognize corresponding assets for those loss contingencies that we believe are probable of being recovered through insurance. In performing these assessments in the three months ended June 30, 2012, we identified an error in our previously issued financial statements for the year ended December 31, 2011 and the three months ended March 31, 2012 related to the recognition of assets for insurance recoveries related to legal and other costs totaling $67 million and $37 million, respectively, which we have concluded should not have been recorded because they were not probable of recovery.

We assessed the materiality of this error in accordance with SEC Staff Accounting Bulletin ("SAB") No. 99, Materiality and SAB No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements ("SAB 108"), using both the rollover method and the iron curtain method, as defined in SAB 108, and concluded the error, inclusive of other adjustments discussed below, was immaterial to prior years but could be material to the current year. Under SAB 108, if the prior year error that, if corrected in the current year, would be material to the current year, the prior year financial statements should be corrected, even though such correction previously was immaterial to the prior year financial statements. Correcting prior year financial statements for immaterial errors does not require our previously filed reports to be amended, but rather these corrections will be made the next time we file the prior period consolidated financial statements.

In addition to the adjustments in 2011 and 2012 related to the assets for insurance recoveries, we recorded other adjustments related to the years ended December 31, 2011 and 2010 and the three months ended March 31, 2012 to correct for immaterial errors for repair and maintenance costs, income taxes, discontinued operations, and the allocation of net income attributable to noncontrolling interest. These other adjustments were not previously recorded in the appropriate periods, as we concluded that they were immaterial to our previously issued consolidated financial statements.

For the three months ended March 31, 2012, the correction of these errors reduced income from continuing operations by $55 million and net income attributable to controlling interest by $32 million. For the three and six month periods ended June 30, 2011, correction of these errors reduced income from continuing operations by $31 million and $34 million, respectively, and net income attributable to controlling interest by $31 million and $22 million, respectively. For the year ended December 31, 2011, correction of these errors increased loss from continuing operations by $31 million and net loss attributable to controlling interest by $29 million. For the year ended December 31, 2010, correction of these errors reduced income from continuing operations by $19 million and net income attributable to controlling interest by $35 million. The summary of adjustments for increases and (decreases) to net income (loss) from continuing operations and net income (loss) attributable to controlling interest for the applicable periods were as follows (in millions):

			Three months ended							Six months ended				Years ended
		March 31, 2012				June 30, 2011				June 30, 2011				December 31, 2011				December 31, 2010
Legal and other costs		$	(37	)		$	(19	)		$	(30	)		$	(67	)		$	--
Repair and maintenance costs			--				(32	)			(48	)			11				(11	)
Income tax (expense) benefit			7				5				20				16				(4	)
Other immaterial adjustments, net			(25	)			15				24				9				(4	)
Net adjustment to income from continuing operations			(55	)			(31	)			(34	)			(31	)			(19	)
Net adjustment to income from discontinued operations, net of tax			14				--				(4	)			(14	)			--
Net adjustment to net income attributable to noncontrolling interest			9				--				16				16				(16	)
Net adjustment to net income attributable to controlling interest		$	(32	)		$	(31	)		$	(22	)		$	(29	)		$	(35	)

The effects of the corrections of the errors on our consolidated statements of operations and balance sheets are presented in the tables below. The corrections of the errors had no effect on our consolidated statements of comprehensive income (loss) other than the effect of the changes to net income (loss) for each period. The corrections of the errors had no effect on the previously reported amounts of operating, investing, and financing cash flows in our consolidated statements of cash flows.

TRANSOCEAN LTD. AND SUBSIDIARIES
APPENDIX A
Correction of Errors in Previously Reported Consolidated Financial Statements (continued)
			Three months ended March 31, 2012
			Previously reported				Adjustments				As adjusted
Operating revenues
	Contract drilling revenues		$	2,214			$	6			$	2,220
	Other revenues			117				--				117
				2,331				6				2,337
Costs and expenses
	Operating and maintenance			1,410				53				1,463
	Depreciation and amortization			351				4				355
	General and administrative			69				--				69
				1,830				57				1,887
Loss on impairment				(227	)			--				(227	)
Gain (loss) on disposal of assets, net				(4	)			--				(4	)
Operating income (loss)				270				(51	)			219
Other income (expense), net
	Interest income			15				--				15
	Interest expense, net of amounts capitalized			(180	)			--				(180	)
	Other, net			(7	)			(11	)			(18	)
				(172	)			(11	)			(183	)
Income (loss) from continuing operations before income tax expense				98				(62	)			36
Income tax (benefit) expense				24				(7	)			17
Income (loss) from continuing operations				74				(55	)			19
Income (loss) from discontinued operations, net of tax				(15	)			14				(1	)
Net income (loss)				59				(41	)			18
Net income (loss) attributable to noncontrolling interest				17				(9	)			8
Net income (loss) attributable to controlling interest			$	42			$	(32	)		$	10
Earnings (loss) per share-basic
	Earnings (loss) from continuing operations		$	0.16			$	(0.13	)		$	0.03
	Earnings (loss) from discontinued operations			(0.04	)			0.04				--
	Earnings (loss) per share		$	0.12			$	(0.09	)		$	0.03
Earnings (loss) per share-diluted
	Earnings (loss) from continuing operations		$	0.16			$	(0.13	)		$	0.03
	Earnings (loss) from discontinued operations			(0.04	)			0.04				--
	Earnings (loss) per share		$	0.12			$	(0.09	)		$	0.03

TRANSOCEAN LTD. AND SUBSIDIARIES

APPENDIX A

Correction of Errors in Previously Reported Consolidated Financial Statements (continued)

			Three months ended June 30, 2011												Six months ended June 30, 2011
			Previously reported				Adjustments				As adjusted				Previously reported				Adjustments				As adjusted
Operating revenues
	Contract drilling revenues		$	2,096			$	--			$	2,096			$	4,056			$	--			$	4,056
	Other revenues			238				--				238				422				--				422
				2,334				--				2,334				4,478				--				4,478
Costs and expenses
	Operating and maintenance			1,492				36				1,528				2,851				54				2,905
	Depreciation and amortization			359				--				359				713				--				713
	General and administrative			66				--				66				133				--				133
				1,917				36				1,953				3,697				54				3,751
Loss on impairment				(25	)			--				(25	)			(25	)			--				(25	)
Gain (loss) on disposal of assets, net				(1	)			--				(1	)			7				--				7
Operating income (loss)				391				(36	)			355				763				(54	)			709
Other income (expense), net
	Interest income			5				--				5				20				--				20
	Interest expense, net of amounts capitalized			(147	)			--				(147	)			(292	)			--				(292	)
	Other, net			(5	)			--				(5	)			(2	)			--				(2	)
				(147	)			--				(147	)			(274	)			--				(274	)
Income (loss) from continuing operations before income tax expense				244				(36	)			208				489				(54	)			435
Income tax (benefit) expense				82				(5	)			77				163				(20	)			143
Income (loss) from continuing operations				162				(31	)			131				326				(34	)			292
Income (loss) from discontinued operations, net of tax				2				--				2				178				(4	)			174
Net income (loss)				164				(31	)			133				504				(38	)			466
Net income (loss) attributable to noncontrolling interest				9				--				9				39				(16	)			23
Net income (loss) attributable to controlling interest			$	155			$	(31	)		$	124			$	465			$	(22	)		$	443
Earnings (loss) per share-basic
	Earnings (loss) from continuing operations		$	0.47			$	(0.09	)		$	0.38			$	0.89			$	(0.05	)		$	0.84
	Earnings (loss) from discontinued operations			0.01				--				0.01				0.55				(0.01	)			0.54
	Earnings (loss) per share		$	0.48			$	(0.09	)		$	0.39			$	1.44			$	(0.06	)		$	1.38
Earnings (loss) per share-diluted
	Earnings (loss) from continuing operations		$	0.47			$	(0.09	)		$	0.38			$	0.89			$	(0.05	)		$	0.84
	Earnings (loss) from discontinued operations			0.01				--				0.01				0.55				(0.01	)			0.54
	Earnings (loss) per share		$	0.48			$	(0.09	)		$	0.39			$	1.44			$	(0.06	)		$	1.38

TRANSOCEAN LTD. AND SUBSIDIARIES

APPENDIX A

Correction of Errors in Previously Reported Consolidated Financial Statements (continued)

			Year ended December 31, 2011												Year ended December 31, 2010
			Previously reported				Adjustments				As adjusted				Previously reported				Adjustments				As adjusted
Operating revenues
	Contract drilling revenues		$	8,380			$	(6	)		$	8,374			$	8,986			$	--			$	8,986
	Other revenues			762				--				762				480				--				480
				9,142				(6	)			9,136				9,466				--				9,466
Costs and expenses
	Operating and maintenance			6,956				45				7,001				5,074				15				5,089
	Depreciation and amortization			1,449				(4	)			1,445				1,536				--				1,536
	General and administrative			288				--				288				246				--				246
				8,693				41				8,734				6,856				15				6,871
Loss on impairment				(5,229	)			--				(5,229	)			(1,010	)			--				(1,010)
Gain (loss) on disposal of assets, net				4				--				4				257				--				257
Operating income (loss)				(4,776	)			(47	)			(4,823	)			1,857				(15	)			1,842
Other income (expense), net
	Interest income			44				--				44				23				--				23
	Interest expense, net of amounts capitalized			(621	)			--				(621	)			(567	)			--				(567	)
	Other, net			(81	)			--				(81	)			(23	)			--				(23	)
				(658	)			--				(658	)			(567	)			--				(567	)
Income (loss) from continuing operations before income tax expense				(5,434	)			(47	)			(5,481	)			1,290				(15	)			1,275
Income tax (benefit) expense				395				(16	)			379				336				4				340
Income (loss) from continuing operations				(5,829	)			(31	)			(5,860	)			954				(19	)			935
Income (loss) from discontinued operations, net of tax				197				(14	)			183				34				--				34
Net income (loss)				(5,632	)			(45	)			(5,677	)			988				(19	)			969
Net income (loss) attributable to noncontrolling interest				93				(16	)			77				27				16				43
Net income (loss) attributable to controlling interest			$	(5,725	)		$	(29	)		$	(5,754	)		$	961			$	(35	)		$	926
Earnings (loss) per share-basic
	Earnings (loss) from continuing operations		$	(18.40	)		$	(0.05	)		$	(18.45	)		$	2.88			$	(0.11	)		$	2.77
	Earnings (loss) from discontinued operations			0.61				(0.04	)			0.57				0.11				--				0.11
	Earnings (loss) per share		$	(17.79	)		$	(0.09	)		$	(17.88	)		$	2.99			$	(0.11	)		$	2.88
Earnings (loss) per share-diluted
	Earnings (loss) from continuing operations		$	(18.40	)		$	(0.05	)		$	(18.45	)		$	2.88			$	(0.11	)		$	2.77
	Earnings (loss) from discontinued operations			0.61				(0.04	)			0.57				0.11				--				0.11
	Earnings (loss) per share		$	(17.79	)		$	(0.09	)		$	(17.88	)		$	2.99			$	(0.11	)		$	2.88

TRANSOCEAN LTD. AND SUBSIDIARIES

APPENDIX A

Correction of Errors in Previously Reported Consolidated Financial Statements (continued)

				December 31, 2011												December 31, 2010
				Previously reported				Adjustments				As adjusted				Previously reported				Adjustments				As adjusted
Assets
Cash and cash equivalents				$	4,017			$	--			$	4,017			$	3,394			$	(40	)		$	3,354
Accounts receivable, net
	Trade				2,049				--				2,049				1,653				--				1,653
	Other				127				--				127				190				--				190
Materials and supplies, net					627				--				627				514				--				514
Deferred income taxes, net					142				--				142				115				--				115
Assets held for sale					26				--				26				--				--				--
Other current assets					621				(84	)			537				329				43				372
		Total current assets			7,609				(84	)			7,525				6,195				3				6,198
Property and equipment					29,037				--				29,037				26,721				--				26,721
Property and equipment of consolidated variable interest entities					2,252				--				2,252				2,214				--				2,214
Less accumulated depreciation					8,760				(4	)			8,756				7,616				--				7,616
	Property and equipment, net				22,529				4				22,533				21,319				--				21,319
Goodwill					3,205				12				3,217				8,132				--				8,132
Other assets					1,745				12				1,757				1,165				--				1,165
		Total assets		$	35,088			$	(56	)		$	35,032			$	36,811			$	3			$	36,814
Liabilities and equity
Accounts payable				$	880			$	--			$	880			$	832			$	--			$	832
Accrued income taxes					89				--				89				109				--				109
Debt due within one year					1,942				--				1,942				1,917				--				1,917
Debt of consolidated variable interest entities due within one year					97				148				245				95				148				243
Other current liabilities					2,350				22				2,372				883				12				895
		Total current liabilities			5,358				170				5,528				3,836				160				3,996
Long-term debt					10,756				--				10,756				8,354				--				8,354
Long-term debt of consolidated variable interest entities					741				(148	)			593				855				(148	)			707
Deferred income taxes, net					523				(4	)			519				575				10				585
Other long-term liabilities					1,903				(10	)			1,893				1,791				--				1,791
		Total long-term liabilities			13,923				(162	)			13,761				11,575				(138	)			11,437
Commitments and contingencies
Redeemable noncontrolling interest					116				--				116				25				16				41
Shares					4,982				--				4,982				4,482				--				4,482
Additional paid-in capital					7,211				--				7,211				7,504				--				7,504
Treasury shares, at cost					(240	)			--				(240	)			(240	)			--				(240	)
Retained earnings					4,244				(64	)			4,180				9,969				(35	)			9,934
Accumulated other comprehensive loss					(496	)			--				(496	)			(332	)			--				(332	)
	Total controlling interest shareholders' equity				15,701				(64	)			15,637				21,383				(35	)			21,348
	Noncontrolling interest				(10	)			--				(10	)			(8	)			--				(8	)
		Total equity			15,691				(64	)			15,627				21,375				(35	)			21,340
		Total liabilities and equity		$	35,088			$	(56	)		$	35,032			$	36,811			$	3			$	36,814