Forward-Looking Information

The statements included in this quarterly report regarding future financial
performance and results of operations and other statements that are not
historical facts are forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. Forward-looking statements in this quarterly report include, but are
not limited to, statements about the following subjects:

    · contract commencements,              · effects of new rigs on the
    · contract option exercises,           market,
    · revenues,                            · income related to and any
    · expenses,                            payments to be received under the
    · results of operations,               TODCO tax sharing agreement,
    · commodity prices,                    · uses of excess cash, including
    · customer drilling programs,          ordinary share repurchases,
    · supply and demand,                   · the timing and funding of share
    · utilization rates,                   repurchases,
    · dayrates,                            · issuance of new debt,
    · contract backlog,                    · debt reduction,
    · the timing and closing of the        · planned asset sales,
    GlobalSantaFe merger and related       · timing of asset sales,
    transactions,                          · proceeds from asset sales,
    · consideration payable in             · our effective tax rate,
    connection with the GlobalSantaFe      · changes in tax laws, treaties
    merger and related transactions,       and regulations,
    · effects and results of the           · tax assessments,
    GlobalSantaFe merger and related       · our other expectations with
    transactions,                          regard to market outlook,
    · planned shipyard projects and        · operations in international
    rig mobilizations and their            markets,
    effects,                               · the level of expected capital
    · newbuild projects and                expenditures,
    opportunities,                         · results and effects of legal
    · the upgrade projects for the         proceedings and governmental
    Sedco 700-series semisubmersible       audits and assessments,
    rigs,                                  · adequacy of insurance,
    ·  other major upgrades,               · liabilities for tax issues,
    ·  the potential purchase of an        including those associated with
    ownership interest in a joint          our activities in Brazil, Norway
    venture that will own the fourth       and the United States,
    Enterprise-class drillship,            · liquidity,
    · the potential purchase of an         · cash flow from operations,
    interest in a joint venture with       · adequacy of cash flow for our
    Pacific Drilling and joint venture     obligations,
    terms,                                 · effects of accounting changes,
    · contract awards,                     · adoption of accounting policies,
    · drillship delivery dates,            · pension plan and other
    · expected downtime,                   postretirement benefit plan
    · insurance proceeds,                  contributions,
    · cash investments of our              · benefit payments, and
    wholly-owned captive insurance         · the timing and cost of
    company,                               completion of capital projects.
    · future activity in the
    deepwater, mid-water and the
    jackup market sectors,
    · market outlook for our various
    geographical operating sectors,
    · capacity constraints for
    ultra-deepwater rigs and other rig
    classes,

Forward-looking statements in this quarterly report are identifiable by use of the following words and other similar expressions among others:

                         · "anticipates"   · "may"
                         · "believes"      · "might"
                         · "budgets"       · "plans"
                         · "could"         · "predicts"
                         · "estimates"     · "projects"
                         · "expects"       · "scheduled"

Such statements are subject to numerous risks, uncertainties and assumptions, including, but not limited to:

· those described under "Item 1A. Risk Factors" included herein and in our Annual Report on Form 10-K for the year ended December 31, 2006 and our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2007,

· the adequacy of sources of liquidity,

· costs, delays and other difficulties related to the proposed merger and related transactions with GlobalSantaFe (including the satisfaction of closing conditions),

· our inability to obtain regulatory clearances and shareholder approval and satisfy closing conditions for the GlobalSantaFe merger and related transactions,

· our inability to obtain contracts for the drillships we are marketing under our marketing and purchase option agreement with Pacific Drilling, negotiate definitive agreements and satisfy closing conditions,

· the effect and results of litigation, tax audits and contingencies, and

· other factors discussed in this quarterly report and in our other filings with the SEC, which are available free of charge on the SEC's website at www.sec.gov.

Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated.

All subsequent written and oral forward-looking statements attributable to us or to persons acting on our behalf are expressly qualified in their entirety by reference to these risks and uncertainties. You should not place undue reliance on forward-looking statements. Each forward-looking statement speaks only as of the date of the particular statement, and we undertake no obligation to publicly update or revise any forward-looking statements.

The following information should be read in conjunction with the unaudited condensed consolidated financial statements included under "Item 1. Financial Statements" herein and the audited consolidated financial statements and the notes thereto and "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our Annual Report on Form 10-K for the year ended December 31, 2006.

Overview

Transocean Inc. (together with its subsidiaries and predecessors, unless the context requires otherwise, "Transocean," "we," "us" or "our") is a leading international provider of offshore contract drilling services for oil and gas wells. As of July 31, 2007, we owned, had partial ownership interests in or operated 82 mobile offshore drilling units. As of this date, our fleet consisted of 33 High-Specification semisubmersibles and drillships ("High-Specification Floaters"), 20 Other Floaters, 25 Jackups and four Other Rigs. We also have four High-Specification Floaters under construction.

Our mobile offshore drilling fleet is considered one of the most modern and versatile fleets in the world. Our primary business is to contract these drilling rigs, related equipment and work crews primarily on a dayrate basis to drill oil and gas wells. We specialize in technically demanding segments of the offshore drilling business with a particular focus on deepwater and harsh environment drilling services. We also provide additional services, including integrated services.

Key measures of our total company results of operations and financial condition are as follows (in millions, except average daily revenue and percentages):

                          Three months ended                         Six months ended
                               June 30,                                  June 30,
                          2007          2006         Change         2007          2006         Change

Average daily revenue
(a)(b)                  $ 202,400     $ 129,000     $  73,400     $ 200,200     $ 124,300     $  75,900
Utilization (b)(c)             91 %          81 %         N/A            90 %          81 %         N/A
Statement of
Operations
Operating revenues      $   1,434     $     854     $     580     $   2,762     $   1,671     $   1,091
Operating and
maintenance expense           627           549            78         1,195         1,024           171
Operating income              676           289           387         1,333           573           760
Net income                    549           249           300         1,102           455           647




                                   June 30,       December 31,
                                     2007             2006          Change
Balance Sheet (at end of period)
Cash and cash equivalents          $     445     $          467     $   (22 )
Total assets                          12,149             11,476         673
Total debt                             3,064              3,295        (231 )


_____________________

(a) Average daily revenue is defined as contract drilling revenue earned per revenue earning day. A revenue earning day is defined as a day for which a rig earns dayrate after commencement of operations.

(b) Excludes a drillship engaged in scientific geological coring activities, the Joides Resolution, that is owned by a joint venture in which we have a 50 percent interest and is accounted for under the equity method of accounting.

(c) Utilization is the total actual number of revenue earning days as a percentage of the total number of calendar days in the period.

We continue to experience strong demand for all of our asset classes, which has resulted in high utilization and historically high dayrates. We are seeing leading dayrates at or near record levels for most rig classes and customer interest for multi-year contracts. Interest in High-Specification Floaters remains particularly strong.

A shortage of qualified personnel in our industry is driving up compensation costs and suppliers are increasing prices as their backlogs grow. These labor and vendor cost increases, while meaningful, are not expected to be significant in comparison with our expected increase in revenue for 2007 and beyond.

Our revenues for the six months ended June 30, 2007 increased from the prior year period primarily as a result of increased activity and higher dayrates. Our operating and maintenance expenses for the same period increased primarily as a result of higher labor and rig maintenance costs in connection with such increased activity (see "-Operating Results"). In addition, our financial results for the six months ended June 30, 2007 included the recognition of gains on the sale of the tender rig Charley Graves (see "-Significant Events"). Cash decreased during the six months ended June 30, 2007 primarily as a result of repayments on our Term Credit Facility, increased capital expenditures and repurchases of our ordinary shares, partially offset by proceeds received from the sale of assets, exercises of stock options and cash provided by operating activities.

We operate in one business segment, which consists of floaters, jackups and other rigs used in support of offshore drilling activities and offshore support services on a worldwide basis. Our fleet operates in a single, global market for the provision of contract drilling services. The location of our rigs and the allocation of resources to build or upgrade rigs are determined by the activities and needs of our customers.

We categorize our fleet as follows: (1) "High-Specification Floaters," consisting of our "Ultra-Deepwater Floaters," "Other Deepwater Floaters" and "Other High-Specification Floaters," (2) "Other Floaters," (3) "Jackups" and (4) "Other Rigs." Within our High-Specification Floaters category, we consider our Ultra-Deepwater Floaters to be the semisubmersibles Deepwater Horizon, Cajun Express, Deepwater Nautilus, Sedco Energy and Sedco Express and the drillships Deepwater Discovery, Deepwater Expedition, Deepwater Frontier, Deepwater Millennium, Deepwater Pathfinder, Discoverer Deep Seas, Discoverer Enterprise and Discoverer Spirit. These rigs have high-pressure mud pumps and a water depth capability of 7,500 feet or greater. The Other Deepwater Floaters are generally those other semisubmersible rigs and drillships that have a water depth capacity of at least 4,500 feet. The Other High-Specification Floaters, built as fourth-generation rigs in the mid to late 1980s, are capable of drilling in harsh environments and have greater displacement than previously constructed rigs resulting in larger variable load capacity, more useable deck space and better motion characteristics. The Other Floaters category is generally comprised of those non-high-specification floaters with a water depth capacity of less than 4,500 feet. The Jackups category consists of our jackup fleet, and the Other Rigs category consists of other rigs that are of a different type or use. These categories reflect how we view, and how we believe our investors and the industry generally view, our fleet.

Significant Events

TODCO Tax Sharing Agreement ("TSA")-On July 11, 2007, Hercules Offshore, Inc. ("Hercules") completed the acquisition of TODCO. The TSA requires Hercules to make an accelerated change of control payment to Transocean Holdings within 30 days of the date of the acquisition as a result of the deemed utilization of TODCO's pre-IPO tax benefits. We expect to recognize approximately $290 million related to the accelerated payment and the previously mentioned 2006 and 2007 tax year payments as other income in the third quarter of 2007. See Notes to Condensed Consolidated Statements Note 13-Subsequent Events-TODCO Tax Sharing Agreement.

Merger with GlobalSantaFe Corporation-On July 21, 2007, we entered into an Agreement and Plan of Merger with GlobalSantaFe Corporation and Transocean Worldwide Inc., our direct wholly owned subsidiary. Subject to obtaining regulatory clearances, shareholder approval and satisfying or waiving all other closing conditions, we estimate that the closing of the merger will take place on or before December 31, 2007. See Notes to Condensed Consolidated Statements Note 13-Subsequent Events-Merger with GlobalSantaFe Corporation.

Construction Program-In June 2007, we were awarded a drilling contract requiring the construction of a fourth enhanced Enterprise-class drillship. We expect the rig to be contributed to a joint venture in which we expect to retain a 65 percent ownership interest. The newbuild is expected to commence operations during the third quarter of 2010. See "-Outlook-Drilling Market."

Repurchase of Ordinary Shares-During the six months ended June 30, 2007, we repurchased and retired 5.2 million of our ordinary shares at a total cost of $400 million. See "-Liquidity and Capital Resources-Sources and Uses of Liquidity."

Outlook

Drilling Market-Demand for offshore drilling capacity continues to be strong, particularly for rigs capable of drilling in deepwater. Our High-Specification Floater fleet is fully committed in 2007 and 2008. We have only one rig remaining in the Other Floater fleet that has any available uncommitted time in 2007 and six rigs remaining in this fleet that have any available uncommitted time in 2008. We have two jackup rigs that have uncommitted time in 2007, and 12 jackup rigs that have uncommitted time in 2008.

We have been successful in building contract backlog within our High-Specification Floater fleet with 27 of our 38 current and future High-Specification Floaters, including the four newbuilds and the two Sedco 700-series deepwater upgrades, contracted into or beyond 2010 as of July 31, 2007. These 27 units include 10 of our 13 current Ultra-Deepwater Floaters and our four new rigs currently under construction with long term contracts upon delivery. Our total contract backlog of approximately $21 billion as of July 31, 2007 includes approximately $16 billion of backlog represented by our High-Specification Floaters. We believe the long-term outlook for deepwater capable rigs continues to be strong.

In April 2007, we entered into a marketing and purchase option agreement with Pacific Drilling Limited that provides us with the exclusive marketing right for two newbuild Ultra-Deepwater Floaters with expected delivery dates in 2009 as well as an option to purchase a 50 percent interest in a joint venture company through which we and Pacific Drilling would own the drillships. We anticipate 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 us by Pacific Drilling will terminate on November 30, 2007 but can be extended by four months. We may elect to exercise the option in our sole discretion and anticipate exercising the option once we have secured a drilling contract or contracts of sufficient value. The purchase price for the 50 percent joint venture interest is 50 percent 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 our ordinary shares or cash.

In June 2007, we were awarded a five-year drilling contract for a fourth enhanced Enterprise-class drillship. The enhanced Enterprise-class drillship is expected to be owned and operated by a joint venture which is expected to be 65 percent owned by us and 35 percent owned by an Angolan partner. We estimate total capital expenditure for the construction of this rig to be approximately $640 million, excluding capitalized interest. We currently expect this rig to begin operations in Angola during the third quarter of 2010, after construction in South Korea followed by sea trials, mobilization to Angola and customer acceptance.

Future demand for deepwater capable rigs should benefit from successful drilling efforts in the lower tertiary trend of the U.S. Gulf of Mexico; the discovery of light oil and non-associated gas in the deepwaters of Brazil; continued exploration success in the deepwaters offshore India; the recent discovery in the deepwaters of the South China Sea; and the exploration activity in the Orphan Basin offshore Eastern Canada. Additionally, the continued exploration success in the deepwaters of West Africa, the opening of additional deepwater acreage in the U.S. Gulf of Mexico and the announced plans by Pemex for ultra deepwater drilling in Mexican waters of the Gulf of Mexico support our optimistic outlook for long term contracts and favorable dayrates in the deepwater drilling market sector. As of July 31, 2007, none of our High-Specification Floater fleet contract days are uncommitted for the remainder of 2007 and 2008, while approximately 11 percent and 40 percent are uncommitted in 2009 and 2010, respectively.

Our Other Floater fleet, comprised of 20 semisubmersible rigs, is largely committed to contracts that extend through 2007, and we continue to see customer demand for both short term and multi-year contracts for these units. As of July 31, 2007, three percent of our Other Floater fleet contract days are uncommitted for the remainder of 2007, while approximately 17 percent, 53 percent and 78 percent are uncommitted in 2008, 2009 and 2010, respectively.

We expect to remain at or near full utilization for our Jackup fleet in 2007. We believe that Asia, India and the Middle East will remain the primary sources of incremental demand for jackup rigs in the near to intermediate term, but there are a large number of new jackup rigs under construction without drilling contracts that are scheduled to be delivered in 2008 and 2009. While our near term outlook for the jackup market sector remains strong, we do not know what impact, if any, that this increase in supply will have on this market sector in the intermediate and long term. As of July 31, 2007, four percent of our Jackup fleet contract days are uncommitted for the remainder of 2007, while approximately 28 percent, 54 percent and 84 percent are uncommitted in 2008, 2009 and 2010, respectively.

We expect our out-of-service time for the second half of 2007 to be in line with the out-of-service time we incurred during the first half of 2007.

We expect each of the following items to contribute to a continued increase in our revenues for the second half of 2007:

· the commencement of new contracts with higher dayrates, primarily on our High-Specification Floaters and Other Floaters;

· the scheduled return to operations of the Sedco 702 in November 2007 after completion of its upgrade that began in April 2006; and

· the completion of two full quarters of operations related to the five integrated services contracts in India and the Jack Bates in Australia.

We expect each of the following items to contribute to a continued increase in our operating and maintenance costs for the second half of 2007:

· normal industry inflation with respect to our shipyard projects, maintenance programs and labor costs;

· an anticipated increase in activity due to the completion of two full quarters of operations by the Jack Bates in Australia and the five integrated services contracts in India and the commencement of operations of the upgraded Sedco 702 in Nigeria; and

· our investments in a number of recruitment, retention and personnel development initiatives related to the manning of the crews of the two deepwater upgrades, the four newbuild rigs under construction and our efforts to mitigate expected personnel attrition.

We have seven existing contracts with fixed-priced or capped options for dayrates that we believe are less than current market dayrates. We expect that four of these fixed-price contract options will be exercised by our customers in the second half of 2007 and 2008, which would preclude us from taking full advantage of any increased market rates for rigs subject to these contract options. Well-in-progress or similar provisions in our existing contracts may delay the start of higher dayrates in subsequent contracts, and some of the delays have been and could be significant.

Our operations are geographically dispersed in oil and gas exploration and development areas throughout the world. Rigs can be moved from one region to another, but the cost of moving a rig and the availability of rig-moving vessels may cause the supply and demand balance to vary somewhat between regions. However, significant variations between regions do not tend to persist long-term because of rig mobility. Consequently, we operate in a single, global offshore drilling market.

Insurance Matters-We periodically evaluate our hull and machinery and third-party liability insurance limits and self-insured retentions. Effective May 1, 2007, we renewed our hull and machinery and third-party liability insurance coverages. Subject to large self-insured retentions, we carry hull and machinery insurance covering physical damage to the rigs for operational risks worldwide, and we carry liability insurance covering damage to third parties. However, we do not generally have commercial market insurance coverage for physical damage losses to the Transocean fleet due to hurricanes in the U.S. Gulf of Mexico and war perils worldwide. Additionally, we do not carry insurance for loss of revenue. In the opinion of management, adequate accruals have been made based on known and estimated losses related to such exposures. See Notes to Condensed Consolidated Statements Note 9?Contingencies-Retained Risk.

Tax Matters-We are a Cayman Islands company and we operate through our various subsidiaries in a number of countries throughout the world. Consequently, we are subject to changes in tax laws, treaties and regulations in and between the countries in which we operate. A material change in these tax laws, treaties or regulations in any of the countries in which we operate could result in a higher or lower effective tax rate on our worldwide earnings.

Our tax returns in the major jurisdictions in which we operate worldwide are generally subject to examination for periods ranging from three to six years. We have agreed to extensions beyond the statute of limitations in two jurisdictions for up to 12 years. Tax authorities in certain jurisdictions are examining our tax returns and in some cases have issued assessments. We are defending our tax positions in those jurisdictions. While we cannot predict or provide assurance as to the final outcome of these proceedings, we do not expect the ultimate liability to have a material adverse effect on our consolidated financial position, results of operations or cash flows.

Norwegian civil tax and criminal authorities are investigating certain transactions undertaken in 2001 and 2002. Further, in the second quarter of 2007, the Norwegian authorities expanded the investigation and are seeking certain records located in the United Kingdom related to a separate Norway subsidiary that was previously subject to tax in Norway. In June 2006, we filed a formal protest with respect to a notification by the Norwegian tax authorities of their intent to propose assessments that would result in an increase in tax of approximately $265 million, plus interest related to the 2001 and 2002 restructuring transactions. The authorities also indicated they intend to impose penalties which could range from 15 to 60 percent of the assessment. We believe the authorities are contemplating a separate assessment of approximately $110 million related to a 2001 dividend payment, plus interest and a penalty, which could range from 15 to 60 percent of the assessment. The authorities initiated inquiries in September 2004 and in March 2005 obtained additional information pursuant to a Norwegian court order. We have continued to respond to information requests from the authorities. We plan to vigorously contest any assertions by the Norwegian authorities in connection with the restructuring transactions or dividend and any increase in the scope of the current investigation. On January 1, 2007, as part of our implementation of FIN 48, we recorded a long-term liability of $142 million related to these issues. Since January 1, 2007, the long-term liability has increased to $152 million due to the accrual of interest and exchange rate fluctuations. While we cannot predict or provide assurance as to the final outcome of these proceedings, we do not expect the ultimate resolution of these matters to have a material adverse effect on our consolidated financial position or results of operations although it may have a material adverse effect on our consolidated cash flows. See Notes to Condensed Consolidated Statements Note 6-Income Taxes.

TODCO Tax Sharing Agreement-Our wholly owned subsidiary, Transocean Holdings . . .