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:

† the offshore drilling market, including supply and demand, utilization rates, dayrates, customer drilling programs, commodity prices, stacking of rigs, effects of new rigs on the market and effects of declines in commodity prices and the downturn in the global economy on market outlook for our various geographical operating sectors and classes of rigs,

† customer contracts, including contract backlog, contract commencements, contract terminations, contract option exercises, contract revenues, contract awards and rig mobilizations,

† newbuild, upgrade, shipyard and other capital projects, including completion, delivery and commencement of operations dates, expected downtime and lost revenue, the level of expected capital expenditures and the timing and cost of completion of capital projects,

† liquidity and adequacy of cash flow for our obligations, including our ability and the expected timing to access certain investments in highly liquid instruments,

† our results of operations and cash flow from operations, including revenues and expenses,

† uses of excess cash, including debt retirement and share repurchases under our share repurchase program,

† acquisitions, dispositions and the timing and proceeds of asset or share sales,

† tax matters, including our effective tax rate, changes in tax laws, treaties and regulations, tax assessments and liabilities for tax issues, including those associated with our activities in Brazil, Norway and the United States ("U.S."),

† legal and regulatory matters, including results and effects of legal proceedings and governmental audits and assessments, outcome and effects of internal and governmental investigations, customs and environmental matters,

† insurance matters, including adequacy of insurance, insurance proceeds and cash investments of our wholly owned captive insurance company,

† the possible benefits, effects or results of the redomestication transaction,

† debt levels, including impacts of the financial and credit crisis,

† effects of accounting changes and adoption of accounting policies, and

† investments in recruitment, retention and personnel development initiatives, pension plan and other postretirement benefit plan contributions, the timing of severance payments and benefit payments.

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"
†   "forecasts"   †   "should"
†   "intends"

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, 2008,

† the adequacy of sources of liquidity,

† our inability to obtain contracts for our rigs that do not have contracts,

† the cancellation of contracts currently included in our reported contract backlog,

† 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 U.S. Securities and Exchange Commission ("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, except as required by law.

Overview

Transocean Ltd. (together with its subsidiaries and predecessors, unless the context requires otherwise, "Transocean," the "Company," "we," "us" or "our") is a leading international provider of offshore contract drilling services for oil and gas wells. As of April 30, 2009, we owned, had partial ownership interests in or operated 136 mobile offshore drilling units. As of this date, our fleet consisted of 39 High-Specification Floaters (Ultra-Deepwater, Deepwater and Harsh Environment semisubmersibles and drillships), 28 Midwater Floaters, 10 High-Specification Jackups, 55 Standard Jackups and four Other Rigs. In addition, we had 10 Ultra-Deepwater Floaters under construction or contracted for construction.

We believe our mobile offshore drilling fleet is 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 oil and gas drilling management services on either a dayrate basis or a completed-project, fixed-price (or "turnkey") basis, as well as drilling engineering and drilling project management services, and we participate in oil and gas exploration and production activities.

We have established two reportable segments: (1) contract drilling services and
(2) other operations. The contract drilling services segment 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.

The other operations segment includes drilling management services and oil and gas properties. Drilling management services are provided through Applied Drilling Technology Inc., our wholly owned subsidiary, and through ADT International, a division of one of our U.K. subsidiaries (together, "ADTI"). Oil and gas properties consist of exploration, development and production activities carried out through Challenger Minerals Inc. and Challenger Minerals (North Sea) Limited (together, "CMI"), our oil and gas subsidiaries.

In December 2008, Transocean Ltd. completed a transaction pursuant to an Agreement and Plan of Merger among Transocean Ltd., Transocean Inc., which was our former parent holding company, and Transocean Cayman Ltd., a company organized under the laws of the Cayman Islands that was a wholly owned subsidiary of Transocean Ltd., pursuant to which Transocean Inc. merged by way of schemes of arrangement under Cayman Islands law with Transocean Cayman Ltd., with Transocean Inc. as the surviving company (the "Redomestication Transaction"). In the Redomestication Transaction, Transocean Ltd. issued one of its shares in exchange for each ordinary share of Transocean Inc. In addition, Transocean Ltd. issued 16 million of its shares to Transocean Inc. for future use to satisfy Transocean Ltd.'s obligations to deliver shares in connection with awards granted under our incentive plans, warrants or other rights to acquire shares of Transocean Ltd. The Redomestication Transaction effectively changed the place of incorporation of our parent holding company from the Cayman Islands to Switzerland. As a result of the Redomestication Transaction, Transocean Inc. became a direct, wholly owned subsidiary of Transocean Ltd. In connection with the Redomestication Transaction, we relocated our principal executive offices to Vernier, Switzerland. We refer to the Redomestication Transaction and the relocation of our principal executive offices together as the "Redomestication."

                                               Three months ended March 31,
                                               2009                  2008              Change
                                                                  (As adjusted)
Average daily revenue (a)(b)               $     256,500       $        228,400       $  28,100
Utilization (b)(c)                                    91 %                   91 %           n/a
Statement of operations data
Operating revenues                         $       3,118       $          3,110       $       8
Operating and maintenance expense                  1,171                  1,157              14
Operating income                                   1,319                  1,540            (221 )
Net income attributable to controlling
interest                                             942                  1,149            (207 )

                                              March 31,           December 31,
                                                 2009                 2008              Change
Balance sheet data (at end of period)                             (As adjusted)
Cash and cash equivalents                  $       1,302       $            963       $     339
Total assets                                      35,259                 35,182              77
Total debt                                        12,964                 13,557            (593 )


____________________

"n/a" means not applicable

(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 Joides Resolution, a drillship engaged in scientific geological coring activities, 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.

Although we are currently experiencing historically high dayrates across our fleet, the downturn in the global economy and the depressed levels of commodity prices have had and are expected to continue to have an adverse effect on our operations. High-specification units continue to attract interest from customers; however, Midwater Floaters and Jackups have experienced diminished demand. We currently have three Midwater Floaters, including one that is held for sale, and nine Jackups that are idle, and we expect to idle more rigs as they come off contracts. See "Item 1A. Risk Factors" in our most recent Annual Report on Form 10-K for a discussion of some of the risks associated with continued depressed levels of commodity prices and an extended worldwide economic downturn.

Over the last few years, a shortage of qualified personnel in our industry caused an increase in compensation costs and suppliers increased prices as their backlogs grew. We expect increasing unemployment, a stronger U.S. dollar and a continued decline in commodity prices to slow the rate of escalation in these costs or cause these costs to decrease over time.

Our revenues for the three months ended March 31, 2009 increased from the prior year period primarily as a result of higher dayrates, partially offset by a decrease in activity. Our operating and maintenance expenses for the same period increased from the prior year period primarily as a result of inflationary cost increases, partially offset by lower labor and rig maintenance costs in connection with such decreased activity (see "-Outlook"). Total debt as of March 31, 2009 decreased compared to December 31, 2008, as a result of repayment of borrowings under the Term Loan during the first quarter of 2009. See "-Liquidity and Capital Resources-Sources and Uses of Liquidity."

Outlook

Drilling market-The decline in commodity prices and the difficult conditions in the credit markets, which are reflective of the global economic crisis, have had a negative impact on our business. As we have only signed a few new contracts during the last several months, our contract backlog has declined to $35.8 billion at May 5, 2009 compared to $38.7 billion as of February 3, 2009. Lower commodity prices may lead to decreases in demand across all rig classes in the near term and, as a result, lower dayrates and utilization for our rigs or further idling of rigs in our fleet. However, we have not seen and do not expect to see as significant an impact on our High-Specification Floater fleet due to the limited availability of rigs in this class during the near term.

The economic crisis resulted in one of our clients being placed into administration (a form of bankruptcy proceeding in the U.K.), and another was unable to post the required escrow leading us to terminate the contract. A few additional clients are experiencing liquidity issues and may be similarly at risk of being unable to perform their obligations.

As of May 5, 2009, the percentage of contract days in our uncommitted fleet for the remainder of 2009, 2010, 2011 and 2012 is as follows:

                Uncommitted fleet percentage   2009    2010    2011    2012
                High-Specification Floaters      3 %    10 %    30 %    47 %
                Midwater Floaters               21 %    44 %    79 %    87 %
                High-Specification Jackups      30 %    74 %    83 %    99 %
                Standard Jackups                33 %    66 %    84 %    97 %

The decline in commodity prices and the downturn in the global economy have contributed to the absence of new High-Specification Floater contracts executed within the last several months and may have a near-term negative effect on dayrates in the High-Specification Floater fleet. The lack of contracting has, in turn, contributed to a decline in our High-Specification Floater contract backlog to $27.9 billion as of May 5, 2009, from $29.2 billion as of February 3, 2009. We only have one High-Specification Floater coming off contract in 2009. Any inability to obtain new contracts for these rigs may result in a continued decline in our backlog. While we are seeing more subletting of our High-Specification Floater fleet, we expect the impact to be minimal for 2009, with potentially increasing exposure in 2010 and later years.

Longer term, the deepwater market benefits from the limited supply of deepwater capable rigs available for contract. As of May 5, 2009, we had 47 of our 49 current and future High-Specification Floaters contracted through the end of 2009, with 39, including all of our newbuilds, contracted into or beyond 2011. These 39 units also include 25 of our 28 current and future Ultra-Deepwater Floaters. We believe the continued exploration successes in the deepwater offshore provinces of Brazil, Angola, India and the U.S. Gulf of Mexico will sustain the significant demand for the Ultra-Deepwater Floaters and support our long-term positive outlook for our High-Specification Floater fleet. We are currently in discussions with several clients showing interest in our High-Specification rigs that are coming available in 2009 and 2010.

For our Midwater Floater fleet, which includes 28 semisubmersible rigs, near-term customer demand has declined significantly, resulting in the absence of tendering opportunities and the stacking of three of our midwater floaters, including one that is classified as held for sale. Weakness in several midwater floater markets, including the U.K, coupled with subletting of the existing rigs under contract and cancellations of and delays in customer programs in other Midwater Floater markets, is resulting in the near-term reduction in dayrates and the anticipated stacking of additional rigs in this fleet. The impact of the expected reduction in dayrates and activity on us is partially mitigated by the fact that 61 percent of our Midwater Floater fleet is committed to contracts that extend into 2010.

We continue to experience weakness in the jackup market. Considering the number of jackups that are under construction without customer contracts and the lack of customer demand, we expect dayrates and utilization to continue to decrease in our Jackup fleet. We believe the delivery of the uncontracted units currently under construction will further adversely impact the market for jackups through 2009, and potentially beyond. As of May 5, 2009, we had stacked nine jackups. With 22 of our 65 jackups completing their current contracts in 2009, continued or additional weakening of the Jackup market may result in the stacking of additional rigs.

We expect our total revenues to be lower in 2009 than in 2008. The commencement of new contracts with higher dayrates and the commencement of operations of five of our newbuilds and Sedco 706 are expected to increase contract drilling revenues, partially offset by the sale of three jackups in 2008, the anticipated sale of GSF Arctic II in 2009 and lost revenue associated with idle rigs. Additionally, contract drilling intangible revenues and other revenues are expected to collectively decline by a greater amount than the increase in contract drilling revenue, primarily due to the expected impact of reduced activity and lower commodity prices on our non-drilling operations.

We expect our total operating and maintenance costs in 2009 to decrease compared to 2008 due to lower operating costs associated with a number of jackups and midwater floaters that have been and may be stacked during 2009, exchange rate changes resulting from a stronger U.S. dollar, the anticipated sale of GSF Arctic II in 2009 and the sale of three jackups during 2008. In addition, we expect support costs to decline due to various overhead cost-reduction initiatives and decreased non-drilling activity. These reductions in 2009 are expected to be partially offset by an increase in operating and maintenance costs as a result of the commencement of operations of five of our deepwater newbuilds and Sedco 706 and the expected bareboat charter costs for GSF Arctic IV after its anticipated sale in 2009. Our projected operating and maintenance costs for 2009 remain uncertain given current economic and market conditions and could be significantly impacted by the actual level of activity and other factors.

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 rigs and the availability of rig-moving vessels may cause the supply and demand balance to vary somewhat between regions. Still, 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, 2009, we renewed our hull and machinery and third-party liability insurance coverages with provisions similar to the existing policies. 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, including liability for removal of wreck expenses, to our rigs due to hurricanes in the U.S. Gulf of Mexico and war perils worldwide. Additionally, we do not carry insurance for loss of revenue. Also, for our subsidiaries ADTI and CMI, we generally self-insure operators' extra expense coverage. This coverage provides protection against expenses related to well control and redrill liability associated with blowouts. Generally, ADTI's clients assume, and indemnify ADTI for, liability associated with blowouts in excess of $50 million. In the opinion of management, adequate accruals have been made based on known and estimated losses related to such exposures.

Tax matters-We are a Swiss corporation, and we operate through our various subsidiaries in a number of countries throughout the world. Our tax provision is based upon the tax laws, regulations and treaties in effect in and between the countries in which our operations are conducted and income is earned. Our effective tax rate for financial reporting purposes will fluctuate from year to year, as our operations are conducted in different taxing jurisdictions. We are subject to changes in tax laws, treaties and regulations in and between the countries in which we operate and earn income. A change in the 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 and, as a result, could have a material effect on our financial results.

Our income tax return filings 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 statement of financial position or results of operations although it may have a material adverse effect on our consolidated cash flows.

With respect to our 2004 and 2005 U.S. federal income tax returns, U.S. taxing authorities previously proposed certain adjustments. In 2008, the tax authorities withdrew one of these proposed adjustments, which reduces the proposed assessment to approximately $79 million, exclusive of interest. One of the remaining adjustments relates to a dispute over the transfer pricing for certain charters of drilling rigs between our subsidiaries. An unfavorable outcome on this assessment with respect to 2004 and 2005 activities would not result in a material adverse effect on our condensed consolidated statement of financial position, results of operations or cash flows. If the authorities were to continue to pursue this position with respect to subsequent years and were successful in such assertion, our effective tax rate on worldwide earnings with respect to years following 2005 could increase substantially, and our earnings and cash flows from operations could be materially and adversely affected. We believe the transfer pricing for these charters is materially correct as filed and intend to defend against such claims vigorously.

The U.S. tax authorities' original assessment also asserted that one of our key subsidiaries maintains a permanent establishment in the U.S. and is, therefore, subject to U.S. taxation on certain earnings effectively connected to such U.S. business. In March 2009, we received verbal indication that this position may be withdrawn by the authorities. We believe the tax treatment asserted in the original assessment with respect to the 2004 or 2005 activity would not result in a material tax liability. If the authorities were to continue to pursue this position with respect to subsequent years and were successful in such assertion, our effective tax rate on worldwide earnings with respect to years following 2005 could increase substantially, and our earnings and cash flows from operations could be materially and adversely affected. We believe our returns are materially correct as filed, and we will continue to vigorously defend against any such claim.

Norwegian civil tax and criminal authorities are investigating various transactions undertaken by our subsidiaries in 2001 and 2002. The authorities issued tax assessments of approximately $233 million, plus interest, related to certain restructuring transactions, approximately $62 million, plus interest, related to a 2001 dividend payment, approximately $4 million, plus interest, related to foreign exchange deductions and approximately $2 million, plus interest, related to dividend withholding tax. We plan to appeal these tax assessments. We may be required to provide some form of financial security, in an amount up to $628 million, including interest and penalties, for these assessed amounts as this dispute is appealed and addressed by the Norwegian courts. Furthermore, the authorities have also issued notification of their intent to issue a tax assessment of approximately $149 million, plus interest, related to the migration of a subsidiary that was previously subject to tax in Norway. The authorities have indicated that they plan to seek penalties of 60 percent on

During the three months ended March 31, 2009, our long-term liability for unrecognized tax benefits related to these Norwegian tax issues increased by $11 million to $157 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 statement of financial position or results of operations although it may have a material adverse effect on our consolidated cash flows.

Certain of our Brazilian income tax returns for the years 2000 through 2004 are currently under examination. The Brazil tax authorities have issued tax assessments totaling $85 million, plus a 75 percent penalty and $67 million of interest through March 31, 2009. The U.S. dollar amount of the assessments decreased during 2008 due to foreign currency exchange rate fluctuations. We . . .