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 economic downturn,

† 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 and our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2009,

† 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 August 3, 2009, we owned, had partial ownership interests in or operated 133 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), 26 Midwater Floaters, 10 High-Specification Jackups, 55 Standard Jackups and three 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.

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,
                               2009             2008         Change           2009            2008         Change

Average daily revenue
(a)(b)                       $ 255,900       $  239,300     $ 16,600       $  256,200       $ 233,700     $ 22,500
Utilization (b)(c)                  84 %             87 %        n/a               87 %            89 %        n/a
Statement of operations
Operating revenues           $   2,882       $    3,102     $   (220 )     $    6,000       $   6,212     $   (212 )
Operating and maintenance
expense                          1,277            1,364          (87 )          2,448           2,521          (73 )
Operating income                 1,121            1,350         (229 )          2,440           2,890         (450 )
Net income attributable to
controlling interest               806            1,065         (259 )          1,748           2,214         (466 )




                                           June 30,         December 31,
                                             2009               2008             Change
   Balance sheet data (at end of period)
   Cash and cash equivalents               $     907       $          963       $    (56 )
   Total assets                               35,257               35,182             75
   Total debt                                 12,053               13,557         (1,504 )


____________________

"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. Stacking rigs that typically have lower dayrates, such as Midwater Floaters and Jackups, has the effect of increasing the average daily revenue since these rig types are typically contracted at lower dayrates compared to the High-Specification Floaters.

(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 available rig calendar days in the period. Idle and stacked rigs are included in the calculation and reduce the utilization rate to the extent these rigs are not earning revenues. Newbuilds are included in the calculation upon acceptance by the client.

The downturn in the global economy and the commodity prices, which have decreased from the historical highs experienced in 2008, have had and continue to have an adverse effect on our operations. Still, we continue to experience historically high average dayrates due to previously executed contract commitments. High-specification units continue to attract interest from customers; however, moored Deepwater Floaters, Midwater Floaters and Jackups have sustained diminished demand.

We currently have four Midwater Floaters, including one that is held for sale, and 15 Jackups that are stacked, and we expect to stack more rigs as they come off contract. A stacked rig, is one that is manned by a reduced crew or unmanned and typically has reduced operating costs and is (a) preparing for an extended period of inactivity, (b) expected to continue to be inactive for an extended period, or (c) completing a period of extended inactivity. 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.

We have recently completed construction on four Ultra-Deepwater newbuilds and each has departed the shipyard. As of August 3, 2009, none of these units were accepted by their respective clients and commenced their respective contracts. By the end of 2009, we expect to complete construction on one additional Ultra-Deepwater newbuilds.

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 worldwide 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 six months ended June 30, 2009 decreased from the prior year period primarily as a result of lower contract intangible revenues and other revenues along with decreased activity in our non-drilling operations. Our operating and maintenance expenses for the same period decreased from the prior year period in connection with such decreased activity (see "-Outlook"). Total debt as of June 30, 2009 decreased compared to December 31, 2008, as a result of repayment of borrowings under the Term Loan and

Outlook

Drilling market-Commodity prices have strengthened from recent lows in the last several months and this strengthening appears to have led to some renewed interests from our customers. However, the economic downturn continues to have a negative impact on our business and has resulted in liquidity issues for a few clients, who may be at risk of being unable to fulfill their obligations. Even though we are engaged in advanced discussions with clients on several opportunities, we have only signed a few new contracts during the last several months. Our contract backlog has declined to $33.7 billion at August 3, 2009 compared to $35.8 billion as of May 5, 2009 and $39.8 billion as of December 31, 2008. We believe the economic downturn and commodity prices, which have fallen from the historical highs experienced in 2008, have led to diminished demand for the jackups, midwater and moored deepwater units in the near term and, as a result, we expect to experience lower dayrates than previously contracted for these rigs as contracts are renewed as well as further stacking of rigs. 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.

We are currently seeing an increase in sublet activity across all rig classes, which could have an adverse impact on the availability of opportunities for our fleet. We anticipate contracting opportunities for the remainder of 2009 to remain at the current low level unless commodity prices strengthen further.

The uncommitted fleet rate is the number of uncommitted days as a percentage of the total number of available rig calendar days in the period. As of August 3, 2009, the uncommitted fleet rates for the remainder of 2009, 2010, 2011 and 2012 are as follows:

                Uncommitted fleet rate        2009    2010    2011    2012
                High-Specification Floaters     5 %    11 %    29 %    45 %
                Midwater Floaters              25 %    44 %    78 %    86 %
                High-Specification Jackups     41 %    66 %    77 %    90 %
                Standard Jackups               42 %    69 %    84 %    97 %

Even though oil prices have strengthened from recent lows and we have recently been engaged in an increasing number of advanced discussions with customers, we have obtained only one firm commitment for a High-Specification Floater in the last several months. The global economic downturn may have a near-term negative effect on dayrates in the High-Specification Floater fleet, especially within the moored Deepwater Floater fleet. The reduced contracting has, in turn, contributed to a decline in our High-Specification Floater contract backlog to $27.1 billion as of August 3, 2009, from $27.9 billion as of May 5, 2009. We only have two High-Specification Floaters coming off contract in 2009 and another seven in 2010. Although we have been engaged in advanced discussions with clients for some rigs in this fleet, any inability to obtain new contracts for the rigs in this fleet may result in a continued decline in our backlog. Although recent subletting of our High-Specification Floater fleet appears to have had a minimal impact on 2009, we cannot be certain of the impact on future years. Due to current weak demand for moored Deepwater units and the availability of a number of these units for 2010, we expect to see continued dayrate and utilization weakness absent further stabilization or increases in commodity pricing.

Longer term, we anticipate that the deepwater market will benefit from the limited supply of deepwater capable rigs available for contract. As of August 3, 2009, we had 47 of our 49 current and future High-Specification Floaters contracted through the end of 2009, with 40, including all of our newbuilds, contracted into or beyond 2011. These 40 units also include 26 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.

For our Midwater Floater fleet, which includes 26 semisubmersible rigs, near-term customer demand has declined significantly, resulting in the absence of tendering opportunities and the stacking of four of our midwater floaters, including one that is classified as held for sale. Considering the weakness in midwater floater markets, particularly in the U.K., coupled with potential competition from the available moored Deepwater units, subletting of the rigs under existing contracts, and the cancellation of or delays in customer programs in other Midwater Floater markets, we expect near-term reduction in dayrates and the stacking of additional rigs in this fleet. The impact on our Midwater Floater fleet of the expected reduction in dayrates and activity 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 as contracts are renewed. We believe the delivery of the uncontracted units currently under construction will further adversely impact the market for jackups through 2009 and beyond. As of August 3, 2009, we had 15 stacked jackups. With 12 of our 65 jackups

We expect our total revenues to be lower in 2009 than in 2008. The lost revenue associated with stacked and idle rigs, the anticipated sale of GSF Arctic II, the termination of management contracts for Dada Gorgud and Istiglal in 2009, and the sale of three jackups in 2008 are all expected to result in reduced contract drilling revenues mostly offset by the benefits of the commencement of new contracts with higher average dayrates and the commencement of operations of five of our newbuilds and Sedco 706. Additionally, contract drilling intangible revenues and other revenues are expected to collectively decline, 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, the anticipated sale of GSF Arctic II in 2009, the termination of management contracts for Dada Gorgud and Istiglal 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.

We have seven existing contracts with fixed-price or capped options, and we expect that a number of these options will not be exercised by our customers in 2009 in light of the current market environment. Well-in-progress or similar provisions of our existing contracts may delay the start of higher dayrates in subsequent contracts, and some of the delays 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 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, except on Dhirubhai Deepwater KG1, with respect to which loss of revenue is contractually required. 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

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 . . .