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,

††† the expiration of bank credit agreements,

††† 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 Reports on Form 10-Q for the quarterly periods ended March 31, 2009 and June 30, 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 November 2, 2009, we owned, had partial ownership interests in or operated 136 mobile offshore drilling units. As of this date, our fleet consisted of 42 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 seven Ultra-Deepwater Floaters under construction.

We operate in two reportable segments: (1) contract drilling services and
(2) other operations. Contract drilling services, our primary business, is involved in contracting our mobile offshore drilling fleet, related equipment and work crews primarily on a dayrate basis to drill oil and gas wells. We believe our drilling fleet is one of the most modern and versatile fleets in the world, consisting of floaters, jackups and other rigs used in support of offshore drilling activities and offshore support services on a worldwide basis. We specialize in technically demanding regions of the offshore drilling business with a particular focus on deepwater and harsh environment drilling services. 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"). ADTI provides 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. Our 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                            Nine months ended
                               September 30,                                September 30,
                           2009            2008         Change          2009            2008         Change

Average daily revenue
(a)(b)                   $ 283,800       $ 242,200     $ 41,600       $ 264,500       $ 236,500     $ 28,000
Utilization (b)(c)              75 %            89 %        n/a              83 %            89 %        n/a
Statement of
operations
Operating revenues       $   2,823       $   3,192     $   (369 )     $   8,823       $   9,404     $   (581 )
Operating and
maintenance expense          1,396           1,426          (30 )         3,844           3,947         (103 )
Operating income               957           1,383         (426 )         3,397           4,273         (876 )
Net income
attributable to
controlling interest           710           1,063         (353 )         2,458           3,277         (819 )



                                         September 30,         December 31,
                                             2009                  2008             Change
Balance sheet data (at end of period)
Cash and cash equivalents               $           886       $          963       $    (77 )
Total assets                                     36,018               35,182            836
Total debt                                       11,922               13,557         (1,635 )


____________________

(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, 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) These calculations exclude results for 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 that 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 customer.

During the three months ended September 30, 2009, oil and gas prices stabilized at levels which supported a recent increase in tendering activity by our customers. The increased tendering, however, has not led to a corresponding increase in dayrates, and we do not expect dayrates to increase or to return to the highs experienced in 2008 for the remainder of 2009 or the first half of 2010. We continue to benefit from the historically high average dayrates resulting from previously executed contract commitments. High-specification units continue to attract interest from customers; however, moored Deepwater Floaters, Midwater Floaters and Jackups are experiencing reduced demand.

We currently have six Midwater Floaters, including one that is held for sale, 23Jackups and one other rig that are stacked, and we expect to stack more rigs as they complete their current contracts. 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 of five Ultra-Deepwater newbuilds and each has departed the shipyard. As of November 2, 2009, three of these units were accepted by their respective customers and commenced their respective contracts. We expect the remaining two Ultra-Deepwater newbuilds that have completed construction to be accepted by its customer and commence its contract prior to December 31, 2009.

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 and decreasing supplier demand to slow the rate of escalation in these costs or to cause these costs to decrease over time.

Our revenues for the nine months ended September 30, 2009 decreased compared to the prior year period primarily due to 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 compared to the prior year period in connection with such decreased activity (see "-Outlook"). Total debt as of September 30, 2009 decreased compared to December 31, 2008, as a result of repayment of borrowings under the $2.0 billion term credit facility subject to the Term Credit Agreement dated March 13, 2008, as amended (the "Term Loan") and repurchases of the 1.625% Series A Convertible Senior Notes during the nine months then ended (see "-Liquidity and Capital Resources-Sources and Uses of Liquidity").

Outlook

Drilling market-Oil and gas prices appear to have stabilized at levels that have led to increased tendering activity in recent months, signaling some renewed interest from our customers. However, the current economic environment continues to have a negative impact on our business and has led to liquidity issues for a few of our customers, who may be at risk of being unable to fulfill their contractual obligations.

We were awarded two Ultra-Deepwater drilling contracts in the third quarter of 2009, and we are engaged in advanced discussions with customers on several additional opportunities. Our contract backlog has declined to $32.2 billion at November 2, 2009 compared to $33.7 billion as of August 3, 2009 and $39.8 billion as of December 31, 2008. We believe the economic downturn and oil and gas prices, which have fallen from the historical highs experienced in 2008, have led to diminished demand for the jackups, midwater and moored deepwater units, and we expect the diminished demand to continue for the near term. Additionally, we expect to experience lower dayrates than previously contracted for these rigs as contracts are renewed, as well as further stacking of rigs. However, during the near term, we expect to see minimal dayrate declines affecting our Ultra-Deepwater Floater fleet.

Subletting activity continues across all rig classes, which could have an adverse impact on contracting opportunities for our fleet. We expect contracting opportunities to remain at their current levels for the remainder of 2009. Recent improvement in tendering activity, however, may lead to additional contracts being entered into in 2010 depending on continued stability or further improvement in oil and gas prices, sustained economic conditions and capital availability for our customers in the coming year.

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 November 2, 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     4 %     9 %    25 %    43 %
                Midwater Floaters              25 %    42 %    75 %    85 %
                High-Specification Jackups     41 %    64 %    80 %    90 %
                Standard Jackups               45 %    67 %    83 %    97 %

Our two recent High-Specification Floater contracts have contributed to the relative stability of our High-Specification Floater contract backlog, which was $26.5 billion as of November 2, 2009. Although we have been engaged in advanced discussions with customers for some rigs in this fleet, our backlog will resume declining if we are unable to obtain new contracts for the rigs in this fleet or additional newbuilds that sufficiently compensates for the lapse of existing backlog. Recent subletting of our High-Specification Floater fleet appears to have had a minimal impact on 2009; however, we cannot be certain of the impact on future years. We have only two High-Specification Floaters completing their contracts in 2009 and another five in 2010. Due to current weak demand for moored Deepwater units and the availability of a number of these units in 2009 and 2010, we expect continued dayrate and utilization weakness absent additional tendering for units having 5,000 ft. water depth capability.

As of November 2, 2009, we had 47 of our 49 current and future High-Specification Floaters contracted through the end of 2009, with 41, including all of our newbuilds, contracted into or beyond 2011. These 41 units also include all 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 foster significant demand and should 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 significantly declined, resulting in a low level of tendering opportunities and the stacking of six of our Midwater Floaters, including one that is classified as held for sale. Considering the weakness in midwater floater markets, coupled with potential competition from the available moored Deepwater units, and the delays in customer programs in midwater floater markets, we expect a reduction in dayrates and additional stacking of rigs in this fleet in the near term. Sixty-nine percent of our Midwater Floater fleet is committed to contracts that extend into 2010. We believe the recent increased tendering activity could result in a few units being extended or returned to work in the second half of 2010.

We continue to experience weakness in the jackup market. Considering the number of new jackups in the market that are under construction without customer contracts and the decrease in customer demand compared to historical levels, we expect near-term dayrates and utilization for our Jackup fleet to continue to decline as contracts are renewed or completed. We believe the delivery of the uncontracted units currently under construction will further adversely impact the jackup market beyond 2009. As of November 2, 2009, we had 23 stacked Jackups. With five of our 65 Jackups completing their current contracts in 2009, continued weakness in the jackup market may result in the stacking of additional rigs. However, the recent increase in tendering could result in the extension of contracts or reactivation of a few units by mid 2010.

We expect our total revenues to be lower in 2009 than in 2008. The decline is primarily associated with the effect on our non-drilling operations of reduced activity and lower oil and gas prices, and the diminishing recognition of contract drilling intangible revenues. Additionally, contract drilling revenues are expected to be lower due to reduced activity associated with stacked and idle rigs, mostly offset by the commencement of operations for five of our newbuilds and Sedco 706, and higher average dayrates in 2009. We expect our total revenues in 2010 to be lower than in 2009 primarily due to reduced activity associated with stacked and idle rigs, partially offset by continued operations of our newbuilds delivered in 2009 and additional newbuilds delivered in 2010.

We expect our total operating and maintenance costs in 2009 to be lower than those in 2008 due to reduced other costs primarily associated with diminished activity in our non-drilling operations and reduced support costs due to various overhead cost-reduction initiatives. Contract drilling operating expenses are expected to rise slightly due to the commencement of operations for five of our newbuilds and Sedco 706 and due to higher costs associated with out of service time for shipyard and maintenance projects, which are expected to be largely offset by a reduction of expenses resulting from the number of our Jackups and Midwater Floaters that have been and may be stacked during 2009. We expect our total operating and maintenance costs in 2010 to be lower than in 2009 primarily due to stacked and idle rigs and reduced support costs, mostly offset by the continued operation of our newbuilds delivered in 2009, additional newbuilds delivered in 2010 and an increase in planned shipyard and maintenance projects. Our projected operating and maintenance costs for 2010 remain uncertain and could be impacted by the actual level of activity as well as other factors.

We have 10 existing contracts with fixed-price or capped options, and given current market conditions, we expect that a number of these options will not be exercised by our customers in 2009 and 2010. 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 named windstorms 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 customers 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, the U.S. tax authorities have withdrawn all of their previously proposed tax adjustments, except a claim regarding transfer pricing for certain charters of drilling rigs between our subsidiaries, reducing the total proposed adjustment to approximately $79 million, exclusive of interest. An unfavorable outcome on this assessment with respect to 2004 and 2005 activities would not result in a material adverse effect on our consolidated 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 indications that this position may be withdrawn by the U.S. tax 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 . . .