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Transocean Ltd. (NYSE:RIG)

Q2 2010 Earnings Conference Call

August 5, 2010 10:00 AM ET

Executives

Gregory Panagos – VP, IR and Communications

Steven Newman – President, CEO and COO

Ricardo Rosa – SVP and CFO

Terry Bonno – VP, Marketing

Analysts

Jeff Tillery – Tudor, Pickering, Holt

Arun Jayaram – Credit Suisse

Ian MacPherson – Simmons & Company

Angie Sedita – UBS

Scott Gruber – Bernstein

Andrea Sharkey – Gabelli & Company

Robin Shoemaker – Citi

Scott Burk – Oppenheimer

Matt Conlan – Wells Fargo Securities

Kurt Hallead – RBC Capital Markets

Brian Uhlmer – Pritchard Capital

Lukas Daul – SEB Investments

Rob Mackenzie – FBR Capital Markets

Waqar Syed – Macquarie Capital

Jud Bailey – Jefferies & Company

Dan Zimmer – GT Trading

Geoff Kieburtz – Weeden & Company

Operator

Good day, everyone and welcome to the Transocean Limited second quarter 2010 earnings results conference call. Today’s conference is being recorded. At this time, for opening remarks and introductions, I’d like to turn this conference over to Mr. Gregory Panagos, Vice President, Investor Relations and Communications. Please go ahead, sir.

Gregory Panagos

Thank you, Jake. Good morning everyone, welcome to Transocean’s second quarter 2010 earnings conference call. A copy of the second quarter press release covering our financial results along with supporting statements and schedules is posted on the company’s website at www.deepwater.com. We’ve also posted a file containing four charts that will be discussed during this morning’s call. That file can be found on the company’s website by selecting Investor Relations, Quarterly Toolkit and then PowerPoint Charts.

The charts included cover average contracted dayrate by rig type, out of service rig months, operating and maintenance cost trends and free cash flow backlog and debt maturities. The Quarterly Toolkit also has four additional financial tables for your convenience covering revenue efficiency, other revenue details, daily operating and maintenance costs by rig type and contract intangibles.

Joining me on this morning’s call are Steven Newman, our Chief Executive Officer; Ricardo Rosa, Senior Vice President and Chief Financial Officer; Ihab Toma, Senior Vice President of Marketing and Planning; and Terry Bonno, Vice President of Marketing.

Before I turn the call over to Steven, I would like to point out that during the course of this conference call participants may make certain forward-looking statements regarding various matters related to our business and company that are not historical facts, including future financial performance, operating results and the prospects for the contract drilling business.

As you know, it is inherently difficult to make projections or other forward-looking statements in a cyclical industry, such as since the risks, assumptions and uncertainties involved in these forward-looking statements include the level of crude oil and natural gas prices, rig demand and operational and other risks which are described in the company’s most recent Form 10-K and other filings with the US Securities and Exchange Commission. Should one or more of these risks and uncertainties materialize or underlying assumptions prove incorrect, actual results may vary materially from those indicated.

Also note that we may use various numerical measures on the call today that are or may be considered non-GAAP financial measures under Reg G. As I indicated earlier, you will find the required supplemental financial disclosures for these measures, including the most directly comparable GAAP measure and an associated reconciliation, on our website at www.deepwater.com under Investor Relations, Quarterly Toolkit, Non-GAAP Financial Measures and Reconciliations.

Finally, in order to give more people an opportunity to ask questions, please limit your questions to one initial question and one follow-up. Thank you and that concludes the preliminary details.

Now I’ll turn the call over to Steven.

Steven Newman

Thanks, Greg. Good morning, everyone and thank you for joining us this morning. Our second quarter earnings came in at $2.22 per diluted share. After adjusting for the items highlighted in our press release, diluted earnings per share would have been a $1.67. So our results were slightly below street estimates, driven by a drop in revenue efficiency and increased cost as a result of the Macondo well incident.

Ricardo will walk you through the second quarter results and our outlook for the remainder of 2010 including our updated estimates of the impact of the Macondo well incident in a few minutes. As I said on our first quarter call, the company remains focused on three key priorities related to the Macondo well tragedy. Working with all of the Transocean personnel who had been affected by this tragedy, especially the families who lost loved ones and the men and women who worked on the Deepwater Horizon.

Supporting BP in the unified area of command and the efforts to permanently plug the Macondo well. And I want to say how proud I am of the crews of the Transocean rigs which have been involved in these efforts. And third, finding out what caused this terrible tragedy.

Through this entire ordeal, our organization has remained strong, steadfast and focused and we appreciate the support, we have received from our customers and our colleagues in the drilling industry. During the second quarter, our management and operations teams around the world remained focus on their business in spite of the potential distraction of the Macondo well events in the Gulf of Mexico.

As I mentioned though, our revenue efficiency did slip in a bit in the second quarter driven by startup issues with the few of the newbuilds and unplanned downtime on some of the deepwater and Ultra-Deepwater fleet. Some of this unplanned downtime related to BOP equipment and control systems, resulting from the rigorous testing and maintenance, we always perform as part of our standard operating procedures.

Our investigation of the Macondo well events is progressing and we continue to respond to request for information from Congress and the administration and others including BP. We have an active dialog with the US Department of Justice, and demonstrating to them the ability of our US subsidiaries to meet any Macondo well related obligations.

As part of those discussions, we have agreed to temporarily suspend activities under our shareholder approved stock repurchase program pending further discussions with the DOJ. As we have regularly stated since the event, we have a broad indemnity in our drilling contract from BP with respect to among other matters, claims related to the cleanup of pollution from the well, or claims resulting from such pollution.

In order that our investors understand our contract and these indemnity obligations, we have filed the drilling contract in connection with our 10-Q filing. While BP has to-date reserved its rights with respect to our indemnification demands, in light of the facts, the law and the long history of contracts signed in our industry, we remained confident that BP will ultimately honor its indemnity obligations.

Let me now make a few comments about the market before turning the call over to Ricardo. The Jackup market has remained relatively stable over the last quarter, with the total number of idle Transocean Jackups of 27. While we are close to agreeing deals to reactivate a couple of those rigs, we also have a couple of rigs in other parts of the world nearing the end of their existing contracts. So the overall level of utilization in the worldwide fleet and in our own fleet is likely to remain relatively steady for the next several months.

Turning to the Midwater, the number of stacked Transocean rigs increased to six with the completion of the Sedco 701’s contract in Angola. The Arctic III has completed her reactivation and is now working for Exxon Mobil in the North Sea. With the uncertainty in the Gulf of Mexico, the worldwide Deepwater and Ultra-Deepwater markets could see some near-term softening.

The two deepwater rigs we are currently marketing with 2010 availability are the MG Hulme where we negotiated a settlement to the disputed Gazprom contract in Libya and the Discoverer 534 which is finishing her contract with Reliance in India. The only other active deepwater rig we had available in 2010, the Richardson has been extended with Chevron into early 2011.

In the Gulf of Mexico, we continue to work closely with our customers through this period of uncertainty. Our recent fleet status report listed the force majeure declarations we have received from our customers and the agreements we have reached in some cases in response to those declarations. In general, our approach with these customers recognizes the unique circumstances of each situation and strives to preserve the overall contract backlog.

These discussions are productive and generally reflect the strength of our relationships in the customer communities, long-term commitment activity and investment in the Gulf of Mexico. The best example of this is Chevron’s decision to extend the Deep Seas for two years through mid 2013. With the Deep Seas deal done, the next available Ultra-Deepwater rig in the Transocean fleet is the Sedco Energy, which is available in mid 2011 following the completion of our Chevron contract and a 10-year special periodic survey.

Elsewhere in the world, we declined to bid on the Petrobras newbuild program, that we are optimistic that we will continue to build on our strong business relationship with Petrobras.

In closing, let me make a few comments on the shareholder distribution. We have submitted our application for the first quarterly installment to the commercial registrar in the Canton of Zug. They have indicated to us that the review process may take longer than normal which is why we haven’t yet set the record in next stage. As stated in our press release, while we strongly believe that the par value reduction should be registered, the registry has indicated that it needs time to consider the matter in light of US lawsuits which were served on the company in Switzerland.

As soon as we received a received a response to our application from the commercial registrar we will communicate back to you. I think we should now turn to the numbers and let Ricardo take you through some of the details, after that Terry will talk a bit more Terry will talk a bit more about what is going on in the market. Ricardo?

Ricardo Rosa

Thank you Steven and good morning everyone. In the second quarter of 2010 we generated net income of $715 million or $2.22 per diluted share, this compares to net income of $677 million or $2.09 per diluted share in the first quarter of 2010. Second quarter net income was favorably impacted by certain items highlighted in our press release, totaling on a net basis $180 million or $0.56 per diluted share including a $267 million accounting gain from the loss of the Deepwater Horizon offset by $69 million of increased insurance and legal expenses associated with the Macondo well incident and $18 million of expenses resulting from litigation matters that did not relate to the Macondo well incident. After adjusting for these items second quarter net income was $535 million or $1.67 per diluted share.

Second quarter contract drilling revenues were down $151 million, compared to the first quarter of this year. Contract drilling revenues were down quarter-to-quarter primarily because we stacked four additional rigs and because of the impact of an average dayrate decline across our fleet of about $15,000. Increases in shipyard and mobilization time, the impact of increased unplanned downtime and about $37 million in lost revenue from the loss of the Deepwater Horizon. Total revenue was about $60 million below street estimates for the second quarter. We believe the shortfall was primarily due to lower revenue efficiency and utilization in the Ultra-Deepwater fleet.

Four of our newbuilds have startup related unplanned downtime, and some of our Ultra-Deepwater Floaters experienced extended periods in shipyard and mobilization. Contract drilling revenues for the remainder of 2010 are projected to benefit from the start of high dayrate contracts for certain high specification floaters and the continued growth in revenue from newbuild Ultra-Deepwater units with two more expected to be commissioned in the second half of this year. Revenues will also benefit from the continued activity of two newbuilds, the Discoverer Inspiration and the Dhirubhai Deepwater KG2, that commenced operations during the second quarter.

However, these projected increases in contract drilling revenue for the remainder of 2010 are expected to be more than offset by the adverse impact on revenue of five significant items during the second half of this year. First, the impact of the drilling moratorium in the US Gulf of Mexico, which we currently estimate to be approximately $165 million. Second, the affect of the loss of the Deepwater Horizon approximately to be $130 million. Third, the impact of additional rigs back during the year. Fourth, higher planned down service and mobilization time for high specification floaters. And fifth, declining rates from some Jackups in Midwater floaters as they commence new contract of lower dayrates.

We expect our other revenues for 2010 to be approximately $550 million; this is down from prior guidance, mainly because of the impact of the US Gulf of Mexico drilling moratorium on our other operations segment.

Operating and maintenance expenses in the second quarter were $1.358 billion versus $1.196 billion in the first quarter. The quarter-to-quarter increase in operating and maintenance costs of $162 million was primarily attributable to $86 million activity driven increase in costs in our other operations segment. In addition to a $1.9 million relating to the Macondo well incident and unrelated litigation matters that we discussed previously.

Our full-year 2010 operating and maintenance expense guidance is consistent with our prior guidance ranging between $5.2 billion and $5.4 billion. This range includes about $530 million of expected costs related to our low margin other revenue items and an estimate of $180 million were incremental expenses net of expected insurance recoveries associated with the Macondo well incident, down slightly from previous guidance.

The largest item included in the $180 million of incremental expense is $70 million of insurance deductibles, most of which were recorded in the second quarter. Other incremental expense items primarily include legal fees and expenses, internal investigation costs, increased insurance premiums and some of the sundry other potential costs. We must emphasize that this estimate is subject to the results of ongoing investigations, changes in regulations, operating requirements and additional information that may become available.

General and administrative expenses were $58 million in the second quarter compared to $63 million in the prior quarter. The reduction was primarily due to higher share based compensation costs in the first quarter that were non-recurring. We expect general and administrative expenses for 2010 to be between $235 million and $245 million.

Capital expenditures in the second quarter of 2010 were $300 million versus $379 million in the first quarter, with the decrease largely due to reduced payments related to our newbuild program which is nearing completion. We expect capital expenditures for the full-year 2010, to be about $1.4 billion including capitalized interest, with $900 million for newbuilds and $500 million primarily related to upgrades and sustaining capital expenditures including unexpected $25 million in additional equipment upgrades to comply with new regulations in the US Gulf of Mexico.

Interest expense, net of amounts capitalized in interest income was $136 million in the second quarter. We continue to expect our full-year 2010 interest expense net of amounts capitalized in interest income to be about $540 million. This is net of an estimated $85 million in expected capitalized interest, and assumes repayment of debt of maturity, no additional newbuild commitments, no new debt issuance and short-term interest rates remaining at current level.

For the first six months of 2010 our annual effective tax rate was 15.5%. We expect our annual effective tax rate for the full-year to be between 15% and 17%, after taking into account the estimated $180 million cost increase projected for the Macondo well incident.

To get a completed financial picture is possible regarding the Macondo well Incident, please refer to our Form 10-Q for June 2010, that, excuse me, that outlines our insurance coverage for hull and machinery and excess liability, both of which had been renewed through May 2011 on generally the same terms and conditions. The Form 10-Q also includes disclosures on pending litigation, contractual indemnities and ongoing investigations.

In addition, as Steven mentioned earlier, we have filed as an exhibit to the 10-Q, our drilling contracts for the Deepwater Horizon with BP America, together with all its exhibits, annexes and amendments. Lastly, our cash balances have increased $1.6 billion during the second quarter to reach $2.9 billion as of June 30. These cash balances provides Transocean with significant liquidity that combined with the free cash flow we flow we expect to generate from our contracted backlog will position us well to meet our debt obligations as they mature.

I will now hand over to Terry to provide some comments on the market.

Terry Bonno

Thanks, Ricardo and good morning to everyone. I’ll move straight to the various markets, then we’ll begin with a discussion on the Ultra-Deepwater market. While we currently had no availability in 2010, and little remaining availability in 2011, the Ultra-Deepwater market remains over supplied in the near-term compounded by the uncertainties of the US Gulf of Mexico moratorium.

Despite this challenging environment, we remained confident that we will be able to extend our only remaining unit available in 2011. As Steven indicated in his opening comments, we extended the Discoverer Deep Seas for two years at 450K per day and this solid fixture represents the long-term commitment of our customer base and the confidence our customers continue to have in our people and equipment.

Moving to Brazil, Petrobras is still evaluating the recent 28 newbuild tenders and we believe that some incremental demand will be required to bridge the gap to the deliveries of the Brazilian newbuilds. Additionally, Petrobras has recently issued a deepwater tender for one incremental unit. We remain committed to growing our market share and improving our position with Petrobras in Brazil and will continue to look for opportunities to do so.

Other areas of opportunity coming to market exist in East Africa, Gabon, Ghana and the Black Sea. Future Ultra-Deepwater demand will continue to grow by some of the recent drilling successes in the US Gulf of Mexico, Brazil, Angola and Mozambique. With a solid worldwide resource base, we remain optimistic about the healthy future of the Ultra-Deepwater market. Turning to the deepwater market, we extended the Richardson to March of 2011 in Angola at 340K per day.

The two remaining marketed deepwater units available in 2010, Discoverer 534 and MG Hulme are under consideration by our customers and we would also expect to capitalize on these opportunities shortly, despite the challenging near-term softness of the deepwater market and the uncertainty of the situation in the Gulf.

Turning to the Harsh environment, worldwide continues to present opportunities for our existing fleet with open tendering from various operators. An additional requirement offshore Eastern Canada will soon be tendered and will be incremental to the existing fleet offshore Newfoundland. Our presence and performance in Canada puts us in a great position to further expand our business there.

Moving on to the worldwide Midwater Floater fleet, the tendering remains active and the contracting pace remains steady compared to the previous quarter. Opportunities generally short-term in duration continue to materialize in UK, India, Asia and Australia. Transocean’s contracting activity for the quarter resulted in the following fixtures. Actinia for one well at 190K in Vietnam, extension of the GSF Rig 135 for two months at 249K in the Congo and extension of the Sedco 714 for six months at 250K in the UK.

Our 2010 availability consists of four active rigs with six additional rigs cold stacked. We remain optimistic that oil price stability will continue to fuel more projects. However we are concerned with the oversupply of deepwater units that could compete in the Midwater market space.

Moving to the Jackup market, much like the Midwater market, tendering activity has remained steady over the previous quarter and resulted in a number of fixtures worldwide, largely due to the stability in the commodity price. The resulting fixtures are as follows, extension of the GSF Baltic at 1,000K for two years in Nigeria, extension of GSF High Island VII at 87.5K for three months in Nigeria, extension of the Trident VIII at 85K for six wells in Gabon, and the extension of the D.R. Stewart for three months.

We also secured a contract to reactivate the Key Gibraltar for three years in Thailand at 105K for the first six months, thereafter the rate is adjusted quarterly based on market dayrates of similar class of rigs, startup of the year it is estimated to be Q1 2011. Of our marketed fleet, we had three high specification and seven standard Jackups available in 2010 and expect more fixtures are on the way.

We are optimistic about continuing tendering activity and expect to reactivate a few of our units between now and the first quarter of 2011. However, we remain cautious about the supply overhand from the newbuild units and expect that some more stacking on rig may occur in the near-term.

Marketing utilization for premium Jackups, greater than 300 feet is 90% of standard Jackup utilization is around 70% for the total international Jackup fleet. We are seeing some downward pricing pressure on the standard Jackups, but the premium Jackup rates are improving and we expect to see continue through 2010.

This concludes my discussion on the market, so I will turn it back to you Steven.

Steven Newman

Thank you. With that we’re ready to open up the line for Q&A.

Question-and-Answer Session

Operator

(Operator Instructions) We’ll pause for a moment to assemble the queue. And we will take the first question from Jeff Tillery from Tudor, Pickering, Holt.

Jeff Tillery – Tudor, Pickering, Holt

Hi good morning.

Steven Newman

Good morning Jeff.

Jeff Tillery – Tudor, Pickering, Holt

For the rigs you have in the Gulf of Mexico contracted right now in the Deepwater side, could you give us an update on just how many, without naming rigs, that you see could be moving internationally as well as an update on, how you’re treating the rigs that have had force majeure declarations. Are you recognizing that revenue going forward?

Steven Newman

I’ll let Terry give you some insight because she is probably the most closely involved with some of those conversations.

Terry Bonno

Other than what’s been reported, we are in active discussions with several of our customers on trying to look for opportunities or find out opportunities or other contracts that they can mobilize the rigs to international locations. As of today, we’re really only speaking with one of our customers that is interested in moving, I’m sorry, there is two customers that is interested in moving to an international location.

Steven Newman

With respect to your question on revenue recognition Jeff, I don’t think there is really an issue. The conversations we have had with the customers who have declared force majeure being productive and there is no real contentious dispute and so we continue to invoice them and recognize that revenue and they’re paying.

Jeff Tillery – Tudor, Pickering, Holt

Okay, great and just my second question, on the disclosure around OPA in the 10-Q, recognizing that Transocean has been established as a responsible party, I mean is it your understanding that’s just with regards to the pollution around the Horizon thinking or has the government sought to lump you in with the operator?

Steven Newman

We have acknowledged OPA related liability for fluids that M&A did from the drilling rig on or above the surface of the water.

Jeff Tillery – Tudor, Pickering, Holt

Okay, thank you very much.

Steven Newman

Thanks Jeff.

Operator

And now we’ll take a question from Arun Jayaram with Credit Suisse.

Arun Jayaram – Credit Suisse

Good morning, gentlemen.

Steven Newman

Good morning Arun.

Arun Jayaram – Credit Suisse

Yes, I wanted to narrow in, in the Q you talked about $2.1 billion of backlog that could potentially be lost in the Gulf of Mexico associated with the moratorium. I just wanted to see if you could comment, is that what customers intend to do or is that just if all the customers intended to terminate the contracts, this would be the impact to your backlog?

Steven Newman

That’s purely an effort on our part to be as transparent as possible, if the customers were able to success defend a force majeure declaration and subsequently terminated the contracts, that represents the contract value that is at risk, because there is no early termination fee associated with those particular contracts.

Arun Jayaram – Credit Suisse

Okay.

Steven Newman

There is a number of assumptions embedded in there, but that’s the – if you applied all of those assumptions Arun, that’s the outcome.

Arun Jayaram – Credit Suisse

Okay, thanks for that. And the second question is regarding kind of a follow-up to Jeff’s question is, I know in the previous Q, the Coast Guard had identified Transocean as a responsible party to potential spill from the Deepwater Horizon rig, the diesel fuel as well as at the subsea from the well. Can you comment on what would be the steps for them to narrow that distinction and when, and if that could occur?

Steven Newman

Arun, the statute is pretty clear on that, we have applied our understanding of the statute and we’re going to continue to stand behind that understanding which is that we are a responsible party for fluids emanating from the drilling rig on or above the surface of the water.

Arun Jayaram – Credit Suisse

Okay, and last one would be, in your 10-Q filed yesterday, the language signals, I guess that BP may attempt to challenge the indemnity clause with the contract. Could you comment on how they could do that or what means, I mean I guess gross negligence recent contract would be but what means do you get the sense that they may try to challenge that indemnity?

Steven Newman

I really don’t think it’s appropriate for us to speculate on BP’s intentions or motives.

Arun Jayaram – Credit Suisse

Okay, fair enough. Thanks Steven.

Steven Newman

Next question.

Operator

Very well. And now we’ll move to the next question from Ian MacPherson, Simmons & Company. Go ahead please.

Ian MacPherson – Simmons & Company

Hey good morning. Thank you.

Steven Newman

Good morning Ian.

Ian MacPherson – Simmons & Company

Steven or Terry, I didn’t discern anything from your deepwater commentary that would support the conclusion that the low-end deepwater market is going to crater near-term. As you look out a couple years in your assessment of the market fundamentals do you think that the low-end of deepwater market is going to bleed lower utilization wise and we’ll see more stacked rigs or what does your market insight suggest at this point?

Steven Newman

I’ll want that Terry could share, all of the rate and benefit of her market insight. Go ahead.

Terry Bonno

Ian, I think it’s certainly with the suspension, I guess that’s what we’re calling it these days, a suspension in the Gulf of Mexico, I think is a little difficult to certainly be crisp on answering that question. I think that we do have softness in the near-term and I do think you’re going to see some pricing pressure but I think when this market settles out, I think the customers with the favorable commodity picture that they’re going to be seeing, I think they’re getting excited about this, the budgeting process and we’re having a lot of discussions and look what we’ve done with during this difficult period, we’ve contracted Ultra-Deepwater unit two more years. So I think there is a lot of confidence in the market.

The numbers – I realize the numbers showing the availability are pretty big but I think we’re going to have to, have a wait and see and believe that it’s going to – we’re going to make it through this as its going to come back.

Ian MacPherson – Simmons & Company

Okay, a follow-up question for Ricardo. I think you said if I got this correctly that your second half revenue impact for Macondo outside of the Horizon revenue erosion, was up $165 million. Is that correct, and from that number would that be what we might infer from your maximum backlog revenue generation, less whatever you’re getting on your various standby rates and suspended rates etcetera. Is that what that number means?

Ricardo Rosa

Ian, you’re quoting the right figure, I did say $165 million and your interpretation is correct.

Ian MacPherson – Simmons & Company

Great, okay I’ll pass it over. Thank you.

Ricardo Rosa

All right.

Operator

And the next question will come from Angie Sedita with UBS.

Angie Sedita – UBS

Great, thank you. Good morning guys.

Steven Newman

Good morning Angie.

Angie Sedita – UBS

Steven, can you give us a time line as far as the Coast Guard patrolling up the BOP and investigating what took place and when you would expect to have some kind of conclusion on the BOP?

Steven Newman

In reviewing the forward planning with our operating people, I suspect we’ll have access to the BOP on the sea bed either later this month or early in September. We have proposed to the unified command that we perform some function testing on the BOP while it remains on the sea bed so we can get a better idea of the condition of the BOP as its sitting there right now. And then recovery of the BOP will take a week or 10 days beyond that, so in terms of the forensics really commencing in earnest, we’re probably looking at late September or early October. And it’s just a question of beyond that, how long those forensics take and how quickly we can get to any sort of definitive answer on what actually happened with the BOP and that’s a little bit more difficult for me to give you any real clarity or crispness around Angie.

Angie Sedita – UBS

Okay, no that’s very, very helpful. And then kind of going along with that, any time line, any guidance from the Swiss authorities on timeline on the review process for the dividend, and in your mind is there any risk that the dividend may not be able to be paid?

Steven Newman

In terms of the timeline of the review, it’s difficult, I think the Swiss authorities are dealing with a situation they’ve never really dealt with before. So they are being very prudent and cautious and deliberative in how they evaluate it. It’s difficult for me to handicap the risks as we’ve said in our press release in our Q, we believe that all the requirements for registering the reduction in par value have been met.

Angie Sedita – UBS

Okay, that’s fair enough. And then, Terry there is a follow-up to your comments on Petrobras. Behind the one tender out there, any sense of the incremental demand that Petrobras may have for deepwater rigs given the dislocation in the market, and any thoughts on if you believe all 28 of the rigs, the tendered rigs will be built?

Terry Bonno

Okay, I do believe that we’d be able to continue their programs and certainly with the continued success that they are having. They are going to have to come to the market for some incremental gap fillers and how many rigs that they will need Angie, I will be guessing at this particular moment. Also I would be guessing at how many rigs are going to contract in this shipyard tender, there is a lot of rumors going around, inside of Brazil so it might be half, it might be 75% but I think we’re going to have to wait and see, but also coupled with this near-term softness. It may end up being that some of the available units are much cheaper than what they see from the shipyard or the contract drillers.

So I think we’re just going to have to wait and see as Petrobras always comes through with a very good strategy, I don’t see them doing anything differently. So I think that they are going to have some good choices in going forward.

Angie Sedita – UBS

All right, thanks Terry. Thanks guys.

Terry Bonno

Thank you Angie.

Operator

And now we’ll take a question from Scott Gruber of Bernstein.

Scott Gruber – Bernstein

Yes good afternoon.

Steven Newman

Hi Scott.

Scott Gruber – Bernstein

Terry, you mentioned the potential to reactivate additional Jackups by early 2011 even in light of some near-term softness at the moment, how many do you think could go back to work based upon your conversations with customers?

Terry Bonno

They’re quite a few opportunities that are about to come to market that, I don’t think that the general market is aware of and it seemed to be a long time. I think we’re going to see some interesting opportunities appear in Thailand and Angola, again if the customers look forward to the pricing stability and they’re confident and I think the 2011 budgets are going to reflect that. So I think it’s a very optimistic picture and also if you look at rumors around Pemex, they’re saying that they perhaps will come out with 21 rigs tender.

So I think it’s – the market is shaping up and I think we can look for some opportunities to certainly reactivate some of these standard Jackups that are sitting on the beach.

Scott Gruber – Bernstein

Okay, and does that reflect at all any incremental shift of dollars out of the deepwater into the shallow water or does it simply reflect a healthy commodity price at this point?

Terry Bonno

From my perspective I think it reflects a healthy commodity price and I think that there is a lot of pent-up demand that just needs to be rolled out into the market.

Scott Gruber – Bernstein

Okay, and given your cash building on the balance sheet and your deepwater investment program winding down, does this change your outlook toward investing and upgrading, some of your older rigs particularly within the Jackup market as there has been a clear preference through the downturn for higher spec equipment?

Steven Newman

I don’t think it’s really changed our perspective on that Scott. We have regularly looked for and taken advantage of opportunities to continually upgrade our fleet, and we’re going to continue to look for those opportunities. We’re going to be disciplined about it as we have historically been. But we’ll continue to look for opportunities, do that going forward.

Scott Gruber – Bernstein

Okay, great. I’ll turn it back.

Operator

Thank you. And now we’ll take a question from Andrea Sharkey with Gabelli & Company.

Andrea Sharkey – Gabelli & Company

Hi good morning.

Steven Newman

Good morning Andrea.

Terry Bonno

Good morning.

Andrea Sharkey – Gabelli & Company

I had a question on the blowout preventer, as there has been a lot of talk about modifications, adding second tier rams and things like that, and some have said, that one of the issues will be whether the rigs can actually carry the extra weight of these upgrades to the blowout preventer. So, I was curious if you could talk about, how many of your rigs would need to have that sort of upgrade done and then would those rigs be able to, say carry that extra weight, what your thoughts are on that?

Steven Newman

Yes, it’s an interesting question Andrea, and as one would spend a lot of time on. Our initial focus has been on ensuring that we have the resources and the plans in place to get all of the rigs compliant with the initial Notice to Lessees Number 5, which does address BOP certification, configuration, testing and maintenance. Beyond that we’ve sort of taken a preliminary look at some of the legislation that’s been proposed in Congress and the impact of that legislation might have, I think the company is in a good position because of the high specification equipment, we operate in the Gulf of Mexico, most of our rigs in the Gulf of Mexico are big rigs.

So if it’s a question of weight consideration, the bigger rigs that Transocean operates in the Gulf of Mexico will certainly be out in advantage.

Andrea Sharkey – Gabelli & Company

Okay, great, that’s helpful. And maybe just to follow-up on that same issue, with the NTL 5 getting the blowout preventers recertified, have you been able to do that yet on all of your rigs in the Gulf of Mexico and I guess where does that stand?

Steven Newman

Yes, we haven’t been able to do it on all of the rigs, we’ve certainly started some of the rigs are extremely far along in that prospect, certainly the newbuilds that have just come out are extremely well positioned, the equipment has been out five or ten years, is part way through that process. So for each rig we have a good understanding of the requirements to get to full certification and a good plan for getting there.

Andrea Sharkey – Gabelli & Company

Okay, great, thanks. I’ll turn it back over.

Operator

And now we’ll move to Robin Shoemaker with Citi.

Robin Shoemaker – Citi

Good morning Steven.

Steven Newman

Hey Robin.

Robin Shoemaker – Citi

Hi, I wanted to ask you – we’ve seen about $5 billion worth of M&A deals in offshore drilling in the last couple of months, and you obviously saw all of those deals, I wonder if you passed on them out of lack of interest, is it because of the circumstances you’re in and the agreement with the DOJ or how do you feel about Transocean as a prospective acquirer of rigs that are being offered for sale currently?

Steven Newman

We continue to be on the lookout for opportunities to grow the company, particularly in the strategic segments. We did look at the deals that were done. They were done at prices that didn’t meet our criteria for attractiveness. We continue to hope for opportunities that materialize, that do meet those criteria and I think we’ll be in a good position to strongly consider them and hopefully act on them.

Robin Shoemaker – Citi

Okay, and so this DOJ agreement you have doesn’t in any way influence that?

Steven Newman

Well I would, the agreement we’ve reached with the DOJ is that we’ll maintain and active dialog with them and it principally relates to the condition of the US subsidiary. So we’ve talked with the DOJ about regular financial reporting for the US subsidiaries, we’ve talked about maintaining cash balances and not executing any significant cash transactions outside the ordinary course of business with the US subsidiaries, well also the discussion with the DOJ is related to the ability to US subsidiaries to meet any expected Macondo well related obligations.

Robin Shoemaker – Citi

Okay, let me just ask one other question then. Ricardo mentioned I believe, some costs or downtime related to startup of newbuild rigs, you’ve had such a prompt and on-time delivery of those rigs from shipyards in the ten rig program that you started quite some years ago. Can you characterize these deepwater rig newbuild startup issues?

Steven Newman

Yes, on the Clear Leader class that were built in Daewoo’s yard in Korea. There was a problem we discovered with the riser tensioner foundations. We discovered the problem as we were testing one of rigs as part of the commissioning process in the shipyard in Korea and as a result of that event we reinspected all the other rigs and discovered similar problems. So we had to take those rigs out of service to correct that problem. The other newbuild startup related issue we have is on the DD-3, which was built in Keppel FELS in Singapore. That problem related to the high pressure mud piping. And so we had to do some significant rework of high pressure mud system.

Robin Shoemaker – Citi

Okay, great. I appreciate that. I’ll turn it back. Thank you.

Steven Newman

Thanks Robin.

Operator

And now Scott Burk with Oppenheimer has the next question.

Scott Burk – Oppenheimer

Good morning. With the Swiss authorities slowing down the approval of the dividend payout just wondered what, if they have any additional oversight over capital expenditures or other capital outflows for acquisitions?

Steven Newman

No.

Scott Burk – Oppenheimer

Okay, so.

Steven Newman

This is purely related to the reduction in par value.

Scott Burk – Oppenheimer

Okay, but they also some oversight over share repurchases as well, correct?

Ricardo Rosa

I mean the oversight of the share repurchases is largely one of insuring that the market has provided with adequate information, and as a result.

Steven Newman

Yes, its question of transparency and reporting.

Ricardo Rosa

That’s right and we have met that through posting every five days of update on our repurchases on our website.

Scott Burk – Oppenheimer

Okay, thanks for that clarification. And I wanted – can you talk about the permitting process for any rigs, for rigs that were operating in the Gulf of Mexico. I’m thinking mostly of the shallow water rigs. There has been a big slowdown in permitting, are you’re – are the operators you are working with starting to see permits becoming available so that activity can ramp up specifically in the shallow water?

Steven Newman

In the shallow water business, our exposure in the Gulf of Mexico is really through ADTI and I guess, the anecdotal information we get from ADTI from ADTI’s customers is that maybe there is a little bit of a loosening of that process, maybe the permits are starting to be issued now.

Scott Burk – Oppenheimer

Okay, all right. Thanks.

Operator

And Scott Conlan, or excuse me, Matt Conlan with Wells Fargo Securities has the next question.

Matt Conlan – Wells Fargo Securities

Thanks guys, earlier in the week Bromwich said that the moratorium could end early if that’s what the fact support. I would like your opinion on what facts do you think could convince the administration to end it earlier. And if it were ended earlier how quickly, what kind of lead time until the operators could get back to work?

Steven Newman

That would really test my powers of speculation Matt, I’m not sure what kind of facts Mr. Bromwich is going to be looking to I think compliance with NTL 5 is going to be a key fact I think, more clarity and understanding about what happened on Macondo is going to be a key fact and beyond that I’m not really sure what else Mr. Bromwich might have had in contemplation of an early termination to the suspension.

Matt Conlan – Wells Fargo Securities

Okay, and to the second part of the question, assuming that permits are going to be issued in a timely manner. How long do you think it would take your customers to be able to get back to work?

Steven Newman

Most of the discussions we’ve had about the readiness to resume work during this period of suspension has been around from our perspective certainly it’s been around maintaining crews and the capability of the equipment to go back to work as quickly as possible. So setting aside the process, we’re going through to comply with NTL 5, the rigs are ready to go back to work and the customers are similarly in a position where they’ve kept all of their capability in tact as well. So I would think it would be a relatively timely resumption of activity.

Matt Conlan – Wells Fargo Securities

So it would be predominately be dependent upon their ability to get the permits?

Steven Newman

Yes.

Matt Conlan – Wells Fargo Securities

Okay, terrific. Thank you very much

Operator

We’ll move to a question from Kurt Hallead with RBC Capital Markets.

Kurt Hallead – RBC Capital Markets

Hi there, good morning or good afternoon, wherever you may be. Hey a couple follow-ups. First Ricardo, I think you referenced the dollar amount that you expect to spend to meet the new requirements as to the NTL. Is that all inclusive or do you expect that number to increase?

Steven Newman

Based on our assessment of the requirements as they’re spelled out in NTL 5 Kurt, that $25 million is related to the capital. We’ll have to add. There is clearly some – there will be cost, some operating costs in terms of getting the inspectors out there and maintenance the internal spend we will incur in terms of carrying the equipment down so that the inspectors can conduct their full inspection. The $25 million is just a capital associated with the new requirements.

Kurt Hallead – RBC Capital Markets

Okay, and then a follow-up with respect to the Swiss authorities, did they give you any specifics as to why they are going through this type of review process, I know you said it’s a unique situation for the Swiss government but at the same time, you have all these rules and laws over there that require you to get shareholder approval. What is it that the Swiss government said explicitly to you as to why they’re holding off on letting you pay the dividend?

Steven Newman

They haven’t been explicit or specific in their comments to us but we understand generally, it relates to the fact that some of the claims that have been lodged in the US, some of the litigation in the US does name the parent company has a defendant and those claims have been served on the parent company in Switzerland.

Kurt Hallead – RBC Capital Markets

Okay, and then yes…

Ricardo Rosa

Just to add on that Kurt, impair in mind too that this process is linked to the fact that we have requested a reduction of the par value of the share. The dividends that potentially in future paid out of APIC (ph) or equivalent of APIC (ph) would not be subject to such a rigorous process.

Kurt Hallead – RBC Capital Markets

Okay, and then in your perspective from a corporate perspective even with respect to – even with what’s going on in the Gulf of Mexico your view is the dividend that you had put forth for approval is something that can be sustained beyond a 12-month period.

Steven Newman

Well the dividend that’s been approved by the shareholders is a $1 billion, paid out over the next year, that’s a commitment, the corporation now has as a result of that shareholder approval. Beyond that we’re – you can imagine we’re currently engaged in a thorough review of the full financial situation of the company including our outlook for the business, our estimate of capital expenditures required on our estimate of operating cash flows generated, the debt profile of the company, there is a significant number of factors that are going into that and we will continue to evaluate that as more information emerges.

Kurt Hallead – RBC Capital Markets

Okay, great. And then just for Terry, a follow-up on the market dynamics. If you – you gave I think an underlying tone of overall optimism with some near-term caution, so when you look at the pricing dynamics of the different stratification on deepwater and Jackups, would you characterize each of the strata now as a point of pricing stabilization, or can you delineate for us, where you see explicit downside pricing risk?

Terry Bonno

Well Kurt, I think it’s a good question by the way, I think that we’re going to see pricing pressure on the moored units, the Ultra-Deepwater and the deepwater moored units and I’m afraid that it could potentially turn down into putting as we said in the comments, putting pressure on the Midwater Floaters because we have a few more, bit more floaters coming available here shortly, I think we have about 17 coming off, rolling off of contract through the end of 2010.

So I think there may some pressure going down. Also in the Jackups space, we are seeing some pressure on the standard Jackups. So those prices, while they’re not dipping significantly, there is a bit of pressure on those two.

Kurt Hallead – RBC Capital Markets

Yes and then, Terry I don’t want to take up too much time here but generally speaking, when you talk about the pressure like for example, on the standard Jackups is that even from, the current leading edge or are you talking off of the Transocean kind of prior contract?

Terry Bonno

I am speaking in reference to the Transocean prior contracts.

Kurt Hallead – RBC Capital Markets

Okay, great. Thanks.

Operator

And now we’ll move to a question from Brian Uhlmer with Pritchard Capital.

Brian Uhlmer – Pritchard Capital

Hey good afternoon, thanks for taking my question.

Steven Newman

Hi Brian.

Brian Uhlmer – Pritchard Capital

I was trying to clarify, you had a little discussion on insurance and talked about your insurance and I was trying to understand that you renewed all your insurance through 2011 and it didn’t seem like it was incrementally that much higher, and what you see as insurance maybe beyond that or just clarify that a little bit for me, if you could?

Steven Newman

Ricardo, can give you some insight on that.

Ricardo Rosa

Yes, Brian as we’ve indicated in the Q and I think you’ll be probably quoting from that. We would be successful in maneuvering our insurance cover for both hollow machinery and excess liability which are two main insurance policies. Through May June 2011 on, with statute (ph) the same terms and conditions and there is no indication at all that the insurance market would in future years will not give us access to those covers in the future.

Brian Uhlmer – Pritchard Capital

Okay, outstanding. That’s really all I had, all my other ones were answered. Thank you.

Steven Newman

Thank you Brian.

Operator

The next question will come from Lukas Daul from SEB Investments.

Steven Newman

Hello Lukas.

Lukas Daul – SEB Investments

Yes, hello good afternoon. I was wondering in your discussion with the operators on the available units, do you get a sense that the oil companies are more selective in terms of who they want to work with referring to track record operational team etcetera, and does it maybe make you less concerned with the speculative newbuilds potentially coming to the market than you were six – nine months ago?

Steven Newman

Terry will give you some insight into our discussions with operators because she is intimately involved with those.

Terry Bonno

Good morning, Lukas. I would say that by enlarge and certainly after the Horizon, our customers are saying that it is important for them to have operational team that they can count on, that can deliver operational excellence and that they are concerned about being able to contract units but they don’t know who the crews would be, they don’t know any sort of or have any track record to depend on. So we are seeing a preference by the operators in looking at those company’s and building better relationships for those companies that they can count on.

Lukas Daul – SEB Investments

Okay, and then on the Midwater units that you have currently stacked, if you were to bring them back to work could you give us a range of what kind of activation costs you would be looking at?

Steven Newman

Yes Lukas, generally the reactivation costs on the Midwater rigs are somewhere between $20 million or $30 million at the low end and $50 million or $60 million at the high end for those that we would choose to reactivate. There may be one or two in that list that have reactivation cost significantly higher than that and so you’d need a really unique set of circumstances to be able to undertake that kind of significant expenditure.

Lukas Daul – SEB Investments

All right, thank you.

Operator

The next question will come from Rob Mackenzie, FBR Capital Markets.

Rob Mackenzie – FBR Capital Markets

Good afternoon guys. Thanks for taking my call.

Steven Newman

Hi Rob.

Rob Mackenzie – FBR Capital Markets

I guess my first question for you is regarding the shareholder approval for the quote, unquote dividend, does that approval applied just for the par value reduction or would that also approval for a dividend payout of APIC (ph) if you wanted to do it that way in the future?

Steven Newman

We would require shareholder approval for all distributions Rob.

Rob Mackenzie – FBR Capital Markets

So for an additional, a change in the distribution format you’d require a new approval?

Steven Newman

Yes, it’s going forward, once we fulfill the current obligation, the par value reduction distribution, if we chose in 2011 and going forward to convert to a dividend that would be in the form of a payout of additional paid in capital, that distribution would still require shareholder approval and when shareholders had approved it, it then becomes an obligation to the corporation.

Rob Mackenzie – FBR Capital Markets

Okay, I guess my question was and you’ve answered it indirectly, was whether this approval would let you choose the method, but obviously not. On the oil spill response organization that Chevron and others are spearheading, has RIG been asked to or considered contributing assets or funds to that?

Steven Newman

We’d not been asked.

Rob Mackenzie – FBR Capital Markets

Okay, on BOPs, can you give us a feel for who the companies are that are certifying those and what some of the challenges are, in getting these certified in a timely manner, is there a meaningful backlog that you guys have to fight through?

Steven Newman

There is a backlog and the limiting factor is just resources. So if you think about some of the third party experts that are capable of doing this and the NTL give you some direction in terms of what qualifies as a third party expert. It’s just a question of are there enough third party expert resources out there to work through all of the 30 or 31 deepwater rigs remaining in the Gulf of Mexico.

Rob Mackenzie – FBR Capital Markets

Okay, well thanks.

Gregory Panagos

Rob, excuse me this is Greg Panagos, I just want to make sure that we’re clear on the shareholder distributions. When the shareholders approve the distribution out of the particular equity account that approval is not open ended or perpetual, it is for a particular amount over particular time period. So whenever any distribution is approved and then paid out, you have to get shareholder approval for a new distribution, even if it’s out of the same equity account.

Rob Mackenzie – FBR Capital Markets

Fair enough, thank you. And then a final question since the Macondo incident in your subsequent release here of a startlingly strong indemnity clause in your 10-Q, have you seen operators try and change the level of indemnity specifically even including gross negligence from recent contract negotiations, or are you still able to get the same kind of contract terms?

Steven Newman

I would say that in terms of that sort of an indemnity provision, we’re still largely successful in obtaining the same provisions.

Rob Mackenzie – FBR Capital Markets

Great, thank you. That’s all I had.

Operator

And now we’ll have from Waqar Syed with Macquarie Capital.

Waqar Syed – Macquarie Capital

Macquarie Capital, good morning.

Steven Newman

Hi Waqar.

Waqar Syed – Macquarie Capital

Terry, regarding the Deep Seas you got what I would consider pretty decent dayrate, was that dayrate negotiated post Macondo incident or was this negotiation for dayrate going on before that, and it just got announced now?

Terry Bonno

Waqar, actually we negotiated this contract yesterday and so I would – we’ve been in discussions for a while but this has been continuing on and as we all know our customers have opportunities to delay or the circumstances provide themselves that they find themselves that they are having second thoughts about contracted rigs, but clearly in this case, this is something that is pointing very positively with the long-term fundamental for this market. we’re delighted and thank you for the complement of the rates.

Waqar Syed – Macquarie Capital

No, but when you said that you expect weakness, when you say that, I just want to understand what the reference point is for you, are you saying from like historical levels of 500, 600 for this class of rigs or are you talking about this recent contract level of 450?

Terry Bonno

I think that this, I guess and you need to rephrase the question, but I – because I’m not really clear of what you’re asking Waqar but I think that this is a strong fixture and I think that the Ultra-Deepwater market is going to be strong through this softness in the market. So I don’t see a lot of deviation from this rate as we move forward, I mean there maybe some downward pressure because we are going to have availability, but like I said, I’m optimistic. So is there another way you’d like to rephrase your question.

Waqar Syed – Macquarie Capital

No, I understand I was – you had mentioned that you still expected some weakness in the Ultra-Deepwater market in the near term, and I just wanted to understand from what was the reference level because I think there are a lot of people, investors out there who believe that maybe the rates for enterprise class rigs or even sixth gen rigs could fall into the $300,000 the low $300,000 level. And I just wanted to understand what your take was on that. And when you said weakness, 450 maybe weaker from 600 level that we had seen before but certainly is a pretty decent rate versus where the expectations in the investor community is.

Terry Bonno

Okay Waqar I think 450 is a strong fixture. I think we are going to see pressure and I think the differentiation for me at least is, the more the deepwater as I previously said the deepwater, the Ultra-Deepwater moored units, there is a quite a few of those and they’re going to be competing certainly down up to the Midwater levels because the demand scenario right now is not robust in the near-term. So that’s why I said we’re going to see a little bit of pricing pressure here in the near-term. So I would say, we are going to go below 300 and I think that the recent fixtures that we’ve seen in the market and its rigs that have just one rig that’s just moved to Egypt and I believe that we saw another fixture out there that was certainly an indication of these more units finding work in and competing for work.

Waqar Syed – Macquarie Capital

Right, so it’s – so it’s quite clear that what you’re saying is that the weakness is for rigs that call themselves Ultra-Deepwater but do not have the capabilities, that your enterprise class rigs or some of the newer sixth gen rigs have in terms of DP or size or number of cranes and all these other factors that go into drilling?

Terry Bonno

Yes Waqar.

Waqar Syed – Macquarie Capital

Okay, Steven I have a question, kind of more macro, have you implemented any major changes in the – into your standard operating procedures on the rigs following a review of the incident on Deepwater Horizon?

Steven Newman

I wouldn’t characterize them as major changes, initially following the event there was a notice issued in the Gulf of Mexico by the US coast guard that had to do with emergency response capabilities and so we’ve taken that and we’ve pushed that globally across the Transocean fleet. Beyond that pending full understanding of what actually happened on Macondo, it’s difficult for us to decide for whether any changes are required on all in our operating systems.

Waqar Syed – Macquarie Capital

Okay. Thank you very much.

Operator

And now we’ll move to Jud Bailey with Jefferies & Company. Go ahead please.

Jud Bailey – Jefferies & Company

Thanks, good morning.

Steven Newman

Hi Jud.

Jud Bailey – Jefferies & Company

A couple of questions. Terry, you talked about Brazil and your thought that there will be some incremental or I guess they’ll probably come to the market to fill some gaps when some of the Brazilian newbuilds are laid, how do we think about a time frame. Do you think that would probably be out in, 2013 or ‘14 when they’re realize they are going to be late or how do you think about timing for them maybe coming back into the market?

Terry Bonno

I think that it’s going to be sooner than that, I think they are going to quickly be able to quantify the number of units that they need and again I also another saying is that Petrobras does have some international, Ultra-Deepwater units that they may actually bring back to Brazil also to fulfill some of the demand. So they’ve got some units and it’s certainly there were some sublet units out there. So that could also fulfill their needs. But I still believe that there are some opportunities for the existing fleet.

Jud Bailey – Jefferies & Company

Okay, and I have just a quick follow-on there, if they were to bring rigs from Petrobras International into Brazil, do you have any sense that they would then seek to replace the rigs in the market that they left like West Africa or the Gulf?

Terry Bonno

I think it’s too early to say that, I think they’re still drilling the programs and trying to evaluate where they are in those programs so that they can entertain what they’re needs are going to be in the future.

Jud Bailey – Jefferies & Company

Okay, and then another question, bigger picture on the Midwater market. If you go back and look at, back in 2002 and 2003 we saw a lot of Midwater rigs go idle at the expense of deepwater rigs. You’ve commented on your expectation of some softness in the Midwater market, do you think that we could see something similar where utilization just gradually bled down over a couple of years and got probably below 70%. Do you think it could get that bad or do you think it’s going to wind up being better than that with this oil price?

Terry Bonno

Well Jeff, I think the demand is going to improve with just a positive outlook of oil. I think that’s one thing that’s for sure, I think we’re going to have to wait and see how we play out with the Gulf of Mexico. And I do think we are going to see some bled down because of the current availability in the near-term. Well again as bad as you’re describing, I think that we need a couple of more quarters, maybe not a couple but we need certainly some quarters to see the confidence build and let’s see what the 2011 budget say.

Jud Bailey – Jefferies & Company

Okay, I appreciate the perspective. And if I could just slip in one more on the Hulme and the 534, given that the comments around the 300 level, should we be thinking about something below 300 for both of those rigs for the next contract?

Terry Bonno

I think that we’re – that was a good one to answer because we’re in a current tendering scenario where both of those rigs are placed until the tender.

Steven Newman

I’m not sure we want to tip our hand on what we bid.

Jud Bailey – Jefferies & Company

Understood, I appreciate it. Thank you.

Steven Newman

All right, Jeff.

Operator

Now we’ll take a question from Dan Zimmer (ph) with GT Trading (ph).

Dan Zimmer – GT Trading

All right. My question has been answered. Thank you.

Operator

Thank you and it looks like we have time for one final question today and that will come from Geoff Kieburtz with Weeden & Company.

Geoff Kieburtz – Weeden & Company

Sorry to disappoint, You’ve answered my questions. Thank you.

Operator

Very well. With that I will go ahead and turn the call back over to your speakers for any additional or closing remarks.

Steven Newman

All I’d say is thank you for your continued interest in the company and your support of us during the events we’ve been through and we’ll talk to you next quarter.

Operator

And with that, that will conclude your conference for today. Thank you for your participation. Everyone have a wonderful day.

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Source: Transocean Ltd. Q2 2010 Earnings Call Transcript
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