**UNITED
        STATES**
 **SECURITIES
        AND EXCHANGE COMMISSION**
 **Washington,
        D.C. 20549**
 **______________________**
 
 **FORM
        10-Q**
 **(Mark
        One)**
 **x**
              **QUARTERLY
                  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                  ACT OF
                  1934**
 
 **For
        the quarterly period ended June 30, 2005**
 
 **OR**
 
 **o**
              **TRANSITION
                  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                  ACT OF
                  1934**
 
 **For
        the transition period from ______ to ______.**
 
 **Commission
        file number 333-75899**
 **______________________**
 
 **TRANSOCEAN
        INC**.
 (Exact
        name of registrant as specified in its charter)
 **______________________**
 
 **Cayman****Islands**
              
              **66-0582307**(State
                  or other jurisdiction of
                  incorporation or organization)
              
              (I.R.S.
                  Employer Identification
                  No.)**4
                  Greenway Plaza****1****Houston,
                  Texas**
              
              **77046**(Address
                  of principal executive offices)
              
              (Zip
                  Code)
 
 Registrant’s
        telephone number, including area code: **(713)
        232-7500**
 **______________________**
  Indicate
        by check mark whether the registrant (1) has filed all reports required to
        be
        filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
        the
        preceding 12 months (or for such shorter period that the registrant was required
        to file such reports), and (2) has been subject to such filing requirements
        for
        the past 90 days. Yes x No o
 
 Indicate
        by check mark whether the registrant is an accelerated filer (as defined
        in Rule
        12b-2 of the Exchange Act). Yes x No o
 
 As
        of
        July 29, 2005, 328,775,188 ordinary shares, par value $0.01 per share, were
        outstanding.












**TRANSOCEAN
      INC.**





**INDEX
      TO FORM 10-Q**





**QUARTER
      ENDED** **JUNE
      30, 2005**





Page**PART
                I - FINANCIAL INFORMATION****Item
                1.**Financial Statements (Unaudited)Condensed
                Consolidated Statements of
                OperationsThree
                and Six Months Ended June 30, 2005 and 2004
            1Condensed
                Consolidated Statements of Comprehensive
                IncomeThree
                and Six Months Ended June 30, 2005 and 2004
            2Condensed
                Consolidated Balance SheetsJune
                30, 2005 and December 31, 2004
            3Condensed
                Consolidated Statements of Cash
                FlowsThree
                and Six Months Ended June 30, 2005 and 2004
            4Notes
                to Condensed Consolidated Financial
                Statements
            5**Item
                2.**Management’s Discussion and Analysis of Financial Condition
                and Results of Operations
            20**Item
                3.**Quantitative
                and Qualitative Disclosures About Market
                Risk
            39**Item
                4.**Controls
                and Procedures
            40**PART
                II - OTHER INFORMATION****Item
                1.**Legal Proceedings
            40**Item
                2.**Unregistered
                Sales of Equity Securities and Use of
                Proceeds
            40**Item
                4.**Submission
                of Matters to a Vote of Security
                Holders
            41**Item
                6.**Exhibits
            42


*Index
            to Form 10-Q*
  **PART
      I - FINANCIAL INFORMATION**





**Item
      1. Financial Statements**





**TRANSOCEAN
      INC. AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS**


(In
      millions, except per share data)


(Unaudited)





Three
                Months Ended June 30,
            
            Six
                Months Ended June 30,<B>
            
            2005
            
            2004
            
            2005
            
            2004Operating
                RevenuesContract
                drilling revenues
            
            $
            682.1
            
            $
            584.9
            
            $
            1,282.7
            
            $
            1,182.4Other
                revenues
            
            
            45.3
            
            
            48.3
            
            
            75.2
            
            
            102.8727.4
            
            
            633.2
            
            
            1,357.9
            
            
            1,285.2Costs
                and ExpensesOperating
                and maintenance
            
            
            438.9
            
            
            406.2
            
            
            827.5
            
            
            818.6Depreciation
            
            
            101.2
            
            
            133.0
            
            
            201.9
            
            
            264.5General
                and administrative
            
            
            18.0
            
            
            14.0
            
            
            36.1
            
            
            29.1558.1
            
            
            553.2
            
            
            1,065.5
            
            
            1,112.2Gain
                from sale of assets, net
            
            
            15.5
            
            
            23.8
            
            
            35.7
            
            
            27.6Operating
                Income
            
            
            184.8
            
            
            103.8
            
            
            328.1
            
            
            200.6Other
                Income (Expense), netEquity
                in earnings of unconsolidated affiliates
            
            
            3.4
            
            
            3.7
            
            
            6.5
            
            
            6.0Interest
                income
            
            
            4.8
            
            
            1.9
            
            
            8.8
            
            
            4.0Interest
                expense
            
            
            (29.8
            )
            
            (42.6
            )
            
            (62.9
            )
            
            (90.0
            )Gain
                from TODCO Stock Sales
            
            
            165.0
            
            
            -
            
            
            165.0
            
            
            39.4Loss
                on retirement of debt
            
            
            -
            
            
            -
            
            
            (6.7
            )
            
            (28.1
            )Other,
                net
            
            
            (3.0
            )
            
            (1.1
            )
            
            (4.1
            )
            
            0.3140.4
            
            
            (38.1
            )
            
            106.6
            
            
            (68.4
            )Income
                Before Income Taxes and Minority Interest
            
            
            325.2
            
            
            65.7
            
            
            434.7
            
            
            132.2Income
                Tax Expense
            
            
            23.6
            
            
            19.9
            
            
            41.1
            
            
            67.9Minority
                Interest
            
            
            (0.2
            )
            
            (2.2
            )
            
            -
            
            
            (6.4
            )Net
                Income
            
            $
            301.8
            
            $
            48.0
            
            $
            393.6
            
            $
            70.7Earnings
                Per ShareBasic
            
            $
            0.93
            
            $
            0.15
            
            $
            1.21
            
            $
            0.22Diluted
            
            $
            0.90
            
            $
            0.15
            
            $
            1.18
            
            $
            0.22Weighted
                Average Shares OutstandingBasic
            
            
            326.1
            
            
            320.8
            
            
            324.8
            
            
            320.7Diluted
            
            
            338.0
            
            
            324.1
            
            
            336.9
            
            
            324.2




See
      accompanying notes.


1
 *Index
            to Form 10-Q*


<


T **TRANSOCEAN
      INC. AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME**


(In
      millions)


(Unaudited)


a





Three
                Months Ended June 30,
            
            Six
                Months Ended June 30,2005
            
            2004
            
            2005
            
            2004Net
                Income
            
            $
            301.8
            
            $
            48.0
            
            $
            393.6
            
            $
            70.7Other
                Comprehensive Income (Loss), net of taxAmortization
                of gain on terminated interest rate swaps
            
            
            (0.1
            )
            
            (0.1
            )
            
            (0.2
            )
            
            (0.2
            )Change
                in unrealized loss on securities available for sale
            
            
            −
            
            
            (0.1
            )
            
            0.3
            
            
            (0.1
            )Minimum
                pension liability adjustments (net of tax expense of $0.2 for the
                three
                months ended June 30, 2004, and $0.7 and $0.2 for the six months
                ended
                June 30, 2005 and June 30, 2004, respectively)
            
            
            −
            
            
            0.5
            
            
            1.4
            
            
            0.5Other
                Comprehensive Income (Loss)
            
            
            (0.1
            )
            
            0.3
            
            
            1.5
            
            
            0.2Total
                Comprehensive Income
            
            $
            301.7
            
            $
            48.3
            
            $
            395.1
            
            $
            70.9


See
        accompanying notes.
 2
 *Index
              to Form 10-Q*




**TRANSOCEAN
      INC. AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED BALANCE SHEETS**


(In
      millions, except share data)




June
                  30,
              
              December
                  31,<B>
              
              2005
              
              2004(Unaudited)**ASSETS**<S>Cash
                  and Cash Equivalents
              
              $
              942.5
              
              $
              451.3Accounts
                  Receivable, net of allowance for doubtful accounts of $18.3 and
                  $16.8 at
                  June 30, 2005 and December 31, 2004, respectively
              
              
              564.2
              
              
              442.0Materials
                  and Supplies, net of allowance for obsolescence of $18.6 and
                  $20.3at
                  June 30, 2005 and December 31, 2004, respectively
              
              
              153.1
              
              
              144.7Deferred
                  Income Taxes, net
              
              
              20.7
              
              
              19.0Other
                  Current Assets
              
              
              41.5
              
              
              52.1Total
                  Current Assets
              
              
              1,722.0
              
              
              1,109.1Property
                  and Equipment
              
              
              9,779.5
              
              
              9,732.9Less
                  Accumulated Depreciation
              
              
              2,896.1
              
              
              2,727.7Property
                  and Equipment, net
              
              
              6,883.4
              
              
              7,005.2Goodwill
              
              
              2,251.9
              
              
              2,251.9Investments
                  in and Advances to Unconsolidated Affiliates
              
              
              4.6
              
              
              109.2Deferred
                  Income Taxes
              
              
              48.1
              
              
              43.8Other
                  Assets
              
              
              249.2
              
              
              239.1Total
                  Assets
              
              $
              11,159.2
              
              $
              10,758.3**LIABILITIES
                  AND SHAREHOLDERS’ EQUITY**Accounts
                  Payable
              
              $
              208.0
              
              $
              180.8Accrued
                  Income Taxes
              
              
              64.1
              
              
              17.1Debt
                  Due Within One Year
              
              
              400.0
              
              
              19.4Other
                  Current Liabilities
              
              
              248.0
              
              
              213.0Total
                  Current Liabilities
              
              
              920.1
              
              
              430.3Long-Term
                  Debt
              
              
              1,793.5
              
              
              2,462.1Deferred
                  Income Taxes, net
              
              
              153.6
              
              
              124.1Other
                  Long-Term Liabilities
              
              
              324.2
              
              
              345.2Total
                  Long-Term Liabilities
              
              
              2,271.3
              
              
              2,931.4Commitments
                  and ContingenciesMinority
                  Interest
              
              
              4.1
              
              
              4.0Preference
                  Shares, $0.10 par value; 50,000,000 shares authorized, none issued
                  and
                  outstanding
              
              
              −
              
              
              −Ordinary
                  Shares, $0.01 par value; 800,000,000 shares authorized, 328,508,472
                  and
                  321,533,998 shares issued and outstanding at June 30, 2005 and
                  December
                  31, 2004, respectively
              
              
              3.3
              
              
              3.2Additional
                  Paid-in Capital
              
              
              10,871.7
              
              
              10,695.8Accumulated
                  Other Comprehensive Loss
              
              
              (22.9
              )
              
              (24.4
              )Retained
                  Deficit
              
              
              (2,888.4
              )
              
              (3,282.0
              )Total
                  Shareholders’ Equity
              
              
              7,963.7
              
              
              7,392.6Total
                  Liabilities and Shareholders’ Equity
              
              $
              11,159.2
              
              $
              10,758.3


See
        accompanying notes.
 3
 *Index
              to Form 10-Q*




**TRANSOCEAN
      INC. AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS**


(In
      millions)


(Unaudited)





<table><caption>
            
            Three
                Months Ended June 30,
            
            Six
                Months Ended June 30,<B>
            
            2005
            
            2004
            
            2005
            
            2004**Cash
                Flows from Operating Activities**Net
                income
            
            $
            301.8
            
            $
            48.0
            
            $
            393.6
            
            $
            70.7Adjustments
                to reconcile net income to net cash provided by operating
                activitiesDepreciation
            
            
            101.2
            
            
            133.0
            
            
            201.9
            
            
            264.5Stock-based
                compensation expense
            
            
            2.8
            
            
            3.5
            
            
            5.9
            
            
            13.5Deferred
                income taxes
            
            
            (2.4
            )
            
            (3.3
            )
            
            2.2
            
            
            28.0Equity
                in earnings of unconsolidated affiliates
            
            
            (3.4
            )
            
            (3.7
            )
            
            (6.5
            )
            
            (6.0
            )Net
                gain from disposal of assets
            
            
            (13.6
            )
            
            (23.1
            )
            
            (33.5
            )
            
            (25.0
            )Gain
                from TODCO Stock Sales
            
            
            (165.0
            )
            
            -
            
            
            (165.0
            )
            
            (39.4
            )Loss
                on retirement of debt
            
            
            -
            
            
            -
            
            
            6.7
            
            
            28.1Amortization
                of debt-related discounts/premiums, fair value adjustments and issue
                costs, net
            
            
            (2.3
            )
            
            (4.9
            )
            
            (5.5
            )
            
            (12.5
            )Deferred
                income, net
            
            
            2.1
            
            
            17.4
            
            
            12.1
            
            
            14.1Deferred
                expenses, net
            
            
            10.3
            
            
            (10.8
            )
            
            9.1
            
            
            (12.7
            )Tax
                benefit from exercise of stock options
            
            
            5.7
            
            
            -
            
            
            4.9
            
            
            -Other
                long-term liabilities
            
            
            7.3
            
            
            4.6
            
            
            12.5
            
            
            6.9Other,
                net
            
            
            (2.4
            )
            
            0.5
            
            
            (1.3
            )
            
            (4.3
            )Changes
                in operating assets and liabilitiesAccounts
                receivable
            
            
            (79.6
            )
            
            (61.6
            )
            
            (119.6
            )
            
            (31.8
            )Accounts
                payable and other current liabilities
            
            
            55.7
            
            
            (23.5
            )
            
            78.6
            
            
            0.1Income
                taxes receivable/payable, net
            
            
            12.2
            
            
            4.4
            
            
            7.1
            
            
            2.0Other
                current assets
            
            
            (24.2
            )
            
            8.9
            
            
            (20.1
            )
            
            (15.6
            )Net
                Cash Provided by Operating Activities
            
            
            206.2
            
            
            89.4
            
            
            383.1
            
            
            280.6**Cash
                Flows from Investing Activities**Capital
                expenditures
            
            
            (78.4
            )
            
            (37.3
            )
            
            (109.6
            )
            
            (54.7
            )Proceeds
                from disposal of assets, net
            
            
            25.0
            
            
            31.5
            
            
            60.5
            
            
            42.0Proceeds
                from TODCO Stock Sales, net
            
            
            271.9
            
            
            -
            
            
            271.9
            
            
            155.7Joint
                ventures and other investments, net
            
            
            1.4
            
            
            3.2
            
            
            4.5
            
            
            4.7Net
                Cash Provided by (Used in) Investing Activities
            
            
            219.9
            
            
            (2.6
            )
            
            227.3
            
            
            147.7**Cash
                Flows from Financing Activities**Repayments
                on revolving credit agreement
            
            
            -
            
            
            (150.0
            )
            
            -
            
            
            (200.0
            )Repayments
                on other debt instruments
            
            
            (7.9
            )
            
            (13.6
            )
            
            (295.3
            )
            
            (395.2
            )Net
                proceeds from issuance of ordinary shares under stock-based compensation
                plans
            
            
            87.0
            
            
            1.0
            
            
            159.4
            
            
            15.0Proceeds
                from issuance of ordinary shares upon exercise of warrants
            
            
            4.6
            
            
            -
            
            
            4.6
            
            
            -Decrease
                in cash dedicated to debt service
            
            
            12.0
            
            
            -
            
            
            12.0
            
            
            -Other,
                net
            
            
            -
            
            
            -
            
            
            0.1
            
            
            -Net
                Cash Provided by (Used in) Financing Activities
            
            
            95.7
            
            
            (162.6
            )
            
            (119.2
            )
            
            (580.2
            )Net
                Increase (Decrease) in Cash and Cash Equivalents
            
            
            521.8
            
            
            (75.8
            )
            
            491.2
            
            
            (151.9
            )Cash
                and Cash Equivalents at Beginning of Period
            
            
            420.7
            
            
            397.9
            
            
            451.3
            
            
            474.0Cash
                and Cash Equivalents at End of Period
            
            $
            942.5
            
            $
            322.1
            
            $
            942.5
            
            $
            322.1


See
        accompanying notes.


4
 *Index
            to Form 10-Q*





**TRANSOCEAN
      INC. AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


(Unaudited)





**Note
      1** ― **Nature
      of Business and Principles of Consolidation**





Transocean
      Inc. (together with its subsidiaries and predecessors, unless the context
      requires otherwise, “Transocean,” “we,” “us” or “our”) is a leading
      international provider of offshore contract drilling services for oil and gas
      wells. We contract our drilling rigs, related equipment and work crews primarily
      on a dayrate basis to drill oil and gas wells. We also provide additional
      services, including integrated well services. At June 30, 2005, we owned, had
      partial ownership interests in or operated 92 mobile offshore and barge drilling
      units. As of this date, our assets consisted of 32 High-Specification
      semisubmersibles and drillships (“floaters”), 24 Other Floaters, 25 Jackup Rigs
      and 11 Other Rigs.





On
      January 31, 2001, we completed a merger transaction (the “R&B Falcon
      merger”) with R&B Falcon Corporation (“R&B Falcon”). At the time of the
      merger, R&B Falcon operated a diverse global drilling rig fleet consisting
      of drillships, semisubmersibles, jackup rigs and other units including the
      Gulf
      of Mexico Shallow and Inland Water segment fleet. R&B Falcon and the Gulf of
      Mexico Shallow and Inland Water segment later became known as TODCO (together
      with its subsidiaries and predecessors, unless the context requires otherwise,
      “TODCO”) and the TODCO segment, respectively. In preparation for the initial
      public offering discussed below, we transferred all assets and businesses out
      of
      R&B Falcon that were unrelated to the Gulf of Mexico Shallow and Inland
      Water business.





In
      February 2004, we completed an initial public offering (the “TODCO IPO”) of
      common stock of TODCO in which we sold 13.8 million shares of TODCO class A
      common stock, representing 23 percent of TODCO’s total outstanding shares. In
      September 2004 and December 2004, respectively, we completed additional public
      offerings of TODCO common stock (respectively referred to as the “September 2004
      Offering” and “December 2004 Offering” and, together with the TODCO IPO, the
“2004 Offerings”). We sold 17.9 million shares of TODCO’s class A common stock
      (30 percent of TODCO’s total outstanding shares) in the September 2004 Offering
      and 15.0 million shares of TODCO’s class A common stock (25 percent of TODCO’s
      total outstanding shares) in the December 2004 Offering. Prior to the December
      2004 Offering, we held TODCO class B common stock, which was entitled to five
      votes per share (compared to one vote per share of TODCO class A common stock)
      and converted automatically into class A common stock upon any sale by us to
      a
      third party. In connection with the December 2004 Offering, we converted all
      of
      our remaining TODCO class B common stock not sold in the 2004 Offerings into
      shares of class A common stock. After the 2004 Offerings, we held a 22 percent
      ownership and voting interest in TODCO, represented by 13.3 million shares
      of
      class A common stock. See Note 3.





We
      consolidated TODCO in our financial statements as a business segment through
      December 16, 2004 and that portion of TODCO that we did not own was reported
      as
      minority interest in our consolidated statements of operations and balance
      sheet. As a result of the conversion of the TODCO class B common stock into
      class A common stock, we no longer had a majority voting interest in TODCO
      and
      no longer consolidated TODCO in our financial statements but accounted for
      our
      remaining investment using the equity method of accounting.





In
      May
      2005 and June 2005, respectively, we completed a public offering of TODCO common
      stock and a sale of TODCO common stock pursuant to Rule 144 under the Securities
      Act of 1933, as amended (respectively referred to as the “May Offering” and the
“June Sale,” collectively referred to as the “2005 Offering and Sale,” and,
      collectively with the 2004 Offerings, the “TODCO Stock Sales”). We sold 12.0
      million shares of TODCO’s class A common stock (20 percent of TODCO’s total
      outstanding shares) in the May TODCO Offering and our remaining 1.3 million
      shares of TODCO’s class A common stock (2 percent of TODCO’s total outstanding
      shares) in the June Sale. As a result of the May Offering, we accounted for
      our
      remaining investment using the cost method of accounting. As a result of the
      June Sale, we no longer own any shares of TODCO’s common stock. See Note
      3.





For
      investments in joint ventures and other entities that do not meet the criteria
      of a variable interest entity or where we are not deemed to be the primary
      beneficiary for accounting purposes of those entities that meet the variable
      interest entity criteria, we use the equity method of accounting where our
      ownership is between 20 percent and 50 percent or where our ownership is more
      than 50 percent and we do not have significant control over the unconsolidated
      affiliate. We use the cost method of accounting for investments in
      unconsolidated affiliates where our ownership is less than 20 percent and where
      we do not have significant influence over the unconsolidated affiliate. We
      consolidate those investments that meet the criteria of a variable interest
      entity where we are deemed to be the primary beneficiary for accounting purposes
      and for entities in which we have a majority voting interest. Intercompany
      transactions and accounts are eliminated.





5
 *Index
            to Form 10-Q*





**TRANSOCEAN
      INC. AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


(Unaudited)





**Note
      2** ― **Summary
      of Significant Accounting Policies**





*Basis
      of Presentation* —Our
      accompanying condensed consolidated financial statements have been prepared
      without audit in accordance with accounting principles generally accepted in
      the
      United States for interim financial information and with the instructions to
      Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange
      Commission (“SEC”). Accordingly, pursuant to such rules and regulations, these
      financial statements do not include all disclosures required by accounting
      principles generally accepted in the U.S. for complete financial statements.
      The
      condensed consolidated financial statements reflect all adjustments, which
      are,
      in the opinion of management, necessary for a fair presentation of financial
      position, results of operations and cash flows for the interim periods. Such
      adjustments are considered to be of a normal recurring nature unless otherwise
      identified. Operating results for the three and six months ended June 30, 2005
      are not necessarily indicative of the results that may be expected for the
      year
      ending December 31, 2005 or for any future period. The accompanying condensed
      consolidated financial statements and notes thereto should be read in
      conjunction with the audited consolidated financial statements and notes thereto
      included in our Annual Report on Form 10-K for the year ended December 31,
      2004.





*Accounting
      Estimates* —The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the U.S. requires management to make estimates and
      assumptions that affect the reported amounts of assets, liabilities, revenues,
      expenses and disclosure of contingent assets and liabilities. On an ongoing
      basis, we evaluate our estimates, including those related to bad debts,
      materials and supplies obsolescence, investments, intangible assets and
      goodwill, property and equipment and other long-lived assets, income taxes,
      workers’ insurance, pensions and other postretirement benefits, other employment
      benefits and contingent liabilities. We base our estimates on historical
      experience and on various other assumptions we believe are reasonable under
      the
      circumstances, the results of which form the basis for making judgments about
      the carrying values of assets and liabilities that are not readily apparent
      from
      other sources. Actual results could differ from such estimates.





*Cash
      and Cash Equivalents—* As
      a
      result of the *Deepwater
      Nautilus* project
      financing in 1999, we were required to maintain in cash an amount to cover
      certain principal and interest payments. Such restricted cash, classified as
      other current assets in the condensed consolidated balance sheet, was $12.0
      million at December 31, 2004. As a result of the repayment of the project
      financing (see Note 6), the restricted cash balance was released in May 2005.





*Change
      in Estimate* —During
      the fourth quarter of 2004, we extended the useful life of four rigs, which
      had
      estimated useful lives ranging from 30 to 32 years, to 35 years. We determined
      35 years was appropriate for each of these rigs based on the current contracts
      these rigs are operating under as well as the additional life-extending work,
      upgrades and inspections we have performed on these rigs. In the three and
      six
      months ended June 30, 2005, the impact of the life extension of these four
      rigs
      was a reduction in depreciation expense of $4.8 million ($0.01 per diluted
      share) and $9.6 million ($0.03 per diluted share), respectively, which had
      no
      tax effect, and such reduction is expected to be approximately $16 million
      before tax in 2005.





*Stock-Based
      Compensation* —Effective
      January 1, 2003, we account for stock-based compensation using the fair value
      recognition provisions of the Financial Accounting Standards Board’s (“FASB”)
      Statement of Financial Accounting Standard (“SFAS”) 123, *Accounting
      for Stock-Based Compensation* ,
      for all
      awards granted or modified on or subsequent to January 1, 2003. We account
      for
      awards granted prior to January 1, 2003 using the intrinsic value method under
      Accounting Principles Board Opinion (“APB”) 25, *Accounting
      for Stock Issued to Employees,* and
      related interpretations (see “ ― New
      Accounting Pronouncements”).





6
 *Index
            to Form 10-Q*





**TRANSOCEAN
      INC. AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


(Unaudited)





If
      compensation expense for grants to employees under our long-term incentive
      plan
      prior to January 1, 2003 was recognized using the fair value method of
      accounting under SFAS 123 rather than the intrinsic value method under APB
      25,
      net income and earnings per share would have been reduced to the pro forma
      amounts indicated below (in millions, except per share data):





Three
                  Months Ended
                June
                  30,
              
              Six
                  Months Ended
                June
                  30,2005
              
              2004
              
              2005
              
              2004Net
                  Income as Reported
              
              $
              301.8
              
              $
              48.0
              
              $
              393.6
              
              $
              70.7Add
                  back: Stock-based compensation expense included in reported net
                  income,
                  net of related tax effects
              
              
              2.5
              
              
              1.5
              
              
              5.3
              
              
              8.8Deduct:
                  Total stock-based compensation expense determined under the fair
                  value
                  method for all awards, net of related tax effectsLong-Term
                  Incentive Plan
              
              
              (3.3
              )
              
              (3.2
              )
              
              (7.9
              )
              
              (12.9
              )Employee
                  Stock Purchase Plan
              
              
              (0.8
              )
              
              (0.5
              )
              
              (1.6
              )
              
              (1.1
              )Pro
                  Forma Net Income
              
              $
              300.2
              
              $
              45.8
              
              $
              389.4
              
              $
              65.5Basic
                  Earnings Per ShareAs
                  Reported
              
              $
              0.93
              
              $
              0.15
              
              $
              1.21
              
              $
              0.22Pro
                  Forma
              
              
              0.92
              
              
              0.14
              
              
              1.20
              
              
              0.20Diluted
                  Earnings Per ShareAs
                  Reported
              
              $
              0.90
              
              $
              0.15
              
              $
              1.18
              
              $
              0.22Pro
                  Forma
              
              
              0.89
              
              
              0.14
              
              
              1.17
              
              
              0.20





*New
      Accounting Pronouncements* —In
      May
      2005, the FASB issued SFAS 154, *“Accounting
      Changes and Error Corrections,”* which
      requires retrospective application to all prior period financial statements
      presented for voluntary changes in accounting principle unless it is
      impracticable.  This statement replaces APB 20, *Accounting
      Changes* ,
      and
      SFAS 3, *Reporting
      Accounting Changes in Interim Financial Statements* , though
      it carries forward the guidance in those pronouncements with respect to
      accounting for changes in estimates, changes in reporting entity and the
      correction of errors.  SFAS 154 is effective for accounting changes and
      corrections of errors made in fiscal years beginning after December 15, 2005.
      We
      will adopt SFAS 154 effective January 1, 2006, and we do not expect the adoption
      of this statement to have an impact on our consolidated financial position,
      results of operations or cash flows.





In
      December 2004, the FASB issued SFAS 123 (revised 2004) (“SFAS
      123(R)”), *Share-Based
      Payment* ,
      which
      is a revision of SFAS 123, *Accounting
      for Stock-Based Compensation* .
      SFAS
      123(R) supersedes APB 25, *Accounting
      for Stock Issued to Employees* ,
      and
      amends SFAS 95, *Statement
      of Cash Flows* .
      While
      the approach in SFAS 123(R) is similar to the approach described in SFAS 123,
      SFAS 123(R) requires recognition in the income statement of all share-based
      payments to employees, including grants of employee stock options, based on
      their fair values, and pro forma disclosure is no longer an alternative. The
      SEC
      has deferred the implementation date, and we are now required to adopt SFAS
      123(R) no later than January 1, 2006.





SFAS
      123(R) permits adoption using one of two methods, a modified prospective method
      (“Prospective Method”) or a modified retrospective method (“Retrospective
      Method”). With the Prospective Method, costs are recognized beginning with the
      effective date based on the requirements of SFAS 123(R) for (i) all share-based
      payments granted after the effective date of SFAS 123(R), and (ii) all awards
      granted to employees prior to the effective date of SFAS 123(R) that remain
      unvested on the effective date. The Retrospective Method applies the
      requirements of the Prospective Method but further permits entities to restate
      all prior periods presented based on the amounts previously recognized under
      SFAS 123 for purposes of pro forma disclosures.





7
 *Index
            to Form 10-Q*





**TRANSOCEAN
      INC. AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


(Unaudited)





Although
      we will adopt SFAS 123(R) effective January 1, 2006, we have not yet determined
      which method we will use. We adopted the fair-value-based method of accounting
      for share-based payments effective January 1, 2003 using the modified
      prospective method as described in SFAS 148, *Accounting
      for Stock-Based Compensation*―*Transition and Disclosure* .
      While
      we currently use the Black-Scholes-Merton formula to estimate the value of
      stock
      options granted to employees, which is an acceptable share-based award valuation
      model, we may choose some other model that is also acceptable in determining
      fair value of stock awards upon adoption of SFAS 123(R). Because SFAS 123(R)
      must be applied to unvested awards granted and accounted for under APB 25,
      any
      additional compensation costs not previously recognized under SFAS 123 will
      be
      recognized under SFAS 123(R). Our unvested APB 25 options will vest in the
      third
      quarter of 2005. If we adopt SFAS 123(R) using the Prospective Method, there
      would be no impact on our consolidated financial position, results of operations
      or cash flows. If we adopt using the Retrospective Method, the impact of those
      amounts would approximate the amounts described in our pro forma net income
      and
      earnings per share disclosure (see “ ― Stock-Based
      Compensation”). In addition to the compensation cost recognition requirements,
      SFAS 123(R) also requires the tax deduction benefits for an award in excess
      of
      recognized compensation cost be reported as a financing cash flow rather than
      as
      an operating cash flow, which is currently required under SFAS 95. While we
      cannot estimate what these amounts will be in the future (because they depend
      on, among other things, when employees exercise stock options), we reported
      operating cash flows related to tax deduction benefits of $5.7 million and
      $4.9
      million for the three and six months ended June 30, 2005, respectively. We
      reported operating cash flows related to the tax deduction benefits of $5.9
      million for the year ended December 31, 2004.





*Reclassifications* —Certain
      reclassifications have been made to prior period amounts to conform with the
      current period’s presentation.





**Note
      3** ― **TODCO
      Stock Sales**





We
      sold
      12.0 million shares of TODCO’s class A common stock, representing 20 percent of
      TODCO’s total outstanding shares, at $20.50 per share in the May Offering. We
      sold our remaining 1.3 million shares of TODCO’s class A common stock,
      representing 2 percent of TODCO’s total outstanding shares, at $23.57 per share
      in the June Sale. We received net proceeds of $271.9 million from the 2005
      Offering and Sale and recognized a gain of $165.0 million ($0.49 per diluted
      share), which had no tax effect, in the second quarter of 2005 and represented
      the excess of net proceeds received over the net book value of the shares sold
      in the 2005 Offering and Sale.





In
      February 2004, we completed the TODCO IPO in which we sold 13.8 million shares
      of TODCO’s class A common stock, representing 23 percent of TODCO’s total
      outstanding shares, at $12.00 per share. We received net proceeds of $155.7
      million from the TODCO IPO and recognized a gain of $39.4 million ($0.12 per
      diluted share), which had no tax effect, in the first quarter of 2004 and
      represented the excess of net proceeds received over the net book value of
      the
      shares sold in the TODCO IPO.





In
      conjunction with the closing of the TODCO IPO, TODCO granted restricted stock
      and stock options to some of its employees under its long-term incentive plan
      and some of these awards vested at the time of grant. In accordance with the
      provisions of SFAS 123, TODCO recognized compensation expense of $5.6 million
      ($0.02 per Transocean’s diluted share), which had no tax effect, in the first
      quarter of 2004 as a result of the immediate vesting of these awards. In
      addition, certain of TODCO’s employees held options that were granted prior to
      the TODCO IPO to acquire our ordinary shares. In accordance with the employee
      matters agreement, these options were modified at the TODCO IPO date, which
      resulted in the accelerated vesting of the options and the extension of the
      term
      of the options through the original contractual life. In connection with the
      modification of these options, TODCO recognized additional compensation expense
      of $1.5 million, which had no tax effect, in the first quarter of 2004.





8
 *Index
            to Form 10-Q*





**TRANSOCEAN
      INC. AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


(Unaudited)





**Note
      4** ― **Asset
      Acquisition, Dispositions and Retirements**





*Asset
      Acquisition* —In
      May
      2005, we purchased for $42.5 million the semisubmersible rig *M.G.
      Hulme, Jr.,* which
      we
      had previously operated under a lease arrangement. See Note 11.





*Asset
      Dispositions and Retirements* —In
      June
      2005, we sold the jackup rig *Transocean
      Jupiter* and a
      land rig for net proceeds of $23.5 million and recognized a gain of $14.0
      million ($9.1 million, or $0.03 per diluted share, net of tax).





In
      January 2005, we completed the sale of the semisubmersible rig *Sedco
      600* for net
      proceeds of $24.9 million and recognized a gain of $18.8 million ($0.06 per
      diluted share), which had no tax effect. At December 31, 2004, this asset was
      held for sale in the amount of $5.6 million and was included in other current
      assets in our condensed consolidated balance sheet.





During
      the six months ended June 30, 2005, we sold certain other assets for net
      proceeds of approximately $12.1 million. We recorded net gains of $2.9 million
      ($2.1 million, or $0.01 per diluted share, net of tax).





In
      June
      2004, in our Transocean Drilling segment, we completed the sale of a
      semisubmersible rig, the *Sedco
      602,* for
      net
      proceeds of $28.0 million and recognized a gain of $21.6 million ($0.07 per
      diluted share), which had no tax effect. During the six months ended June 30,
      2004, we settled insurance claims and sold marine support vessels and certain
      other assets for net proceeds of approximately $14.0 million. We recorded net
      gains of $1.0 million ($0.6 million, net of tax) and $4.6 million ($0.01 per
      diluted share), which had no tax effect, in our Transocean Drilling and TODCO
      segments, respectively.





**Note
      5** ― **Income
      Taxes**





We
      are a
      Cayman Islands company registered in Barbados, and we are not subject to income
      tax in the Cayman Islands. Income taxes have been provided based upon the tax
      laws and rates in the countries in which operations are conducted and income
      is
      earned. There is no expected relationship between the provision for or benefit
      from income taxes and income or loss before income taxes because the countries
      in which we operate have taxation regimes that vary not only with respect to
      nominal rate, but also in terms of the availability of deductions, credits
      and
      other benefits. Variations also arise because income earned and taxed in any
      particular country or countries may fluctuate from year to year.





The
      estimated annual effective tax rates for the six months ended June 30, 2005
      and
      2004, respectively, were based on estimated 2005 and 2004 annual income before
      income taxes and minority interest. In accordance with APB 28, *Interim
      Financial Reporting,* certain
      items have been excluded from the estimated annual effective tax rate and
      treated as period items. These items included portions of net gains on sales
      of
      assets, TODCO Stock Sales-related items (see Note 3) and losses on retirements
      of debt (see Note 6).





Under
      the
      tax sharing agreement entered into between us and TODCO at the time of the
      TODCO
      IPO, we are entitled to receive from TODCO payment for most of the tax benefits
      TODCO generated prior to the TODCO IPO that they utilize subsequent to the
      TODCO
      IPO. While TODCO was included in our consolidated statements of operations
      and
      balance sheet as a consolidated subsidiary until the fourth quarter of 2004,
      we
      followed the provisions of SFAS 109, *Accounting
      for Income Taxes,* which
      allowed us to evaluate the recoverability of the deferred tax assets associated
      with the tax sharing agreement considering TODCO’s deferred tax liabilities.
      Because we no longer own shares of TODCO, TODCO is no longer included as a
      consolidated subsidiary in our financial statements. Future payments we receive
      from TODCO’s utilization of the pre-TODCO IPO deferred tax assets will be
      recognized in other income as those amounts are realized based on the filing
      of
      TODCO’s tax returns. We received $8.5 million and $9.7 million in estimated
      payments from TODCO during the six months ended June 30, 2005 related to TODCO’s
      expected utilization of such tax benefits for the 2004 tax year and a portion
      of
      the 2005 tax year, respectively. These amounts were deferred in other current
      liabilities and other long-term liabilities, respectively, in our consolidated
      balance sheet. We will recognize these estimated payments as other income when
      TODCO finalizes and files its 2004 and 2005 tax returns. Estimated
      tax benefits in excess of $300 million remain to be utilized by TODCO under
      the
      tax sharing agreement, although the ultimate amount and timing of the
      utilization is highly contingent on a variety of factors including the filing
      of
      the final 2004 Transocean tax returns, potential revisions to the tax benefits
      upon examination by the U.S. Internal Revenue Service ("IRS"), which is
      currently reviewing our 2002 and 2003 tax years, and the amount of taxable
      income that TODCO realizes in future years.





9
 *Index
            to Form 10-Q*




**TRANSOCEAN
      INC. AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


(Unaudited)


As
      a
      result of the deconsolidation of TODCO from our other U.S. subsidiaries for
      U.S.
      federal income tax purposes in conjunction with the TODCO IPO (see Note 3),
      we
      established an initial valuation allowance in the first quarter of 2004 of
      $31.0
      million ($0.9 per diluted share) against the estimated deferred tax assets
      of
      TODCO in excess of its deferred tax liabilities, taking into account prudent
      and
      feasible tax planning strategies as required by SFAS 109. We adjusted the
      initial valuation allowance during 2004 to reflect changes in our estimate
      of
      the ultimate amount of TODCO’s deferred tax assets. An allocation of tax
      benefits between TODCO and our other U.S. subsidiaries will occur in 2005 upon
      the filing of our 2004 U.S. consolidated federal income tax return. This
      allocation is subject to potential revision upon subsequent IRS audit of our
      tax
      return. This final allocation of tax benefits could impact our effective tax
      rate for 2005 or future years as well as the ultimate amount of payments by
      TODCO under the tax sharing agreement.





We
      operate through our various subsidiaries in a number of countries throughout
      the
      world. Consequently, we are subject to changes in tax laws, treaties and
      regulations in and between the countries in which we operate, including treaties
      that the U.S. has with other nations.  A material change in these tax laws,
      treaties or regulations, including those in and involving the U.S., could result
      in a higher effective tax rate on our worldwide earnings.





Our
      income tax returns are subject to review and examination in the various
      jurisdictions in which we operate. In October 2004, we received from the IRS
      examination reports setting forth proposed changes to the U.S. federal income
      tax reported for the period 1999-2000. The proposed changes total approximately
      $195 million, exclusive of interest. While we have agreed to certain
      non-material adjustments, we believe our returns are materially correct as
      filed
      and intend to defend ourselves vigorously. The IRS is currently auditing our
      2002 and 2003 tax years. No examination report has been received at this time.
      While we cannot predict or provide assurance as to the final outcome, we do
      not
      expect the liability, if any, resulting from the proposed changes to have a
      material adverse effect on our consolidated financial position and results
      of
      operations although it could have such an effect on our consolidated cash
      flows.





In
      September 2004, the Norwegian tax authorities initiated inquiries related to
      a
      restructuring transaction undertaken in 2001 and 2002 and a dividend payment
      made during 2001. In February 2005, we filed a response to these inquiries.
      In
      March 2005, pursuant to court orders, the Norwegian tax authorities took action
      to obtain additional information regarding these transactions. Based on these
      inquiries, we believe the Norwegian authorities are contemplating a tax
      assessment on the dividend of approximately $106 million, plus penalty and
      interest. No assessment has been made, and we believe such an assessment
      would be without merit. While we cannot predict or provide assurance as to
      the
      final outcome, we do not expect the liability, if any, resulting from the
      inquiry to have a material adverse effect on our consolidated financial
      position, results of operations and cash flows.





In
      addition, other tax authorities have examined the amounts of income and expense
      subject to tax in their jurisdiction for prior periods. We are currently
      contesting various non-U.S. assessments that have been asserted and would expect
      to contest any future U.S. or non-U.S. assessments. While we cannot predict
      or
      provide assurance as to the final outcome, we do not expect the liability,
      if
      any, resulting from existing or future assessments to have a material adverse
      effect on our consolidated financial position and results of operations although
      it may have such an effect on our consolidated cash flows.





10
 *Index
            to Form 10-Q*





**TRANSOCEAN
      INC. AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


(Unaudited)





**Note
      6** ― **Debt**





Debt,
      net
      of unamortized discounts, premiums and fair value adjustments, is comprised
      of
      the following (in millions):





June
                30,
            
            December
                31,2005
            
            20047.31%
                Nautilus Class A1 Amortizing Notes - final maturity May
                2005
            
            $
            -
            
            $
            19.46.95%
                Senior Notes, due April 2008
            
            
            -
            
            
            263.16.625%
                Notes, due April 2011 (a)
            
            
            779.8
            
            
            785.77.375%
                Senior Notes, due April 2018
            
            
            246.9
            
            
            246.9Zero
                Coupon Convertible Debentures, due May 2020 (put options exercisable
                May 2008 and May 2013)
            
            
            17.3
            
            
            17.01.5%
                Convertible Debentures, due May 2021 (put options exercisable May
                2006,
                May 2011 and May 2016) (b)
            
            
            400.0
            
            
            400.08%
                Debentures, due April 2027
            
            
            56.8
            
            
            56.87.45%
                Notes, due April 2027 (put options exercisable April 2007)
            
            
            95.1
            
            
            95.07.5%
                Notes, due April 2031
            
            
            597.6
            
            
            597.6Total
                Debt
            
            
            2,193.5
            
            
            2,481.5Less
                Debt Due Within One Year
            
            
            400.0
            
            
            19.4Total
                Long-Term Debt
            
            $
            1,793.5
            
            $
            2,462.1


_________________


(a)
            See
                Note 13.


(b)
            The
                1.5% Convertible Debentures are classified as debt due within one
                year
                since the holders can exercise their right to require us to repurchase
                the
                debentures in May 2006.





The
      scheduled maturity of our debt assumes the bondholders exercise their
      options to require us to repurchase the 1.5% Convertible Debentures, 7.45%
      Notes
      and Zero Coupon Convertible Debentures in May 2006, April 2007 and May 2008,
      respectively. All amounts are at face value except for the Zero Coupon
      Convertible Debentures, which are included at the price we would be required
      to
      pay should the bondholders exercise their right to require us to repurchase
      the debentures in May 2008. The scheduled maturities are as follows (in
      millions):





Twelve
                MonthsEnding
              June
                30,2006
            
            $
            400.02007
            
            
            100.02008
            
            
            19.02009
            
            
            -2010
            
            
            -Thereafter
            
            
            1,603.8Total
            
            $
            2,122.8





*Revolving
      Credit Agreement* —We
      are
      party to an $800.0 million five-year revolving credit agreement dated December
      16, 2003. See Note 13.





*Debt
      Redemptions and Repayments* —In
      May
      2005, we repaid the remaining principal amount outstanding for the 7.31%
      Nautilus Class A1 amortizing note, plus accrued and unpaid interest, in
      accordance with its scheduled maturity. We funded the repayment from existing
      cash balances.





11
 *Index
            to Form 10-Q*





**TRANSOCEAN
      INC. AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


(Unaudited)





In
      March
      2005, we redeemed our $247.8 million aggregate principal amount outstanding
      6.95% Senior Notes due April 2008 at the make-whole premium price provided
      in
      the indenture. We redeemed these notes at 108.259 percent of face value or
      $268.2 million, plus accrued and unpaid interest. In the first quarter of 2005,
      we recognized a loss on the redemption of debt of $6.7 million ($0.02 per
      diluted share), which had no tax effect and reflected adjustments for fair
      value
      of the debt at the date of the R&B Falcon merger and the unamortized fair
      value adjustment on a previously terminated interest rate swap. We funded the
      redemption with existing cash balances.





In
      March
      2004, we redeemed our $289.8 million aggregate principal amount outstanding
      9.5%
      Senior Notes due December 2008 at the make-whole premium price provided in
      the
      indenture. We redeemed these notes at 127.796 percent of face value or $370.3
      million, plus accrued and unpaid interest. In the first quarter of 2004, we
      recognized a loss on the redemption of debt of $28.1 million ($0.09 per diluted
      share), which had no tax effect and reflected adjustments for fair value of
      the
      debt at the date of the R&B Falcon merger and the unamortized fair value
      adjustment on a previously terminated interest rate swap. We funded the
      redemption with existing cash balances, which included proceeds from the TODCO
      IPO.





**Note
      7** — **Interest
      Rate Swaps**





In
      2003,
      we terminated all our outstanding interest rate swaps, which were designated
      as
      fair value hedges, and recognized $173.5 million as a fair value adjustment
      to
      the underlying long-term debt in our consolidated balance sheet. We amortize
      this amount as a reduction to interest expense over the remaining life of the
      underlying debt. During the three and six months ended June 30, 2005, such
      reduction amounted to $3.1 million ($0.01 per diluted share) and $7.0 million
      ($0.02 per diluted share), respectively. During the three and six months ended
      June 30, 2004, such reduction amounted to $5.7 million ($0.02 per diluted share)
      and $12.4 million ($0.04 per diluted share), respectively. As a result of the
      redemption of our 6.95% Senior Notes in March 2005 and 9.5% Senior Notes in
      March 2004, we recognized $13.2 million and $22.0 million, respectively, of
      the
      unamortized fair value adjustment as a reduction to our loss on redemption
      of
      debt (see Notes 6 and 13). There were no tax effects related to these
      reductions.





At
      June
      30, 2005 and December 31, 2004, we had no outstanding interest rate
      swaps.





**Note
      8** ― **Segments**





Through
      December 16, 2004, our operations were aggregated into two reportable segments:
      (i) Transocean Drilling and (ii) TODCO. The Transocean Drilling segment consists
      of floaters, jackups and other rigs used in support of offshore drilling
      activities and offshore support services. The TODCO segment consisted of our
      interest in TODCO, which conducts jackup, drilling barge, land rig, submersible
      and other operations located in the U.S. Gulf of Mexico and inland waters,
      Mexico, Trinidad and Venezuela. The organization and aggregation of our business
      into the two segments were based on differences in economic characteristics,
      customer base, asset class, contract structure and management structure. In
      addition, the TODCO segment fleet was highly dependent upon the U.S. natural
      gas
      industry while the Transocean Drilling segment’s operations are more dependent
      upon the worldwide oil industry. As a result of the deconsolidation of TODCO
      (see Note 1), we now operate in one industry segment, the Transocean Drilling
      segment.





Our
      Transocean Drilling segment fleet operates in what is 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. Accounting policies of the segments
      are
      the same as those described in Note 2 within “Item 8. Financial Statements and
      Supplementary Data” included in our Annual Report on Form 10-K for the year
      ended December 31, 2004. We accounted for intersegment revenue and expenses
      as
      if the revenue or expenses were to third parties at current market
      prices.





12
 *Index
            to Form 10-Q*





**TRANSOCEAN
      INC. AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


(Unaudited)





Operating
      revenues and income before income taxes and minority interest by segment were
      as
      follows (in millions):





Three
                Months Ended June 30,
            
            Six
                Months Ended June 30,2005
            
            2004
            
            2005
            
            2004Operating
                RevenuesTransocean
                Drilling
            
            $
            727.4
            
            $
            552.5
            
            $
            1,357.9
            
            $
            1,130.7TODCO
            
            
            -
            
            
            80.7
            
            
            -
            
            
            154.5Total
                Operating Revenues
            
            $
            727.4
            
            $
            633.2
            
            $
            1,357.9
            
            $
            1,285.2Operating
                Income (Loss) Before General and Administrative ExpenseTransocean
                Drilling
            
            $
            202.8
            
            $
            127.2
            
            $
            364.2
            
            $
            266.0TODCO
                (a)
            
            
            -
            
            
            (9.4
            )
            
            -
            
            
            (36.3
            )202.8
            
            
            117.8
            
            
            364.2
            
            
            229.7Unallocated
                general and administrative expense
            
            
            (18.0
            )
            
            (14.0
            )
            
            (36.1
            )
            
            (29.1
            )Unallocated
                other income (expense), net
            
            
            140.4
            
            
            (38.1
            )
            
            106.6
            
            
            (68.4
            )Income
                Before Income Taxes and Minority Interest
            
            $
            325.2
            
            $
            65.7
            
            $
            434.7
            
            $
            132.2


______________


(a)
            The
                three and six months ended June 30, 2004 includes $7.1 million and
                $19.4
                million, respectively, of operating and maintenance expense that
                TODCO
                classified as general and administrative
                expense.





Depreciation
      expense by segment was as follows (in millions):





Three
                Months Ended June 30,
            
            Six
                Months Ended June 30,2005
            
            2004
            
            2005
            
            2004Transocean
                Drilling
            
            $
            101.2
            
            $
            109.1
            
            $
            201.9
            
            $
            216.4TODCO
            
            
            -
            
            
            23.9
            
            
            -
            
            
            48.1Total
                Depreciation Expense
            
            $
            101.2
            
            $
            133.0
            
            $
            201.9
            
            $
            264.5





Total
      capital expenditures by segment were as follows (in millions):





Three
                Months Ended June 30,
            
            Six
                Months Ended June 30,2005
            
            2004
            
            2005
            
            2004Transocean
                Drilling
            
            $
            78.4
            
            $
            35.5
            
            $
            109.6
            
            $
            51.0TODCO
            
            
            -
            
            
            1.8
            
            
            -
            
            
            3.7Total
                Capital Expenditures
            
            $
            78.4
            
            $
            37.3
            
            $
            109.6
            
            $
            54.7





13
 *Index
            to Form 10-Q*





**TRANSOCEAN
      INC. AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


(Unaudited)





**Note
      9** ― **Earnings
      Per Share**





The
      reconciliation of the numerator and denominator used for the computation of
      basic and diluted earnings per share is as follows (in millions, except per
      share data):





Three
                Months Ended June 30,
            
            Six
                Months Ended June 30,2005
            
            2004
            
            2005
            
            2004**Numerator
                for Basic Earnings per Share**Net
                Income for basic earnings per share
            
            $
            301.8
            
            $
            48.0
            
            $
            393.6
            
            $
            70.7**Numerator
                for Diluted Earnings per Share**Net
                Income
            
            $
            301.8
            
            $
            48.0
            
            $
            393.6
            
            $
            70.7Add
                back interest expense on the 1.5% convertible debentures
            
            
            1.6
            
            
            -
            
            
            3.2
            
            
            -Net
                Income for diluted earnings per share
            
            $
            303.4
            
            $
            48.0
            
            $
            396.8
            
            $
            70.7**Denominator
                for Diluted Earnings per Share**Weighted-average
                shares outstanding for basic earnings per share
            
            
            326.1
            
            
            320.8
            
            
            324.8
            
            
            320.7Effect
                of dilutive securities:Employee
                stock options and unvested stock grants
            
            
            3.6
            
            
            2.0
            
            
            3.8
            
            
            2.1Warrants
                to purchase ordinary shares
            
            
            2.8
            
            
            1.3
            
            
            2.8
            
            
            1.41.5%
                convertible debentures
            
            
            5.5
            
            
            -
            
            
            5.5
            
            
            -Adjusted
                weighted-average shares and assumed conversions for diluted earnings
                per
                share
            
            
            338.0
            
            
            324.1
            
            
            336.9
            
            
            324.2**Basic
                Earnings Per Share**Net
                Income
            
            $
            0.93
            
            $
            0.15
            
            $
            1.21
            
            $
            0.22**Diluted
                Earnings Per Share**Net
                Income
            
            $
            0.90
            
            $
            0.15
            
            $
            1.18
            
            $
            0.22





Ordinary
      shares subject to issuance pursuant to the conversion features of the Zero
      Coupon Convertible Debentures are not included in the calculation of adjusted
      weighted-average shares and assumed conversions for diluted earnings per share
      because the effect of including those shares is anti-dilutive for all periods
      presented. Ordinary shares subject to issuance pursuant to the conversion
      features of the 1.5% Convertible Debentures are not included in the calculation
      of the adjusted weighted-average shares and assumed conversions for diluted
      earnings per share for the three and six months ended June 30, 2004 because
      the
      effect of including those shares is anti-dilutive.





**Note
      10** ― **Contingencies**





*Legal
      Proceedings* —Several
      of our subsidiaries have been named, along with other defendants, in several
      complaints that have been filed in the Circuit Courts of the State of
      Mississippi involving over 700 persons that allege personal injury arising
      out
      of asbestos exposure in the course of their employment by some of these
      defendants between 1965 and 1986. The complaints also name as defendants certain
      of TODCO's subsidiaries to whom we may owe indemnity and other unaffiliated
      defendant companies, including companies that allegedly manufactured drilling
      related products containing asbestos that are the subject of the complaints.
      The
      number of unaffiliated defendant companies involved in each complaint ranges
      from approximately 20 to 70. The complaints allege that the defendant drilling
      contractors used those asbestos-containing products in offshore drilling
      operations, land based drilling operations and in drilling structures, drilling
      rigs, vessels and other equipment and assert claims based on, among other
      things, negligence and strict liability, and claims authorized under the Jones
      Act. The plaintiffs seek, among other things, awards of unspecified compensatory
      and punitive damages. Based on a recent decision of the Mississippi Supreme
      Court, we anticipate that the trial courts may grant motions requiring each
      plaintiff to name the specific defendant or defendants against whom such
      plaintiff makes a claim and the time period and location of asbestos exposure
      so
      that the cases may be properly severed. We have not yet had an opportunity
      to
      conduct any discovery nor have we been able to determine the number of
      plaintiffs, if any, that were employed by our subsidiaries or otherwise have
      any
      connection with our drilling operations. We intend to defend ourselves
      vigorously and, based on the limited information available to us at this time,
      we do not expect the liability, if any, resulting from these matters to have
      a
      material adverse effect on our consolidated financial position, results of
      operations and cash flows.





14
 *Index
            to Form 10-Q*





**TRANSOCEAN
      INC. AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


(Unaudited)





In
      1990
      and 1991, two of our subsidiaries were served with various assessments
      collectively valued at approximately $6.8 million from the municipality of
      Rio
      de Janeiro, Brazil to collect a municipal tax on services. We believe that
      neither subsidiary is liable for the taxes and have contested the assessments
      in
      the Brazilian administrative and court systems. We have received several adverse
      rulings by various courts with respect to a June 1991 assessment, which is
      valued at approximately $5.9 million. We are continuing to challenge the
      assessment, however, and have an action to stay execution of a related tax
      foreclosure proceeding. We have received a favorable ruling in connection with
      a
      disputed August 1990 assessment but the government has appealed that ruling.
      We
      also are awaiting a ruling from the Taxpayer's Council in connection with an
      October 1990 assessment. If our defenses are ultimately unsuccessful, we believe
      that the Brazilian government-controlled oil company, Petrobras, has a
      contractual obligation to reimburse us for municipal tax payments required
      to be
      paid by them. We do not expect the liability, if any, resulting from these
      assessments to have a material adverse effect on our consolidated financial
      position, results of operations and cash flows.





The
      Indian Customs Department, Mumbai, filed a “show cause notice” against one of
      our subsidiaries and various third parties in July 1999. The show cause notice
      alleged that the initial entry into India in 1988 and other subsequent movements
      of the *Trident
      II* jackup
      rig operated by the subsidiary constituted imports and exports for which proper
      customs procedures were not followed and sought payment of customs duties of
      approximately $31 million based on an alleged 1998 rig value of $49 million,
      plus interest and penalties, and confiscation of the rig. In January 2000,
      the
      Customs Department issued its order, which found that we had imported the rig
      improperly and intentionally concealed the import from the authorities, and
      directed us to pay a redemption fee of approximately $3 million for the rig
      in
      lieu of confiscation and to pay penalties of approximately $1 million in
      addition to the amount of customs duties owed. In February 2000, we filed an
      appeal with the Customs, Excise and Service Tax Appellate Tribunal (“CESTAT”)
      (formerly known as the Customs, Excise and Gold (Control) Appellate Tribunal),
      together with an application to have the confiscation of the rig stayed pending
      the outcome of the appeal. In March 2000, the CESTAT ruled on the stay
      application, directing that the confiscation be stayed pending the appeal.
      The
      CESTAT issued its order on our appeal on February 2, 2001, and while it found
      that the rig was imported in 1988 without proper documentation or payment of
      duties, the redemption fee and penalties were reduced to less than $0.1 million
      in view of the ambiguity surrounding the import practice at the time and the
      lack of intentional concealment by us. The CESTAT further sustained our position
      regarding the value of the rig at the time of import as $13 million and ruled
      that subsequent movements of the rig were not liable to import documentation
      or
      duties in view of the prevailing practice of the Customs Department, thus
      limiting our exposure as to custom duties to approximately $6 million. Although
      CESTAT did not grant us the benefit of a customs duty exemption due to the
      absence of the required documentation, CESTAT left it open for our subsidiary
      to
      seek such documentation from the Ministry of Petroleum. Following the CESTAT
      order, we tendered payment of redemption, penalty and duty in the amount
      specified by the order by offset against a $0.6 million deposit and $10.7
      million guarantee previously made by us. The Customs Department attempted to
      draw the entire guarantee, alleging the actual duty payable is approximately
      $22
      million based on an interpretation of the CESTAT order that we believe is
      incorrect. This action was stopped by an interim ruling of the High Court,
      Mumbai on writ petition filed by us. We and the Customs Department both filed
      appeals with the Supreme Court of India against the order of the CESTAT, and
      both appeals were admitted. The Supreme Court has dismissed the Customs
      Department appeal and affirmed the CESTAT order but the Customs Department
      has
      not agreed with our interpretation of that order. We and our customer agreed
      to
      pursue and obtained the issuance of the required documentation from the Ministry
      of Petroleum that, if accepted by the Customs Department, would reduce the
      duty
      to nil. The Customs Department did not accept the documentation or agree to
      refund the duties already paid. We are pursuing our remedies against the Customs
      Department and our customer. We do not expect the liability, if any, resulting
      from this matter to have a material adverse effect on our consolidated financial
      position, results of operations and cash flows.





15
 *Index
            to Form 10-Q*





**TRANSOCEAN
      INC. AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


(Unaudited)





In
      October 2001, TODCO was notified by the U.S. Environmental Protection Agency
      ("EPA") that the EPA had identified a subsidiary as a potentially responsible
      party in connection with the Palmer Barge Line superfund site located in Port
      Arthur, Texas. Based upon the information provided by the EPA and a review
      of
      TODCO's internal records to date, TODCO disputes its designation as a
      potentially responsible party. Pursuant to the master separation agreement
      with
      TODCO, we are responsible and will indemnify TODCO for any losses TODCO incurs
      in connection with this action. We do not expect the liability, if any,
      resulting from this matter to have a material adverse effect on our consolidated
      financial position, results of operations and cash flows.





In
      August
      2003, a judgment of approximately $9.5 million was entered by the Labor Division
      of the Provincial Court of Luanda, Angola, against us and one of our labor
      contractors, Hull Blyth, in favor of certain former workers on several of our
      drilling rigs. The workers were employed by Hull Blyth to work on several
      drilling rigs while the rigs were located in Angola. When the drilling contracts
      concluded and the rigs left Angola, the workers' employment ended. The workers
      brought suit claiming that they were not properly compensated when their
      employment ended. In addition to the monetary judgment, the Labor Division
      ordered the workers to be hired by us. We believe that this judgment is without
      sufficient legal foundation and have appealed the matter to the Angola Supreme
      Court. We further believe that Hull Blyth has an obligation to protect us from
      any judgment. We do not expect the liability, if any, resulting from this matter
      to have a material adverse effect on our consolidated financial position,
      results of operations and cash flows.





One
      of
      our subsidiaries is involved in an action with respect to customs penalties
      relating to the *Sedco
      710* semisubmersible drilling rig. Prior to our merger with Sedco Forex, this
      drilling rig, which was working for Petrobras in Brazil at the time, had been
      admitted into the country on a temporary basis under authority granted to a
      Schlumberger entity. Prior to the Sedco Forex merger, the drilling contract
      was
      moved to an entity that would become one of our subsidiaries. In early 2000,
      the
      drilling contract was extended for another year. On January 10, 2000, the
      temporary import permit granted to the Schlumberger entity expired, and renewal
      filings were not made until later that January. In April 2000, the Brazilian
      customs authorities cancelled the import permit. The Schlumberger entity filed
      an action in the Brazilian federal court of Campos for the purpose of extending
      the temporary admission. Other proceedings were also initiated in order to
      secure the transfer of the temporary admission to our subsidiary. Ultimately,
      the court permitted the transfer to our entity but has not ruled that the
      temporary admission could be extended without the payment of a financial
      penalty. During the first quarter of 2004, the customs office renewed its
      efforts to collect a penalty and issued a second assessment for this penalty
      but
      has now done so against our subsidiary. The assessment is for approximately
      $61
      million. We believe that the amount of the assessment, even if it were
      appropriate, should only be approximately $6 million and should in any event
      be
      assessed against the Schlumberger entity. We and Schlumberger are contesting
      our
      respective assessments. We have put Schlumberger on notice that we consider
      any
      assessment to be the responsibility of Schlumberger. We do not expect the
      liability, if any, resulting from this matter to have a material adverse effect
      on our consolidated financial position, results of operations and cash
      flows.





We
      are
      involved in a number of other lawsuits, all of which have arisen in the ordinary
      course of our business. We do not expect the liability, if any, resulting from
      these matters to have a material adverse effect on our consolidated financial
      position, results of operations and cash flows.





*Self
      Insurance* —We
      are
      self-insured for the deductible portion of our insurance coverage. In the
      opinion of management, adequate accruals have been made based on known and
      estimated exposures up to the deductible portion of our insurance coverages.
      Management believes that claims and liabilities in excess of the amounts accrued
      are adequately insured.





16
 *Index
            to Form 10-Q*





**TRANSOCEAN
      INC. AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


(Unaudited)





*Letters
      of Credit and Surety Bonds* —We
      had
      letters of credit outstanding totaling $179.8 million and $182.2 million at
      June
      30, 2005 and December 31, 2004, respectively. These letters of credit guarantee
      various contract bidding and performance activities under various uncommitted
      lines provided by several banks.





As
      is
      customary in the contract drilling business, we also have various surety bonds
      in place that secure customs obligations relating to the importation of our
      rigs
      and certain performance and other obligations. Surety bonds outstanding totaled
      $8.5 million and $7.6 million at June 30, 2005 and December 31, 2004,
      respectively.





**Note
      11** ― **Off-Balance
      Sheet Arrangement**





We
      leased
      the semisubmersible rig *M.
      G.
      Hulme, Jr.* from
      Deep Sea Investors, L.L.C., (“Deep Sea Investors”), a special purpose entity
      formed by several leasing companies to acquire the rig from one of our
      subsidiaries in November 1995 in a sale/leaseback transaction. We accounted
      for
      the lease of this semisubmersible drilling rig as an operating lease. We
      recorded $4.6 million and $6.3 million of such rent expense in the six months
      ended June 30, 2005 and 2004, respectively. In May 2005, we purchased the rig
      for $42.5 million. The rig was reflected as property and equipment in the
      consolidated balance sheet at June 30, 2005.





Effective
      December 31, 2003, we adopted and applied the provisions of FASB Interpretation
      (“FIN”) 46, *Consolidation
      of Variable Interest Entities* ,
      as
      revised December 31, 2003, for all variable interest entities. FIN 46 requires
      the consolidation of variable interest entities in which an enterprise absorbs
      a
      majority of the entity’s expected losses, receives a majority of the entity’s
      expected residual returns, or both, as a result of ownership, contractual or
      other financial interests in the entity. Because the sale/leaseback agreement
      was with an entity in which we had no direct investment, we were not entitled
      to
      receive the financial information of the leasing entity and the equity holders
      of the leasing company would not release the financial statements or other
      financial information to us in order for us to make the determination of whether
      the entity was a variable interest entity. In addition, without the financial
      statements or other financial information, we were unable to determine if we
      were the primary beneficiary of the entity and, if so, what we would have
      consolidated. We had no exposure to loss as a result of the sale/leaseback
      agreement. As a result of the purchase of the *M.
      G.
      Hulme, Jr.* ,
      we are
      no longer associated with Deep Seas Investors and, as such, are no longer
      required to review for FIN 46 applicability.





**Note
      12** ― **Retirement
      Plans and Other Postemployment Benefits**





*Defined
      Benefit Pension Plans* —We
      have
      several defined benefit pension plans, both funded and unfunded, covering
      substantially all U.S. employees. We also have various defined benefit plans
      that cover Norway and Nigeria employees and various current and former employees
      covered under certain frozen plans acquired in connection with the R&B
      Falcon merger. Net periodic benefit cost for these defined benefit pension
      plans
      included the following components (in millions):





Three
                Months Ended
              June
                30,
            
            Six
                Months Ended
              June
                30,2005
            
            2004
            
            2005
            
            2004**Components
                of Net Periodic Benefit Cost (a)**Service
                cost
            
            $
            4.5
            
            $
            3.9
            
            $
            9.1
            
            $
            7.8Interest
                cost
            
            
            4.5
            
            
            4.1
            
            
            8.9
            
            
            8.3Expected
                return on plan assets
            
            
            (5.2
            )
            
            (4.9
            )
            
            (10.3
            )
            
            (9.7
            )Amortization
                of transition obligation
            
            
            -
            
            
            -
            
            
            0.1
            
            
            0.1Amortization
                of prior service cost
            
            
            0.6
            
            
            0.2
            
            
            0.4
            
            
            0.3Recognized
                net actuarial losses
            
            
            0.5
            
            
            0.7
            
            
            1.9
            
            
            1.3SFAS
                88 settlements/curtailments
            
            
            -
            
            
            -
            
            
            2.1
            
            
            -Benefit
                cost
            
            $
            4.9
            
            $
            4.0
            
            $
            12.2
            
            $
            8.1


______________


(a)
            Amounts
                are before income tax effect.





17
 *Index
            to Form 10-Q*





**TRANSOCEAN
      INC. AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


(Unaudited)





During
      the six months ended June 30, 2005, we contributed to the funded and unfunded
      defined benefit pension plans $1.7 million and $0.7 million, respectively,
      which
      is the total amount expected to be contributed for the year ending December
      31,
      2005. We funded the contributions from cash flows from operations.





*Postretirement
      Benefits Other Than Pensions (“OPEB”)* —We
      have
      several unfunded contributory and noncontributory OPEB plans covering
      substantially all of our U.S. employees. Net periodic benefit cost for these
      other postretirement plans included the following components (in
      millions):





Three
                Months Ended
              June
                30,
            
            Six
                Months Ended
              June
                30,2005
            
            2004
            
            2005
            
            2004**Components
                of Net Periodic Benefit Cost (a)**Service
                cost
            
            $
            0.3
            
            $
            0.2
            
            $
            0.6
            
            $
            0.5Interest
                cost
            
            
            0.6
            
            
            0.6
            
            
            1.1
            
            
            1.1Amortization
                of prior service cost
            
            
            (0.6
            )
            
            (0.5
            )
            
            (1.1
            )
            
            (1.1
            )Recognized
                net actuarial losses
            
            
            0.4
            
            
            0.4
            
            
            0.8
            
            
            0.8Benefit
                cost
            
            $
            0.7
            
            $
            0.7
            
            $
            1.4
            
            $
            1.3


______________


(a)
            Amounts
                are before income tax effect.





We
      contributed $1.1 million to the other postretirement benefit plans to fund
      benefit payments in the six months ended June 30, 2005.





In
      December 2003, the Medicare Prescription Drug, Improvement and Modernization
      Act
      of 2003 (the “Medicare Act”) was signed into law. The Medicare Act introduced
      two new features to Medicare that employers must consider in determining the
      effect of the Medicare Act on their accumulated postretirement benefit
      obligation (‘‘APBO’’) and net periodic post retirement benefit cost: (i) a
      subsidy based on 28 percent of an individual beneficiary’s annual prescription
      drug costs between $250 and $5,000, and (ii) the opportunity for a retiree
      to
      obtain a prescription drug benefit under Medicare that is at least actuarially
      equivalent to Medicare Part D.





In
      May
      2004, the FASB staff issued FSP 106-2, *Accounting
      and Disclosure Requirements Related to the Medicare Prescription Drug,
      Improvement and Modernization Act of 2003* .
      We
      adopted FSP 106-2 effective July 1, 2004, and account for these new features
      in
      the Medicare Act prospectively as an actuarial gain to be amortized into income
      over the average remaining service period of the plan participants.





**Note
      13** **―** **Subsequent
      Events**





*Revolving
      Credit Agreement* —In
      July
      2005, we entered into a $500.0 million, five-year revolving credit agreement
      dated July 8, 2005 (the “Revolving Credit Agreement”). The Revolving Credit
      Agreement bears interest, at our option, at a base rate or at the London
      Interbank Offered Rate (“LIBOR”) plus a margin that can vary from 0.19 percent
      to 0.58 percent depending on our non-credit enhanced senior unsecured public
      debt rating. At July 29, 2005, the applicable margin was 0.225 percent. A
      facility fee, varying from 0.06 percent to 0.17 percent depending on our
      non-credit enhanced senior unsecured public debt rating, is incurred on the
      daily amount of the underlying commitment, whether used or unused, throughout
      the term of the facility. At July 29, 2005, the applicable facility fee was
      0.075 percent. A utilization fee, varying from 0.05 percent to 0.10 percent
      depending on our non-credit enhanced senior unsecured public debt rating, is
      payable if amounts outstanding under the Revolving Credit Agreement are greater
      than 50 percent of the total underlying commitment. The Revolving Credit
      Agreement requires compliance with various covenants and provisions customary
      for agreements of this nature, including a debt to total tangible capitalization
      ratio, as defined by the credit agreement, of not greater than 60 percent.
      At
      July 29, 2005, no amount was outstanding under the Revolving Credit
      Agreement.





18
 *Index
            to Form 10-Q*





**TRANSOCEAN
      INC. AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


(Unaudited)





In
      conjunction with the activation of this facility, we terminated our $800.0
      million five-year revolving credit agreement dated December 16, 2003 and we
      expect to recognize a loss on the termination of this agreement of approximately
      $0.8 million in the third quarter of 2005.





*Tender
      Offer—* In
      July
      2005, we acquired, pursuant to a tender offer, a total of $534.4 million, or
      approximately 76.3 percent of the aggregate principal amount of our 6.625%
      Notes
      due April 2011 at 110.578 percent of face value, or $590.9 million, plus accrued
      and unpaid interest. We expect to recognize a gain on the repurchase of $0.3
      million in the third quarter of 2005. We funded the repurchase with existing
      cash balances.





19
 *Index
            to Form 10-Q*





**Item
        2. Management’s Discussion and Analysis of Financial Condition
        and Results of Operations**


The
      following information should be read in conjunction with the unaudited condensed
      consolidated financial statements included under “Item 1. Financial Statements”
herein and the audited consolidated financial statements and the notes thereto
      and “Item 7. Management’s Discussion and Analysis of Financial Condition and
      Results of Operations” included in our Annual Report on Form 10-K for the year
      ended December 31, 2004.





**Overview**





Transocean
      Inc. (together with its subsidiaries and predecessors, unless the context
      requires otherwise, “Transocean,”“we,”“us” or “our”) is a leading international
      provider of offshore contract drilling services for oil and gas wells. As of
      July 29, 2005, we owned, had partial ownership interests in or operated 92
      mobile offshore and barge drilling units. As of this date, our fleet included
      32
      High-Specification semisubmersibles and drillships (“floaters”), 24 Other
      Floaters, 25 Jackup Rigs and 11 Other Rigs.





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





Key
      measures of our total company results of operations and financial condition
      are
      as follows:





Three
                Months Ended
              June
                30,
            
            Three
              Months
            
            Six
                Months Ended
              June
                30,
            
            Six
              Months2005
            
            2004
            
            Change
            
            2005
            
            2004
            
            Change(In
                millions, except dayrates and percentages)**Average
                dayrate (a)(c)**
            
            $
            103,100
            
            $
            69,600
            
            $
            33,500
            
            $
            99,900
            
            $
            70,600
            
            $
            29,300**Utilization
                (b)(c)**
            
            
            79
            %
            
            56
            %
            
            N/A
            
            
            77
            %
            
            56
            %
            
            N/A**Statement
                of Operations (c)**Operating
                revenues
            
            $
            727.4
            
            $
            633.2
            
            $
            94.2
            
            $
            1,357.9
            
            $
            1,285.2
            
            $
            72.7Operating
                and maintenance expense
            
            
            438.9
            
            
            406.2
            
            
            32.7
            
            
            827.5
            
            
            818.6
            
            
            8.9Operating
                income
            
            
            184.8
            
            
            103.8
            
            
            81.0
            
            
            328.1
            
            
            200.6
            
            
            127.5Net
                income
            
            
            301.8
            
            
            48.0
            
            
            253.8
            
            
            393.6
            
            
            70.7
            
            
            322.9





June
                30,
            
            December
                31,2005
            
            2004
            
            Change(In
                millions)**Balance
                Sheet Data (at end of period) (c)**Cash
            
            $
            942.5
            
            $
            451.3
            
            $
            491.2Total
                Assets
            
            
            11,159.2
            
            
            10,758.3
            
            
            400.9Total
                Debt
            
            
            2,193.5
            
            
            2,481.5
            
            
            (288.0
            )


_____________________


“N/A”
      means not applicable.





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


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


(c)
            We
                consolidated TODCO’s (together with its subsidiaries and predecessors,
                unless the context requires otherwise, “TODCO,” a publicly traded company
                and a former wholly-owned subsidiary) results of operations and financial
                condition in our consolidated financial statements through December
                16,
                2004. We deconsolidated TODCO effective December 17, 2004 and subsequently
                accounted for our investment in TODCO under the equity method of
                accounting through May 18, 2005, at which time our ownership interest
                fell
                below 20 percent.See
                “―Significant Events.”





20
 *Index
            to Form 10-Q*





2005
      began with our industry experiencing strong demand for all major rig types
      resulting in high utilization and increasing dayrates. As a result, we see
      an
      improvement in the outlook
      for our fleet, especially among our 13 Fifth-Generation Deepwater Floaters,
      where demand is likely to exceed supply for the next 12 to 24 months. We expect
      our industry to experience higher costs in 2005 relative to levels seen in
      the
      recent past, due in part to higher personnel and vendor costs required to
      support the increased level of offshore drilling activity, although we
      anticipate revenue increases to outpace these increased costs.





Our
      revenues and operating and maintenance expenses for the six months ended June
      30, 2005 increased from the prior year due to increased activity and dayrates
      within our Transocean Drilling fleet, partially offset by the deconsolidation
      of
      TODCO effective December 17, 2004 (see “—Operating Results”) and decreased
      integrated services provided to our clients in the first six months of 2005.
      Our
      financial results for the first six months of 2005 included the recognition
      of
      our May 2005 public offering (the “May Offering”) and June 2005 sale (the “June
      Sale,” and, together with the May Offering, the “2005 Offering and Sale”) of
      TODCO common stock as well as gains from the sale of three rigs, partially
      offset by a non-cash charge pertaining to a loss on retirement of debt (see
      “—Significant Events”). Our six months ended June 30, 2004 financial results
      included a gain recognized on the TODCO initial public offering (“TODCO IPO”),
      partially offset by a tax valuation allowance adjustment and stock option
      expense recorded in connection with the TODCO IPO as well as a non-cash charge
      pertaining to a loss on retirement of debt (see “—Operating Results”). Cash
      increased during the six months ended June 30, 2005 primarily as a result of
      proceeds received from the 2005 Offering and Sale, the sale of rigs and
      exercises of stock options, as well as cash provided by operating activities,
      partially offset by increased capital expenditures and the early retirement
      of
      debt.





Through
      December 16, 2004, our operations were aggregated into two reportable segments:
      (i) Transocean Drilling and (ii) TODCO. The Transocean Drilling segment consists
      of floaters, jackups and other rigs used in support of offshore drilling
      activities and offshore support services. The TODCO segment consisted of our
      interest in TODCO, which conducts jackup, drilling barge, land rig, submersible
      and other operations in the U.S. Gulf of Mexico and inland waters, Mexico,
      Trinidad and Venezuela. The organization and aggregation of our business into
      the two segments were based on differences in economic characteristics, customer
      base, asset class, contract structure and management structure. In addition,
      the
      TODCO segment fleet was highly dependent upon the U.S. natural gas industry
      while the Transocean Drilling segment’s operations are more dependent upon the
      worldwide oil industry. As a result of the deconsolidation of TODCO (see
“—Operating Results”), we now operate in one business segment, the Transocean
      Drilling segment.





Our
      Transocean Drilling segment fleet operates in what is a single, global market
      for the provision of contract drilling services. The location of our rigs and
      the allocation of resources to build or upgrade rigs are determined by the
      activities and needs of our customers.





We
      categorize our fleet as follows: (i) “High-Specification Floaters”, consisting
      of our “Fifth-Generation Deepwater Floaters,”“Other Deepwater Floaters” and
“Other High-Specification Floaters,” (ii) “Other Floaters,” (iii) “Jackups,” and
      (iv) “Other Rigs.” Within our High-Specification Floaters category, we consider
      our Fifth-Generation Deepwater Floaters to be the semisubmersibles *Deepwater
      Horizon* , *Cajun
      Express* , *Deepwater
      Nautilus* , *Sedco
      Energy* and *Sedco
      Express* and the drillships *Deepwater
      Discovery* , *Deepwater
      Expedition* , *Deepwater
      Frontier* , *Deepwater
      Millennium* , *Deepwater
      Pathfinder* , *Discoverer
      Deep Seas* , *Discoverer
      Enterprise* and *Discoverer
      Spirit* .
      These rigs were built in the last construction cycle (approximately 1996-2001)
      and have high-pressure mud pumps and a water depth capability of 7,500 feet
      or
      greater. The Other Deepwater Floaters are generally those other semisubmersible
      rigs and drillships that have a water depth capacity of at least 4,500 feet.
      The
      Other High-Specification Floaters, built as fourth-generation rigs in the mid
      to
      late 1980’s, are capable of drilling in harsh environments and have greater
      displacement than previously constructed rigs resulting in larger variable
      load
      capacity, more useable deck space and better motion characteristics. The Other
      Floaters category is generally comprised of those non-high-specification
      floaters with a water depth capacity of less than 4,500 feet. The Jackups
      category consists of our jackup fleet, and the Other Rigs category consists
      of
      other rigs that are of a different type or use. These categories reflect how
      we
      view, and how we believe our investors and the industry generally view, our
      fleet, and reflect our strategic focus on the ownership and operation of premium
      high-specification floating rigs and jackups.




21
 *Index
            to Form 10-Q*





Significant
      Events




*Asset
      Acquisition* —In
      May
      2005, we purchased the semisubmersible rig *M.
      G.
      Hulme, Jr* .,
      which
      we had previously operated under a lease arrangement. See “—Off-Balance
      Sheet Arrangement.”





*Asset
      Dispositions* —In
      January 2005, we completed the sale of the semisubmersible rig *Sedco
      600* for net
      proceeds of $24.9 million and recognized a gain on the sale of $18.8 million.
      In
      June 2005, we sold the jackup rig *Transocean
      Jupiter* and a
      land rig for net proceeds of $23.5 million and recognized a gain on the sale
      of
      $14.0 million in the second quarter of 2005.





*Debt
      Redemption* —In
      March
      2005, we redeemed our $247.8 million aggregate principal amount outstanding
      6.95% Senior Notes due April 2008 at the make-whole premium price provided
      in
      the indenture. We redeemed these notes at 108.259 percent of face value or
      $268.2 million, plus accrued and unpaid interest. In the first quarter of 2005,
      we recognized a loss on the redemption of debt of $6.7 million, which reflected
      adjustments for fair value of the debt at the date of the merger (“R&B
      Falcon merger”) with R&B Falcon Corporation (“R&B Falcon”) and the
      unamortized fair value adjustment on a previously terminated interest rate
      swap.
      We funded the redemption with existing cash balances.





*Revolving
      Credit Agreement* —In
      July
      2005, we entered into a $500.0 million, five-year revolving credit agreement
      dated July 8, 2005 (the “Revolving Credit Agreement”). In conjunction with the
      activation of this facility, we terminated our $800.0 million five-year
      revolving credit agreement dated December 16, 2003 and we expect to recognize
      a
      loss on the termination of this agreement of approximately $0.8 million in
      the
      third quarter of 2005.





*Tender
      Offer—* In
      July
      2005, we acquired, pursuant to a tender offer, a total of $534.4 million, or
      approximately 76.3 percent of the aggregate principal amount of our 6.625%
      Notes
      due April 2011 at 110.578 percent of face value, or $590.9 million, plus accrued
      and unpaid interest. We expect to recognize a gain on the repurchase of $0.3
      million in the third quarter of 2005. We funded the repurchase with existing
      cash balances.





*TODCO* —We
      sold
      12.0 million shares of TODCO’s class A common stock representing 20 percent of
      TODCO’s total outstanding shares at $20.50 per share in the May Offering. We
      sold our remaining 1.3 million shares of TODCO’s class A common stock
      representing 2 percent of TODCO’s total outstanding shares at $23.57 in the June
      Sale pursuant to Rule 144 under the Securities Act of 1933, as amended. As
      a
      result of the May Offering, we accounted for our remaining investment using
      the
      cost method of accounting. As a result of the June Sale, we no longer own any
      shares of TODCO’s common stock. In the second quarter of 2005, we received net
      proceeds of $271.9 million from the 2005 Offering and Sale and recognized a
      gain
      of $165.0 million, which had no tax effect and represented the excess of net
      proceeds received over the net book value of the shares sold in the 2005
      Offering and Sale. We refer collectively to the 2005 Offering and Sale and
      the
      public offerings of TODCO Class A common stock in 2004 as the “TODCO
      Stock Sales.”





**Outlook**





*Drilling
      Market* —Oil
      prices remain strong, and we expect prices to remain high in the near future.
      Future price expectations have historically been a key driver for offshore
      drilling demand. However, the availability of quality drilling prospects,
      exploration success, relative production costs, the stage of reservoir
      development and political and regulatory environments also affect our customers’
drilling programs.





22
 *Index
            to Form 10-Q*





Prospects
      for our 32 High-Specification Floaters have improved substantially, with new
      and
      expected contracts resulting in a tight supply among this fleet during 2005.
      We
      have signed a number of new contracts or extensions for our High-Specification
      Floaters that reflect the increased activity in this sector. We entered into
      contract extensions for a five year program for the *Deepwater
      Horizon,* a
      340 day
      program for the *Transocean Marianas* and a
      two year program for the *Deepwater
      Millennium* .
      We were
      also awarded two year contracts for both the *Deepwater
      Discovery* and ** the *Deepwater Frontier* ,
      a four
      month contract for the *Deepwater
      Expedition* and a
      number of short-term contracts for the *Sedco
      709* and the *Deepwater
      Discovery* .  In
      addition, Petrobras’ board of directors approved the award of contracts for the *Deepwater
      Navigator* , *Sedco
      707* , *Sedco
      710* , *Transocean
      Driller* and *Peregrine
      I* for
      a
      combined total of 19 rig years, although the drilling contracts have not yet
      been executed. We continue to believe that, over the long term, deepwater
      exploration and development drilling opportunities in the Gulf of Mexico, West
      Africa, India and other market sectors represent a significant source of future
      deepwater rig demand. We continue to see a strong customer preference for using
      fifth-generation equipment in these deepwater areas, which we believe has led
      to
      a near-term shortage of these highest specification rigs. At August 2, 2005,
      63
      percent of our High-Specification Floater fleet days are contracted in
      2006.





Our
      Other
      Floaters fleet, comprised of 23 semisubmersible rigs and one drillship,
      continues to benefit from improving activity levels in all regions. In the
      U.K.
      sector of the North Sea, five of our semisubmersible rigs have been recently
      contracted for durations of six months to 12 months and at dayrates ranging
      from
      $140,000 to $200,000. Customer activity levels outside of the U.K. sector of
      the
      North Sea are expected to be stable to higher through 2006. We continue to
      evaluate contract opportunities that could result in the reactivation of up
      to
      three of our idle rigs. Should a decision be made to reactivate any of the
      idle
      units, they are not expected to be operational before 2006. At August 2, 2005,
      approximately 47% of our Other Floater fleet days are contracted in
      2006.





The
      outlook for activity for the jackup market sector continues to remain strong,
      particularly in South East Asia, India and West Africa. We expect to remain
      at
      or near full utilization for our Jackup fleet in the near term. However, we
      continue to monitor the potential effect of newbuild jackups, the majority
      of
      which are scheduled for delivery beginning in late 2006 and into 2007. At August
      2, 2005, 50 percent of the Jackup fleet days are contracted in
      2006.





The
      increase in demand, particularly in our High-Specification Floater fleet, has
      produced a significant increase in our revenue backlog in 2005. This increase
      is
      driven by both increased dayrates and a number of long-term contracts we have
      been able to secure.





We
      expect
      downtime during the third quarter of 2005 to result from planned shipyard
      projects and/or mobilizations for the *Sedco
      Energy* and *Deepwater Navigator* .
      These
      rig mobilizations and shipyard projects are expected to have an impact on
      revenues and operating income. In addition, the increase in activity, vendor
      price increases and rising labor costs are expected to increase operating and
      maintenance costs. The combination of these trends is expected to lead to a
      level of operating and maintenance costs in the third quarter that is slightly
      higher than the second quarter.




We
      also
      expect that a number of pre-existing, fixed-price contract options will be
      exercised by our customers, which will preclude us from taking full advantage
      of
      increased market rates for those rigs subject to these contract options. We
      have
      10 existing contracts with fixed-priced or capped options for dayrates that
      we
      believe are or could reasonably be less than current market
      dayrates.





The
      offshore contract drilling market remains highly competitive and cyclical,
      and
      it has been historically difficult to forecast future market conditions.
      Declines in oil and/or gas prices and other risks may reduce rig demand and
      adversely affect utilization and dayrates. Major operator and national oil
      company capital budgets are key drivers of the overall business climate, and
      these may change within a fiscal year depending on exploration results and
      other
      factors. Additionally, increased competition for our customers’ drilling budgets
      could come from, among other areas, land-based energy markets in Africa, Russia,
      other former Soviet Union States, the Middle East and Alaska.





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





23
 *Index
            to Form 10-Q*





As
      of
      August 2, 2005, approximately 77 percent of our total fleet days were committed
      for the remainder of 2005 and approximately 52 percent for the year
      2006.





*Insurance* —We
      have
      renewed our insurance policy for 12 months effective May 1, 2005, with terms
      similar to those under our prior policy. We have maintained a per occurrence
      insurance deductible of $10 million on our hull and machinery and our protection
      and indemnity policies. We also have an additional aggregate deductible of
      $20
      million that is applied to each hull and machinery occurrence until it has
      been
      exhausted over one or more occurrences. After the $20 million aggregate
      deductible is fully exhausted, the hull and machinery deductible reverts to
      $10
      million per occurrence.





*Tax
      Matters* —We
      are a
      Cayman Islands company registered in Barbados. We operate through our various
      subsidiaries in a number of countries throughout the world. Consequently, we
      are
      subject to changes in tax laws, treaties and regulations in and between the
      countries in which we operate, including treaties that the U.S. has with other
      nations. A material change in these tax laws, treaties or regulations, including
      those in and involving the U.S., could result in a higher effective tax rate
      on
      our worldwide earnings.





Our
      income tax returns are subject to review and examination in the various
      jurisdictions in which we operate. In October 2004, we received from the U.S.
      Internal Revenue Service (“IRS”) examination reports setting forth proposed
      changes to the U.S. federal income tax reported for the period 1999-2000. The
      maximum amount of additional tax based on the proposed changes would be
      approximately $195 million, exclusive of interest. While we have agreed to
      certain non-material adjustments, we believe our returns are materially correct
      as filed and intend to defend ourselves vigorously. The IRS is currently
      auditing our 2002 and 2003 tax years. No examination report has been received
      at
      this time. While we cannot predict or provide assurance as to the final outcome,
      we do not expect the liability, if any, resulting from the proposed changes
      to
      have a material adverse effect on our consolidated financial position or results
      of operations although it may have such an effect on our consolidated cash
      flows.





In
      September 2004, the Norwegian tax authorities initiated inquiries related to
      a
      restructuring transaction undertaken in 2001 and 2002 and a dividend payment
      made during 2001. In February 2005, we filed a response to these inquiries.
      In
      March 2005, pursuant to court orders, the Norwegian tax authorities took action
      to obtain additional information regarding these transactions. Based on these
      inquiries, we believe the Norwegian authorities are contemplating a tax
      assessment on the dividend of approximately $106 million, plus penalty and
      interest. No assessment has been made, and we believe such an assessment
      would be without merit. While we cannot predict or provide assurance as to
      the
      final outcome, we do not expect the liability, if any, resulting from the
      inquiry to have a material adverse effect on our consolidated financial
      position, results of operations and cash flows.





In
      addition, other tax authorities have examined the amounts of income and expense
      subject to tax in their jurisdiction for prior periods. We are currently
      contesting various non-U.S. assessments that have been asserted and would expect
      to contest any future U.S. or non-U.S. assessments. We do not expect the
      liability, if any, resulting from existing or future assessments to have a
      material adverse effect on our current consolidated financial position, results
      of operations and cash flows. We
      cannot predict with certainty the outcome or effect of any of the tax
      assessments described herein. There can be no assurance that our beliefs or
      expectations as to the outcome or effect of any tax assessment we are contesting
      will prove correct and the eventual outcome of these matters could materially
      differ from management's current estimates.





As
      a
      result of the deconsolidation of TODCO from our other U.S. subsidiaries for
      U.S.
      federal income tax purposes in conjunction with the TODCO IPO, we established
      an
      initial valuation allowance in the first quarter of 2004 of approximately $31.0
      million against the estimated deferred tax assets of TODCO in excess of its
      deferred tax liabilities, taking into account prudent and feasible tax planning
      strategies as required by the Financial Accounting Standards Board’s (“FASB”)
      Statement of Financial Accounting Standard (“SFAS”) 109, *Accounting
      for Income Taxes* . We
      adjusted the initial valuation allowance during 2004 to reflect changes in
      our
      estimate of the ultimate amount of TODCO’s deferred tax assets. An allocation of
      tax benefits between TODCO and our other U.S. subsidiaries will occur in 2005
      upon the filing of our 2004 U.S. consolidated federal income tax return. This
      allocation is subject to potential revision upon subsequent IRS audit of
      our tax return. This final allocation of tax benefits could impact our effective
      tax rate for 2005 or future years as well as the ultimate amount of payments
      by
      TODCO under the tax sharing agreement.





24
 *Index
            to Form 10-Q*





Under
      the
      tax sharing agreement entered into between us and TODCO in connection with
      the
      TODCO IPO, we are entitled to receive from TODCO payment for most of the tax
      benefits generated prior to the TODCO IPO that TODCO utilizes subsequent to
      the
      TODCO IPO. As long as TODCO was our consolidated subsidiary, we followed the
      provisions of SFAS 109, which allowed us to evaluate the recoverability of
      the
      deferred tax assets associated with the tax sharing agreement considering the
      deferred tax liabilities of TODCO. We recorded a valuation allowance for the
      excess of these deferred tax assets over the deferred tax liabilities of TODCO,
      also taking into account prudent and feasible tax planning strategies as
      required by SFAS 109. Because we no longer have a majority ownership or voting
      interest in TODCO, we no longer include TODCO as a consolidated subsidiary
      in
      our financial statements and we are no longer able to apply the provisions
      of
      SFAS 109 in accounting for the utilization of these deferred tax assets. As
      a
      result, we recorded a non-cash charge of $167.1 million, which had no tax
      effect, in the fourth quarter of 2004 related to contingent amounts due from
      TODCO under the tax sharing agreement. In future years, as TODCO generates
      income and utilizes its pre-TODCO IPO tax assets, TODCO is required to pay
      us
      for the benefits received in accordance with the provisions of the tax sharing
      agreement. We will recognize those amounts as other income as those amounts
      are
      realized, which is based on when TODCO files its annual tax returns. We received
      $30.0 million in 2005, of which $18.2 million was received in the six months
      ended June 30, 2005, in estimated payments from TODCO related to TODCO’s
      expected utilization of such tax benefits for the 2004 and 2005 tax years.
      Of
      the $30.0 million received, $8.5 million and $21.5 million was received for
      the
      2004 tax year and a portion of the 2005 tax year, respectively. These amounts
      were deferred in other current liabilities and other long-term liabilities
      in
      our consolidated balance sheet. We will recognize these estimated payments
      as
      other income when TODCO finalizes and files its 2004 and 2005 tax returns.
Estimated
      tax benefits in excess of $300 million remain to be utilized by TODCO under
      the
      tax sharing agreement, although the ultimate amount and timing of the
      utilization is highly contingent on a variety of factors including the filing
      of
      the final 2004 Transocean tax returns, potential revisions to the tax benefits
      upon examination by the IRS, which is currently reviewing our 2002 and 2003
      tax
      years, and the amount of taxable income that TODCO realizes in future
      years.





25
 *Index
            to Form 10-Q*





**Performance
      and Other Key Indicators**





*Fleet
      Utilization and Dayrates* —The
      following table shows our average dayrates and utilization for the quarterly
      periods ended on or prior to June 30, 2005. We consolidated TODCO’s results of
      operations and financial condition in our condensed consolidated financial
      statements through December 16, 2004 (see “—Operating Results”). See “—Overview”
for a definition of average dayrate, revenue earning day and utilization.





Three
                Months EndedJune
                30,
              2005
            
            March
                31,
              2005
            
            June
                30,
              2004Average
                Dayrates*Transocean
                Drilling Segment:*High-Specification
                FloatersFifth-Generation
                Deepwater Floaters
            
            $
            197,100
            
            $
            182,300
            
            $
            177,800Other
                Deepwater Floaters
            
            $
            132,700
            
            $
            124,500
            
            $
            107,800Other
                High-Specification Floaters
            
            $
            170,500
            
            $
            153,000
            
            $
            115,500Total
                High-Specification Floaters
            
            $
            165,500
            
            $
            153,900
            
            $
            141,100Other
                Floaters
            
            $
            82,400
            
            $
            71,200
            
            $
            65,000Jackups
            
            $
            58,200
            
            $
            57,600
            
            $
            52,700Other
                Rigs
            
            $
            47,000
            
            $
            45,800
            
            $
            43,300Segment
                Total
            
            $
            103,100
            
            $
            96,600
            
            $
            89,100*TODCO
                Segment (a)*
            
            $
            -
            
            $
            -
            
            $
            26,200Total
                Drilling Fleet
            
            $
            103,100
            
            $
            96,600
            
            $
            69,600





Utilization*Transocean
                Drilling Segment:*High-Specification
                FloatersFifth-Generation
                Deepwater Floaters
            92%
            
            90%
            
            90%Other
                Deepwater Floaters
            80%
            
            75%
            
            70%Other
                High-Specification Floaters
            90%
            
            91%
            
            75%Total
                High-Specification Floaters
            86%
            
            83%
            
            79%Other
                Floaters
            63%
            
            57%
            
            45%Jackups
            94%
            
            94%
            
            85%Other
                Rigs
            57%
            
            44%
            
            46%Segment
                Total
            79%
            
            75%
            
            68%*TODCO
                Segment (a)*
            -
            
            -
            
            41%Total
                Drilling Fleet
            79%
            
            75%
            
            56%


__________________________


(a)
            TODCO
                was deconsolidated effective December 17, 2004 (see “—Operating
                Results”).





26
 *Index
            to Form 10-Q*





**Financial
      Condition**





***June
      30, 2005 compared to December 31, 2004***




June
                    30, 2005
                
                December
                    31, 2004
                
                Change
                
                %
                    Change(In
                    millions, except % change)Total
                    Assets
                
                $
                11,159.2
                
                $
                10,758.3
                
                $
                400.9
                
                
                4
                %





The
      increase in assets was mainly due to increases in cash and cash equivalents
      and
      accounts receivable of $491.2 million and $122.2 million, respectively,
      partially offset by decreases in property and equipment of $121.8 million and
      investments in unconsolidated affiliates. The increase in cash and cash
      equivalents related primarily to net proceeds received from the 2005 Offering
      and Sale (see “—Significant Events”), the exercise of stock options ($159.4
      million), the sale of assets ($60.5 million) and cash from operations during
      the
      six months ended June 30, 2005, partially offset by the repayment of debt
      ($295.3 million) and capital expenditures ($109.6 million) (see “—Acquisitions
      and Dispositions”). The increase in accounts receivable is primarily related to
      the increase in activity during the first six months of 2005. The decrease
      in
      property and equipment primarily related to depreciation and asset disposals,
      partially offset by capital expenditures. The decrease in investments in
      unconsolidated affiliates primarily related to the 2005 Offering and
      Sale.





**Liquidity
      and Capital Resources**





**Sources
      and Uses of Cash**





Six
                Months Ended
              June
                30,2005
            
            2004
            
            Change(In
                millions)**Net
                Cash Provided by Operating Activities**Net
                income
            
            $
            393.6
            
            $
            70.7
            
            $
            322.9Depreciation
            
            
            201.9
            
            
            264.5
            
            
            (62.6
            )Other
                non-cash items
            
            
            (158.4
            )
            
            (9.3
            )
            
            (149.1
            )Working
                capital
            
            
            (54.0
            )
            
            (45.3
            )
            
            (8.7
            )$
            383.1
            
            $
            280.6
            
            $
            102.5





Net
      cash
      provided by operating activities increased due to an increase in cash generated
      from net income adjusted for non-cash activity of $111.2 million resulting
      primarily from the gain on the TODCO Stock Sales, partially offset by a decrease
      in cash related to working capital items of $8.7 million during the six months
      ended June 30, 2005 as compared to the corresponding prior year
      period.





27
 *Index
            to Form 10-Q*




Six
                    Months Ended
                  June
                    30,2005
                
                2004
                
                Change(In
                    millions)**Net
                    Cash Provided by Investing Activities**Capital
                    expenditures
                
                $
                (109.6
                )
                $
                (54.7
                )
                $
                (54.9
                )Proceeds
                    from disposal of assets, net
                
                
                60.5
                
                
                42.0
                
                
                18.5Proceeds
                    from TODCO Stock Sales, net
                
                
                271.9
                
                
                155.7
                
                
                116.2Other,
                    net
                
                
                4.5
                
                
                4.7
                
                
                (0.2
                )$
                227.3
                
                $
                147.7
                
                $
                79.6





Net
      cash
      provided by investing activities for the six months ended June 30, 2005
      increased $79.6 million over the corresponding prior year period. The increase
      in cash provided by investing activities is primarily the result of an increase
      in net proceeds from the TODCO Stock Sales of $116.2 million and net proceeds
      from asset sales of $18.5 million, partially offset by an increase in capital
      expenditures of $54.9 million over the corresponding prior year period. Capital
      expenditures in 2005 included $42.5 million for the purchase of the *M.
      G.
      Hulme, Jr.* (see
“―Off-Balance Sheet Arrangement”).




Six
                    Months Ended
                  June
                    30,2005
                
                2004
                
                Change(In
                    millions)**Net
                    Cash Used in Financing Activities**Repayments
                    on revolving credit agreement
                
                $
                -
                
                $
                (200.0
                )
                $
                200.0Repayments
                    on other debt instruments
                
                
                (295.3
                )
                
                (395.2
                )
                
                99.9Net
                    proceeds from issuance of ordinary shares under stock-based compensation
                    plans
                
                
                159.4
                
                
                15.0
                
                
                144.4Proceeds
                    from issuance of ordinary shares upon exercise of warrants
                
                
                4.6
                
                
                -
                
                
                4.6Decrease
                    in cash dedicated to debt service
                
                
                12.0
                
                
                -
                
                
                12.0Other,
                    net
                
                
                0.1
                
                
                -
                
                
                0.1$
                (119.2
                )
                $
                (580.2
                )
                $
                461.0





The
      decrease in net cash used in financing activities is primarily attributable
      to
      the early redemption of our 9.5% Senior Notes totaling $370.3 million and
      payments made on our $800 million revolving credit agreement of $200.0 million
      during the six months ended June 30, 2004 compared to $247.8 million for the
      early redemption of our 6.95% Senior Notes during the same period in 2005.
      In
      the six months ended June 30, 2005, we received higher proceeds from stock
      option exercises compared to the same period in 2004. The decrease in cash
      dedicated to debt service of $12.0 million resulted from the repayment of the *Deepwater
      Nautilus* project
      financing in May 2005 and the subsequent release of the restrictions on the
      related cash.





**Capital
      Expenditures**





Capital
      expenditures totaled $109.6 million during the six months ended June 30, 2005.
      We expect to spend approximately $100 million during the second half of 2005
      on
      our existing fleet, including major upgrades, and corporate infrastructure.
      These amounts are dependent upon the actual level of operational and contracting
      activity. In addition, we expect to spend another $25 million for upgrades
      required and funded by our drilling contracts. We intend to fund the cash
      requirements relating to our capital expenditures through available cash
      balances, cash generated from operations and asset sales. We also have available
      credit under our revolving credit agreement (see “—Sources of Liquidity”) and
      may utilize other commercial bank or capital market financings.





28
 *Index
            to Form 10-Q*





**Acquisitions
      and Dispositions**





From
      time
      to time, we review possible acquisitions of businesses and drilling units and
      may in the future make significant capital commitments for such purposes. Any
      such acquisition could involve the payment by us of a substantial amount of
      cash
      or the issuance of a substantial number of additional ordinary shares or other
      securities. We would likely fund the cash portion of any such acquisition
      through cash balances on hand, the incurrence of additional debt, sales of
      assets, issuance of ordinary shares or other securities or a combination
      thereof. In addition, from time to time, we review possible dispositions of
      drilling units.





*Acquisition* —In
      May
      2005, we purchased the semisubmersible rig *M.
      G.
      Hulme, Jr* .,
      which
      we had previously operated under a lease arrangement. See “—Off-Balance Sheet
      Arrangement.”





*Dispositions* —In
      June
      2005, we sold the jackup rig *Transocean
      Jupiter* and a
      land rig for net proceeds of $23.5 million and recognized a gain of $14.0
      million. In January 2005, we completed the sale of the semisubmersible rig *Sedco
      600* for net
      proceeds of $24.9 million and recognized a gain of $18.8 million.





During
      the six months ended June 30, 2005, we sold certain other assets for net
      proceeds of approximately $12.1 million and we recorded net gains of $2.9
      million.





**Sources
      of Liquidity**





Our
      primary sources of liquidity in the second quarter of 2005 were our cash flows
      from operations, proceeds from the 2005 Offering and Sale, proceeds from asset
      sales, proceeds from issuance of ordinary shares under stock-based compensation
      plans and existing cash balances. Our primary uses of cash were debt repayments
      and capital expenditures. At June 30, 2005, we had $942.5 million in cash and
      cash equivalents.





We
      expect
      to use existing cash balances, internally generated cash flows and proceeds
      from
      asset sales to fulfill anticipated obligations such as scheduled debt
      maturities, capital expenditures and working capital needs. From time to time,
      we may also use bank lines of credit to maintain liquidity for short-term cash
      needs.





When
      cash
      on hand, cash flows from operations, proceeds from asset sales and committed
      bank facility availability exceed our expected liquidity needs, we may use
      a
      portion of such cash to reduce debt prior to scheduled maturities through
      repurchases, redemptions or tender offers, or make repayments on any outstanding
      bank borrowings. We expect to continue this focus on debt reduction through
      the
      third quarter of 2005, at which time we will consider alternative uses of our
      excess cash. Such possible uses could include allowing cash balances to
      increase, continued debt reduction, extraordinary dividends, share repurchases,
      resumption of periodic dividends, major rig upgrades and/or opportunistic asset
      acquisitions.





At
      June
      30, 2005 and December 31, 2004, our total debt was $2,193.5 million and $2,481.5
      million, respectively. Net debt, a non-GAAP financial measure defined as total
      debt less cash and cash equivalents, at such dates was $1,251.0 million and
      $2,030.2 million, respectively. During the six months ended June 30, 2005,
      we
      reduced net debt by $779.2 million. The reconciliation of total debt to net
      debt
      at carrying value is as follows (in millions):





June
                30,
            
            December
                31,2005
            
            2004Total
                Debt
            
            $
            2,193.5
            
            $
            2,481.5Less:
                Cash and cash equivalents
            
            
            942.5
            
            
            451.3Net
                Debt
            
            $
            1,251.0
            
            $
            2,030.2





We
      believe net debt provides useful information regarding the level of our
      indebtedness by reflecting the amount of indebtedness assuming cash and
      investments are used to repay debt. Net debt declined each year since 2001
      because cash flows, primarily from operations and asset sales, have exceeded
      capital expenditures.





29
 *Index
            to Form 10-Q*





Our
      internally generated cash flow is directly related to our business and the
      market sectors in which we operate. Should the drilling market deteriorate,
      or
      should we experience poor results in our operations, cash flow from operations
      may be reduced. We have, however, continued to generate positive cash flow
      from
      operating activities over recent years and expect cash flow will continue to
      be
      positive over the next year.





In
      July
      2005, we entered into a bank line of credit under a $500.0 million five-year
      revolving credit agreement dated July 8, 2005. At July 29, 2005, $500.0 million
      remained available under the new revolving credit agreement. In conjunction
      with
      the activation of this facility, we terminated our $800.0 million five-year
      revolving credit agreement dated December 16, 2003.





The
      new
      revolving credit agreement requires compliance with various covenants and
      provisions customary for agreements of this nature, including a debt to total
      tangible capitalization ratio as defined by the credit agreement not greater
      than 60 percent. There is no interest coverage covenant associated with this
      facility. Other provisions of the credit agreement include limitations on
      creating liens, incurring subsidiary debt, transactions with affiliates,
      sale/leaseback transactions and mergers and sale of substantially all assets.
      Should we fail to comply with these covenants, we would be in default and may
      lose access to this facility. We are also subject to various covenants under
      the
      indentures pursuant to which our public debt was issued, including restrictions
      on creating liens, engaging in sale/leaseback transactions and engaging in
      merger, consolidation or reorganization transactions. A default under our public
      debt could trigger a default under our credit line and cause us to lose access
      to this facility.




In
      April
      2001, the Securities and Exchange Commission (“SEC”) declared effective our
      shelf registration statement on Form S-3 for the proposed offering from time
      to
      time of up to $2.0 billion in gross proceeds of senior or subordinated debt
      securities, preference shares, ordinary shares and warrants to purchase debt
      securities, preference shares, ordinary shares or other securities. At June
      30,
      2005, $1.6 billion in gross proceeds of securities remained unissued under
      the
      shelf registration statement.





Our
      access to debt and equity markets may be reduced or closed to us due to a
      variety of events, including, among others, downgrades of our debt ratings,
      industry conditions, general economic conditions, market conditions and market
      perceptions of us and our industry.





As
      is
      customary in the contract drilling business, we also have various surety bonds
      in place that secure customs obligations relating to the importation of our
      rigs
      and certain performance and other obligations. Surety bonds outstanding totaled
      $8.5 million and $7.6 million at June 30, 2005 and December 31, 2004,
      respectively.





**Derivative
      Instruments**





In
      2003,
      we terminated all our outstanding interest rate swaps, which were designated
      as
      fair value hedges, and recognized a $173.5 million fair value adjustment to
      long-term debt in our consolidated balance sheet. We amortize this amount as
      a
      reduction to interest expense over the life of the underlying debt. During
      the
      three and six months ended June 30, 2005, such reduction amounted to $3.1
      million and $7.0 million, respectively. As a result of the redemption of our
      6.95% Senior Notes in March 2005, we recognized $13.2 million of the unamortized
      fair value adjustment as a reduction to our loss on redemption of debt. In
      addition, as a result of the repurchase of our 6.625% notes in July 2005 (see
      “—Significant Events”), we expect to recognize $62.0 million of the unamortized
      fair value adjustment as an offset to our loss on repurchase of debt, which
      will
      result in a gain on this repurchase in the third quarter of 2005. We expect
      the
      amortization of the unamortized premiums remaining on the terminated interest
      rate swaps to reduce interest expense by $2.0 million during the last six months
      of 2005.





30
 *Index
            to Form 10-Q*





**Operating
      Results**





***Quarter
      ended June 30, 2005 compared to quarter ended June 30,
      2004***





Following
      is an analysis of our Transocean Drilling segment operating results, as well
      as
      an analysis of income and expense categories that we have not allocated to
      our
      segment. See “—Overview” for a definition of average dayrate, revenue earnings
      day and utilization.





*Transocean
      Drilling Segment*





Three
                Months EndedJune
                30,2005
            
            2004
            
            Change
            
            %
                Change(In
                millions, except day amounts and percentages)Revenue
                earning days
            
            
            6,617
            
            
            5,795
            
            
            822
            
            
            14
            %Utilization
            
            
            79
            %
            
            68
            %
            
            N/A
            
            
            16
            %Average
                dayrate
            
            $
            103,100
            
            $
            89,100
            
            $
            14,000
            
            
            16
            %Contract
                drilling revenues
            
            $
            682.1
            
            $
            516.6
            
            $
            165.5
            
            
            32
            %Other
                revenues
            
            
            45.3
            
            
            35.9
            
            
            9.4
            
            
            26
            %727.4
            
            
            552.5
            
            
            174.9
            
            
            32
            %Operating
                and maintenance expense
            
            
            (438.9
            )
            
            (338.1
            )
            
            (100.8
            )
            
            30
            %Depreciation
            
            
            (101.2
            )
            
            (109.1
            )
            
            7.9
            
            
            (7
            )%Gain
                from sale of assets, net
            
            
            15.5
            
            
            21.9
            
            
            (6.4
            )
            
            (29
            )%Operating
                income before general and administrative expense
            
            $
            202.8
            
            $
            127.2
            
            $
            75.6
            
            
            59
            %


_________________


“N/A”
      means not applicable


“N/M”
      means not meaningful





This
      segment’s contract drilling revenues increased by $165.5 million primarily due
      to increased activity resulting in higher average dayrates and utilization.





Other
      revenues for the three months ended June 30, 2005 increased $9.4 million
      primarily due to a $4.3 million increase in integrated services revenue, an
      increase of $3.5 million from client reimbursable revenue and compensation
      received in 2005 relating to a 2004 labor strike of $2.3 million.





This
      segment’s operating and maintenance expenses increased by $100.8 million
      primarily from increased activity resulting in higher labor and rig maintenance
      costs, insurance proceeds received in 2004 related to the 2003 *Discoverer
      Enterprise* riser
      separation incident partially offset by a comparable settlement in 2005,
      increased local personnel taxes related to stock option exercises and restricted
      stock vestings and increased integrated services activity in 2005.





The
      decrease in this segment’s depreciation expense was due primarily to extending
      the useful lives of four rigs with original useful lives from 30 to 32 years
      to
      35 years and the reduction in depreciation on one rig and certain other
      equipment that were substantially depreciated during 2004.





During
      the three months ended June 30, 2005, this segment recognized net gains of
      $15.5
      million related to the sale of the jackup rig *Transocean
      Jupiter* ,
      the
      sale of a land rig and the sale of other assets. During the three months ended
      June 30, 2004, this segment recognized net gains of $21.9 million related to
      the
      sale of the semisubmersible rig *Sedco
      602* and the
      sale of other assets.





31
 *Index
            to Form 10-Q*





*Total
      Company Results of Operations*





Three
                Months EndedJune
                30,2005
            
            2004
            
            Change
            
            %
                Change(In
                millions, except % change)General
                and Administrative Expense
            
            $
            18.0
            
            $
            14.0
            
            $
            4.0
            
            
            29
            %Other
                (Income) Expense, netEquity
                in earnings of unconsolidated affiliates
            
            
            (3.4
            )
            
            (3.7
            )
            
            0.3
            
            
            (8
            )%Interest
                income
            
            
            (4.8
            )
            
            (1.9
            )
            
            (2.9
            )
            
            N/MInterest
                expense
            
            
            29.8
            
            
            42.6
            
            
            (12.8
            )
            
            (30
            )%Gain
                from TODCO Stock Sales
            
            
            (165.0
            )
            
            -
            
            
            (165.0
            )
            
            N/MOther,
                net
            
            
            3.0
            
            
            1.1
            
            
            1.9
            
            
            N/MIncome
                Tax Expense
            
            
            23.6
            
            
            19.9
            
            
            3.7
            
            
            19
            %Minority
                Interest
            
            
            (0.2
            )
            
            (2.2
            )
            
            2.0
            
            
            N/M


_________________________


“N/M”
      means not meaningful





The
      increase in general and administrative expense was primarily attributable to
      increases of approximately $1.2 million in rent expense, $1.0 million in
      personnel expense and $0.9 million in public accounting and professional fees
      primarily related to compliance with the Sarbanes Oxley Act of
      2002.





The
      decrease in interest expense was primarily attributable to reductions of $11.6
      million associated with debt that was redeemed, retired or repurchased during
      or
      subsequent to the second quarter of 2004. Additional decreases resulted from
      $1.0 million of interest expense in the second quarter of 2004 on TODCO’s debt
      with no comparable activity for the same period in 2005.





During
      the second quarter of 2005, we recognized gains of $165.0 million from the
      2005
      Offering and Sale. See “—TODCO Segment.”





We
      operate internationally and provide for income taxes based on the tax laws
      and
      rates in the countries in which we operate and earn income. There is no expected
      relationship between the provision for income taxes and income before income
      taxes. The estimated annual effective tax rates for 2005 and 2004 were estimated
      to be approximately 17 percent and 35 percent, respectively, based on estimated
      2005 and 2004 annual income before income taxes and minority interest. In
      accordance with Accounting Principles Board Opinion (“APB”) 28, *Interim
      Financial Reporting* ,
      certain
      items have been excluded from the estimated annual effective tax rate and
      treated as period items. These items included portions of the net gains on
      sales
      of assets, TODCO Stock Sales-related items and losses on retirements of debt.
      The estimated annual effective tax rate at June 30, 2005 increased from
      approximately 16 percent estimated at March 31, 2005 as a result of developments
      in the second quarter on certain international tax disputes and changes in
      the
      expected amount and geographical concentration of income. The catch-up effect
      of
      the increase in the estimated annual effective tax rate, a reduction in earnings
      of $1.4 million, was reflected in the second quarter of 2005 resulting in an
      effective tax rate of 18 percent on earnings for the three months ended June
      30,
      2005. The estimated annual effective tax rate at June 30, 2004 increased from
      approximately 27 percent estimated at March 31, 2004 as a result of developments
      in the second quarter on certain international tax disputes, an increase in
      the
      valuation allowance established at the time of the TODCO IPO and changes in
      the
      expected amount and geographical concentration of income. The catch-up effect
      of
      the increase in the annual effective tax rate, a reduction in earnings of $4.6
      million, was reflected in the second quarter of 2004 resulting in an effective
      tax rate of 45 percent on earnings for the three months ended June 30,
      2004.





32
 *Index
            to Form 10-Q*





***Six
      months ended June 30, 2005 compared to six months ended June 30,
      2004***





Following
      is an analysis of our Transocean Drilling segment operating results, as well
      as
      an analysis of income and expense categories that we have not allocated to
      our
      segment.





*Transocean
      Drilling Segment*





Six
                Months EndedJune
                30,2005
            
            2004
            
            Change
            
            %
                Change(In
                millions, except day amounts and percentages)Revenue
                earnings days
            
            
            12,835
            
            
            11,731
            
            
            1,104
            
            
            9
            %Utilization
            
            
            77
            %
            
            68
            %
            
            N/A
            
            
            13
            %Average
                dayrate
            
            $
            99,900
            
            $
            89,700
            
            $
            10,200
            
            
            11
            %Contract
                drilling revenues
            
            $
            1,282.7
            
            $
            1,052.1
            
            $
            230.6
            
            
            22
            %Other
                revenues
            
            
            75.2
            
            
            78.6
            
            
            (3.4
            )
            
            (4
            )%1,357.9
            
            
            1,130.7
            
            
            227.2
            
            
            20
            %Operating
                and maintenance expense
            
            
            (827.5
            )
            
            (671.3
            )
            
            (156.2
            )
            
            23
            %Depreciation
            
            
            (201.9
            )
            
            (216.4
            )
            
            14.5
            
            
            (7
            )%Gain
                from sale of assets, net
            
            
            35.7
            
            
            23.0
            
            
            12.7
            
            
            55
            %Operating
                income before general and administrative expense
            
            $
            364.2
            
            $
            266.0
            
            $
            98.2
            
            
            37
            %


_________________


“N/A”
      means not applicable


“N/M”
      means not meaningful





This
      segment’s contract drilling revenues increased by $230.6 million primarily due
      to increased activity resulting in higher average dayrates and utilization
      and
      $3.5 million related to equipment rentals on the *Jim
      Cunningham* following its well control incident that resulted in a fire while operating
      offshore Egypt in August 2004. Partially offsetting these increases was a
      decrease of approximately $13.7 million resulting from the 2004 favorable
      settlement of the 2003 *Discoverer
      Enterprise* riser
      separation incident.





Other
      revenues for the six months ended June 30, 2005 decreased $3.4 million primarily
      due to a $12.6 million decrease in integrated services revenue partially offset
      by compensation received in 2005 relating to a 2004 labor strike of $4.9 million
      and an increase of $5.8 million from client reimbursable revenue.





This
      segment’s operating and maintenance expenses increased by $156.2 million
      primarily from increased activity resulting in higher labor and rig maintenance
      costs and from additional costs related to the *Jim
      Cunningham* well
      control incident. Operating and maintenance expenses also increased as a result
      of the favorable settlement in 2004 of a prior year *Peregrine
      I* riser
      incident and a turnkey dispute with no comparable activity for the same period
      in 2005, insurance proceeds received in 2004 related to the 2003 *Discoverer
      Enterprise* riser
      separation incident, which was partially offset by costs incurred in 2004 and
      a
      comparable settlement in 2005 and increased local personnel taxes related to
      stock option exercises and restricted stock vestings.





The
      decrease in this segment’s depreciation expense was due primarily to extending
      the useful lives of four rigs, with original useful lives from 30 to 32 years
      to
      35 years, and the reduction in depreciation on two rigs and certain other
      equipment that were substantially depreciated during 2004.





During
      the six months ended June 30, 2005, this segment recognized net gains of $35.7
      million related to the sale of the semisubmersible rig *Sedco
      600* ,
      the
      jackup rig *Transocean
      Jupiter* ,
      a land
      rig and the sale of other assets. During the six months ended June 30, 2004,
      this segment recognized net gains of $23.0 million related to the sale of the
      semisubmersible rig *Sedco
      602* and the
      sale of other assets.





33
 *Index
            to Form 10-Q*





*Total
      Company Results of Operations*





Six
                Months EndedJune
                30,2005
            
            2004
            
            Change
            
            %
                Change(In
                millions, except % change)General
                and Administrative Expense
            
            $
            36.1
            
            $
            29.1
            
            $
            7.0
            
            
            24
            %Other
                (Income) Expense, netEquity
                in earnings of unconsolidated affiliates
            
            
            (6.5
            )
            
            (6.0
            )
            
            (0.5
            )
            
            8
            %Interest
                income
            
            
            (8.8
            )
            
            (4.0
            )
            
            (4.8
            )
            
            N/MInterest
                expense
            
            
            62.9
            
            
            90.0
            
            
            (27.1
            )
            
            (30
            )%Gain
                from TODCO Stock Sales
            
            
            (165.0
            )
            
            (39.4
            )
            
            (125.6
            )
            
            N/MLoss
                on retirement of debt
            
            
            6.7
            
            
            28.1
            
            
            (21.4
            )
            
            76
            %Other,
                net
            
            
            4.1
            
            
            (0.3
            )
            
            4.4
            
            
            N/MIncome
                Tax Expense
            
            
            41.1
            
            
            67.9
            
            
            (26.8
            )
            
            39
            %Minority
                Interest
            
            
            -
            
            
            (6.4
            )
            
            6.4
            
            
            N/M


_________________________


“N/M”
      means not meaningful





The
      increase in general and administrative expense was primarily attributable to
      increases of approximately $2.6 million in public accounting and professional
      fees primarily related to compliance with the Sarbanes Oxley Act of 2002 as
      well
      as $1.8 million in increased rent and personnel expenses.





The
      increase in interest income was primarily due to an increase in average cash
      balances for 2005 compared to 2004 and an increase in interest rates on cash
      investments, the combination of which resulted in an increase in interest income
      of $2.9 million. Additional increases resulted from $0.5 million related to
      various tax refunds received during the six months ended June 30,
      2005.





The
      decrease in interest expense was primarily attributable to reductions of $24.6
      million associated with debt that was redeemed, retired or repurchased during
      or
      subsequent to the six months ended June 30, 2004. Additional decreases resulted
      from $2.1 million of interest expense in the six months ended June 30, 2004
      on
      TODCO’s debt with no comparable activity for the same period in 2005.





During
      the six months ended June 30, 2005, we recognized gains of $165.0 million from
      the 2005 Offering and Sale compared to the $39.4 million gain from the TODCO
      IPO
      recognized during the six months ended June 30, 2004. See “—TODCO
      Segment.”





During
      the six months ended June 30, 2005, we recognized a $6.7 million loss related
      to
      the early redemption of $247.8 million aggregate principal amount of our debt
      (see “—Significant Events”). During the six months ended June 30, 2004, we
      recognized a $28.1 million loss related to the early redemption of $289.8
      million aggregate principal amount of our debt.





The
      $4.4
      million unfavorable change in other, net primarily relates to the effect of
      foreign currency exchange rate changes on our monetary assets and liabilities
      denominated in non-U.S. currencies.





We
      operate internationally and provide for income taxes based on the tax laws
      and
      rates in the countries in which we operate and earn income. There is no expected
      relationship between the provision for income taxes and income before income
      taxes. The estimated annual effective tax rates for 2005 and 2004 were estimated
      to be approximately 17 percent and 35 percent, respectively, based on estimated
      2005 and 2004 annual income before income taxes and minority interest. In
      accordance with APB 28, certain items have been excluded from the estimated
      annual effective tax rate and treated as period items. These items included
      portions of the net gains on sales of assets, TODCO Stock Sales-related items
      and losses on retirements of debt. The six months ended June 30, 2004 included
      a
      provision for a valuation allowance of approximately $31.0 million related
      to
      the TODCO IPO.





34
 *Index
            to Form 10-Q*





The
      decrease in minority interest was primarily attributable to the deconsolidation
      of TODCO.





*TODCO
      Segment*





In
      February 2004, we completed the TODCO IPO of common stock of TODCO in which
      we
      sold 13.8 million shares of TODCO class A common stock, representing 23 percent
      of TODCO’s total outstanding shares. In September 2004 and December 2004,
      respectively, we completed additional public offerings of TODCO common stock
      (respectively referred to as the “September 2004 Offering” and “December 2004
      Offering” and, together with the TODCO IPO, the “2004 Offerings”). We sold 17.9
      million shares of TODCO’s class A common stock (30 percent of TODCO’s total
      outstanding shares) in the September 2004 Offering and 15.0 million shares
      of
      TODCO’s class A common stock (25 percent of TODCO’s total outstanding shares) in
      the December 2004 Offering. Prior to the December 2004 Offering, we held TODCO
      class B common stock, which was entitled to five votes per share (compared
      to
      one vote per share of TODCO class A common stock) and converted automatically
      into class A common stock upon any sale by us to a third party. In connection
      with the December 2004 Offering, we converted all of our remaining TODCO class
      B
      common stock not sold in the 2004 Offerings into shares of class A common stock.
      After the 2004 Offerings, we held a 22 percent ownership and voting interest
      in
      TODCO, represented by 13.3 million shares of class A common stock.





We
      consolidated TODCO in our financial statements as a business segment through
      December 16, 2004, and that portion of TODCO that we did not own was reflected
      as minority interest in our consolidated statements of operations and balance
      sheets. We deconsolidated TODCO from our consolidated statements of operations
      and balance sheets effective December 17, 2004 and subsequently accounted for
      our investment in TODCO under the equity method of accounting.





**Critical
      Accounting Policies and Estimates**





Our
      discussion and analysis of our financial condition and results of operations
      are
      based upon our condensed consolidated financial statements. This discussion
      should be read in conjunction with disclosures included in the notes to our
      condensed consolidated financial statements related to estimates, contingencies
      and new accounting pronouncements. Significant accounting policies are discussed
      in Note 2 to our condensed consolidated financial statements included elsewhere
      and in Note 2 to our consolidated financial statements in our Annual Report
      on
      Form 10-K for the year ended December 31, 2004. The preparation of these
      financial statements requires us to make estimates and judgments that affect
      the
      reported amounts of assets, liabilities, revenues, expenses and related
      disclosure of contingent assets and liabilities. On an on-going basis, we
      evaluate our estimates, including those related to bad debts, materials and
      supplies obsolescence, investments, property and equipment, intangible assets
      and goodwill, income taxes, workers’ insurance, pensions and other
      post-retirement and employment benefits and contingent liabilities. We base
      our
      estimates on historical experience and on various other assumptions that are
      believed to be reasonable under the circumstances, the results of which form
      the
      basis for making judgments about the carrying values of assets and liabilities
      that are not readily apparent from other sources. Actual results may differ
      from
      these estimates under different assumptions or conditions.





For
      a
      discussion of the critical accounting policies and estimates that we use in
      the
      preparation of our condensed consolidated financial statements, see "Item 7.
      Management's Discussion and Analysis of Financial Condition and Results of
      Operations" in our Annual Report on Form 10-K for the year ended December 31,
      2004. There have been no material changes to these policies during the six
      months ended June 30, 2005. These policies require significant judgments and
      estimates used in the preparation of our consolidated financial statements.
      Management has discussed each of these critical accounting policies and
      estimates with the audit committee of the board of directors.





35
 *Index
            to Form 10-Q*





**Retirement
      Plans and Other Postemployment Benefits**





*Defined
      Benefit Pension Plans* —We
      have
      several defined benefit pension plans, both funded and unfunded, covering
      substantially all U.S. employees. We also have various defined benefit plans
      that cover Norway and Nigeria employees and various current and former employees
      covered under certain frozen plans acquired in connection with the R&B
      Falcon merger.





For
      the
      funded plans, our funding policy consists of reviewing the funded status of
      these plans annually and contributing an amount at least equal to the minimum
      contribution required under the Employee Retirement Income Security Act of
      1974
      (ERISA) or other applicable funding regulations. Employer contributions to
      the
      funded plans are based on actuarial computations that establish the minimum
      contribution required under ERISA and the maximum deductible contribution for
      income tax purposes, or other applicable funding regulations.





During
      the six months ended June 30, 2005, we contributed to the funded and unfunded
      defined benefit pension plans $1.7 million and $0.7 million, respectively,
      which
      is the total amount expected to be contributed for the year ending December
      31,
      2005. We funded the contributions from cash flows from operations.





*Postretirement
      Benefits Other Than Pensions* ― We **** have
      several unfunded contributory and noncontributory postretirement benefit plans
      covering substantially all of our U.S. employees. Funding for these plans is
      to
      cover benefit payments of plan participants as they are incurred.





We
      have
      contributed $1.1 million to the other postretirement benefit plans to fund
      benefit payments in the six months ended June 30, 2005.





**Off-Balance
      Sheet Arrangement**





We
      leased
      the semisubmersible rig *M.
      G.
      Hulme, Jr.* from
      Deep Sea Investors, L.L.C., (“Deep Sea Investors”), a special purpose entity
      formed by several leasing companies to acquire the rig from one of our
      subsidiaries in November 1995 in a sale/leaseback transaction. We accounted
      for
      the lease of this semisubmersible drilling rig as an operating lease. We
      recorded $4.6 million and $6.3 million of such rent expense in the six months
      ended June 30, 2005 and 2004, respectively. In May 2005, we purchased the rig
      for $42.5 million. The rig was reflected as property and equipment in the
      consolidated balance sheet at June 30, 2005.





Effective
      December 31, 2003, we adopted and applied the provisions of FASB Interpretation
      (“FIN”) 46, *Consolidation
      of Variable Interest Entities* ,
      as
      revised December 31, 2003, for all variable interest entities. FIN 46 requires
      the consolidation of variable interest entities in which an enterprise absorbs
      a
      majority of the entity’s expected losses, receives a majority of the entity’s
      expected residual returns, or both, as a result of ownership, contractual or
      other financial interests in the entity. Because the sale/leaseback agreement
      was with an entity in which we had no direct investment, we were not entitled
      to
      receive the financial information of the leasing entity and the equity holders
      of the leasing company would not release the financial statements or other
      financial information to us in order for us to make the determination of whether
      the entity was a variable interest entity. In addition, without the financial
      statements or other financial information, we were unable to determine if we
      were the primary beneficiary of the entity and, if so, what we would have
      consolidated. We had no exposure to loss as a result of the sale/leaseback
      agreement. As a result of the purchase of the *M.
      G.
      Hulme, Jr.* ,
      we are
      no longer associated with Deep Seas Investors and, as such, are no longer
      required to review for FIN 46 applicability.





**New
      Accounting Pronouncements**





In
      May
      2005, the FASB issued SFAS 154, *“Accounting
      Changes and Error Corrections,”* which
      requires retrospective application to all prior period financial statements
      presented for voluntary changes in accounting principle unless it is
      impracticable.  This statement replaces APB 20, *Accounting
      Changes* ,
      and
      SFAS 3, *Reporting
      Accounting Changes in Interim Financial Statements* , though
      it carries forward the guidance in those pronouncements with respect to
      accounting for changes in estimates, changes in reporting entity and the
      correction of errors.  SFAS 154 is effective for accounting changes and
      corrections of errors made in fiscal years beginning after December 15, 2005.
      We
      will adopt SFAS 154 effective January 1, 2006, and we do not expect the adoption
      of this statement to have an impact on our consolidated financial position,
      results of operations or cash flows.





36
 *Index
            to Form 10-Q*





In
      December 2004, the FASB issued SFAS 123 (revised 2004) (“SFAS
      123(R)”), *Share-Based
      Payment* ,
      which
      is a revision of SFAS 123, *Accounting
      for Stock-Based Compensation* .
      SFAS
      123(R) supersedes APB 25, *Accounting
      for Stock Issued to Employees* ,
      and
      amends SFAS 95, *Statement
      of Cash Flows* .
      While
      the approach in SFAS 123(R) is similar to the approach described in SFAS 123,
      SFAS 123(R) requires recognition in the income statement of all share-based
      payments to employees, including grants of employee stock options, based on
      their fair values, and pro forma disclosure is no longer an alternative. The
      SEC
      has deferred the implementation date, and we are now required to adopt SFAS
      123(R) no later than January 1, 2006.





SFAS
      123(R) permits adoption using one of two methods, a modified prospective method
      (“Prospective Method”) or a modified retrospective method (“Retrospective
      Method”). With the Prospective Method, costs are recognized beginning with the
      effective date based on the requirements of SFAS 123(R) for (i) all share-based
      payments granted after the effective date of SFAS 123(R), and (ii) all awards
      granted to employees prior to the effective date of SFAS 123(R) that remain
      unvested on the effective date. The Retrospective Method applies the
      requirements of the Prospective Method but further permits entities to restate
      all prior periods presented based on the amounts previously recognized under
      SFAS 123 for purposes of pro forma disclosures.





Although
      we will adopt SFAS 123(R) effective January 1, 2006, we have not yet determined
      which method we will use. We adopted the fair-value-based method of accounting
      for share-based payments effective January 1, 2003 using the Prospective Method
      as described in SFAS 148, *Accounting
      for Stock-Based Compensation*―*Transition and Disclosure* .
      While
      we currently use the Black-Scholes-Merton formula to estimate the value of
      stock
      options granted to employees, which is an acceptable share-based award valuation
      model, we may choose some other model that is also acceptable in determining
      fair value of stock awards upon adoption of SFAS 123(R). Because SFAS 123(R)
      must be applied to unvested awards granted and accounted for under APB 25,
      any
      additional compensation costs not previously recognized under SFAS 123 will
      be
      recognized under SFAS 123(R). Our unvested APB 25 options will vest in the
      third
      quarter of 2005. If we adopt SFAS 123(R) using the Prospective Method, there
      would be no impact on our consolidated financial position, results of operations
      or cash flows. If we adopt using the Retrospective Method, the impact of those
      amounts would approximate the amounts described in our pro forma net income
      and
      earnings per share disclosure in Note 2 to our condensed consolidated financial
      statements under “Item 1. Financial Statements” included elsewhere in this
      quarterly report. In addition to the compensation cost recognition requirements,
      SFAS 123(R) also requires the tax deduction benefits for an award in excess
      of
      recognized compensation cost be reported as a financing cash flow rather than
      as
      an operating cash flow, which is currently required under SFAS 95. While we
      cannot estimate what these amounts will be in the future (because they depend
      on, among other things, when employees exercise stock options), we reported
      operating cash flows related to tax deduction benefits of $5.7 million and
      $4.9
      million for the three and six months ended June 30, 2005, respectively. We
      reported operating cash flows related to the tax deduction benefits of $5.9
      million for the year ended December 31, 2004.


37
 *Index
            to Form
            10-Q*
  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. Statements to the effect that we or management
“anticipates,”“believes,”“budgets,”“estimates,”“expects,”“forecasts,”“intends,”“plans,”“predicts,”
or “projects” a particular result or course of events, or that such result or
      course of events “could,”“might,”“may,”“scheduled” or “should” occur, and
      similar expressions, are also intended to identify forward-looking statements.
      Forward-looking statements in this quarterly report include, but are not limited
      to, statements involving contract commencements, contract option exercises,
      revenues, expenses, commodity prices, customer drilling programs, supply and
      demand, utilization rates, dayrates, contract backlog, planned shipyard projects
      and rig mobilizations and their effects, rig relocations, expected downtime,
      future activity in the deepwater, mid-water and the shallow and inland water
      market sectors, market outlook for our various geographical operating sectors,
      capacity constraints for fifth-generation rigs, rig classes and business
      segments, the valuation allowance for deferred net tax assets of TODCO, intended
      reduction of debt, planned asset sales, timing of asset sales, proceeds from
      asset sales, our effective tax rate, changes in tax laws, treaties and
      regulations, our Sarbanes-Oxley Section 404 process, implementation of a
      financial integrated system, changes in our internal control structure and
      the
      impact of these changes on the overall effectiveness of our controls, our other
      expectations with regard to market outlook, operations in international markets,
      expected capital expenditures, results and effects of legal proceedings and
      governmental audits and assessments, adequacy of insurance, liabilities for
      tax
      issues, recognition of loss on termination of our prior revolving credit
      agreement, recognition of gain on debt repurchase, liquidity, cash flow from
      operations, adequacy of cash flow for our obligations, effects of accounting
      changes, adoption of accounting policies, pension plan contributions and the
      timing and cost of completion of capital projects. Such statements are subject
      to numerous risks, uncertainties and assumptions, including, but not limited
      to,
      those described in “Item 7. Management’s Discussion and Analysis of Financial
      Condition and Results of Operations ― Risk
      Factors” included in our Annual Report on Form 10-K for the year ended December
      31, 2004, the adequacy of sources of liquidity, the effect and results of
      litigation, audits and contingencies and other factors discussed in this
      quarterly report and in our other filings with the SEC, which are available
      free
      of charge on the SEC's website at www.sec.gov. Should one or more of these
      risks
      or uncertainties materialize, or should underlying assumptions prove incorrect,
      actual results may vary materially from those indicated. All subsequent written
      and oral forward-looking statements attributable to us or to persons acting
      on
      our behalf are expressly qualified in their entirety by reference to these
      risks
      and uncertainties. You should not place undue reliance on forward-looking
      statements. Each forward-looking statement speaks only as of the date of the
      particular statement, and we undertake no obligation to publicly update or
      revise any forward-looking statements.





38
 *Index
            to Form 10-Q*





**ITEM
      3. Quantitative and Qualitative Disclosures About Market
      Risk**





**Interest
      Rate Risk**





Our
      exposure to market risk for changes in interest rates relates primarily to
      our
      long-term and short-term debt. The table below presents scheduled debt
      maturities and related weighted-average interest rates for each of the 12-month
      periods ending June 30 relating to debt obligations as of June 30, 2005.





At June
      30 ,
      2005
      (in millions, except interest rate percentages):





Scheduled
                Maturity Date (a) (b)
            
            Fair
                Value2006
            
            2007
            
            2008
            
            2009
            
            2010
            
            Thereafter
            
            Total
            
            06/30/05Total
                debtFixed
                Rate
            
            $
            400.0
            
            $
            100.0
            
            $
            19.0
            
            $
            -
            
            $
            -
            
            $
            1,603.8
            
            $
            2,122.8
            
            $
            2,491.2Average
                interest rate
            
            
            1.5
            %
            
            7.5
            %
            
            2.8
            %
            
            -
            %
            
            -
            %
            
            7.1
            %
            
            6.0
            %


__________________________


(a)
            Maturity
                dates of the face value of our debt assume the put options on 1.5%
                Convertible Debentures, 7.45% Notes and the Zero Coupon Convertible
                Debentures will be exercised in May 2006, April 2007 and May 2008,
                respectively.


(b)
            Expected
                maturity amounts are based on the face value of
                debt.





At
      June
      30, 2005, we had no variable rate debt and as such interest expense had no
      exposure to changes in interest rates. However, a large part of our cash
      investments would earn commensurately higher rates of return if interest rates
      increase. Using June 30, 2005 cash investment levels, a one percent increase
      in
      interest rates would result in approximately $8.1 million of additional interest
      income per year.





**Foreign
      Exchange Risk**





Our
      international operations expose us to foreign exchange risk. We use a variety
      of
      techniques to minimize the exposure to foreign exchange risk, including customer
      contract payment terms and the possible use of foreign exchange derivative
      instruments. Our primary foreign exchange risk management strategy involves
      structuring customer contracts to provide for payment in both U.S. dollars,
      which is our functional currency, and local currency. The payment portion
      denominated in local currency is based on anticipated local currency
      requirements over the contract term. Due to various factors, including customer
      acceptance, local banking laws, other statutory requirements, local currency
      convertibility and the impact of inflation on local costs, actual foreign
      exchange needs may vary from those anticipated in the customer contracts,
      resulting in partial exposure to foreign exchange risk. Fluctuations in foreign
      currencies typically have not had a material impact on overall results. In
      situations where payments of local currency do not equal local currency
      requirements, foreign exchange derivative instruments, specifically foreign
      exchange forward contracts or spot purchases, may be used to mitigate foreign
      currency risk. A foreign exchange forward contract obligates us to exchange
      predetermined amounts of specified foreign currencies at specified exchange
      rates on specified dates or to make an equivalent U.S. dollar payment equal
      to
      the value of such exchange. We do not enter into derivative transactions for
      speculative purposes. At June 30, 2005, we had no open foreign exchange
      derivative contracts.





39
 *Index
            to Form 10-Q*





**ITEM
      4. Controls and Procedures**





In
      accordance with Exchange Act Rules 13a-15 and 15d-15, we carried out an
      evaluation, under the supervision and with the participation of management,
      including our Chief Executive Officer and Chief Financial Officer, of the
      effectiveness of our disclosure controls and procedures as of the end of the
      period covered by this report. Based on that evaluation, our Chief Executive
      Officer and Chief Financial Officer concluded that our disclosure controls
      and
      procedures were effective as of June 30, 2005 and provide reasonable assurance
      that information required to be disclosed in our reports filed or submitted
      under the Exchange Act is (i) accumulated and communicated to our management,
      including our Chief Executive Officer and our Chief Financial Officer, to allow
      timely decisions regarding required disclosure and (ii) recorded, processed,
      summarized and reported within the time periods specified in the Securities
      and
      Exchange Commission’s rules and forms.





Pursuant
      to our efforts relating to Section 404 of the Sarbanes-Oxley Act, we continued
      to make certain changes to our internal controls over financial reporting during
      the quarter ended June 30, 2005 that we believe better align these controls
      with
      the Section 404 requirements. However, there were no changes in these internal
      controls during that quarter that have materially affected, or are reasonably
      likely to materially affect, our internal controls over financial
      reporting.





We
      also
      implemented an integrated financial reporting system in the second quarter
      of
      2005. As a result, we made a variety of changes in our internal control
      structure. These changes did not impact the overall effectiveness of our
      controls.





**PART
      II - OTHER INFORMATION**





**Item
      1. Legal Proceedings**





We
      have
      certain other actions or claims pending that have been previously discussed
      and
      reported in our Annual Report on Form 10-K for the year ended December 31,
      2004
      and our other reports filed with the Securities and Exchange Commission. There
      have been no material developments in these previously reported matters. We
      are
      involved in a number of other lawsuits, all of which have arisen in the ordinary
      course of our business. We do not expect the liability, if any, resulting from
      these other lawsuits to have a material adverse effect on our current
      consolidated financial position, results of operations and cash flows. We cannot
      predict with certainty the outcome or effect of any of the litigation matters
      specifically described above or of any such other pending or threatened
      litigation. There can be no assurance that our beliefs or expectations as to
      the
      outcome or effect of any lawsuit or other litigation matter will prove correct
      and the eventual outcome of these matters could materially differ from
      management’s current estimates.





**Item
      2. Unregistered Sales of Equity Securities and Use of Proceeds**





**Issuer
      Purchases of Equity Securities**





**Period**
            
            **(a)
                Total Number****of
                Shares****Purchased
                (1)**
            
            **(b)
                Average Price****Paid
                Per Share**
            
            **(c)
                Total Number of****Shares
                Purchased as****Part
                of Publicly Announced Plans or Programs (2)**
            
            **(d)
                Maximum Number****(or
                Approximate Dollar Value) of Shares that May Yet Be Purchased Under
                the
                Plans or Programs (2)**April
                2005
            
            58,237
            
            $52.01
            
            N/A
            
            N/AMay
                2005
            
            163
            
            $52.01
            
            N/A
            
            N/AJune
                2005
            
            -
            
            -
            
            N/A
            
            N/ATotal
            
            58,400
            
            $52.01
            
            N/A
            
            N/A


__________


(1)
            The
                issuer purchase during the period covered by this report represents
                shares
                withheld by us in satisfaction of withholding taxes due upon the
                vesting
                of restricted shares granted to our employees under our Long-Term
                Incentive Plan to pay withholding taxes due upon vesting of a restricted
                stock award.





(2)
            In
                connection with the vesting of restricted share awards under our
                Long-Term
                Incentive Plan, we generally withhold shares to satisfy withholding
                taxes
                upon vesting.





40
 *Index
            to Form 10-Q*





**Item
      4. Submission of Matters to a Vote of Security Holders**





At
      the
      Annual General Meeting of Transocean Inc. held on May 12, 2005, 281,059,338
      shares were represented in person or by proxy out of 324,466,430 shares
      outstanding and entitled to vote as of the record date, constituting a quorum.
      The matters submitted to a vote of shareholders, as set forth in the Company’s
      Proxy Statement relating to the meeting, and the corresponding voting results
      were as follows:





(i)
            With
                respect to the election of Class III Director nominees as set forth
                in the
                Company’s Proxy Statement relating to the meeting, the following number of
                votes were cast:





**Name
                of Nominee for****Class
                III Director**
            **For**
            **Withheld/**
              **Abstain**Judy
                J. Kelly
            278,742,474
            2,316,864Roberto
                Monti
            278,758,870
            2,300,468Ian
                C. Strachan
            278,698,035
            2,361,303





(ii)
            With
                respect to the amendment of the Company’s Employee Stock Purchase Plan to
                increase the number of ordinary shares reserved for issuance under
                the
                plan from 2,500,000 to 3,500,000, the following number of votes were
                cast:





**For**
            **Against/**
              **Authority
                Withheld**
            **Exceptions/**
              **Abstain**
            **Broker****Non-Votes**235,373,811
            1,546,794
            1,892,579
            42,246,154





(iii)
            With
                respect to the approval of the Company’s appointment of Ernst & Young
                LLP as independent registered public accounting firm for 2005, the
                following number of votes were
                cast:





**For**
            **Against/**
              **Authority
                Withheld**
            **Exceptions/**
              **Abstain**
            **Broker****Non-Votes**276,226,610
            3,081,703
            1,751,025
            −





41
 *Index
            to Form 10-Q*





**Item
      6. Exhibits** ****





(a)
            Exhibits





The
      following exhibits are filed in connection with this Report:





**Number**
            
            **Description***3.1
            
            Memorandum
                of Association of Transocean Inc., as amended (incorporated by reference
                to Annex E to the Joint Proxy Statement/Prospectus dated October
                30, 2000
                included in a 424(b)(3) prospectus filed by us on November 1,
                2000)*3.2
            
            Articles
                of Association of Transocean Inc., as amended (incorporated by reference
                to Annex F to the Joint Proxy Statement/Prospectus dated October
                30, 2000
                included in a 424(b)(3) prospectus filed by us on November 1,
                2000)*3.3
            
            Certificate
                of Incorporation on Change of Name to Transocean Inc. (incorporated
                by
                reference to Exhibit 3.3 to our Form 10-Q for the quarter ended June
                30,
                2002)*4.1
            
            Revolving
                Credit Agreement, dated as of July 8, 2005, among Transocean Inc.,
                the
                lenders from time to time party thereto, Citibank, N.A., Bank of
                America,
                N.A., JPMorgan Chase Bank, N.A., The Royal Bank of Scotland plc and
                SunTrust Bank (incorporated by reference to our Current Report on
                Form 8-K
                filed on July 13, 2005)*10.1
            
            Amended
                and Restated Employee Stock Purchase Plan (incorporated by reference
                to
                our Current Report on Form 8-K filed on May 16, 2005)*10.2
            
            Executive
                Change of Control Severance Benefit (incorporated by reference to
                our
                Current Report on Form 8-K filed on July 19, 2005)†31.1
            
            CEO
                Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of
                2002†31.2
            
            CFO
                Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of
                2002†32.1
            
            CEO
                Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002†32.2
            
            CFO
                Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002


_________________________


*
      Incorporated by reference as indicated.


†
Filed
      herewith.





42
 *Index
            to Form 10-Q*





**SIGNATURES**





Pursuant
      to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
      1934, the registrant has duly caused this report to be signed on its behalf
      by
      the undersigned, hereunto duly authorized, on August 2, 2005.





TRANSOCEAN
      INC.







By:
              /s/
              Gregory
                  L. CauthenGregory
                  L. CauthenSenior
                  Vice President and Chief Financial Officer(Principal
                  Financial Officer)By:
              /s/
              David
                  A. TonnelDavid
                  A. TonnelVice
                  President and Controller(Principal
                  Accounting Officer)