================================================================================

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                              -------------------

                                    FORM 10-Q

[X]    QUARTERLY  REPORT  PURSUANT  TO  SECTION  13  OR 15(d) OF THE SECURITIES
       EXCHANGE  ACT  OF  1934

                For the quarterly period ended September 30, 2001

                                       OR

[ ]    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 SEDCO FOREX INC.
             (Exact name of registrant as specified in its charter)

                              -------------------

              Cayman  Islands                              N/A
       (State  or  other  jurisdiction              (I.R.S.  Employer
     of  incorporation  or  organization)           Identification  No.)


     4 Greenway  Plaza
      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
                                                    -----    ---
As of October 31, 2001, 318,771,994 ordinary shares, par value $0.01 per share,
were  outstanding.

================================================================================

<PAGE>

                           TRANSOCEAN SEDCO FOREX INC.

                               INDEX TO FORM 10-Q

                         QUARTER  ENDED  SEPTEMBER  30,  2001

                                                                            PAGE
                                                                            ----
PART  I  -  FINANCIAL  INFORMATION

Item  1.  Financial  Statements  (Unaudited)

Condensed  Consolidated  Statements  of  Operations
     Three and Nine Months Ended September 30, 2001 and 2000                   1

Condensed  Consolidated  Balance  Sheets
     September  30,  2001  and  December  31,  2000                            2

Condensed  Consolidated  Statements  of  Cash  Flows
     Nine  Months  Ended  September  30,  2001  and  2000                      3

Notes  to  Condensed  Consolidated  Financial  Statements                      4

Item  2.  Management's  Discussion  and  Analysis  of  Financial
Condition  and  Results  of  Operations                                       17

Item  3.  Quantitative  and  Qualitative  Disclosures  about  Market Risk     27

PART  II  -  OTHER  INFORMATION
-------------------------------

Item  1.  Legal  Proceedings                                                  28

Item  6.  Exhibits  and  Reports  on  Form  8-K                               29


<PAGE>

                         PART I - FINANCIAL INFORMATION

ITEM  1.  FINANCIAL  STATEMENTS

     The  condensed  consolidated financial statements of Transocean Sedco Forex
Inc. and its consolidated subsidiaries (the "Company") included herein have been
prepared, without audit, pursuant to the rules and regulations of the Securities
and  Exchange  Commission.  Certain  information  and notes normally included in
financial statements prepared in accordance with accounting principles generally
accepted  in  the  United States have been condensed or omitted pursuant to such
rules  and regulations. These financial statements should be read in conjunction
with  the  audited  consolidated  financial  statements  and  the  notes thereto
included in the Company's Annual Report on Form 10-K for the year ended December
31,  2000.

<TABLE>
<CAPTION>

                            TRANSOCEAN SEDCO FOREX INC. AND SUBSIDIARIES
                           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                (In millions, except per share data)
                                             (Unaudited)

                                                     Three Months Ended         Nine Months Ended
                                                        September  30,            September  30,
                                                  ------------------------   ----------------------


                                                       2001        2000         2001         2000
                                                  -----------  -----------  -----------  ----------
<S>                                               <C>          <C>          <C>          <C>
Operating Revenues                                $    770.2   $    314.5   $  2,072.5   $    914.6
---------------------------------------------------------------------------------------------------
Costs and Expenses
  Operating and maintenance                            418.2        192.2      1,163.5        562.0
  Depreciation                                         125.4         57.7        348.3        173.8
  Goodwill amortization                                 41.7          6.7        113.4         20.0
  General and administrative                            14.5          9.2         43.9         31.6
---------------------------------------------------------------------------------------------------
                                                       599.8        265.8      1,669.1        787.4
---------------------------------------------------------------------------------------------------
Gain from Sale of Assets, net                            9.4         11.3         29.0         13.6
---------------------------------------------------------------------------------------------------
Operating Income                                       179.8         60.0        432.4        140.8
---------------------------------------------------------------------------------------------------
Other Income (Expense), net
  Equity in earnings of joint ventures                   6.3          2.6         12.0          7.6
  Interest income                                        5.5          1.7         13.7          4.6
  Interest expense, net of amounts capitalized         (60.8)        (1.8)      (164.8)        (2.1)
  Other, net                                            (0.5)         0.1         (2.0)         1.3
---------------------------------------------------------------------------------------------------
                                                       (49.5)         2.6       (141.1)        11.4
---------------------------------------------------------------------------------------------------
Income Before Income Taxes, Minority Interest
  and Extraordinary Items                              130.3         62.6        291.3        152.2

Income Tax Expense                                      32.6         14.6         74.9         35.4
Minority Interest                                        0.1          0.1          2.5          0.5
---------------------------------------------------------------------------------------------------
Income Before Extraordinary Items                       97.6         47.9        213.9        116.3

Gain (Loss) on Extraordinary Items, net of tax             -          1.4        (17.3)         1.4
---------------------------------------------------------------------------------------------------

Net Income                                        $     97.6   $     49.3   $    196.6   $    117.7
===================================================================================================

Basic Earnings Per Share
  Income Before Extraordinary Items               $     0.31   $     0.22   $     0.70   $     0.55
  Gain (Loss) on Extraordinary Items, net of tax           -         0.01        (0.06)        0.01
---------------------------------------------------------------------------------------------------

  Net Income                                      $     0.31   $     0.23   $     0.64   $     0.56
===================================================================================================

Diluted Earnings Per Share
  Income Before Extraordinary Items               $     0.30   $     0.22   $     0.69   $     0.55
  Gain (Loss) on Extraordinary Items, net of tax           -         0.01        (0.06)        0.01
---------------------------------------------------------------------------------------------------

  Net Income                                      $     0.30   $     0.23   $     0.63   $     0.56
===================================================================================================

Weighted Average Shares Outstanding
  Basic                                                318.7        210.5        305.2        210.4
---------------------------------------------------------------------------------------------------
  Diluted                                              322.7        212.0        310.7        211.6
---------------------------------------------------------------------------------------------------
Dividends Paid Per Share                          $     0.03   $     0.03   $     0.09   $     0.09
---------------------------------------------------------------------------------------------------
</TABLE>



                             See accompanying notes.

<PAGE>
<TABLE>
<CAPTION>
                  TRANSOCEAN SEDCO FOREX INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                        (In millions, except share data)
                                  (Unaudited)

                                                                           September 30,   December 31,
                                                                               2001           2000
                                                                          --------------  -------------
                                     ASSETS
<S>                                                                       <C>             <C>
Cash and Cash Equivalents                                                 $        351.0  $        34.5
Accounts Receivable, net of allowance for doubtful accounts of $22.5 and
   $24.3 at September 30, 2001 and December 31, 2000, respectively                 727.4          296.0
Materials and Supplies, net of allowance for obsolescence of $25.5 and
   $23.3 at September 30, 2001 and December 31, 2000, respectively                 157.9           89.5
Deferred Income Taxes                                                               16.0           18.1
Other Current Assets                                                                35.2           10.0
-------------------------------------------------------------------------------------------------------
    Total Current Assets                                                         1,287.5          448.1
-------------------------------------------------------------------------------------------------------

Property and Equipment                                                          10,208.9        6,003.2
Less Accumulated Depreciation                                                    1,608.9        1,308.2
-------------------------------------------------------------------------------------------------------
    Property and Equipment, net                                                  8,600.0        4,695.0
-------------------------------------------------------------------------------------------------------

Goodwill, net                                                                    6,503.3        1,037.9
Investments in and Advances to Joint Ventures                                       36.0          105.9
Other Assets                                                                       441.2           71.9
-------------------------------------------------------------------------------------------------------
    Total Assets                                                          $     16,868.0  $     6,358.8
=======================================================================================================

                      LIABILITIES AND SHAREHOLDERS' EQUITY

Accounts Payable                                                          $        160.4  $       135.6
Accrued Income Taxes                                                               199.7          113.1
Debt Due Within One Year                                                           135.9           23.1
Other Current Liabilities                                                          342.4          223.4
-------------------------------------------------------------------------------------------------------
    Total Current Liabilities                                                      838.4          495.2
-------------------------------------------------------------------------------------------------------

Long-Term Debt                                                                   4,645.1        1,430.3
Deferred Income Taxes                                                              412.1          359.2
Other Long-Term Liabilities                                                        113.1           70.0
-------------------------------------------------------------------------------------------------------
    Total Long-Term Liabilities                                                  5,170.3        1,859.5
-------------------------------------------------------------------------------------------------------

Commitments and Contingencies

SHAREHOLDERS' EQUITY
  Preference 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,
    318,763,744 and 210,710,363 shares issued and outstanding at
    September 30, 2001 and December 31, 2000, respectively                           3.2            2.1
  Additional Paid-in Capital                                                    10,601.8        3,918.7
  Accumulated Other Comprehensive Income                                             3.1
  Retained Earnings                                                                251.2           83.3
-------------------------------------------------------------------------------------------------------
    Total Shareholders' Equity                                                  10,859.3        4,004.1
-------------------------------------------------------------------------------------------------------
    Total Liabilities and Shareholders' Equity                            $     16,868.0  $     6,358.8
=======================================================================================================
</TABLE>

                            See accompanying notes.


<PAGE>
<TABLE>
<CAPTION>
                                          TRANSOCEAN SEDCO FOREX INC. AND SUBSIDIARIES
                                         CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                          (In millions)
                                                           (Unaudited)

                                                                                                      Nine Months Ended
                                                                                                         September 30,
                                                                                             ------------------------------------
                                                                                                     2001              2000
                                                                                             ----------------  ------------------
<S>                                                                                           <C>               <C>
Cash Flows from Operating Activities
   Net income                                                                                 $         196.6   $         117.7
   Adjustments to reconcile net income to net cash provided by operating activities
Depreciation                                                                                            348.3             173.8
Goodwill amortization                                                                                   113.4              20.0
Deferred income taxes                                                                                   (62.0)             17.0
Equity in earnings of joint ventures                                                                    (12.0)             (7.6)
Net gain from disposal of assets                                                                        (25.9)            (11.5)
Loss on sale of securities                                                                                2.0                 -
Amortization of debt related discounts/premiums, fair value adjustments and issue costs, net             (4.2)              5.7
Deferred income, net                                                                                    (42.8)            (23.7)
Deferred expenses, net                                                                                  (38.1)             (4.8)
Extraordinary (gain) loss on debt extinguishment, net of tax                                             17.3              (1.4)
Other, net                                                                                              (10.3)             (4.3)
Changes in operating assets and liabilities, net of effects from the R&B Falcon merger
Accounts receivable                                                                                    (103.5)            (12.2)
Accounts payable and other current liabilities                                                          (78.7)            (53.5)
Income taxes receivable/payable, net                                                                     75.4             (20.5)
Other current assets                                                                                     (9.2)            (12.7)
--------------------------------------------------------------------------------------------------------------------------------
Net Cash Provided by Operating Activities                                                               366.3             182.0
--------------------------------------------------------------------------------------------------------------------------------

Cash Flows from Investing Activities
Capital expenditures                                                                                   (443.1)           (465.6)
Proceeds from sale of coiled tubing drilling services business                                              -              24.9
Proceeds from sale of securities                                                                         17.2                 -
Other proceeds from disposal of assets, net                                                             108.4              48.7
Merger costs paid                                                                                       (24.4)             (2.3)
R&B Falcon cash at acquisition                                                                          264.7                 -
Joint ventures and other investments                                                                     13.0               3.8
--------------------------------------------------------------------------------------------------------------------------------
Net Cash Used in Investing Activities                                                                   (64.2)           (390.5)
--------------------------------------------------------------------------------------------------------------------------------

Cash Flows from Financing Activities
Net proceeds from issuance of debt                                                                    1,693.5             489.1
Early repayments of debt instruments                                                                 (1,458.0)           (233.8)
Net repayments on revolving credit agreements                                                          (180.1)           (153.3)
 Other repayments of debt instruments                                                                   (42.1)            (16.9)
Net proceeds from issuance of ordinary shares under stock-based compensation plans                       29.5              13.8
 Proceeds from issuance of ordinary shares upon exercise of warrants                                     10.6                 -
 Dividends paid                                                                                         (28.6)            (18.9)
    Financing costs                                                                                     (15.7)             (0.6)
     Other, net                                                                                           5.3               0.4
--------------------------------------------------------------------------------------------------------------------------------
Net Cash Provided by Financing Activities                                                                14.4              79.8
--------------------------------------------------------------------------------------------------------------------------------

Net Increase (Decrease) in Cash and Cash Equivalents                                                    316.5            (128.7)
--------------------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at Beginning of Period                                                         34.5             165.7
--------------------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Period                                                    $         351.0   $          37.0
===============================================================================================================================
</TABLE>

                             See accompanying notes.


<PAGE>
                  TRANSOCEAN SEDCO FOREX INC.AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

Note  1 - Principles  of  Consolidation

     Transocean  Sedco  Forex  Inc.   (together   with  its   subsidiaries   and
predecessors, unless the context requires otherwise, the "Company") is a leading
international  provider of offshore and inland marine contract drilling services
for  oil  and  gas wells. As of October 31, 2001, the Company owned, had partial
ownership interests in or operated 165 mobile offshore and barge drilling units.
The  Company  contracts  its  drilling  rigs,  related  equipment and work Crews
primarily  on  a  dayrate  basis  to  drill  oil  and  gas  wells.

     On  January  31,  2001,  the  Company  completed a merger transaction ("R&B
Falcon  merger")  with R&B Falcon Corporation ("R&B Falcon"). As a result of the
merger,  R&B  Falcon  became an indirect wholly owned subsidiary of the Company.
The  merger  was  accounted for as a purchase with the Company as the accounting
acquirer.

     The  condensed  consolidated   balance  sheet  as  of  September  30,  2001
represents  the  consolidated  financial  position  of  the  merged company. The
condensed  consolidated  statements  of  operations  and cash flows for the nine
months  ended  September  30, 2001 include eight months of operating results and
cash  flows  for  R&B Falcon. The condensed consolidated statement of operations
for the three months ended September 30, 2001 is that of the merged company. The
condensed  consolidated  balance  sheet  as  of December 31, 2000, the condensed
consolidated  statements  of  operations  for  the  three  and nine months ended
September  30,  2000  and the condensed consolidated statement of cash flows for
the  nine  months  ended September 30, 2000 represent the consolidated financial
position,  cash  flows  and results of operations of Transocean Sedco Forex Inc.
and not those of the merged company. Intercompany transactions and accounts have
been  eliminated.  The  equity  method  of accounting is used for investments in
joint  ventures  owned  50 percent or less and for investments in joint ventures
owned  50  percent or more where the Company does not have significant influence
or  control  over  the  day-to-day  operations  of  the  joint  venture.

Note  2 - General

     Basis  of Consolidation - The accompanying condensed consolidated financial
statements  of  the  Company 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. Accordingly, pursuant
to  such  rules  and  regulations, these financial statements do not include all
disclosures  required  by accounting principles generally accepted in the United
States  for  complete  financial statements. Operating results for the three and
nine  months  ended  September  30,  2001  are not necessarily indicative of the
results  that  may  be expected for the year ending December 31, 2001 or for any
future period. In connection with the preparation of these financial statements,
management  was  required  to  make  estimates  and  assumptions that affect the
reported  amounts  of  assets, liabilities, revenues, expenses and disclosure of
contingent  liabilities.  Actual  results  could differ from such estimates. 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 the Company's Annual Report on Form 10-K for the
year  ended  December  31,  2000.

     Supplementary  Cash  Flow  Information  -  Concurrent  with  the R&B Falcon
merger,  the  Company  removed  certain non-strategic assets from the active rig
fleet  and  categorized  them as assets held for sale. This was reflected in the
condensed  consolidated  balance sheets as a decrease in Property and Equipment,
net  of  $177.8  million  with  a  corresponding  increase  in  Other  Assets.

     In  February 2001, the Company received a distribution from a joint venture
in the form of marketable securities held for sale valued at $19.9 million.  The
distribution  was  reflected  in the condensed consolidated balance sheets as an
increase in Other Current Assets with a corresponding decrease in Investments in
and  Advances  to  Joint  Ventures.

     Cash  payments  for interest and income taxes, net, were $168.7 million and
$49.9  million,  respectively,  for the nine months ended September 30, 2001 and
$58.6  million  and  $38.3  million,  respectively,  for  the  nine months ended
September  30,  2000.

     Goodwill  -  The excess of the purchase price over the estimated fair value
of  net  assets  acquired  is  accounted  for  as goodwill and is amortized on a
straight-line  basis  over  40  years.  The  amortization period is based on the
nature  of the offshore drilling industry, long-lived drilling equipment and the
long-standing  relationships with core customers. Accumulated amortization as of
September  30,  2001 and December 31, 2000 was $140.0 million and $26.7 million,
respectively.  See  "- New  Accounting  Pronouncements."

     Capitalized  Interest  - Interest costs for the construction and upgrade of
qualifying  assets  are  capitalized.  The Company capitalized interest costs on
construction  work  in progress of $4.4 million and $34.9 million, respectively,
for  the  three  and  nine months ended September 30, 2001 and $20.7 million and
$66.6  million,  respectively,  for  the  corresponding  periods  of  2000.


<PAGE>
     Change  in  Estimate  -  As  a result of the R&B Falcon merger, the Company
conformed  its  policies  relating  to  estimated  rig lives and salvage values.
Estimated  useful  lives  of  drilling  units  now  range  from  18 to 35 years,
reflecting  maintenance  history  and  market  demand  for these drilling units,
buildings  and improvements from 10 to 30 years and machinery and equipment from
four  to  12  years.  Depreciation  expense  for the three and nine months ended
September  30,  2001  was  reduced  by  approximately  $6 million (net $0.02 per
diluted share) and $17 million (net $0.05 per diluted share), respectively, as a
result  of  conforming  these  policies.

     Income  Taxes - Income taxes have been provided based upon the tax laws and
rates  in  the countries in which operations are conducted and income is earned.
The  income  tax  rates  imposed by these taxing authorities vary substantially.
Taxable income may differ from pre-tax income for financial accounting purposes.
There  is  no  expected  relationship between the provision for income taxes and
income  before  income  taxes  because the countries have taxation regimes which
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  period  to  period.

     Comprehensive Income - The components of total comprehensive income for the
three  and  nine  months ended September 30, 2001 and 2000, respectively, are as
follows  (in  millions):

<TABLE>
<CAPTION>
                                                                Three Months Ended         Nine Months Ended
                                                                    September 30,             September 30,
                                                            --------------------------  -------------------------
                                                                 2001          2000         2001        2000
                                                            -------------  -----------  ------------  -----------
<S>                                                         <C>            <C>          <C>           <C>
Net income                                                  $       97.6   $      49.3  $     196.6   $     117.7
Unrealized gain (loss) on interest rate hedge transactions          (0.1)            -          3.9             -
Unrealized gain on foreign currency hedge transactions               0.5             -            -             -
Unrealized loss on securities available for sale                    (0.4)            -         (0.8)            -
                                                            -------------  -----------  ------------  -----------
Total comprehensive income                                  $       97.6   $      49.3  $     199.7   $     117.7
                                                            =============  ===========  ============  ===========
</TABLE>

     There  was  no  accumulated  other  comprehensive income as of December 31,
2000.  The  components of accumulated other comprehensive income as of September
30,  2001  are  as  follows  (in  millions):

<TABLE>
<CAPTION>
                                                      September 30,
                                                          2001
                                                     ---------------
<S>                                                  <C>
Unrealized gain on interest rate hedge transactions  $          3.9
Unrealized loss on securities available for sale               (0.8)
                                                     ---------------
Accumulated other comprehensive income               $          3.1
                                                     ===============
</TABLE>

     Segments  -  The  Company's  operations  have  been   aggregated  into  two
reportable  segments:  (i)  International  and  U.S.  Floater  Contract Drilling
Services  and (ii) Gulf of Mexico Shallow and Inland Water. The Company provides
services  with  different  types  of  drilling  equipment  in several geographic
regions.  The  location  of the Company's operating assets and the allocation of
resources to build or upgrade drilling units is determined by the activities and
needs  of  customers.  See  Note  7.


     Interim  Financial  Information  -  The  financial  statements  reflect all
adjustments  which  are,  in  the  opinion of management, necessary for the fair
statement of results of operations for the interim periods. Such adjustments are
considered  to  be  of  a  normal  recurring nature unless otherwise identified.

     Derivative Instruments and Hedging Activities - In June 1998, the Financial
Accounting  Standards  Board  ("FASB")  issued Statement of Financial Accounting
Standards  ("SFAS")  No.  133, Accounting for Derivative Instruments and Hedging
Activities,  as  amended  in  June  1999. The Company adopted SFAS No. 133 as of
January  1,  2001. Because of the Company's limited use of derivatives to manage
its  exposure  to  fluctuations  in foreign currency exchange rates and interest
rates,  the  adoption  of  the  new  statement  had  no effect on the results of
operations  or  the  consolidated financial position of the Company. See Note 6.

     New Accounting Pronouncements - In July 2001, the FASB issued SFAS No. 141,
Business  Combinations.  SFAS  No.  141  requires that all business combinations
initiated  or  completed after June 30, 2001 be accounted for using the purchase
method of accounting.  The statement provides for recognition and measurement of
intangible assets separate from goodwill. The Company adopted SFAS No. 141 as of
July  1, 2001. The adoption of the new statement had no effect on the results of
operations  or  the  consolidated  financial  position  of  the  Company.

     In  July  2001, the FASB issued SFAS No. 142, Goodwill and Other Intangible
Assets,  which  becomes  effective for fiscal years beginning after December 15,
2001. SFAS No. 142 prohibits amortization of goodwill and requires that goodwill
be  tested  annually  for  impairment.  The  statement  also  includes  specific
guidance for testing goodwill impairment. The Company will adopt SFAS No. 142 as
of  January  1,  2002.  Management  is currently evaluating SFAS No. 142 and the
impact  of  implementing  the  annual  goodwill impairment test on the Company's
consolidated  financial  position  and  results  of  operations.  The  Company's
consolidated  statement  of  operations for the year ending December 31, 2001 is
expected to include approximately $154 million of goodwill amortization expense.

     In  August 2001, the FASB issued SFAS No. 144, Accounting for Impairment or
Disposal of Long-Lived Assets.  SFAS No. 144 supersedes SFAS No. 121, Accounting
for Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of,
and  the  accounting  and  reporting  provisions  of Accounting Principles Board
Opinion  ("APB")  No.  30,  Reporting  the Results of Operations - Reporting the
Effects  of  Disposal of a Segment of a Business, and Extraordinary, Unusual and
Infrequently  Occurring  Events  and  Transactions.  SFAS  No.  144  retains the
fundamental  provisions  of  SFAS  No.  121  for  recognition and measurement of
long-lived  asset  impairment and for the measurement of long-lived assets to be
disposed  of  by  sale  and the basic requirements of APB No. 30. In addition to
these  fundamental  provisions,  SFAS  No. 144 provides guidance for determining
whether  long-lived assets should be tested for impairment and specific criteria
for  classifying  assets  to  be disposed of as held for sale.  The statement is
effective  for  fiscal  years beginning after December 15, 2001, and the Company
will  adopt  the new standard as of January 1, 2002.  Management does not expect
the  adoption  of  this  new standard to have a material effect on the Company's
consolidated  financial  position  or  results  of  operations.

     Reclassifications  -  Certain  reclassifications  have  been  made to prior
period  amounts  to  conform  with  the  current  period's  presentation.

Note  3  -  Business  Combination

     On  January  31,  2001, the Company completed a merger transaction with R&B
Falcon  in  which an indirect wholly owned subsidiary of the Company merged with
and  into R&B Falcon.  As a result of the merger, R&B Falcon common shareholders
received  0.5  newly  issued  ordinary shares of the Company for each R&B Falcon
share.  The Company issued approximately 106 million ordinary shares in exchange
for  the  issued  and  outstanding shares of R&B Falcon and assumed warrants and
options  exercisable  for approximately 13 million ordinary shares. The ordinary
shares  issued  in  exchange for the issued and outstanding shares of R&B Falcon
constituted  approximately  33  percent  of  the  Company's outstanding ordinary
shares  after  the  merger.

     The  Company  accounted  for  the  merger  using  the  purchase  method  of
accounting  with  the  Company  treated as the accounting acquirer. The purchase
price  of  $6.7  billion is comprised of the calculated market capitalization of
the  Company's  ordinary  shares issued at the time of merger with R&B Falcon of
$6.1  billion  and  the  estimated  fair  value  of R&B Falcon stock options and
warrants at the time of the merger of $0.6 billion. The market capitalization of
the  Company's  ordinary shares issued was calculated using a $57.2313 per share
average  closing price of the Company's ordinary shares for a period immediately
before  and  after  August  21,  2000,  the  date  the   merger  was  announced.

     The  purchase  price  included,  at estimated fair value, current assets of
$671.4  million,  drilling and other property and equipment of $4,063.3 million,
other  assets  of  $161.7  million  and the assumption of current liabilities of
$341.5  million,  other  net  long-term  liabilities of $187.1 million, minority
interest of $102.6 million and long-term debt of $3,205.8 million. The excess of
the  purchase  price  over  the  estimated fair value of net assets acquired was
$5,578.0  million,  which  has  been  accounted  for  as  goodwill  and is being
amortized  on  a  straight-line  basis  over  40  years.  See  Note  2.

     In  conjunction  with  the  R&B  Falcon  merger,  the Company established a
liability  of $15.9 million for the estimated severance related costs associated
with  the  involuntary  termination  of  569  R&B  Falcon  employees pursuant to
management's  plan  to  consolidate   operations  and  administrative  functions
post-merger.  Included  in  the  569  planned  involuntary terminations were 387
employees  engaged  in  the  Company's  land  and  barge  drilling  business  in
Venezuela.  The  Company  has  suspended active marketing efforts to divest this
business  and, as a result, the estimated liability was adjusted by $4.3 million
in  the  third quarter of 2001 with an offset to goodwill. Through September 30,
2001, approximately $11 million in severance related costs have been paid to 170
employees  whose  positions  were eliminated as a result of the consolidation of
operations  and  administrative  functions  post-merger. The Company anticipates
that substantially all of the remaining amounts will be paid by the end of 2001.

<PAGE>
     Unaudited  pro  forma  combined  operating  results  of the Company and R&B
Falcon  assuming  the  merger  was  completed  as  of  January 1, 2001 and 2000,
respectively,  are  as  follows  (in  millions,  except  per  share  data):

<TABLE>
<CAPTION>
                                                Nine Months Ended
                                                  September 30,
                                               2001          2000
                                          ------------   -------------
<S>                                       <C>           <C>
Operating revenues                        $    2,198.4   $    1,648.0
Operating income                                 431.9           79.8
Income (loss) from continuing operations         199.6          (37.7)
Basic earnings (loss) per share                   0.63          (0.24)
Diluted earnings (loss) per share                 0.62          (0.24)
</TABLE>

     The  pro forma information includes adjustments for additional depreciation
based  on the fair market value of the drilling and other property and equipment
acquired,  amortization  of  goodwill  arising  from  the transaction, increased
interest  expense  for  debt  assumed  in the merger and related adjustments for
income  taxes.  The  pro  forma information is not necessarily indicative of the
results  of operations had the transaction been effected on the assumed dates or
the  results  of  operations  for  any  future  periods.

Note  4 - Upgrade  and  Expansion  of  Drilling  Fleet

     Capital expenditures, including capitalized interest, totaled approximately
$443  million  during  the  nine  months  ended  September  30, 2001 and include
approximately  $39  million,  $40 million, $169 million and $23 million spent on
the construction of the Sedco Express, Sedco Energy, Deepwater Horizon and Cajun
Express,  respectively.  A  substantial  majority of the capital expenditures is
related  to  the  International  and  U.S.  Floater  Contract  Drilling Services
segment.

Note  5  -  Debt

     Debt  is  comprised  of  the  following  (in  millions):

<TABLE>
<CAPTION>
                                                      September 30,  December 31,
                                                          2001           2000
                                                      -------------  -------------
<S>                                                   <C>            <C>
6.625% Notes, due April 2011                          $       747.3  $           -
7.5% Notes, due April 2031                                    597.3              -
Zero Coupon Convertible Debentures(1), due May 2020           508.5          497.7
Term Loan Agreement                                           400.0          400.0
1.5% Convertible Debentures, due May 2021                     400.0              -
6.75% Senior Notes, due April 2005                            354.9              -
9.5% Senior Notes, due December 2008                          349.8              -
6.95% Senior Notes, due April 2008                            252.3              -
6.5% Senior Notes, due April 2003                             251.3              -
7.375% Senior Notes, due April 2018                           250.5              -
8.00% Debentures, due April 2027                              197.9          197.9
Nautilus Class A1 Notes                                       152.1              -
9.125% Senior Notes, due December 2003                        106.3              -
7.45% Notes, due April 2027                                    94.3           94.1
Secured Rig Financing                                          55.3           68.6
Nautilus Class A2 Notes, due May 2005                          52.6              -
6.9% Notes                                                     10.6           14.9
ABN Revolving Credit Agreement                                    -          180.1
Other                                                             -            0.1
                                                      -------------  -------------
Total Debt                                                  4,781.0        1,453.4
Less Debt Due Within One Year                                 135.9           23.1
                                                      -------------  -------------
Total Long-Term Debt                                  $     4,645.1  $     1,430.3
                                                      =============  =============
(1)   Net of unamortized discount and issue costs.
</TABLE>


<PAGE>
Expected  maturity  of  the  face  value of the Company's debt is as follows (in
millions):

<TABLE>
<CAPTION>
             Twelve Months Ended
                  September 30,
             -------------------
<S>         <C>
2002              $        135.9
2003                       200.5
2004                       565.4
2005                        68.6
2006                       400.0
Thereafter               3,665.0
             -------------------
Total             $      5,035.4
             ===================
</TABLE>

     6.625%  Notes  and  7.5%  Notes  - In April 2001, the Company issued $700.0
million aggregate principal amount of 6.625% Notes due April 15, 2011 and $600.0
million aggregate principal amount of 7.5% Notes due April 15, 2031. Interest on
these notes is payable on April 15 and October 15 of each year. The 6.625% Notes
and  the  7.5% Notes are redeemable at the option of the Company at a make-whole
premium  with  present  values  calculated  using  a  discount rate equal to the
then-prevailing  yield  of  U.S.  Treasury  notes  for a corresponding remaining
period plus 25 basis points and 35 basis points, respectively. The fair value of
the  6.625% Notes and 7.5% Notes as of September 30, 2001 was approximately $685
million and $575 million, respectively, based on the estimated yield to maturity
as  of  that  date. The Company entered into interest rate swaps relating to the
6.625%  Notes  and  7.5%  Notes.  See  Note  6.

     The  indenture  and  supplemental  indentures  pursuant to which the 6.625%
Notes  and  the 7.5% Notes, as well as the 1.5% Convertible Debentures, the Zero
Coupon  Convertible  Debentures,  the  7.45%  Notes  and  the  8.00%  Debentures
described  below,  were  issued  impose  restrictions  on certain actions by the
Company,  including  creating liens, engaging in sale/leaseback transactions and
engaging  in  merger,  consolidation  or  reorganization  transactions.

     1.5%  Convertible  Debentures  -  In  May  2001,  the Company issued $400.0
million  aggregate principal amount of 1.5% Convertible Debentures due May 2021.
Interest is payable on May 15 and November 15 of each year.  The Company has the
right to redeem the debentures after five years for a price equal to 100 percent
of  the  principal  amount  plus  interest  accrued  up to but not including the
redemption date.  Each holder has the right to require the Company to repurchase
the debentures after five, ten and fifteen years at 100 percent of the principal
amount  plus  accrued  interest  up  to  and including the repurchase date.  The
Company  may  pay this repurchase price with either cash or ordinary shares or a
combination  of  cash  and ordinary shares.  The debentures are convertible into
ordinary  shares  of  the  Company  at the option of the holder at any time at a
ratio  of  13.8627  shares  per  $1,000  principal  amount debenture, subject to
adjustments if certain events take place, if the closing sale price per ordinary
share  exceeds  110 percent of the conversion price for at least 20 trading days
in a period of 30 consecutive trading days ending on the trading day immediately
prior  to the conversion date or if other specified conditions are met. The fair
value  of  the  1.5%  Convertible  Debentures  as  of  September  30,  2001  was
approximately  $338  million based on the estimated yield to maturity as of that
date.

     Zero  Coupon  Convertible Debentures - In May 2000, the Company issued Zero
Coupon  Convertible  Debentures  due  May  2020 with a face value at maturity of
$865.0  million.  The debentures were issued at a price to the public of $579.12
per  debenture  and accrue original issue discount at a rate of 2.75 percent per
annum  compounded  semiannually  to reach a face value at maturity of $1,000 per
debenture.  The Company will pay no interest on the debentures prior to maturity
and  has  the right to redeem the debentures after three years for a price equal
to  the  issuance  price  plus  accrued  original  issue discount to the date of
redemption.  Each  holder has the right to require the Company to repurchase the
debentures  on  the  third, eighth and thirteenth anniversary of issuance at the
issuance  price  plus accrued original issue discount to the date of repurchase.
The Company may pay this repurchase price with either cash or ordinary shares or
a  combination of cash and ordinary shares.  The debentures are convertible into
ordinary  shares  of  the  Company  at the option of the holder at any time at a
ratio  of  8.1566  shares per debenture subject to adjustments if certain events
take  place.  The  fair  value  of  the Zero Coupon Convertible Debentures as of
September  30,  2001 was approximately $502 million based on the estimated yield
to  maturity  as  of  that  date.

     Term  Loan Agreement - The Company is a party to a $400.0 million unsecured
five-year  term  loan  agreement  with  a  group  of banks led by SunTrust Bank,
Atlanta,  as agent, dated as of December 16, 1999. Amounts outstanding under the
Term  Loan  Agreement  bear  interest at the Company's option, at a base rate or
London Interbank Offered Rate ("LIBOR") plus a margin (0.70 percent per annum at
September  30,  2001)  that  varies  depending on the Company's senior unsecured
public  debt rating. No principal payments are required for the first two years,
and  the  Company may prepay some or all of the debt at any time without premium
or  penalty  at  the end of an interest period. The Term Loan Agreement requires
compliance  with  various  restrictive covenants and provisions customary for an
agreement of this nature including an interest coverage ratio of not less than 3
to 1, a leverage ratio of not greater than 40 percent and limitations on mergers
and  sale  of  substantially  all  assets,  creating   liens,  incurring   debt,
transactions with affiliates and sale/leaseback transactions. The carrying value
of  borrowings  under  the  Term  Loan  Agreement  approximates  fair  value.

     6.5%,  6.75%,  6.95%  and  7.375%  Senior Notes - In April 1998, R&B Falcon
issued  6.5%  Senior  Notes,  6.75%  Senior Notes, 6.95% Senior Notes and 7.375%
Senior  Notes  with  an  aggregate principal amount of $1.1 billion. Interest on
these notes is payable on April 15 and October 15 of each year. These notes have
maturity  dates  of  April  2003,  April  2005,  April  2008  and   April  2018,
respectively. The 6.75% Senior Notes, 6.95% Senior Notes and 7.375% Senior Notes
are  redeemable at the option of R&B Falcon at a make-whole premium with present
values  calculated  using  a discount rate equal to the then-prevailing yield of
U.S.  Treasury notes for a corresponding remaining term plus 20 basis points for
the 6.75% Senior Notes and 6.95% Senior Notes and 25 basis points for the 7.375%
Senior  Notes.  The  6.5%  Senior  Notes are not redeemable at the option of R&B
Falcon.  At  September  30, 2001, approximately $250 million, $350 million, $250
million  and  $250  million  principal  amount  of  these notes was outstanding,
respectively.  These  notes  were  recorded at fair value on January 31, 2001 as
part  of  the  R&B  Falcon  merger. The fair value of the 6.5%, 6.75%, 6.95% and
7.375%  Senior  Notes  as  of September 30, 2001 was approximately $256 million,
$360  million,  $256  million  and  $241  million,  respectively,  based  on the
estimated  yield  to  maturity  as  of  that  date.

     9.125%  and 9.5%  Senior Notes - In December 1998, R&B Falcon issued 9.125%
Senior  Notes and 9.5% Senior Notes with an aggregate principal amount of $400.0
million.  Interest  on these notes is payable on June 15 and December 15 of each
year.  These  notes  have  maturity  dates  of  December 2003 and December 2008,
respectively.  These  notes  are  redeemable  at  the  option of R&B Falcon at a
make-whole premium with present values calculated using a discount rate equal to
the  then-prevailing  yield of U.S. Treasury notes for a corresponding remaining
term plus 50 basis points. At September 30, 2001, approximately $100 million and
$300  million  principal  amount  of  these notes was outstanding, respectively.
These  notes  were recorded at fair value on January 31, 2001 as part of the R&B
Falcon  merger.  The  fair  value  of  the  9.125%  and  9.5% Senior Notes as of
September  30,  2001  was   approximately   $109  million   and   $350  million,
respectively,  based  on  the  estimated  yield  to  maturity  as  of that date.

     The indentures pursuant to which the 6.5% Senior Notes, 6.75% Senior Notes,
6.95%  Senior  Notes,  7.375%  Senior Notes, 9.125% Senior Notes and 9.5% Senior
Notes  were  issued  impose  restrictions  on  certain  actions  by  R&B Falcon,
including  creating  liens, engaging in sale/leaseback transactions and engaging
in  merger,  consolidation  or  reorganization  transactions.  In  addition, the
indenture  pursuant  to which the 9.125% Senior Notes and 9.5% Senior Notes were
issued imposes restrictions on the incurrence of additional indebtedness and the
payment of dividends and other restricted payments by R&B Falcon. However, these
restrictions  are  suspended  during  the  period  that these notes are rated as
investment  grade.

     7.45% Notes and 8.00% Debentures - In April 1997, the Company issued $100.0
million  aggregate principal amount of 7.45% Notes due April 15, 2027 and $200.0
million  aggregate  principal  amount  of  8.00%  Debentures due April 15, 2027.
Interest  on  these  notes  is  payable on April 15 and October 15 of each year.
Holders  of  the  7.45%  Notes may elect to have all or any portion of the 7.45%
Notes repaid on April 15, 2007 at 100 percent of the principal amount. The 7.45%
Notes,  at any time after April 15, 2007, and the 8.00% Debentures, at any time,
are  redeemable  at  the  Company's  option at a make-whole premium with present
values  calculated  using  a discount rate equal to the then-prevailing yield of
U.S.  Treasury  notes  for  a corresponding remaining term plus 20 basis points.
The  fair value of the 7.45% Notes and 8.00% Debentures as of September 30, 2001
was  approximately  $94  million  and  $202  million, respectively, based on the
estimated  yield  to  maturity  as  of  that  date.

     Nautilus Class A1 and A2 Notes - In August 1999, a subsidiary of R&B Falcon
completed  a  $250.0  million  project  financing  for  the  construction of the
Deepwater  Nautilus  which consisted of two five-year notes. The first note with
an  original  principal amount of $200.0 million bears interest at 7.31 percent,
with  monthly  interest  and  principal  payments,  and matures in May 2005. The
second  note  with  a  principal  amount of $50.0 million bears interest at 9.41
percent, with monthly interest payments and a balloon principal payment which is
due  at  maturity  in  May  2005. Both notes are collateralized by the Deepwater
Nautilus  and  drilling contract revenues from such rig and are without recourse
to R&B Falcon. At September 30, 2001, approximately $154 million and $50 million
principal  amount of these notes was outstanding, respectively. These notes were
recorded at fair value on January 31, 2001 as part of the R&B Falcon merger. The
fair  value  of  the Nautilus Class A1 and A2 Notes as of September 30, 2001 was
approximately $174 million and $57 million, respectively, based on the estimated
yield  to  maturity  as  of  that  date.

     Revolving  Credit Agreement and Commercial Paper Program - The Company is a
party  to  a $550.0 million five-year revolving credit agreement (the "Five-Year
Revolver") and a $250.0 million 364-day revolving credit agreement (the "364-Day
Revolver")  with a group of banks led by SunTrust Bank, Atlanta, as agent, dated
as  of  December  29, 2000 (together the "SunTrust Revolving Credit Agreements")
under  which  the  Company  may borrow or procure credit. At September 30, 2001,
amounts  outstanding  under  the  SunTrust   Revolving  Credit  Agreements  bore
interest, at the Company's option, at a base rate or LIBOR plus a margin of 0.45
percent per annum under the Five-Year Revolver and 0.475 percent per annum under
the  364-Day  Revolver.  The  margin under the Five-Year Revolver will vary from
0.180  percent to 0.700 percent and the margin on the 364-Day Revolver will vary
from  0.190 percent to 0.725 percent depending on the Company's senior unsecured
public  debt  rating.  A  utilization  fee  varying  from 0.075 percent to 0.150
percent,  depending  on  the  Company's  senior unsecured public debt rating, is
payable  if  amounts  outstanding  under  the  Five-Year Revolver or the 364-Day
Revolver  are  greater  than  $181.5 million or $82.5 million, respectively. The
SunTrust  Revolving Credit Agreements contain substantially the same restrictive
covenants  as  are  contained  in the Term Loan Agreement. There were no amounts
outstanding  under  the SunTrust Revolving Credit Agreements as of September 30,
2001.

     On  March  29,  2001, the Company established its Commercial Paper Program.
Borrowings  of $60.3 million outstanding at June 30, 2001 were repaid during the
third  quarter  of 2001 and there were no borrowings outstanding as of September
30,  2001.  The  SunTrust  Revolving  Credit  Agreements  provide  liquidity for
commercial  paper  borrowings.

     Secured  Rig Financing - At September 30, 2001, the Company had outstanding
$55.3  million  of debt secured by the Trident IX and Trident 16. Payments under
these financing agreements include an interest component of 7.95 percent for the
Trident IX and 7.20 percent for the Trident 16.  The Trident IX facility expires
in  April  2003  while  the  Trident 16 facility expires in September 2004.  The
financing  arrangements  provide  for a call right on the part of the Company to
repay  the  financing  prior  to expiration of their scheduled terms and in some
circumstances  a  put  right  on the part of the banks to require the Company to
repay  the  financings.  Under  either  circumstance,  the  Company would retain
ownership  of  the  rigs.  The  fair  value  of  the Secured Rig Financing as of
September 30, 2001 was approximately $62 million based on the estimated yield to
maturity  as  of  that  date.

     6.9%  Notes  -  At  September  30,  2001, the Company had outstanding $11.5
million aggregate principal amount of unsecured 6.9% Notes due February 15, 2004
originally issued in a private placement. The note purchase agreement underlying
the  6.9%  Notes  requires  compliance  with  various  restrictive covenants and
provisions  customary  for  an agreement of this nature and on substantially the
same  terms  as  those under the Term Loan Agreement. The fair value of the 6.9%
Notes  as  of  September  30,  2001  was  approximately $13 million based on the
estimated  yield  to  maturity  as  of  that  date.

     Redeemed and Repurchased Debt - On March 29, 2001, the Company redeemed all
of  the  approximately  $0.4  million principal amount outstanding 8.875% Senior
Notes at a price equal to 102.2188 percent of the principal amount together with
interest  accrued  to  the  redemption  date.

     On  April 10, 2001, R&B Falcon acquired, pursuant to a tender offer, all of
the  approximately  $400  million  principal  amount  outstanding 11.375% Senior
Secured  Notes  due 2009 of its affiliate, RBF Finance Co., at 122.51 percent of
principal  amount,  or  $1,225.10  per $1,000 principal amount, plus accrued and
unpaid  interest.  On  April  6,  2001, RBF Finance Co. also redeemed all of the
approximately $400 million principal amount outstanding 11% Senior Secured Notes
due  2006  at  125.282  percent,  or $1,252.82 per $1,000 principal amount, plus
accrued  and  unpaid  interest, and R&B Falcon redeemed all of the approximately
$200  million  principal  amount  outstanding  12.25%  Senior  Notes due 2006 at
130.675  percent  or  $1,306.75  per  $1,000  principal amount, plus accrued and
unpaid  interest.  The  Company  funded  the redemption from the issuance of the
6.625%  Notes  and 7.5% Notes in April 2001.  In the second quarter of 2001, the
Company  recognized  an  extraordinary loss, net of tax, of $18.9 million ($0.06
per  diluted  share)  on  the  early  retirement  of  this  debt.

     On  March  30,  2001,  pursuant  to  an  offer  made in connection with the
Company's  acquisition  of  R&B  Falcon, Cliffs Drilling Company, a wholly owned
subsidiary  of  R&B  Falcon  ("Cliffs  Drilling"),  acquired  approximately $0.1
million of the 10.25% Senior Notes due 2003 at an amount equal to 101 percent of
the  principal  amount.  On  May  18,  2001, Cliffs Drilling redeemed all of the
approximately  $200 million principal amount outstanding 10.25% Senior Notes due
2003,  at  102.5  percent,  or $1,025 per $1,000 principal amount, plus interest
accrued  to  the  redemption  date.  As  a  result,  the  Company  recognized an
extraordinary gain, net of tax, of $1.6 million ($0.01 per diluted share) in the
second  quarter  of  2001  relating  to  the  early extinguishment of this debt.

Note  6  -  Financial  Instruments

     Foreign  Exchange Risk - The Company operates internationally, resulting in
exposure  to  foreign  exchange  risk.  This  risk  is primarily associated with
compensation costs denominated in currencies other than the U.S. dollar and with
purchases  from  foreign  suppliers. The Company uses a variety of techniques to
minimize  exposure to foreign exchange risk, including customer contract payment
terms  and  foreign  exchange  derivative  instruments.

     The  Company's  primary  foreign exchange risk management strategy involves
structuring  customer  contracts to provide for payment in both U.S. dollars and
local  currency.  The  payment portion denominated in local currency is based on
anticipated local currency requirements over the contract term. Foreign exchange
derivative  instruments, specifically foreign exchange forward contracts, may be
used  to  minimize foreign exchange risk in instances where the primary strategy
is  not attainable. A foreign exchange forward contract obligates the Company 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.

     Gains  and losses on foreign exchange derivative instruments, which qualify
as  accounting hedges, are deferred as other comprehensive income and recognized
when  the  underlying foreign exchange exposure is realized. Gains and losses on
foreign  exchange  derivative  instruments,  which  do not qualify as hedges for
accounting  purposes, are recognized currently based on the change in the market
value  of  the  derivative  instruments.

     On  January  10,  2001,  the  Company entered into foreign currency forward
contracts  in  conjunction  with the settlement agreement dated January 4, 2001,
with  DCN International ("DCN") relating to disputes between a subsidiary of the
Company  and  DCN  with  respect  to construction of the Sedco Express and Sedco
Energy.  The  forward contracts were designated as a hedge of the payable to DCN
of  150  million  French francs (approximately $21 million), of which 75 million
was  paid  on  June 28, 2001 and 75 million was paid on September 27, 2001.  The
objective  of  the  hedge  transactions  was  to  hedge  the  variability in the
forecasted  cash  flow due to the French franc currency risk. No ineffectiveness
occurred  as the notional amount and the maturity dates of the forward contracts
coincided with the payable balance and due dates, respectively. Over the life of
the  hedge, interest expense has been reflected in earnings based on the implied
interest  rate included in the forward contract; other changes in the fair value
of  the  forward  contracts  relate  to  the remeasurement of the payable at the
monthly  accounting  rate  and have been recorded in earnings as the payable and
related  forward  contract settled.  There is no remaining balance included as a
component  of  Accumulated   Other   Comprehensive   Income  in   the  condensed
consolidated  balance  sheet  as  of  September 30, 2001. A pre-tax loss of $0.2
million  and  $0.4  million,  respectively,  was  recognized  in  the  condensed
consolidated  statements  of  operations  for  the  three  and nine months ended
September  30,  2001.

     Interest  Rate Risk - The Company, from time to time, may use interest rate
swap  agreements to manage the effect of interest rate changes on future income.
Interest  rate  swaps  are  designated  as a hedge of underlying future interest
payments.  These  agreements  involve  the exchange of amounts based on variable
interest  rates  and amounts based on a fixed interest rate over the life of the
agreement without an exchange of the notional amount upon which the payments are
based.  The  interest  rate  differential to be received or paid on the swaps is
recognized  over  the  lives  of the swaps as an adjustment to interest expense.
Gains  and  losses on terminations of interest rate swap agreements are deferred
as  other  comprehensive  income  and  recognized  as  an adjustment to interest
expense  related  to  the  debt over the remaining term of the original contract
life  of the terminated swap agreement. In the event of the early extinguishment
of  a  designated  debt obligation, any realized or unrealized gain or loss from
the  swap  would  be  recognized  in  income.

     In  March  2001,  the  Company  entered  into interest rate swap agreements
relating  to  the  anticipated  private  placement  of  $700.0 million aggregate
principal amount of 6.625% Notes due April 15, 2011 and $600.0 million aggregate
principal  amount  of  7.5%  Notes due April 15, 2031 in the notional amounts of
$200.0  million  and  $400.0  million,  respectively.  The  objective  of   each
transaction  was  to  hedge  a  portion  of  the forecasted payments of interest
resulting  from  the anticipated issuance of fixed rate debt. Under each forward
start  date  interest  swap, the Company paid a LIBOR swap rate and received the
floating  rate  of  three-month  LIBOR.  Hedge effectiveness was assessed by the
dollar-offset  method  by  comparing the changes in expected cash flows from the
hedges  with the change in the LIBOR swap rates.  No ineffectiveness occurred as
changes  in  the expected payment under the forward start date swaps were highly
effective  in  offsetting  changes  in  the expected fair value of the debt cash
flows due to changes in the LIBOR swap rates. The hedge transactions were closed
out  on  March  30,  2001.  The  unrealized gain on the hedge transactions ($3.9
million  as  of  September  30,  2001)  is  a  component  of  Accumulated  Other
Comprehensive Income in the condensed consolidated balance sheet as of September
30,  2001  and had no material effect on the results of operations for the three
or  nine  months  ended  September  30,  2001.  This  unrealized  gain  is being
recognized  as  a  reduction of interest expense over the life of the 7.5% Notes
beginning in April 2001. Over the next 12-month period, the amount of gain to be
recognized  will  be  approximately  $0.3  million.

     In June 2001, the Company entered into interest rate swap agreements with a
group  of  banks  relating  to  the  issuance  of  the  $700.0 million aggregate
principal  amount  of  6.625%  Notes  due  April 15, 2011. The objective of each
transaction  is to protect the debt against changes in fair value due to changes
in  the  benchmark  interest  rate.  Under  each interest rate swap, the Company
receives  the  fixed  rate  equal  to the coupon of the hedged item and pays the
floating  rate  (LIBOR)  plus  a  weighted-average spread of 49.56 basis points,
which  is  designated the benchmark interest rate, on October 15 and April 15 of
each  year  until  maturity on April 15, 2011. The hedge is considered perfectly
effective  against  changes  in the fair value of the debt due to changes in the
benchmark  interest rate over its term. As a result, the shortcut method applies
and  there  is  no  need to periodically reassess the effectiveness of the hedge
during  the  term  of  the  swaps.  At September 30, 2001, the fair value of the
interest  rate  swap  agreements  was  approximately  $51 million. This has been
reflected  in  the condensed consolidated balance sheets as an increase in Other
Assets  with  a  corresponding  increase  in  Long-Term  Debt.

Note  7  -  Segments

     Prior  to  the  R&B  Falcon  merger,  the  Company operated in one industry
segment. As a result of acquiring shallow and inland water drilling units in the
R&B  Falcon  merger,  the  Company's  operations  have  been aggregated into two
reportable  segments:  (i)  International  and  U.S.  Floater  Contract Drilling
Services and (ii) Gulf of Mexico Shallow and Inland Water. The International and
U.S.  Floater  Contract Drilling Services segment consists of high-specification
floaters  (drillships  and  semisubmersibles), other floaters, non-U.S. jackups,
other  mobile  offshore and land drilling units, other assets used in support of
offshore  drilling  activities  and other offshore support services. The Gulf of
Mexico  Shallow  and Inland Water segment consists of the Gulf of Mexico jackups
and  submersible  drilling rigs and the U.S. inland drilling barges. The Company
provides  services  with  different  types  of  drilling  equipment  in  several
geographic  regions.  The  location  of the Company's rigs and the allocation of
resources  to build or upgrade rigs is determined by the activities and needs of
customers.

     Operating  revenues  and  income before income taxes, minority interest and
extraordinary  items  by  segment  are  as  follows  (in  millions):

<TABLE>
<CAPTION>
                                                                  Three Months Ended          Nine Months Ended
                                                                     September 30,               September 30,
                                                                   2001          2000         2001          2000
                                                               ------------  -----------  ------------  ------------
<S>                                                            <C>           <C>          <C>           <C>
Operating Revenues
   International and U.S. Floater Contract Drilling Services   $     655.0   $     314.5  $   1,742.6   $     914.6
   Gulf of Mexico Shallow and Inland Water                           115.2             -        336.1             -
   Elimination of intersegment revenues                                  -             -         (6.2)            -
                                                               ------------  -----------  ------------  ------------
       Total Operating Revenues                                $     770.2   $     314.5  $   2,072.5   $     914.6
                                                               ------------  -----------  ------------  ------------

Income Before Income Taxes, Minority Interest and
 Extraordinary Items
   International and U.S. Floater Contract Drilling Services   $     192.3   $      62.6  $     429.1   $     152.2
   Gulf of Mexico Shallow and Inland Water                             2.0             -         47.2             -
                                                               ------------  ------------ ------------  ------------
                                                                     194.3          62.6        476.3         152.2
Unallocated general and administrative expense                       (14.5)            -        (43.9)            -
Unallocated other income (expense)                                   (49.5)            -       (141.1)            -
                                                                -----------   -----------  ------------  -----------
   Total Income Before Income Taxes, Minority Interest
     and Extraordinary Items                                   $     130.3   $      62.6  $     291.3   $     152.2
                                                               ============  ============ ============  ============
</TABLE>


<PAGE>
<TABLE>
<CAPTION>
Total assets by segment are as follows (in millions):

                                                              September 30,   December 31,
                                                                   2001           2000
                                                              -------------  -------------
<S>                                                           <C>            <C>
   International and U.S. Floater Contract Drilling Services  $    14,028.9  $     6,358.8
   Gulf of Mexico Shallow and Inland Water                          2,743.3              -
   Unallocated Corporate                                               95.8              -
                                                              -------------  -------------
       Total Assets                                           $    16,868.0  $     6,358.8
                                                              =============  =============
</TABLE>

     Prior to the R&B Falcon merger on January 31, 2001, the Company operated in
one  industry  segment  and, as such, there were no unallocated assets or income
items  for  periods  prior  to  the  merger.

Note  8  -  Asset  Dispositions

     In  February  2001, Sea Wolf Drilling Limited ("Sea Wolf"), a joint venture
in which the Company holds a 25 percent interest, sold two semisubmersible rigs,
the  Drill  Star  and  Sedco Explorer, to Pride International, Inc. In the first
quarter of 2001, the Company recognized accelerated amortization of the deferred
gain  related  to  the Sedco Explorer of $18.5 million which is included in Gain
from  Sale of Assets. The Company continued to operate the Drill Star, which has
been  renamed the Pride North Atlantic, under a bareboat charter agreement until
October  2001 at which time the rig was returned to its owner.  The amortization
of the Drill Star's deferred gain was accelerated and produced incremental gains
totaling  $13.6  million  and  $36.3 million for the three and nine months ended
September  30, 2001, respectively, which is included as a reduction in operating
and  maintenance  expense. No additional deferred gain will be recognized in the
fourth  quarter  of  2001.  The  Company's bareboat charter with Sea Wolf on the
Sedco  Explorer  was  terminated  effective  June  2000.

     During  the  nine months ended September 30, 2001, the Company sold certain
non-strategic  assets acquired in the R&B Falcon merger and certain other assets
held  for sale. The Company received net proceeds of approximately $108 million.
These  sales resulted in a net after-tax gain of $7.5 million ($0.02 per diluted
share)  for  the  three  and  nine  months  ended  September  30,  2001.

     In  July  2000,  the  Company  sold   a  semisubmersible,   the  Transocean
Discoverer.  Net  proceeds  from the sale of the rig, which had been idle in the
U.K.  sector  of  the  North  Sea since February 2000, totaled $42.7 million and
resulted  in  a  net after-tax gain of $9.4 million, or $0.04 per diluted share.

     In  February  2000,  the  Company  sold its coiled tubing drilling services
business  to  Schlumberger  Limited.  The  net proceeds from the sale were $24.9
million  and  no gain or loss was recognized on the sale. The Company's interest
in  its  Transocean-Nabors  Drilling  Technology  LLC  and  DeepVision LLC joint
ventures  were  excluded  from  the  sale.


<PAGE>
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):

<TABLE>
<CAPTION>
                                                              Three Months Ended          Nine Months Ended
                                                                  September 30,             September 30,
                                                           ------------------------  --------------------------

                                                               2001         2000          2001         2000
                                                           -----------  -----------  ------------  ------------
<S>                                                        <C>          <C>          <C>           <C>
Income Before Extraordinary Items                          $      97.6  $      47.9  $     213.9   $      116.3
Gain (Loss) on Extraordinary Items, net of tax                       -          1.4        (17.3)           1.4
                                                           -----------  -----------  ------------  ------------
Net Income                                                 $      97.6  $      49.3  $     196.6   $      117.7
                                                           ===========  ===========  ============  ============

Weighted Average Shares Outstanding
      Shares for basic earnings per share                        318.7        210.5        305.2          210.4
      Effect of dilutive securities:
         Employee stock options and unvested stock grants          2.2          1.5          3.1            1.2
         Warrants to purchase ordinary shares                      1.8            -          2.4              -
                                                           -----------  -----------  ------------  ------------
Adjusted weighted-average shares and assumed
   conversions for diluted earnings per share                    322.7        212.0        310.7          211.6
                                                           ===========  ===========  ============  ============

Basic Earnings Per Share
Income Before Extraordinary Items                          $      0.31  $      0.22  $      0.70   $       0.55
Gain (Loss) on Extraordinary Items, net of tax                       -         0.01        (0.06)          0.01
                                                           -----------  -----------  ------------  ------------
Net Income                                                 $      0.31  $      0.23  $      0.64   $       0.56
                                                           ===========  ===========  ============  ============

Diluted Earnings Per Share
 Income Before Extraordinary Items                         $      0.30  $      0.22  $      0.69   $       0.55
 Gain (Loss) on Extraordinary Items, net of tax                      -         0.01        (0.06)          0.01
                                                           -----------  -----------  ------------  ------------
Net Income                                                 $      0.30  $      0.23  $      0.63   $       0.56
                                                           ===========  ===========  ============  ============
</TABLE>

     Ordinary  shares subject to issuance pursuant to the conversion features of
the  convertible  debentures (see Note 5) 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.

Note  10  -  Contingencies

     Litigation  -  In  1990  and  1991,  two of the Company's subsidiaries were
served  with various assessments collectively valued at approximately $7 million
from  the  municipality  of Rio de Janeiro, Brazil to collect a municipal tax on
services.  The  Company believes that neither subsidiary is liable for the taxes
and  has  contested  the  assessments  in the Brazilian administrative and court
systems. In October 2001, the Brazil Supreme Court rejected the Company's appeal
of an adverse lower court's ruling with respect to a June 1991 assessment, which
was  valued  at  approximately  $6  million.  The  Company  is  challenging  the
assessment in a separate proceeding which is currently at the trial court level.
A  disputed  August  1990 assessment is pending before the Brazil Supreme Court.
The  Company  also  received  an  adverse  ruling from the Taxpayer's Council in
connection  with  an October 1990 assessment and is appealing the ruling. If the
Company's  defenses  are  ultimately unsuccessful, the Company believes that the
Brazilian  government-controlled  oil  company,  Petrobras,  has  a  contractual
obligation  to  reimburse  the Company for municipal tax payments required to be
paid  by them. The Company does not expect the liability, if any, resulting from
these  assessments  to  have  a  material  adverse  effect  on  its  business or
consolidated  financial  position.

     The  Indian Customs Department, Mumbai, filed a "show cause notice" against
a  subsidiary  of  the  Company 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, with interest and penalties, and
confiscation  of  the  rig.  In  January 2000, the Customs Department issued its
order,  which  found  that  the  Company  had  imported  the  rig improperly and
intentionally  concealed  the  import  from  the  authorities,  and directed the
Company  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, the Company filed an appeal
with  the  Customs,  Excise  and  Gold  (Control)  Appellate  Tribunal ("CEGAT")
together  with an application to have the confiscation of the rig stayed pending
the  outcome  of  the  appeal.  In  March  2000,  the  CEGAT  ruled  on the stay
application,  directing  that the confiscation be stayed pending the appeal. The
CEGAT  issued its opinion on the Company's 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 the Company. The CEGAT further
sustained  the  Company's 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 the Company's exposure as to custom duties
to  approximately  $6  million.  Following the CEGAT order, the Company 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  the  Company.  The  Customs  Department  attempted  to draw the entire
guarantee,  alleging  the actual duty payable is approximately $22 million based
on  an  interpretation  of the CEGAT order that the Company strongly believes is
incorrect.  This  action  was  stopped  by  an interim ruling of the High Court,
Mumbai  on  writ  petition  filed  by  the  Company. Both the Department and the
Company  filed  appeals with the Supreme Court of India against the order of the
CEGAT,  and both appeals have been admitted. The Company has also applied for an
expedited  hearing  and  is  awaiting  a  ruling  by  the  Supreme Court on this
application.  The Company and its customer have agreed to pursue the issuance of
documentation  from  the  Ministry  of  Petroleum  that,  if  accepted  by  the
Department, would reduce the duty to nil. The agreement further provides that if
this  reduction  is not obtained by December 31, 2001, the customer will pay the
duty  up  to a limit of $7.7 million. The Company does not expect, in any event,
that  the  ultimate  liability,  if  any,  resulting from the matter will have a
material  adverse  effect  on  its  business or consolidated financial position.

     The  Company  is  a defendant in Bryant, et al. v. R&B Falcon Drilling USA,
Inc.,  et  al.  in the United States District Court for the Southern District of
Texas,  Houston  Division.  R&B  Falcon  Drilling USA is a wholly owned indirect
subsidiary  of  R&B  Falcon. In this suit, the plaintiffs allege that R&B Falcon
Drilling  USA,  the  Company and a number of other offshore drilling contractors
with  operations  in  the  U.S.  Gulf  of Mexico have engaged in a conspiracy to
depress  wages  and  benefits  paid  to certain of their offshore employees. The
plaintiffs  contend that this alleged conduct violates federal antitrust law and
constitutes unfair trade practices and wrongful employment acts under state law.
The  plaintiffs  sought  treble  damages, attorneys' fees and costs on behalf of
themselves  and  an  alleged class of offshore workers, along with an injunction
against  exchanging  certain  wage  and  benefit information with other offshore
drilling  contractors  named  as defendants. In May 2001, the Company reached an
agreement  in  principle  with  the  plaintiffs'  counsel  to settle all claims,
pending  Court  approval  of  the settlement. In July 2001, before the Court had
considered  the  proposed settlement, the case, along with a number of unrelated
cases  also  pending  in  the  federal  court in Galveston, was transferred to a
federal judge sitting in Houston as a docket equalization measure. The judge has
granted  preliminary approval of the proposed settlement, and the parties are in
the  process  of  notifying class members. The terms of the settlement have been
reflected  in the Company's results of operations for the first quarter of 2001.
The  settlement  did  not  have  a  material  adverse  effect on its business or
consolidated  financial  position.

     In  October  2001,  the  Company  was  notified  by  the U.S. Environmental
Protection  Agency  ("EPA")  that  the  EPA  had  identified a subsidiary of the
Company  as  a potentially responsible party in connection with the Palmer Barge
Line superfund site located in Port Arthur, Jefferson County, Texas. The EPA has
not  yet  provided substantive information to the Company relating to the extent
of  the  pollution at the site, the remediation costs incurred to date or future
estimated  remediation  costs.  The  Company  does not know a this time how many
other  potentially  responsible  parties  have  been  identified by the EPA. The
Company  continues  to  investigate  the  matter.

     The Company has certain actions or claims pending that have been previously
discussed  and reported in the Company's Annual Report on Form 10-K for the year
ended  December 31, 2000 and Quarterly Report on Form 10-Q for the quarter ended
June  30,  2001  and  the  Company's other reports filed with the Securities and
Exchange  Commission.  There  have  been  no  material   developments  in  these
previously reported matters.  The Company and its subsidiaries are involved in a
number of other lawsuits, all of which have arisen in the ordinary course of the
Company's  business.  The  Company does not believe that the ultimate liability,
if  any,  resulting  from any such other pending litigation will have a material
adverse  effect  on  its  business  or  consolidated  financial  position.

     The  Company  cannot predict with certainty the outcome or effect of any of
the litigation matters specifically described above or of any such other pending
litigation.  There can be no assurance that the Company's belief 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.

     Letters  of  Credit  and  Surety  Bonds - The Company had letters of credit
outstanding  at  September  30,  2001 totaling $91.7 million. The total includes
outstanding  letters  of credit of $56.1 million under a $70.0 million letter of
credit  facility entered into with three banks. Under this facility, the Company
pays letter of credit fees of 1.5 percent per annum and commitment fees of 0.375
percent  per  annum,  respectively.  This facility, which matures in April 2004,
requires a collateral value ratio of 1.75 times the commitment and is secured by
mortgages  on  five  drilling units, the J.W. McLean, J.T. Angel, Randolph Yost,
D.R.  Stewart  and  George  H.  Galloway.  The remaining letter of credit amount
outstanding  guarantees  various  contract  bidding  and  insurance  activities.

     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.


<PAGE>
Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations

     The  following  information  should be read in conjunction with the audited
consolidated  financial  statements and the notes thereto included in our Annual
Report  on  Form  10-K  for  the  year  ended  December  31,  2000.

Overview

     Transocean   Sedco   Forex  Inc.   (together   with  its  subsidiaries  and
predecessors,  unless  the context requires otherwise, the "Company", "we", "us"
or  "our")  is  a  leading  international provider of offshore and inland marine
contract  drilling  services  for oil and gas wells.  As of October 31, 2001, we
owned,  had  partial  ownership interests in or operated 165 mobile offshore and
barge  drilling  units.  Our  active  fleet  consists  of  31 high-specification
floaters,  31  other  floaters, 54 jackup rigs, 35 drilling barges, five tenders
and  three  submersible  drilling  rigs.  In  addition, the fleet includes three
mobile  offshore  production  units,  one  multi-purpose  service vessel and two
platform drilling rigs.  We also have a fleet of land and barge drilling rigs in
Venezuela consisting of eight wholly owned and two partially owned land rigs and
three  lake  barges.  We  contract our drilling rigs, related equipment and work
crews  primarily  on  a  dayrate  basis  to  drill  oil  and  gas  wells.

     On  January  31,  2001,  we  completed  a  merger  transaction ("R&B Falcon
merger")  with R&B Falcon Corporation ("R&B Falcon"). As a result of the merger,
R&B Falcon became our indirect wholly owned subsidiary. The merger was accounted
for  as  a  purchase  and  we  were  the  accounting  acquirer.  The   condensed
consolidated  financial  statements for the nine months ended September 30, 2001
include  eight  months  of  operating  results  and  cash  flows for R&B Falcon.

     Prior  to  the R&B Falcon merger, we operated in one industry segment. As a
result  of  acquiring  shallow and inland water drilling units in the R&B Falcon
merger,  our  operations  have been aggregated into two reportable segments: (i)
International  and  U.S.  Floater  Contract  Drilling  Services and (ii) Gulf of
Mexico  Shallow  and  Inland  Water. The International and U.S. Floater Contract
Drilling  Services  segment  consists of high-specification floaters (drillships
and  semisubmersibles),  other floaters, non-U.S. jackups, other mobile offshore
and  land  drilling  units,  other  assets  used in support of offshore drilling
activities  and  other offshore support services. The Gulf of Mexico Shallow and
Inland  Water  segment  consists  of  the Gulf of Mexico jackups and submersible
drilling  rigs  and  the  U.S.  inland  drilling  barges.

Operating  Results

Quarter  ended  September  30, 2001 compared to Quarter ended September 30, 2000

     Operating  revenues  for  the  three  months  ended September 30, 2001 were
$770.2  million  compared  to  $314.5  million  for  the  same  period  in 2000.
International  and  U.S.  Floater  Contract Drilling Services operating revenues
were  $655.0  million  for the three months ended September 30, 2001 compared to
$314.5  million  for  the same period in 2000, an increase of $340.5 million, or
108  percent.  The  increase  relates to R&B Falcon operations of $225.4 million
since  the  R&B  Falcon  merger, $58.6 million in revenues from four rigs placed
into  service  subsequent  to September 30, 2000 and one rig placed into service
during  September  2000,  recognition of $10.7 million related to a loss of hire
claim  for an incident that occurred in November 2000 and increased utilization.
The Gulf of Mexico Shallow and Inland Water operating revenues of $115.2 million
were  attributable  to  operations  acquired  in  the  R&B  Falcon  merger.

     Operating  and maintenance expense for the three months ended September 30,
2001  was $418.2 million compared to $192.2 million for the same period in 2000.
International  and  U.S.  Floater  Contract Drilling Services operating expenses
were  $341.6  million  for the three months ended September 30, 2001 compared to
$192.2 million for the same period in 2000, an increase of $149.4 million, or 78
percent.  The  increase  was  primarily  a  result of the R&B Falcon merger, the
activation  of  five newbuild drilling units since the third quarter of 2000 and
one  rig  that  was  placed  into  service during September 2000 offset by $13.6
million  related  to  accelerated amortization of the deferred gain on the Pride
North Atlantic (formerly the Drill Star) during the three months ended September
30,  2001. See "-Liquidity and Capital Resources-Acquisitions and Dispositions."
The  Gulf of Mexico Shallow and Inland Water operating expenses of $76.6 million
resulted  from  operations acquired in the R&B Falcon merger. A large portion of
our  operating and maintenance expense consists of employee-related costs and is
fixed or only semi-variable. Accordingly, operating and maintenance expense does
not  vary  in  direct  proportion  to  activity.

     Depreciation  expense  was  $125.4  million  for  the  three  months  ended
September  30,  2001  compared  to  $57.7  million  for the same period in 2000.
International  and  U.S. Floater Contract Drilling Services depreciation expense
was  $99.9  million  for  the  three months ended September 30, 2001 compared to
$57.7  million  for the same period in 2000, an increase of $42.2 million, or 73
percent.  The  increase  was  primarily due to depreciation expense for the rigs
acquired  in  the  R&B  Falcon  merger  and depreciation expense in 2001 for six
newbuild  drilling  units  placed into service since the second quarter of 2000.
This  increase  was  partially offset by a reduction of approximately $6 million
(net $0.02 per diluted share) for the three months ended September 30, 2001 as a
result  of conforming our policies related to estimated rig lives in conjunction
with  the  R&B  Falcon  merger.  The  Gulf  of  Mexico  Shallow and Inland Water
depreciation  expense  of  $25.5  million resulted from rigs acquired in the R&B
Falcon  merger.

     Goodwill  amortization expense was $41.7 million for the three months ended
September  30,  2001  compared  to  $6.7  million  for  the same period in 2000.
International  and  U.S. Floater Contract Drilling Services amortization expense
was $30.5 million for the three months ended September 30, 2001 compared to $6.7
million  for  the  same  period  in 2000. This increase of $23.8 million, or 355
percent,  was due to additional goodwill amortization expense resulting from the
R&B  Falcon  merger.  The  Gulf  of  Mexico  Shallow  and  Inland Water goodwill
amortization  expense  of $11.2 million resulted from the R&B Falcon merger. See
"- New  Accounting  Pronouncements."

     General and administrative expense for the three months ended September 30,
2001  was $14.5 million compared to $9.2 million for the same period in 2000, an
increase  of $5.3 million, or 58 percent. The increase is primarily attributable
to  the  R&B  Falcon  merger  and reflects the costs to manage a larger and more
complex  organization.

     During  the  three months ended September 30, 2001, we recognized a pre-tax
gain  of  $9.5  million primarily related to the sale of two Nigerian-based land
rigs  and  the disposal of an inland drilling barge. See "-Liquidity and Capital
Resources-Acquisitions  and  Dispositions."  During  the   three  months   ended
September 30, 2000, we recognized a pre-tax gain of $11.2 million on the sale of
two  drilling  rigs,   the   semisubmersible   Transocean   Discoverer  and  the
multi-purpose  service  vessel  Mr.  John.

     Other  expense  was  $49.5 million for the three months ended September 30,
2001  compared  to  other  income of $2.6 million for the same period in 2000, a
decrease  in  other  income  of  $52.1 million. Interest expense, net of amounts
capitalized,  was  $60.8  million  and  $1.8  million for the three months ended
September  30,  2001  and  2000,  respectively. Total interest expense was $65.2
million  for the three months ended September 30, 2001 compared to $22.5 million
for  the  same period in 2000, an increase of $42.7 million, or 190 percent. The
increase  during  2001 was due to higher debt levels arising from the additional
debt  assumed  in  the  R&B  Falcon  merger  and borrowings to complete newbuild
construction  projects.  Total  interest  capitalized  relating  to construction
projects was $4.4 million for the three months ended September 30, 2001 compared
to $20.7 million for the same period in 2000, a decrease of $16.3 million, or 79
percent,  resulting  from the completion of six rigs since the second quarter of
2000.  Equity in earnings of joint ventures increased $3.7 million for the three
months  ended  September  30,  2001 due primarily to equity in earnings of joint
ventures acquired in the R&B Falcon merger. Interest income was $5.5 million for
the  three months ended September 30, 2001 compared to $1.7 million for the same
period  in  2000,  an  increase of $3.8 million, or 224 percent. The increase is
primarily due to interest earned on secured contingent notes acquired as part of
the  R&B  Falcon  merger  and  higher average cash balances for the three months
ended  September  30,  2001  compared  to  the  same  period  in  2000.

     Provision  for  income  taxes for the three months ended September 30, 2001
was  $32.6  million  compared  to  $14.6 million for the same period in 2000. 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.

     During  the  three  months  ended  September 30, 2000, we recognized a $1.4
million  extraordinary  gain, net of tax, related to the early extinguishment of
certain  debt.

     Nine  months  ended  September  30,  2001  compared  to  Nine  months ended
September  30,  2000

     Operating  revenues  for  the  nine  months  ended  September 30, 2001 were
$2,072.5  million  compared  to  $914.6  million  for  the  same period in 2000.
International  and  U.S.  Floater  Contract Drilling Services operating revenues
were  $1,742.6  million for the nine months ended September 30, 2001 compared to
$914.6 million for the same period in 2000, an increase of $828.0 million, or 91
percent.  The  increase relates to R&B Falcon operations of $595.1 million since
the  R&B  Falcon  merger,  $162.4 million in revenues from four rigs placed into
service  subsequent to September 30, 2000 and one rig placed into service during
September 2000, recognition of $10.7 million related to a loss of hire claim for
an  incident  that occurred in November 2000 and increased utilization. Revenues
for the nine months ended September 30, 2000 included a cash settlement of $25.1
million  relating  to  an agreement with a unit of BP to cancel the remaining 14
months  of  firm  contract  time on the semisubmersible Transocean Amirante. The
Gulf  of  Mexico  Shallow  and Inland Water operating revenues of $329.9 million
were  attributable  to  operations  acquired  in  the  R&B  Falcon  merger.

     Operating  and  maintenance expense for the nine months ended September 30,
2001  was  $1,163.5  million  compared  to $562.0 million for the same period in
2000.  International  and  U.S.  Floater  Contract  Drilling  Services operating
expenses  were  $975.8  million  for  the  nine  months ended September 30, 2001
compared  to  $562.0  million for the same period in 2000, an increase of $413.8
million,  or  74  percent. The increase was primarily a result of the R&B Falcon
merger,  the  activation of five newbuild drilling units since the third quarter
of  2000  and one rig that was placed into service during September 2000, offset
by $36.3 million related to accelerated amortization of the deferred gain on the
Pride  North  Atlantic  (formerly  the  Drill Star) during the nine months ended
September  30,  2001.  See  "-Liquidity  and  Capital Resources-Acquisitions and
Dispositions." The Gulf of Mexico Shallow and Inland Water operating expenses of
$187.7  million  resulted  from  operations acquired in the R&B Falcon merger. A
large   portion   of  our   operating  and   maintenance   expense  consists  of
employee-related  costs   and  is  fixed  or  only  semi-variable.  Accordingly,
operating  and  maintenance  expense  does  not  vary  in  direct  proportion to
activity.

     Depreciation expense was $348.3 million for the nine months ended September
30,  2001  compared to $173.8 million for the same period in 2000. International
and  U.S.  Floater  Contract  Drilling  Services depreciation expense was $277.3
million  for the nine months ended September 30, 2001 compared to $173.8 million
for  the  same period in 2000, an increase of $103.5 million, or 60 percent. The
increase  was primarily due to depreciation expense for the rigs acquired in the
R&B  Falcon  merger  and  depreciation expense in 2001 for six newbuild drilling
units  placed  into  service since the second quarter of 2000. This increase was
partially  offset  by  a  reduction  of approximately $17 million (net $0.05 per
diluted  share)  for  the  nine  months  ended September 30, 2001 as a result of
conforming  our  policies related to estimated rig lives in conjunction with the
R&B  Falcon  merger.  The  Gulf  of Mexico Shallow and Inland Water depreciation
expense  of  $71.0 million resulted from rigs acquired in the R&B Falcon merger.

     Goodwill  amortization expense was $113.4 million for the nine months ended
September  30,  2001  compared  to  $20.0  million  for the same period in 2000.
International  and  U.S. Floater Contract Drilling Services amortization expense
was $83.6 million for the nine months ended September 30, 2001 compared to $20.0
million  for  the  same  period  in 2000. This increase of $63.6 million, or 318
percent,  was due to additional goodwill amortization expense resulting from the
R&B  Falcon  merger.  The  Gulf  of  Mexico  Shallow  and  Inland Water goodwill
amortization  expense  of $29.8 million resulted from the R&B Falcon merger. See
"- New  Accounting  Pronouncements."

     General  and administrative expense for the nine months ended September 30,
2001 was $43.9 million compared to $31.6 million for the same period in 2000, an
increase of $12.3 million, or 39 percent. The increase is primarily attributable
to  the  R&B  Falcon  merger  and reflects the costs to manage a larger and more
complex  organization.

     During  the  nine  months  ended  September  30,  2001, we recognized $18.5
million  related to accelerated amortization of the deferred gain on the sale of
the  Sedco  Explorer.  In addition, we recognized a pre-tax gain of $9.5 million
primarily  related  to the sale of two Nigerian-based land rigs and the disposal
of an inland drilling barge during the nine months ended September 30, 2001. See
"-Liquidity  and  Capital  Resources-Acquisitions  and Dispositions." During the
nine  months  ended  September  30,  2000, we recognized a pre-tax gain of $12.9
million  on  the sale of three units, the semisubmersible Transocean Discoverer,
the  multi-purpose  service  vessel  Mr.  John  and  the  tender  Searex  V.

     Other  expense  was  $141.1 million for the nine months ended September 30,
2001  compared  to  other income of $11.4 million for the same period in 2000, a
decrease  in  other  income  of $152.5 million. Interest expense, net of amounts
capitalized,  was  $164.8  million  and  $2.1  million for the nine months ended
September  30,  2001  and  2000, respectively. Total interest expense was $199.7
million  for  the nine months ended September 30, 2001 compared to $68.7 million
for  the same period in 2000, an increase of $131.0 million, or 191 percent. The
increase  during  2001 was due to higher debt levels arising from the additional
debt  assumed  in  the  R&B  Falcon  merger  and borrowings to complete newbuild
construction  projects.  Total  interest  capitalized  relating  to construction
projects was $34.9 million for the nine months ended September 30, 2001 compared
to $66.6 million for the same period in 2000, a decrease of $31.7 million, or 48
percent,  resulting  from the completion of six rigs since the second quarter of
2000.  Equity in earnings of joint ventures increased $4.4 million for the three
months  ended  September  30,  2001 due primarily to equity in earnings of joint
ventures  acquired  in  the R&B Falcon merger. Interest income was $13.7 million
for  the  nine  months ended September 30, 2001 compared to $4.6 million for the
same  period  in 2000, an increase of $9.1 million, or 198 percent. The increase
is primarily due to interest earned on secured contingent notes acquired as part
of  the  R&B  Falcon merger and higher average cash balances for the nine months
ended  September  30,  2001  compared  to  the  same  period  in  2000.

     Provision for income taxes for the nine months ended September 30, 2001 was
$74.9  million compared to $35.4 million for the same period in 2000. 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.

     During  the  nine  months  ended  September 30, 2001, we recognized a $17.3
million  extraordinary  loss, net of tax, related to the early extinguishment of
certain  debt.  See  "-Liquidity and Capital Resources-Debt."  During  the  nine
months  ended  September  30,  2000,  we recognized a $1.4 million extraordinary
gain,  net  of  tax,  related  to  the  early  extinguishment  of  certain debt.

Financial  Condition

     September 30, 2001 compared to December 31, 2000

     Total  assets  at  September  30,  2001 were $16.9 billion compared to $6.4
billion  at  December 31, 2000. International and U.S. Floater Contract Drilling
Services  assets  were  $14.0  billion  at  September  30, 2001 compared to $6.4
billion  at  December 31, 2000, an increase of $7.6 billion, or 119 percent. The
increase  was primarily due to the addition of R&B Falcon's assets at fair value
on  January 31, 2001 and goodwill related to the R&B Falcon merger. The increase
in  Gulf of Mexico Shallow and Inland Water assets to $2.7 billion was primarily
due to the addition of R&B Falcon's assets at fair value on January 31, 2001 and
goodwill  related  to  the  R&B  Falcon  merger.

Restructuring  Charges

     In  conjunction  with  the R&B Falcon merger, we established a liability of
$15.9  million  for  the  estimated  severance related costs associated with the
involuntary  termination  of  569  R&B Falcon employees pursuant to management's
plan  to  consolidate  operations   and  administrative  functions  post-merger.
Included  in the 569 planned involuntary terminations were 387 employees engaged
in  our  land and barge drilling business in Venezuela. We have suspended active
marketing  efforts  to  divest  this  business  and,  as a result, the estimated
liability  was  adjusted  by  $4.3  million in the third quarter of 2001 with an
offset  to  goodwill.  Through  September 30, 2001, approximately $11 million in
severance  related  costs  have  been paid to 170 employees whose positions were
eliminated  as  a  result  of the consolidation of operations and administrative
functions  post-merger.  We  anticipate  that substantially all of the remaining
amounts  will  be  paid  by  the  end  of  2001.

Outlook

     Fleet  utilization  within  our  International  and  U.S.  Floater Contract
Drilling Services business segment was down slightly during the third quarter of
2001,  although  we  saw  improving  average dayrates within the segment.  While
there was some decline in world crude oil prices during the most recent quarter,
prices  remained  at  levels  sufficient  to  support  demand  similar  to  that
experienced  in the second quarter of 2001.  However, the recent decline in U.S.
natural  gas  prices  has  led  to a fairly abrupt decline in our Gulf of Mexico
Shallow  and  Inland Water business segment activity, where both utilization and
average  dayrates  are  down.  The  decline  has  been particularly acute in the
segment's  jackup  and  submersible  fleet.  Pro  forma  utilization and average
dayrate information noted below have been calculated based on the combined fleet
of  Transocean  Sedco  Forex and R&B Falcon for the three months ended September
30, 2000.

     Within  our  International  and  U.S.  Floater  Contract  Drilling Services
business, segment fleet utilization for the third quarter of 2001 was 81 percent
compared  to  82  percent  during  the second quarter of 2001 and a pro forma 82
percent  during the third quarter of 2000. Utilization of our high-specification
floaters  (drillships  and  semisubmersibles) for the most recent quarter was 87
percent  compared  to  utilization of 86 percent for the second quarter of 2001.
Utilization  for the other floaters and non-U.S. jackups during the three months
ended  September  30, 2001 was 82 percent and 84 percent, respectively, compared
to  utilization  of  84  percent and 85 percent, respectively, during the second
quarter  of  2001.  Average  dayrates within this segment during the most recent
quarter were $86,600 compared to $82,000 during the second quarter of 2001 and a
pro  forma average of $69,000 during the third quarter of 2000. Average dayrates
for  our high-specification floaters, other floaters and non-U.S. jackups during
the  third  quarter  of  2001  were $144,500, $66,600 and $49,200, respectively,
compared  to  $141,600,  $62,600  and  $44,100,  respectively, during the second
quarter  of  2001.

     Within  our Gulf of Mexico Shallow and Inland Water business, segment fleet
utilization  for the third quarter of 2001 was 63 percent compared to 71 percent
during  the  second  quarter of 2001 and a pro forma 58 percent during the third
quarter  of  2000. Utilization for our jackups and submersibles included in this
segment  was  52 percent during the three months ended September 30, 2001, while
the  inland barge utilization was 75 percent. During the second quarter of 2001,
jackup  and  submersible  utilization  was  72 percent and inland drilling barge
utilization was 71 percent. Average dayrates within this segment during the most
recent  quarter  were  $30,000  compared to $31,800 during the second quarter of
2001  and  a  pro  forma  average  of  $23,500 during the third quarter of 2000.
Average  dayrates during the third quarter of 2001 for the segment's jackups and
submersibles  were  $37,700  and  $24,400  for the inland drilling barges. These
dayrates compare to $39,800 and $23,100, respectively, for the second quarter of
2001.

     Scheduled maintenance and repairs affected our utilization during the third
quarter  of  2001,  as we experienced approximately 350 days of planned shipyard
time  (excluding  the  newbuild  rig under construction).  However, we expect to
have  less  than  200  days  of planned shipyard time during the fourth quarter.
Three  newbuild rigs were placed into service during the second quarter of 2001,
and  our  last  remaining  newbuild  of  the  current  construction program, the
Deepwater  Horizon,  was  placed  into  service  during  September  2001.

     We  expect  the  general trend of relatively stable utilization and average
dayrates  in  our  International  and  U.S.  Floater  Contract Drilling Services
segment  to  continue  in  the near term although activity is directly dependent
upon  crude oil prices. The market for deepwater drilling rigs remains stable at
present  but  rig  farmout  activity  continues  from exploration and production
companies  with  existing deepwater rig contracts as these companies re-evaluate
near-term  deepwater  drilling   equipment  requirements.  This  process   could
negatively  affect  future  deepwater  rig  utilization and average dayrates. We
believe  that  activity  in  our Gulf of Mexico Shallow and Inland Water segment
will  not  improve  significantly until greater confidence returns for near-term
improvement  in  U.S.  natural  gas  prices. Demand is particularly soft for our
jackups and we expect a further weakening in utilization and average dayrates in
this  business  segment.  While  we believe the very recent improvement in these
prices and the decline in U.S. natural gas production levels are encouraging and
expect  the  market  to recover somewhat in 2002, there can be no assurance of a
recovery  in  this  market.

     The  contract  drilling market historically has been highly competitive and
cyclical,  and  we  are  unable  to  predict  the extent to which current market
conditions  will  continue.  A  decline in oil or gas prices could reduce demand
for  our  contract  drilling  services and adversely affect both utilization and
dayrates.

     We  also  continue  to  experience  technical difficulties with some of our
newbuild  rigs.  Technical   and  engineering  challenges  associated  with  the
equipment  and software systems of these rigs were expected, and we believe that
we are adequately prepared to successfully deal with these issues as they arise.
However,  operational  difficulties  with  these  newbuilds can adversely affect
results  of  operations  and  lead  to  disputes  with  clients.

     We  are experiencing higher levels of expenses during 2001 compared to 2000
due  to  a variety of factors, including, but not limited to, those described in
this  paragraph.  After  completion  of  our  last  remaining major construction
project  during  the  third  quarter  of 2001, interest expense has increased as
interest on the projects completed this year is no longer capitalized. Also, the
2001  planned  shipyard  maintenance  and  upgrade  projects  are  resulting  in
increased  expenses during 2001. We also replaced previous employment agreements
with  certain  executives  which contained change in control provisions that had
been  triggered by the Sedco Forex Holdings Limited merger. These new agreements
will require us to recognize approximately $6 million in additional compensation
expense  during  2001  (approximately  $2  million  per  quarter).

     We  are  proceeding  with plans to sell a number of assets (see "-Liquidity
and  Capital  Resources-Acquisitions  and  Dispositions"),  although  the recent
downturn  in  the U.S. natural gas market and the general market uncertainty has
affected  our  efforts.  These  asset  sales will be dependent upon obtaining an
acceptable  sale  price, and we will not conclude all sales in the current year.
We have suspended active marketing efforts to divest our land and barge drilling
business  in  Venezuela until such time as we believe an acceptable price may be
obtained.  We  currently expect the total proceeds of these sales, including the
Venezuela  business,  to  be  between  $400  million and $500 million (including
$108.4  million  of proceeds received through September 30, 2001). Most of these
assets  identified for sale were marked to fair value on our books in connection
with  the  R&B Falcon merger pursuant to purchase accounting rules and we do not
expect  sales  of  those  assets  to  have  a  material effect on our results of
operations.  However,  the  actual  proceeds  may  differ substantially from our
expectations,  which may have a material effect on our results of operations. We
may  decide  to  discontinue  our  sales  effort.

     As  of  October 29, 2001, approximately 87 percent of our International and
U.S.  Floater  Contract  Drilling Services segment fleet days were committed for
the  remainder  of 2001 and approximately 51 percent for the year 2002.  For our
Gulf  of  Mexico  Shallow  and  Inland  Water  segment,  which has traditionally
operated  under short-term contracts, committed fleet days were approximately 25
percent  for  the remainder of 2001 and approximately three percent for the year
2002.

Liquidity  And  Capital  Resources

     Sources  and  Uses  of  Cash

     Cash  flows  provided by operations were $366.3 million for the nine months
ended  September  30,  2001,  compared  to $182.0 million for the same period in
2000,  an  increase  of  $184.3  million.  Cash flows from net income items were
$201.4  million higher and cash used for working capital items was $17.1 million
higher  for  the  nine  months  ended September 30, 2001 as compared to the same
period  in  2000.

     Cash  flows  used  in  investing activities were $64.2 million for the nine
months  ended September 30, 2001, compared to $390.5 million for the same period
in  2000,  a  decrease  of  $326.3  million.  During  2001,  we received cash in
connection  with  the R&B Falcon merger of $264.7 million.  No such amounts were
received  during  2000.  Capital  expenditures  relating to rig construction and
upgrade  projects decreased by $22.5 million and we paid merger costs related to
the R&B Falcon merger of $24.4 million in 2001. We also received net proceeds of
$17.2  million  from  the  sale  of securities and proceeds from the disposal of
assets  was  $108.4  million  in  2001. During the first nine months of 2000, we
received  net  proceeds  of  $24.9  million  from  the sale of our coiled tubing
drilling services business and $42.7 million on the sale of the semisubmersible,
Transocean  Discoverer.

     Cash flows provided by financing activities were $14.4 million for the nine
months  ended  September 30, 2001, compared to $79.8 million for the same period
in  2000,  a  decrease  of $65.4 million. During 2001, we had an increase in net
repayments  under  our  revolving  credit  agreements  of  $26.8  million, early
repayments  of  debt instruments of $1,458.0 million and net proceeds from other
debt of $1,693.5 million primarily due to the issuance of the 6.625% Notes, 7.5%
Notes  and 1.5% Convertible Debentures in the second quarter of 2001. During the
first nine months of 2000, we had net proceeds from other debt of $489.1 million
from  the issuance of the zero coupon convertible debentures partially offset by
the $153.3 million repayment of our revolving credit agreement and by the $233.8
million  early  repayment  on  our  secured  loan  agreement.

     Capital  Expenditures

     Capital  expenditures, including capitalized interest, totaled $443 million
during the nine months ended September 30, 2001. During 2001, we expect to spend
approximately  $544  million  on  our   existing   fleet,   expanded   corporate
infrastructure, completion of major construction projects, major upgrades to the
Discoverer 534 and Sedco 710 and the conversion of the Sedco 135D to an offshore
production  facility.  We  currently  expect to spend approximately $175 to $225
million  in  2002  on  our  existing  fleet,  corporate infrastructure and major
upgrades.  A  substantial majority of the capital expenditures is related to the
International  and  U.S.  Floater  Contract  Drilling  Services  segment.

     The   following  table   summarizes   projected   expenditures   (including
capitalized  interest)  during  the remainder of 2001 for our major construction
projects.

<TABLE>
<CAPTION>
                                          Expenditures -             Projected              Projected
                                        Nine Months Ended          Expenditures -         Recorded Value
                                       September 30, 2001        Remainder of 2001         At Completion
---------------------------------------------------------------------------------------------------------
<S>                               <C>  <C>                  <C>  <C>                 <C>  <C>
(In millions)

Sedco Express                            $        39                $      9                  $    396
Sedco Energy                                      40                       5                       398
Cajun Express                                     23                       4                       327
Discoverer Deep Seas                              11                       5                       317
Deepwater Horizon                                169                      13                       364
---------------------------------------------------------------------------------------------------------
                                         $       282                $     36                  $  1,802
=========================================================================================================
</TABLE>

     The  Sedco Express was placed into service in April 2001. In February 2001,
a unit of TotalFinaElf terminated the six-year contract for the Sedco Express in
light  of  the  rig's  delayed  delivery  beyond  December  28, 2000. The rig is
expected  to begin a four-month contract with a unit of BP in the Middle East in
the fourth quarter of 2001. The Sedco Energy arrived in Brazil in April 2001 and
began a 42-month contract with ChevronTexaco in  May 2001. The Cajun Express was
delivered in April 2001, when it began an 18-month contract with Marathon in the
U.S. Gulf of Mexico. In July 2001, Marathon terminated the 18-month contract for
the  Cajun  Express  allegedly  because   of  downtime  relating   to  equipment
performance.  The  Cajun  Express  is  currently  operating  under  a four-month
contract  with Ocean Energy in the U.S. Gulf of Mexico. The Discoverer Deep Seas
was  delivered  early  in  the  first quarter of 2001, when it began a five-year
contract  with  ChevronTexaco  in the U.S. Gulf of Mexico. The Deepwater Horizon
was  placed  into  service in September 2001 when it began a three-year contract
with  a  unit  of  BP  in  the  U.S.  Gulf  of  Mexico.

     We  intend  to  fund  the  cash   requirements  relating   to  our  capital
expenditures  through  available  cash  balances,  borrowings under the SunTrust
Revolving  Credit  Agreements and the Commercial Paper Program referred to below
and  other  commercial  bank  or  capital  market  financings.

     Debt

     6.625%  Notes  and  7.5%  Notes  -  In April 2001, we issued $700.0 million
aggregate principal amount of 6.625% Notes due April 15, 2011 and $600.0 million
aggregate principal amount of 7.5% Notes due April 15, 2031. Interest is payable
on  April  15  and October 15 of each year. We used the net proceeds of $1,293.5
million  to redeem the 11% Secured Notes and the 12.25% Senior Notes and to fund
the  tender  offer  for the 11.375% Secured Notes. The 6.625% Notes and the 7.5%
Notes  are  redeemable at our option at a make-whole premium with present values
calculated  using  a  discount  rate  equal to the then-prevailing yield of U.S.
Treasury  notes for a corresponding remaining period plus 25 basis points and 35
basis  points, respectively. We entered into interest rate swaps relating to the
6.625%  Notes and 7.5% Notes. See Note 6 of the Condensed Consolidated Financial
Statements.

     The  indenture  and  supplemental  indentures  pursuant to which the 6.625%
Notes  and  the 7.5% Notes, as well as the 1.5% Convertible Debentures, the Zero
Coupon  Convertible  Debentures,  the  7.45%  Notes  and  the  8.00%  Debentures
described  below,  were  issued  impose  restrictions  on certain actions by us,
including  creating  liens, engaging in sale/leaseback transactions and engaging
in  merger,  consolidation  or  reorganization  transactions.

     1.5%  Convertible  Debentures  -  In  May  2001,  we  issued $400.0 million
aggregate principal amount of 1.5% Convertible Debentures due May 2021. Interest
is  payable  on May 15 and November 15 of each year. We used the net proceeds of
$400.0  million  to  redeem  the  10.25%  Senior Notes and to repay a portion of
borrowings  outstanding under the Commercial Paper Program. We have the right to
redeem  the  debentures after five years for a price equal to 100 percent of the
principal  amount  plus  interest accrued up to but not including the redemption
date. Each holder has the right to require us to repurchase the debentures after
five,  ten and fifteen years at 100 percent of the principal amount plus accrued
interest  up  to  and  including the repurchase date. We may pay this repurchase
price  with either cash or ordinary shares or a combination of cash and ordinary
shares. The debentures are convertible into our ordinary shares at the option of
the  holder at any time at a ratio of 13.8627 shares per $1,000 principal amount
debenture,  subject  to adjustments if certain events take place, if the closing
sale price per ordinary share exceeds 110 percent of the conversion price for at
least  20  trading days in a period of 30 consecutive trading days ending on the
trading  day  immediately  prior  to  the  conversion date or if other specified
conditions  are  met.

     Zero  Coupon  Convertible  Debentures  - In May 2000, we issued Zero Coupon
Convertible  Debentures  due  May  2020  with a face value at maturity of $865.0
million.  The  debentures  were  issued  at a price to the public of $579.12 per
debenture and accrue original issue discount at a rate of 2.75 percent per annum
compounded  semiannually  to  reach  a  face  value  at  maturity  of $1,000 per
debenture.  We will pay no interest on the debentures prior to maturity and have
the  right  to  redeem the debentures after three years for a price equal to the
issuance  price  plus accrued original issue discount to the date of redemption.
Each  holder  has  the  right  to require us to repurchase the debentures on the
third,  eighth and thirteenth anniversary of issuance at the issuance price plus
accrued  original  issue  discount  to  the  date of repurchase. We may pay this
repurchase  price  with  either cash or ordinary shares or a combination of cash
and  ordinary shares. The debentures are convertible into our ordinary shares at
the  option  of the holder at any time at a ratio of 8.1566 shares per debenture
subject  to  adjustments  if  certain  events  take  place.

     Term  Loan  Agreement  -  We  are  a  party  to  a $400.0 million unsecured
five-year  term  loan  agreement  with  a  group  of banks led by SunTrust Bank,
Atlanta,  as agent, dated as of December 16, 1999. Amounts outstanding under the
Term  Loan  Agreement  bear  interest  at  our  option, at a base rate or London
Interbank  Offered  Rate  ("LIBOR")  plus  a  margin  (0.70 percent per annum at
September  30,  2001)  that varies depending on our senior unsecured public debt
rating.  No  principal payments are required for the first two years, and we may
prepay some or all of the debt at any time without premium or penalty at the end
of  an interest period. The Term Loan Agreement requires compliance with various
restrictive  covenants  and provisions customary for an agreement of this nature
including  an  interest coverage ratio of not less than 3 to 1, a leverage ratio
of  not  greater  than  40  percent  and  limitations  on  mergers  and  sale of
substantially  all  assets,  creating  liens,  incurring debt, transactions with
affiliates  and  sale/leaseback  transactions.

     6.5%,  6.75%,  6.95%  and  7.375%  Senior Notes - In April 1998, R&B Falcon
issued  6.5%  Senior  Notes,  6.75%  Senior Notes, 6.95% Senior Notes and 7.375%
Senior  Notes  with  an  aggregate principal amount of $1.1 billion. Interest on
these notes is payable on April 15 and October 15 of each year. These notes have
maturity  dates  of  April  2003,   April  2005,  April  2008  and  April  2018,
respectively.  The  6.75%  Senior  Notes,  the 6.95% Senior Notes and the 7.375%
Senior  Notes are redeemable at the option of R&B Falcon at a make-whole premium
with  present   values  calculated   using   a  discount   rate   equal  to  the
then-prevailing  yield of U.S. treasury notes for a corresponding remaining term
plus  20  basis points for the 6.75% Senior Notes and the 6.95% Senior Notes and
25  basis  points  for  the  7.375%  Senior Notes. The 6.5% Senior Notes are not
redeemable  at  the  option  of R&B Falcon. At September 30, 2001, approximately
$250  million,  $350  million, $250 million and $250 million principal amount of
these  notes  was  outstanding,  respectively. These notes were recorded at fair
value  on  January  31,  2001  as  part  of  the  R&B  Falcon  merger.

     9.125%  and 9.5% - Senior  Notes In December 1998, R&B Falcon issued 9.125%
Senior  Notes and 9.5% Senior Notes with an aggregate principal amount of $400.0
million.  Interest  on these notes is payable on June 15 and December 15 of each
year.  These  notes  have  maturity  dates  of  December 2003 and December 2008,
respectively.  These  notes  are  redeemable  at  the  option of R&B Falcon at a
make-whole premium with present values calculated using a discount rate equal to
the  then-prevailing  yield of U.S. Treasury notes for a corresponding remaining
term plus 50 basis points. At September 30, 2001, approximately $100 million and
$300  million  principal  amount  of  these notes was outstanding, respectively.
These  notes  were recorded at fair value on January 31, 2001 as part of the R&B
Falcon  merger.

     The indentures pursuant to which the 6.5% Senior Notes, 6.75% Senior Notes,
6.95%  Senior  Notes,  7.375% Senior Notes, the 9.125% Senior Notes and the 9.5%
Senior  Notes  were issued impose restrictions on certain actions by R&B Falcon,
including  creating  liens, engaging in sale/leaseback transactions and engaging
in  merger,  consolidation  or  reorganization  transactions.  In  addition, the
indenture  pursuant  to  which the 9.125% Senior Notes and the 9.5% Senior Notes
were  issued  imposes  restrictions on the incurrence of additional indebtedness
and  the  payment  of  dividends  and  other  restricted payments by R&B Falcon.
However, these restrictions are suspended during the period that these notes are
rated  as  investment  grade.


     7.45%  Notes and 8.00% Debentures - In April 1997, we issued $100.0 million
aggregate  principal amount of 7.45% Notes due April 15, 2027 and $200.0 million
aggregate  principal  amount  of 8.00% Debentures due April 15, 2027. Holders of
the  7.45%  Notes may elect to have all or any portion of the 7.45% Notes repaid
on  April  15,  2007 at 100 percent of the principal amount. The 7.45% Notes, at
any  time  after  April  15,  2007,  and  the 8.00% Debentures, at any time, are
redeemable  at our option at a make-whole premium with present values calculated
using  a discount rate equal to the then-prevailing yield of U.S. Treasury notes
for  a corresponding remaining term plus 20 basis points. Interest is payable on
April  15  and  October  15  of  each  year.

     Nautilus Class A1 and A2 Notes - In August 1999, a subsidiary of R&B Falcon
completed  a  $250.0  million  project  financing  for  the  construction of the
Deepwater  Nautilus  which consisted of two five-year notes. The first note with
an  original  principal amount of $200.0 million bears interest at 7.31 percent,
with  monthly  interest  and  principal  payments,  and matures in May 2005. The
second  note  with  a  principal  amount of $50.0 million bears interest at 9.41
percent, with monthly interest payments and a balloon principal payment which is
due  at  maturity  in  May  2005. Both notes are collateralized by the Deepwater
Nautilus  and  drilling contract revenues from such rig and are without recourse
to R&B Falcon. At September 30, 2001, approximately $154 million and $50 million
principal  amount of these notes was outstanding, respectively. These notes were
recorded  at  fair  value  on January 31, 2001 as part of the R&B Falcon merger.

     Revolving Credit Agreement and Commercial Paper Program - We are a party to
a $550.0 million five-year revolving credit agreement (the "Five-Year Revolver")
and a $250.0 million 364-day revolving credit agreement (the "364-Day Revolver")
with  a  group  of  banks  led  by SunTrust Bank, Atlanta, as agent, dated as of
December  29,  2000  (together the "SunTrust Revolving Credit Agreements") under
which  we  may  borrow  or  procure  credit.  At  September  30,  2001,  amounts
outstanding under the SunTrust Revolving Credit Agreements bore interest, at our
option,  at  a  base rate or LIBOR plus a margin of 0.45 percent per annum under
the  Five-Year  Revolver and 0.475 percent per annum under the 364-Day Revolver.
The  margin  under  the Five-Year Revolver will vary from 0.180 percent to 0.700
percent  and  the margin on the 364-Day Revolver will vary from 0.190 percent to
0.725  percent  depending  on  our  senior   unsecured  public  debt  rating.  A
utilization  fee  varying  from 0.075 percent to 0.150 percent, depending on our
senior unsecured public debt rating, is payable if amounts outstanding under the
Five-Year  Revolver  or  the 364-Day Revolver are greater than $181.5 million or
$82.5  million,  respectively.  The SunTrust Revolving Credit Agreements contain
substantially  the  same restrictive covenants as are contained in the Term Loan
Agreement. There were no amounts outstanding under the SunTrust Revolving Credit
Agreements  as  of  September  30,  2001.

     On  March 29, 2001, we established our Commercial Paper Program. Borrowings
of  $60.3  million  outstanding  at  June  30, 2001 were repaid during the third
quarter  of  2001  and  there were no borrowings outstanding as of September 30,
2001.  The SunTrust Revolving Credit Agreements provide liquidity for commercial
paper  borrowings.

     Secured  Rig  Financing  -  At September 30, 2001, we had outstanding $55.3
million  of  debt secured by the Trident IX and Trident 16. Payments under these
financing  agreements  include  an  interest  component  of 7.95 percent for the
Trident IX and 7.20 percent for the Trident 16.  The Trident IX facility expires
in  April  2003  while  the  Trident 16 facility expires in September 2004.  The
financing  arrangements  provide  for  a  call  right  on  our part to repay the
financing prior to expiration of their scheduled terms and in some circumstances
a  put  right  on  the  part of the banks to require us to repay the financings.
Under  either  circumstance,  we  would  retain  ownership  of  the  rigs.

     6.9%  Notes  -  At  September  30,  2001,  we had outstanding $11.5 million
aggregate  principal  amount  of  unsecured  6.9%  Notes  due  February 15, 2004
originally issued in a private placement. The note purchase agreement underlying
the  6.9%  Notes  requires  compliance  with  various  restrictive covenants and
provisions  customary  for  an agreement of this nature and on substantially the
same  terms  as  those  under  the  Term  Loan  Agreement.

     Redeemed  and  Repurchased Debt - On March 29, 2001, we redeemed all of the
approximately $0.4 million principal amount outstanding 8.875% Senior Notes at a
price  equal  to 102.2188 percent of the principal amount together with interest
accrued  to  the  redemption  date.

     On  April 10, 2001, R&B Falcon acquired, pursuant to a tender offer, all of
the  approximately  $400  million  principal  amount  outstanding 11.375% Senior
Secured  Notes  due 2009 of its affiliate, RBF Finance Co., at 122.51 percent of
principal  amount,  or  $1,225.10  per $1,000 principal amount, plus accrued and
unpaid  interest.  On  April  6,  2001, RBF Finance Co. also redeemed all of the
approximately $400 million principal amount outstanding 11% Senior Secured Notes
due  2006  at  125.282  percent,  or $1,252.82 per $1,000 principal amount, plus
accrued  and  unpaid  interest, and R&B Falcon redeemed all of the approximately
$200  million  principal  amount  outstanding  12.25%  Senior  Notes due 2006 at
130.675  percent  or  $1,306.75  per  $1,000  principal amount, plus accrued and
unpaid  interest. We funded the redemption from the issuance of the 6.625% Notes
and  7.5%  Notes in April 2001.  In the second quarter of 2001, we recognized an
extraordinary  loss,  net  of tax, of $18.9 million ($0.06 per diluted share) on
the  early  retirement  of  this  debt.

     On  March  30,  2001,  pursuant  to  an  offer  made in connection with our
acquisition of R&B Falcon, Cliffs Drilling Company, a wholly owned subsidiary of
R&B  Falcon  ("Cliffs  Drilling"),  acquired  approximately  $0.1 million of the
10.25%  Senior Notes due 2003 at an amount equal to 101 percent of the principal
amount.  On May 18, 2001, Cliffs Drilling redeemed all of the approximately $200
million  principal  amount  outstanding  10.25%  Senior Notes due 2003, at 102.5
percent,  or  $1,025  per  $1,000 principal amount, plus interest accrued to the
redemption  date.  As a result, we recognized an extraordinary gain, net of tax,
of $1.6 million ($0.01 per diluted share) in the second quarter of 2001 relating
to  the  early  extinguishment  of  this  debt.

     Depending  on  market  conditions,  we  or  our  affiliates  may  seek  to
repurchase,  redeem  or  otherwise  acquire  additional  debt  securities.

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,  ordinary  shares or other securities or a combination
thereof.  In  addition,  from  time  to time, we review possible dispositions of
drilling  units.  See  "-Outlook."

     In  February  2001, Sea Wolf Drilling Limited ("Sea Wolf"), a joint venture
in which we hold a 25 percent interest, sold two semisubmersible rigs, the Drill
Star  and  Sedco  Explorer, to Pride International, Inc. In the first quarter of
2001, we recognized accelerated amortization of the deferred gain related to the
Sedco  Explorer  of $18.5 million which is included in Gain from Sale of Assets.
We  continued  to operate the Drill Star, which has been renamed the Pride North
Atlantic,  under  a  bareboat charter agreement until October 2001 at which time
the rig was returned to its owner. The amortization of the Drill Star's deferred
gain  was  accelerated and produced incremental gains totaling $13.6 million and
$36.3  million  for  the  three  and  nine  months  ended  September  30,  2001,
respectively,  which  is  included  as  a reduction in operating and maintenance
expense. No additional deferred gain will be recognized in the fourth quarter of
2001.  Our  bareboat  charter with Sea Wolf on the Sedco Explorer was terminated
effective  June  2000.

     During  the  nine  months  ended  September  30,  2001,  we  sold   certain
non-strategic  assets acquired in the R&B Falcon merger and certain other assets
held  for  sale.  We received net proceeds of approximately $108 million.  These
sales resulted in a net after-tax gain of $7.5 million ($0.02 per diluted share)
for  the  three  and  nine  months  ended  September  30,  2001.

     On  January  31, 2001, we completed a merger transaction with R&B Falcon in
which  our indirect wholly owned subsidiary merged with and into R&B Falcon.  As
a result of the merger, R&B Falcon common shareholders received 0.5 of our newly
issued  ordinary  shares for each R&B Falcon share.  We issued approximately 106
million ordinary shares in exchange for the issued and outstanding shares of R&B
Falcon and assumed warrants and options exercisable for approximately 13 million
ordinary  shares.  The  ordinary  shares  issued  in exchange for the issued and
outstanding  shares  of  R&B  Falcon constituted approximately 33 percent of our
outstanding  ordinary  shares  after  the  merger.

Derivative  Instruments

     From  time  to  time,  we  may enter into a variety of derivative financial
instruments in connection with the management of our exposure to fluctuations in
foreign  exchange  rates  and  interest  rates.  We do not enter into derivative
transactions  for speculative purposes; however, for accounting purposes certain
transactions  may  not  meet  the  criteria  for  hedge  accounting.

     Gains  and losses on foreign exchange derivative instruments, which qualify
as accounting hedges, are deferred as other comprehensive income, and recognized
when  the  underlying foreign exchange exposure is realized. Gains and losses on
foreign  exchange  derivative  instruments,  which  do not qualify as hedges for
accounting  purposes,  are  recognized  currently  based on the change in market
value  of  the derivative instruments. At September 30, 2001, we had no material
open  foreign  exchange  derivative  instruments.

     From  time  to time, we may use interest rate swap agreements to manage the
effect  of  interest  rate  changes  on  future  income. Interest rate swaps are
designated  as a hedge of underlying future interest payments. The interest rate
differential to be received or paid on the swaps is recognized over the lives of
the  swaps as an adjustment to interest expense. At September 30, 2001, we had a
$3.9  million  unrealized gain related to interest rate swap agreements which is
included in Accumulated Other Comprehensive Income in the condensed consolidated
balance  sheet  as  of  September  30,  2001.

Shelf  Registration

     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.

     In  May  2001,  under  the  shelf  registration statement, we issued $400.0
million  aggregate  principal  amount of 1.5% Convertible Debentures due May 15,
2021.

     Sources  of  Liquidity

     We  believe  that  our  cash  and  cash  equivalents,  cash  generated from
operations,  borrowings available under our SunTrust Revolving Credit Agreements
and  access  to other financing sources will be adequate to meet our anticipated
short-term  and  long-term  liquidity  requirements,  including  scheduled  debt
repayments  and  capital  expenditures.

      Letters  of  Credit  and  Surety  Bonds

      Letters  of Credit - We had letters of credit outstanding at September 30,
2001 totaling $91.7 million. The total includes outstanding letters of credit of
$56.1  million under a $70.0 million letter of credit facility entered into with
three  banks.  Under  this facility, we pay letter of credit fees of 1.5 percent
per  annum  and  commitment  fees of 0.375 percent per annum, respectively. This
facility, which matures in April 2004, requires a collateral value ratio of 1.75
times  the  commitment  and  is secured by mortgages on five drilling units, the
J.W. McLean, J.T. Angel, Randolph Yost, D.R. Stewart and George H. Galloway. The
remaining  letter  of  credit  amount  outstanding  guarantees  various contract
bidding  and  insurance  activities.

     Surety  Bonds  - 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.

New  Accounting  Pronouncements

     In  July  2001,  the  Financial  Accounting Standards Board ("FASB") issued
Statement  of  Financial  Accounting  Standards  ("SFAS")   No.  141,   Business
Combinations.  SFAS No. 141 requires that all business combinations initiated or
completed  after  June  30,  2001  be accounted for using the purchase method of
accounting. The statement provides for recognition and measurement of intangible
assets  separate  from goodwill. We adopted SFAS No. 141 as of July 1, 2001. The
adoption  of  the  new  statement  had no effect on our results of operations or
consolidated  financial  position.

     In  July  2001, the FASB issued SFAS No. 142, Goodwill and Other Intangible
Assets,  which  becomes  effective for fiscal years beginning after December 15,
2001. SFAS No. 142 prohibits amortization of goodwill and requires that goodwill
be  tested  annually  for  impairment.  The  statement  also  includes  specific
guidance  for  testing  goodwill  impairment.  We  will adopt SFAS No. 142 as of
January  1, 2002. Management is currently evaluating SFAS No. 142 and the impact
of  implementing  the  annual  goodwill  impairment  test  on  our  consolidated
financial  position  and  results  of  operations. Our consolidated statement of
operations  for  the  year  ending  December  31,  2001  is  expected to include
approximately  $154  million  of  goodwill  amortization  expense.

     In  August 2001, the FASB issued SFAS No. 144, Accounting for Impairment or
Disposal  of Long-Lived Assets. SFAS No. 144 supersedes SFAS No. 121, Accounting
for Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of,
and  the  accounting  and  reporting  provisions  of Accounting Principles Board
Opinion  ("APB")  No.  30,  Reporting  the Results of Operations - Reporting the
Effects  of  Disposal of a Segment of a Business, and Extraordinary, Unusual and
Infrequently  Occurring  Events  and  Transactions.  SFAS  No.  144  retains the
fundamental  provisions  of  SFAS  No.  121  for  recognition and measurement of
long-lived  asset  impairment and for the measurement of long-lived assets to be
disposed  of  by  sale  and the basic requirements of APB No. 30. In addition to
these  fundamental  provisions,  SFAS  No. 144 provides guidance for determining
whether  long-lived assets should be tested for impairment and specific criteria
for  classifying  assets  to  be  disposed of as held for sale. The statement is
effective  for fiscal years beginning after December 15, 2001, and we will adopt
the  new standard as of January 1, 2002. Management does not expect the adoption
of  this  new  standard  to have a material effect on our consolidated financial
position  or  results  of  operations.

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 the Company 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  payment  of  severance costs, contract
commencements,  timing  of  delivery  of  drilling  units,  potential  revenues,
increased  expenses,  customer  drilling  programs, utilization rates, dayrates,
planned  shipyard  projects  and   associated   downtime,  effect  of  technical
difficulties  with  newbuild  rigs,  future  activity  in  the deepwater and the
shallow  and  inland water markets, planned asset sales, reactivation of stacked
units,  future  labor  costs,  the  Company's  other expectations with regard to
market  outlook,  expected  capital  expenditures,  results and effects of legal
proceedings,  receipt  of  loss  of hire insurance proceeds, liabilities for tax
issues,  liquidity  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, worldwide demand for oil and gas, uncertainties
relating  to  the  level  of  activity  in  offshore oil and gas exploration and
development,  exploration  success  by  producers, oil and gas prices (including
U.S. natural gas prices), demand for offshore and inland water rigs, competition
and  market  conditions  in  the  contract  drilling  industry,  our  ability to
successfully  integrate  the  operations  of  acquired  businesses,   delays  or
terminations  of  drilling  contracts  due to a number of events, delays or cost
overruns  on  construction  and  shipyard  projects and possible cancellation of
drilling  contracts  as  a result of delays or performance, our ability to enter
into and the terms of future contracts, the availability of qualified personnel,
labor  relations  and  the  outcome  of  negotiations  with  unions representing
workers,  operating  hazards,  political  and  other  uncertainties  inherent in
non-U.S.  operations  (including  exchange  and currency fluctuations), risks of
war, terrorism and cancellation or unavailability of certain insurance coverage,
the  impact  of  governmental  laws  and regulations, the adequacy of sources of
liquidity,  the  effect  of  litigation  and  contingencies  and  other  factors
discussed  in  this quarterly report and in the Company's 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.  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.

Item  3.  Quantitative  and  Qualitative  Disclosures  about  Market  Risk

Interest  Rate  Risk

     Our  exposure  to  market  risk  fluctuations in interest rates has changed
since  December  31,  2000  due  to  the  debt assumed in the R&B Falcon merger,
extinguishment  of  certain  R&B Falcon debt and issuance of additional debt and
interest rate swap agreements. See "Item 2. Management's Discussion and Analysis
of  Financial  Condition  and   Results  of  Operations-Liquidity   and  Capital
Resources-Debt."  Our  exposure to market risk for changes in interest rates now
relates  primarily  to  our  long-term  debt  obligations.

     The  table  below presents expected cash flows and related weighted-average
interest  rates  expected  by  maturity dates relating to debt obligations as of
September  30,  2001  and  the  twelve months ended September 30 for each of the
years  presented.  Weighted-average  variable rates are based on estimated LIBOR
rates as of September 30, 2001, plus applicable margins. The fair value of fixed
rate  debt is based on the estimated yield to maturity for each debt issue as of
September  30,  2001.

     As  of  September 30, 2001 (in millions, except interest rate percentages):
<TABLE>
<CAPTION>
                                                                  EXPECTED MATURITY DATE

                                         2002    2003     2004     2005    2006     THEREAFTER     TOTAL    FAIR VALUE
                                        ------  -------  -------  ------  -------  ------------  ---------  -----------
<S>                                     <C>     <C>      <C>      <C>     <C>      <C>           <C>        <C>
TOTAL DEBT
  Fixed Rate (a)                        $60.9   $ 63.0   $415.4   $31.1   $400.0   $   2,965.0   $3,935.4   $   3,586.8
     Average interest rate                6.7%     6.6%     7.1%    6.2%     7.1%          5.5%       5.9%
  Variable Rate                         $75.0   $137.5   $150.0   $37.5        -             -   $  400.0   $     400.0
     Average interest rate                3.2%     3.2%     3.2%    3.2%       -             -        3.2%
  Receive Fixed/Pay Variable Swaps (b)      -        -        -       -        -    $     700.0  $  700.0   $     685.3
     Average interest rate                  -        -        -       -        -            3.0%      3.0%
<FN>

(a)  Expected  maturity  amounts  are based on the face value of debt and do not
     reflect  fair  market  value  of  debt.
(b)  The  6.625%  Notes are considered variable as a result of the interest rate
     swaps.  See  Note  6  of  the  Condensed Consolidated Financial Statements.
</TABLE>


FOREIGN  EXCHANGE  RISK

     Our  exposure  to  foreign  exchange  risk has not materially changed since
December  31,  2000.  See  "Item  2.  Management's  Discussion  and  Analysis of
Financial   Condition   and   Results   of   Operations-Liquidity  and   Capital
Resources-Derivative  Instruments."


<PAGE>
                           PART II - OTHER INFORMATION

Item  1.  Legal  Proceedings

     In  1990  and  1991,  two  of  the  Company's subsidiaries were served with
various  assessments  collectively  valued  at approximately $7 million from the
municipality  of  Rio de Janeiro, Brazil to collect a municipal tax on services.
The  Company  believes  that  neither subsidiary is liable for the taxes and has
contested  the assessments in the Brazilian administrative and court systems. In
October  2001,  the  Brazil  Supreme  Court  rejected the Company's appeal of an
adverse  lower  court's ruling with respect to a June 1991 assessment, which was
valued at approximately $6 million. The Company is challenging the assessment in
a  separate  proceeding  which is currently at the trial court level. A disputed
August  1990  assessment is pending before the Brazil Supreme Court. The Company
also  received  an adverse ruling from the Taxpayer's Council in connection with
an  October  1990  assessment  and  is  appealing  the  ruling. If the Company's
defenses  are  ultimately  unsuccessful, the Company believes that the Brazilian
government-controlled  oil  company,  Petrobras, has a contractual obligation to
reimburse  the  Company  for municipal tax payments required to be paid by them.
The  Company  does  not  expect  the  liability,  if  any,  resulting from these
assessments  to  have  a material adverse effect on its business or consolidated
financial  position.

     The  Indian Customs Department, Mumbai, filed a "show cause notice" against
a  subsidiary  of  the  Company 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, with interest and penalties, and
confiscation  of  the  rig.  In  January 2000, the Customs Department issued its
order,  which  found  that  the  Company  had  imported  the  rig improperly and
intentionally  concealed  the  import  from  the  authorities,  and directed the
Company  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, the Company filed an appeal
with  the  Customs,  Excise  and  Gold  (Control)  Appellate  Tribunal ("CEGAT")
together  with an application to have the confiscation of the rig stayed pending
the  outcome  of  the  appeal.  In  March  2000,  the  CEGAT  ruled  on the stay
application,  directing  that the confiscation be stayed pending the appeal. The
CEGAT  issued its opinion on the Company's 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 the Company. The CEGAT further
sustained  the  Company's 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 the Company's exposure as to custom duties
to  approximately  $6  million.  Following the CEGAT order, the Company 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  the  Company.  The  Customs  Department  attempted  to draw the entire
guarantee,  alleging  the actual duty payable is approximately $22 million based
on  an  interpretation  of the CEGAT order that the Company strongly believes is
incorrect.  This  action  was  stopped  by  an interim ruling of the High Court,
Mumbai  on  writ  petition  filed  by  the  Company. Both the Department and the
Company  filed  appeals with the Supreme Court of India against the order of the
CEGAT, and both appeals have been admitted.  The Company has also applied for an
expedited  hearing  and  is  awaiting  a  ruling  by  the  Supreme Court on this
application.  The Company and its customer have agreed to pursue the issuance of
documentation  from  the  Ministry  of   Petroleum  that,  if  accepted  by  the
Department, would reduce the duty to nil. The agreement further provides that if
this  reduction  is not obtained by December 31, 2001, the customer will pay the
duty  up  to a limit of $7.7 million. The Company does not expect, in any event,
that  the  ultimate  liability,  if  any,  resulting from the matter will have a
material  adverse  effect  on  its  business or consolidated financial position.

     The  Company  is  a defendant in Bryant, et al. v. R&B Falcon Drilling USA,
Inc.,  et  al.  in the United States District Court for the Southern District of
Texas,  Houston  Division.  R&B  Falcon  Drilling USA is a wholly owned indirect
subsidiary  of  R&B  Falcon. In this suit, the plaintiffs allege that R&B Falcon
Drilling  USA,  the  Company and a number of other offshore drilling contractors
with  operations  in  the  U.S.  Gulf  of Mexico have engaged in a conspiracy to
depress  wages  and  benefits  paid  to certain of their offshore employees. The
plaintiffs  contend that this alleged conduct violates federal antitrust law and
constitutes unfair trade practices and wrongful employment acts under state law.
The  plaintiffs  sought  treble  damages, attorneys' fees and costs on behalf of
themselves  and  an  alleged class of offshore workers, along with an injunction
against  exchanging  certain  wage  and  benefit information with other offshore
drilling  contractors  named  as defendants. In May 2001, the Company reached an
agreement  in  principle  with  the  plaintiffs'  counsel  to settle all claims,
pending  Court  approval  of  the settlement. In July 2001, before the Court had
considered  the  proposed settlement, the case, along with a number of unrelated
cases  also  pending  in  the  federal  court in Galveston, was transferred to a
federal judge sitting in Houston as a docket equalization measure. The judge has
granted  preliminary approval of the proposed settlement, and the parties are in
the  process  of  notifying class members. The terms of the settlement have been
reflected  in the Company's results of operations for the first quarter of 2001.
The  settlement  did  not  have  a  material  adverse  effect on its business or
consolidated  financial  position.

     In  October  2001,  the  Company  was  notified  by  the U.S. Environmental
Protection  Agency  ("EPA")  that  the  EPA  had  identified a subsidiary of the
Company  as  a potentially responsible party in connection with the Palmer Barge
Line superfund site located in Port Arthur, Jefferson County, Texas. The EPA has
not  yet  provided substantive information to the Company relating to the extent
of  the  pollution at the site, the remediation costs incurred to date or future
estimated  remediation  costs.  The  Company does not know at this time how many
other  potentially  responsible  parties  have  been  identified by the EPA. The
Company  continues  to  investigate  the  matter.

     The Company has certain actions or claims pending that have been previously
discussed  and reported in the Company's Annual Report on Form 10-K for the year
ended  December 31, 2000 and Quarterly Report on Form 10-Q for the quarter ended
June  30,  2001  and  the  Company's other reports filed with the Securities and
Exchange  Commission.  There  have  been  no   material  developments  in  these
previously  reported matters. The Company and its subsidiaries are involved in a
number of other lawsuits, all of which have arisen in the ordinary course of the
Company's business. The Company does not believe that the ultimate liability, if
any,  resulting  from  any  such  other  pending litigation will have a material
adverse  effect  on  its  business  or  consolidated  financial  position.

     The  Company  cannot predict with certainty the outcome or effect of any of
the litigation matters specifically described above or of any such other pending
litigation.  There can be no assurance that the Company's belief 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  6.  Exhibits  and  Reports  on  Form  8-K

          (a) Exhibits

      The  following  exhibits  are  filed  in  connection  with  this  Report:

Number                              Description
------                              -----------

*2.1    Agreement  and Plan of Merger dated as of August 19, 2000 by and among
        Transocean  Sedco  Forex  Inc., Transocean Holdings Inc., TSF Delaware
        Inc.and  R&B  Falcon Corporation (incorporated by reference to Annex A
        to  the  Joint  Proxy  Statement/Prospectus  dated  October  30,  2000
        included in a 424(b)(3) prospectus filed by the Company on November 1,
        2000)

*3.1    Memorandum  of  Association of Transocean Sedco Forex 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  the  Company  on  November  1,  2000)

*3.2    Articles  of  Association  of  Transocean Sedco Forex 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  the  Company  on  November  1,  2000)

*  Incorporated  by  reference  as  indicated.

     (b)     Reports  on  Form  8-K

     The  Company  filed a Current Report on Form 8-K on July 31, 2001 to report
the  availability of drilling rig status and contract information as of July 31,
2001, a Current Report on Form 8-K on August 8, 2001 to disclose certain dayrate
trends  and  other  financial  information  in  accordance with Regulation FD, a
Current  Report  on  Form  8-K  on August 30, 2001 to report the availability of
drilling rig status and contract information as of August 30, 2001 and a Current
Report  on Form 8-K on September 28, 2001 to report the availability of drilling
rig  status  and  contract  information  as  of  September  28,  2001.


<PAGE>
                                   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 November 12, 2001.


                                          TRANSOCEAN SEDCO FOREX INC.


                                     By:  /s/  Robert  L.  Long
                                         -----------------------------
                                               Robert  L.  Long
                                               Executive Vice President and
                                                 Chief  Financial Officer
                                               (Principal  Financial  Officer)


                                     By:  /s/  Ricardo H. Rosa
                                         -----------------------------
                                               Ricardo  H. Rosa
                                               Vice  President and Controller
                                               Principal Accounting Officer)


<PAGE>