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

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                             ______________________

                                    FORM 10-Q
(Mark One)
[X]     QUARTERLY  REPORT  PURSUANT  TO  SECTION  13  OR 15(D) OF THE SECURITIES
        EXCHANGE  ACT  OF  1934

                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2004

                                       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 INC.
             (Exact name of registrant as specified in its charter)
                             ______________________

               CAYMAN ISLANDS                                66-0582307
        (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
                                                     ---        ---

     Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes  X      No
                                                ---         ---

     As of October 29, 2004, 321,166,523 ordinary shares, par value $0.01 per
share, were outstanding.

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


<PAGE>
<TABLE>
<CAPTION>
                                 TRANSOCEAN INC.

                               INDEX TO FORM 10-Q

                        QUARTER ENDED SEPTEMBER 30, 2004

                                                                                    Page
                                                                                    ----
<S>                                                                                 <C>

PART I - FINANCIAL INFORMATION
------------------------------

     ITEM 1. Financial Statements (Unaudited)

          Condensed Consolidated Statements of Operations
            Three and Nine Months Ended September 30, 2004 and 2003. . . . . . . .     1

          Condensed Consolidated Statements of Comprehensive Income
            Three and Nine Months Ended September 30, 2004 and 2003. . . . . . . .     2

          Condensed Consolidated Balance Sheets
            September 30, 2004 and December 31, 2003 . . . . . . . . . . . . . . .     3

          Condensed Consolidated Statements of Cash Flows
            Three and Nine Months Ended September 30, 2004 and 2003. . . . . . . .     4

          Notes to Condensed Consolidated Financial Statements . . . . . . . . . .     5

     ITEM 2. Management's Discussion and Analysis of Financial
           Condition and Results of Operations . . . . . . . . . . . . . . . . . .    20

     ITEM 3. Quantitative and Qualitative Disclosures About Market Risk. . . . . .    45

     ITEM 4. Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . .    46

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

     ITEM 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . .    47

     ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds . . . . .    47

     ITEM 5. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . .    47

     ITEM 6. Exhibits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    48
</TABLE>


<PAGE>
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

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

                                                            Three Months Ended         Nine Months Ended
                                                               September 30,             September 30,
                                                          ------------------------  -----------------------
<B>                                                          2004         2003         2004         2003
                                                          -----------  -----------  -----------  ----------
<S>                                                       <C>          <C>          <C>          <C>
Operating Revenues
  Contract drilling revenues                              $    607.1   $    597.0   $  1,789.5   $ 1,759.2
  Other revenues                                                44.7         25.9        147.5        83.6
-----------------------------------------------------------------------------------------------------------
                                                               651.8        622.9      1,937.0     1,842.8
-----------------------------------------------------------------------------------------------------------
Costs and Expenses
  Operating and maintenance                                    432.9        403.0      1,251.5     1,203.6
  Depreciation                                                 133.9        126.8        398.4       381.1
  General and administrative                                    15.2         21.2         44.3        50.0
  Impairment loss on long-lived assets                             -            -            -        16.8
  Gain from sale of assets, net                                 (1.3)        (0.9)       (28.9)       (2.9)
  Gain from TODCO offerings                                   (129.4)           -       (168.8)          -
-----------------------------------------------------------------------------------------------------------
                                                               451.3        550.1      1,496.5     1,648.6
-----------------------------------------------------------------------------------------------------------


Operating Income                                               200.5         72.8        440.5       194.2

Other Income (Expense), net
  Equity in earnings of joint ventures                           1.7          1.9          7.7         7.3
  Interest income                                                2.5          3.0          6.5        15.7
  Interest expense                                             (42.6)       (49.0)      (132.6)     (154.4)
  Loss on retirement of debt                                       -            -        (28.1)      (15.7)
  Impairment loss on note receivable from related party            -            -            -       (21.3)
  Other, net                                                     0.1         (0.2)         0.4        (3.5)
-----------------------------------------------------------------------------------------------------------
                                                               (38.3)       (44.3)      (146.1)     (171.9)
-----------------------------------------------------------------------------------------------------------


Income Before Income Taxes and Minority Interest               162.2         28.5        294.4        22.3
Income Tax Expense                                               6.3         17.3         74.2         8.3
Minority Interest                                                1.0          0.2         (5.4)        0.3
-----------------------------------------------------------------------------------------------------------


Net Income                                                $    154.9   $     11.0   $    225.6   $    13.7
===========================================================================================================


Earnings Per Share
  Basic and Diluted                                       $     0.48   $     0.03   $     0.70   $    0.04
===========================================================================================================


Weighted Average Shares Outstanding
  Basic                                                        320.9        319.9        320.7       319.8
-----------------------------------------------------------------------------------------------------------
  Diluted                                                      325.3        321.1        324.5       321.4
-----------------------------------------------------------------------------------------------------------
</TABLE>

                             See accompanying notes.


                                        1
<PAGE>
<TABLE>
<CAPTION>
                                       TRANSOCEAN INC. AND SUBSIDIARIES
                           CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                                 (In millions)
                                                  (Unaudited)

                                                                   Three Months Ended       Nine Months Ended
                                                                      September 30,            September 30,
                                                                ------------------------  -----------------------
                                                                   2004         2003         2004         2003
                                                                -----------  -----------  -----------  ----------
<S>                                                             <C>          <C>          <C>          <C>

Net Income                                                      $    154.9   $     11.0   $    225.6   $    13.7
-----------------------------------------------------------------------------------------------------------------
Other Comprehensive Income, net of tax
  Amortization of gain on terminated interest rate swaps                 -         (0.1)        (0.2)       (0.2)
  Change in unrealized loss on securities available for sale           0.2         (0.1)         0.1         0.1
  Change in share of unrealized loss in unconsolidated joint
    venture's interest rate swaps (net of tax expense of $0.4
    and $1.0 for the three and nine months ended
    September 30, 2003, respectively)                                    -          0.7            -         1.8
   Minimum pension liability adjustments (net of tax
     expense of  $0.2 and $0.4 for the nine months ended
     September 30, 2004 and 2003, respectively)                       (0.1)           -          0.4         0.8
-----------------------------------------------------------------------------------------------------------------
Other Comprehensive Income                                             0.1          0.5          0.3         2.5
-----------------------------------------------------------------------------------------------------------------
Total Comprehensive Income                                      $    155.0   $     11.5   $    225.9   $    16.2
=================================================================================================================
</TABLE>

                             See accompanying notes.


                                        2
<PAGE>
<TABLE>
<CAPTION>
                                  TRANSOCEAN INC. AND SUBSIDIARIES
                                CONDENSED CONSOLIDATED BALANCE SHEETS
                                (In millions, except per share data)


                                                                               September 30,    December 31,
                                                                                   2004             2003
                                                                              ---------------  --------------
                                                                                (Unaudited)
<S>                                                                           <C>              <C>
                                             ASSETS

Cash and Cash Equivalents                                                     $        775.8   $       474.0
Accounts Receivable, net of allowance for doubtful accounts of $14.9
  and $29.1 at September 30, 2004 and December 31, 2003, respectively                  503.6           480.3
Materials and Supplies, net of allowance for obsolescence of $18.4 and $17.5
  at September 30, 2004 and December 31, 2003, respectively                            150.1           152.0
Deferred Income Taxes                                                                   35.6            41.0
Other Current Assets                                                                    41.7            31.6
-------------------------------------------------------------------------------------------------------------
    Total Current Assets                                                             1,506.8         1,178.9
-------------------------------------------------------------------------------------------------------------


Property and Equipment                                                              10,672.3        10,673.0
Less Accumulated Depreciation                                                        2,988.9         2,663.4
-------------------------------------------------------------------------------------------------------------
    Property and Equipment, net                                                      7,683.4         8,009.6
-------------------------------------------------------------------------------------------------------------


Goodwill                                                                             2,257.1         2,230.8
Investments in and Advances to Joint Ventures                                            4.1             5.5
Deferred Income Taxes                                                                   30.0            28.2
Other Assets                                                                           222.6           209.6
-------------------------------------------------------------------------------------------------------------
    Total Assets                                                              $     11,704.0   $    11,662.6
=============================================================================================================


                                    LIABILITIES AND SHAREHOLDERS' EQUITY

Accounts Payable                                                              $        180.2   $       146.1
Accrued Income Taxes                                                                    48.3            57.2
Debt Due Within One Year                                                               386.7            45.8
Other Current Liabilities                                                              295.8           262.0
-------------------------------------------------------------------------------------------------------------
    Total Current Liabilities                                                          911.0           511.1
-------------------------------------------------------------------------------------------------------------

Long-Term Debt                                                                       2,674.7         3,612.3
Deferred Income Taxes                                                                   85.5            42.8
Other Long-Term Liabilities                                                            320.5           299.4
-------------------------------------------------------------------------------------------------------------
    Total Long-Term Liabilities                                                      3,080.7         3,954.5
-------------------------------------------------------------------------------------------------------------

Commitments and Contingencies

Minority Interest                                                                      263.7             4.4

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,
    321,071,783 and 319,926,500 shares issued and outstanding at
    September 30, 2004 and December 31, 2003, respectively                               3.2             3.2
Additional Paid-in Capital                                                          10,673.9        10,643.8
Accumulated Other Comprehensive Loss                                                   (19.9)          (20.2)
Retained Deficit                                                                    (3,208.6)       (3,434.2)
-------------------------------------------------------------------------------------------------------------
    Total Shareholders' Equity                                                       7,448.6         7,192.6
-------------------------------------------------------------------------------------------------------------
    Total Liabilities and Shareholders' Equity                                $     11,704.0   $    11,662.6
=============================================================================================================
</TABLE>

                             See accompanying notes.


                                        3
<PAGE>
<TABLE>
<CAPTION>
                                       TRANSOCEAN INC. AND SUBSIDIARIES
                                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                 (In millions)
                                                  (Unaudited)

                                                              Three Months Ended        Nine Months Ended
                                                                  September 30,           September 30,
                                                            ------------------------  -----------------------
<B>                                                            2004         2003         2004         2003
                                                            -----------  -----------  -----------  ----------
<S>                                                         <C>          <C>          <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income                                                $    154.9   $     11.0   $    225.6   $    13.7
  Adjustments to reconcile net income to
   net cash provided by operating activities
     Depreciation                                                133.9        126.8        398.4       381.1
     Stock- based compensation expense                             4.2          1.4         17.7         4.3
     Deferred income taxes                                        (7.6)        19.1         20.4       (40.4)
     Equity in earnings of joint ventures                         (1.7)        (1.9)        (7.7)       (7.3)
     Net (gain)/loss from disposal of assets                       1.4          4.4        (23.6)       12.2
     Gain from TODCO offerings                                  (129.4)           -       (168.8)          -
     Loss on retirement of debt                                      -            -         28.1        15.7
     Impairment loss on long-lived assets                            -            -            -        16.8
     Impairment loss on note receivable from related party           -            -            -        21.3
     Amortization of debt-related discounts/premiums, fair
       value adjustments and issue costs, net                     (5.1)        (8.2)       (17.6)      (16.1)
     Deferred income, net                                          1.0         (5.3)        15.1        (6.9)
     Deferred expenses, net                                       (5.8)        (5.1)       (18.5)       (2.4)
     Other long-term liabilities                                  (1.5)         0.2          5.4        13.7
     Other, net                                                    3.7          6.7         (0.6)       11.8
     Changes in operating assets and liabilities
       Accounts receivable                                         8.6        (44.0)       (23.2)        7.6
       Accounts payable and other current liabilities             61.0         48.2         61.1        46.6
       Income taxes receivable/payable, net                        3.4         (8.0)         5.4         1.6
       Other current assets                                        5.0         14.3        (10.6)       (9.0)
-------------------------------------------------------------------------------------------------------------
Net Cash Provided by Operating Activities                        226.0        159.6        506.6       464.3
-------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES
   Capital expenditures                                          (45.1)       (22.4)       (99.8)      (72.6)
   Note issued to related party, net of repayments                   -          1.1            -       (44.2)
   Proceeds from disposal of assets, net                           4.3          0.9         46.3         4.1
   Deepwater Drilling II LLC's cash acquired, net of cash
    paid                                                             -            -            -        18.1
   Proceeds from TODCO offerings                                 269.9            -        425.6           -
   Joint ventures and other investments, net                       4.3          0.5          9.0         2.7
-------------------------------------------------------------------------------------------------------------
Net Cash Provided by (Used in) Investing Activities              233.4        (19.9)       381.1       (91.9)
-------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES
   Repayments on revolving credit agreements                         -            -       (200.0)          -
   Repayments on other debt instruments                          (11.8)       (48.0)      (407.0)     (967.2)
   Cash from termination of interest rate swaps                      -            -            -       173.5
   Net proceeds from issuance of ordinary shares under
    stock-based compensation plans                                 5.0          0.6         20.0        12.3
   Other, net                                                      1.1            -          1.1         1.1
-------------------------------------------------------------------------------------------------------------
Net Cash Used in Financing Activities                             (5.7)       (47.4)      (585.9)     (780.3)
-------------------------------------------------------------------------------------------------------------


Net Increase (Decrease) in Cash and Cash Equivalents             453.7         92.3        301.8      (407.9)
-------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at Beginning of Period                 322.1        714.0        474.0     1,214.2
-------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Period                  $    775.8   $    806.3   $    775.8   $   806.3
=============================================================================================================
</TABLE>

                             See accompanying notes.


                                        4
<PAGE>
                        TRANSOCEAN INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

NOTE 1 - NATURE OF BUSINESS AND PRINCIPLES OF CONSOLIDATION

     Transocean  Inc.  (together  with our subsidiaries and predecessors, unless
the  context requires otherwise, "Transocean," "we," "us" or "our") is a leading
international  provider  of  offshore contract drilling services for oil and gas
wells. As of September 30, 2004, we owned, had partial ownership interests in or
operated 94 mobile offshore and barge drilling units, excluding the 70-rig fleet
of  TODCO  (together  with its subsidiaries and predecessors, unless the context
requires  otherwise,  "TODCO"),  a  publicly  traded  company in which we have a
majority  voting  interest. We contract our drilling rigs, related equipment and
work  crews  primarily  on  a  dayrate basis to drill oil and gas wells. We also
provide  additional  services, including integrated well services and management
of  third  party  well  service  activities.

     On  January  31,  2001,  we completed a merger transaction (the "R&B Falcon
merger")  with R&B Falcon Corporation ("R&B Falcon"). At the time of the merger,
R&B  Falcon  owned,  had  partial  ownership interests in, operated or had under
construction  more  than  100  mobile  offshore  drilling  units  consisting  of
drillships,  semisubmersibles, jackup rigs and other units including the Gulf of
Mexico  Shallow  and  Inland Water segment fleet. 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  acquiror.

     In  July  2002,  we  announced plans to pursue a divestiture of our Gulf of
Mexico  Shallow  and  Inland Water business, which was a part of R&B Falcon. R&B
Falcon's  overall  business  was  considerably  broader  than the Gulf of Mexico
Shallow and Inland Water business. In preparation for this divestiture, we began
the  transfer of all assets and businesses out of R&B Falcon that were unrelated
to  the  Gulf of Mexico Shallow and Inland Water business. In December 2002, R&B
Falcon  changed  its  name  to  TODCO  and,  in January 2004, the Gulf of Mexico
Shallow  and Inland Water business segment became known as the TODCO segment. In
February  2004,  we completed an initial public offering ("IPO") of TODCO and in
September  2004  we  completed  a  secondary  offering  (see Note 3). Before the
closing  of  the  IPO,  TODCO completed the transfer of all unrelated assets and
businesses  to  us.

     Our  operations  are  aggregated into two reportable business segments: (i)
Transocean  Drilling and (ii) TODCO. We provide services with different types of
drilling  equipment in several geographic regions. The location of our operating
assets  and  the  allocation of resources to build or upgrade drilling units are
determined  by  the  activities  and  needs  of  customers.  See  Note  9.

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

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Basis  of  Presentation - Our accompanying condensed consolidated financial
statements  have  been  prepared  without  audit  in  accordance with accounting
principles  generally  accepted  in  the  United  States  for  interim financial
information  and with the instructions to Form 10-Q and Article 10 of Regulation
S-X  of the Securities and Exchange Commission ("SEC"). Accordingly, pursuant to
such  rules  and  regulations,  these  financial  statements  do not include all
disclosures required by accounting principles generally accepted in the U.S. for
complete  financial  statements.  The


                                        5
<PAGE>
                        TRANSOCEAN INC. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (Unaudited)

condensed  consolidated financial statements reflect all adjustments, which are,
in  the  opinion  of  management, necessary for a fair presentation of financial
position,  results  of  operations  and cash flows for the interim periods. Such
adjustments  are  considered to be of a normal recurring nature unless otherwise
identified.  Operating results for the three and nine months ended September 30,
2004  are not necessarily indicative of the results that may be expected for the
year  ending  December  31,  2004  or  for  any  future period. The accompanying
condensed  consolidated financial statements and notes thereto should be read in
conjunction with the audited consolidated financial statements and notes thereto
included in our Annual Report on Form 10-K for the year ended December 31, 2003.

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

     Stock-Based Compensation - Through December 31, 2002 and in accordance with
the  provisions  of  SFAS  123,  Accounting for Stock-Based Compensation, we had
elected to follow Accounting Principles Board Opinion ("APB") 25, Accounting for
Stock  Issued  to  Employees,  and related interpretations in accounting for our
employee  stock-based  compensation plans. Effective January 1, 2003, we adopted
the  fair  value recognition provisions of SFAS 123 using the prospective method
proscribed in SFAS 148, Accounting for Stock-Based Compensation - Transition and
Disclosure.  Under  the  prospective  method,  employee stock-based compensation
awards granted on or subsequent to January 1, 2003 are expensed over the vesting
period  based  on  the fair value of the underlying awards on the date of grant.
The fair value of the stock options is determined using the Black-Scholes option
pricing  model,  while  the  fair value of restricted stock grants is determined
based on the market price of our stock on the date of grant. Additionally, stock
appreciation  rights  are  recorded at fair value with the changes in fair value
being  recorded  as  compensation  expense as incurred. Stock-based compensation
awards  granted  prior  to  January  1, 2003, if not subsequently modified, will
continue to be accounted for under the recognition and measurement provisions of
APB  25.


                                        6
<PAGE>
                        TRANSOCEAN INC. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (Unaudited)

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

<TABLE>
<CAPTION>
                                                                      Three Months Ended        Nine Months Ended
                                                                         September 30,            September 30,
                                                                   ------------------------  -----------------------
                                                                      2004         2003         2004         2003
                                                                   -----------  -----------  -----------  ----------
<S>                                                                <C>          <C>          <C>          <C>
Net Income as Reported                                             $    154.9   $     11.0   $    225.6   $    13.7
  Add back: Stock-based compensation expense included in
    reported net income, net of related tax effects                       3.2          0.1         12.5         2.6

  Deduct: Total stock-based compensation expense
    determined under the fair value method for all awards, net of
    related tax effects
      Long-Term Incentive Plan                                           (4.0)        (4.2)       (17.4)      (12.5)
      Employee Stock Purchase Plan                                       (0.6)         0.4         (2.0)       (1.7)

                                                                   -----------  -----------  -----------  ----------
Pro Forma Net Income                                               $    153.5   $      7.3   $    218.7   $     2.1
                                                                   ===========  ===========  ===========  ==========

Basic Earnings Per Share
  As Reported                                                      $     0.48   $     0.03   $     0.70   $    0.04
  Pro Forma                                                              0.48         0.02         0.68        0.01

Diluted Earnings Per Share
  As Reported                                                      $     0.48   $     0.03   $     0.70   $    0.04
  Pro Forma                                                              0.47         0.02         0.67        0.01
</TABLE>

     New  Accounting  Pronouncements - In April 2004, the FASB issued FASB Staff
Position  ("FSP")  129-1,  Disclosure  of  Information  about Capital Structure,
Relating  to  Contingently  Convertible  Securities,  which  applies  to  all
contingently  convertible securities and became effective the date of issue. The
FSP  requires  disclosure  of  the  nature  of the contingency and the potential
impact  of  conversion  on  the financial statements, particularly the impact on
earnings  per  share,  and  whether  the  securities  have  been included in the
entity's  calculation  of diluted earnings per share. The implementation of this
FSP  did  not  have an effect on our condensed consolidated financial statements
and  related  notes  thereto  as  our  disclosures  are  in  accordance with the
disclosure  requirements  as  stated  in  this  FSP.

     In September 2004, the Emerging Issues Task Force ("EITF") of the Financial
Accounting  Standards Board ("FASB") reached a consensus on issue No. 04-08, The
Effect  of  Contingently  Convertible  Instruments on Diluted Earnings per Share
("EITF  04-08"),  which is effective for reporting periods ending after December
15, 2004. Contingently convertible instruments within the scope of this EITF are
instruments  that  contain conversion features that are contingently convertible
or exercisable based on (a) a market price trigger or (b) multiple contingencies
if  one  of the contingencies is a market price trigger for which the instrument
may be converted or share settled based on meeting a specified market condition.
The  EITF  requires  companies  to  include  shares  issuable  under convertible
instruments  in diluted earnings per share computations (if dilutive) regardless
of  whether the market price trigger (or other contingent feature) has been met.
In  addition,  prior period earnings per share amounts presented for comparative
purposes  must be restated. The EITF would not have had an effect on our diluted
earnings  per  share  for  the years ended December 31, 2003, 2002 and 2001, the
nine  months  ended  September  30,  2004 or for the three and nine months ended
September  30,  2003.  For  the  three  months ended September 30, 2004, diluted
earnings  per  share would have been reduced by $0.01.  We will adopt EITF 04-08
as  of December 31, 2004 and do not expect adoption to have a material effect on
our  earnings  per  share  for  the  year  then  ending.


                                        7
<PAGE>
                        TRANSOCEAN INC. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (Unaudited)

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

NOTE  3  -  TODCO  OFFERINGS

     Initial  Public  Offering - In February 2004, we completed the TODCO IPO in
which  we sold 13.8 million shares of TODCO's class A common stock, representing
approximately  23  percent  of  TODCO's  total outstanding shares, at $12.00 per
share.  We received net proceeds of $155.7 million from the IPO and recognized a
gain  of  $39.4  million ($0.12 per diluted share) in the first quarter of 2004,
which represented the excess of net proceeds received over the net book value of
the  TODCO  shares  sold  in  the  IPO.

     We  entered  into various agreements with TODCO to set forth our respective
rights  and  obligations relating to our businesses and to effect the separation
of  our  two companies. These agreements included a master separation agreement,
tax sharing agreement, employee matters agreement, transition services agreement
and  registration  rights  agreement.

     As  a  result  of  the  deconsolidation  of  TODCO  from  our  other  U.S.
subsidiaries  for  U.S. federal income tax purposes in conjunction with the IPO,
we  established  in  the first quarter of 2004 an initial valuation allowance of
approximately  $31.0  million  ($0.09  per  diluted share) against the estimated
deferred  tax  assets of TODCO in excess of its deferred tax liabilities, taking
into  account  prudent and feasible planning strategies as required by SFAS 109,
Accounting  for  Income  Taxes.  In  the  third  quarter of 2004, we reduced the
initial  valuation  allowance  by approximately $14.0 million ($0.04 per diluted
share) as a result of changes in our estimate of the ultimate utilization of the
benefits  from  the  tax  sharing  agreement  with  TODCO. This reduction in the
valuation  allowance  excludes  other  partially  offsetting  adjustments to our
overall  valuation allowance that were included in the computation of the annual
effective  tax  rate. The ultimate amount of such valuation allowance could vary
significantly depending upon a number of factors, including the final allocation
of  tax  benefits between TODCO and our other subsidiaries under applicable law,
taxable  income  for  calendar  year  2004 and our ability to implement planning
strategies  under  SFAS  109.

     In  conjunction with the closing of the TODCO IPO, TODCO granted restricted
stock  and  stock  options  to  certain  of  its  employees  under its long-term
incentive  plan  and  certain  of  these  awards vested at the time of grant. In
accordance  with  the  provisions  of  SFAS  123,  TODCO  expects  to  recognize
compensation  expense of approximately $17.0 million over the vesting periods of
the  awards. TODCO recognized approximately $6.0 million ($0.02 per Transocean's
diluted share) in the first quarter of 2004 as a result of the immediate vesting
of  certain  awards.  TODCO  will amortize the remaining amount of approximately
$11.0  million  to  compensation  expense  over  the  next  three  years  with
approximately  $5.0  million  to  be  recognized  over the remainder of 2004 and
approximately  $5.0  million and $1.0 million to be recognized in 2005 and 2006,
respectively.  In  addition, certain of TODCO's employees held options that were
granted  prior to the IPO to acquire our ordinary shares. In accordance with the
employee  matters  agreement, these options were modified at the IPO date, which
resulted in the accelerated vesting of the options and the extension of the term
of  the  options  through  the  original contractual life. TODCO recognized $1.5
million additional compensation expense in the first quarter of 2004 as a result
of  the  modification.

     Secondary  Offering  -  In September 2004, we completed the TODCO secondary
offering  in  which we sold 17.9 million shares of TODCO's class A common stock,
representing  approximately  30  percent of TODCO's total outstanding shares, at
$15.75  per share. We received net proceeds of $269.9 million from the secondary
offering  and  recognized  a gain of $129.4 million ($0.40 per diluted share) in
the third quarter of 2004, which represented the excess of net proceeds received
over  the  net  book  value  of the TODCO shares sold in the secondary offering.
After  the  secondary  offering,  we  hold an approximate 47 percent interest in
TODCO, represented by 28.3 million shares of class B common stock. Each share of
our class B common stock has five votes per share compared to one vote per share
of  class  A  common  stock. We have approximately 82 percent of the outstanding
voting  interest in TODCO. We consolidate TODCO in our financial statements as a
business  segment,  and that portion of TODCO that we do not own is reflected as
minority  interest  in  our  condensed consolidated statements of operations and
balance  sheets.


                                        8
<PAGE>
                        TRANSOCEAN INC. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (Unaudited)

NOTE  4  -  ASSET  DISPOSITIONS,  RETIREMENTS  AND  IMPAIRMENTS

     Asset Dispositions and Retirements - In June 2004, we completed the sale of
a  semisubmersible  rig,  the  Sedco  602, for net proceeds of $28.0 million and
recognized  a  gain of $21.6 million ($0.07 per diluted share), which had no tax
effect,  in  our  Transocean  Drilling  segment.

     During  the  nine  months  ended  September  30, 2004, we settled insurance
claims and sold marine support vessels and certain other assets for net proceeds
of  $18.3  million.  We recorded net gains of $1.9 million ($1.3 million, net of
tax)  in  our  Transocean  Drilling  segment and $5.4 million ($0.02 per diluted
share),  which  had  no  tax  effect,  in  our  TODCO  segment.

     In  January  2003,  we completed the sale of the jackup rig RBF 160 for net
proceeds  of  $13.1 million and recognized a gain of $0.3 million ($0.2 million,
net  of  tax)  in our Transocean Drilling segment. The proceeds were received in
December  2002.

     During  the  nine  months ended September 30, 2003, we settled an insurance
claim  and  sold  certain  other  assets  for  net  proceeds of $4.1 million. We
recorded  net  gains  of $2.1 million ($1.9 million, or $0.01 per diluted share,
net  of  tax) in our Transocean Drilling segment and $0.5 million ($0.3 million,
net  of  tax)  in  our  TODCO  segment.

     Impairments  - During the nine months ended September 30, 2003, we recorded
non-cash impairment charges of $5.2 million ($0.02 per diluted share), which had
no tax effect, in our Transocean Drilling segment associated with the removal of
two  rigs  from drilling service and the value assigned to leases on oil and gas
properties  that  we  intended to discontinue.  The determination of fair market
value was based on an offer from a potential buyer, in the case of the two rigs,
and  management's assessment of fair value, in the case of the leases on oil and
gas  properties  for  which  third  party  valuations  were  not  available.

     During  the  nine  months  ended  September  30, 2003, we recorded non-cash
impairment  charges  of $11.6 million ($7.6 million, or $0.02 per diluted share,
net of tax) in our TODCO segment associated with the removal of five jackup rigs
from  drilling  service  and  the  write down in the value of an investment in a
joint venture to fair value. The determination of fair market value was based on
third  party  valuations,  in  the  case  of  the  jackup rigs, and management's
assessment  of  fair value, in the case of the investment in a joint venture for
which  third  party  valuations  were  not  available.

NOTE 5 - 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. There is no
expected relationship between the provision for or benefit from income taxes and
income  or  loss before income taxes because the countries have taxation regimes
that  vary  not  only  with  respect  to  nominal rate, but also in terms of the
availability  of  deductions,  credits and other benefits. Variations also arise
because  income  earned  and  taxed  in  any particular country or countries may
fluctuate  from  year to year. Transocean Inc., a Cayman Islands company, is not
subject  to  income  tax  in  the  Cayman  Islands.

     The  effective  tax  rate for the three and nine months ended September 30,
2004  varies largely as a result of items included in income before income taxes
and minority interest for which there is no tax expense. These items include the
gains from TODCO offerings, losses on retirement of debt and portions of the net
gains  from  sale  of  assets.  Included in our tax expense for the three months
ended  September  30,  2004  is  an  approximately  $10.0 million additional tax
expense  that  resulted  from  the increase in our expected annual effective tax
rate  during  the third quarter. In addition, changes in our valuation allowance
also  impact  the  effective  tax  rate.  See  Note  3.


                                        9
<PAGE>
                        TRANSOCEAN INC. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (Unaudited)

     The  effective  tax  rate for the three and nine months ended September 30,
2003  varies in part as a result of items included in income before income taxes
and  minority interest for which there is no tax expense or for which a specific
tax rate is applied as a result of the tax jurisdiction to which the transaction
relates.  The items that have no tax expense include loss on retirement of debt,
TODCO  IPO-related  costs  recognized as expense and a portion of the impairment
losses  on  long-lived  assets.  The  items  that  are  taxed  in  specific  tax
jurisdictions primarily include a portion of the impairment losses on long-lived
assets,  losses  on  retirement  of  certain  assets, a portion of the losses on
retirement  of  debt  and an impairment loss on a note receivable from a related
party.

     As a result of our estimates related to the ultimate disposition of certain
pre-acquisition  tax  contingencies arising prior to our merger with Sedco Forex
Holdings  Limited  effective  December  31,  1999,  we recorded $26.3 million of
additional  goodwill  during  the  nine  months  ended  September  30,  2004.

NOTE 6 - DEBT

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

<TABLE>
<CAPTION>
                                                                             September 30,   December 31,
                                                                                  2004           2003
                                                                             --------------  -------------
<S>                                                                          <C>             <C>

6.75% Senior Notes, due April 2005                                           $        354.8  $       361.2
7.31% Nautilus Class A1 Amortizing Notes - final maturity May 2005                     30.8           63.6
6.95% Senior Notes, due April 2008                                                    266.3          269.5
9.5% Senior Notes, due December 2008                                                   11.2          357.3
800 Million Revolving Credit Agreement - final maturity December 2008                  50.0          250.0
6.625% Notes, due April 2011                                                          788.7          797.3
7.375% Senior Notes, due April 2018                                                   250.4          250.4
Zero Coupon Convertible Debentures, due May 2020 (put options exercisable
  May 2008 and May 2013)                                                               16.9           16.5
1.5% Convertible Debentures, due May 2021 (put options exercisable May
  2006, May 2011 and May 2016)                                                        400.0          400.0
8% Debentures, due April 2027                                                         198.2          198.1
7.45% Notes, due April 2027 (put options exercisable April 2007)                       95.0           94.8
7.5% Notes, due April 2031                                                            597.5          597.5
Other                                                                                   1.6            1.9
                                                                             --------------  -------------
Total Debt                                                                          3,061.4        3,658.1
Less Debt Due Within One Year                                                         386.7           45.8
                                                                             --------------  -------------
Total Long-Term Debt                                                         $      2,674.7  $     3,612.3
                                                                             ==============  =============
</TABLE>


                                       10
<PAGE>
                        TRANSOCEAN INC. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (Unaudited)


     The scheduled maturity of our debt, at face value, assumes the bondholders
exercise  their  options  to  require  us  to  repurchase  the  1.5% Convertible
Debentures,  7.45%  Notes  and  Zero  Coupon Convertible Debentures in May 2006,
April  2007  and  May  2008,  respectively,  and  is  as  follows (in millions):

<TABLE>
<CAPTION>
                                                      Twelve Months
                                                          Ending
                                                      September 30,
                                                      --------------
<S>                                                   <C>

                     2005                             $        382.2
                     2006                                      400.4
                     2007                                      100.0
                     2008                                      269.0
                     2009                                       60.2
                     Thereafter                              1,750.0
                                                      --------------
                       Total                          $      2,961.8
                                                      ==============
</TABLE>

     Commercial Paper Program - We have a revolving credit agreement, described
below,  which,  together  with  previous  revolving  credit agreements, provided
liquidity  for  commercial  paper borrowings during 2003. Because we believe our
current cash balances and the revolving credit agreement described below provide
us  with  adequate  liquidity, we terminated our Commercial Paper Program during
the  first  quarter  of  2004.

     Revolving  Credit Agreements - We are party to an $800.0 million five-year
revolving credit agreement (the "Revolving Credit Agreement") dated December 16,
2003.  The  Revolving  Credit Agreement bears interest, at our option, at a base
rate or London Interbank Offered Rate ("LIBOR") plus a margin that can vary from
0.35  percent  to  0.95  percent  depending  on  our  non-credit enhanced senior
unsecured  public  debt rating. At September 30, 2004, the applicable margin was
0.5  percent.  A  facility  fee  varying  from  0.075  percent  to 0.225 percent
depending  on  our  non-credit  enhanced senior unsecured public debt rating, is
incurred  on  the  daily  amount  of  the underlying commitment, whether used or
unused,  throughout  the  term  of  the  facility.  At  September  30, 2004, the
applicable facility fee was 0.125 percent. A utilization fee of 0.125 percent is
payable  if amounts outstanding under the Revolving Credit Agreement are greater
than  $264.0 million. At September 30, 2004, $50.0 million was outstanding under
the  Revolving  Credit  Agreement.

     The  Revolving Credit Agreement requires compliance with various covenants
and  provisions  customary  for agreements of this nature, including an earnings
before  interest,  taxes,  depreciation  and amortization ("EBITDA") to interest
coverage  ratio,  as  defined by the credit agreement, of not less than three to
one, a debt to total tangible capital ratio, as defined by the credit agreement,
of  not  greater  than  50 percent, and limitations on creating liens, incurring
debt,  transactions with affiliates, sale/leaseback transactions and mergers and
sale  of  substantially  all  assets.

     In  December  2003,  TODCO entered into a $75.0 million two-year revolving
credit  agreement (the "TODCO Revolving Credit Agreement"), which will reduce to
$60.0  million  in  December  2004.  The  TODCO Revolving Credit Agreement bears
interest,  at  TODCO's  option,  at a base rate plus a margin of 2.50 percent or
LIBOR  plus a margin of 3.50 percent.  Utilization of the facility is limited by
a  borrowing  base.  Commitment  fees  on the unused portion of the facility are
1.50  percent  of  the  average  daily  balance  and  are payable quarterly.  At
September  30,  2004,  there were no borrowings under the TODCO Revolving Credit
Agreement. The TODCO Revolving Credit Agreement requires compliance with various
covenants  and  provisions  customary  for  similar agreements of non-investment
grade  facilities.  TODCO's  Revolving Credit Agreement is not guaranteed by us.

     Debt  Redeemed,  Retired and Repurchased - In March 2004, we completed the
redemption  of  our  $289.8  million aggregate principal amount outstanding 9.5%
Senior  Notes  due December 2008 at the make-whole premium price provided in the
indenture.  We  redeemed  these notes at 127.796 percent of face value or $370.3
million,  plus


                                       11
<PAGE>
                        TRANSOCEAN INC. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (Unaudited)

accrued  and  unpaid interest. We recognized an after-tax loss on the redemption
of debt of $28.1 million ($0.09 per diluted share) in the first quarter of 2004,
which  reflected  adjustments  for fair value of the debt at the date of the R&B
Falcon  merger  and  the unamortized fair value adjustment on the termination of
the  related  interest  rate  swap.  We funded the redemption with existing cash
balances,  which  included  proceeds from the TODCO IPO.  The redemption did not
affect  the 9.5% Senior Notes due December 2008 of TODCO, which had an aggregate
principal  amount  outstanding  of  $10.2  million  at  September  30,  2004.

     In May 2003, we repurchased and retired all of the $50.0 million principal
amount  outstanding  9.41%  Nautilus  Class A2 Notes due May 2005 and funded the
repurchase  from  existing  cash balances. We recognized a loss on retirement of
debt  of  $5.5 million ($3.6 million, or $0.01 per diluted share, net of tax) in
the  second  quarter  of  2003.

     In May 2003, holders of our Zero Coupon Convertible Debentures due May 24,
2020  had  the  option  to require us to repurchase their debentures. Holders of
$838.6 million aggregate principal amount, or approximately 97 percent, of these
debentures  exercised  this  option,  and  we  repurchased their debentures at a
repurchase  price of $628.57 per $1,000 principal amount. Under the terms of the
debentures,  we had the option to pay for the debentures with cash, our ordinary
shares  or  a  combination  of cash and shares, and we elected to pay the $527.2
million  repurchase  price from existing cash balances. We recognized additional
expense  of  $10.2  million  ($0.03  per  diluted share) as an after-tax loss on
retirement of debt in the second quarter of 2003 to fully amortize the remaining
debt  issue  costs  related  to  the  repurchased  debentures.

     In  April  2003,  we  repaid the entire $239.5 million aggregate principal
amount  outstanding  6.5%  Senior  Notes, of which $5.0 million principal amount
outstanding  was  the  obligation of TODCO, plus accrued and unpaid interest, in
accordance  with their scheduled maturity. We funded the repayment from existing
cash  balances.

NOTE  7  -  INTEREST  RATE  SWAPS

     In January 2003, we terminated swaps and associated fair value hedges with
respect  to  our 6.75% Senior Notes due April 2005, 6.95% Senior Notes due April
2008 and 9.5% Senior Notes due December 2008. In March 2003, we terminated swaps
with respect to our 6.625% Notes. As a result of these terminations, we received
cash  proceeds,  net  of  accrued  interest,  of  $173.5  million  that had been
recognized  in  connection with the associated fair value hedges as a fair value
adjustment  to  the  underlying long-term debt in our consolidated balance sheet
and  the  fair  value  adjustment  is being amortized as a reduction to interest
expense  over  the  remaining  life of the underlying debt. During the three and
nine  months  ended  September 30, 2004, such reduction amounted to $5.8 million
($0.02  per  diluted  share)  and  $18.2  million  ($0.06  per  diluted  share),
respectively.  During  the  three and nine months ended September 30, 2003, such
reduction  amounted  to $6.5 million ($0.02 per diluted share) and $16.5 million
($0.05  per  diluted  share), respectively. As a result of the redemption of our
9.5%  Senior Notes in March 2004, we recognized $22.0 million of the unamortized
fair value adjustment as a reduction to our loss on redemption of debt (see Note
6).

     At  September  30,  2004  and  December  31,  2003,  we had no outstanding
interest  rate  swaps.

NOTE  8  -  SEGMENTS

     Our operations are aggregated into two reportable segments: (i) Transocean
Drilling  and  (ii) TODCO. The Transocean Drilling segment consists of floaters,
jackups  and  other  rigs  used  in  support of offshore drilling activities and
offshore  support services. The TODCO segment consists of our interest in TODCO,
which  conducts  jackup,  drilling  barge,  land  rig,  submersible  and  other
operations  located  in  the  U.S.  Gulf  of  Mexico  and inland waters, Mexico,
Trinidad  and  Venezuela.  We  provide services with different types of drilling
equipment  in  several  geographic  regions.  The  location  of our rigs and the
allocation of resources to build or upgrade rigs is determined by the activities
and  needs  of  customers.  Accounting  policies of the segments are the same as
those described in Note 2 within "Item 8. Financial Statements and Supplementary
Data" included in our Annual Report on Form 10-K for the year ended December 31,
2003.  We  account  for  intersegment  revenue  and  expenses, if any, as if the
revenue  or  expenses  were  to  third  parties  at  current  market  prices.


                                       12
<PAGE>
                        TRANSOCEAN INC. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (Unaudited)

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

<TABLE>
<CAPTION>
                                                        Three Months Ended        Nine Months Ended
                                                           September 30,            September 30,
                                                     ------------------------  -----------------------
                                                        2004         2003         2004         2003
                                                     -----------  -----------  -----------  ----------
<S>                                                  <C>          <C>          <C>          <C>
Operating Revenues
  Transocean Drilling                                $    558.7   $    564.4   $  1,689.4   $ 1,675.6
  TODCO                                                    93.1         58.5        247.6       167.2
                                                     -----------  -----------  -----------  ----------
    Total Operating Revenues                         $    651.8   $    622.9   $  1,937.0   $ 1,842.8
                                                     -----------  -----------  -----------  ----------

Operating Income (Loss) Before General and
    Administrative Expense
  Transocean Drilling (a)                            $    218.1   $    118.9   $    523.5   $   347.1
  TODCO (b)                                                (2.4)       (24.9)       (38.7)     (102.9)
                                                     -----------  -----------  -----------  ----------
                                                          215.7         94.0        484.8       244.2
Unallocated general and administrative expense            (15.2)       (21.2)       (44.3)      (50.0)
Unallocated other expense, net                            (38.3)       (44.3)      (146.1)     (171.9)
                                                     -----------  -----------  -----------  ----------
  Income Before Income Taxes and Minority Interest   $    162.2   $     28.5   $    294.4   $    22.3
                                                     ===========  ===========  ===========  ==========
</TABLE>

_______________
(a)  The  three  and nine months ended September 30, 2004 include gains from the
     TODCO  offerings  of  $129.4  million  and  $168.8  million,  respectively.
(b)  The three and nine months ended September 30, 2004 include $6.9 million and
     $26.3  million,  respectively,  of  operating  and maintenance expense that
     TODCO  classifies as general and administrative expense. The three and nine
     months  ended  September  30,  2003 include $3.9 million and $11.2 million,
     respectively, of operating and maintenance expense that TODCO classifies as
     general  and  administrative  expense.

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

<TABLE>
<CAPTION>
                                Three Months Ended      Nine Months Ended
                                   September 30,           September 30,
                              ----------------------  ---------------------
                                 2004        2003        2004       2003
                              ----------  ----------  ----------  ---------
<S>                           <C>         <C>         <C>         <C>

Transocean Drilling           $    110.0  $    103.9  $    326.4  $   311.9
TODCO                               23.9        22.9        72.0       69.2
                              ----------  ----------  ----------  ---------
  Total Depreciation Expense  $    133.9  $    126.8  $    398.4  $   381.1
                              ==========  ==========  ==========  =========
</TABLE>

     Total assets by segment were as follows (in millions):

<TABLE>
<CAPTION>
                                          September 30,   December 31,
                                               2004           2003
                                          --------------  -------------
<S>                                       <C>             <C>

Transocean Drilling                       $     10,964.0  $    10,874.0
TODCO                                              740.0          788.6
                                          --------------  -------------
  Total Assets                            $     11,704.0  $    11,662.6
                                          ==============  =============
</TABLE>


                                       13
<PAGE>
                        TRANSOCEAN INC. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (Unaudited)

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

<TABLE>
<CAPTION>
                                Three Months Ended      Nine Months Ended
                                   September 30,          September 30,
                              ----------------------  ---------------------
                                 2004        2003        2004       2003
                              ----------  ----------  ----------  ---------
<S>                           <C>         <C>         <C>         <C>

Transocean Drilling           $     42.6  $     20.4  $     93.6  $    67.5
TODCO                                2.5         2.0         6.2        5.1
                              ----------  ----------  ----------  ---------
  Total Capital Expenditures  $     45.1  $     22.4  $     99.8  $    72.6
                              ==========  ==========  ==========  =========
</TABLE>

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,
                                                    ----------------------  ---------------------
                                                       2004        2003        2004       2003
                                                    ----------  ----------  ----------  ---------
<S>                                                 <C>         <C>         <C>         <C>
NUMERATOR FOR BASIC AND DILUTED EARNINGS PER
  SHARE
Net Income for Basic and Diluted Earnings per
  Share                                             $    154.9  $     11.0  $    225.6  $    13.7
                                                    ==========  ==========  ==========  =========

DENOMINATOR FOR DILUTED EARNINGS PER SHARE
Weighted-average shares outstanding for basic
  earnings per share                                     320.9       319.9       320.7      319.8
Effect of dilutive securities:
  Employee stock options and unvested stock grants         2.8         0.9         2.3        1.1
  Warrants to purchase ordinary shares                     1.6         0.3         1.5        0.5
                                                    ----------  ----------  ----------  ---------
Adjusted weighted-average shares and assumed
  conversions for diluted earnings per share             325.3       321.1       324.5      321.4
                                                    ==========  ==========  ==========  =========

BASIC AND DILUTED EARNINGS PER SHARE
  Net Income                                        $     0.48  $     0.03  $     0.70  $    0.04
                                                    ==========  ==========  ==========  =========
</TABLE>

     Ordinary  shares subject to issuance pursuant to the conversion features of
the  convertible  debentures  are  not  included  in the calculation of adjusted
weighted-average  shares  and assumed conversions for diluted earnings per share
because  the  effect  of including those shares is anti-dilutive for all periods
presented.  Ordinary  shares  subject  to  issuance  pursuant  to the conversion
features  of  the  contingently  convertible  debentures are not included in the
calculation  of  adjusted  weighted-average  shares  and assumed conversions for
diluted  earnings  per  share  because  the  conversion  features  have not been
triggered  for  all  periods  presented  (see  Note  2).

NOTE  10  -  CONTINGENCIES

     Legal Proceedings - Several of our subsidiaries have been named, along with
other  defendants,  in  several  complaints  that have been filed in the Circuit
Courts  of  the  State  of  Mississippi  involving  over 700 persons that allege
personal  injury  arising  out  of  asbestos  exposure  in  the  course of their
employment  by  some  of  these defendants between 1965 and 1986. The complaints
also  name  as  defendants  certain  of  TODCO's subsidiaries to whom we may owe
indemnity  and  other unaffiliated defendant companies, including companies that
allegedly  manufactured  drilling  related products containing asbestos that are
the  subject  of  the  complaints.  The  number  of  unaffiliated  defendant


                                       14
<PAGE>
                        TRANSOCEAN INC. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (Unaudited)

companies  involved  in  each  complaint ranges from approximately 20 to 70. The
complaints  allege  that  the  defendant  drilling  contractors  used  those
asbestos-containing  products  in  offshore  drilling  operations,  land  based
drilling operations and in drilling structures, drilling rigs, vessels and other
equipment  and assert claims based on, among other things, negligence and strict
liability, and claims authorized under the Jones Act. The plaintiffs seek, among
other  things, awards of unspecified compensatory and punitive damages. Based on
a recent decision of the Mississippi Supreme Court, we anticipate that the trial
courts may grant motions requiring each plaintiff to name the specific defendant
or  defendants against whom such plaintiff makes a claim and the time period and
location of asbestos exposure so that the cases may be properly severed. We have
not  yet  had  an  opportunity to conduct any discovery nor have we been able to
determine  the  number  of  plaintiffs,  if  any,  that  were  employed  by  our
subsidiaries  or  otherwise have any connection with our drilling operations. We
intend  to  defend  ourselves  vigorously  and, based on the limited information
available  to  us  at  this time, we do not expect the ultimate outcome of these
lawsuits  to  have  a  material  adverse  effect on our business or consolidated
financial  position.

     In  1990  and  1991,  two  of  our  subsidiaries  were  served with various
assessments  collectively  valued  at  approximately  $5.8  million  from  the
municipality  of  Rio de Janeiro, Brazil to collect a municipal tax on services.
We  believe  that  neither subsidiary is liable for the taxes and have contested
the  assessments  in  the Brazilian administrative and court systems. In October
2001,  the  Brazil Supreme Court rejected our appeal of an adverse lower court's
ruling  with respect to a June 1991 assessment, which is valued at approximately
$5  million. We are continuing to challenge the assessment and have an action to
suspend  a  related  tax  foreclosure  proceeding.  We have received a favorable
ruling  in  connection with a disputed August 1990 assessment but the government
has  appealed  that  ruling.  We  also are awaiting a ruling from the Taxpayer's
Council  in  connection  with  an  October  1990 assessment. If our defenses are
ultimately unsuccessful, we believe that the Brazilian government-controlled oil
company,  Petrobras,  has a contractual obligation to reimburse us for municipal
tax  payments  required  to  be paid by them. We do not expect the liability, if
any,  resulting  from these assessments to have a material adverse effect on our
business  or  consolidated  financial  position.

     The  Indian Customs Department, Mumbai, filed a "show cause notice" against
one  of  our subsidiaries and various third parties in July 1999. The show cause
notice  alleged  that  the initial entry into India in 1988 and other subsequent
movements  of  the  Trident II jackup rig operated by the subsidiary constituted
imports  and  exports  for which proper customs procedures were not followed and
sought  payment  of  customs  duties  of  approximately  $31 million based on an
alleged  1998  rig  value  of  $49  million,  plus  interest  and penalties, and
confiscation  of  the  rig.  In  January 2000, the Customs Department issued its
order,  which  found  that  we had imported the rig improperly and intentionally
concealed  the  import from the authorities, and directed us to pay a redemption
fee  of  approximately $3 million for the rig in lieu of confiscation and to pay
penalties  of  approximately  $1  million  in  addition to the amount of customs
duties  owed.  In February 2000, we filed an appeal with the Customs, Excise and
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 our appeal on
February  2,  2001, and while it found that the rig was imported in 1988 without
proper documentation or payment of duties, the redemption fee and penalties were
reduced  to  less  than  $0.1  million  in view of the ambiguity surrounding the
import  practice  at the time and the lack of intentional concealment by us. The
CEGAT  further sustained our position regarding the value of the rig at the time
of import as $13 million and ruled that subsequent movements of the rig were not
liable  to  import documentation or duties in view of the prevailing practice of
the  Customs  Department,  thus  limiting  our  exposure  as to custom duties to
approximately  $6  million.  Following  the  CEGAT order, we tendered payment of
redemption,  penalty  and  duty  in  the amount specified by the order by offset
against  a  $0.6  million deposit and $10.7 million guarantee previously made by
us.  The Customs Department attempted to draw the entire guarantee, alleging the
actual  duty  payable is approximately $22 million based on an interpretation of
the  CEGAT  order  that  we  believe is incorrect. This action was stopped by an
interim  ruling  of  the High Court, Mumbai on writ petition filed by us. We and
the  Customs  Department  both  filed  appeals  with  the Supreme Court of India
against the order of the CEGAT, and both appeals have been admitted. The Supreme
Court  has  recently  dismissed  the  Customs Department appeal and affirmed the
CEGAT order but the Customs Department has not agreed with our interpretation of
that  order.  We  and our customer agreed to pursue and obtained the issuance of
documentation  from  the  Ministry of Petroleum that, if accepted by the Customs
Department,  would  reduce  the  duty  to  nil.  The


                                       15
<PAGE>
                        TRANSOCEAN INC. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (Unaudited)

agreement  with  the  customer  further  provided that if this reduction was not
obtained  by  the  end of 2001, our customer would pay the duty up to a limit of
$7.7  million.  The Customs Department did not accept the documentation or agree
to  refund  the  duties  already  paid. We are pursuing our remedies against the
Customs  Department  and  our customer. We do not expect, in any event, that the
ultimate  liability,  if  any,  resulting  from  the matter will have a material
adverse  effect  on  our  business  or  consolidated  financial  position.

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

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

     One  of  our  subsidiaries is involved in an action with respect to customs
penalties  relating  to the Sedco 710 semisubmersible drilling rig. Prior to our
merger  with  Sedco  Forex  Holdings Limited ("Sedco Forex"), this drilling rig,
which  was  working  for Petrobras in Brazil at the time, had been admitted into
the  country  on  a  temporary  basis  under authority granted to a Schlumberger
entity.  Prior  to  the merger with Sedco Forex at the end of 1999, the drilling
contract  was  moved  to an entity that would become one of our subsidiaries. In
early  2000, the drilling contract was extended for another year. On January 10,
2000,  the  temporary  import permit granted to the Schlumberger entity expired,
and  renewal  filings were not made until later that January. In April 2000, the
Brazilian  customs  authorities  cancelled  the  import permit. The Schlumberger
entity  filed an action in the Brazilian federal court of Campos for the purpose
of  extending  the temporary admission. Other proceedings were also initiated in
order  to  secure  the  transfer  of  the temporary admission to our subsidiary.
Ultimately,  the  court  permitted  the transfer to our entity but has not ruled
that  the  temporary  admission  could  be  extended  without  the  payment of a
financial  penalty. During the first quarter of 2004, the customs office renewed
its efforts to collect a penalty and issued a second assessment for this penalty
but  has now done so against our subsidiary. The assessment is for approximately
$50  million.  We  believe  that  the  amount of the assessment, even if it were
appropriate,  should  only be approximately $7.6 million and should in any event
be  assessed against the Schlumberger entity. We and Schlumberger are contesting
our  respective assessments. We have put Schlumberger on notice that we consider
any  assessment  to  be the responsibility of Schlumberger. We do not expect the
ultimate  outcome  of  this  matter  to  have  a  material adverse effect on our
business  or  consolidated  financial  position.

     We  are involved in a number of other lawsuits, all of which have arisen in
the  ordinary course of our business. We do not believe that ultimate liability,
if  any,  resulting  from any such other pending litigation will have a material
adverse  effect  on  our  business  or  consolidated  financial  position.

     Letters  of  Credit and Surety Bonds - We had letters of credit outstanding
totaling  $176.4  million  and $186.2 million at September 30, 2004 and December
31,  2003,  respectively.  These  letters  of  credit guarantee various contract
bidding  and  performance activities under various uncommitted lines provided by
several  banks.


                                       16
<PAGE>
                        TRANSOCEAN INC. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (Unaudited)

     As  is  customary  in  the contract drilling business, we also have various
surety  bonds  in  place  that  secure  customs  obligations  relating  to  the
importation  of  our  rigs and certain performance and other obligations. Surety
bonds outstanding totaled $21.6 million and $169.5 million at September 30, 2004
and December 31, 2003, respectively. The decrease in outstanding surety bonds is
primarily  attributable  to  the  expiration of three such bonds totaling $151.1
million  related  to  our  Brazil  operations.

NOTE 11 - SALE/LEASEBACK TRANSACTION

     We  lease the drillship M. G. Hulme, Jr. from Deep Sea Investors, L.L.C., a
special  purpose  entity  formed by several leasing companies to acquire the rig
from  one  of our subsidiaries in November 1995 in a sale/leaseback transaction.
We  are  obligated  to  pay  rent  of approximately $13 million per year through
November  2005.  At  the termination of the lease, we may purchase the rig for a
maximum  amount  of  approximately  $35.7 million. Effective September 2002, the
lease  neither  requires  that  collateral be maintained nor contains any credit
rating  triggers.

     Effective  December 31, 2003, we adopted and applied the provisions of FASB
Interpretation  ("FIN")  46,  Consolidation  of  Variable  Interest Entities, as
revised  December  31, 2003, for all variable interest entities. FIN 46 requires
the consolidation of variable interest entities in which an enterprise absorbs a
majority  of  the  entity's expected losses, receives a majority of the entity's
expected  residual  returns,  or  both, as a result of ownership, contractual or
other financial interests in the entity. Because the sale/leaseback agreement is
with  an  entity  in  which we have no direct investment, we are not entitled to
receive the financial statements of the leasing entity and the equity holders of
the leasing company will not release the financial statements or other financial
information  to  us  in  order  for  us to make the determination of whether the
entity  is  a  variable  interest  entity.  In  addition,  without the financial
statements,  we are unable to determine if we are the primary beneficiary of the
entity  and,  if so, what we would consolidate. We have no exposure to loss as a
result  of  the  sale/leaseback agreement. We currently account for the lease of
this  semisubmersible  drilling  rig  as  an  operating  lease.

NOTE 12 - RELATED PARTY TRANSACTIONS

     Delta  Towing  - TODCO owns a 25 percent interest in a joint venture, Delta
Towing  Holdings,  LLC  ("Delta  Towing"), and TODCO holds notes receivable from
Delta  Towing  with  a face amount of approximately $143.0 million, which at the
time  of  the  R&B  Falcon  merger  were  valued  at $80.0 million. Delta Towing
defaulted  on  the  notes  receivable  in  January  2003  by failing to make its
scheduled  quarterly interest payment and remained in default as a result of its
continued  failure  to  make  its  quarterly  interest  payments. As a result of
TODCO's  continued evaluation of the collectibility of the notes, TODCO recorded
an  impairment on the notes receivable of $21.3 million ($13.8 million, or $0.04
per  diluted  share, net of tax) in June 2003 based on Delta Towing's discounted
cash flows over the terms of the notes, which deteriorated in the second quarter
of 2003 as a result of the continued decline in Delta Towing's business outlook.
In  September 2003, we established a reserve of $1.6 million for interest income
earned  during the third quarter on the notes receivable. During the nine months
ended  September  30,  2003,  we  earned  interest  income  related to the notes
receivable and the three-year revolving credit facility of $3.1 million and $0.2
million,  respectively.

     As  a  result  of the adoption of FIN 46 and a determination that TODCO was
the  primary  beneficiary  for  accounting  purposes  of  Delta  Towing,  TODCO
consolidated  Delta  Towing  effective  December  31,  2003  and  intercompany
transactions  and  accounts  have been eliminated, including the above described
notes  receivable.

     DDII  LLC  -  In  May  2003, WestLB AG, one of the lenders in the Deepwater
Frontier  synthetic  lease  financing  facility,  assigned  its  $46.1  million
remaining  promissory  note  receivable  to  us  in  exchange  for cash of $46.1
million.  Also  in  May  2003,  but  subsequent  to the WestLB AG assignment, we
purchased  ConocoPhillips'  40  percent interest in Deepwater Drilling II L.L.C.
("DDII  LLC")  for  approximately $5.0 million. As a result of this purchase, we
consolidated  DDII  LLC  late  in  the  second  quarter of 2003. In addition, we
acquired  certain  drilling  and  other  contracts  from  ConocoPhillips  for
approximately  $9.0  million  in  cash.  Through September 30, 2003, we received
payments  on  the  promissory  note  receivable  of  $1.9  million.


                                       17
<PAGE>
                        TRANSOCEAN INC. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (Unaudited)

NOTE  13  -  RETIREMENT  PLANS  AND  OTHER  POSTEMPLOYMENT  BENEFITS

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

<TABLE>
<CAPTION>
                                                Three Months Ended        Nine Months Ended
                                                   September 30,            September 30,
                                             ------------------------  -----------------------
                                                2004         2003         2004         2003
                                             -----------  -----------  -----------  ----------
<S>                                          <C>          <C>          <C>          <C>
COMPONENTS OF NET PERIODIC BENEFIT COST (A)
  Service cost                               $      4.7   $      4.2   $     12.5   $    12.5
  Interest cost                                     4.1          4.8         12.4        14.0
  Expected return on plan assets                   (4.9)        (4.9)       (14.6)      (14.7)
  Amortization of transition obligation             0.1            -          0.2         0.2
  Amortization of prior service cost               (0.9)         0.3         (0.6)        1.0
  Recognized net actuarial losses                   1.5          0.1          2.8         0.3
  SFAS 88 settlements/curtailments                    -         (0.8)           -        (0.8)
                                             -----------  -----------  -----------  ----------
    Benefit cost                             $      4.6   $      3.7   $     12.7   $    12.5
                                             ===========  ===========  ===========  ==========
</TABLE>

______________
(a)  Amounts are before income tax effect.

     Due  to  an increase in the number of retirements, including the retirement
of an executive officer, and expected retirements in the fourth quarter of 2004,
we  have  revised  our estimated contributions for 2004. We expect to contribute
approximately  $14.0  million,  a  $4  million  increase from amounts previously
disclosed, to our defined benefit pension plans in 2004. Such contributions will
be  funded  from our cash flows from operations. As of September 30, 2004, $10.2
million  in  contributions  have been made to the defined benefit pension plans.

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

<TABLE>
<CAPTION>
                                               Three Months Ended        Nine Months Ended
                                                  September 30,            September 30,
                                             -----------------------  -----------------------
                                                2004         2003        2004         2003
                                             -----------  ----------  -----------  ----------
<S>                                          <C>          <C>         <C>          <C>
COMPONENTS OF NET PERIODIC BENEFIT COST (A)
 Service cost                                $      0.3   $      0.4  $      0.8   $     1.4
 Interest cost                                      0.5          0.9         1.6         2.6
 Amortization of prior service cost                (0.6)         0.1        (1.7)        0.3
 Recognized net actuarial losses                    0.3          0.4         1.1         1.0
 SFAS 88 settlements/curtailments                     -            -           -        (0.6)
                                             -----------  ----------  -----------  ----------
 Benefit cost                                $      0.5   $      1.8  $      1.8   $     4.7
                                             ===========  ==========  ===========  ==========
</TABLE>

______________
(a)  Amounts are before income tax effect.

     In  December  2003,  the  Medicare  Prescription  Drug,  Improvement  and
Modernization Act of 2003 (the "Medicare Act") was signed into law. The Medicare
Act  introduced  two  new  features  to Medicare that employers must consider in
determining  the  effect of the Medicare Act on their accumulated postretirement
benefit obligation (''APBO'') and net periodic post retirement benefit cost: (i)
a  subsidy  based  on  28  percent  of  an  individual


                                       18
<PAGE>
                        TRANSOCEAN INC. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (Unaudited)

beneficiary's  annual  prescription drug costs between $250 and $5,000, and (ii)
the  opportunity  for  a  retiree  to  obtain  a prescription drug benefit under
Medicare  that  is  at  least  actuarially  equivalent  to  Medicare  Part  D.

     In  May  2004,  the  FASB  staff  issued FASB Staff Position ("FSP") 106-2,
Accounting  and  Disclosure  Requirements  Related  to the Medicare Prescription
Drug, Improvement and Modernization Act of 2003. We adopted FSP 106-2, effective
July  1,  2004,  accounting  for  these  new  features  in  the  Medicare  Act
prospectively  as an actuarial gain to be amortized into income over the average
remaining  service  period  of  the  plan  participants.  The  adoption of these
requirements  did  not  have  a  material  impact  on our condensed consolidated
financial  position  or results of operations for the three or nine months ended
September  30,  2004.

NOTE 14 - SUBSEQUENT EVENTS

     6.75%  Senior  Note  Redemption  -  In October 2004, we redeemed our $342.3
million aggregate principal amount outstanding 6.75% Senior Notes due April 2005
at  the  make-whole  premium  price provided in the indenture. We redeemed these
notes  at  102.127  percent  of  face  value or $349.5 million, plus accrued and
unpaid  interest.  We  recognized a loss on the redemption of approximately $3.3
million,  which  reflects  adjustments for fair value of the debt at the date of
the R&B Falcon merger and the premium on the termination of the related interest
rate  swap.  We funded the redemption with existing cash on hand, which included
proceeds  from  the TODCO secondary offering.  The redemption did not affect the
6.75%  Senior  Notes  due  April 2005 of TODCO, which had an aggregate principal
amount  outstanding  of  $7.7  million  at  September  30,  2004.

     Tax  Matters  - In October 2004, we received from the U.S. Internal Revenue
Service  ("IRS")  examination reports setting forth proposed changes to the U.S.
federal income tax reported for the period 1999-2000. The proposed changes total
approximately  $195 million, exclusive of interest. The IRS has also notified us
of  its  intent  to  audit  our 2002 and 2003 tax years. While we have agreed to
certain  non-material adjustments, we believe our returns are materially correct
as  filed  and  intend  to  defend  ourselves  vigorously. While there can be no
assurance,  we  do  not  expect  the ultimate outcome to have a material adverse
effect  on  our  business  or  consolidated  financial  position.


                                       19
<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 unaudited
condensed  consolidated  financial  statements  included  herein  under "Item 1.
Financial  Statements" and the audited consolidated financial statements and the
notes  thereto  and  "Item  7. Management's Discussion and Analysis of Financial
Condition  and Results of Operations" included in our Annual Report on Form 10-K
for  the  year  ended  December  31,  2003.

OVERVIEW

     Transocean  Inc.  (together  with our subsidiaries and predecessors, unless
the  context requires otherwise, "Transocean," "we," "us" or "our") is a leading
international  provider  of  offshore contract drilling services for oil and gas
wells.  As  of October 29, 2004, we owned, had partial ownership interests in or
operated  94  mobile  offshore  and barge drilling units, excluding the fleet of
TODCO  (together  with  its  subsidiaries  and  predecessors, unless the context
requires  otherwise,  "TODCO"),  a  publicly  traded  company in which we have a
majority  voting  interest.  As  of  this  date,  our  fleet  included  32
High-Specification  semisubmersibles  and  drillships  ("floaters"),  25  Other
Floaters,  26  Jackup  Rigs  and  11 Other Rigs. As of October 29, 2004, TODCO's
fleet  consisted  of  24  jackup rigs, 30 drilling barges, nine land rigs, three
submersible  drilling  rigs  and  four  other  drilling  rigs.

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

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


<TABLE>
<CAPTION>
                                       Three Months Ended                 Nine Months Ended
                                          September 30,       Three         September 30,        Nine
                                    ------------------------  Months   -----------------------  Months
                                       2004         2003      Change      2004         2003     Change
                                    ------------------------  -------  -----------------------  -------
<S>                                 <C>          <C>          <C>      <C>          <C>         <C>
                                              (In millions, except dayrates and percentages)
Average dayrate (a)                 $   70,100   $   67,000   $ 3,100  $   70,400   $  67,100   $ 3,300
Utilization (b)                             57%          59%  N/A              57%         57%  N/A

STATEMENT OF OPERATIONS
Operating revenue                   $    651.8   $    622.9   $  28.9  $  1,937.0   $ 1,842.8   $  94.2
Operating and maintenance expense        432.9        403.0      29.9     1,251.5     1,203.6      47.9
Operating income                         200.5         72.8     127.7       440.5       194.2     246.3
Net income                               154.9         11.0     143.9       225.6        13.7     211.9
</TABLE>


<TABLE>
<CAPTION>
                                       September 30,   December 31,
                                            2004           2003        Change
                                       --------------  -------------  --------
                                                     (In millions)
<S>                                    <C>             <C>            <C>
BALANCE SHEET DATA (AT END OF PERIOD)
Cash                                   $        775.8  $       474.0  $ 301.8
Total Assets                                 11,704.0       11,662.6     41.4
Debt                                          3,061.4        3,658.1   (596.7)
</TABLE>

_____________________
"N/A" means not applicable.

(a)  Average  dayrate is defined as contract drilling revenue earned per revenue
     earning  day  in  the  period.
(b)  Utilization  is  defined as the total actual number of revenue earning days
     as  a  percentage  of  the  total  number  of  calendar days in the period.


                                       20
<PAGE>
     Our  revenue  and  operating  and  maintenance expenses for the nine months
ended  September  30, 2004 increased from the comparable period last year due to
the  current year effect of including the operations of the drillships Deepwater
Pathfinder  and  Deepwater  Frontier as a result of the 2003 acquisitions of the
portions  of  the Deepwater Drilling L.L.C. ("DD LLC") and Deepwater Drilling II
L.L.C.  ("DDII  LLC")  joint  ventures previously held by ConocoPhillips and the
subsequent payoff of the synthetic lease financing arrangements in late December
2003,  as  well  as  from  higher integrated services provided to our clients in
2004.  In  2003,  the  Discoverer  Enterprise riser incident negatively impacted
revenues  and  operating  and  maintenance  expense.  In  2004,  the  Discoverer
Enterprise  operating  and  maintenance  was  partially  reduced by an insurance
settlement  related  to  the  riser  incident  (see "-Significant Events"). Also
adding  to  the  increase  in  operating  and  maintenance  expense were repairs
resulting  from  a  fire on the jackup rig Trident 20 that occurred in the third
quarter  of  2004. Revenues were negatively impacted by suspended operations due
to  the  recently  concluded  strike in Norway, a fire on the Trident 20 and the
well  control  incident  on the semisubmersible rig Jim Cunningham, all of which
occurred  during  the third quarter of 2004. Our nine months ended September 30,
2004  financial  results  included  a  non-cash  charge  pertaining to a loss on
retirement  of debt partially offset by the recognition of a gain on the sale of
a  semisubmersible  rig.  We  also  recognized gains on the TODCO initial public
offering  ("IPO")  and  secondary  offering  that were partially offset by a tax
valuation  allowance adjustment and stock option expense recorded in relation to
the IPO (see "-Significant Events"). Cash increased during the nine months ended
September  30,  2004  primarily  as a result of proceeds received from the TODCO
offerings  and  cash  provided  by  operating  activities,  partially  offset by
repayments  on  debt  instruments  as  we continue to maintain our focus on debt
reduction.

     Our  operations are aggregated into two reportable segments: (i) Transocean
Drilling  and  (ii) TODCO. The Transocean Drilling segment consists of floaters,
jackups  and  other  rigs  used  in  support of offshore drilling activities and
offshore  support services. The TODCO segment consists of our interest in TODCO,
which  conducts  jackup,  drilling  barge,  land  rig,  submersible  and  other
operations  in  the  U.S. Gulf of Mexico and inland waters, Mexico, Trinidad and
Venezuela.  We  provide  services  with different types of drilling equipment in
several  geographic  regions.  The  location  of  our rigs and the allocation of
resources  to build or upgrade rigs is determined by the activities and needs of
our  customers.

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

SIGNIFICANT EVENTS

Transocean Drilling Segment

     Operational Incidents - In May 2003, we announced that a drilling riser had
separated  on our deepwater drillship Discoverer Enterprise and that the rig had
temporarily  suspended  drilling  operations  for  our customer. The rig resumed
operations  in  July  2003  and  we  resolved  a  disagreement with our customer
regarding  the  incident  in  early 2004, which had no significant effect on our
results  of operations. In June 2004, we finalized discussions with our insurers
relating  to  an  insurance claim for a portion of our losses stemming from this
incident  and  received  a


                                       21
<PAGE>
significant portion of an insurance settlement in June 2004 and the remainder in
August  2004, which had a favorable effect on pre-tax earnings of $13.4 million.

     In July 2004, members of the OFS, one of three unions representing offshore
workers in Norway, called a strike on our semisubmersible units operating in the
country.  OFS  called  the strike after it was unable to reach an agreement with
the Norwegian Shipowners Association, which represents rig owners in Norway. The
rigs  affected are the Polar Pioneer, Transocean Searcher and Transocean Leader.
The  strike has concluded after government intervention. The Transocean Searcher
and  Transocean  Leader  resumed operations in the Norwegian sector of the North
Sea  in  November 2004.  The Polar Pioneer is expected to commence operations in
November  2004  on  a  project  for  Statoil following the completion of planned
survey  and  upgrade  work.  Operating  income would have been an estimated $8.0
million  higher  absent  the  labor  strike.  See  "-Operating  Results."

     In  July  2004,  the jackup rig Trident 20 suffered damage resulting from a
fire  in  the  rig's  engine  room  while operating offshore Turkmenistan in the
Caspian  Sea.  The  rig  has  been  under a three-well contract. Pursuant to the
contract,  our  customer  has  the  right  to  terminate the contract. While the
contract has been suspended by the customer to allow time for rig repairs and we
expect  that  drilling will resume under the terms of the original contract upon
completion of the repairs, no assurances can be given that the contract will not
be  terminated.  The  rig  is  expected to be out of service the majority of the
fourth  quarter and we currently estimate the total repair, crew and other costs
to be approximately $18.0 million. Operating income would have been an estimated
$13.0  million  higher  absent  the  incident.  See  "-Operating  Results."

     In  August  2004, the semisubmersible rig Jim Cunningham experienced a well
control incident that resulted in a fire while operating offshore Egypt. The rig
is  expected  to  be  out  of  service  until  late in the fourth quarter and we
currently estimate the repair, crew and other costs to be between $9 million and
$14  million.  Operating income would have been an estimated $1.5 million higher
absent  the  incident.  See  "-Operating  Results."

     Asset  Dispositions  - In March 2004 we entered into an agreement to sell a
semisubmersible  rig,  the  Sedco  600,  for net proceeds of approximately $25.0
million.  We  expect  to  close the sale during the fourth quarter of 2004 after
completion  of  a  drilling  project.

     In  June  2004,  we  completed the sale of a semisubmersible rig, the Sedco
602,  for  net  proceeds of approximately $28.0 million and recognized a gain of
$21.6  million.

     Debt  Redemption - In March 2004, we completed the redemption of our $289.8
million  aggregate  principal  amount outstanding 9.5% Senior Notes due December
2008  at  the  make-whole  premium  price provided in the indenture. We redeemed
these notes at 127.796 percent of face value or $370.3 million, plus accrued and
unpaid  interest.  We  recognized an after-tax loss on the redemption of debt of
$28.1 million in the first quarter of 2004, which reflected adjustments for fair
value  of  the  debt  at  the  date of the merger ("R&B Falcon merger") with R&B
Falcon  Corporation  ("R&B Falcon") and the unamortized fair value adjustment on
the termination of the related interest rate swap. We funded the redemption with
existing  cash  balances,  which  included  proceeds  from  the  TODCO IPO.  The
redemption  did  not  affect  the  9.5% Senior Notes due December 2008 of TODCO,
which  had  an  aggregate  principal  amount  outstanding  of  $10.2  million at
September  30,  2004.

     In  October 2004, we redeemed our $342.3 million aggregate principal amount
outstanding  6.75%  Senior  Notes due April 2005 at the make-whole premium price
provided  in  the  indenture. We redeemed these notes at 102.127 percent of face
value  or $349.5 million, plus accrued and unpaid interest. We recognized a loss
on  the redemption of approximately $3.3 million, which reflects adjustments for
fair  value of the debt at the date of the R&B Falcon merger and the unamortized
fair  value adjustment on the termination of the related interest rate swap.  We
funded  the  redemption with existing cash on hand, which included proceeds from
the  TODCO  secondary  offering.  The redemption did not affect the 6.75% Senior
Notes  due  April  2005  of  TODCO,  which  had  an  aggregate  principal amount
outstanding  of  $7.7  million  at  September  30,  2004.

     IPO  and Secondary Offering - In February 2004, we completed the TODCO IPO,
in  which  we  sold  13.8  million  shares  of  TODCO's  class  A  common stock,
representing  approximately  23  percent  of  TODCO's  total


                                       22
<PAGE>
outstanding  shares,  at  $12.00  per  share. We received net proceeds of $155.7
million from the IPO and recognized a gain of $39.4 million in the first quarter
of  2004, which represents the excess of net proceeds received over the net book
value  of  the  TODCO  shares  sold  in the IPO. TODCO was formerly known as R&B
Falcon.  Before  the  closing of the IPO, TODCO transferred to us all assets and
businesses  unrelated  to TODCO's business. R&B Falcon's business was previously
considerably  broader  than  TODCO's  ongoing  business.

     As  a  result  of  the  deconsolidation  of  TODCO  from  our  other  U.S.
subsidiaries  for  U.S. federal income tax purposes in conjunction with the IPO,
we  established  an  initial valuation allowance in the first quarter of 2004 of
approximately  $31.0  million against the estimated deferred tax assets of TODCO
in  excess  of  its  deferred  tax  liabilities, taking into account prudent and
feasible  planning  strategies  as  required  by  Financial Accounting Standards
Board's  ("FASB")  Statement  of  Financial  Accounting  Standards ("SFAS") 109,
Accounting  for  Income  Taxes.  In  the  third  quarter of 2004, we reduced the
initial  valuation  allowance  by  approximately  $14.0  million  as a result of
changes in our estimate of the ultimate utilization of the benefits from the tax
sharing agreement with TODCO. This reduction in the valuation allowance excludes
other  partially  offsetting adjustments to our overall valuation allowance that
were included in the computation of the annual estimated effective tax rate. The
ultimate  amount  of such valuation allowance could vary significantly depending
upon a number of factors, including the final allocation of tax benefits between
TODCO  and  our  other  subsidiaries  under  applicable  law, taxable income for
calendar  year  2004  and our ability to implement tax planning strategies under
SFAS  109.

     In  conjunction with the closing of the TODCO IPO, TODCO granted restricted
stock  and  stock  options  to  certain  of  its  employees  under its long-term
incentive  plan  and  certain  of  these  awards vested at the time of grant. In
accordance  with  the  provisions  of  the  SFAS 123, Accounting for Stock-Based
Compensation,  TODCO  expects to recognize compensation expense of approximately
$17.0  million  over  the  vesting  periods  of  the  awards.  TODCO  recognized
approximately  $6.0  million  in  the  first  quarter of 2004 as a result of the
immediate vesting of certain awards. TODCO will amortize the remaining amount of
approximately  $11.0  million  to compensation expense over the next three years
with  approximately $5.0 million to be recognized over the remainder of 2004 and
approximately  $5.0  million and $1.0 million to be recognized in 2005 and 2006,
respectively.  In  addition, certain of TODCO's employees held options that were
granted  prior to the IPO to acquire our ordinary shares. In accordance with the
employee  matters  agreement, these options were modified, which resulted in the
accelerated  vesting of the options and the extension of the term of the options
through  the  original  contractual life. In connection with the modification of
these  options,  TODCO  recognized  approximately  $1.5  million  additional
compensation  expense  in  the  first  quarter  of  2004.

     In  September  2004, we completed the TODCO secondary offering, in which we
sold  17.9  million  shares  of  TODCO's  class  A  common  stock,  representing
approximately  30  percent  of  TODCO's  total outstanding shares, at $15.75 per
share.  We  received  net proceeds of $269.9 million from the secondary offering
and  recognized  a  gain  of  $129.4 million in the third quarter of 2004, which
represented  the  excess of net proceeds received over the net book value of the
TODCO  shares  sold  in  the  secondary  offering.

     As  of  October  29,  2004,  we  hold an approximate 47 percent interest in
TODCO,  represented  by 28.3 million shares of class B common stock, and we have
approximately 82 percent of the outstanding voting interest in TODCO. Each share
of  our  class  B common stock has five votes per share compared to one vote per
share  of  the  class  A  common  stock.  We  consolidate TODCO in our financial
statements  as a separate business segment and expect to continue to consolidate
TODCO  in  our  financial  statements  until we no longer have a majority voting
interest.

     Our  current  long-term  intent  is to dispose of our remaining interest in
TODCO,  which  could  be  achieved  through  a  number  of possible transactions
including  additional  public offerings, open market sales, sales to one or more
third  parties,  a  spin-off  to  our  shareholders,  split-off offerings to our
shareholders  that  would  allow  for the opportunity to exchange our shares for
shares  of TODCO class A common stock or a combination of these transactions. We
may  also  decide  to  convert  our  TODCO class B shares to class A shares, the
effect  of  which  would  be  that  we  would  no  longer hold a majority voting
interest.
`
     TODCO  Deferred  Tax  Charge - Under the tax sharing agreement entered into
between Transocean and TODCO at the time of the initial IPO of TODCO, Transocean
is  entitled  to  receive  from  TODCO  payment  for  the  tax


                                       23
<PAGE>
benefits  generated  prior to the IPO that TODCO utilizes subsequent to the IPO.
As  long  as  TODCO  is  included as a consolidated subsidiary of Transocean, we
follow  the provisions of SFAS 109 which allow us to evaluate the recoverability
of the deferred tax assets associated with the tax sharing agreement considering
the  deferred  tax  liabilities of TODCO. We have recorded a valuation allowance
for the excess of these deferred tax assets over the deferred tax liabilities of
TODCO,  also  taking  into  account  prudent and feasible planning strategies as
required  by  SFAS  109.  Once  we fall below a majority voting interest so that
TODCO  is no longer included as a consolidated subsidiary of Transocean, we will
no  longer  be  able  to  apply the provisions of SFAS 109 in accounting for the
utilization  of  our deferred tax assets. At that time, the receivable under the
tax  sharing  agreement  will  be accounted for as a contractual receivable from
TODCO  and we will write-off this receivable, which at September 30, 2004, would
have  resulted in a charge of approximately $166 million.  Under these rules the
write-off  is  necessary  as the future payments under the tax sharing agreement
are dependent on TODCO generating future taxable income, which cannot be assumed
until  such  income is actually generated.  In addition, once TODCO is no longer
included  as  a  consolidated  subsidiary  of  Transocean  in  its  consolidated
financial  statements,  future  payments  received  by  Transocean  from  the
utilization  by  TODCO  of the pre-IPO deferred tax assets will be recognized in
other  income  as  those  payments  are  received.

TODCO Segment

     Delta  Towing  - As a result of the adoption of FASB Interpretation ("FIN")
46  and  a  determination  that TODCO was the primary beneficiary for accounting
purposes  of TODCO's joint venture, Delta Towing Holdings, LLC ("Delta Towing"),
TODCO  consolidated  Delta Towing at December 31, 2003. Due to the consolidation
of  Delta  Towing,  operating  revenue  and  operating  and  maintenance expense
increased  during  the nine months ended September 30, 2004 by $21.9 million and
$19.4  million,  respectively.

Effective Tax Rate

     Tax  expense for the third quarter of 2004 totaled $6.3 million, or 3.9% of
pretax  income  for the quarter.  Tax expense decreased approximately $6 million
related to changes in estimates of prior tax years and approximately $14 million
related to the change in the initial TODCO valuation allowance.  Excluding these
decreases,  the  effective tax rate for 2004 is estimated to be approximately 44
percent  of  earnings  before items related to the TODCO offerings, loss on debt
retirements  and gains on significant asset sales, for which there is no related
tax  expense.  Applying  the  revised tax rate to income before income taxes and
minority  interest  for  the six months ended June 30, 2004 increased our income
tax expense for the quarter by approximately $10 million. The effective tax rate
increased  from approximately 35 percent estimated at June 30, 2004 primarily as
a  result  of  a change in the expected amount and geographical concentration of
income  for  the  remainder of 2004 and the impact of an increase in our overall
valuation  allowance associated with higher net operating loss carryforwards now
estimated  for  the  remainder  of  the  year  for  certain  subsidiaries.

OUTLOOK

     Drilling  Market - During the third quarter of 2004, oil prices remained at
levels  that  at  times  exceeded  record  highs.  While prices may decline from
current  levels,  we  expect  them  to remain strong in historical terms. Future
price  expectations  have  historically  been a key driver for offshore drilling
demand.  The  availability  of  quality drilling prospects, exploration success,
relative  production costs, the stage of reservoir development and political and
regulatory  environments  also  affect  our  customers'  drilling  programs.

     Prospects  for  our  High-Specification Floaters continue to gain strength.
While a few of these units will conclude contracts by the first half of 2005, we
are  increasingly  confident  that  most  of  the available time in 2005 will be
contracted.  However,  some  intermittent  idle  time  remains  a  possibility,
especially  for some of the lower capability rigs in this fleet.  We have signed
a  number  of  new contracts or extensions for our High-Specification fleet that
reflect  the  increased activity in this sector. The Sedco Express was awarded a
three-year  contract  for BP's Plutonio project in Angola, and the Paul B. Loyd,
Jr.  received  a  two-year  contract  extension. The Cajun Express was awarded a
210-day  contract  as  well as an additional two-year contract to begin in 2005.
The  Deepwater  Discovery  was  awarded  a  combined  three-well commitment, the
Deepwater  Navigator  was  awarded  a  240-day  extension  and the Sedco 709 was
awarded  a  two-well  contract. The Sovereign Explorer was awarded two contracts
totaling  320  days,  the  Deepwater


                                       24
<PAGE>
Pathfinder  was  awarded  a  new  estimated  475-day  contract  and the existing
contract  for the Discoverer Deep Seas was extended for one year. In addition, a
number  of  shorter term jobs were awarded to other High-Specification Floaters,
including  a  six-month  contract  in  the  Gulf  of  Mexico  for  the Deepwater
Millennium  and  a  120-day contract for the Transocean Marianas. We continue to
believe  that  over the long term deepwater exploration and development drilling
opportunities in the Gulf of Mexico, West Africa, India and other market sectors
represent a significant source of future deepwater rig demand, although the risk
of  project  delays  remains,  especially  in  West Africa. We continue to see a
strong  customer  preference  for  using  fifth-generation  equipment  in  these
deepwater  areas,  which  may  lead  to  a  near  term shortage of these highest
specification  rigs.

     The  outlook for activity for the non-U.S. jackup market sector is expected
to  remain  strong,  particularly  in  Asia and the Middle East. There remains a
current  overcapacity in the West Africa jackup sector, and we are repositioning
several  units  to  take  advantage of better opportunities.  The Trident VI has
moved  from West Africa to India and the Shelf Explorer will also move from West
Africa  to  Indonesia.  The  J.  T.  Angel is currently mobilizing from India to
South  East  Asia.  All three units are either under contract or are expected to
be  under  contract  in  the  near  term.

     The  outlook for our Other Floaters that operate in the mid-water sector is
improving  from the global oversupply position that has persisted throughout the
first  three  quarters  of  2004.  We  expect  overall  North Sea industry fleet
utilization to remain above recent seasonal norms when the winter season begins,
and there is a growing expectation that overall utilization and dayrates will be
higher  in 2005 compared to 2004. Demand in the Gulf of Mexico market sector has
risen  in  recent  months,  which  could cause some of the cold stacked units to
re-enter  the  market. In other regions, the Actinia recently relocated from the
Mediterranean  Sea  to  India  for  a  seven-month  program.

     We  expect  to  mobilize  the Shelf Explorer, the Transocean Rather and the
Deepwater  Pathfinder  during  the  fourth  quarter.  In  addition  to  these
mobilizations, we expect downtime to result from planned shipyards for the Polar
Pioneer,  Searex  10  and  J. T. Angel.  Also, the Trident 20 and Jim Cunningham
will  be  in  the  shipyard for repairs resulting from an engine room fire and a
well  control  incident,  respectively.  These  rig  mobilizations  and shipyard
projects  are  expected to have a negative impact on fourth quarter revenues and
related  earnings.

     TODCO expects the declining jackup rig supply in the U.S. Gulf Coast region
to  continue  to  support  higher  dayrates for its jackup fleet compared to the
beginning  of  the  year.  TODCO  has  also  seen  improvement  in  dayrates and
utilization  for  its  inland  barges  in  this  region.

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

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

     As of October 26, 2004, approximately 71 percent of our Transocean Drilling
segment fleet days were committed for the remainder of 2004 and approximately 45
percent  for  the  year  2005.


                                       25
<PAGE>
     Tax  Matters  -  We are a Cayman Islands company registered in Barbados. We
operate through our various subsidiaries in a number of countries throughout the
world.  Consequently,  we  are  subject  to  changes  in  tax laws, treaties and
regulations in and between the countries in which we operate, including treaties
that  the  U.S.  has  with  other  nations. A material change in these tax laws,
treaties or regulations, including those in and involving the U.S., could result
in  a  higher effective tax rate on our worldwide earnings. On October 22, 2004,
the  American Jobs Creation Act of 2004 (the "Act") was signed into law. The Act
contains  provisions  which  apply  to  certain  companies  which  undertook  a
transaction  commonly  known as an inversion after a specified date. Because our
reorganization  transaction  occurred  prior to the effective dates specified in
the  Act,  we  do  not  believe  there  should  be  any  adverse  impact  to us.
Additionally,  a  protocol  was  recently  signed  by  the U.S. and Barbados and
approved  by  the  U.S. Senate, which would amend the tax treaty between the two
countries.  We  do not expect the amendment to have a material adverse effect on
our  business  or  consolidated  financial  position.

     Our income tax returns are subject to review and examination in the various
jurisdictions  in  which  we operate. In October 2004, we received from the U.S.
Internal  Revenue  Service  ("IRS")  examination  reports setting forth proposed
changes  to  the  U.S. federal income tax reported for the period 1999-2000. The
proposed  changes  total  approximately $195 million, exclusive of interest. The
IRS  has  also notified us of its intent to audit our 2002 and 2003 tax years.
While we have agreed to certain non-material adjustments, we believe our returns
are materially correct as filed and intend to defend ourselves vigorously. While
there  can  be  no  assurance,  we  do not expect the ultimate outcome to have a
material  adverse  effect on our business or consolidated financial position. In
addition,  other tax authorities have examined the amounts of income and expense
subject  to  tax  in  their  jurisdiction  for  prior  periods. We are currently
contesting various non-U.S. assessments that have been asserted and would expect
to  contest  any future U.S. or non-U.S. assessments. While we cannot predict or
provide  assurance as to the final outcome of existing or future assessments, we
do  not  believe  that  the  ultimate  resolution  of  these asserted income tax
liabilities  will have a material adverse effect on our business or consolidated
financial  position.

     General  and  Administrative Expense - We expect general and administrative
expense to increase approximately $3 million to $4 million in the fourth quarter
of  2004 primarily as a result of compliance with the Sarbanes-Oxley Act of 2002
(the  "Sarbanes-Oxley  Act").

     Stock-Based  Compensation  Expense - As a result of the adoption in January
2003  of  the  fair  value  recognition  provisions  of SFAS 123, Accounting for
Stock-Based  Compensation,  using the prospective method prescribed by SFAS 148,
Accounting  for  Stock-Based  Compensation  Transition  and  Disclosure,  our
stock-based  compensation  expense is expected to increase in 2004. The increase
will result from the impact of a full year of expense related to our 2003 awards
that  were  granted in July 2003, compared to six months of expense in 2003, and
expense  related  to  our  2004  awards,  which  were  granted  in July 2004. As
stock-based  compensation  expense  is recognized over the vesting period of the
underlying  award,  we  expect  to  have  increases  in stock-based compensation
expense  in future periods until such periods have awards being both granted and
becoming  fully  vested.  In  addition, TODCO now has a long-term incentive plan
under  which  it  grants  stock  options  and  restricted  stock  to certain key
employees  (see "-Significant Events"). Awards made under this plan in 2004 will
result  in  an  increase  in  stock-based  compensation  expense  in  2004.


                                       26
<PAGE>
PERFORMANCE AND OTHER KEY INDICATORS

     Fleet  Utilization  and  Dayrates  -  The following table shows our average
dayrate and utilization for the quarterly periods ended on or prior to September
30,  2004.  Average  dayrate  is defined as contract drilling revenue earned per
revenue  earning  day  in the period. Utilization is defined as the total actual
number of revenue earning days in the period as a percentage of the total number
of  calendar  days  in  the  period  for  all  drilling  rigs  in  our  fleet.

<TABLE>
<CAPTION>
                                                     Three Months Ended
                                         --------------------------------------------
                                          September 30,    June 30,    September 30,
                                              2004           2004          2003
                                         ---------------  ----------  ---------------
<S>                                      <C>              <C>         <C>
Average Dayrates

Transocean Drilling Segment:
  High-Specification Floaters
    Fifth-Generation Deepwater Floaters  $      193,400   $ 177,800   $      176,600
    Other Deepwater Floaters             $      103,900   $ 107,800   $      112,500
    Other High-Specification Floaters    $      111,200   $ 115,500   $      117,200
  Total High-Specification Floaters      $      142,200   $ 141,100   $      142,200
  Other Floaters                         $       65,400   $  65,000   $       60,600
  Jackups                                $       52,500   $  52,700   $       54,400
  Other Rigs                             $       41,900   $  43,300   $       48,800
                                         ---------------  ----------  ---------------
Segment Total                            $       90,700   $  89,100   $       89,000
                                         ---------------  ----------  ---------------

                                         ---------------  ----------  ---------------
TODCO Segment                            $       27,800   $  26,200   $       19,300
                                         ---------------  ----------  ---------------

Total Drilling Fleet                     $       70,100   $  69,600   $       67,000
                                         ===============  ==========  ===============

Utilization

Transocean Drilling Segment:
  High-Specification Floaters
    Fifth-Generation Deepwater Floaters              83%         90%              97%
    Other Deepwater Floaters                         78%         70%              73%
    Other High-Specification Floaters                84%         75%              74%
  Total High-Specification Floaters                  81%         79%              82%
  Other Floaters                                     45%         45%              51%
  Jackups                                            81%         85%              85%
  Other Rigs                                         47%         46%              49%
                                         ---------------  ----------  ---------------
Segment Total                                        67%         68%              71%
                                         ---------------  ----------  ---------------

                                         ---------------  ----------  ---------------
TODCO Segment                                        44%         41%              44%
                                         ---------------  ----------  ---------------

Total Drilling Fleet                                 57%         56%              59%
                                         ===============  ==========  ===============
</TABLE>

     Contract  Drilling  Revenue  -  Our  contract  drilling  revenues are based
primarily  on  dayrates  received  for  our  drilling services and the number of
operating  days  during the relevant periods. The level of our contract drilling
revenue  depends on dayrates, which in turn are primarily a function of industry
supply  and demand for drilling units in the markets in which we operate. During
periods  of  high  demand,  our  rigs  typically  achieve higher utilization and
dayrates  than during periods of low demand. Some of our drilling contracts also
enable us to earn mobilization, contract preparation, capital upgrade, bonus and
demobilization  revenue.  Mobilization, contract preparation and capital upgrade
revenue  paid on a lump sum basis is recognized over the original contract term.
Bonus  and  demobilization  revenue  is  recognized  when  earned.


                                       27
<PAGE>
     Other  Revenue  -  Beginning  with  the  first  quarter  of  2004, we began
classifying our revenues into two categories: (1) contract drilling revenues and
(2)  other revenues, as other revenue became a more significant component of our
total  revenues.  Our  other  revenue  represents  client  reimbursable revenue,
integrated  services  revenue,  management  service  revenues,  revenues  from
operation  of  Delta  Towing's  fleet  of  marine  support  vessels  and  other
miscellaneous  revenues. From time to time, we provide well services in addition
to  our  normal  drilling  services through third party contractors. We refer to
these  other  services  as  integrated  services.

     Operating  and  Maintenance  Costs  -  Our  operating and maintenance costs
represent  all  direct  and  indirect  costs  associated  with the operation and
maintenance  of  our  drilling  rigs.  The principal elements of these costs are
direct  and indirect labor and benefits, repair and maintenance, insurance, boat
and  helicopter  rentals,  professional  and  technical  fees,  freight  costs,
communications,  customs  duties,  tool  rentals  and  services, fuel and water,
general  taxes  and  licenses. Labor, repair and maintenance and insurance costs
represent  the  most  significant  components  of  our operating and maintenance
costs.

     We  do  not  expect  operating  and  maintenance  expenses  to  necessarily
fluctuate in proportion to changes in operating revenues. Operating revenues may
fluctuate  as  a  function of changes in dayrate. However, costs for operating a
rig  are  generally  fixed or only semi-variable regardless of the dayrate being
earned.  In  addition,  should  our  rigs  incur idle time between contracts, we
typically  do  not de-man those rigs because we will use the crew to prepare the
rig for its next contract. During times of reduced activity, reductions in costs
may not be immediate as portions of the crew may be required to prepare our rigs
for  stacking,  after which time the crew members are assigned to active rigs or
dismissed.  In  addition, as our rigs are mobilized from one geographic location
to  another,  the  labor  and  other  operating  and  maintenance costs can vary
significantly.  In  general, labor costs increase primarily due to higher salary
levels  and  inflation.  Equipment maintenance expenses fluctuate depending upon
the  type  of  activity  the unit is performing and the age and condition of the
equipment. While our per occurrence deductible levels for our hull and machinery
and  our  protection  and indemnity policies remained unchanged from 2003 at $10
million,  we  increased our additional aggregate annual insurance deductible for
the  current policy year in an effort to reduce costs. This additional aggregate
annual  deductible of $20 million is applied after the per occurrence deductible
is  met  until it is fully utilized at which time the $10 million per occurrence
applies  for  all  remaining  claims  during  the  year.

     Depreciation  Expense  -  Our  depreciation  expense is based on estimates,
assumptions  and  judgments  relative  to  capitalized  costs,  useful lives and
salvage  values  of  our assets. We compute depreciation using the straight-line
method,  generally  after  allowing  for  salvage  values.

     General  and  Administrative  Expense  - General and administrative expense
includes  costs  related  to  our  corporate  executives,  directors,  investor
relations,  corporate accounting and reporting, information technology, internal
audit,  legal,  tax,  treasury,  risk  management  and human resource functions.

     Interest  Expense  -  Interest expense consists of interest associated with
our  senior  notes  and  other  debt  and  related  financing cost amortization.
Interest  expense  is  partially  offset  by  the amortization of the fair value
adjustments  on  interest  rate  swaps  terminated  during  2003.  We expect the
amortization  of  these  fair value adjustments to continue over the life of the
related  debt  instruments  (see  "-Derivative  Instruments").

     Income  Taxes  -  Provisions for income taxes are based on expected taxable
income,  statutory  rates  and tax planning opportunities available to us in the
various  jurisdictions  in  which  we  operate.  Taxable  income may differ from
pre-tax income for financial accounting purposes, particularly in countries with
revenue-based taxes. There is no expected relationship between the provision for
income  taxes  and  income before income taxes because the countries in which we
operate  have  different  taxation regimes. We provide a valuation allowance for
deferred  tax  assets  when  it  is more likely than not that some or all of the
benefit  from  the  deferred  tax  asset  will  not  be  realized.


                                       28
<PAGE>
FINANCIAL CONDITION

     SEPTEMBER 30, 2004 COMPARED TO DECEMBER 31, 2003

<TABLE>
<CAPTION>
                                September 30,   December 31,
                                     2004           2003        Change   % Change
                                --------------  -------------  --------  ---------
<S>                             <C>             <C>            <C>       <C>
                                       (In millions, except % change)
TOTAL ASSETS
  Transocean Drilling           $     10,964.0  $    10,874.0  $  90.0          1%
  TODCO                                  740.0          788.6    (48.6)       (6)%
                                --------------  -------------  --------  ---------
                                $     11,704.0  $    11,662.6  $  41.4         N/M
                                ==============  =============  ========  =========
</TABLE>

_________________
"N/M"  means  not  meaningful

     The  increase  in  Transocean  Drilling segment assets was primarily due to
increases in cash and cash equivalents ($268.0 million), property and equipment,
net  of  retirements  ($71.0  million),  goodwill  ($26.4  million),  accounts
receivable  ($22.2  million)  and  other  long-term assets ($24.1 million).  The
increase  in cash and cash equivalents resulted primarily from proceeds received
from  the  TODCO offerings ($425.6 million), net proceeds received from the sale
of  a  semisubmersible  rig  ($28.0 million) and cash from operations, partially
offset  by  repayments  of debt ($603.5 million) and capital expenditures ($93.6
million)  during  the  nine  months  ended  September  30, 2004. The increase in
goodwill  primarily  related to changes in our estimates related to our expected
disposition of certain income tax-related pre-acquisition contingencies, and the
increase  in  other  long-term assets related primarily to deferred mobilization
and  contract  prep  costs.  These  increases  were  partially  offset  by asset
depreciation  ($326.4  million).  The  decrease  in  TODCO  segment  assets  was
primarily  due  to depreciation ($72.0 million), partially offset by an increase
in  cash  and  cash  equivalents  ($33.8  million).

LIQUIDITY AND CAPITAL RESOURCES

     SOURCES AND USES OF CASH

<TABLE>
<CAPTION>
                                              Nine Months Ended
                                                September 30,
                                            ----------------------
                                               2004        2003      Change
                                            -----------  ---------  --------
<S>                                         <C>          <C>        <C>
                                                      (In millions)
NET CASH PROVIDED BY OPERATING ACTIVITIES
  Net income                                $    225.6   $    13.7  $ 211.9
  Depreciation                                   398.4       381.1     17.3
  Other non-cash items                          (150.1)       22.7   (172.8)
  Working capital                                 32.7        46.8    (14.1)
                                            -----------  ---------  --------
                                            $    506.6   $   464.3  $  42.3
                                            ===========  =========  ========
</TABLE>

     Net cash provided by operating activities increased $42.3 million due to an
increase  in  cash  generated  from net income adjusted for non-cash activity of
$56.4  million,  partially  offset  by  a  decrease  in cash provided by working
capital  items  of $14.1 million during the nine months ended September 30, 2004
as  compared  to  the  corresponding  prior  year  period.


                                       29
<PAGE>
<TABLE>
<CAPTION>
                                                         Nine Months Ended
                                                           September 30,
                                                      -----------------------
                                                         2004         2003      Change
                                                      -----------  ----------  --------
<S>                                                   <C>          <C>         <C>
                                                                 (In millions)
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
  Capital expenditures                                $    (99.8)  $   (72.6)  $ (27.2)
  Note issued to related party, net of repayments            -         (44.2)     44.2
  Proceeds from disposal of assets                          46.3         4.1      42.2
  DDII LLC's cash acquired, net of cash paid                 -          18.1     (18.1)
  Proceeds from TODCO offerings                            425.6          -      425.6
  Other, net                                                 9.0         2.7       6.3
                                                      -----------  ----------  --------
                                                      $    381.1   $   (91.9)  $ 473.0
                                                      ===========  ==========  ========
</TABLE>

     Net  cash  provided  by investing activities increased approximately $473.0
million  for  the  nine  months ended September 30, 2004 as compared to net cash
used  in  investing  activities  in  the  same  period in the previous year. The
increase  is primarily the result of proceeds from the TODCO offerings of $425.6
million  (see  "-Significant Events") combined with an increase in proceeds from
asset sales as compared to the corresponding prior year period, partially offset
by  an  increase  in current year capital expenditures. In addition, we acquired
ConocoPhillips'  40 percent interest in DDII LLC and issued a note receivable to
a  related  party  during  the  nine  months  ended  September 30, 2003, with no
comparable  activity  for  the  same  period  in  2004.

<TABLE>
<CAPTION>
                                                            Nine Months Ended
                                                               September 30,
                                                          -----------  ----------
                                                             2004         2003      Change
                                                          -----------  ----------  --------
<S>                                                       <C>          <C>         <C>
                                                                    (In millions)
NET CASH USED IN FINANCING ACTIVITIES
  Repayments on revolving credit agreements               $   (200.0)  $     -     $(200.0)
  Repayments on other debt instruments                        (407.0)     (967.2)    560.2
  Cash received from termination of interest rate swaps          -         173.5    (173.5)
  Other, net                                                    21.1        13.4       7.7
                                                          -----------  ----------  --------
                                                          $   (585.9)  $  (780.3)  $ 194.4
                                                          ===========  ==========  ========
</TABLE>

     We repaid $200.0 million under our $800.0 million revolving credit facility
during  the  nine months ended September 30, 2004 while no such payment was made
for  the  same  period in 2003. For the nine months ended September 30, 2004, we
used  cash  of  $370.3 million for the early redemption of our 9.5% Senior Notes
(see  "-Significant  Events")  and  $36.7  million  in  other  scheduled  debt
maturities.  For  the nine months ended September 30, 2003, we received interest
rate swap termination proceeds of $173.5 million (see "-Derivative Instruments")
for which there was no comparable activity in 2004. In addition, we used cash of
$527.2  million  to  repurchase our Zero Coupon Convertible Debentures that were
put  to  us  in  May  2003,  $50.0  million for the early repayment of our 9.41%
Nautilus  Class  A2 Notes and $390.0 million for other scheduled debt maturities
during  the  nine  months  ended  September  30,  2003.


                                       30
<PAGE>
     CAPITAL  EXPENDITURES

     Capital  expenditures  totaled  $99.8  million during the nine months ended
September  30,  2004  of  which  $93.6  million  and $6.2 million related to the
Transocean  Drilling  and  TODCO  segments,  respectively.

     During 2004, we expect to spend approximately $80 million to $90 million on
our  existing  Transocean  Drilling  segment fleet, corporate infrastructure and
major  upgrades,  excluding  upgrades  required  and  funded  by  our  drilling
contracts, which we anticipate will be approximately $40 million to $50 million.
These amounts are dependent upon the actual level of operational and contracting
activity.  We  intend  to  fund  the  cash  requirements relating to our capital
expenditures through available cash balances, cash generated from operations and
asset  sales. We also have available credit under our revolving credit agreement
(see "-Sources of Liquidity") and may engage in other commercial bank or capital
market  financings.

     TODCO expects to spend approximately $11 million on capital expenditures in
2004.

     ACQUISITIONS  AND  DISPOSITIONS

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

     Dispositions  - In February 2004 and September 2004, we completed the TODCO
IPO  and  secondary  offering,  respectively.  See  "-Significant  Events."

     In March 2004, we entered into agreements to sell two semisubmersible rigs,
the  Sedco  600  and  Sedco 602, for net proceeds of $52.7 million in connection
with  our  efforts  to dispose of certain non-strategic assets in our Transocean
Drilling  segment.  In June 2004, we completed the sale of the Sedco 602 for net
proceeds  of  $28.0 million and recognized a gain of $21.6 million, which had no
tax  effect.  The sale of the Sedco 600, for net proceeds of approximately $25.0
million,  is  expected  to  close  during  the  fourth quarter of 2004 following
demobilization  from  its  prior  operating  location.

     During  the  nine  months  ended  September  30, 2004, we settled insurance
claims and sold marine support vessels and certain other assets for net proceeds
of  $18.3  million  and recorded net gains of $1.9 million ($1.3 million, net of
tax)  in  our  Transocean  Drilling  segment  and $5.4 million, which had no tax
effect,  in  our  TODCO  segment.

     SOURCES  OF  LIQUIDITY

     Our primary sources of liquidity in the third quarter of 2004 were our cash
flows  from  operations, proceeds from the TODCO secondary offering and existing
cash  balances.  Our  primary  uses  of  cash  were  debt repayments and capital
expenditures.  At  September  30,  2004,  we had $775.8 million in cash and cash
equivalents.

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

     Excluding  the  acquisition  of  the  Deepwater  Pathfinder  and  Deepwater
Frontier  in  December  2003,  we  have  significantly  reduced  our  capital
expenditures  compared  to  prior  years  due  to the completion of our newbuild
program  in  2001  and  ongoing  efforts  to  contain capital expenditures.  See
"-Capital  Expenditures."


                                       31
<PAGE>
     When  cash  on hand, cash flows from operations, proceeds from asset sales,
including  potential  additional  sales  of our interest in TODCO, and committed
bank  facility  availability  exceed  our expected liquidity needs, we may use a
portion  of  such  cash  to  reduce  debt  prior to scheduled maturities through
repurchases,  redemptions  or  tender  offers,  or  make  repayments  on  bank
borrowings.

     In  October 2004, we redeemed our 6.75% Senior Notes due April 2005 with an
aggregate  face  value  of  $342.3  million.  See  "-Significant  Events."

     At  September  30,  2004 and December 31, 2003, our total debt was $3,061.4
million  and  $3,658.1  million,  respectively.  Net  debt, a non-GAAP financial
measure  defined as total debt less cash and cash equivalents, at such dates was
$2,285.6  million  and  $3,184.1  million,  respectively. During the nine months
ended  September  30,  2004,  we  reduced  net  debt  by  $898.5  million.  The
reconciliation  of  total  debt  to net debt at carrying value is as follows (in
millions):

<TABLE>
<CAPTION>
                                  September 30,    December 31,
                                      2004             2003
                                 ---------------  --------------
<S>                              <C>              <C>
Total Debt                       $      3,061.4   $     3,658.1
Less: Cash and cash equivalents          (775.8)         (474.0)
                                 ---------------  --------------
    Net Debt                     $      2,285.6   $     3,184.1
                                 ===============  ==============
</TABLE>

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

     Our  internally generated cash flow is directly related to our business and
the  market sectors in which we operate. Should the drilling market deteriorate,
or  should  we  experience  poor  results  in  our  operations,  cash  flow from
operations  may  be  reduced. Also, as a result of the TODCO IPO, we do not have
access  to  TODCO's  cash flows as we do with our wholly owned subsidiaries.  We
have,  however,  continued  to  generate  positive  cash  flow  from  operating
activities  over  recent years and expect cash flow will continue to be positive
over  the  next  year.

     We  have  access to a bank line of credit under an $800.0 million five-year
revolving  credit agreement expiring in December 2008. As of September 30, 2004,
$750.0  million  remained  available under this credit line. Because our current
cash balances, expected cash flow and this revolving credit agreement provide us
with  adequate  liquidity, we terminated our commercial paper program during the
first  quarter  of  2004.

     The  bank  credit  line  requires  compliance  with  various  covenants and
provisions customary for agreements of this nature, including an earnings before
interest,  taxes,  depreciation and amortization ("EBITDA") to interest coverage
ratio  and  a  debt  to  tangible  capital  ratio, both as defined by the credit
agreement,  of  not  less  than  three  to  one and not greater than 50 percent,
respectively.  Other  provisions  of the credit agreement include limitations on
creating  liens,  incurring  debt,  transactions with affiliates, sale/leaseback
transactions and mergers and sale of substantially all assets. Should we fail to
comply  with these covenants, we would be in default and may lose access to this
facility. We are also subject to various covenants under the indentures pursuant
to  which  our public debt was issued, including restrictions on creating liens,
engaging in sale/leaseback transactions and engaging in merger, consolidation or
reorganization  transactions.  A  default  under our public debt could trigger a
default  under  our  credit  line  and cause us to lose access to this facility.

     TODCO  has  access  to a bank line of credit under a $75.0 million two-year
revolving  credit agreement (the "TODCO Revolving Credit Agreement"), which will
reduce  to  $60.0  million  in December 2004 and expires in December 2005. As of
September  30, 2004, $75.0 million remained available under this line of credit.
The  TODCO Revolving Credit Agreement requires compliance with various covenants
and  provisions  customary  for  similar  agreements  of  non-investment  grade
facilities.  TODCO's  Revolving  Credit  Agreement  is  not  guaranteed  by  us.

     In  April 2001, the 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


                                       32
<PAGE>
shares,  ordinary  shares  and  warrants to purchase debt securities, preference
shares, ordinary shares or other securities. At September 30, 2004, $1.6 billion
in  gross  proceeds of securities remained unissued under the shelf registration
statement.

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

     As  is  customary  in  the contract drilling business, we also have various
surety  bonds  in  place  that  secure  customs  obligations  relating  to  the
importation  of  our rigs and certain performance and other obligations.  Surety
bonds outstanding totaled $21.6 million and $169.5 million at September 30, 2004
and December 31, 2003, respectively. The decrease in outstanding surety bonds is
primarily  attributable  to  the  expiration of three such bonds totaling $151.1
million  related  to  our  Brazil  operations.

     DERIVATIVE  INSTRUMENTS

     We have established policies and procedures for derivative instruments that
have  been  approved  by  our  Board of Directors. These policies and procedures
provide  for the prior approval of derivative instruments by our Chief Financial
Officer.  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 that qualify
and  are  designated  as accounting cash flow hedges are deferred as accumulated
other  comprehensive  income  (loss)  and recognized when the underlying foreign
exchange  exposure  is realized. Gains and losses on foreign exchange derivative
instruments  that are not designated as cash flow hedges or no longer qualify or
are  terminated  as  such  for  accounting  purposes are recognized currently in
other,  net  in our consolidated statements of operations based on the change in
market  value  of  the  derivative instruments. At September 30, 2004, we had no
material  open  foreign  exchange  derivative  instruments.

     From  time  to time, we may use interest rate swaps to manage the effect of
interest  rate  changes on our future interest rate expense. Interest rate swaps
that  we enter into are designated as a hedge of future interest payments on our
underlying debt. The interest rate differential to be received or paid under the
swaps  is  recognized  over  the lives of the swaps as an adjustment to interest
expense. If an interest rate swap is terminated or no longer qualifies for hedge
accounting,  the  gain  or  loss  is  amortized  over  the remaining life of the
underlying  debt.  We  do  not  enter  into  interest rate swaps for speculative
purposes.

     In  January 2003, we terminated swaps and associated fair value hedges with
respect  to  our 6.75% Senior Notes due April 2005, 6.95% Senior Notes due April
2008 and 9.5% Senior Notes due December 2008. In March 2003, we terminated swaps
with  respect  to  our  6.625%  Notes  due  April  2011.  As  a  result of these
terminations,  we  received  cash  proceeds,  net of accrued interest, of $173.5
million  that  had  been recognized in connection with the associated fair value
hedges  as a fair value adjustment to long-term debt in our consolidated balance
sheet and is being amortized as a reduction to interest expense over the life of
the  underlying  debt. As a result of the redemption of our 9.5% Senior Notes in
March  2004, we recognized a swap premium of $22.0 million on the termination of
the  related interest rate swap as a reduction to our loss on retirement of debt
(see  "-Operating  Results").  As a result of the redemption of our 6.75% Senior
Notes  in  October 2004, we will recognize a swap premium of $3.5 million on the
termination  of  the  related  interest  rate swap as a reduction to our loss on
retirement  of  debt  (see  "-Significant  Events").  Based  on  the unamortized
premiums  remaining  on  the terminated interest rate swaps, we expect to reduce
our  interest  expense  by  $22.8  million  in  2004.


                                       33
<PAGE>
OPERATING RESULTS

     QUARTER  ENDED  SEPTEMBER  30, 2004 COMPARED TO QUARTER ENDED SEPTEMBER 30,
2003

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

Transocean Drilling Segment

<TABLE>
<CAPTION>
                                                                Three Months Ended
                                                                   September 30,
                                                             ------------------------
                                                                2004         2003        Change     % Change
                                                             -----------  -----------  ----------  -----------
<S>                                                          <C>          <C>          <C>         <C>
                                                             (In millions, except day amounts and percentages)

Operating days                                                    5,823        6,101        (278)         (5)%
Utilization (a)                                                      67%          71%        N/A          (6)%
Average dayrate (b)                                          $   90,700   $   89,000   $   1,700            2%

Contract drilling revenues                                   $    528.0   $    542.9   $   (14.9)         (3)%
Other revenues                                                     30.7         21.5         9.2           43%
                                                             -----------  -----------  ----------  -----------
                                                                  558.7        564.4        (5.7)         (1)%
Operating and maintenance expense                                 360.5        342.4        18.1            5%
Depreciation                                                      110.0        103.9         6.1            6%
Gain from sale of assets, net                                      (0.5)        (0.8)        0.3         (38)%
Gain from TODCO offerings                                        (129.4)           -      (129.4)          N/M
                                                             -----------  -----------  ----------  -----------
Operating income before general and administrative expense.  $    218.1   $    118.9   $    99.2           83%
                                                             ===========  ===========  ==========  ===========
</TABLE>

_________________
"N/A"  means  not  applicable
"N/M"  means  not  meaningful

(a)  Utilization  is  defined as the total actual number of revenue earning days
     as  a  percentage  of  the  total  number  of  calendar days in the period.
(b)  Average  dayrate is defined as contract drilling revenue earned per revenue
     earning  day.

     This  segment's contract drilling revenues decreased by approximately $17.0
million  as  a  result  of  the  strike  in  Norway  and  the Trident 20 and Jim
Cunningham incidents in the third quarter of 2004. Excluding the impact of these
items  and  the  Deepwater  Pathfinder  and  the Discoverer Enterprise, contract
drilling  revenues  were also negatively impacted by approximately $26.0 million
due  to  a  slight  decline in utilization and average dayrates. These decreases
were  partially  offset  by an approximate $29.0 million increase as a result of
additional revenues from the Deepwater Pathfinder due to the consolidation of DD
LLC late in the fourth quarter of 2003 and lower revenues in 2003 resulting from
the  Discoverer Enterprise riser incident during the second quarter of 2003 with
no  comparable  activity for the same period in 2004. See "-Significant Events."

     Other revenues for the three months ended September 30, 2004 increased $9.2
million  primarily  due  to  a  $12.2  million  increase  in integrated services
revenue,  partially  offset by a decrease of $2.8 million in client reimbursable
revenue  and  the absence of revenue from management fees in 2004 as a result of
the  consolidation  of  DD  LLC  late  in  the  fourth  quarter  of  2003.

     The  increase  in  this  segment's  operating  and  maintenance expenses of
approximately $34.0 million resulted primarily from costs associated with higher
property  and  indemnity  insurance,  integrated  services,  additional expenses
related  to  the Deepwater Pathfinder as a result of the consolidation of DD LLC
late  in  the  fourth  quarter  of  2003  and  the Trident 20 and Jim Cunningham
incidents in 2004. Partially offsetting these increases were decreased operating
and maintenance expenses of approximately $16.0 million related primarily to the
settlement  in  2004  of  the  Discoverer


                                       34
<PAGE>
Enterprise  riser  incident  that  occurred  in May 2003, lower activity and the
electrical  fire on the Peregrine I in 2003 with no comparable activity in 2004.
See  "-Significant  Events."

     The increase in this segment's depreciation expense resulted primarily from
$5.7  million  of  additional  depreciation  expense  related  to  the Deepwater
Frontier  and  Deepwater Pathfinder as a result of the late December 2003 payoff
of  the  synthetic  lease  financing  arrangements  by  DDII  LLC  and  DD  LLC,
respectively,  which were consolidated late in the second and fourth quarters of
2003,  respectively,  and the Discoverer Enterprise purchase of tensioner system
equipment.

TODCO Segment

<TABLE>
<CAPTION>
                                                              Three Months Ended
                                                                September 30,
                                                           -----------  -----------
                                                              2004         2003        Change     % Change
                                                           -----------  -----------  ----------  -----------
<S>                                                        <C>          <C>          <C>         <C>
                                                           (In millions, except day amounts and percentages)

Operating days                                                  2,839        2,808          31            1%
Utilization (a)                                                    44%          44%        N/A            -
Average dayrate (b)                                        $   27,800   $   19,300   $   8,500           44%

Contract drilling revenues                                 $     79.1   $     54.1   $    25.0           46%
Other revenues                                                   14.0          4.4         9.6           N/M
                                                           -----------  -----------  ----------  -----------
                                                                 93.1         58.5        34.6           59%
Operating and maintenance                                        72.4         60.6        11.8           19%
Depreciation                                                     23.9         22.9         1.0            4%
Gain from sale of assets, net                                    (0.8)        (0.1)       (0.7)          N/M
                                                           -----------  -----------  ----------  -----------
Operating loss before general and administrative expense   $     (2.4)  $    (24.9)  $    22.5         (90)%
                                                           ===========  ===========  ==========  ===========
</TABLE>

_________________
"N/A" means not applicable
"N/M" means not meaningful

(a)  Utilization  is  defined as the total actual number of revenue earning days
     as  a  percentage  of  the  total  number  of  calendar days in the period.
(b)  Average  dayrate is defined as contract drilling revenue earned per revenue
     earning  day.

     This  segment's  contract  drilling revenues increased by $25.0 million due
primarily  to  an increase in average dayrates, which included the operations of
three  jackup rigs in Venezuela (THE 156) and Mexico (THE 205 and THE 206) after
being  transferred  from  the  Gulf of Mexico during the fourth quarter of 2003.

     Other revenues for the three months ended September 30, 2004 increased $9.6
million  due primarily to the consolidation of Delta Towing at December 31, 2003
and  increased  client  reimbursable  revenue.

     The  increase  in  this  segment's  operating  and  maintenance expense was
primarily  due  to  $7.6  million  of costs associated with the consolidation of
Delta  Towing at December 31, 2003 and $5.1 million of operating and maintenance
expense  associated  with  operating  two jackup rigs in Mexico (THE 205 and THE
206)  after  being  transferred from the Gulf of Mexico and compensation expense
related  to  stock  options and restricted stock as the result of the TODCO IPO.
Partially  offsetting  the  above  increases  were approximately $4.0 million of
costs  associated  with  a  fire  incident on inland barge Rig 20 and the inland
barge  Rig 62 well control incident in 2003 with no comparable activity in 2004.

     The  increase  in  this  segment's  depreciation  expense  of  $1.0 million
resulted  primarily  from  the  consolidation  of  Delta  Towing.


                                       35
<PAGE>
<TABLE>
<CAPTION>
Total Company Results of Operations

                                           Three Months Ended
                                              September 30,
                                         ------------------------
                                            2004         2003       Change   % Change
                                         -----------  -----------  --------  ---------
<S>                                      <C>          <C>          <C>       <C>
                                                 (In millions, except % change)

General and Administrative Expense       $     15.2   $     21.2   $  (6.0)      (28)%
Other (Income) Expense, net
  Equity in earnings of joint ventures         (1.7)        (1.9)      0.2       (11)%
  Interest income                              (2.5)        (3.0)      0.5       (17)%
  Interest expense                             42.6         49.0      (6.4)      (13)%
  Other, net                                   (0.1)         0.2      (0.3)        N/M
Income Tax Expense                              6.3         17.3     (11.0)      (64)%
Minority Interest                               1.0          0.2       0.8         N/M
</TABLE>

_________________________
"N/M" means not meaningful

     The  decrease  in  general  and  administrative  expense  was  primarily
attributable  to  the  recognition  of  $8.0 million in expenses relating to the
TODCO  IPO  during  the  three  months  ended September 30, 2003, which had been
deferred  in previous periods. The decrease was partially offset by increases in
professional  fees  related  to compliance with the Sarbanes-Oxley Act effective
for  2004.

     The decrease in interest expense was attributable to reductions in interest
expense  of  $7.8  million  associated  with  debt that was redeemed, retired or
repurchased  during  or  subsequent  to  the  third  quarter  of 2003. Partially
offsetting  this  decrease  was the issuance of new debt subsequent to the third
quarter  of  2003,  which  resulted  in  an increase in interest expense of $1.2
million.

     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.  Income tax expense for the three months ended September 30, 2003
was  $11.0 million higher than in the comparable period in 2004. Excluding other
partially  offsetting adjustments to our overall valuation allowance, which were
included  in  the  computation  of the tax rate, the quarter ended September 30,
2004  included  a  reduction of approximately $14.0 million in the initial TODCO
valuation  allowance  recorded in conjunction with the TODCO IPO associated with
changes in our estimate of the ultimate utilization of the benefits from the tax
sharing agreement with TODCO during 2004. Income tax expense was further reduced
by  approximately  $6.0  million, which related to changes in estimates of prior
year taxes. The income tax expense for the three months ended September 30, 2003
had  no  comparable  adjustments.  Partially  offsetting  these reductions was a
catch-up  of approximately $10.0 million in the three months ended September 30,
2004  compared  to approximately $3.0 million in the same period for 2003, which
resulted from an increase in the estimated annual effective tax rate for each of
these  periods.

     The  increase  in  minority  interest  was  primarily  attributable  to the
minority  interest  owners' share of TODCO resulting from the TODCO offerings in
2004.


                                       36
<PAGE>
     NINE  MONTHS  ENDED  SEPTEMBER  30,  2004  COMPARED  TO  NINE  MONTHS ENDED
SEPTEMBER  30,  2003

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

<TABLE>
<CAPTION>
Transocean Drilling Segment

                                                                Nine Months Ended
                                                                  September 30,
                                                             -----------------------
                                                                2004         2003       Change     % Change
                                                             -----------  ----------  ----------  -----------
<S>                                                          <C>          <C>         <C>         <C>
                                                             (In millions, except day amounts and percentages)

Operating days                                                   17,555      17,870        (315)         (2)%
Utilization (a)                                                      68%         69%        N/A          (1)%
Average dayrate (b)                                          $   90,000   $  89,800   $     200           N/M

Contract drilling revenues                                   $  1,580.1   $ 1,605.5   $   (25.4)         (2)%
Other revenues                                                    109.3        70.1        39.2           56%
                                                             -----------  ----------  ----------  -----------
                                                                1,689.4     1,675.6        13.8            1%
Operating and maintenance expense                               1,031.8     1,013.8        18.0            2%
Depreciation                                                      326.4       311.9        14.5            5%
Impairment loss on long-lived assets                                -           5.2        (5.2)          N/M
Gain from sale of assets, net                                     (23.5)       (2.4)      (21.1)          N/M
Gain from TODCO offerings                                        (168.8)        -        (168.8)          N/M
                                                             -----------  ----------  ----------  -----------
Operating income before general and administrative expense   $    523.5   $   347.1   $   176.4           51%
                                                             ===========  ==========  ==========  ===========
</TABLE>

_________________
"N/A"  means  not  applicable
"N/M"  means  not  meaningful

(a)  Utilization  is  defined as the total actual number of revenue earning days
     as  a  percentage  of  the  total  number  of  calendar days in the period.
(b)  Average  dayrate is defined as contract drilling revenue earned per revenue
     earning  day.

     This  segment's contract drilling revenues decreased by approximately $22.0
million  as  a  result  of  the  strike  in  Norway  and  the Trident 20 and Jim
Cunningham incidents in the third quarter of 2004. Excluding the impact of these
items, the Deepwater Pathfinder and the Discoverer Enterprise, contract drilling
revenues  were also negatively impacted by approximately $105.0 million due to a
slight  decline  in  average  dayrates  that  was  partially  offset by a slight
improvement  in  utilization,  compounded  by the release of a provision of $3.3
million due to a favorable settlement of a contract dispute related to penalties
on  the  Peregrine I during the first quarter of 2003 with no comparable benefit
for  the same period in 2004. Partially offsetting these decreases were revenues
for  the  full  nine  months  in  2004  on  the Discoverer Enterprise, which was
inactive  for  the  latter  part  of  the  second quarter of 2003 due to a riser
separation incident, and revenues from the consolidation of DDII LLC and DD LLC,
which  occurred  late  in  the second and fourth quarters of 2003, respectively.
Additionally,  a labor strike in Nigeria and the Peregrine I electrical incident
during  the second quarter of 2003 negatively impacted revenues during 2003 with
no  comparable  activity  in  2004. These items resulted in a positive impact of
approximately  $105.0  million  in  2004  over  the  prior  year.

     Other revenues for the nine months ended September 30, 2004 increased $39.2
million  primarily  due  to  a  $50.1  million  increase  in integrated services
revenue,  partially  offset  by  a  decrease  of  $11.5  million  from  client
reimbursable revenue and the absence of revenue from management fees as a result
of  the  consolidation  of  DDII  LLC  and  DD LLC late in the second and fourth
quarters,  respectively,  of  2003.

     This  segment's  operating  and  maintenance  expenses  increased  by
approximately $59.0 million primarily from costs associated with higher property
and indemnity insurance, integrated services, additional expenses related to the
Deepwater  Pathfinder  as  a  result  of the consolidation of DD LLC late in the
fourth  quarter of 2003 and the Trident 20 and Jim Cunningham incidents in 2004.
Expenses  also  increased  approximately  $9.0  million  due  to  a


                                       37
<PAGE>
loss  on  retirement  and  higher  provisions  for  local  tax  matters in 2004.
Additional  increases  of  $6.7  million  resulted from favorable litigation and
turnkey  settlements  during  2003  with  no  comparable  activity  during 2004.
Partially  offsetting  these  increases were decreased operating and maintenance
expenses of approximately $57.0 million primarily related to decreased activity,
the  settlement  of  the  Discoverer  Enterprise  May  2003  riser incident, the
favorable  insurance  settlement  related to the Peregrine I riser incident, the
favorable settlement of a turnkey dispute during 2004 and from costs incurred in
2003  related to the Peregrine I electrical incident with no comparable activity
in  2004.

     The increase in this segment's depreciation expense resulted primarily from
$13.9  million  of  additional  depreciation  expense  related  to the Deepwater
Frontier  and  Deepwater Pathfinder as a result of the late December 2003 payoff
of  the  synthetic  lease  financing  arrangements  by  DDII  LLC  and  DD  LLC,
respectively,  which  were  consolidated late in the second and fourth quarters,
respectively, of 2003 and the Discoverer Enterprise purchase of tensioner system
equipment.

     During  the  nine  months  ended  September  30, 2003, we recorded non-cash
impairment  charges  in this segment of $5.2 million associated with the removal
of  two  rigs  from drilling service and the value assigned to leases on oil and
gas  properties  that  we  intended  to  discontinue.  The determination of fair
market  value  was  based on an offer from a potential buyer, in the case of the
two  rigs,  and management's assessment of fair value, in the case of the leases
on  oil  and  gas  properties,  where third party valuations were not available.

     During  the  nine  months ended September 30, 2004, this segment recognized
net  gains of $23.5 million related to the sale of the semisubmersible rig Sedco
602  and  the  sale  of other assets. During the nine months ended September 30,
2003,  this  segment recognized net gains of $2.4 million related to the sale of
the  jackup  rig  RBF  160, the settlement of an insurance claim and the sale of
other  assets.

<TABLE>
<CAPTION>
TODCO Segment

                                                              Nine Months Ended
                                                                September 30,
                                                           -----------------------
                                                              2004         2003       Change     % Change
                                                           -----------  ----------  ----------  -----------
<S>                                                        <C>          <C>         <C>         <C>
                                                           (In millions, except day amounts and percentages)

Operating days                                                  7,865       8,348        (483)         (6)%
Utilization (a)                                                    41%         41%        N/A           N/M
Average dayrate (b)                                        $   26,600   $  18,400   $   8,200           45%

Contract drilling revenues                                 $    209.4   $   153.7   $    55.7           36%
Other revenues                                                   38.2        13.5        24.7           N/M
                                                           -----------  ----------  ----------  -----------
                                                                247.6       167.2        80.4           48%
Operating and maintenance                                       219.7       189.8        29.9           16%
Depreciation                                                     72.0        69.2         2.8            4%
Impairment loss on long-lived assets                                -        11.6       (11.6)          N/M
Gain from sale of assets, net                                    (5.4)       (0.5)       (4.9)          N/M
                                                           -----------  ----------  ----------  -----------
Operating loss before general and administrative expense   $    (38.7)  $  (102.9)  $    64.2         (62)%
                                                           ===========  ==========  ==========  ===========
</TABLE>

_________________
"N/A" means not applicable
"N/M" means not meaningful

(a)  Utilization  is  defined as the total actual number of revenue earning days
     as  a  percentage  of  the  total  number  of  calendar days in the period.
(b)     Average  dayrate  is  defined  as  contract  drilling revenue earned per
revenue  earning  day.


                                       38
<PAGE>
     This segment's contract drilling revenues increased by $55.7 million due to
an  increase  in average dayrates, which included the operations of three jackup
rigs  in  Venezuela  (THE  156)  and  Mexico  (THE  205 and THE 206) after being
transferred  from  the  Gulf  of  Mexico  during  the  fourth  quarter  of 2003.

     Other revenues for the nine months ended September 30, 2004 increased $24.7
million  due primarily to the consolidation of Delta Towing at December 31, 2003
and  increased  client  reimbursable  revenue.

     The  increase  in  this  segment's  operating  and  maintenance expense was
primarily  due  to  $19.5  million of costs associated with the consolidation of
Delta  Towing  at  December 31, 2003, $13.1 million of operating and maintenance
expense  related  to  the operations of three jackup rigs in Venezuela (THE 156)
and Mexico (THE 205 and THE 206) after being transferred from the Gulf of Mexico
and  $10.7  million  of  higher compensation expense related to stock option and
restricted stock grants as the result of the TODCO IPO. Partially offsetting the
above  increases  were decreases primarily due to approximately $11.0 million of
costs  associated  with  the  fire  incident on inland barge Rig 20 and the well
control  incident on inland barge Rig 62 during 2003 with no comparable activity
during  2004.

     The  increase  in  this  segment's  depreciation  expense  of  $2.8 million
resulted  primarily  from  additional  depreciation  expense  related  to  the
consolidation  of  Delta Towing, partially offset by a reduction in depreciation
resulting  from  the write down to fair market value of five jackup rigs removed
from  active  drilling  service  in  2003.

     During  the  nine  months  ended  September  30, 2003, we recorded non-cash
impairment  charges in this segment of $11.6 million associated with the removal
of  five jackup rigs from drilling service and the write down in the value of an
investment  in  a  joint venture to fair value. The determination of fair market
value  was  based on third party valuations, in the case of the jackup rigs, and
management's  assessment of fair value, in the case of the investment in a joint
venture,  where  third  party  valuations  were  not  available.

     During  the  nine  months ended September 30, 2004, this segment recognized
net  gains  of $5.4 million primarily related to the sale of four marine support
vessels  by Delta Towing, as well as the sale of other assets and the settlement
of  an  October  2000  insurance  claim.

<TABLE>
<CAPTION>
Total Company Results of Operations

                                                             Nine Months Ended
                                                               September 30,
                                                          -----------------------
                                                             2004         2003      Change   % Change
                                                          -----------  ----------  --------  ---------
<S>                                                       <C>          <C>         <C>       <C>
                                                                   (In millions, except % change)

General and Administrative Expense                        $     44.3   $    50.0   $  (5.7)      (11)%
Other (Income) Expense, net
  Equity in earnings of joint ventures                          (7.7)       (7.3)     (0.4)         5%
  Interest income                                               (6.5)      (15.7)      9.2       (59)%
  Interest expense                                             132.6       154.4     (21.8)      (14)%
  Loss on retirement of debt                                    28.1        15.7      12.4         79%
  Impairment loss on note receivable from related party            -        21.3     (21.3)        N/M
  Other, net                                                    (0.4)        3.5      (3.9)        N/M
Income Tax Expense                                              74.2         8.3      65.9         N/M
Minority Interest                                               (5.4)        0.3      (5.7)        N/M
</TABLE>
_________________________
"N/M" means not meaningful

     The  decrease  in  general  and  administrative  expense  was  primarily
attributable  to  the  recognition  of  $8.0 million in expenses relating to the
TODCO  IPO during 2003, partially offset by costs related to compliance with the
Sarbanes-Oxley  Act  effective  for  2004.


                                       39
<PAGE>
     Equity  in  earnings  of  joint  ventures  increased $6.6 million primarily
related  to  our  50  percent  share of earnings from Overseas Drilling Limited,
which  owns  the  drillship  Joides Resolution, combined with the absence of our
share  of  losses  from Delta Towing in the nine months ended September 30, 2003
due  to  the consolidation of the joint venture at December 31, 2003 as a result
of  the adoption of FIN 46.  Offsetting these increases was a decrease in equity
in  earnings of $6.2 million related to our consolidation of DD LLC and DDII LLC
in  2003,  which  resulted  from the completion of the buyout of ConocoPhillips'
share  of  the  joint  ventures.

     The  decrease  in  interest  income  was primarily related to a decrease in
average  cash  balances  for 2004 compared to 2003 as cash was utilized for debt
reduction  and  capital  expenditures, which resulted in a reduction of interest
income  of $5.5 million.  Additional decreases resulted from the absence in 2004
of  $3.3  million  of interest earned in 2003 on the notes receivable from Delta
Towing,  which was consolidated at December 31, 2003 as a result of the adoption
of  FIN  46.

     The decrease in interest expense was attributable to reductions in interest
expense  of  $32.3  million  associated  with debt that was redeemed, retired or
repurchased  during  or  subsequent to the nine months ended September 30, 2003.
Partially  offsetting  these  decreases  was  the  termination  of  our fixed to
floating  interest  rate swaps in the first quarter of 2003, which resulted in a
net increase in interest expense of $4.6 million (see "-Derivative Instruments")
and  the  issuance of new debt subsequent to the nine months ended September 30,
2003,  which  resulted  in  an  increase in interest expense of $4.8 million. In
addition, we received a refund of interest from a taxing authority that resulted
in  a  reduction  of  interest  expense of $0.8 million in the nine months ended
September  30,  2003,  with  no comparable activity for the same period in 2004.

     During  the  nine  months  ended  September 30, 2004, we recognized a $28.1
million  loss  related  to  the redemption of $289.8 million aggregate principal
amount  outstanding  9.5%  Senior  Notes  due  December  2008 (see "-Significant
Events"). During the nine months ended September 30, 2003, we recognized a $15.7
million  loss  related  to  the repurchase of $838.6 million aggregate principal
amount of our Zero Coupon Convertible Debentures due May 2020 and the repurchase
and  retirement  of  the  $50.0 million principal amount 9.41% Nautilus Class A2
Notes  due  May  2005.

     During  the  nine  months  ended  September 30, 2003, we recognized a $21.3
million  impairment  loss  on  our  notes  receivable  from  Delta  Towing.

     We recognized a $3.6 million favorable change in other, net relating to the
effect  of  foreign  currency  exchange  rate changes on our monetary assets and
liabilities  denominated  in  non-U.S.  currencies, partially offset by proceeds
received  from  the  sale  of  a patent with no comparable activity for the same
period  in  2004.

     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.  Income  tax expense for the nine months ended September 30, 2004
was  $65.9  million  higher  than  in  the  same period in 2003. Excluding other
partially  offsetting adjustments to our overall valuation allowance, which were
included in the computation of the tax rate, the nine months ended September 30,
2004  included  a  valuation allowance of approximately $17.0 million related to
the  TODCO  IPO  (see  "-Significant Events"). Income tax expense was reduced by
approximately  $6.0 million, which related to changes in estimates of prior year
taxes.  The  nine  months  ended  September  30,  2003 included the impact of an
approximate  $15.0  million  foreign  tax  benefit  attributed  to  a  favorable
resolution  of  a  non-U.S.  income  tax  liability  and  income tax benefits of
approximately $13.0 million resulting from non-cash impairments and loss on debt
retirements.  The  estimated annual effective tax rate was 1.4 percentage points
higher  for the nine months ended September 30, 2004 compared to the same period
in  2003,  which  further  contributed  to the higher income tax expense in 2004
compared  to  2003.

     The  increase  in  minority  interest  was  primarily  attributable  to the
minority  interest  owners' share of TODCO resulting from the TODCO offerings in
2004.


                                       40
<PAGE>
CRITICAL ACCOUNTING POLICIES AND ESTIMATES

     Our  discussion  and  analysis  of  our  financial condition and results of
operations  are based upon our condensed consolidated financial statements. This
discussion  should be read in conjunction with disclosures included in the notes
to  our  condensed  consolidated  financial  statements  related  to  estimates,
contingencies and new accounting pronouncements. Significant accounting policies
are  discussed  in  Note  2  to  our condensed consolidated financial statements
included elsewhere and in Note 2 to our consolidated financial statements in our
Annual Report on Form 10-K for the year ended December 31, 2003. The preparation
of  these  financial statements requires us to make estimates and judgments that
affect  the  reported  amounts  of  assets,  liabilities, revenues, expenses and
related  disclosure  of contingent assets and liabilities. On an on-going basis,
we  evaluate  our estimates, including those related to bad debts, materials and
supplies  obsolescence,  investments,  property and equipment, intangible assets
and  goodwill,  income  taxes,  workers'  insurance,  pensions  and  other
post-retirement  and employment benefits and contingent liabilities. We base our
estimates  on  historical  experience  and on various other assumptions that are
believed to be reasonable under the circumstances, the results of which form the
basis  for  making judgments about the carrying values of assets and liabilities
that are not readily apparent from other sources. Actual results may differ from
these  estimates  under  different  assumptions  or  conditions.

     For  a discussion of the critical accounting policies and estimates that we
use  in  the preparation of our condensed consolidated financial statements, see
"Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations" in our Annual Report on Form 10-K for the year ended December 31,
2003.  There  have  been  no  material changes to these policies during the nine
months  ended  September  30, 2004. These policies require significant judgments
and  estimates used in the preparation of our consolidated financial statements.
Management  has  discussed  each  of  these  critical  accounting  policies  and
estimates  with  the  Audit  Committee  of  the  Board  of  Directors.

SECTION 404 OF THE SARBANES-OXLEY ACT OF 2002

     The  Securities  and Exchange Commission, as directed by Section 404 of the
Sarbanes-Oxley  Act,  adopted  rules  generally requiring each public company to
include a report of management on the company's internal controls over financial
reporting  in  its  annual  report  on  Form 10-K that contains an assessment by
management  of  the  effectiveness  of  the  company's  internal  controls  over
financial  reporting.  In  addition, the company's independent registered public
accounting  firm  must  attest  to  and report on management's assessment of the
effectiveness of the company's internal controls over financial reporting.  This
requirement  will  first  apply  to  our annual report on Form 10-K for the year
ending  December  31,  2004.

     We  are  engaged  in  a  significant  effort  to  document and evaluate our
internal  controls over financial reporting, including assessing and documenting
the  adequacy  of  our  internal  controls, taking steps to enhance controls and
testing  that  the  controls are operating as designed. We are also working with
our  independent  registered  public accounting firm in an effort to ensure that
they  have  sufficient time to perform the work necessary to issue their report.
Based on our evaluation of the status of our documentation and testing completed
to  date and discussions with our independent registered public accounting firm,
we  believe we are well behind in our assessment process. Consequently, there is
a  significant  risk  that  (i)  we  will  not  complete  our  assessment of the
effectiveness  of  our  internal  controls  over  financial reporting within the
required  timeframe, (ii) our independent registered public accounting firm will
not have sufficient time to attest to and report on our assessment, or (iii) our
reports  could indicate that material weaknesses in our internal controls exist.
We  cannot  predict  what  impact, if any, these possible events will have on us
since  such  assessment  and reporting under Sarbanes-Oxley Act Section 404 have
not  previously  been  required.

RETIREMENT PLANS AND OTHER POSTEMPLOYMENT BENEFITS

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

     For  the  funded plans, our funding policy consists of reviewing the funded
status  of these plans annually and contributing an amount at least equal to the
minimum  contribution required under the Employee Retirement Income Security Act
of  1974 (ERISA) or other applicable funding regulations. Employer contributions
to  the  funded  plan  are


                                       41
<PAGE>
based on actuarial computations that establish the minimum contribution required
under  ERISA  and  the  maximum deductible contribution for income tax purposes.

     Due  to  an increase in the number of retirements, including the retirement
of an executive officer, and expected retirements in the fourth quarter of 2004,
we  have  revised  our estimated contributions for 2004. We expect to contribute
approximately  $14.0  million,  a  $4  million  increase from amounts previously
disclosed, to our defined benefit pension plans in 2004. Such contributions will
be  funded  from our cash flows from operations. As of September 30, 2004, $10.2
million  in  contributions  have been made to the defined benefit pension plans.

     Net  periodic benefit cost for these defined benefit pension plans included
the  following  components  (in  millions):

<TABLE>
<CAPTION>
                                                Three Months Ended        Nine Months Ended
                                                   September 30,            September 30,
                                             ------------------------  -----------------------
                                                2004         2003         2004         2003
                                             -----------  -----------  -----------  ----------
<S>                                          <C>          <C>          <C>          <C>
COMPONENTS OF NET PERIODIC BENEFIT COST (A)
  Service cost                               $      4.7   $      4.2   $     12.5   $    12.5
  Interest cost                                     4.1          4.8         12.4        14.0
  Expected return on plan assets                   (4.9)        (4.9)       (14.6)      (14.7)
  Amortization of transition obligation             0.1            -          0.2         0.2
  Amortization of prior service cost               (0.9)         0.3         (0.6)        1.0
  Recognized net actuarial losses                   1.5          0.1          2.8         0.3
  SFAS 88 settlements/curtailments                    -         (0.8)           -        (0.8)
                                             -----------  -----------  -----------  ----------
    Benefit cost                             $      4.6   $      3.7   $     12.7   $    12.5
                                             ===========  ===========  ===========  ==========
</TABLE>

______________
(a)  Amounts are before income tax effect.

     Postretirement  Benefits  Other  Than  Pensions  - We have several unfunded
contributory  and  noncontributory  postretirement  benefit  plans  covering
substantially  all of our Transocean Drilling segment U.S. employees. Funding of
benefit  payments  for plan participants will be made as costs are incurred. Net
periodic  benefit  cost  for  these  other  postretirement  plans  included  the
following  components  (in  millions):

<TABLE>
<CAPTION>
                                                Three Months Ended       Nine Months Ended
                                                   September 30,           September 30,
                                             -----------------------  -----------------------
                                                2004         2003        2004         2003
                                             -----------  ----------  -----------  ----------
<S>                                          <C>          <C>         <C>          <C>
COMPONENTS OF NET PERIODIC BENEFIT COST (A)
  Service cost                               $      0.3   $      0.4  $      0.8   $     1.4
  Interest cost                                     0.5          0.9         1.6         2.6
  Amortization of prior service cost               (0.6)         0.1        (1.7)        0.3
  Recognized net actuarial losses                   0.3          0.4         1.1         1.0
  SFAS 88 settlements/curtailments                    -            -           -        (0.6)
                                             -----------  ----------  -----------  ----------
    Benefit cost                             $      0.5   $      1.8  $      1.8   $     4.7
                                             ===========  ==========  ===========  ==========
</TABLE>

______________
(a)  Amounts are before income tax effect.

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


                                       42
<PAGE>
     In  May  2004,  the  FASB  staff  issued FASB Staff Position ("FSP") 106-2,
Accounting  and  Disclosure  Requirements  Related  to the Medicare Prescription
Drug, Improvement and Modernization Act of 2003. We adopted FSP 106-2, effective
July  1,  2004,  accounting  for  these  new  features  in  the  Medicare  Act
prospectively  as an actuarial gain to be amortized into income over the average
remaining  service  period  of  the  plan  participants.  The  adoption of these
requirements  did  not  have  a  material  impact  on our condensed consolidated
financial  position  or results of operations for the three or nine months ended
September  30,  2004.

SALE/LEASEBACK  TRANSACTION

     We  lease the drillship M. G. Hulme, Jr. from Deep Sea Investors, L.L.C., a
special  purpose  entity  formed by several leasing companies to acquire the rig
from  one  of our subsidiaries in November 1995 in a sale/leaseback transaction.
We  are  obligated  to  pay  rent  of approximately $13 million per year through
November  2005.  At  the termination of the lease, we may purchase the rig for a
maximum  amount  of  approximately  $35.7 million, and we intend to exercise our
purchase  option.  Effective  September  2002,  the  lease neither requires that
collateral  be  maintained  nor  contains  any  credit  rating  triggers.

     Effective  December  31, 2003, we adopted and applied the provisions of FIN
46,  Consolidation  of Variable Interest Entities, as revised December 31, 2003,
for  all  variable  interest  entities.  FIN  46  requires  the consolidation of
variable  interest  entities  in  which  an enterprise absorbs a majority of the
entity's  expected losses, receives a majority of the entity's expected residual
returns,  or  both,  as  a  result  of ownership, contractual or other financial
interests  in the entity. Because the sale/leaseback agreement is with an entity
in  which  we  have  no  direct  investment,  we are not entitled to receive the
financial statements of the leasing entity and the equity holders of the leasing
company will not release the financial statements or other financial information
to  us  in  order  for  us  to make the determination of whether the entity is a
variable  interest entity. In addition, without the financial statements, we are
unable  to determine if we are the primary beneficiary of the entity and, if so,
what  we  would  consolidate.  We  have  no  exposure to loss as a result of the
sale/leaseback  agreement.  We  currently  account  for  the  lease  of  this
semisubmersible  drilling  rig  as  an  operating  lease.

NEW ACCOUNTING PRONOUNCEMENTS

     In  April  2004, the FASB issued FSP 129-1, Disclosure of Information about
Capital  Structure,  Relating  to  Contingently  Convertible  Securities,  which
applies to all contingently convertible securities and became effective the date
of  issue.  The FSP requires disclosure of the nature of the contingency and the
potential  impact  of  conversion  on the financial statements, particularly the
impact  on  earnings per share, and whether the securities have been included in
the  entity's  calculation of diluted earnings per share.  The implementation of
this  FSP  did  not  have  an  effect  on  our  condensed consolidated financial
statements  and  related notes thereto as our disclosures are in accordance with
the  disclosure  requirements  as  stated  in  this  FSP.

     In September 2004, the Emerging Issues Task Force ("EITF") of the Financial
Accounting  Standards Board ("FASB") reached a consensus on issue No. 04-08, The
Effect  of  Contingently  Convertible  Instruments on Diluted Earnings per Share
("EITF  04-08"),  which is effective for reporting periods ending after December
15,  2004  (December  31,  2004  for  calendar  year  companies).  Contingently
convertible  instruments  within  the  scope  of  this EITF are instruments that
contain  conversion  features  that  are contingently convertible or exercisable
based  on (a) a market price trigger or (b) multiple contingencies if one of the
contingencies  is  a  market  price  trigger  for  which  the  instrument may be
converted  or  share  settled based on meeting a specified market condition. The
EITF requires companies to include shares issuable under convertible instruments
in  diluted  earnings per share computations (if dilutive) regardless of whether
the  market  price  trigger  (or  other  contingent  feature)  has  been met. In
addition,  prior  period  earnings  per  share amounts presented for comparative
purposes  must be restated. The EITF would not have had an effect on our diluted
earnings  per  share  for  the years ended December 31, 2003, 2002 and 2001, the
nine  months  ended  September  30,  2004 or for the three and nine months ended
September  30,  2003.  For  the  three  months ended September 30, 2004, diluted
earnings  per  share would have been reduced by $0.01.  We will adopt EITF 04-08
as  of December 31, 2004 and do not expect adoption to have a material effect on
our  earnings  per  share  for  the  year  then  ending.


                                       43
<PAGE>
FORWARD-LOOKING INFORMATION

     The statements included in this quarterly report regarding future financial
performance  and  results  of  operations  and  other  statements  that  are not
historical  facts  are  forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of  1934.  Statements  to  the  effect  that  we  or  management  "anticipates,"
"believes,"  "budgets," "estimates," "expects," "forecasts," "intends," "plans,"
"predicts,"  or "projects" a particular result or course of events, or that such
result  or  course  of  events  "could," "might," "may," "scheduled" or "should"
occur,  and  similar  expressions, are also intended to identify forward-looking
statements. Forward-looking statements in this quarterly report include, but are
not limited to, statements involving contract commencements, revenues, expenses,
commodity  prices,  customer  drilling  programs, supply and demand, utilization
rates,  dayrates,  planned  shipyard  projects  and  rig mobilizations, expected
downtime, future activity in the deepwater, mid-water and the shallow and inland
water  market  segments,  market  outlook for our various geographical operating
sectors,  effects  of increases in utilization in the U.S. Gulf of Mexico market
sector,  rig  classes  and  business segments, plans to dispose of our remaining
interest in TODCO, the valuation allowance for deferred net tax assets of TODCO,
the  write-off of TODCO deferred tax assets and related contractual receivables,
intended  reduction  of  debt,  planned  asset  sales,  timing  of  asset sales,
including  the  Sedco 600, proceeds from asset sales, the effect and duration of
the Norway strike, the effect of the Trident 20 fire and the Jim Cunningham well
control  incident,  our effective tax rate, the purchase of the M.G. Hulme, Jr.,
changes  in  tax  laws, treaties and regulations, our Sarbanes-Oxley Section 404
process,  our  other  expectations  with regard to market outlook, operations in
international  markets,  expected  capital  expenditures, results and effects of
legal  proceedings  and  governmental  audits  and  assessments,  adequacy  of
insurance,  liabilities  for  tax  issues, liquidity, cash flow from operations,
adequacy  of  cash  flow  for  our  obligations,  effects of accounting changes,
pension  plan  contributions  and  the  timing and cost of completion of capital
projects.  Such  statements  are  subject  to  numerous risks, uncertainties and
assumptions,  including,  but  not  limited  to,  those  described  in  "Item 7.
Management's  Discussion  and  Analysis  of  Financial  Condition and Results of
Operations  -  Risk  Factors" included in our Annual Report on Form 10-K for the
year  ended  December 31, 2003, the adequacy of sources of liquidity, the effect
and  results of litigation, audits and contingencies and other factors discussed
in this annual report and in our other filings with the SEC, which are available
free  of charge on the SEC's website at www.sec.gov. Should one or more of these
risks  or  uncertainties  materialize,  or  should  underlying assumptions prove
incorrect,  actual  results  may  vary  materially  from  those  indicated.  All
subsequent  written and oral forward-looking statements attributable to us or to
persons  acting  on  our  behalf  are  expressly  qualified in their entirety by
reference  to these risks and uncertainties. You should not place undue reliance
on  forward-looking statements. Each forward-looking statement speaks only as of
the date of the particular statement, and we undertake no obligation to publicly
update  or  revise  any  forward-looking  statements.


                                       44
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

INTEREST  RATE  RISK

     Our exposure to market risk for changes in interest rates relates primarily
to  our  long-term  and  short-term  debt  obligations. The table below presents
scheduled  debt  maturities and related weighted-average interest rates for each
of  the  12-month periods ending September 30 relating to debt obligations as of
September  30,  2004.  Weighted-average  variable  rates are based on the London
Interbank Offered Rate in effect at September 30, 2004, plus applicable margins.

     At  September  30,  2004  (in  millions, except interest rate percentages):

<TABLE>
<CAPTION>
                                                  Scheduled Maturity Date (a) (b)                     Fair Value
                            ------------------------------------------------------------------------  -----------
                                2005       2006     2007     2008     2009    Thereafter     Total     09/30/04
                            ------------  -------  -------  -------  ------  ------------  ---------  -----------
<S>                         <C>           <C>      <C>      <C>      <C>     <C>           <C>        <C>
Total debt
  Fixed Rate                $  381.5      $400.4   $100.0   $269.0   $10.2   $   1,750.0   $2,911.1   $   3,253.1
    Average interest rate        6.8%        1.5%     7.5%     6.7%    9.5%          7.2%       6.3%
  Variable Rate             $    0.7      $    -   $    -   $    -   $50.0   $         -   $   50.7   $      50.7
    Average interest rate       17.0%(c)       -        -        -     2.3%            -        2.6%
</TABLE>

__________________________
(a)  Maturity dates of the face value of our debt assume the put options on 1.5%
     Convertible  Debentures,  7.45%  Notes  and  the  Zero  Coupon  Convertible
     Debentures  will  be  exercised  in  May  2006,  April  2007  and May 2008,
     respectively.
(b)  Expected  maturity  amounts  are  based  on  the  face  value  of  debt.
(c)  Reflects  line  of credit used in Venezuela by TODCO at Venezuelan interest
     rates  customary  for  similar  agreements.

     At  September  30, 2004, we had $50.7 million of variable rate debt at face
value  (1.7  percent  of  total  debt  at  face  value). This variable rate debt
represented  revolving  credit  bank  debt. Given outstanding amounts as of that
date,  a  one  percent rise in interest rates would result in an additional $0.5
million  in interest expense per year. Offsetting this, a large part of our cash
investments  would  earn  commensurately higher rates of return. Using September
30,  2004 cash investment levels, a one percent increase in interest rates would
result  in  approximately  $7.0  million of additional interest income per year.

FOREIGN EXCHANGE RISK

     Our  international  operations expose us to foreign exchange risk. We use a
variety  of  techniques  to  minimize the exposure to foreign exchange risk. Our
primary  foreign exchange risk management strategy involves structuring customer
contracts  to  provide for payment in both U.S. dollars, which is our functional
currency,  and local currency. The payment portion denominated in local currency
is  based on anticipated local currency requirements over the contract term. Due
to  various factors, including local banking laws, other statutory requirements,
local currency convertibility and the impact of inflation on local costs, actual
foreign  exchange  needs  may  vary  from  those  anticipated  in  the  customer
contracts,  resulting in partial exposure to foreign exchange risk. Fluctuations
in  foreign  currencies  typically  have  not  had  a material impact on overall
results.  In  situations  where  payments  of  local currency do not equal local
currency  requirements,  foreign  exchange  derivative instruments, specifically
foreign  exchange  forward  contracts or spot purchases, may be used to mitigate
foreign  currency  risk.  We  do  not  enter  into  derivative  transactions for
speculative  purposes.  At  September  30, 2004, we had no open foreign exchange
derivative  contracts.


                                       45
<PAGE>
ITEM 4. CONTROLS AND PROCEDURES

     In  accordance with Exchange Act Rules 13a-15 and 15d-15, we carried out an
evaluation,  under  the  supervision  and  with the participation of management,
including  our  Chief  Executive  Officer  and  Chief  Financial Officer, of the
effectiveness  of  our  disclosure  controls and procedures as of the end of the
period  covered  by  this  report. Based on that evaluation, our Chief Executive
Officer  and  Chief Financial Officer concluded that our disclosure controls and
procedures  were  effective  as  of  September  30,  2004  to provide reasonable
assurance  that  information  required  to  be disclosed in our reports filed or
submitted under the Exchange Act is recorded, processed, summarized and reported
within  the  time  periods specified in the Securities and Exchange Commission's
rules  and  forms.

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


                                       46
<PAGE>
PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

     The  Indian Customs Department, Mumbai, filed a "show cause notice" against
one  of  our subsidiaries and various third parties in July 1999. The show cause
notice  alleged  that  the initial entry into India in 1988 and other subsequent
movements  of  the  Trident II jackup rig operated by the subsidiary constituted
imports  and  exports  for which proper customs procedures were not followed and
sought  payment  of  customs  duties  of  approximately  $31 million based on an
alleged  1998  rig  value  of  $49  million,  plus  interest  and penalties, and
confiscation  of  the  rig.  In  January 2000, the Customs Department issued its
order,  which  found  that  we had imported the rig improperly and intentionally
concealed  the  import from the authorities, and directed us to pay a redemption
fee  of  approximately $3 million for the rig in lieu of confiscation and to pay
penalties  of  approximately  $1  million  in  addition to the amount of customs
duties  owed.  In February 2000, we filed an appeal with the Customs, Excise and
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 our appeal on
February  2,  2001, and while it found that the rig was imported in 1988 without
proper documentation or payment of duties, the redemption fee and penalties were
reduced  to  less  than  $0.1  million  in view of the ambiguity surrounding the
import  practice  at the time and the lack of intentional concealment by us. The
CEGAT  further sustained our position regarding the value of the rig at the time
of import as $13 million and ruled that subsequent movements of the rig were not
liable  to  import documentation or duties in view of the prevailing practice of
the  Customs  Department,  thus  limiting  our  exposure  as to custom duties to
approximately  $6  million.  Following  the  CEGAT order, we tendered payment of
redemption,  penalty  and  duty  in  the amount specified by the order by offset
against  a  $0.6  million deposit and $10.7 million guarantee previously made by
us.  The Customs Department attempted to draw the entire guarantee, alleging the
actual  duty  payable is approximately $22 million based on an interpretation of
the  CEGAT  order  that  we  believe is incorrect. This action was stopped by an
interim  ruling  of  the High Court, Mumbai on writ petition filed by us. We and
the  Customs  Department  both  filed  appeals  with  the Supreme Court of India
against the order of the CEGAT, and both appeals have been admitted. The Supreme
Court  has  recently  dismissed  the  Customs Department appeal and affirmed the
CEGAT order but the Customs Department has not agreed with our interpretation of
that  order.  We  and our customer agreed to pursue and obtained the issuance of
documentation  from  the  Ministry of Petroleum that, if accepted by the Customs
Department,  would  reduce  the  duty  to  nil.  The agreement with the customer
further provided that if this reduction was not obtained by the end of 2001, our
customer  would  pay  the  duty  up  to  a  limit  of  $7.7 million. The Customs
Department  did  not  accept  the  documentation  or  agree to refund the duties
already  paid.  We  are pursuing our remedies against the Customs Department and
our  customer.  We  do not expect, in any event, that the ultimate liability, if
any,  resulting  from  the  matter  will  have  a material adverse effect on our
business  or  consolidated  financial  position.

     We  have  certain other actions or claims pending that have been previously
discussed  and  reported  in  our  Annual Report on Form 10-K for the year ended
December  31,  2003 and our other reports filed with the Securities and Exchange
Commission.  There  have  been  no  material  developments  in  these previously
reported  matters.  We  are involved in a number of other lawsuits, all of which
have  arisen  in  the  ordinary  course  of our business. We do not believe that
ultimate  liability,  if  any,  resulting from any such other pending litigation
will  have  a  material adverse effect on our business or consolidated financial
position.  We  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 our beliefs or expectations as to the
outcome  or  effect of any lawsuit or other litigation matter will prove correct
and  the  eventual  outcome  of  these  matters  could  materially  differ  from
management's  current  estimates.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

<TABLE>
<CAPTION>
                                   ISSUER PURCHASES OF EQUITY SECURITIES

                                                       (c) TOTAL NUMBER OF       (d) MAXIMUM NUMBER
                                                       SHARES PURCHASED AS     (OR APPROXIMATE DOLLAR
                (a) TOTAL NUMBER                         PART OF PUBLICLY    VALUE) OF SHARES THAT MAY
                    OF SHARES      (b) AVERAGE PRICE    ANNOUNCED PLANS OR     YET BE PURCHASED UNDER
    PERIOD        PURCHASED (1)      PAID PER SHARE        PROGRAMS (2)      THE PLANS OR PROGRAMS (2)
--------------  -----------------  ------------------  --------------------  --------------------------
<S>             <C>                <C>                 <C>                   <C>
July 2004                   3,325  $            28.61                   N/A                         N/A
August 2004                     -                   -                   N/A                         N/A
September 2004                  -                   -                   N/A                         N/A
                -----------------  ------------------  --------------------  --------------------------
Total                       3,325  $            28.61                   N/A                         N/A
                =================  ==================  ====================  ==========================
</TABLE>

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

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

ITEM  5.  OTHER  INFORMATION

     Our  independent  registered  public  accounting  firm,  Ernst  & Young LLP
("E&Y")  recently  notified us that certain non-audit services were performed in
China  for  Transocean which could raise a question regarding their independence
in  their  performance  of  audit  services.

     E&Y's  member  firm  in China performed certain tax compliance services for
Transocean in 2000 and 2001 related to a contract for drilling services offshore
China.  In  January  2001,  we  utilized  E&Y's  member  firm in China to make a
payment  to the Chinese tax authorities of the relevant taxes on our behalf. The
payment  of  these  taxes  involved  E&Y's member firm having custody of company
funds,  which  is  not  permitted under the SEC's auditor independence rules. We
forwarded  approximately  $3,500  to the E&Y member firm in China for payment of
these taxes of which approximately $350 of residual funds remained after payment
was  made.  These  funds  were repaid to us in July 2004.  No such services were
performed  subsequent  to  2001.

     In  response,  we  have  performed  an internal review of other payments to
local  tax authorities to determine if other instances have occurred by which an
E&Y  member  firm  made  a  payment to a local tax authority on our behalf after
having  taken  possession  of  company  funds  to  make  such  payments. We have
identified other such instances that occurred during 2002 and 2003. During 2002,
we provided approximately $39,000 to the E&Y member firm in Thailand for payment
to  the  Thai  tax  office  on our behalf of withholding taxes due. In addition,
corporate  income  tax  payments  and  local  employee  tax  payments  totaling
approximately  $369,000  were made by the E&Y member firm in Spain on our behalf
to  the  Spanish  tax authorities during 2002 after receiving the funds from us.
During  2002  and  2003,  we  provided  approximately  $637,000  and  $381,000,
respectively,  to  an  E&Y  member  firm  in  Egypt for payment of 2001 and 2002
corporate  income  taxes.  In each of these cases, the E&Y member firm forwarded
the  funds  to  the  local  tax authorities on our behalf in accordance with our
instructions.  No  such  services  were  performed  subsequent  to  2003. In all
instances,  management  believes  that the fees paid to the E&Y member firms for
these  tax  compliance  services were reasonable and appropriate in light of the
services  performed.

     The  Audit  Committee  and E&Y discussed E&Y's independence with respect to
Transocean  in  light  of  the foregoing facts.  E&Y, company management and the
Audit  Committee  concluded  that  these  occurrences did not, in their opinion,
impair  E&Y's  independence  with  respect  to  the  company.


                                       47
<PAGE>
Item 6. Exhibits

The following exhibits are filed in connection with this Report:

<TABLE>
<CAPTION>
NUMBER     DESCRIPTION
------     -----------
<C>     <S>

 *3.1   Memorandum of Association of Transocean Inc., as amended (incorporated by reference to Annex E to the
        Joint Proxy Statement/Prospectus dated October 30, 2000 included in a 424(b)(3) prospectus filed by us on
        November 1, 2000)

 *3.2   Articles of Association of Transocean Inc., as amended (incorporated by reference to Annex F to the Joint
        Proxy Statement/Prospectus dated October 30, 2000 included in a 424(b)(3) prospectus filed by us on
        November 1, 2000)

 *3.3
        Certificate of Incorporation on Change of Name to Transocean Inc. (incorporated by reference to Exhibit 3.3
        to our Form 10-Q for the quarter ended June 30, 2002)

*10.1   Amendment No. 1 to Registration Rights Agreement dated September 7, 2004 between Transocean Inc. and
        TODCO (incorporated by reference to Exhibit 10.15 to TODCO's Registration Statement on Form S-1 (Reg.
        No. 333-117888))

**31.1  CEO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

**31.2  CFO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

**32.1  CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

**32.2  CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
</TABLE>

_________________________
*  Incorporated  by  reference  as  indicated.
** Filed  herewith.


                                       48
<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 8, 2004.

TRANSOCEAN  INC.



By:   /s/  Gregory  L.  Cauthen
     --------------------------
        Gregory  L.  Cauthen
        Senior  Vice  President  and  Chief  Financial  Officer
        (Principal  Financial  Officer)

By:   /s/  William  G.  Henderson
     ----------------------------
        William  G.  Henderson
        Vice  President  and  Controller
        (Principal  Accounting  Officer)


                                       49
<PAGE>