Good day, and welcome to the Transocean Q3 2014 Earnings Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Mr. Thad Vayda. Please go ahead.

Thank you, Makweta. Good day to everyone and welcome to Transocean’s third quarter 2014 earnings conference call. A copy of the press release covering our financial results, along with supporting statements and schedules, including reconciliations and disclosures regarding non-GAAP financial measures are posted on the company’s website at deepwater.com. Joining me on this morning’s call are Steven Newman, Chief Executive Officer; Esa Ikaheimonen, Executive Vice President and Chief Financial Officer; and Terry Bonno, Senior Vice President, Marketing. During the course of this call, participants may make certain forward-looking statements regarding various matters related to our business and company that are not historical facts. Such statements are based upon the current expectations and certain assumptions of management and are therefore subject to certain risks and uncertainties. Many factors could cause actual results to differ materially. Please refer to our SEC filings for more information regarding our forward-looking statements, including the risks and uncertainties that could impact our future results. Also please note that the company undertakes no duty to update or revise forward-looking statements. Finally, to give more people an opportunity to participate on this call, please limit your questions to one initial question and one follow-up question. Thanks very much. I’ll now turn the call over to Steven Newman. Steven?

Thanks, Thad, and welcome to all of our employees, customers, investors, and analysts. Thank you for joining us on the call today. I apologize for the sudden change in our reporting schedule. As indicated in the notification, the implications of the impairment testing adversely affected the timetable for the conference call. As you saw from our third quarter press release last night, we reported a net loss attributable to controlling interest of $2.22 billion or $6.12 per diluted share. After adjusting for net unfavorable items of $2.57 billion, including the impairment of our goodwill and of the deepwater asset group, adjusted earnings from continuing operations were $352 million, or $0.96 per diluted share While we made very good progress in our operating performance during the first half of the year with 95.4% revenue efficiency, the third quarter was disappointing at 92.6%. The challenges we experienced during July and August were associated primarily with the drawworks incident on the Deepwater Nautilus and well control and station keeping incidence on other rigs, but they represented only temporary setbacks in our long-term efforts to improve the consistency of our operations. As I have said in the past, while our progress in improving our underlying operating results will not always be linear, we are making significant headway and you should expect this to continue. Our quarterly results benefited from two key elements of our strategy; investment in high specification ultra-deepwater assets as illustrated by the commencement of operations on the Deepwater Invictus and the Deepwater Asgard, the two newest additions to our fleet of high spec ultra-deepwater floaters and continued progress in our efforts to improve our cost structure. Esa will provide you with some additional color on the numbers including the goodwill and asset impairments in a moment. The market pause we began…

Thank you, Steven. And good day to everyone on the call. I’ll discuss the key elements of our results and then comment on our 2014 and our preliminary 2015 guidance. As Steven already mentioned, for the third quarter of 2014, we reported a net loss attributable to controlling interest of $2.22 billion or $6.12 per diluted share. These results included $2.57 billion or $7.08 per diluted share in net unfavorable items. Excluding these items, our adjusted earnings from continuing operations were $352 million or $0.96 per diluted share. This compares with adjusted earnings of $587 million or $1.61 per diluted share in the second quarter of 2014. Net unfavorable items included an estimated non-cash charge of $1.92 billion for goodwill impairment. Under US GAAP, we test for goodwill impairment annually as of October 1 and whenever we identify indicators of impairment. The goodwill impairment relates primarily to the general drilling market conditions that have led to a decline in the market valuation of the contract drilling business. Subsequent to September 30, 2014, we have observed additional indicators of impairment and a continued degradation of market conditions. We will evaluate our goodwill again in the fourth quarter and may be required to recognize additional losses for impairment. After this periods of adjustment, the remaining value of the goodwill on our books is approximately $1 billion. Net unfavorable items also included an after-tax charge of $693 million associated with an impairment of our deepwater asset group. The pretax impairment was $788 million as disclosed on Friday. Similar to goodwill, the asset impairment results from a markdown of the book value of the asset group to its implied market value, also reflecting the recent decline in day rates and utilization for this particular asset class. Other net favorable items of $45 million or…

Thanks, Esa and good day to everyone. As everyone is aware, the market remains challenging. Year-to-date, we secured $2.1 billion of contract backlog, including contracts for the Transocean Leader, Transocean Honor, Transocean Amirante, and others. In addition, we recently executed an agreement to replace the Sedneth 701 with a GSF Rig 135, for the remaining backlog on the 701 contact. We also just signed a one-well extension on the Discoverer Enterprise at about $398,000 per day. The agreement also includes four one-well price options. We added about 700 million in contract backlog since the last call, generally in line with what we delivered in each of the first two quarters of the year. This demonstrates the company's ability to continue to transact business in this very challenging market. Since our last call, ultra-deepwater dayrates and utilization have remained under pressure. Customers continue to focus on short term cash flows and capital allocation, and as the recent reduction in commodity pricing experienced further pressure on their cash flows, it affects our activity levels and spending plans. In this environment, operators are also increasingly inclinec to reduce their contractual commitments to farmout activity. We do not yet know how much the decrease in commodity pricing will ultimately impact E&P budgeting for 2015, but we are pleased to see the supply of available rigs decline as a result of the recent and expected announcement of contract awards in Brazil, US Gulf of Mexico, and West Africa. Additionally, the delay in delivery of competitors’ new builds also reduced its near term rig supply. However, we continue to expect challenging conditions as we work to contract our rigs in an oversupplied market and are likely to experience inter-contract idle time and significant competition on the limited tendering opportunities available. Deepwater and midwater markets remain weak…

Thanks, Terry. With that Makweta, we’re ready to open it up for Q&A.

Thank you. (Operator instructions) We'll take our first question from Greg Lewis with Credit Suisse.

Steven, good morning.

Good morning, Greg.

Steven or Esa when we think about the MLP going forward, in terms of growth rate, in terms of asset drop downs, is there sort of a target or an estimate in terms of how much capital the MLP is looking to raise or grow on an annual basis?

Yes. It’s a tough one because we are still setting Transocean Partners up and first should I say seriously proper board meeting takes place in a couple of weeks’ time. But if you look at the S1 and you look at the pipeline, if you look, if you know, remind yourself of the conversation we had during IPO process, and you get a feel as to what's available from Transocean to the MLPs. So the pipeline rigs represent quite a large number of assets, some of them will only be delivered in 2016, 2017 and altogether six assets of which four are obliged or Transocean is going to obligation, drop them into the MLP. So that gives you a good feel as to what's the minimum scope for the MLP capital. And obviously depending on the market conditions, depending on the Transocean's needs for proceeds and obviously depending on how well Transocean partners will trade in the future, that amount of capital may be higher than the minimum.

Okay. And then just shifting gears, on the write-down of assets, I don’t believe specific rigs were identified. But I guess from the comments it looks like it was primarily or solely deepwater rigs, in thinking about that, does that mean, and I don’t – if you could provide a little color in terms of what trigger those specific write-downs and as we think about the mid-water fleet, there is a handful of mid-water rigs that are already stacked, is it that those assets are already at appropriate book values or as we think about it the mid-water rigs we can potentially see write downs in some of those idle rigs in the future?

Yes. It’s a good question. So, first of all we do asset impairment on a asset class basis, generally speaking and then clearly deepwater asset class has been quite significantly impacted by the recent deterioration in the quality of the marketplace, though that explains – goes a long way to explain why deepwater. Mid-water is a mixed bag, particularly given the fact that it also includes the high value Caledonia assets and the high value Caledonia business and therefore there has been no impairment associated to that asset class at least not in Q3. When it comes to those individual assets that you mentioned, we've got stacked assets and so on as long as they are stacked and available for operations they will be part of impairment evaluation in its respective asset class. The moment we take a decision to either scrap it or sell it, we look at the book value in comparison with the fair market value for that particular asset. So that’s the way the mechanics work so far as the asset class review and then depending on the situation of the individual asset we then considering payment on a asset by asset basis.

We'll take our next question from Jason Gilbert with Goldman Sachs.

Thanks for taking my question. I want to ask quickly about the logistics of stacking six in seven gen rigs, several of your peers are saying they would rather chase day rates down than stack high end floaters. So I am just wondering if this is a case how should we think about a floor for ultra-deep day rates and what's keeping them moving towards cash costs?

I think broadly speaking Jason it is more difficult to stack a dynamically positioned rig with very complex operating and control systems than it has historically been to stack a more floater with relatively simple systems. There aren’t many peers around the world with key side access that peer owner is willing to allow to be tied up with dynamically positioned asset and there aren’t very many available peers that have the kind of water depth required to get an asset with thrusters in the key sites. So typically what the scenario would suggest is you'd be keeping the dynamically positioned asset idle but have to continue to run the power plant to provide power to the thrusters to be able to maintain station. So that limits the ability to dramatically reduce costs on an idle fifth or sixth or seventh generation DP vessel and I think that’s what the peers might be alluding to when they say they'd rather maintain those assets operating rather than stack them, I think we're probably in the same situation. I think the answer to the second part of your question which is what's going to provide the floors just overall activity levels, overtime you'll see dynamically positioned assets displace more assets provided the DP assets can work in water depth and so you know dynamically – I think the industry will try and maintain utilization levels of DP assets at the expense of more assets and as long as activity levels are out there to support that that should provide a bit of floor underneath day rates for DP assets. So that new has a got a lot of supposition and speculation embedded in that answer.

Right. That’s helpful, thanks. Maybe let’s segue into my second which is maybe more for Terry, but we sort of now with the supply side of new built deliveries looks like from next year and you guys always seem to have a pretty good hand on the number of tenders for incremental rigs that are out there. I was wondering if you could maybe put some numbers around the demand side.

Yes. It’s a little bit difficult at the moment because we're not seeing a lot of demand that’s being pushed out on the table. There are few opportunities coming up that we're helpful. I mentioned some of those and some of that’s in India and also we believe that you know Brazil is going to come out with a tender that it’s going to be little bit less of a respect to displace some of their moored units for the Campus Basin. So we're hopeful that those tenders come out and I think that will have another high spec tender. We think there will three rigs for labor to be announced soon. So we like the movement that we're just not seeing enough demand to take on the significant supply. We think there is probably one more rig that could be contracted in the Gulf of Mexico and so again those are positive points, but simply not enough to absorb all supply and also the other positive is the folks that are setting the new builds without contract, they are further delaying their rigs so that’s an artificial improvement in the market.

(Operator instructions) We'll take our next question from Jud Bailey with Wells Fargo Securities.

Thank you. Good morning.

Good morning, Jud.

Question, I guess for Terry, Terry thanks for the candid commentary on the market. I wonder if you could maybe give us a little more color you've got, you have some good rigs, higher spec rigs at the Jack Ryan and the Luigs which are looking for work and several other high spec ultra-deepwater rigs coming off contract? Could you give us just a little color on the conversations maybe that you are having with customers are you primarily looking at well to well work, are you looking at even lower spec opportunities for those rigs and I was trying to get a sense how much longer those rigs could remain idle before they pick up some of sort of work?

Hi, Jud. You know, being able to be very specific on the exact opportunities that we're chasing, obviously is not good to let our competitors know what we're thinking about. But right now it appears that we're able to talk with our customers about some one off works and well to well work. We have identified few customers that have, I guess we're going to call long-term work now six months of work which is certainly a very positive but there are some opportunities in the Gulf of Mexico to do this, there is also some opportunities in West Africa, in Asia that we can quickly identify and hopefully close out. But there is going to be some idle time, we see, we know it and we're just going to fight to put those rigs to work. There’s this interesting if you think of the C.R. Luigs. It’s probably one of the most efficient rigs in the Gulf of Mexico and we’d put her up against a newbuild any day and we have so many customers that in our call constantly saying we mam we'd love to take that rig and it’s just that it’s a condition that they find themselves in it simply can't add capacity. So like you said we do have some great rigs that our customers would really like to put to work, but in this constraint capital and budget concerns for them it’s going to just take some time for that to play out.

Okay. And then, I guess my follow up would be just maybe talk a little bit more maybe about the north sea and the landscape there, Steven in his prepared comments I think accurately said that the slowdown is turning into more of cynical down turn and I presume the first place you start to see this in the north sea, are you – is that what you're starting to, are you seeing a reaction from customers in that market or any other markets already from the decline in oil price?

In some of the conversations we've had with our customers it’s a fact that they can’t sell down their properties, they need partners, some are saying they have a little bit of challenge in getting access to capital. It’s certainly the impact of Statoil dropping as many rigs as they can or suspending them is not good news. We were very fortunate as you know to quickly move the leader and attain that contract in the North Sea, but it’s challenging and we're not seeing a lot of opportunity on the horizon right now in 2015.

We'll take our next question from Ross Payne with Wells Fargo

Thanks. And I appreciate your comments on your investment grade rating. It feels like number one want to keep your financial flexibility and number two keep your investment grade rating, does that play into the potential to, it sounds like you guys are going to be looking at the dividend, you could still keep it competitive with a decrease in that dividend, is that kind of where things maybe heading for you guys in terms of keeping your financial flexibility? Thanks.

Yes, Ross without trying to paint the board’s decision making process into a corner, I would reiterate what I said on my prepared comments that management team and the board believe in a balanced approach to allocating capital. We think that financial flexibility in a cyclical industry is a competitive advantage and we'd like to retain that competitive advantage given the current challenges in the industry. We also believe that continuing to invest in our fleet will drive long-term shareholder returns and we believe it’s appropriate to reward our shareholders with the distribution of excess cash. So the board will take all of that into consideration as they continue to refine their thinking and rationalize their decision making process in anticipation of giving the shareholders a recommendation in advance to the 2015 AGM.

Right. Thank you guys.

We'll take our next question from Angie Sedita with UBS.

Thanks, good morning, guys.

Good morning, Angie.

Hi, so as a follow up to the prior question, if you do consider either reducing or eliminating the dividend, could you remind us of the process given your Switzerland location and the time out of your board meetings and what is the process and the timeline?

Yes. So, one of the outcomes of being a Swiss corporation is that the dividend is a shareholder decision and so I – as you have seen historically the board typically presents its recommendation to the shareholders when the board publishes the proxy with all of the recommendations for the AGM. And so that, that typically comes out in preliminary form in early March and in definitive form in early April in anticipation of a board meeting that typically takes place in the May time frame, and so that same timeline would apply for the 2015 AGM as well.

Okay. All right, thanks. That’s helpful. And then Terry, I obviously a difficult market and a challenging one, and here in Q4 you have ten of your floaters, particularly good floaters up for contract renewal and then I think roughly 50% of your floaters are up for contract renewals in 2015. So when you think through that at least as in Q4 where do you think the risk is or maybe even where you think you're more likely to stack rig. Can you talk about some other rigs that you think do have a chance sustain working or versus the ones that are very likely to be stacked in the near term or idle?

Hi, Angie. Yes, I think you described it quite well, incredibly challenging. We do have obviously more rigs coming available than our competitors in the timeframe, in a very brilliant market. We would certainly be thrilled about that. But as luck would have it, here we are. I think the biggest risk is the budget cycle and commodity – the macro. So I mean it’s something that obviously none of us can control but I think that’s a bigger risk. How I would see our opportunities we just announced on one of them, the enterprise, she has been performing very well for BP and they extended our as I said for one well and then have four options. So they like what she is doing and we're very hopeful to keep her going there. We do have some other opportunities on extensions that we are discussing with some of our customers but I would expect that if you look at our older class rigs that are pretty long in the tooth and if we don’t have follow on work I think those would be the first ones that we would sell off and I don’t think that we've actually stared naming names yet, but I think that’s where we're headed with that, I'll let Steven comment more on that if he'd like to. The other thing that we're doing and we've done this on several of the rigs previously as an example on the DD2, we displaced moored unit to one that works, so we're going to compete down with the rest of our fleet and we're going do our best to keep these rigs working. But again, the demand level - if we look at the rig years that were fixed in this last – the beginning of 2014, on the floater side those levels are looking a lot like 2002 and 2009 unfortunately. So that’s - as you say it’s a challenging market but that’s what we're going to do.

We'll take our next question from Darren Gacicia with Guggenheim Partners. Darren Gacicia – Guggenheim Partners: Hey, thanks for taking my question. It strikes me that the write-downs that have happened here maybe part of a function of the fact that this been consolidation by Transocean over time and maybe a write off of some of the assets acquired now. Does that in anyway impact what may be happening on kind of 5G rigs going forward as maybe your carrying cost versus some of your peers maybe a little bit higher is that something that we may see when you kind of talk about future asset write downs, is that something that may become a factor?

Darren, it’s Esa here. I wouldn’t mind if you repeated the question because the line wasn’t very clear and we are all a little bit puzzled as to what exactly you wanted to ask from us, so if you don’t mind? Darren Gacicia – Guggenheim Partners: No, I am sorry. Do hear me okay now?

Yes, better. Darren Gacicia – Guggenheim Partners: Great. So what I was saying is that given the fact you know, Global Santa Fe acquisitions, different things that have kind of been pulled together and probably assets marked up upon purchase. Does that create an issue when you think about what's just happened with write downs for maybe 5G assets, that maybe at a higher carrying value than say kind of the average and maybe what your peers are carrying the same assets at, because I noticed within you commentary you mentioned the potential for future asset write-downs?

Yes, good question. The - pretty much the goodwill write down actually - very large driver of that have to do with the legacies created as part of the merger. At the end of the day of course is the decline in the quality of the marketplace and that the forecasted utilization in dayrates that drive the outcome, but a lot of the goodwill that we carried on our books was actually origined some year back as a result of the merger. And there are some fifth gen assets that relate to the same situation and some assets that the company actually inherited but none of them as far as I remember are also deepwater capable. So you know this does take care of most of those legacy situations; we may have some further legacies but as long as the fifth gen assets are part of the ultra-deepwater asset class as they typically are that is the most robust asset class going forward because the market conditions as present as well as forecasted are most favorable in that asset group. So I don’t think we've got any particular disadvantage against our competitors there, some of our competitors have actually gone through some acquisitions and merger as well and as a result of that they may have similar challenges to what Transocean had as a result of its own activities in the past. Darren Gacicia – Guggenheim Partners: Okay. Understood. And you know, I don’t know who to direct this one at in particular but you know obviously we've been poking around at retirements here and trying to get a better understanding, can we get like an order of magnitude of maybe the like just, if is not rig specifically and maybe kind of number of rigs we’re considering for retiring, is it 10 to 15, 15 to 20, just to give us some frame of mind?

Yes, I think we're reluctant to do that Darren for a whole host of reasons. You can assume that the assets we have in our fleet that are cold stacked and have been cold stacked for any period of time are likely candidates for retirement, but as both I and Terry said in our prepared comments the ongoing decision making is really going to reflect an asset by asset analysis. If we're confident that Terry can find opportunities to keep the rigs operating we're likely to do exactly that, but if we bump up against a significant investment like a special periodic survey and market condition don’t support that kind of an investment, then we're left with the decision about how to cut costs on that kind of an asset as quickly as possible and if we conclude that there is very little likelihood of that asset ever retuning in an economic way to compete in the marketplace then we're likely to take the decision to scrap it, but you can see how that manifest itself in really an asset by asset determination. Darren Gacicia – Guggenheim Partners: Got it. Are we far along in those determinations now or is it sort of something we’ve started to work on?

Well, it’s ongoing exercise, so as I said the rigs that are – the rigs that have been cold stacked I would say we're fairly far along, but assets that are still operating today are focused as both I and Terry indicated our focus is to try and maintain those rigs operating to continue to generate cash.

We'll take our next question from Andreas Stubsrud with Pareto Securities.

Thank you. I have a question…

Hi, Andrew…

Related to actually what you just answered in terms of typically SPS or going into the shipyard typically for the 5G unit. So in terms of GSF CR Luigs, how do you pronounce that name, is that going through its SPS without a contract behind or am I misunderstanding the situation there?

On the CR Luigs address we are undertaking minimal expenditure and trying to manage that expenditure in the context of the opportunities that Terry is chasing. So we're not committing significant capital to the rig until we find an opportunity but there are some things we are taking advantage of idle time to undertake that don’t represent a significant cost.

Okay. Great. That was my only question. Thank you.

Thanks, Andrew.

(Operator instructions) We'll go next to David Smith with Heikkinen Energy Advisors.

Good morning, thank you for taking my question.

Hi, David.

Along the lines of the substitution of the Sedco Energy against the GSF Rig 135 contract, I was wondering if you see other opportunities to substitute available ultra-deepwater rigs against lower spec contract backlog that you may have as a way to keep those rigs active and rationalize the contract overall cost structure?

Yes, David. You know we're looking at all those types of opportunities in our own fleet and also in where our competitors have less capable rigs. So we're going to look if it makes sense to displace the asset and do that to keep our more capable assets running, that’s what we're looking at.

And including substituting against existing backlog that the lower spec rigs may already have?

That’s correct. We'll look at those opportunities too as long as it makes economical sense to do so at the time.

All right, thank you.

We'll take our next question from Vivek Pal with Jefferies.

Yes, good morning.

Good morning.

Can you please refresh your debt reduction targets? Is it still $9 billion by 2016 or is there a change in that and the reason I asked that is in the next two years you have over $2 billion of debt reduction. So how should we think about it? Is it going to be an absolute pay down? Are you looking to term it out?

:

Okay. Now if the situation, the macro situation doesn’t improve, how would you prioritize between dividend cut, issuing new equity or selling more assets into the MLP?

You know, as I have repeatedly said Vivek, we will look at a whole host of levers that we think are available to us including asset divestitures and operating cash flow and continuing to think about our investment program alongside our balance sheet objectives and the return of excess cash to our shareholders. So I wouldn’t say that there is a constrained priority that’s going to force the Board to make one decision over another, the Board looks at all of those things when they carry on their debate about all those various alternatives and they would factor all of those alternatives and that decision making process into the final recommendation they present to the shareholders next spring.

Yes, it’s Esa Ikaheimonen here, just one thing to add just one thing to add, you specifically mentioned the Transocean Partners and dropping assets to Transocean Partners, and I should just mentioned that the Transocean's periodic needs for proceeds is the prime reason for us establishing Transocean Partners and that gives us that financial flexibility, significant element of financial flexibility that supports our capital allocation priorities. So if there is a priority in some of the levers that you just mentioned, it’s probably the easy one because that’s why it’s there. As long as it makes sense, and as long as the economics are supportive and as long as there is a cost to capital advantage in leveraging Transocean Partners that would make sense, and that’s why it’s there.

We'll take our last question from Mabel Yu with Vanguard. Mabel Yu – Vanguard: Hello, thank you. Can you elaborate how flexible is your capital budget, so that helps you to balance your capital structure? And also you know, can you give us a little bit more insight why the investment grade rating is important to you guys when it comes to prioritize the capital structure?

Okay. Thanks, for the question Mabel. Esa Ikaheimonen here again, the CFO, briefly both our CapEx for the next three years or so is pretty fixed as a result of the fact that we've got most of that CapEx is due to commitment to newbuilds that we've made. So to take for instance the guidance that I just gave on 2015, preliminary guidance I should mention, total CapEx $1.9 billion, $1.4 of that has to do with the committed newbuild payments and the remaining $500 million or so has to do with ongoing run and maintain CapEx as well as the shipyard activities that we undertake during 2015. So, in the short run it’s not flexible, in longer run it’s obviously quite flexible because we can choose either to continue build or buy incremental assets which is the key component of the CapEx or then we can choose not to do that. But next couple of years it’s pretty firm. The other question with regards to the investment grade rating, we've said continuously and repeatedly that this is a cyclical industry and having a strong balance sheet is a competitive advantage. It give us obviously competitive cost of capital advantage as well as access to capital which is the most important part of it. So people probably don’t pay quite enough attention to the fact that every once in a while the non-investment grade debt markets are challenging and therefore investment grade provides us with continuous ongoing access to capital as and when needed.

It appears we have no further questions at this time.

So, thank you very much for participating in today' call. We're available over the balance of the day to answer any follow up questions you may have. We look forward to speaking with you again on our fourth quarter 2014 call. Have a good day.