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RIG has a revenue backlog of 32.2 billion and 96% of this backlog is with companies that have investment
grade debt or better. This makes it unlikely that any of these companies would try to break their current
contracts. Weakness in the shallow and midwater markets have negatively impacted earnings, however, the
deepwater market has seen increased demand. RIG is well positioned to take advantage of this market. For
example, RIG’s Deepwater Horizon just completed the deepest oil and gas well ever drilled to a true vertical
depth of 35,050 feet in 4,130 feet of water in the Gulf of Mexico. BP recently signed a three-year extension to
continue use of the Deepwater Horizon. While not yet announced, sources have speculated there is a one billion
dollar agreement between Transocean and Exxon Mobil to drill in the Arctic. There are also other prospects as
companies seek to explore offshore drilling. Oil fields are falling into the hands of governments or unstable
regions. In the United States, existing onshore oil reserves are depleting, while there are more abundant reserves
offshore. This should provide a steady stream of revenue for Transocean in the near future. Transocean has
recently seen a spike in the number of idle rigs, and third quarter utilization was down 9%. A continuation in
this trend would be troublesome for Transocean.