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Transocean Ltd., Shelf Drilling International Holdings, Ltd. - M&A Call

I'd like to take this opportunity to welcome Esa Ikäheimonen, who will assume the CFO responsibilities on November 15. Esa's extensive experience and industry knowledge make him a great fit for this key role at Transocean. Although it's a bit premature as he will be here until the end of the year to help with Esa's transition, I'd like to thank Greg for his dedication and extraordinary efforts.

As you can see from our many filings and press releases this week, we have made significant progress executing on our asset strategy. First of all, we are pleased to announce that we reached the definitive agreement to sell 38 shallow water drilling rigs to Shelf Drilling International for $1.05 billion. This marks a major milestone in our asset strategy and a significant step to increase our focus on High-Specification Floaters and Jackups, improving our long-term competitiveness by reducing the diversity of our fleet. We have made measurable progress on this important goal, and this is extremely encouraging.

Let me give you a few key highlights of the transaction. The $1.05 billion sales price comprises $855 million in cash and $195 million in seller financing. The seller financing will be in the form of preference shares issued by the parent company of Shelf Drilling to Transocean. And we expect the transaction to close in the fourth quarter of this year.

As part of this transaction and to provide as seamless a transition as possible for our customers and for our employees joining the new company, we've agreed to provide various support services to Shelf Drilling for a period of time following closing.

We also announced our discussions with a major oil company for the potential construction of 4 ultra-deepwater newbuild drillships, which we would expect to be backed by 10-year drilling contracts. We currently have a nonbinding letter of intent that outlines most of the commercial terms associated with this project, including an estimated capital investment of $3 billion or about $750 million per rig. Contract backlog associated with this newbuild opportunity is expected to be approximately $7.6 billion, representing 40 rig years of work. The implied day rate for each rig is $520,000.

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