Two weeks after unveiling a planned merger of the two companies, offshore drillers Transocean ( RIG) and GlobalSantaFe ( GSF) both reported strong second-quarter earnings growth that beat out analyst expectations.

Transocean reported second-quarter income of $549 million, or $1.84 a share, up from $249 million, or 75 cents a share, during the same period a year ago.

It generated $1.43 billion in revenue in the quarter, compared with $854 million a year earlier. Analysts were expecting second-quarter earnings of $1.72 a share, according to a survey conducted by Thomson Financial.

Transocean's increase in revenue was mostly due to "a combination of a higher average dayrate, increased rig activity and decreased shipyard time," according to the company's press release.

"For the first time in Transocean's history, the fleet-wide quarterly average dayrate exceeded $200,000. Over the same period, rig utilization rose to 91% from 89%," the company stated.

Transocean's high-specification floater ship fleet is fully committed through 2008 and has limited capacity in 2009. The company also has new drill-ships under construction that will come online in 2009 that are already being reserved by producers, said David Mullen, senior vice president of marketing, in a conference call.

Demand for rigs in the emerging markets of India and Asia is not being satisfied, and mature markets in Angola, Nigeria, Brazil and the Gulf of Mexico continue to seek more deepwater capacity, Mullen said.

According to Transocean CFO Greg Cauthen, the company forecasts continued revenue growth through 2008, although it also predicts that operating costs will increase by about 10% next year due to rig upgrades and increasing shipyard storage inflation.

Meanwhile, GlobalSantaFe also performed well in the quarter, posting earnings of $369 million, or $1.60 a share, compared with $248.5 million, or $1.01 a share, in the second quarter of 2006.

The results beat the $1.59 a share that analysts expected.

GlobalSantaFe had $1.07 billion in revenue in the quarter, compared to $773 million a year ago. It increased its average daily rig rate to $177,100 from $113,700 during the same period last year.

"GlobalSantaFe turned in another great quarter with record financial results as we continued to benefit from strong international rig demand and the resulting improvement in our average dayrates," said GlobalSantaFe CEO Jon Marshall in a press release.

Marshall foresees strong demand for his company's rigs going into next year due to an ever-increasing global demand for oil, he said in a conference call.

Shares of Transocean were recently down 1.4% at $104.10. GlobalSantaFe was trading 2.5% lower at $68.55.

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