28 slides from Transocean Ltd (switzerland)'s proxy contest presentation, May 3, 2013
Slide 1: About Transocean
About Transocean Transocean is a leading international provider of offshore contract drilling services for oil and gas wells. The company specializes in technically demanding sectors of the global offshore drilling business with a particular focus on deepwater and harsh environment drilling services
Slide 2: Transocean Ltd. Presentation to Shareholders
Transocean Ltd. Presentation to Shareholders May 2013 www.deepwater.com
Slide 3: Legal Disclaimer
Legal Disclaimer ‘The statements described inthis presentation that are not historical facts are forward-looking statements within the meaning of Section 2TAof the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements which could be made include, b
Slide 4: Agenda
“STransocean Page # |. Transocean's Balanced Capital Allocation Approach Will Maximize Long-Term Value + Financial flexibility and investment grade rating have value pg. 6-7 + Our dividend proposal is the right proposal pg. 8-11 Il Icahn's Claims Based on Overly Simplistic and Highly Flawed Analysis
Slide 5: Board Recommends Shareholders Support Company's Proposals
Board Recommends Shareholders Support Company's Proposals Capital Allocation ‘Transocean is focused on a balanced capital allocation strategy to maximize long-term shareholder value through financial flexibly, dlscipined, high-return investments in the fleet and the goal of fulure increases in distr
Slide 6: Transocean's Balanced Capital Allocation Approach Will Maximize Long-Term Value
|. Transocean's Balanced Capital Allocation Approach Will Maximize Long-Term Value www.deepwater.com
Slide 7: Transocean's Balanced Capital Allocation Approach
Transocean's Balanced Capital Allocation Approach We believe Transocean's balanced capital allocation approach will max‘ value creation Financial Flexibility Shareholder Value Return of Capital Capital Investment Abalanced capital allocation strategy provides for financial flexibility to ensure comp
Slide 8: Importance of Investment Grade (IG) Rating
Importance of Investment Grade (IG) Rating A downgrade would have real, adverse implications for Transocean + Access — non-IG market is subject to significant market dislocation in periods of instability + More restrictive covenants for non-IG bonds + We believe it takes approximately three years to
Slide 9: Board's Attractive Dividend Proposal
Board's Attractive Dividend Proposal Sustainable dividend proposal that provides for future increases in distributions + Operational and litigation successes permit reinstatement of dividend ~ Proposed dividend of $2.24 per share, or approximately $800 million + Responsible and robust dividend with
Slide 10: Dividend Proposal Among Highest in Industry
Dividend Proposal Among Highest in Industry Transocean's recommended dividend ranks among the highest in the industry* + In our opinion, payout ratios significantly higher than this level will threaten the company's operating flexibility and investment grade credit rating — putting its long-term per
Slide 11: Analysts Agree with Our Capital Allocation Strategy
Analysts Agree with Our Capital Allocation Strategy Significant equity research analyst support for Transocean's dividend proposal + Icahn provides only limited equity research support while utilizing reports published prior to Transocean dividend proposal (e.g. JPMorgan and Guggenheim) or “cherry-p
Slide 12: Transocean Board Focused on Long-Term Value Creation
Transocean Board Focused on Le erm Value Creation Transocean's balanced capital allocation approach is designed to maximize value- creation for shareholders + Transocean's Board is focused on a balanced capital allocation strategy and does not intend to take steps that will threaten the company's fi
Slide 13: Icahn's Claims Based on Overly Simplistic and Highly Flawed Analysis
Il. Ilcahn's Claims Based on Overly Simplistic and Highly Flawed Analysis www.deepwater.com
Slide 14: 2011 Equity Raise Not Primarily Driven By Aker
2011 Equity Raise Not Primarily Driven By Aker We believe Icahn's criticism of the Aker transaction is misleading + White a portion ofthe proceeds were used to refinance Aker debt, the equiy raise was primarily driven by factors unrelated tothe Aker acquisition + Credit markets weakened significantl
Slide 15: Why Icahn Is Really Attacking the Equity Raise
Why Icahn Is Really Attacking the Equity Raise Icahn’s Misguided Views Transocean Views ondo ut erating performance, ensure financial flexibility Investment Grade investment gra Credit Rating and access t Doesn't Matter Loss of investment grade ating would have areal, negative impact on tainties and
Slide 16: The Facts on GlobalSantaFe
The Facts on GlobalSantaFe We believe Icahn’s characterization of the GlobalSantaFe transaction is simplistic and misleading + Even with the benefit of hindsight for a transaction that occurred six years ago, Icahn chooses to ignore important facts: — Transocean outperformed peers one year following
Slide 17: The Facts on GlobalSantaFe (Cont'd)
The Facts on GlobalSantaFe (Cont'd) Benefits realized over time since transaction close have been ignored by Icahn The GlobalSantaFe merger combined the two most capable fleets in the industry, increased Transocean’s leadership in high-specification assets, and permitted the distribution of ~$15 bil
Slide 18: Icahn Mistaken on Valuation
Icahn Mistaken on Valuation We believe Icahn’s flawed analysis overstates the valuation gap Icahn copied offshore driller valuation multiples from just ame equity research report dated 4/1/13 instead of using consensus estimates. Icahn selectively excluded legitimate peer Hercules, overstating the v
Slide 19: Icahn's Flawed Newbuild Assertions
Icahn's Flawed Newbuild Assertions Icahn’s views on newbuilds and a flexible balance sheet are flawed and contradictory, in our view Flawed Assertions* [Newbuilds: [Cjombination of higher construction costs and lower dayrates makes it almost impossible that Transocean will gnerato a Postive NPV vers
Slide 20: Icahn's Flawed Newbuild Comparison
Icahn's Flawed Newbuild Comparison We view Icahn’s comparison of Transocean’s and Noble’s newbuild programs as inappropriate and mislea ) Icahn argues that Transocean's competitors build same quality at lower costs, but: + Transocean rig includes a second blowout preventer and. capacity to upgrade t
Slide 21: Icahn's Flawed NAV Assertions
Icahn's Flawed NAV Assertions We believe Icahn incorrectly uses Net Asset Value (NAV) to support his capital allocation plan + Icahn believes that since the company is trading at a discount to NAV, cash should be returned to shareholders, preventing reinvestment for the long term — At the same time,
Slide 22: Truth About Transocean Cost of Debt
Truth About Transocean Cost of Debt ‘Truth About Debt Prepayment Penalties Icahn's Debt Claims Are Inaccurate No material impact on cost of debt or broade implications from a it ratings downgrade ven if the company is dawngraded from BBB- to BB d vl likely stay below 4% after tax Debt pay down will
Slide 23: Icahn's Board Nominees Are Captive To His Misguided Agenda
Ill. Icahn's Board Nominees Are Captive To His Misguided Agenda www.deepwater.com
Slide 24: Handpicked Nominees Beholden to Icahn's Misguided Agenda
Handpicked Nominees Beholden to Icahn's Misguided Agenda Icahn's nominees have a long history of serving...Icahn + We fail to see any strategy or plan other than the extraction of an unsustainable dividend that the company believes would be detrimental to value creation, and which leading proxy advi
Slide 25: Icahn's Distortion of His Nominees' Resumes
Icahn's Distortion of His Nominees' Resumes Icahn states his nominees have "deep energy and international business experience,” which we believe is unfounded What energy experience? ~ Mr, Alapont and Mr. Merksamer have no apparent energy experience ~ Mr. Lipinski leads a U.S.-based refiner, which is
Slide 26: Icahn's Nominees Bring No Value
Icahn's Nominees Bring No Value + Samuel Merksamer Overboarded - Currenty on five public boards and one non public board — and has a fll time position with Icahn Capital Inexperienced - Icahn believes Mr. Merksamer "would be helpful building management teams" — how is that possible when he's never J
Slide 27: ISS Doesn't Make the Rules, Our Shareholders Do
ISS Doesn't Make the Rules, Our Shareholders Do We strongly disagree with: + ISS! decision to reject only one of Icahn's three nominees, particularly due to the nominees’ lack of relevant experience and their affiliations with Icahn + The notion that Icahn or his nominees have offered a plan or stra
Slide 28: Transocean's Board is Highly Qualified, Diverse and Experienced
Transocean's Board is Highly Qualified, Diverse and Experienced “STransocean + Our Board members have been successful: ~ They have worked closely with current management to develop and implement the strategic initiatives: against which the company is successfully executing ~ They have exhibited lead