62 slides from Transocean Ltd (switzerland)'s proxy contest presentation, Apr 16, 2013
Slide 1: Transocean Ltd.
Transocean Ltd. April 2013 www.deepwater.com
Slide 2: 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 3: Progress, Execution, Capital Allocation, Leadership, Icahn's Agenda
lL. Progress + Improved operational and financial performance with reduction in litigation uncertainties Il, Execution + Positioned to deliver through highly capable fleet and margin improvement initiatives Ill, Balanced Capital Allocation + Sustainable dividend that supports future increases along
Slide 4: Progress
Progress www.deepwater.com
Slide 5: Operational Improvement
Progress Operational Improvement + Strong 2012 operating performance reflected in financial results Increased revenue efficiency to 93% from ~91% in 2011 ~ Utilization up ~9% to 78% year-over-year ~ Improved adjusted earnings per share from operations by ~160% Cash flow from operations up ~50% to $2
Slide 6: Litigation Update
Progress Litigation Update Macondo Incident + Civil and criminal settlement agreements reached with Department of Justice comprising $1.4 billion paid over five years ~ Phase 1 of trial began 2/25/13 Brazil — Frade Field Incident + Preliminary injunction served on Transocean 9/27/12; lifted by Court
Slide 7: Proposing an Attractive Dividend
Progress Proposing an Attractive Dividend + Operational and litigation successes permit reinstatement of dividend ~ Proposing dividend of $2.24 per share, or approximately $800 million + Maximizes long-term value creation and, importantly, establishes a basis that is sustainable and supports future
Slide 8: Transocean Shares Have Outperformed
Progress Transocean Shares Have Outperformed + In the 3- and 5-year periods leading up to Macondo and since the Macondo partial settlement announcement in January, Transocean has outperformed a composite of its peers ‘Transocean 3- and S-year Total Retus Exceed Poors” Macondo Settloment Has Beon a C
Slide 9: Board Continues to Lead
Progress Board Continues to Lead Transocean’s Board of Directors provides strategic guidance and leadership + Consistently delivered shareholder returns above the peer group, excluding Macondo + Encouraged the company’s focus on technological innovation and training, resulting in and sustaining Tran
Slide 10: Execution
Execution www.deepwater.com
Slide 11: Strategic Objectives
Execution Strategic Objectives + Capitalize on industry expansion through well-positioned + Continue to improve operational performance ~ Revenue efficiency — historic levels ~95% achievable + Technical improvements + Contractual enhancements ~ Reduce out-of-service time + Planning, executing to pla
Slide 12: Positioned for UDW Market Demand
Execution Positioned for UDW Market Demand Robust deepwater exploration performance in 2012 provides strong pipeline for future demand ~ 28% of volume discovered in conventional deepwater (1,300 ~ 5,000 feet) ~ 49% of volume discovered in ultra- deepwater (>5,000 feet) Medium-term ultra-deepwater ri
Slide 13: Building World's Highest-Quality Fleet
Execution Building World’s Highest-Quality Fleet I ransocean ‘ACompany Built o Last is 44 Global Operational Footprint
Slide 14: Backlog Provides Foundation
Execution Backlog Provides Foundation mensooeset Contract Backlog as Multiple of Transocean's Contract Backlog IEhverpgsl Vals Val Poses ($ billion) C) 120 2 10 100 0 80 °. 60 06 - 60 102 i 35 40 04 12 08 18 20 02 19 19 10 2013 5 RIG NE D0 RL ESV High-Speciication Jackups ml Midwater Floaters Ceres
Slide 15: Continued Operational Improvement
Execution Continued Operational Improvement + Focus on execution and operations have led to increased revenue efficiency and utilization + Focus now shifts to operating and maintenance cost improvements Transocean is Delivering On Its Promise of Operational Improvement Revenue Efficiency o) + Techni
Slide 16: Margin Expansion Initiatives
Execution Margin Expansion Initiatives + Margin expansion initiatives separated into two key areas — Shorebased costs — organizational efficiency — Rig operating costs + Initiative currently focuses primarily on organizational efficiency ~ Emphasis on delivering the most efficient and appropriate su
Slide 17: Operational Improvements Reflected in Cash Flow Generation
Execution Operational Improvements Reflected in Cash Flow Generation STransocean + Operating cash flow started to deteriorate in 2010 as fleet utilization declined following the Macondo incident due to idling of rigs, significantly higher out-of-service days for maintenance, recertification and repa
Slide 18: Asset Strategy
Execution Asset Strategy + Grow our leadership position in high-spec assets ~ Build, acquire, divest and / or spin-off + Core, strategic asset portfolio Ultra-deepwater Harsh environment High-spec jackups High-quality floaters
Slide 19: Asset Strategy — Fleet Expansion
Execution Asset Strategy — Fleet Expansion Fleet expansion Four dynamically-positioned ultra-deepwater drillships 10-year contracts ($7.6 billion of backlog) ~$3.0 billion investment with attractive terms Ships have advanced capabilities Dual activity, industry-leading hoisting capacity Second blow-
Slide 20: High-Grade Asset Transformation
Execution High-Grade Asset Transformation Transformative GSF Merger Maximized Exposure to Rising Dayrates. Dayeates (000) = midwater Spec Jackaps \Gperating ests ony exces sacha ie Tes ie wt ater depih capacity a 0D eer ihe “STransocean Subsequent Transactions Consistently Focused on High-Grade Tran
Slide 21: Asset Strategy — Divestitures
Execution Asset Strategy — Divestitures Sold 38 rig package to Shelf Drilling ~ Buyer group has deep industry experience ~ Transocean will provide support to facilitate a successful transition ~ Asignificant step forward in execution of asset strategy Divested 18 additional non-core rigs in single-a
Slide 22: Accelerating Portfolio Transformation
Execution Accelerating Portfolio Transformation \Transocean Siamnanseets Recmune Tromaamnanen -2x UDW and DW Rigs vs. Closest Peer 180 : Key Events: H + Sale of 38 shallow water rigs ssi | to Shelf H 120 + 4 newbuild contracts with Shell _ at ; co i ee | 2 so -E 3 o ie . 6 ' ‘8 x0 ! P ore PF 2013 [s
Slide 23: Balanced Capital Allocation
Balanced Capital Allocation www.deepwater.com
Slide 24: Maximizing Shareholder Value
Balanced Capital Allocation Maximizing Shareholder Value Financial Flexibility Shareholder Value Return of Capital Capital Investment
Slide 25: Financial Flexibility Drives Long-Term Value
Balanced Capital Allocation Financial Flexibility Drives Long-Term Value + Financial flexibility is essential in a capital-intensive and cyclical business + Future capital requirements include: ~ Remaining litigation uncertainties + Progress made in reducing litigation exposure, but some uncertainty
Slide 26: Actions to Enhance Financial Flexibility
Balanced Capital Allocation Actions to Enhance Financial Flexibility + Continued resolution of outstanding litigation + Proposing highly attractive, but responsible, dividend ~ Allows for future increases in distributions as litigation uncertainties diminish + Prudent investment in the fleet resulti
Slide 27: Importance of Investment Grade Rating
Balanced Capital Allocation Importance of Investment Grade (IG) Rating A downgrade would have 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 It takes approximately three yea
Slide 28: Access and Cost of Capital
Balanced Capital Allocation Access and Cost of Capital + Continued access to low cost capital is important in a cyclical, asset-intensive industry to preserve shareholder value + IG market is larger and more liquid than the non-IG market + During periods of financial crises (as recently as 2011), sp
Slide 29: Financial Flexibility — Downgrade Impact
Balanced Capital Allocation Financial Flexibility — Downgrade Impact + Although there is currently significant demand for high yield credit, over the past five years there have been periods of significant market dislocation + While the current spread between investment grade and non-investment grade
Slide 30: Icahn's Detrimental Impact on Cost of Capital
Balanced Capital Allocation Icahn’s Detrimental Impact on Cost of Capital + Since the Icahn announcement, Transocean spreads have widened 42bps + The widening in spreads occurred following the announcement of Mr. Icahn’s stake, highlighting the credit market's concerns about his short-term focus and
Slide 31: Strong Rating Agency Support For Board's Capital Allocation Proposals
Balanced Capital Allocation Strong Rating Agency Support For Board’s Capital Allocation Proposals Moody's Commentary asi unikely that leverage largets can be achieved wth this amount of eash being diverted from debt repayment and prepayment.” - Moody's (March 13, 2013) “[The] proposal to prepay $1 b
Slide 32: Capital Investment
Balanced Capital Allocation Capital Investment + High-retum additions of new, state-of-the-art drilling rigs are essential for the long-term competitiveness of the company ~ Represents primary source of growth and future operating income ~ Alack of investment in high-return assets would compromise t
Slide 33: Capital Investment — Shell Newbuilds
Balanced Capital Allocation Capital Investment — Shell Newbuilds Strategic Rationale + Long-term (10-year) contracts for each of the four newbuilds + Profitable growth opportunity and asset portfolio improvement + Strategic placement of state-of-the-art unit with a major international customer + Exp
Slide 34: Board Focused on Return of Capital
Balanced Capital Allocation Board Focused on Return of Capital + Board has proven record of returning capital with approximately $21 billion’ returned to shareholders since 2000 + Proposed dividend: ~ Represents one of the industry's highest implied payout ratios and dividend yields ~ Supported by m
Slide 35: Return of Capital — History of Delivering
Balanced Capital Allocation Return of Capital — History of Delivering VTransocean + GlobalSantaFe Merger - ~$15 Billion* + Share Repurchases _ ~$4 Billion + Cumulative Dividends i ~$1 Billion + Proposed Dividend = ~$0.8 Billion Total Capital Returned ~$21 Billion
Slide 36: Return of Capital — Substantial Payout
Balanced Capital Allocation Return of Capital — Substantial Payout. + Transocean's recommended dividend ranks favorably when viewed as a percentage of Street consensus 2013 net income + Payout ratios significantly higher than this level will threaten the company’s operating flexibility and investmen
Slide 37: Return of Capital — Compelling Yield
Balanced Capital Allocation Return of Capital — Compelling Yield + Transocean's dividend yield of 4.4% (based on $2.24 dividend / share) ranks favorably among other offshore drilling companies and other oilfield services sectors Indicated Dividend Yield (Average of Peer Groups) '"" v4 co ‘ a. 44} “
Slide 38: Analysts Agree with Our Approach
Balanced Capital Allocation Analysts Agree with Our Approach S Transocean "We think Transocean's dividend proposal of $2:24 per shata siikes a mare reasonable balance between capital reinvestment in the fleet and return of capital to shareholders. If we compare Transocean's proposed payout with the
Slide 39: Corporate and Financing Structures
Balanced Capital Allocation Corporate and Financing Structures + In the interest of maximizing long-term value, the company continuously evaluates alternative corporate and financing structures with the goal of optimizing Transocean's cost of capital + Transocean has a proven track record of executi
Slide 40: Leadership
Leadership www.deepwater.com
Slide 41: Strong Corporate Governance and Board
Leadership Strong Corporate Governance and Board Example Performance / Action Total Return Outperformance Versus Peers Cutperformed peers during 3- and 5-year periods pre-Macondo and since announcement of the DOJ settlement in January 2013 Board Renewal Diverse Board Experience ‘Commitment to Return
Slide 42: Strength of Transocean Nominees
Leadership Strength of Transocean Nominees Frederico F. Curado President and CEO - Embraer Significant senior management experience operating an international corporation Indepth knowledge of Brazil, an important operating region for the company ‘Thomas W. Cason Former Senior Vice President and Chie
Slide 43: Icahn's Misguided Agenda
Icahn’s Misguided Agenda www.deepwater.com
Slide 44: Capital Allocation and Board
Icahn’s Misguided Agenda Capital Allocation and Board Icahn’s misguided agenda highlights his. + ..lack of drilling industry expertise given his implied opposition to investments in newbuilds ~ the lifeblood of a drilling contractor + ...superficial analysis that resulted in his demand for an 85% pa
Slide 45: Proposals Disavowed by Analysts
Icahn’s Misguided Agenda Proposals Disavowed by Analysts "What's galling, in our view, is the unreasonable nature of can's demands, which show a poor understanding ofthe offshore deling business and threatens to derail a series of balance sheet and operational improvements during the next few years
Slide 46: Board Nominees Add No Value
Icahn’s Misguided Agenda Board Nominees Add No Value + Nominees are closely tied to Icahn through current and past associations ~ Handpicked to pursue his misguided agenda + Icahn’s Board nominees reflect his lack of industry knowledge and bring no value to the company ~ Two of three have no oil and
Slide 47: A Questionable Board Slate
A Questionable Board Slate During his contentious takeover | | + of CVR, Icahn said that Lipinski was. ~ Trying to fool shareholders ~ ACEO with a “dismat” performance and that CVR Energy was being mismanaged ~ More interested in empire building than increasing . value No offshore drilling experienc
Slide 48: Concluding Thoughts
Icahn’s Misguided Agenda Concluding Thoughts + We believe Icahn has failed to invest the appropriate time and analysis necessary to. understand Transocean’s business and industry + Icahn has focused on potential short-term gains at the expense of the company’s future and that of stakeholders + Icahn
Slide 49: Appendix
Appendix www.deepwater.com
Slide 50: Icahn Slate's Weaknesses are Transocean Nominees' Strengths
Icahn’s Misguided Agenda Icahn Slate’s Weaknesses are Transocean Nominees’ Strengths “STransocean Frederico F. Thomas W. Steven L. Robert MJ. Mich: Curado Cason Newman Sprague Talber eran . © 8 8 ames ot aroma bea sate 1 0 0 0 0 SEND Fey z International exposure to key RIG markets v vw v ¥ v Financi
Slide 51: RIG Nominee — Frederico Curado
Appendix RIG Nominee — Frederico Curado Frederico F. Curado, President and CEO - Embraer Frederico F. Curado has served as President and Chief Executive Officer of Embraer S.A. (NYSE: ER4) since 2008. Mr. Curado joined Embraer in 1984 and has served in a variety of management positions during his ca
Slide 52: RIG Nominee — Thomas Cason
Appendix RIG Nominee — Thomas Cason ‘Thomas W. Cason, Former Senior Vice President and Chief Financial Officer - Baker Hughes Thomas W. Cason has served as a director of the Company since 2007. He served as a director of GlobalSantaFe Corporation from 2001 until 2007 and of Global Marine, Inc. from
Slide 53: RIG Nominee — Steven Newman
Appendix RIG Nominee — Steven Newman Steven L. Newman, President and Chief Executive Officer - Transocean Steven L. Newman is President and Chief Executive Officer, and @ member of the Board of the Company since 2010. Before being named as Chief Executive Officer in March 2010, Mr. Newman served as
Slide 54: RIG Nominee — Robert Sprague
Appendix RIG Nominee — Robert Sprague Robert M. Sprague, Former Executive - Royal Dutch/Shell Robert M. Sprague has served as a director of the Company since 2004. Mr. Sprague is the retired Regional Business Director of Shell EP International BV, a position in which he served from 1997 until 2003.
Slide 55: RIG Nominee — J. Michael Talbert
Appendix RIG Nominee — J. Michael Talbert J. Michael Talbert, Chairman of the Board - Transocean J. Michael Talbert has served as a director of the Company since 1994. He has served as the non- ‘executive Chairman of the Board since 2011 and previously served as non-executive Vice Chaitman of the Bo
Slide 56: Icahn Nominee — John Lipinski
Appendix Icahn Nominee — John Lipinski + During his contentious takeover of CVR, Icahn wrote an open letter to shareholders stating that Lipinski... ~ Was trying to fool shareholders ~ Was more interested in empire building than increasing value Failed to make proper management decisions while being
Slide 57: Icahn Nominee — Samuel Merksamer
Appendix Icahn Nominee — Samuel Merksamer + Long-time employee of Icahn; lack of independence that stakeholders and corporate governance experts demand + Already on the boards of five public and two private companies + No oil and gas operating experience and no experience in the offshore drilling in
Slide 58: Icahn Nominee — Jose Maria Alapont
Appendix Icahn Nominee — Jose Maria Alapont + Limited experience as a director of a public company + No known oil and gas experience and no offshore drilling experience + Closely tied with Icahn; relationship since 2005 + Icahn appears to nominate Alapont frequently and indiscriminately, with little
Slide 59: Comparable Companies
Appendix Comparable Companies Transocean lotshore Driers
Slide 60: Transocean Ltd.
Transocean Ltd. April 2013 www.deepwater.com
Slide 61: Footnotes
a ° “ « ” «) 10) «ny (12) Footnotes “STransocean Per Flet Status Report issued January 17,2013 and Feet Update Summaries issued February 14, 2013 and March 14,2013 Floater classifications are by \watr depth as deserbed nthe Flat Stats Report. Harsh Environment Fosters ar included inthe appropriata w
Slide 62: Litigation Update
Progress Litigation Update Macondo Incident + Civil and criminal settlement agreements reached with Department of Justice comprising $1.4 billion paid over five years ~ Phase 1 of trial began 2/25/13 Brazil — Frade Field Incident + Preliminary injunction served on Transocean 9/27/12; lifted by Court