Good day, and welcome to the Transocean Q3 2015 earnings conference call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Brad Alexander. Please go ahead, sir.

Thank you, Noah. Welcome to Transocean's third quarter 2015 earnings conference call. A copy of the press release covering our financial results, along with supporting statements and schedules including reconciliations and disclosures regarding non-GAAP financial measures, are posted on the company's website at deepwater.com. Joining me on this morning's call are Jeremy Thigpen, President and Chief Executive Officer; Mark Mey, Executive Vice President and Chief Financial Officer; and Terry Bonno, Senior Vice President, Marketing. During the course of this call, participants may make certain forward-looking statements regarding various matters related to our business and company that are not historical facts. Such statements are based upon the current expectations and certain assumptions of management and are therefore subject to certain risks and uncertainties. Many factors could cause actual results to differ materially. Please refer to our SEC filings for more information regarding our forward-looking statements, including the risks and uncertainties that could impact our future results. Also please note that the company undertakes no duty to update or revise forward-looking statements. Finally, to give more participants an opportunity to speak on this call, please limit your questions to one initial question and one follow-up question. Thank you very much. And now I'll turn the call over to Jeremy Thigpen. Jeremy D. Thigpen - President & Chief Executive Officer: Thank you, Brad, and a warm welcome to our employees, customers, investors, and analysts participating in today's call. Our performance in the third quarter was strong, as we reported adjusted net income of $316 million, or $0.87 per diluted share on $1.6 billion in revenues. Mark will take you through the figures in more detail shortly, but I would like to stress that these results reflect the strong emphasis we continue to place on operating performance and cost management. From an operating performance…

Thanks, Mark, and good day to everyone. As Jeremy and Mark already articulated, the market remains very challenging, and we expect this to continue through 2016 and into 2017. But we fully expect that relief will come in the form of improved commodity pricing, increased exploration programs, lower operating cost, and the continued scrapping of less-capable rigs. Until then, we will be fighting for every opportunity in a highly competitive offshore market. Despite these challenges, we've added $218 million of contract backlog since the last earnings call, bringing the year-to-date total to $430 million. We are pleased to report the contracting of the KG2, Sedco 706, and the Constellation I since our last call, again highlighting our ability to compete for work with our diverse fleet of rigs. And I am pleased to report that since issuing our fleet status report last week, we have successfully renegotiated our Petrobras fleet. As part of the renegotiation, we will be terminating the Deepwater Navigator on December 31, 2015, and the Deepwater Driller on June 30, 2016, and in exchange receive an additional 747 days of term at $275,000 a day for the Sedco 706, a second-generation deepwater rig which was upgraded in 2007. This adds approximately $164 million net contract backlog and is a testament to the quality of our fleet and operating performance, and our longstanding and solid relationship with Petrobras. Outside of Brazil, we are also very close to realizing several opportunities already in the pipeline, and we'll have more positive news shortly. Our backlog as of October 26 was $16.9 billion, the largest and strongest in the industry, comprised of a stable customer base with limited exposure for early termination without compensation. This foundation provides for solid cash flow generation with 70% of revenues contracted with the majors, 14%…

Thanks, Terry. Noah, we're ready to open the line for questions. As a reminder to the participants, please limit your questions to one initial question and one follow-up.

Thank you. We'll take our first question from Ian Macpherson with Simmons. Ian Macpherson - Simmons & Company International: Hey, thank you very much. Good morning, everyone.

Good morning, Ian. Ian Macpherson - Simmons & Company International: It's got to be difficult to project 2016 when you've got so many rollovers across the fleet, and so I appreciate that guidance. And I wonder if that guidance contemplates the scrapping of any of your ultra-deepwater rigs that are currently cold-stacked, and does it also contemplate cold-stacking incremental ultra-deepwater rigs? Just trying to kind of probe in that area a little bit. Mark Mey - Chief Financial Officer & Executive Vice President: Yeah, thanks, Ian, and good morning to you as well. Look, you're absolutely right, trying to forecast and budget in this environment is very difficult. But as Terry said, the market is tough, but we do feel that we have an opportunity with a certain number of our rigs. So, as most of our competitors will do, we'll take a stab at what we think's going to be recontracted, what's not going to be recontracted, and budget accordingly to that. So if you look out over next year, look at my guidance, I did indicate that we're going to be substantially lower than this year for our O&M costs, and about 80% of that is associated with the reduced rig activity. So we fully expect to see that a certain amount of our rigs that do roll over in 2016 do not get contract awards. Jeremy D. Thigpen - President & Chief Executive Officer: What I'd add to that, Ian, is on the last call we talked about 10 to 15 rigs that we were watching pretty closely and really trying to determine the marketability of those rigs and could ultimately wind up retiring those rigs over time. What I will say is, is some of those rigs are currently on contract, and others are being actively marketed into viable opportunities, so as we get a clearer picture of those opportunities and our success in them, we will quickly make decisions. Ian Macpherson - Simmons & Company International: Okay, thanks. And then for the follow-up question, I'm sorry, it's just a repeat of what you said. Mark, was the 2016 total CapEx $1.4 billion? I thought that sounded low if your newbuild spending is over $1.3 billion. I might have misheard you. Mark Mey - Chief Financial Officer & Executive Vice President: Our newbuild spending has been updated on our website, and that's $1.16 billion of the $1.4 billion.

And we'll take our next question from Dave Wilson with Howard Weil.

Good morning, everyone. Thanks for taking my questions. First, Mark, just regarding the Pontus and Poseidon and the agreed-upon delays, I just wanted to verify that I'm reading the info right and that the total cost for those rigs has increased by $60 million. And, of that, how much is capitalized interest, and how much is more going to the shipyards? Mark Mey - Chief Financial Officer & Executive Vice President: Your assessment, Robin, (sic) [Dave] on the increasing capitalized interest, that's correct. With regard to the detailed model questions, I'm sure that Greg can help you after the call.

Okay. And then, Terry, from a marketing perspective, looking out into 2016, I know it's challenging and many have written it off, but say if for some unforeseen reason oil prices find their way back into the $70 range, would a move like that really change operator behavior in 2016 and get more rigs contracted? I mean, part of me thinks that some of these bigger companies are slow to move and adjust and so there wouldn't be much change, but another part of me thinks that from a standpoint there could be some pent-up inventory and demand, that that makes sense at those prices. Just wondering if you'd given much thought to that scenario.

Hi, Dave, yeah, that's a good question. What we're seeing is that in discussions with the customers, some of the customers actually have programs that they would like to drill now, but they're unable in this environment to get their partners' approval. So I think on the inventory that's on the table today that in the event we see that, that we would see more partner approval and push some of this one-off wells into the market. So again, and it's not just one customer that is saying this, it's several customers that really – they have the budget, and these are people that want to get out there and drill countercyclical, as I alluded to in my notes, so we are seeing some of that.

And we'll take our next question from Robin Shoemaker with KeyBanc Capital Markets.

Thank you. I just wanted to ask also regarding the Pontus and Poseidon. Now that you have delayed these two rigs, is the book closed with regard to Shell's four 10-year contracts on these rigs? We have seen, of course, Shell's announcement about lower CapEx going forward and so forth. So, as far as you know, does this sort of settle the issue?

Hi, Robin, it's Terry. I'm not altogether sure of the question, when you say "close the book." Are you asking are we moving forward on all four of these rigs and everything is fine with the projected programs that Shell's going to be drilling?

Well – no, actually, I was just asking if there are continuing negotiations about either the term or pricing -

No.

– or delivery date? Yeah.

No, not at this time.

Okay.

We are not having any of those discussions.

Okay, thank you. And then, Terry, on your comment about some of the national oil companies being countercyclical in terms of looking to add rigs in this environment, well aware of the Indian National Oil Company. What other NOCs do you think are looking at these low rig rates opportunistically?

Well, what we're seeing is there's some tendering activity out there, Robin, that's public information. So there's some tenders in the hopper right now. What comes to mind is Petronas is out there, and then for the others, we're in some discussions that we really don't want to make public at this time.

And we'll take our next question from Mike Urban with Deutsche Bank.

Thanks, good morning. So you guys have done a great job of showing market leadership with both stacking and scrapping rigs. And you've talked about the potential for more. Is there a set of assumptions that goes into the scrap-versus-stack discussion? So, in other words, if you're stacking something instead of scrapping it, is there at least some view of work for that rig within a certain period of time, a certain reactivation cost? Just anything you could share in terms of your analysis in terms of going one route versus another with an idle rig?

Yeah, Mike, what we do is we sit down and we go through an economic analysis of what makes sense, if we're going to keep a rig warm, are we going to move it to cold? We look at the open opportunities that we are either targeting the rig for or that we've actually already bid the rig for, and we do that analysis on a case-by-case basis. So once it shows that we're not going to be able to contract the rig, then we quickly make the decision to move it to cold-stack or scrap.

And is there kind of a critical threshold there? Again, I'm kind of looking for more the scrap-versus-stack decision. Is there, say, a period of which you say, look, there's no work for this rig within the next two years; therefore, it's a scrap candidate? Or is it more qualitative than that?

Well, I mean, as you can see what we've done already with the rigs that we've already scrapped, it's been the lower-capable rigs as we continue to high-grade our fleet. So it'd be the deepwater and the midwater assets that we have already scrapped, with some exceptions on some very old ultra-deepwater rigs that were built – and they're almost as old as me. So that's what we've done.

Got you. And then kind of a housekeeping question for Mark. The 2016 OpEx, 25% to 30% on an adjusted basis, what's the – just so we can make sure we get the right number – what's the starting point for that in absolute terms relative to the OpEx you gave us for 2015? Is it at that OpEx number, or is that an adjusted number relative to the 2015 guidance? Mark Mey - Chief Financial Officer & Executive Vice President: Mike, it's the $3.7 billion to $3.75 billion guidance, which I provided earlier in my prepared comments.

And we'll take our next question from J.B. Lowe with Cowen & Company. J.B. Lowe - Cowen & Co. LLC: Hey, good morning, everyone. Just had a question on your uses of cash going forward. So it sounds like you paid back some debt. I'm just wondering, going forward, when we're talking about some assets that might be distressed or some rigs in the shipyards that are owned by players who won't be able to operate them, how are you kind of looking at further debt repayment versus maybe taking a look at some assets that could come up to the market cheaply? Mark Mey - Chief Financial Officer & Executive Vice President: Yeah, J.B., that's a good question. Obviously, when we look at this, we optimize liquidity. And in this environment, with activity being as low as it is, it's critical to us to increase liquidity as much as possible. So we will look at assets in the shipyards, we will look at assets for sale, but obviously, we have bid comments. We have CapEx commitments, we've got new rigs coming from the shipyard – very high-quality, high-spec rigs coming from the shipyard. So we don't feel compelled to go out there and make any decisions. Obviously, if prices get down to a level where they are so appealing that you couldn't walk away from it, we'll take a hard look at that as well. But at this stage we're more focused on operating our business and making sure that we come through the downturn able to thrive at the next cycle recovery. J.B. Lowe - Cowen & Co. LLC: Okay, great. And just the follow-up question would be, what was the rationale behind your guys' changing the disclosures you provide for the operating and maintenance costs? Mark Mey - Chief Financial Officer & Executive Vice President: We just want to be in line with the peer group. So we thought there was too much information in comparison to what the peers provide.

And we'll take our next question from Sean Meakim with JPMorgan.

Hey, good morning. Mark Mey - Chief Financial Officer & Executive Vice President: Morning.

So thinking about your credit facility that matures in 2019, we're seeing rig deliveries across the space getting pushed out. The industry seems to be getting smarter at finding ways to keep rigs stacked, but not too far from activation if they're given the opportunity. How do we think about that maturity timing and your optionality to perhaps de-risk it sooner rather than later? Mark Mey - Chief Financial Officer & Executive Vice President: Sean, I think you're asking me whether we can extend maturity of that?

Sorry, just how you think about that in the context of – I know we don't have a lot of visibility out to 2019, but looking at the cadence of supply/demand over that time, particularly on the supply side, just curious how you think about your strategy with respect to that particular maturity? Mark Mey - Chief Financial Officer & Executive Vice President: Well, we look at every lever out there. As you've seen, the company's done a tremendous job with regard to costs, with regard to pushing out CapEx. With repurchasing debt that's trading at a discount. So we've got to look at all of these levers on a continuous basis to improve liquidity. Obviously, one of those is to give us more headroom around a major maturity in 2019. So, as we get better clarity over the next few years, we'll certainly engage with our banks. We'll talk about what it takes to extend that or make alternative plans with regard to that credit facility. But absolutely. This is something we focus on every single day.

All right, well, that's certainly fair enough. And then, just congrats on getting the Petrobras deal completed. But I guess I was hoping to get a little more context of where do you think Transocean is and where do you think the industry is, in terms of that renegotiation process? Does that process drag on through 2016, or are we getting closer to the end of resetting a lot of the existing contracts?

Well, in discussions with Petrobras, what they are saying is, they've got more that they would like to do with the current fleet, as far as – I think that they'll, if they can, that they will keep some of their better-equipped assets and also look for some other opportunities to do a blend and extend. I think it's just only hampered by the fact that they've got so much on their plate and they're working through this. So we finally got our approval, and they just kept telling us, it's coming. It's just that we've got so much on our plate to work through, and that we just can't get to the next thing. So we're hopeful that there's going to be more discussion about extension of current fleet.

And we'll take our next question from David Anderson with Barclays.

Thanks. I'm just wondering if you could comment a little bit more about the midwater market. Seems like there's some debate around that market. Some are thinking that the midwater market could actually recover faster than the sixth-gen market. So I was just wondering if you could just kind of comment about how you're thinking about the tightness of that market or the supply of that market, particularly how it ties into potentially retiring your fleet. I guess my question is, are you feeling better about that market today than you were, say, six months ago, and how do you see that playing out?

Well, I think that if you look at the North Sea and the Norwegian market, certainly that's a closed market, and that market is going to, once the commodity price turns around, that's going to be a viable market, in our opinion, and we have a strong presence there. So we call that our standard midwater, and then certainly our harsh environment fleet. Outside of that arena, we look at certainly other midwater arenas, and that would be Australia and Asia. And, certainly, let's not forget India, with the open tenders that we have there. So there are certain areas in the world there's always going to be midwater floaters that are going to work there. I look to our own fleet and look at the Actinia, who is – it's one of our oldest midwater floaters in the fleet. It's a second-generation rig. And she's worked for a very long time. Customers like her. She's very simple to work, and so I think that there's viability. But I don't think that it's a whole lot different when we had other up markets. When the market returns, it's easy to put the midwaters back to work, because it's plug-and-play. You get production very quickly. So I don't think midwater floater fleet is dead, but certainly some of the better capable equipment can work down into those arenas, in a low-cost environment.

Okay. Thank you. So, Jeremy, back in September, you made a comment, and you said that, now more than ever, offshore drillers are having more involvement in the sequencing of a well to help drive down costs. Can you help us understand with me a little bit where you are in that process? How prevalent is that now? Are you seeing more interaction with the majors, and do you think that will be a big cost driver going forward, in order for offshore to work better? Jeremy D. Thigpen - President & Chief Executive Officer: David, I think you're quoting someone else. I'm not sure I followed the question. Would you ask it again, maybe?

Well, I'm just kind of curious if you're getting more involved with the operator, in terms of, kind of say, the well design, the sequencing, in terms of like another way to drive down offshore development costs or offshore exploration costs. I'm just wondering if your business mix has changed, in terms of kind of how you guys fit in with the whole scheme.

Well, I guess if you're talking about, are we helping with thinking about other utility assets that could go through in a well program, do top hull, intervention work, help sequence that kind of process, then the answer to the question is, we talk about all of those type of things with our customers and how we can be more efficient in their development programs. But I guess that I'm a little lost as to the other part of the question. Jeremy D. Thigpen - President & Chief Executive Officer: The other thing that I would add there, and this may not be the question you're asking, but it may be, so I'll just throw it out. We are having more intentional conversations with our customers around different commercial models potentially, about aligning ourselves better with some of their other service providers, so that we are all jointly working toward the same objective, which is safe and lower-cost, more efficient wells.

And we'll take our next question from Greg Lewis with Credit Suisse. Gregory Lewis - Credit Suisse Securities (USA) LLC (Broker): Yes, thank you, and good morning. And I guess, good afternoon. Terry, just listening to some of your comments – and I'm realizing the outlook for 2016 is very challenging. Then again, 2015 was really challenging as well. As we look out and you talk to customers, should we expect or are we thinking about maybe seeing a pickup in activity, or at least terms of rig years being tendered in 2016 versus 2015? Or is 2016 more likely going to look a lot more like 2015?

Greg, that's a good question. If you look at the activity we've had to date, it's, what, been maybe 25 fixtures, and that's about 50% of what we had in 2013 and 2014. So, as I look into 2016, I have to say from Transocean's knowledge of the activity that we're currently working on, we're busy as beavers. So we've got a lot of things that we're trying to close. Again, I alluded to the fact we've got lots of opportunities that we hope to have positive news soon. We just have really been working hard to close down some of these open opportunities. And I really can't give you a whole lot more color than that, but that gives me some optimism just from my own perspective. I don't know what the other folks are closing down in their shops, other than what – I can only speak to what we're closing down. Gregory Lewis - Credit Suisse Securities (USA) LLC (Broker): Okay, great. And then just, I mean – and it's been touched on a couple times, in terms of getting costs down. I mean, clearly, that's been a big focus across the sector. And really I just wanted to kind of talk a little bit about the decision – and it's been touched on – stacking a rig and scrapping a rig. Clearly, everyone's in a room analyzing the ability, the decision to finally scrap a rig. Does that end up being a board decision, or is that something that just management is able to make that decision on their own? I'm just trying to figure out if that's maybe why the scrapping of rigs is taking a little bit longer than maybe some people would think. Mark Mey - Chief Financial Officer & Executive Vice President:…

And we'll take our next question from Scott Gruber with Citigroup.

Yes, thank you. I want to come back to the midwater market. Historically there was a fair amount of overlap in the operating range across the floater fleet. Terry, how much of that overlap remains? Are we now basically in a market where the moored assets are almost exclusively working on jobs requiring moorings?

What was the last word you said, requiring – ?

Requiring moorings. I mean, are the moored assets -

Oh.

I'm wondering about the – is there a bifurcation in the floater market? We have the moored assets working on jobs requiring moorings and the DP rigs basically constituting the rest of the market.

Well, there's a segment in there that does overlap, and it's the rigs that are DP and equipped to moor. So we have ultra-deepwater rigs in Norway that can operate in 100 meters of water because they can moor. So you have special circumstances, and we have other assets that work in any other type of environment other than harsh environment. We have other assets that can moor in DP. So we do have some very special rigs that our customers like the optionality. And, in fact, there were recently three rigs that can moor in DP and the requirements were mooring and in DP. So it's a special niche market, and we have the majority of those rigs, so we like that opportunity for sure. But as far as giving you a breakdown of which ones can cross over to the midwater sector, I don't have those particular numbers to be able to discuss at this time, other than to again say that I believe that there is life for the midwater floaters after this market in some capacity, but again the world is going to move toward high-spec assets.

Well, the thinking more along the lines of the moored assets obviously have a lower operating cost, but the sixth-generation rigs are more efficient, but come with a higher operating cost, given the DP systems. What's the balance? I mean, if you're looking at wells in 3,000, 4,000 feet of water depth, what's the competitive balance there? (47:03) of the sixth-gen units able to overcome higher operating costs?

Well, in a low-cost environment, your efficiency's going to overcome to the point that you can't operate the lower-class asset because you'll be below your cash breakeven hurdle, especially in a high-cost environment where the spread costs are enormous. Does that make sense?

Yes, it does. Thanks.

Okay, thanks. Mark Mey - Chief Financial Officer & Executive Vice President: And, Scott, let me just add to that. It's not just water depth, it's also the operating conditions, the labor cost environment. If you look at Australia and compare that no West Africa, in Australia the preference would be for a moored asset. In West Africa, in the same water depth, the preference would be for a DP asset. So there's more that goes into this than just the rig capability.

And we'll take our final question today from Mark Brown with Seaport Global Securities.

Hi. I was wondering, on the Transocean Spitsbergen, you recently had the OMV contract transferred to that from the Arctic and older vessel built in 1986, and I was just wondering if that's something that you're looking at your fleet, if you have a contract on it, an older rig and a customer might benefit from a newer rig that has availability. Are you having discussions like that with other contracting situations with your customers?

Mark, we're always open to conversations of that nature, especially if we can put a higher-spec asset on an opportunity and keep it going. So that's something that we do have with the customers. The Spitsbergen is a unique situation in that we actually ended up with two streams of revenue because the work that was transferred onto the Spitsbergen, the actual work that we currently have on the Arctic, they're going to run concurrent. So it wasn't like we were scooting all the backlog onto the OMV work; we actually now have two streams. The Arctic continued on, and we'll have the Spitsbergen starting up the first of the year.

All right, thank you. And just as a follow-up, I would be curious to hear your thoughts on consolidation in the industry. You spoke a little bit about making asset acquisitions, but what about company acquisitions? Do you feel that there's a benefit in terms of cost synergies that could be driven out, or would there be a benefit for you to perhaps get more exposure to a particular asset class? I'm just curious what your thoughts are on the M&A market today. Jeremy D. Thigpen - President & Chief Executive Officer: Yeah, I think there definitely could be some cost savings associated with a combination, undoubtedly. And in terms of our approach to it, we're looking to high-grade our fleet. We're proving that through the newbuild construction that we're doing today and the rigs that we have in the yards, but if there was an opportunity out there to acquire a complete company at the right value and at the right time and simultaneously upgrade our fleet, we would certainly be interested.

And that concludes our question and answer session for today. I'd like to turn the call back over to Brad Alexander for any additional or closing remarks.

Thank you, Noah. And I would like to thank everyone for their participation and questions today. If you have any further questions, please feel free to contact me. We will look forward to talking to you again when we report our fourth quarter 2015 results. Have a good day.