www.deepwater.com Taking A Closer Look At Transocean CONTENTS Transocean Fleet Map Shareholders’ Letter Notice of 2003 Annual General Meeting and Proxy Statement 2002 Annual Report to Shareholders ABOUT TRANSOCEAN INC. Transocean Inc. is the world's largest offshore drilling contractor with more than 150 full or partially owned and managed mobile offshore drilling units, inland drilling barges and other assets utilized in the support of offshore drilling activities worldwide.The company's mobile offshore drilling fleet is considered one of the most modern and versatile in the world with 31 high-specification semisubmersibles and drillships, 27 other semisubmersibles, two other drillships and 55 jackup drilling rigs.Transocean Inc. specializes in technically demanding segments of the off- shore drilling business, including industry-leading positions in deepwater and harsh environment drilling services. Since launching the offshore drilling industry's first jackup drilling rig in 1954,Transocean has achieved a long history of technological "firsts." These innovations include the first dynamically positioned drillship, the first rig to drill year- round in the North Sea, the first semisubmersible for sub-Arctic, year-round operations and the latest generation of ultra-deepwater semisubmersible rigs and drillships. A Cayman Islands company,Transocean has approximately 13,200 employees worldwide. Principal executive U.S. offices are at 4 Greenway Plaza, Houston,Texas 77046,where the telephone number is 713.232.7500. With the largest equity market capitalization among all offshore drilling companies in excess of $7 billion at February 28, 2003, the company's ordinary shares are traded on the New York Stock Exchange under the symbol "RIG." Transocean:We're never out of our depth.® About the Cover: For the second consecutive year,Transocean Inc. has combined a shareholders’ letter, Proxy Statement and Annual Report on Form 10-K into a single, cost-effective document for shareholders.The company invites shareholders to take a closer look at Transocean and its initiatives aimed at improving operational and financial performance. Forward Looking Statements: Any statements included in this Proxy Statement and 2002 Annual Report that are not historical facts, including without limitation statements regarding future results and operations, are forward-looking statements within the meaning of applica- ble securities laws. Such statements are subject to numerous risks and uncertainties (including, but not limited to, those that can be found on pages A-__ to A-__ and A-__ and A-__ of this Proxy Statement and 2002 Annual Report) that could cause actual results to differ materially from those projected. TRANSOCEAN: A WORLD OF EXPERIENCE Transocean's industry-leading fleet of mobile offshore drilling units has constructed the majority of deepwater wells in the world and has held a leading position in harsh-environment drilling since the beginning of well construction in challenging offshore envi- ronments. Here are just a few more examples why Transocean brings a world of experience to clients who explore for and devel- op oil and natural gas offshore. Deepwater Drilling: Our drillships and semisubmersibles form the world's largest "floater" fleet and the largest deepwater fleet, working all around the world. Transocean's Discoverer Spirit drillship holds the current world deepwater drilling record at 9,727 feet of water in the U.S. Gulf of Mexico, as well as the world record for setting a subsea production "tree" in 7,209 feet of water, also in the U.S. Gulf of Mexico. The Deepwater Nautilus semisubmersible holds the current world deepwater record by a floating drilling rig in a moored configuration at 8,009 feet of water in the U.S. Gulf of Mexico. Harsh-Environment Drilling: Transocean has achieved several milestones in harsh-environment drilling, including the first rigs to drill year-round in the Barents Sea and in the deepwaters west of the Shetland Islands. Our harsh-environment fleet serves customers in the Norwegian North Sea, the U.K. North Sea and Eastern Canada. Jackup and Inland Barge Drilling: The company operates a fleet of non-U.S. jackup rigs and has the largest fleet of jackups and inland drilling barges in the U.S. Gulf Coast. Transocean: We’re never out of our depth.® * As of February 28, 2003 - Does not include three submersible drilling rigs, one mobile offshore production unit, two platform drilling rigs, 10 land rigs and three lake barges. To Our Shareholders, We entered 2002 with optimism that the year would be a rewarding one if commodity prices were reason- able. Our newbuild program was substantially behind us and the integration of R&B Falcon Corporation into the company had gone well. We had an excellent backlog of contracts and were generating substantial cash from operations to pay down debt. Even though commodity prices exceeded our expectations, 2002 proved to be a difficult year. We reported a net loss for the year of $3,732 million, or $11.69 per diluted share, on revenues of $2,674 million. Excluding the impact of goodwill impairment charges totaling $4,240 million and long-lived asset impairments of $34 million, both of which were non-cash charges, a tax benefit totaling $176 million (attributable to the restructuring of certain non-U.S. operations) and a net after-tax gain on the sale of assets of $3 million, net income for the year ended December 31, 2002 was $363 million, or $1.14 per diluted share. While our operating earnings reflected the slowdown in activity, we generated $376 million more cash flow from operating activities in 2002 than we did in 2001 and reduced our net debt by $873 million, from $4,155 million at the beginning of the year to $3,282 million at December 31, 2002. Developments leading up to war in Iraq and a lengthy national strike in Venezuela aided commodity prices, but created an environment of uncertainty. This made our customers more cautious about their exploration and production drilling. Drilling activity declined dramatically throughout the year, especially in the U.K. and Norwegian sectors of the North Sea and in the U.S. Gulf of Mexico shallow water market segment. In addi- tion, while deepwater drilling in the Gulf of Mexico remained active, drilling levels were less than expected and a modest oversupply of deepwater rigs put pressure on dayrates. We responded to these uncertainties by utilizing the advantages afforded by our size and geographic diversity to reposition rigs to stronger markets and to reduce operating and maintenance costs. During 2002, we enhanced our financial performance by cost-reduction efforts that focused primarily on procurement, maintenance and personnel. We made progress in implementing worldwide purchasing agree- ments, which allowed us to take advantage of our company’s size to realize substantial savings in the cost of supplying our rigs with needed parts and equipment. We were particularly successful with our efforts to increase the number of local nationals hired from within certain regions of operation, resulting in a reduced reliance on expatriates in these regions. We expect to continue this effort and realize additional savings in 2003 and beyond. The result of our cost-reduction initiatives allowed us to improve our 2002 adjusted EBITDA mar- gin in our International and U.S. Floater Contract Drilling Services business segment to 46% from 43% in 2001, despite a decline in fleet utilization. However, the margin improvement was offset by a marked decline in activity levels within our Gulf of Mexico Shallow and Inland Water business segment, leaving the overall adjusted EBITDA margin flat at 42% when compared to the 2001 level. Our industry-leading fleet size and geographic diversity contributed to our successful efforts in placing rigs in regions possessing more robust demand while removing these units from areas of depressed rig activity. Responding to weakening activity in the North Sea jackup market segment and an oversupply situation in the deepwater U.S. Gulf of Mexico, we mobilized rigs to locations where our strong operations base and knowledge and understanding of customer needs helped us secure profitable, long-term contracts. Two jackup rigs previ- ously operating in the North Sea were mobilized to India and Equatorial Guinea, while a semisubmersible rig and a drillship previously operating in the U.S. Gulf of Mexico were moved to Angola and India, respectively. India became a significant market segment for Transocean, as we grew from one jackup rig in 2001 to five jackup rigs and a deepwater drillship in early 2003. Like most regions where we operate, Transocean now has i the largest presence of any international drilling contractor in India and is well positioned to compete for the expected increase in the long-term needs for deepwater drilling rigs offshore India. Excellent progress was made in 2002 resolving technical problems initially experienced on several of our newbuild rigs. During the year, we improved operating uptime on our 12 newly constructed semisubmersible rigs and drillships to 95% from 90% in 2001. All of these technically advanced rigs are now performing with- in expected industry norms for reliable uptime and are providing our customers with enhanced drilling effi- ciencies in well construction. The company is advantageously positioned in 2003 to weather the continuing market uncertainties caused by geopolitical events and concern over the near-term economic outlook of the developed countries. We begin 2003 with $1.2 billion of cash and cash equivalents, and we expect to continue to generate significant cash from operations, despite the anticipated difficult market conditions. Operationally, we will continue to stress our longstanding focus on safety after a disappointing year in which there were several fatalities and serious injuries on the company’s rigs. These incidents have had a pro- found effect on all of us, and we have recommitted the company to strive for an incident-free environment – all the time, everywhere.