OOFFSHOREFFSHORE FFA TransoceanRONTIERSRONTIERS Sedco Forex Publication August 2000 Brazil: Times of Change Victor E. Grijalva, Chairman (right), J. Michael Talbert, President, CEO Welcome The first half of 2000 showed steady improvement for Transocean Sedco Forex, as our rig fleet utilization approached 75% entering the third quarter, up from a low of less than 60% in February. In virtually every major offshore drilling market, employees have been hard at work returning rigs to service. In four of our seven major markets, utilization rates now stand at 100% for rigs we actively market. These areas cover Brazil, which is featured in this edition of Offshore Frontiers, Southeast Asia, Norway and the U.S. Gulf of Mexico. In addition, our newbuild jackup the Trident 20, which is also profiled in this edition of the company magazine, will soon begin work as the first rig built at a new Baku shipyard and outfitted with advanced Western technology for drilling in the Caspian Sea. One of our biggest market turnarounds has been the U.K. sector of the North Sea, which some industry watchers had written off at the beginning of the year. In January, only six of our 13 fully- or partially-owned semisubmersibles in this market were drilling. But by mid-summer, we had returned three rigs to service, deployed the Sedco 714 to Canada and sold the Transocean Discoverer, an idle unit with limited near-term prospects. At that point, we had nine of 11 rigs working in the U.K. North Sea. What a difference half a year makes! Looking forward, the long-anticipated increase in exploration and production spend- ing levels by our customers appears to have begun and should accelerate through 2001. Because oil prices have hovered near the $30-a-barrel mark for several weeks, customers’ cautiousness about E&P spending appears to be lessening. In fact, BP in July announced its intention to increase E&P expenditures by an average of up to 33% per year over the next three years. Such a move by this valued customer and others, coupled with the continued strength of national economies, should bring opportunities to keep more of our offshore drilling rigs working, many at higher dayrates. Also important to our success will be our ability to continue to focus on our core values of FIRST as we further meet our customers’ needs for offshore drilling. Keep up the great work! CONTENTSAugust 2000 Volume 1. Number 2 FEATURES From deepwater drilling offshore Brazil to building a new jackup in Baku, Azerbaijan, Offshore Frontiers Mission Statement: profiles two of the company’s industry-leading initiatives. To be the premier offshore drilling company providing worldwide, Brazil: Times of Change rig-based well-construction services 2 Deepwater drilling and a constant diet of change make to our customers through the inte- the Brazilian market one of the most exciting and gration of motivated people, quality potentially rewarding drilling theatres in the world. equipment and innovative technology, with a particular focus on technically About Brazil demanding environments. 10 Don’t get caught in-country without the facts. Core Values: Transocean Sedco Forex Firsts in Brazil Financial Discipline Transocean Sedco Forex — a leader in the Brazilian Integrity and Honesty 11 Respect for Employees, offshore drilling industry for more than three and a Customers and Suppliers half decades. Safety Technical Leadership Marketing Brazil: Supporting Change 12 Marketing Representative Daniel Elias explains how Offshore Frontiers is published the Brazilian offshore drilling market is evolving and quarterly for our employees, his role in a new business environment. retirees, customers and other key audiences. Also published quarterly Making the Most of Offshore Drilling for employees is On Location, which 13 Petrobras Manager of Drilling Rigs Edson Luiz Megale is designed to keep up with off- Vale describes what his company looks for in an off- shore personnel around the world. shore drilling contractor. Submit ideas, comments and articles for the next issues of Brazil: Hot Market, Warm Culture Offshore Frontiers and 14 Sun, surf and samba mix well in friendly Brazil. On Location BY OCTOBER 20, 2000 to: Trident 20: From Singapore to Baku 16 The world-class Trident 20 — built in Singapore and Guy Cantwell a new Baku yard — possesses advanced,Western tech- Corporate Communications Manager 4 Greenway Plaza nology for drilling in the Caspian Sea. Houston, Texas USA 77046 [email protected] Executive Editor & Writer: DEPARTMENTS Guy Cantwell Contributing Writers: Legacy of Leadership Theresa Seegers, Daniel Elias, 22 Egypt, land of the pyramids — and Transocean Sedco Deepak Munganahalli, Forex. Mark Nystrom Design: People FIRST Ellen Custer 23 Tony Igho — Millennium Citizen of Excellence. Photography: It’s Not Too Late! Marcus Almeida, Guy Cantwell, Connecting with Customers Ken Childress, Daniel Elias, 24 Our customers tell us how we’re doing. Don’t forget to send in Walter Knur, Monica Nelson, your favorite photo for Alvaro Victor, King Chou Wong Corporate Report entry in the company- On-the-job training is the latest in learning for employees. Printing: 26 wide photo contest. AC Graphics The Big 6 The deadline for Visit us at our Web site: 28 Construction updates on our advanced drilling rigs. sending entries to the www.deepwater.com Executive Editor Rig Locator has been extended On the Cover: 29 World map and complete rig listing. to October 20, 2000. The Transocean Legend works in the Winners will be featured Marlim field of the Campos Basin in the next issue. of Brazil. Brazil: Times of Change 2 Offshore Frontiers August 2000 Facing Page: Transocean Driller, Marlim field. Below, left to right: Transocean Driller; Sedco 710, Albacora field; Koos Hooghiem, Captain, Sedco 707, Roncador field. RIO DE JANEIRO — Brazil, one of the world’s hottest sale of concessions for potential oil-producing areas deepwater offshore drilling markets is on the verge to foreign operators will help the country to boost of getting even hotter. And Transocean Sedco Forex production to 2 million barrels a day by 2005. The is playing an important role in the process. concessions for 21 areas are also expected to generate “Future business opportunities in the $1 billion in technology and infrastructure development. Brazilian petroleum industry could be tremendous,” As a backdrop to that development, consider that 37 says Daniel Elias, Marketing Representative in Brazil foreign and seven Brazilian companies were approved for Transocean Sedco Forex. “The opening of the to bid for the concessions and that: E&P market to foreign operators and investors has • Brazil’s demand for semisubmersibles and drillships generated huge, international focus and expectations. has doubled the past four years. If additional discoveries of crude oil are made in the • Brazil ranks as the largest global market for dynami- next 10 years, as everyone is expecting, Brazilian cally positioned rigs. production could double to about three million • Almost half of the world’s rigs able to work in more barrels a day.” In that case, the demand outlook for than 5,000 feet of water will be in Brazil this year. offshore drilling rigs — especially deepwater units — • Demand for semisubmersibles and drillships, or will brighten even more. floating rigs, is expected to increase in the next few years. Becoming a Net Exporter • Seismic activity — a precursor to drilling — during the past 18 months has been vigorous. One of the country’s goals is to quickly change from being a net importer of crude oil to net exporter. The main reason: economics. Brazil last year imported Experience, Experience, Experience 339,000 barrels of oil per day,enough to meet about a When asked to name the single most important suc- fifth of its oil needs. By increasing crude oil production, cess factor for Transocean Sedco Forex, Elias doesn’t Brazil could better support its growing population, hesitate. “Experience, experience, experience,”he says. fuel an expanding industrial base and eventually profit “You can plan, negotiate contracts and study by selling excess oil on the world market, especially the market all you want. But at the end of the day,our if higher prices continue to hold up. people — who fully understand day-to-day business in Brazil, including operational, technical, logistical, Boosting Production and legal issues — give Transocean Sedco Forex a The country is off to a good start toward achieving great deal of credibility. This is recognized by our its goals. By mid-year 2000, Brazil had increased its partners and clients, and has been achieved not only production to 1.2 million barrels a day, up from by the quality of our people, but also by the fact that almost 1 million barrels a day last year. In addition, we have been continuously operating with Petrobras the National Petroleum Agency hopes the recent June in Brazil for over 35 years.” 3 Press Box FORTALEZA Media Mentions An offshore pioneer in this country, the company [Transocean Sedco Forex] has been active in offshore activities in Brazil since they started in 1964, and has accompanied the Brazilian national oil company in its “March Into Deep Waters.” Brasil Energia March 2000 SALVADOR ✯ BRASÍLIA BRAZIL BELO HORIZONTE VITÓRIA CAMPOS Discoverer Seven Seas MACAÉ Sedco 707 Sedco 710 RIO DE JANEIRO Legend Driller Sedco 135D SAO PAULO SANTOS CURITIBA PORTO ALEGRE Atlantic Ocean 4 Offshore Frontiers August 2000 Below, left to right: Charlie Hobgood, Deck Supervisor; Joao Evangelista, Welder; José P.Nunes, Roustabout; and Luiz Oliveira Peres, Roustabout, on Transocean Driller. Also, Sedco 707; Sedco 707 moonpool. Drilling Firsts, Passo a Passo the National Petroleum Agency,a new regulatory body, or Petrobras, and you will find people everywhere As elsewhere in the world, offshore drilling experience planning to create a more effective energy industry in Brazil is a hallmark of Transocean Sedco Forex.