2014 CONSENT DECREE ANNUAL REPORT Consent Decree 2014 Annual Report 04.02.15 TABLE OF CONTENTS Annual Report Section Section Name Page 14. GENERAL TERMS .…………………………………………………………… 2 14.a COMPLIANCE AND IMPLEMENTATION …..……………………………… 2 14.b POSTINGS TO THE PUBLIC WEB SITE …….………………………….…… 3 TREATMENT OF INFORMATION ASSERTED TO BE EITHER 14.c 4 TRADE SECRETS OR CONFIDENTIAL INFORMATION ………………..… 14.d TIMEFRAMES ………………………………………………………………….. 8 14.e PERFORMANCE PLAN …………………………………………………….…. 9 15. OPERATIONAL OVERSIGHT ………………………………………………… 11 15.a.1 DRILLING OPERATIONS – AUDIT .…….…………………………………… 11 15.a.1 DRILLING OPERATIONS – SEMS .………………………….………..……… 14 15.a.2 DRILLING OPERATIONS – STOP-WORK AUTHORITY………………..….. 16 15.b BLOW OUT PREVENTER (“BOP”) CERTIFICATION ……………………… 18 15.c BOP REPORTS………………………………………………………………….. 20 15.c.1 BOP AND PIPE SHEARING REPORT………………………………………… 20 15.c.2 BOP PREVENTATIVE MAINTENANCE GAP ANALYSIS REPORT ……… 21 15.d.1& WELL CONTROL COMPETENCY ASSESSMENTS ………………………… 23 15.d.2 15.d.3 TRAINING …………………………………………………………………….… 25 15.d.4 TRAINING CENTER …………………………………………………………… 27 15.d.5 COMPETENCE ASSESSMENT MANAGEMENT SYSTEM ………………… 29 15.d.6 COMPETENCE ASSESSMENT PROGRAM …………………………………. 31 15.d.7& OPERATIONAL ALERTS ……………………………………………………… 34 15.d.8 15.d.9 HAZARD IDENTIFICATION TRAINING …………………………………….. 35 15.e DRILLING MONITORING …………………………………………………….. 36 15.f RECORDS ………………………………………………………………………. 38 15.g INCIDENT TRACKING REPORT ……………………………….…………….. 39 16.a&b OIL SPILL TRAINING ………………………………………………………….. 40 17. OIL SPILL EXERCISES ………………………………………………………… 43 17.a SIMULATED NOTIFICATION ………………………………………………… 43 i | Page Consent Decree 2014 Annual Report 04.02.15 Annual Report Section Section Name Page 17.b ACTUAL NOTIFICATION …………………………………………………….. 44 17.c OPERATOR TABLE-TOP EXERCISES ………………………………………. 45 17.d WEEKLY EMERGENCY RESPONSE DRILLS ………………………………. 47 17.e COORDINATE WITH OPERATORS ………………………………………..… 48 18. OIL SPILL RESPONSE PLANS (“OSRP”) .………………………………..….. 49 19. BEST PRACTICES ……………………………………………………………... 52 19.a COMMUNICATIONS WITH OPERATORS ………………………………..… 52 19.b ALARM SYSTEM SAFETY ………………………………………………….… 54 20. INNOVATION …………………………………………………………………... 55 21. TRANSPARENCY …………………………………………………………….... 58 21.a RESPONSIBILITY FOR CONSENT DECREE COMPLIANCE ……………… 58 21.b PUBLIC WEB SITE .……………………………………………………….…… 59 21.c NATIONAL RESPONSE RESOURCE INVENTORY …………………………. 62 22. INDEPENDENT CONSENT DECREE COMPLIANCE AUDITOR …………. 63 23. PROCESS SAFETY ………………………………………………………..…… 66 TRANSOCEAN OFFSHORE DEEPWATER DRILLING INC. 23.a 66 HEALTH, SAFETY AND ENVIRONMENTAL BOARD ……………………. 23.b INDEPENDENT PROCESS SAFETY CONSULTANT …………………..….. 67 24-28. APPROVAL OF DELIVERABLES ……………………………………………. 69 29. PERMITS ……………………………………………………………………….. 70 32. NON-COMPLIANCE REPORTS ………………………………………………. 71 ii | Page Consent Decree 2014 Annual Report 04.02.15 Appendices and Attachments Appendix 15.a.1 – Audit Appendix 15.a.1 – SEMS . Attachment 15.a.1-SEMS-2014 Certification Appendix 15.a.2 Appendix 15.b . Attachment 15.b Appendix 15.c.1 . Attachment 15.c.1 Appendix 15.c.2 Appendix 15.d.1 & 2 Appendix 15.d.3 . Attachment 15.d.3 Appendix 15.d.4 . Attachment 15.d.4 Appendix 15.d.5 & 6 Appendix 15.d.7 & 8 Appendix 15.d.9 . Attachment 15.d.9 Appendix 15.e . Attachment 15.e Appendix 15.g Appendix 16.a & b Appendix 17.a . Attachment 17.a Appendix 17.b Appendix 17.c Appendix 17.d Appendix 17.e Appendix 18 & 19.a Appendix 19.b Appendix 20 . Attachment 20 Appendix 21.a Appendix 21.b Appendix 21.c Appendix 23.a Appendix 32 Appendix 33 (2014 Certification) Appendix-Officer's Obligations Certification iii | Page Consent Decree 2014 Annual Report 04.02.15 2014 CONSENT DECREE ANNUAL REPORT A. INTRODUCTION On January 2, 2013, a settlement was entered into between certain affiliates of Transocean (“Transocean”) and the US Department of Justice (“DOJ”) relating to the 2010 Macondo incident. An important part of that settlement is a detailed Consent Decree that describes the terms of the civil settlement and includes the imposition of specific obligations on Transocean for a period of five years from the effective date of the related Performance Plan. Transocean, along with the DOJ and the other government agencies involved (“United States”) understood the importance of having a detailed and substantive Performance Plan that throughout the Consent Decree term could be verified by the United States and Consent Decree Independent Auditor. The terms of the Performance Plan primarily relate to Consent Decree Article VI (Measures to Improve Performance and Prevent Recurrence, Paragraphs 14-23) and became effective January 2, 2014. The Consent Decree, Paragraph 31.a, requires Transocean to prepare and submit an Annual Report by April 2nd of each year after the effective date of the Performance Plan to describe measures taken to comply with each of the requirements of Article VI during the previous year. In addition, Paragraph 31.a describes a number of other Annual Report requirements including the Report must be organized to show the measures taken, the status and whether there were any problems encountered with compliance. The Consent Decree requires that the status of permit applications, operation and maintenance and reports to federal or state agencies be included. These items, if any, are included throughout the Annual Report but do not have a separate section for identification. In addition, the Performance Plan in certain sections references items, lists or summaries required to be included in the Annual Report. Along with Consent Decree Paragraphs 14-23, the Annual Report is to address the remaining Paragraphs under Article VI, Paragraphs 24-28, Approval of Deliverables and Paragraph 29, Permits. Finally, under Article VIII (Reporting), Paragraph 32 requires Transocean to include in the Annual Report a description of any non-compliance and provide an explanation of the likely cause and remedial steps taken or to be taken. Because the Performance Plan and the Annual Report obligations both relate to Article VI, for organizational purposes, the 2014 Annual Report structure is based on the Performance Plan document that was approved on January 2, 2014. That document contains three subsections: “1. Implementation” which sets forth the specific actions that Transocean must undertake; “2. Milestones and Deliverables” which identifies the timeframes and required submissions; and “3. Annual Report” which identifies the information to be included in the Annual Report. Each of the sections required to be addressed in this Annual Report are set forth below. For reference and understanding, the Performance Plan “Implementation” and “Milestones and Deliverables” language is included and is shown in black font. The 2014 Annual Report related information is included in bold blue font. 1 | Page Consent Decree 2014 Annual Report 04.02.15 B. REPORT: MEASURES TO IMPROVE PERFORMANCE AND PREVENT REOCCURENCE 14. GENERAL TERMS 14.a. COMPLIANCE AND IMPLEMENTATION 1. Implementation a. As provided in this Performance Plan, Transocean shall implement or cause to be implemented, including through employees, affiliates, or contractors, the injunctive relief requirements imposed in the Consent Decree for all Drilling Operations in Waters of the United States in accordance with the requirements of the Consent Decree, within the deadlines in this Performance Plan. b. Transocean shall continue to implement or cause to be implemented the requirements of the Consent Decree and this Performance Plan for the duration of the Consent Decree. c. Compliance with the requirements of the Consent Decree and this Performance Plan by any one or more of the Transocean affiliates shall satisfy the requirements of the Consent Decree for all the Transocean affiliates. 2. Milestones and Deliverables a. All See “Annual Report” below. 3. 2014 Annual Report Measures Taken: Q.1 – Q.4 This Section of the Consent Decree is the general provision that requires Transocean and its subsidiaries to fully implement the Consent Decree and Performance Plan obligations for all “Drilling Operations” in the “Waters of the United States,” as defined in the Consent Decree. Therefore the measures taken during each quarter are all those described in Sections 14.b through 23 below, in addition to other obligations required under other Sections of the Consent Decree and Performance Plan that were met during the quarter. Status and Summary (if required): Transocean is continuing its focus on fully implementing the Consent Decree and Performance Plan obligations. The company has a team of professionals (the “Obligations Team”) focused on the effort and numerous processes in place to ensure compliance. There has been a special focus on the key operations positions of Rig Managers and Offshore Installation Managers (“OIMs”). Specific obligation summaries with highlighted priorities have been developed for those positions and there are ongoing communications between the Obligations Team and the individuals in these roles. In addition, the Obligations Team has built a close working relationship with the company personnel in key roles in functions such as Health, Safety and Environmental (“HSE”), Training and 2 | Page Consent Decree 2014 Annual Report 04.02.15 Subsea Engineering. The Obligations Team has also built extensive databases to track their compliance efforts and new tracking requirements were added to the existing electronic global management system (“GMS”), maintenance and training tracking systems. Importantly, the Obligations