CHICAGO—Transocean Inc., the world’s largest offshore oil and gas driller, said fourth-quarter net income jumped 70 percent as record crude prices and a scarcity of deep-water rigs lifted rents. The company’s shares had their biggest gain in more than five years.

Profit climbed to $1.06 billion, or $4.17 a share, from $621 million, or $2.92, a year earlier, Houston-based Transocean said last week in a public filing. Excluding such items as a gain from an asset sale, profit was about $3.40 a share, 89 cents above the average of 22 analyst estimates compiled by Bloomberg.

Increasing exploration spending by oil and natural-gas producers pushed utilization of Transocean’s most prized deepwater rigs to 98 percent last year from 90 percent in 2006.

Transocean signed a then-record $600,000-a-day drilling contract in October and the next month acquired rival GlobalSanteFe Corp. to combine the world’s two largest offshore rig operators.

“They are seeing the benefits of the expansion of their fleet and market share, which has given them more control over the market,” Andreas Stubsrud, an analyst at Kaupthing Bank in Oslo said last week in a telephone interview. “Acquiring the management of GlobalSanteFe is also helping them in getting better rates because that’s something GlobalSantFe was always better at than Transocean.”

Transocean rose $9.08, or 7 percent, to $138.73 in New York Stock Exchange composite trading. The gain was Transocean’s largest since November 2002.

Fourth-quarter revenue surged 75 percent to $2.08 billion, including about one month of results from the former GlobalSantaFe operations, Transocean said. US oil futures jumped 57 percent last year on the way to topping $100 a barrel for the first time in January.

Transocean’s acquisition of GlobalSantaFe Corp. helped increase the company’s contract backlog to $30.9 billion. The company announced more than $900 million in contract extensions and new leases in the past week for vessels to drill in the Gulf of Mexico and Indonesia’s Makassar Straits for producers such as Marathon Oil Corp., StatoilHydro ASA and ConocoPhillips.

Transocean’s earnings probably will continue to rise for at least the next three years, said Stubsrud, who has a “buy” rating on the company’s shares and owns none.

Drillers are benefiting as producers push exploration programs further offshore in search of deposits like Brazil’s Tupi field and Chevron Corp.’s Jack prospect in the Gulf of Mexico.

Deep-water rigs are “supply-constrained” amid increasing demand for vessels to explore new prospects in Brazil and India, Transocean chief executive officer Robert Long told investors last week on a conference call.

The average fourth-quarter rent for Transocean’s ultradeep-water floating rigs was $346,100 a day, up 26 percent from a year earlier. Its jack-up units, which work in shallower waters and have retractable legs that extend to the sea floor, averaged $130,800 a day, up 37 percent.

Transocean, which opened the deepest regions of the Gulf of Mexico to oil exploration eight years ago by venturing into 8,000-foot (2,400-meter) seas for the first time, has five vessels under construction that can operate in 12,000-foot oceans and bore wells more than seven miles beneath the sea floor.

The company’s fleet includes rigs leased through 2014.

Demand and rates for jack-up rigs have “positively surprised” the company and appear likely to remain strong through the first half of this year, David Mullen, senior vice president for marketing and planning, said on the conference call.

Fourth-quarter operating and maintenance costs rose 62 percent to $923 million. For all of 2008, those costs probably will reach $5.1 billion to $5.3 billion, Transocean said.

“The big worry in this industry is cost because cost inflation has been tremendous,” said Truls Olsen, an analyst at Fearnley Fonds ASA in Oslo. “The key challenge to continuing to post strong earnings will be how successful they are in pushing cost increases onto their customers.” (Bloomberg)

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CHICAGO—Transocean Inc., the world’s largest offshore oil and gas driller, said fourth-quarter net income jumped 70 percent as record crude prices and a scarcity of deep-water rigs lifted rents. The company’s shares had their biggest gain in more than five years.

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