UPDATE 2-Transocean 1st-qtr profit up sharply, tops Street

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By Anna Driver

HOUSTON, May 7 (Reuters) - Transocean Inc (RIG.N), the world's largest oil and gas drilling contractor, said on Wednesday quarterly profit more than doubled, beating Wall Street expectations, on higher rates for its deepwater rigs and lower-than-expected expenses.

Shares of the company rose 2.6 percent in pre-market trading.

Record high crude oil prices have created a boom in demand for floating rigs and drill ships that operate in the deepest waters. Drilling contractors have benefited as tight supplies have pushed daily rig rates above $600,000 in some cases.

First-quarter profit jumped to $1.19 billion, or $3.71 per share, from $553 million, or $2.62 per share, a year earlier.

Excluding one-time items, the company earned $3.80 a share. Analysts, on average, had expected $3.32, according to Reuters Estimates.

"The beat was mainly due to lower operating expenses," Mark Urness, oilfield service analyst at Calyon Securities, said. "It's probably deferred maintenance, so it will come back later in the year. Still it's still a good quarter."

Revenue soared 135 percent to $3.11 billion, boosted by Transocean's acquisition of smaller rival GlobalSanteFe Corp. in November 2007.

Average daily rental rates, or dayrates, for the Houston company's total fleet rose 15.6 percent to $229,000.

The increase in average dayrate was seen in all categories, primarily due to rigs starting new contracts at the higher dayrates, Transocean said.

Costs for the first quarter of 2008 benefited from the postponement of several shipyard and major maintenance projects to later in the year, according to the company.

Transocean shares jumped to $162 in premarket trading, up from Tuesday's New York Stock Exchange close of $157.85. (Reporting by Anna Driver in Houston, editing by Dave Zimmerman)