UPDATE 3-Transocean profit falls, sees no rig buy bargains

* Q4 net EPS $2.50 vs $4.17 a year ago

* Q4 adjusted EPS $3.69, in line with Wall St estimate

* CEO does not see much market now to buy discounted rigs

* Shares down 5 pct, sector down 7 pct (Adds comments from conference call, updates shares)

By Euan Rocha and Braden Reddall

NEW YORK/SAN FRANCISCO, Feb 17 (Reuters) - Transocean Ltd (RIG.N), the world's largest offshore drilling contractor, reported a lower quarterly net profit on Tuesday due to charges and its shares and the sector tumbled along with oil prices.

The company sees continued good demand for its expanding deepwater fleet, particularly from Brazil and India, but sees significant downtime for some of its other rigs in 2009.

Chief Executive Bob Long, reporting the first results since moving his company to Switzerland, also said current asking prices to buy rigs from companies seeking to raise cash were not discounted enough to attract Transocean's interest.

"I don't detect much of a market out there right now for opportunities to acquire rigs of any class," Long told analysts on a conference call. "I expect some will develop, but there aren't very many being discussed right now."

The company is building 10 new rigs of its own, which will account for three-quarters of its planned 2009 capital expenditure of $3.95 billion, up from $2.2 billion last year.

Fourth-quarter net income fell to $800 million, or $2.50 a share, from $1.06 billion, or $4.17 a share, in the same quarter a year ago, when results also included a gain from the sale of a drillship. Revenue rose 57 percent to $3.27 billion.

Charges included $208 million for goodwill and impairments related to drilling management services, $97 million for writedowns on two rigs held for sale and $46 million related to rigs acquired in its GlobalSantaFe merger in 2007.

Excluding items, it earned $3.69 a share, in line with the average Wall Street forecast, according to Reuters Estimates.

Previously, Diamond Offshore Drilling Inc (DO.N) and Noble Corp (NE.N) both reported strong fourth-quarter profits ahead of the sharp slowdown in activity this year, particularly on land and for operators of jackups that drill in shallower waters.

On the deepwater side, Long said Brazil's Petrobras (PETR4.SA) and India's Oil and Natural Gas Corp Ltd (ONGC.BO) were in the market for multiple rigs.

U.S.-listed Transocean, which moved its incorporation to Switzerland from the Cayman Islands two months ago for tax reasons, announced on Monday plans to seek shareholder approval in May to buy back up to about $3 billion of its own shares.