Three months ended
Three months ended June 30, March 31, sequential June 30, year-over-year 2024 2024 change 2023 change(In millions, except per share amounts, percentages and backlog) Contract drilling revenues$861 $763 $98 $729 $132 Adjusted contract drilling revenues$861 $767 $94 $748 $113 Revenue efficiency (1)96.9% 92.9% 4.0% 97.2% (0.3)%Operating and maintenance expense$534 $523 $11 $484 $50 Net income (loss) attributable to controlling interest$(123) $98 $(221) $(165) $42 Diluted earnings (loss) per share$(0.15) $0.11 $(0.26) $(0.22) $0.07 Adjusted EBITDA$284 $199 $85 $237 $47 Adjusted EBITDA margin33.0% 26.0% 7.0% 31.7% 1.3%Adjusted net loss$(123) $(22) $(101) $(110) $(13)Adjusted diluted loss per share$(0.15) $(0.03) $(0.12) $(0.15) $— Backlog as of the July 2024 Fleet Status Report$8.64 billion
STEINHAUSEN, Switzerland, July 31, 2024 (GLOBE NEWSWIRE) — Transocean Ltd. (NYSE: RIG) today reported a net loss attributable to controlling interest of $123 million, $0.15 per diluted share, for the three months ended June 30, 2024. Second quarter results included certain favorable and unfavorable items, that were offsetting (see attached schedule).
Contract drilling revenues for the three months ended June 30, 2024, increased sequentially by $98 million to $861 million, primarily due to increased rig utilization and higher revenue efficiency across the fleet. This was partially offset by lower reimbursable revenue and lower revenues resulting from the sale of Paul B. Loyd, Jr.
Operating and maintenance expense was $534 million, compared with $523 million in the prior quarter. The sequential increase was primarily due to rigs returning to work after undergoing contract preparation in the first quarter and increased costs associated with the early retirement of certain personnel. This was partially offset by lower reimbursed expenses and lower operating costs resulting from the sale of Paul B. Loyd, Jr.
General and administrative expense was $59 million, up from $52 million in the first quarter. The increase was primarily due to costs associated with the early retirement of certain personnel and professional fees.
After consideration of the favorable adjustment of $69 million and $10 million in the second and first quarter, respectively, for the fair value of the bifurcated exchange feature related to the 4.625% exchangeable bonds, interest expense net of capitalized amounts was $143 million, compared to $127 million in the prior quarter. Interest income was $14 million, compared to $15 million in the previous quarter.
The Effective Tax Rate(2) was 474.5%, up from 206.0% in the prior quarter. The increase was primarily due to increased income before tax. The Effective Tax Rate excluding discrete items was 416.3% compared to 76.9% in the previous quarter.
Cash provided by operating activities was $133 million during the second quarter of 2024, representing an increase of $219 million compared to $86 million cash used in operating activities in the prior quarter. The sequential increase was primarily due to timing of interest payments, decreased payments for payroll-related costs and increased cash collected from customers.
Second quarter 2024 capital expenditures of $84 million were primarily associated with the newbuild ultra-deepwater drillship Deepwater Aquila. This compares with $83 million in the prior quarter.
“The entire Transocean team executed well in the second quarter, delivering strong uptime performance for our customers, which drove revenue efficiency to 97% and produced 33% Adjusted EBITDA margins,” said Chief Executive Officer, Jeremy Thigpen. “In addition, the team recently secured a number of meaningful contracts, which are illustrative of current industry dynamics and reinforce our view that we are in an increasingly tightening market. Of these contracts, we are especially excited to continue 20K operations with Beacon in the U.S. Gulf of Mexico.”
Thigpen concluded, “As we continue to secure work for our fleet, our focus remains on optimizing our portfolio of assets to maximize EBITDA and generate free cash flows, which we can use to de-lever the balance sheet.”
Non-GAAP Financial Measures
We present our operating results in accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”). We believe certain financial measures, such as Adjusted Contract Drilling Revenues, EBITDA, Adjusted EBITDA and Adjusted Net Income, which are non-GAAP measures, provide users of our financial statements with supplemental information that may be useful in evaluating our operating performance. We believe that such non-GAAP measures, when read in conjunction with our operating results presented under U.S. GAAP, can be used to better assess our performance from period to period and relative to performance of other companies in our industry, without regard to financing methods, historical cost basis or capital structure. Such non-GAAP measures should be considered as a supplement to, and not as a substitute for, financial measures prepared in accordance with U.S. GAAP.
All non-GAAP measure reconciliations to the most comparative U.S. GAAP measures are displayed in quantitative schedules on the company’s website at: www.deepwater.com.
About Transocean
Transocean is a leading international provider of offshore contract drilling services for oil and gas wells. The company specializes in technically demanding sectors of the global offshore drilling business with a particular focus on ultra-deepwater and harsh environment drilling services, and operates the highest specification floating offshore drilling fleet in the world.
Transocean owns or has partial ownership interests in and operates a fleet of 36 mobile offshore drilling units, consisting of 28 ultra-deepwater floaters and eight harsh environment floaters.
For more information about Transocean, please visit: www.deepwater.com.
Conference Call Information
Transocean will conduct a teleconference starting at 11 a.m. EDT, 5 p.m. CEST, on Thursday, August 1, 2024, to discuss the results. To participate, dial +1 785-424-1222 and refer to conference code 119567 approximately 15 minutes prior to the scheduled start time.
The teleconference will be simulcast in a listen-only mode at: www.deepwater.com, by selecting Investors, News, and Webcasts. Supplemental materials that may be referenced during the teleconference will be available at: www.deepwater.com, by selecting Investors, Financial Reports.
A replay of the conference call will be available after 2 p.m. EDT, 8 p.m. CEST, on Thursday, August 1, 2024. The replay, which will be archived for approximately 30 days, can be accessed at +1 402-220-1119, passcode 119567. The replay will also be available on the company’s website.
Forward-Looking Statements
The statements described herein that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements could contain words such as “possible,” “intend,” “will,” “if,” “expect,” or other similar expressions. Forward-looking statements are based on management’s current expectations and assumptions, and are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. As a result, actual results could differ materially from those indicated in these forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, estimated duration of customer contracts, contract dayrate amounts, future contract commencement dates and locations, planned shipyard projects and other out-of-service time, sales of drilling units, timing of the company’s newbuild deliveries, operating hazards and delays, risks associated with international operations, actions by customers and other third parties, the fluctuation of current and future prices of oil and gas, the global and regional supply and demand for oil and gas, the intention to scrap certain drilling rigs, the success of our business following prior acquisitions, the effects of the spread of and mitigation efforts by governments, businesses and individuals related to contagious illnesses, and other factors, including those and other risks discussed in the company’s most recent Annual Report on Form 10-K for the year ended December 31, 2023, and in the company’s other filings with the SEC, which are available free of charge on the SEC’s website at: www.sec.gov. Should one or more of these risks or uncertainties materialize (or the other consequences of such a development worsen), or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or expressed or implied by such forward-looking statements. All subsequent written and oral forward-looking statements attributable to the company or to persons acting on our behalf are expressly qualified in their entirety by reference to these risks and uncertainties. You should not place undue reliance on forward-looking statements. Each forward-looking statement speaks only as of the date of the particular statement, and we undertake no obligation to publicly update or revise any forward-looking statements to reflect events or circumstances that occur, or which we become aware of, after the date hereof, except as otherwise may be required by law. All non-GAAP financial measure reconciliations to the most comparative GAAP measure are displayed in quantitative schedules on the company’s website at: www.deepwater.com.
This press release, or referenced documents, do not constitute an offer to sell, or a solicitation of an offer to buy, any securities, and do not constitute an offering prospectus within the meaning of the Swiss Financial Services Act (“FinSA”) or advertising within the meaning of the FinSA. Investors must rely on their own evaluation of Transocean and its securities, including the merits and risks involved. Nothing contained herein is, or shall be relied on as, a promise or representation as to the future performance of Transocean.
Notes
(1) Revenue efficiency is defined as actual operating revenues, excluding revenues for contract terminations and reimbursements, for the measurement period divided by the maximum revenue calculated for the measurement period, expressed as a percentage. Maximum revenue is defined as the greatest amount of contract drilling revenues the drilling unit could earn for the measurement period, excluding revenues for incentive provisions, reimbursements and contract terminations. See the accompanying schedule entitled “Revenue Efficiency.”
(2) Effective Tax Rate is defined as income tax expense or benefit divided by income or loss before income taxes. See the accompanying schedule entitled “Supplemental Effective Tax Rate Analysis.”
Analyst Contact:
Alison Johnson
+1 713-232-7214
Media Contact:
Pam Easton
+1 713-232-7647
TRANSOCEAN LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share data)
(Unaudited)
Three months ended Six months ended June 30, June 30, 2024 2023 2024 2023 Contract drilling revenues$861 $729 $1,624 $1,378 Costs and expenses Operating and maintenance 534 484 1,057 893 Depreciation and amortization 184 186 369 368 General and administrative 59 48 111 93 777 718 1,537 1,354 Loss on impairment of assets (143) (53) (143) (53)Loss on disposal of assets, net — — (6) (170)Operating loss (59) (42) (62) (199) Other income (expense), net Interest income 14 11 29 30 Interest expense, net of amounts capitalized (74) (168) (191) (417)Gain (loss) on retirement of debt 140 — 140 (32)Other, net 12 18 24 23 92 (139) 2 (396)Income (loss) before income tax expense (benefit) 33 (181) (60) (595)Income tax expense (benefit) 156 (16) (35) 35 Net loss (123) (165) (25) (630)Net income attributable to noncontrolling interest — — — — Net loss attributable to controlling interest$(123) $(165) $(25) $(630) Loss per share, basic and diluted$(0.15) $(0.22) $(0.03) $(0.85)Weighted-average shares, basic and diluted 824 761 821 745
TRANSOCEAN LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except share data)
(Unaudited)
June 30, December 31, 2024 2023Assets Cash and cash equivalents$475 $762 Accounts receivable, net of allowance of $2 at June 30, 2024 and December 31, 2023 607 512 Materials and supplies, net of allowance of $197 and $198 at June 30, 2024 and December 31, 2023, respectively 440 426 Restricted cash and cash equivalents 400 233 Other current assets 213 193 Total current assets 2,135 2,126 Property and equipment 24,066 23,875 Less accumulated depreciation (6,983) (6,934)Property and equipment, net 17,083 16,941 Contract intangible assets — 4 Deferred tax assets, net 30 44 Other assets 1,077 1,139 Total assets$20,325 $20,254 Liabilities and equity Accounts payable$296 $323 Accrued income taxes 22 23 Debt due within one year 526 370 Other current liabilities 729 681 Total current liabilities 1,573 1,397 Long-term debt 6,775 7,043 Deferred tax liabilities, net 470 540 Other long-term liabilities 798 858 Total long-term liabilities 8,043 8,441 Commitments and contingencies Shares, $0.10 par value, 1,057,879,029 authorized, 141,262,093 conditionally authorized, 940,828,901 issued and 875,456,314 outstanding at June 30, 2024, and CHF 0.10 par value, 1,021,294,549 authorized, 142,362,093 conditionally authorized, 843,715,858 issued and 809,030,846 outstanding at December 31, 2023 87 81 Additional paid-in capital 14,859 14,544 Accumulated deficit (4,058) (4,033)Accumulated other comprehensive loss (180) (177)Total controlling interest shareholders’ equity 10,708 10,415 Noncontrolling interest 1 1 Total equity 10,709 10,416 Total liabilities and equity$20,325 $20,254
TRANSOCEAN LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Six months ended June 30, 2024 2023Cash flows from operating activities Net loss$(25) $(630)Adjustments to reconcile to net cash provided by operating activities: Amortization of contract intangible asset 4 37 Depreciation and amortization 369 368 Share-based compensation expense 26 20 Loss on impairment of assets 143 53 Loss on impairment of investment in unconsolidated affiliate 5 — Loss on disposal of assets, net 6 170 Fair value adjustment to bifurcated compound exchange feature (79) 179 Amortization of debt-related balances, net 26 25 (Gain) loss on retirement of debt (140) 32 Deferred income tax expense (benefit) (56) 27 Other, net (3) 21 Changes in deferred revenues, net 97 27 Changes in deferred costs, net (49) (37)Changes in other operating assets and liabilities, net (277) (182)Net cash provided by operating activities 47 110 Cash flows from investing activities Capital expenditures (167) (157)Investment in loan to unconsolidated affiliate (3) — Investment in equity of unconsolidated affiliate — (10)Proceeds from disposal of assets, net 51 4 Cash acquired in acquisition of unconsolidated affiliate 5 — Net cash used in investing activities (114) (163) Cash flows from financing activities Repayments of debt (1,815) (1,568)Proceeds from issuance of debt, net of issue costs 1,767 1,665 Other, net (5) (1)Net cash provided by (used in) financing activities (53) 96 Net increase (decrease) in unrestricted and restricted cash and cash equivalents (120) 43 Unrestricted and restricted cash and cash equivalents, beginning of period 995 991 Unrestricted and restricted cash and cash equivalents, end of period$875 $1,034
TRANSOCEAN LTD. AND SUBSIDIARIESFLEET OPERATING STATISTICS Three months ended June 30, March 31, June 30, Contract Drilling Revenues (in millions)2024 2024 2023Ultra-deepwater floaters$606 $569 $536 Harsh environment floaters 255 194 193 Total contract drilling revenues$861 $763 $729
Three months ended June 30, March 31, June 30, Average Daily Revenue (1)2024 2024 2023Ultra-deepwater floaters$433,900 $422,900 $380,600 Harsh environment floaters 449,600 367,900 332,000 Total fleet average daily revenue$438,300 $408,200 $367,000
Three months ended June 30, March 31, June 30, Utilization (2)2024 2024 2023Ultra-deepwater floaters 53.5% 51.2% 53.7%Harsh environment floaters 73.0% 62.0% 57.7%Total fleet average rig utilization 57.8% 53.7% 54.7%
Three months ended June 30, March 31, June 30, Revenue Efficiency (3)2024 2024 2023Ultra-deepwater floaters 96.5% 92.7% 97.3%Harsh environment floaters 98.1% 93.3% 96.8%Total fleet average revenue efficiency 96.9% 92.9% 97.2% (1) Average daily revenue is defined as operating revenues, excluding revenues for contract terminations, reimbursements and contract intangible amortization, earned per operating day. An operating day is defined as a day for which a rig is contracted to earn a dayrate during the firm contract period after operations commence. (2) Rig utilization is defined as the total number of operating days divided by the total number of rig calendar days in the measurement period, expressed as a percentage. (3) Revenue efficiency is defined as actual operating revenues, excluding revenues for contract terminations and reimbursements, for the measurement period divided by the maximum revenue calculated for the measurement period, expressed as a percentage. Maximum revenue is defined as the greatest amount of contract drilling revenues the drilling unit could earn for the measurement period, excluding revenues for incentive provisions, reimbursements and contract terminations.
TRANSOCEAN LTD. AND SUBSIDIARIESNON-GAAP FINANCIAL MEASURES AND RECONCILIATIONSADJUSTED NET INCOME (LOSS) AND ADJUSTED DILUTED EARNINGS (LOSS) PER SHARE(in millions, except per share data) YTD QTD YTD 06/30/24 06/30/24 03/31/24Adjusted Net Loss Net income (loss) attributable to controlling interest, as reported$(25) $(123) $98 Loss on impairment of assets, net of tax 138 138 — Loss on impairment of investment in unconsolidated affiliates 5 4 1 Gain on retirement of debt (140) (140) — Discrete tax items (123) (2) (121)Net loss, as adjusted$(145) $(123) $(22) Adjusted Diluted Loss Per Share: Diluted earnings (loss) per share, as reported$(0.03) $(0.15) $0.11 Loss on impairment of assets, net of tax 0.17 0.17 — Loss on impairment of investment in unconsolidated affiliates — — — Gain on retirement of debt (0.17) (0.17) — Discrete tax items (0.15) — (0.14)Diluted loss per share, as adjusted$(0.18) $(0.15) $(0.03)
YTD QTD YTD QTD YTD QTD YTD 12/31/23 12/31/23 09/30/23 09/30/23 06/30/23 06/30/23 03/31/23Adjusted Net Loss Net loss attributable to controlling interest, as reported$(954) $(104) $(850) $(220) $(630) $(165) $(465)Loss on impairment of assets 57 (1) 58 5 53 53 — Loss on disposal of assets, net 169 — 169 — 169 — 169 Loss on impairment of investment in unconsolidated affiliate 5 5 — — — — — Loss on conversion of debt to equity 27 24 3 — 3 3 — (Gain) loss on retirement of debt 31 (1) 32 — 32 — 32 Discrete tax items (74) 3 (77) (65) (12) (1) (11)Net loss, as adjusted$(739) $(74) $(665) $(280) $(385) $(110) $(275) Adjusted Diluted Loss Per Share: Diluted loss per share, as reported$(1.24) $(0.13) $(1.13) $(0.28) $(0.85) $(0.22) $(0.64)Loss on impairment of assets 0.07 — 0.08 0.01 0.07 0.07 — Loss on disposal of assets, net 0.22 — 0.23 — 0.23 — 0.23 Loss on impairment of investment in unconsolidated affiliate 0.01 0.01 — — — — — Loss on conversion of debt to equity 0.04 0.03 — — — — — (Gain) loss on retirement of debt 0.04 — 0.04 — 0.04 — 0.04 Discrete tax items (0.10) — (0.10) (0.09) (0.01) — (0.01)Diluted loss per share, as adjusted$(0.96) $(0.09) $(0.88) $(0.36) $(0.52) $(0.15) $(0.38)
TRANSOCEAN LTD. AND SUBSIDIARIES
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS
ADJUSTED CONTRACT DRILLING REVENUES
EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION AND RELATED MARGINS
(in millions, except percentages)
YTD QTD YTD 06/30/24 06/30/24 03/31/24 Contract drilling revenues$1,624 $861 $763 Contract intangible asset amortization 4 — 4 Adjusted Contract Drilling Revenues$1,628 $861 $767 Net income (loss)$(25) $(123) $98 Interest expense, net of interest income 162 60 102 Income tax expense (benefit) (35) 156 (191)Depreciation and amortization 369 184 185 Contract intangible asset amortization 4 — 4 EBITDA 475 277 198 Loss on impairment of assets 143 143 — Loss on impairment of investment in unconsolidated affiliates 5 4 1 Gain on retirement of debt (140) (140) — Adjusted EBITDA$483 $284 $199 Profit (loss) margin (1.5)% (14.3)% 12.9 EBITDA margin 29.2% 32.2% 25.8 Adjusted EBITDA margin 29.7% 33.0% 26.0
YTD QTD YTD QTD YTD QTD YTD 12/31/23 12/31/23 09/30/23 09/30/23 06/30/23 06/30/23 03/31/23 Contract drilling revenues$2,832 $741 $2,091 $713 $1,378 $729 $649 Contract intangible asset amortization 52 7 45 8 37 19 18 Adjusted Contract Drilling Revenues$2,884 $748 $2,136 $721 $1,415 $748 $667 Net loss$(954) $(104) $(850) $(220) $(630) $(165) $(465)Interest expense, net of interest income 594 (13) 607 220 387 157 230 Income tax expense (benefit) 13 21 (8) (43) 35 (16) 51 Depreciation and amortization 744 184 560 192 368 186 182 Contract intangible asset amortization 52 7 45 8 37 19 18 EBITDA 449 95 354 157 197 181 16 Loss on impairment of assets 57 (1) 58 5 53 53 — Loss on disposal of assets, net 169 — 169 — 169 — 169 Loss on impairment of investment in unconsolidated affiliate 5 5 — — — — — Loss on conversion of debt to equity 27 24 3 — 3 3 — (Gain) loss on retirement of debt 31 (1) 32 — 32 — 32 Adjusted EBITDA$738 $122 $616 $162 $454 $237 $217 Loss margin (33.7)% (14.0)% (40.7)% (30.9)% (45.7)% (22.6)% (71.6)%EBITDA margin 15.6% 12.7% 16.6% 21.8% 13.9% 24.2% 2.4%Adjusted EBITDA margin 25.6% 16.3% 28.9% 22.5% 32.1% 31.7% 32.5%
TRANSOCEAN LTD. AND SUBSIDIARIES
SUPPLEMENTAL EFFECTIVE TAX RATE ANALYSIS
(in millions, except tax rates)
Three months ended
Six months ended
June 30,
March 31,
June 30,
June 30,
June 30,
2024
2024
2023
2024
2023
Income (loss) before income taxes$33 $(93) $(181) $(60) $(595)Loss on impairment of assets 143 — 53 143 53 Loss on disposal of assets, net — — — — 169 Loss on impairment of investment in unconsolidated affiliates 4 1 — 5 — Loss on conversion of debt to equity — — 3 — 3 (Gain) loss on retirement of debt (140) — — (140) 32 Adjusted income (loss) before income taxes$40 $(92) $(125) $(52) $(338) Income tax expense (benefit)$156 $(191) $(16) $(35) $35 Loss on impairment of assets 5 — — 5 — Loss on disposal of assets, net — — — — — Loss on impairment of investment in unconsolidated affiliates — — — — — Loss on conversion of debt to equity — — — — — (Gain) loss on retirement of debt — — — — — Changes in estimates (1) 2 121 1 123 12 Adjusted income tax expense (benefit) (2)$163 $(70) $(15) $93 $47 Effective Tax Rate (3) 474.5% 206.0% 8.8 % 57.8% (5.9)% Effective Tax Rate, excluding discrete items (4) 416.3% 76.9% 11.7% (179.3)% (14.0)% (1) Our estimates change as we file tax returns, settle disputes with tax authorities, or become aware of changes in laws and other events that have an effect on our (a) deferred taxes, (b) valuation allowances on deferred taxes and (c) other tax liabilities.
(2) The three months ended June 30, 2024 included $234 million of additional tax expense, reflecting the cumulative effect of a decrease in the annual effective tax rate from the previous quarter estimate.
(3) Our effective tax rate is calculated as income tax expense or benefit divided by income or loss before income taxes.
(4) Our effective tax rate, excluding discrete items, is calculated as income tax expense or benefit, excluding various discrete items (such as changes in estimates and tax on items excluded from income before income taxes), divided by income or loss before income taxes, excluding gains and losses on sales and similar items pursuant to the accounting standards for income taxes related to estimating the annual effective tax rate.
