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Transocean Ltd. Reports Third Quarter 2020 Results
- Total contract drilling revenues were $773 million (total adjusted contract drilling revenues of $830 million), compared with $930 million in the second quarter of 2020 (total adjusted contract drilling revenues of
$983 million ); - Revenue efficiency(1) was 96.6%, compared with 97.2% in the prior quarter;
- Operating and maintenance expense was $470 million, compared with $525 million in the prior period;
- Net income attributable to controlling interest was $359 million,
$0 .51 per diluted share, compared with net loss attributable to controlling interest of $497 million,$0 .81 per diluted share, in the second quarter of 2020; - Adjusted net loss was $69 million,
$0 .11 per diluted share, excluding $428 million of net favorable items. This compares with adjusted net loss of $1 million, in the previous quarter; - Adjusted EBITDA was $338 million, compared with adjusted EBITDA of $418 million in the prior quarter; and
- Contract backlog was
$8 .2 billion as of theOctober 2020 Fleet Status Report.
STEINHAUSEN,
Third quarter 2020 results included net favorable items of $428 million, or
- $449 million,
$0 .65 per diluted share, gain on restructuring and retirement of debt; and - $45 million,
$0 .07 per diluted share, related to discrete tax items.
These favorable items were partially offset by:
- $61 million,
$0 .09 per diluted share, loss on disposal of assets; and - $5 million,
$0 .01 per diluted share, in restructuring costs.
After consideration of these net favorable items, third quarter 2020 adjusted net loss was $69 million,
Contract drilling revenues for the three months ended
Additionally, a non-cash revenue reduction of $57 million, was recognized in the third quarter as a result of contract intangible amortization associated with the Songa and Ocean Rig acquisitions. This compared to $53 million in the prior quarter.
Operating and maintenance expense was $470 million, compared with $525 million in the prior quarter. The sequential decrease was the result of decreased activity, lower costs related to the COVID-19 pandemic, and lower legal fees due to the aforementioned settlement in the third quarter, partially offset by higher in-service maintenance costs across our fleet.
General and administrative expense was $45 million, in line with the second quarter of 2020.
Interest expense, net of amounts capitalized, was $145 million, compared with $153 million, in the prior quarter. Interest income was $6 million, compared with $4 million in the previous quarter.
The Effective Tax Rate(2) was (7.0)%, down from (6.8)% in the prior quarter. The decrease was primarily due to tax benefits for the carryback of net operating losses in the
Net cash provided by operating activities were $81 million, compared to $87 million in the prior quarter.
Third quarter 2020 capital expenditures of $65 million were primarily related to our newbuild drillships under construction coupled with capital upgrades for certain rigs in our fleet. This compares with $46 million in the previous quarter.
“Despite the challenges associated with COVID-19 and an active storm season in the
Thigpen added, “With our backlog, strong operating performance, and our recent liability management transactions, we have sufficient liquidity to continue to invest in our workforce, our assets and the development of new and differentiating technologies. As we approach the end of the year, we are growing increasingly encouraged by the contracting activity that could unfold in the second half of 2021. Our high‑specification fleet and our reputation for delivering safe, reliable and efficient operations will enable us to build upon our position as the leader in ultra‑deepwater and harsh environment drilling.”
Non-GAAP Financial Measures
We present our operating results in accordance with accounting principles generally accepted in the
All non-GAAP measure reconciliations to the most comparative
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 believes that it operates one of the most versatile offshore drilling fleets in the world.
Transocean owns or has partial ownership interests in, and operates a fleet of 38 mobile offshore drilling units consisting of 27 ultra-deepwater floaters and 11 harsh environment floaters. In addition, Transocean is constructing two ultra-deepwater drillships.
For more information about Transocean, please visit: www.deepwater.com.
Conference Call Information
Transocean will conduct a teleconference starting at 9 a.m. EST, 3 p.m. CET, on
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 12 p.m. EST, 6 p.m. CET, on
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, such as COVID-19, 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
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
- Revenue efficiency is defined as actual contract drilling 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, excluding revenues for contract terminations and reimbursements, the drilling unit could earn for the measurement period, excluding amounts related to incentive provisions. See the accompanying schedule entitled “Revenue Efficiency.”
- Effective Tax Rate is defined as income tax expense divided by income before income taxes. See the accompanying schedule entitled “Supplemental Effective Tax Rate Analysis.”
Analyst Contact:
+1 832-587-6515
Media Contact:
+1 713-232-7647
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
(In millions, except per share data) |
(Unaudited) |
Three months ended | Nine months ended | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Contract drilling revenues | $ | 773 | $ | 784 | $ | 2,462 | $ | 2,296 | ||||||||
Costs and expenses | ||||||||||||||||
Operating and maintenance | 470 | 547 | 1,535 | 1,565 | ||||||||||||
Depreciation and amortization | 190 | 212 | 592 | 648 | ||||||||||||
General and administrative | 45 | 45 | 133 | 139 | ||||||||||||
705 | 804 | 2,260 | 2,352 | |||||||||||||
Loss on impairment | — | (583 | ) | (597 | ) | (584 | ) | |||||||||
Loss on disposal of assets, net | (64 | ) | (4 | ) | (64 | ) | (7 | ) | ||||||||
Operating income (loss) | 4 | (607 | ) | (459 | ) | (647 | ) | |||||||||
Other income (expense), net | ||||||||||||||||
Interest income | 6 | 11 | 19 | 33 | ||||||||||||
Interest expense, net of amounts capitalized | (145 | ) | (166 | ) | (458 | ) | (500 | ) | ||||||||
Gain (loss) on restructuring and retirement of debt | 449 | (12 | ) | 396 | (39 | ) | ||||||||||
Other, net | 21 | 3 | (23 | ) | 34 | |||||||||||
331 | (164 | ) | (66 | ) | (472 | ) | ||||||||||
Income (loss) before income tax expense | 335 | (771 | ) | (525 | ) | (1,119 | ) | |||||||||
Income tax expense (benefit) | (24 | ) | 54 | 4 | 83 | |||||||||||
Net income (loss) | 359 | (825 | ) | (529 | ) | (1,202 | ) | |||||||||
Net income attributable to noncontrolling interest | — | — | 1 | 2 | ||||||||||||
Net income (loss) attributable to controlling interest | $ | 359 | $ | (825 | ) | $ | (530 | ) | $ | (1,204 | ) | |||||
Earnings (loss) per share | ||||||||||||||||
Basic | $ | 0.58 | $ | (1.35 | ) | $ | (0.86 | ) | $ | (1.97 | ) | |||||
Diluted | $ | 0.51 | $ | (1.35 | ) | $ | (0.86 | ) | $ | (1.97 | ) | |||||
Weighted-average shares outstanding | ||||||||||||||||
Basic | 616 | 613 | 615 | 612 | ||||||||||||
Diluted | 702 | 613 | 615 | 612 |
CONDENSED CONSOLIDATED BALANCE SHEETS |
(In millions, except share data) |
(Unaudited) |
2020 | 2019 | |||||||
Assets | ||||||||
Cash and cash equivalents | $ | 1,382 | $ | 1,790 | ||||
Accounts receivable, net of allowance of |
699 | 654 | ||||||
Materials and supplies, net of allowance of |
459 | 479 | ||||||
Restricted cash accounts and investments | 448 | 558 | ||||||
Other current assets | 187 | 159 | ||||||
Total current assets | 3,175 | 3,640 | ||||||
Property and equipment | 23,038 | 24,281 | ||||||
Less accumulated depreciation | (5,207 | ) | (5,434 | ) | ||||
Property and equipment, net | 17,831 | 18,847 | ||||||
Contract intangible assets | 450 | 608 | ||||||
Deferred income taxes, net | 19 | 20 | ||||||
Other assets | 997 | 990 | ||||||
Total assets | $ | 22,472 | $ | 24,105 | ||||
Liabilities and equity | ||||||||
Accounts payable | $ | 214 | $ | 311 | ||||
Accrued income taxes | 42 | 64 | ||||||
Debt due within one year | 640 | 568 | ||||||
Other current liabilities | 655 | 781 | ||||||
Total current liabilities | 1,551 | 1,724 | ||||||
Long-term debt | 7,794 | 8,693 | ||||||
Deferred income taxes, net | 294 | 266 | ||||||
Other long-term liabilities | 1,430 | 1,555 | ||||||
Total long-term liabilities | 9,518 | 10,514 | ||||||
Commitments and contingencies | ||||||||
Shares, |
||||||||
and 614,861,972 outstanding at |
||||||||
authorized, 617,970,525 issued and 611,871,374 outstanding at |
60 | 59 | ||||||
Additional paid-in capital | 13,493 | 13,424 | ||||||
Accumulated deficit | (1,829 | ) | (1,297 | ) | ||||
Accumulated other comprehensive loss | (327 | ) | (324 | ) | ||||
Total controlling interest shareholders’ equity | 11,397 | 11,862 | ||||||
Noncontrolling interest | 6 | 5 | ||||||
Total equity | 11,403 | 11,867 | ||||||
Total liabilities and equity | $ | 22,472 | $ | 24,105 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
(In millions) |
(Unaudited) |
Nine months ended | ||||||||
2020 | 2019 | |||||||
Cash flows from operating activities | ||||||||
Net loss | $ | (529 | ) | $ | (1,202 | ) | ||
Adjustments to reconcile to net cash provided by operating activities: | ||||||||
Contract intangible asset amortization | 158 | 140 | ||||||
Depreciation and amortization | 592 | 648 | ||||||
Share-based compensation expense | 24 | 28 | ||||||
Loss on impairment | 597 | 584 | ||||||
Loss on impairment of investment in unconsolidated affiliate | 59 | — | ||||||
Loss on disposal of assets, net | 64 | 7 | ||||||
(Gain) loss on restructuring and retirement of debt | (396 | ) | 39 | |||||
Deferred income tax expense | 28 | 139 | ||||||
Other, net | 42 | 28 | ||||||
Changes in deferred revenues, net | (45 | ) | 19 | |||||
Changes in deferred costs, net | 10 | (21 | ) | |||||
Changes in other operating assets and liabilities, net | (484 | ) | (216 | ) | ||||
Net cash provided by operating activities | 120 | 193 | ||||||
Cash flows from investing activities | ||||||||
Capital expenditures | (218 | ) | (259 | ) | ||||
Proceeds from disposal of assets, net | 15 | 52 | ||||||
Investments in unconsolidated affiliates | (17 | ) | (77 | ) | ||||
Proceeds from maturities of unrestricted and restricted investments | — | 123 | ||||||
Other, net | — | 3 | ||||||
Net cash used in investing activities | (220 | ) | (158 | ) | ||||
Cash flows from financing activities | ||||||||
Proceeds from issuance of debt, net of discounts and issue costs | 743 | 1,056 | ||||||
Repayments of debt | (1,135 | ) | (1,189 | ) | ||||
Other, net | (27 | ) | (34 | ) | ||||
Net cash used in financing activities | (419 | ) | (167 | ) | ||||
Net decrease in unrestricted and restricted cash and cash equivalents | (519 | ) | (132 | ) | ||||
Unrestricted and restricted cash and cash equivalents, beginning of period | 2,349 | 2,589 | ||||||
Unrestricted and restricted cash and cash equivalents, end of period | $ | 1,830 | $ | 2,457 |
FLEET OPERATING STATISTICS | |||||||||||||||
Three months ended | Nine months ended | ||||||||||||||
Contract Drilling Revenues (in millions) | 2020 | 2020 | 2019 | 2020 | 2019 | ||||||||||
Contract drilling revenues | |||||||||||||||
Ultra-deepwater floaters | $ | 490 | $ | 636 | $ | 493 | $ | 1,654 | $ | 1,455 | |||||
Harsh environment floaters | 283 | 293 | 281 | 796 | 790 | ||||||||||
Deepwater floaters | — | — | — | — | 7 | ||||||||||
Midwater floaters | — | 1 | 10 | 12 | 44 | ||||||||||
Total contract drilling revenues | $ | 773 | $ | 930 | $ | 784 | $ | 2,462 | $ | 2,296 |
Three months ended | Nine months ended | ||||||||||||||
Average Daily Revenue (1) | 2020 | 2020 | 2019 | 2020 | 2019 | ||||||||||
Ultra-deepwater floaters | $ | 329,300 | $ | 296,500 | $ | 339,400 | $ | 319,500 | $ | 338,200 | |||||
Harsh environment floaters | 372,500 | 331,900 | 298,300 | 334,400 | 295,300 | ||||||||||
Midwater floaters | — | 99,400 | 106,200 | 111,400 | 118,100 | ||||||||||
Total drilling fleet | $ | 343,500 | 307,800 | $ | 314,500 | $ | 321,800 | $ | 312,000 |
Three months ended | Nine months ended | ||||||||||||||
Utilization (2) | 2020 | 2020 | 2019 | 2020 | 2019 | ||||||||||
Ultra-deepwater floaters | 60 | % | 61 | % | 51 | % | 61 | % | 49 | % | |||||
Harsh environment floaters | 75 | % | 80 | % | 79 | % | 72 | % | 78 | % | |||||
Midwater floaters | — | % | 25 | % | 33 | % | 37 | % | 38 | % | |||||
Total drilling fleet | 65 | % | 66 | % | 58 | % | 64 | % | 57 | % |
Three months ended | Nine months ended | |||||||||||||||
Revenue Efficiency (3) | 2020 | 2020 | 2019 | 2020 | 2019 | |||||||||||
Ultra-deepwater floaters | 97 | % | 98 | % | 98 | % | 97 | % | 99 | % | ||||||
Harsh environment floaters | 96 | % | 97 | % | 96 | % | 94 | % | 95 | % | ||||||
Midwater floaters | — | % | 79 | % | 79 | % | 86 | % | 102 | % | ||||||
Total drilling fleet | 97 | % | 97 | % | 97 | % | 96 | % | 98 | % | ||||||
(1) Average daily revenue is defined as contract drilling revenues, excluding revenues for contract terminations, reimbursements and contract intangible amortization, earned per operating day. An operating day is defined as a calendar day during which a rig is contracted to earn a dayrate during the firm contract period after commencement of operations. | ||||||||||||||||
(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 contract drilling 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, excluding revenues for contract terminations and reimbursements, the drilling unit could earn for the measurement period, excluding amounts related to incentive provisions. |
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS | ||||||||||||||||||||
ADJUSTED NET INCOME (LOSS) AND ADJUSTED DILUTED EARNINGS (LOSS) PER SHARE | ||||||||||||||||||||
(In millions, except per share data) | ||||||||||||||||||||
YTD | QTD | YTD | QTD | YTD | ||||||||||||||||
Adjusted Net Loss | ||||||||||||||||||||
Net income (loss) attributable to controlling interest, as reported | $ | (530 | ) | $ | 359 | $ | (889 | ) | $ | (497 | ) | $ | (392 | ) | ||||||
Restructuring costs | 6 | 5 | 1 | 1 | — | |||||||||||||||
Loss on impairment of investment in unconsolidated affiliate | 59 | — | 59 | 59 | — | |||||||||||||||
Loss on impairment of assets | 597 | — | 597 | 430 | 167 | |||||||||||||||
Loss on disposal of assets, net | 61 | 61 | — | — | — | |||||||||||||||
(Gain) loss on restructuring and retirement of debt | (396 | ) | (449 | ) | 53 | (4 | ) | 57 | ||||||||||||
Discrete tax items | (54 | ) | (45 | ) | (9 | ) | 10 | (19 | ) | |||||||||||
Net loss, as adjusted | $ | (257 | ) | $ | (69 | ) | $ | (188 | ) | $ | (1 | ) | $ | (187 | ) | |||||
Adjusted Diluted Loss Per Share: | ||||||||||||||||||||
Diluted earnings (loss) per share, as reported | $ | (0.86 | ) | $ | 0.51 | $ | (1.45 | ) | $ | (0.81 | ) | $ | (0.64 | ) | ||||||
Restructuring costs | 0.01 | 0.01 | — | — | — | |||||||||||||||
Loss on impairment of investment in unconsolidated affiliate | 0.10 | — | 0.10 | 0.10 | — | |||||||||||||||
Loss on impairment of assets | 0.97 | — | 0.97 | 0.70 | 0.28 | |||||||||||||||
Loss on disposal of assets, net | 0.10 | 0.09 | — | — | — | |||||||||||||||
(Gain) loss on restructuring and retirement of debt | (0.65 | ) | (0.65 | ) | 0.09 | (0.01 | ) | 0.09 | ||||||||||||
Discrete tax items | (0.09 | ) | (0.07 | ) | (0.02 | ) | 0.02 | (0.03 | ) | |||||||||||
Diluted loss per share, as adjusted | $ | (0.42 | ) | $ | (0.11 | ) | $ | (0.31 | ) | $ | — | $ | (0.30 | ) |
YTD | QTD | YTD | QTD | YTD | QTD | YTD | ||||||||||||||||||||||
Adjusted Net Loss | ||||||||||||||||||||||||||||
Net loss attributable to controlling interest, as reported | $ | (1,255 | ) | $ | (51 | ) | $ | (1,204 | ) | $ | (825 | ) | $ | (379 | ) | $ | (208 | ) | $ | (171 | ) | |||||||
Acquisition and restructuring costs | 6 | 5 | 1 | — | 1 | 1 | — | |||||||||||||||||||||
Gain on bargain purchase | (11 | ) | — | (11 | ) | — | (11 | ) | (9 | ) | (2 | ) | ||||||||||||||||
Loss on impairment of assets | 609 | 25 | 584 | 583 | 1 | 1 | — | |||||||||||||||||||||
(Gain) loss on disposal of assets, net | 5 | (2 | ) | 7 | 6 | 1 | 2 | (1 | ) | |||||||||||||||||||
Gain on terminated construction contracts | (132 | ) | (132 | ) | — | — | — | — | — | |||||||||||||||||||
Loss on retirement of debt | 41 | 2 | 39 | 12 | 27 | 9 | 18 | |||||||||||||||||||||
Discrete tax items and other, net | (150 | ) | (110 | ) | (40 | ) | (10 | ) | (30 | ) | (5 | ) | (25 | ) | ||||||||||||||
Net loss, as adjusted | $ | (887 | ) | $ | (263 | ) | $ | (624 | ) | $ | (234 | ) | $ | (390 | ) | $ | (209 | ) | $ | (181 | ) | |||||||
Adjusted Diluted Loss Per Share: | ||||||||||||||||||||||||||||
Diluted loss per share, as reported | $ | (2.05 | ) | $ | (0.08 | ) | $ | (1.97 | ) | $ | (1.35 | ) | $ | (0.62 | ) | $ | (0.34 | ) | $ | (0.28 | ) | |||||||
Acquisition and restructuring costs | 0.01 | 0.01 | — | — | — | — | — | |||||||||||||||||||||
Gain on bargain purchase | (0.02 | ) | — | (0.02 | ) | — | (0.02 | ) | (0.01 | ) | — | |||||||||||||||||
Loss on impairment of assets | 0.99 | 0.04 | 0.97 | 0.96 | — | — | — | |||||||||||||||||||||
(Gain) loss on disposal of assets, net | 0.01 | — | 0.01 | 0.01 | — | — | — | |||||||||||||||||||||
Gain on terminated construction contracts | (0.22 | ) | (0.22 | ) | — | — | — | — | — | |||||||||||||||||||
Loss on retirement of debt | 0.07 | — | 0.06 | 0.02 | 0.05 | 0.01 | 0.03 | |||||||||||||||||||||
Discrete tax items and other, net | (0.24 | ) | (0.18 | ) | (0.07 | ) | (0.02 | ) | (0.05 | ) | — | (0.05 | ) | |||||||||||||||
Diluted loss per share, as adjusted | $ | (1.45 | ) | $ | (0.43 | ) | $ | (1.02 | ) | $ | (0.38 | ) | $ | (0.64 | ) | $ | (0.34 | ) | $ | (0.30 | ) |
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 | QTD | YTD | |||||||||||||||||
Contract drilling revenues | $ | 2,462 | $ | 773 | $ | 1,689 | $ | 930 | $ | 759 | |||||||||||
Contract intangible amortization | 158 | 57 | 101 | 53 | 48 | ||||||||||||||||
Adjusted Contract Drilling Revenues | $ | 2,620 | $ | 830 | $ | 1,790 | $ | 983 | $ | 807 | |||||||||||
Net income (loss) | $ | (529 | ) | $ | 359 | $ | (888 | ) | $ | (497 | ) | $ | (391 | ) | |||||||
Interest expense, net of interest income | 439 | 139 | 300 | 149 | 151 | ||||||||||||||||
Income tax expense (benefit) | 4 | (24 | ) | 28 | 32 | (4 | ) | ||||||||||||||
Depreciation and amortization | 592 | 190 | 402 | 196 | 206 | ||||||||||||||||
Contract intangible amortization | 158 | 57 | 101 | 53 | 48 | ||||||||||||||||
EBITDA | 664 | 721 | (57 | ) | (67 | ) | 10 | ||||||||||||||
Restructuring costs | 6 | 5 | 1 | 1 | — | ||||||||||||||||
Loss on impairment of assets | 597 | — | 597 | 429 | 168 | ||||||||||||||||
Loss on disposal of assets, net | 61 | 61 | — | — | — | ||||||||||||||||
(Gain) loss on restructuring and retirement of debt | (396 | ) | (449 | ) | 53 | (4 | ) | 57 | |||||||||||||
Loss on impairment of investment in unconsolidated affiliate | 59 | — | 59 | 59 | — | ||||||||||||||||
Adjusted EBITDA | $ | 991 | $ | 338 | $ | 653 | $ | 418 | $ | 235 | |||||||||||
EBITDA margin | 25 | % | 87 | % | (3 | ) | % | (7 | ) | % | 1 | % | |||||||||
Adjusted EBITDA margin | 38 | % | 41 | % | 36 | % | 43 | % | 29 | % |
YTD | QTD | YTD | QTD | YTD | QTD | YTD | |||||||||||||||||||||||
Contract drilling revenues | $ | 3,088 | $ | 792 | $ | 2,296 | $ | 784 | $ | 1,512 | $ | 758 | $ | 754 | |||||||||||||||
Contract intangible amortization | 187 | 47 | 140 | 48 | 92 | 47 | 45 | ||||||||||||||||||||||
Adjusted Contract Drilling Revenues | $ | 3,275 | $ | 839 | $ | 2,436 | $ | 832 | $ | 1,604 | $ | 805 | $ | 799 | |||||||||||||||
Net loss | $ | (1,257 | ) | $ | (55 | ) | $ | (1,202 | ) | $ | (825 | ) | $ | (377 | ) | $ | (206 | ) | $ | (171 | ) | ||||||||
Interest expense, net of interest income | 617 | 150 | 467 | 155 | 312 | 156 | 156 | ||||||||||||||||||||||
Income tax expense (benefit) | 59 | (24 | ) | 83 | 54 | 29 | 37 | (8 | ) | ||||||||||||||||||||
Depreciation and amortization | 855 | 207 | 648 | 212 | 436 | 219 | 217 | ||||||||||||||||||||||
Contract intangible amortization | 187 | 47 | 140 | 48 | 92 | 47 | 45 | ||||||||||||||||||||||
EBITDA | 461 | 325 | 136 | (356 | ) | 492 | 253 | 239 | |||||||||||||||||||||
Acquisition and restructuring costs | 6 | 5 | 1 | — | 1 | 1 | — | ||||||||||||||||||||||
Loss on impairment of assets | 609 | 25 | 584 | 583 | 1 | 1 | — | ||||||||||||||||||||||
(Gain) loss on disposal of assets, net | 5 | (2 | ) | 7 | 6 | 1 | 2 | (1 | ) | ||||||||||||||||||||
Gain on bargain purchase | (11 | ) | — | (11 | ) | — | (11 | ) | (9 | ) | (2 | ) | |||||||||||||||||
Loss on retirement of debt | 41 | 2 | 39 | 12 | 27 | 9 | 18 | ||||||||||||||||||||||
Gain on termination of construction contracts | (132 | ) | (132 | ) | — | — | — | — | — | ||||||||||||||||||||
Adjusted EBITDA | $ | 979 | $ | 223 | $ | 756 | $ | 245 | $ | 511 | $ | 257 | $ | 254 | |||||||||||||||
EBITDA margin | 14 | % | 39 | % | 6 | % | (43 | ) | % | 31 | % | 31 | % | 30 | % | ||||||||||||||
Adjusted EBITDA margin | 30 | % | 27 | % | 31 | % | 29 | % | 32 | % | 32 | % | 32 | % | |||||||||||||||
SUPPLEMENTAL EFFECTIVE TAX RATE ANALYSIS | |||||||||||||||||||||
(In millions, except tax rates) | |||||||||||||||||||||
Three months ended | Six months ended | ||||||||||||||||||||
2020 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||
Income (loss) before income taxes | $ | 335 | $ | (465 | ) | $ | (771 | ) | $ | (525 | ) | $ | (1,119 | ) | |||||||
Acquisition and restructuring costs | 5 | 1 | — | 6 | 1 | ||||||||||||||||
Gain on bargain purchase | — | — | — | — | (11 | ) | |||||||||||||||
Loss on impairment of assets | — | 429 | 583 | 597 | 584 | ||||||||||||||||
Loss on impairment of investment in unconsolidated affiliate | — | 59 | — | 59 | — | ||||||||||||||||
Loss on disposal of assets, net | 61 | — | 6 | 61 | 7 | ||||||||||||||||
(Gain) loss on restructuring and retirement of debt | (449 | ) | (4 | ) | 12 | (396 | ) | 39 | |||||||||||||
Adjusted income (loss) before income taxes | $ | (48 | ) | $ | 20 | $ | (170 | ) | $ | (198 | ) | $ | (499 | ) | |||||||
Revenues recognized for the settlement of disputes | — | (157 | ) | (157 | ) | ||||||||||||||||
Adjusted loss before income taxes for determining effective tax rate | (48 | ) | (137 | ) | (355 | ) | |||||||||||||||
Income tax expense (benefit) | $ | (24 | ) | $ | 32 | $ | 54 | $ | 4 | $ | 83 | ||||||||||
Acquisition and restructuring costs | — | — | — | — | — | ||||||||||||||||
Gain on bargain purchase | — | — | — | — | — | ||||||||||||||||
Loss on impairment of assets | — | (1 | ) | — | — | — | |||||||||||||||
Loss on impairment of investment in unconsolidated affiliate | — | — | — | — | — | ||||||||||||||||
Loss on disposal of assets, net | — | — | — | — | — | ||||||||||||||||
(Gain) loss on restructuring and retirement of debt | — | — | — | — | — | ||||||||||||||||
Changes in estimates (1) | 43 | (8 | ) | 10 | 54 | 40 | |||||||||||||||
Revenues recognized for the settlement of disputes | 2 | (2 | ) | — | — | — | |||||||||||||||
Adjusted income tax expense (2) | $ | 21 | $ | 21 | $ | 64 | $ | 58 | $ | 123 | |||||||||||
Effective Tax Rate (3) | (7.0 | ) | % | (6.8 | ) | % | (6.9 | ) | % | (0.8 | ) | % | (7.4 | ) | % | ||||||
Effective Tax Rate, excluding discrete items (4) | (45.6 | ) | % | (15.0 | ) | % | (37.5 | ) | % | (16.4 | ) | % | (24.7 | ) | % | ||||||
(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 |
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(3) Our effective tax rate is calculated as income tax expense divided by income before income taxes. | |||||||||||||||||||||
(4) Our effective tax rate, excluding discrete items, is calculated as income tax expense, excluding various discrete items (such as changes in estimates and tax on items excluded from income before income taxes), divided by income before income tax expense, 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. |
Source: Transocean Ltd.