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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of report (date of earliest event reported): July 31, 2023

Graphic

TRANSOCEAN LTD.

(Exact name of registrant as specified in its charter)

Switzerland

001-38373

98-0599916

(State or other jurisdiction of incorporation or organization)

(Commission file number)

(I.R.S. Employer Identification No.)

Turmstrasse 30

Steinhausen, Switzerland

CH-6312

(Address of principal executive offices)

(Zip Code)

+41 (41) 749-0500

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Securities Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol

Name of each exchange on which registered

Shares, CHF 0.10 par value

RIG

New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Item 2.02.

Results of Operations and Financial Condition

Transocean Ltd.’s press release dated July 31, 2023, concerning financial results for the second quarter 2023, furnished as Exhibit 99.1 to this report, is incorporated by reference herein.

Item 9.01.

Financial Statements and Exhibits

(d)  Exhibits

The exhibit to this report is furnished pursuant to Item 9.01 as follows:

Number

Description

99.1

Press Release Reporting Second Quarter 2023 Financial Results

101

Interactive data files pursuant to Rule 405 of Regulation S-T formatted in Inline Extensible Business Reporting Language

104

Cover Page Interactive Data File (formatted as inline XBRL)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

TRANSOCEAN LTD.

Date: July 31, 2023

By

/s/ Daniel Ro-Trock

Daniel Ro-Trock

Authorized Person

EXHIBIT 99.1

Graphic

TRANSOCEAN LTD. REPORTS SECOND QUARTER 2023 RESULTS

Total contract drilling revenues were $729 million, compared to $649 million in the first quarter of 2023 (total adjusted contract drilling revenues of $748 million, compared to $667 million in the first quarter of 2023);
Revenue efficiency(1) was 97.2%, compared to 97.8% in the prior quarter;
Operating and maintenance expense was $484 million, compared to $409 million in the prior quarter;
Net loss attributable to controlling interest was $165 million, $0.22 per diluted share, compared to $465 million, $0.64 per diluted share, in the first quarter of 2023;
Adjusted EBITDA was $237 million, compared to $217 million in the prior quarter;
Cash flows from operations was $157 million, versus $(47) million in the first quarter of 2023; and
Contract backlog was $9.2 billion as of the July 2023 Fleet Status Report.

STEINHAUSEN, Switzerland—July 31, 2023—Transocean Ltd. (NYSE: RIG) today reported a net loss attributable to controlling interest of $165 million, $0.22 per diluted share, for the three months ended June 30, 2023.

Second quarter results included net unfavorable items of $55 million, or $0.07 per diluted share as follows:

$53 million, $0.07 per diluted share, loss on impairment of assets; and
$2 million, other discrete items, net.

After consideration of these net unfavorable items, second quarter 2023 adjusted net loss was $110 million, or $0.15 per diluted share.

Contract drilling revenues for the three months ended June 30, 2023, increased sequentially by $80 million to $729 million, primarily due to increased activity for rigs that returned to work after being idle in the first quarter, the commencement of operations of the newbuild Deepwater Titan and $19 million of revenues associated with the early termination of Transocean Endurance and Transocean Barents, partially offset by reduced activity for two rigs that were idle in the second quarter of 2023.

Contract intangible amortization represented a non-cash revenue reduction of $19 million. This compares with $18 million in the prior quarter.

Operating and maintenance expense was $484 million, compared with $409 million in the prior quarter. The sequential increase was primarily due to rigs that returned to work after being idle, the commencement of operations of the newbuild Deepwater Titan and higher costs associated with two rigs undergoing contract preparation.


Interest expense, net of amounts capitalized, was $168 million, compared with $249 million in the prior quarter. Interest expense included a non-cash loss of $46 million, compared with $133 million in the prior quarter, associated with the fair value adjustment of the bifurcated exchange feature embedded in our exchangeable bonds issued in September of 2022. Interest income was $11 million, compared with $19 million in the previous quarter.

The Effective Tax Rate(2) was 8.8%, up from (12.3)% in the prior quarter. The increase was primarily due to updates to our forecast to include losses on revaluation of our exchangeable bonds. The Effective Tax Rate excluding discrete items was 11.7% compared to (29.0)% in the previous quarter.

Cash provided by operating activities was $157 million during the second quarter of 2023, representing an increase of $204 million compared to the prior quarter. The sequential increase is primarily due to increased collections from customers, reduced payments for payroll-related items, and reduced payments for interest.

Second quarter 2023 capital expenditures of $76 million decreased primarily due to reduced spending for our newbuild rigs under construction. This compares with $81 million in the prior quarter.

“During the second quarter, we continued to benefit from increased demand for our fleet of high-specification floaters. As of our latest fleet status report, we secured an additional $1.2 billion of backlog at a weighted average dayrate of approximately $456,000,” said Chief Executive Officer, Jeremy Thigpen. “As evidenced by our customers contracting rigs well in advance of their programs and committing to long-term contracts, the outlook for our high-specification assets and services remains robust.”

Thigpen concluded, “In addition to securing contracts at market-leading rates, our focus remains on the flawless execution of our offshore operations to maximize the value of our $9.2 billion backlog for our shareholders.”


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 37 mobile offshore drilling units, consisting of 28 ultra-deepwater floaters and nine harsh environment floaters. In addition, Transocean holds a noncontrolling ownership interest in a company that is constructing one ultra-deepwater drillship.

For more information about Transocean, please visit: www.deepwater.com.


Conference Call Information

Transocean will conduct a teleconference starting at 9 a.m. EDT, 3 p.m. CEST, on Tuesday, August 1, 2023, to discuss the results. To participate, dial +1 785-424-1222 and refer to conference code 623461 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 12 p.m. EDT, 6 p.m. CEST, on Tuesday, August 1, 2023. The replay, which will be archived for approximately 30 days, can be accessed at +1 402-220-7343, passcode 623461. 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, 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 December 31, 2022, 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, 

   

2023

   

2022

   

2023

   

2022

 

Contract drilling revenues

$

729

$

692

$

1,378

$

1,278

Costs and expenses

Operating and maintenance

484

433

893

845

Depreciation and amortization

186

184

368

367

General and administrative

48

43

93

85

718

660

1,354

1,297

Loss on impairment of assets

(53)

(53)

Loss on disposal of assets, net

(4)

(170)

(3)

Operating income (loss)

(42)

28

(199)

(22)

Other income (expense), net

Interest income

11

4

30

6

Interest expense, net of amounts capitalized

(168)

(100)

(417)

(202)

Loss on retirement of debt

(32)

Other, net

18

3

23

4

(139)

(93)

(396)

(192)

Loss before income tax expense (benefit)

(181)

(65)

(595)

(214)

Income tax expense (benefit)

(16)

3

35

29

Net loss

(165)

(68)

(630)

(243)

Net income attributable to noncontrolling interest

Net loss attributable to controlling interest

$

(165)

$

(68)

$

(630)

$

(243)

Loss per share, basic and diluted

$

(0.22)

$

(0.10)

$

(0.85)

$

(0.36)

Weighted-average shares, basic and diluted

761

692

745

678


TRANSOCEAN LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except share data)

(Unaudited)

June 30, 

December 31,

   

2023

   

2022

 

Assets

Cash and cash equivalents

 

$

821

$

683

Accounts receivable, net of allowance of $3 and $2 at June 30, 2023 and December 31, 2022, respectively

523

485

Materials and supplies, net of allowance of $202 and $199 at June 30, 2023 and December 31, 2022, respectively

397

388

Restricted cash and cash equivalents

213

308

Other current assets

281

144

Total current assets

2,235

2,008

Property and equipment

23,527

24,217

Less accumulated depreciation

(6,607)

(6,748)

Property and equipment, net

16,920

17,469

Contract intangible assets

19

56

Deferred tax assets, net

45

13

Other assets

994

890

Total assets

 

$

20,213

$

20,436

Liabilities and equity

Accounts payable

 

$

285

$

281

Accrued income taxes

16

19

Debt due within one year

293

719

Other current liabilities

547

539

Total current liabilities

1,141

1,558

Long-term debt

7,154

6,628

Deferred tax liabilities, net

552

493

Other long-term liabilities

961

965

Total long-term liabilities

8,667

8,086

Commitments and contingencies

Shares, CHF 0.10 par value, 1,021,294,549 authorized, 142,362,093 conditionally authorized, 831,845,482 issued

and 766,655,180 outstanding at June 30, 2023, and 905,093,509 authorized, 142,362,675 conditionally

authorized, 797,244,753 issued and 721,888,427 outstanding at December 31, 2022

76

71

Additional paid-in capital

14,233

13,984

Accumulated deficit

(3,709)

(3,079)

Accumulated other comprehensive loss

(196)

(185)

Total controlling interest shareholders’ equity

10,404

10,791

Noncontrolling interest

1

1

Total equity

10,405

10,792

Total liabilities and equity

 

$

20,213

$

20,436


TRANSOCEAN LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

Six months ended

June 30, 

    

2023

    

2022

   

Cash flows from operating activities

Net loss

 

$

(630)

$

(243)

Adjustments to reconcile to net cash provided by operating activities:

Contract intangible asset amortization

37

59

Depreciation and amortization

368

367

Share-based compensation expense

20

15

Loss on impairment of assets

53

Loss on disposal of assets, net

170

3

Fair value adjustment to bifurcated compound exchange feature

179

Loss on retirement of debt

32

Deferred income tax expense

27

25

Other, net

46

32

Changes in deferred revenues, net

27

(31)

Changes in deferred costs, net

(37)

13

Changes in other operating assets and liabilities, net

(182)

(200)

Net cash provided by operating activities

110

40

Cash flows from investing activities

Capital expenditures

(157)

(221)

Investments in equity of unconsolidated affiliates

(10)

(19)

Proceeds from disposal of assets, net

4

4

Net cash used in investing activities

(163)

(236)

Cash flows from financing activities

Repayments of debt

(1,568)

(257)

Proceeds from issuance of debt, net of issue costs

1,665

Proceeds from issuance of shares, net of issue costs

206

Other, net

(1)

(4)

Net cash provided by (used in) financing activities

96

(55)

Net increase (decrease) in unrestricted and restricted cash and cash equivalents

43

(251)

Unrestricted and restricted cash and cash equivalents, beginning of period

991

1,412

Unrestricted and restricted cash and cash equivalents, end of period

 

$

1,034

$

1,161


TRANSOCEAN LTD. AND SUBSIDIARIES

FLEET OPERATING STATISTICS

Three months ended

June 30, 

March 31

June 30, 

Contract Drilling Revenues (in millions)

    

2023

  

2023

  

2022

  

Contract drilling revenues

Ultra-deepwater floaters

$

536

$

484

$

451

Harsh environment floaters

193

165

241

Total contract drilling revenues

$

729

$

649

$

692

Three months ended

June 30, 

March 31

June 30, 

Average Daily Revenue (1)

    

2023

  

2023

  

2022

  

Ultra-deepwater floaters

$

380,600

$

360,000

$

334,400

Harsh environment floaters

 

332,000

 

376,000

 

406,000

Total fleet average daily revenue

$

367,000

$

364,100

$

358,100

Three months ended

 

  

  

June 30, 

  

March 31

  

June 30, 

 

Utilization (2)

2023

2023

2022

 

Ultra-deepwater floaters

53.7

%

52.5

%

53.8

%

Harsh environment floaters

57.7

%

50.1

%

70.0

%

Total fleet average rig utilization

54.7

%

51.9

%

58.2

%

Three months ended

June 30, 

March 31

June 30, 

Revenue Efficiency (3)

  

  

2023

  

2023

  

2022

Ultra-deepwater floaters

97.3

%

97.4

%

96.8

%

Harsh environment floaters

96.8

%

98.7

%

99.5

%

Total fleet average revenue efficiency

97.2

%

97.8

%

97.8

%

(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 SUBSIDIARIES

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

  

06/30/23

  

06/30/23

  

03/31/23

 

Adjusted Net Loss

Net loss attributable to controlling interest, as reported

$

(630)

$

(165)

$

(465)

Loss on impairment of assets

53

53

Loss on disposal of assets, net

169

169

Loss on debt conversion

3

3

Loss on retirement of debt

32

32

Discrete tax items

 

(12)

 

(1)

 

(11)

Net loss, as adjusted

$

(385)

$

(110)

$

(275)

Adjusted Diluted Loss Per Share:

Diluted loss per share, as reported

$

(0.85)

$

(0.22)

$

(0.64)

Loss on impairment of assets

0.07

0.07

Loss on disposal of assets, net

0.23

0.23

Loss on debt conversion

Loss on retirement of debt

 

0.04

 

 

0.04

Discrete tax items

 

(0.01)

 

 

(0.01)

Diluted loss per share, as adjusted

$

(0.52)

$

(0.15)

$

(0.38)

YTD

QTD

YTD

QTD

YTD

QTD

YTD

 

    

12/31/22

   

12/31/22

  

09/30/22

   

09/30/22

  

06/30/22

  

06/30/22

  

03/31/22

 

Adjusted Net Loss

Net loss attributable to controlling interest, as reported

$

(621)

$

(350)

$

(271)

$

(28)

$

(243)

$

(68)

$

(175)

Gain on retirement of debt

(8)

(1)

(7)

(7)

Discrete tax items

 

(19)

(5)

(14)

(6)

(8)

 

(8)

Net loss, as adjusted

$

(648)

$

(356)

$

(292)

$

(41)

$

(251)

$

(68)

$

(183)

Adjusted Diluted Loss Per Share:

Diluted loss per share, as reported

$

(0.89)

$

(0.48)

$

(0.39)

$

(0.04)

$

(0.36)

$

(0.10)

$

(0.26)

Gain on retirement of debt

(0.01)

 

 

(0.01)

 

(0.01)

 

 

 

Discrete tax items

 

(0.03)

 

(0.01)

 

(0.02)

 

(0.01)

 

(0.01)

 

 

(0.02)

Diluted loss per share, as adjusted

$

(0.93)

$

(0.49)

$

(0.42)

$

(0.06)

$

(0.37)

$

(0.10)

$

(0.28)


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

  

06/30/23

  

06/30/23

 

03/31/23

 

Contract drilling revenues

$

1,378

$

729

$

649

Contract intangible asset amortization

37

19

18

Adjusted Contract Drilling Revenues

$

1,415

$

748

$

667

Net loss

$

(630)

$

(165)

$

(465)

Interest expense, net of interest income

387

157

230

Income tax expense (benefit)

35

(16)

51

Depreciation and amortization

368

186

182

Contract intangible asset amortization

37

19

18

EBITDA

197

181

16

Loss on disposal of assets, net

169

169

Loss on impairment

53

53

Loss on debt conversion

3

3

Loss on retirement of debt

32

32

Adjusted EBITDA

$

454

$

237

$

217

Loss margin

(45.7)

%

(22.6)

%

(71.6)

%

EBITDA margin

13.9

%

24.2

%

2.4

%

Adjusted EBITDA margin

32.1

%

31.7

%

32.5

%

YTD

QTD

YTD

QTD

YTD

QTD

YTD

12/31/22

  

12/31/22

  

09/30/22

  

09/30/22

  

06/30/22

  

06/30/22

  

03/31/22

Contract drilling revenues

$

2,575

$

606

$

1,969

$

691

$

1,278

$

692

$

586

Contract intangible asset amortization

117

19

98

39

59

30

29

Adjusted Contract Drilling Revenues

$

2,692

$

625

$

2,067

$

730

$

1,337

$

722

$

615

Net loss

$

(621)

$

(350)

$

(271)

$

(28)

$

(243)

$