UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark one)
For the quarterly period ended
OR
For the transition period from _____ to _____
Commission file number
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices) | (Zip Code) |
(Registrant’s telephone number, including area code) | |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading symbol | Name of each exchange on which registered |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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. ◻
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of July 24, 2024,
PART I. FINANCIAL INFORMATION
Item I. | Financial Statements |
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 | $ | | $ | | $ | | $ | | |||||
Costs and expenses | |||||||||||||
Operating and maintenance | | | | | |||||||||
Depreciation and amortization | | | | | |||||||||
General and administrative | | | | | |||||||||
| | | | ||||||||||
Loss on impairment of assets | ( | ( | ( | ( | |||||||||
Loss on disposal of assets, net | — | — | ( | ( | |||||||||
Operating loss | ( | ( | ( | ( | |||||||||
Other income (expense), net | |||||||||||||
Interest income | | | | | |||||||||
Interest expense, net of amounts capitalized | ( | ( | ( | ( | |||||||||
Gain (loss) on retirement of debt | | — | | ( | |||||||||
Other, net | | | | | |||||||||
| ( | | ( | ||||||||||
Income (loss) before income tax expense (benefit) | | ( | ( | ( | |||||||||
Income tax expense (benefit) | | ( | ( | | |||||||||
Net loss | ( | ( | ( | ( | |||||||||
Net income attributable to noncontrolling interest | — | — | — | — | |||||||||
Net loss attributable to controlling interest | $ | ( | $ | ( | $ | ( | $ | ( | |||||
Loss per share, basic and diluted | $ | ( | $ | ( | $ | ( | $ | ( | |||||
Weighted-average shares, basic and diluted | | | | | |||||||||
See accompanying notes.
- 1 -
TRANSOCEAN LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in millions)
(Unaudited)
Three months ended | Six months ended | |||||||||||
June 30, | June 30, | |||||||||||
| 2024 |
| 2023 | 2024 |
| 2023 | ||||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Net income attributable to noncontrolling interest | — | — | — | — | ||||||||
Net loss attributable to controlling interest | ( | ( | ( | ( | ||||||||
Components of net periodic benefit costs before reclassifications | ( | — | ( | ( | ||||||||
Components of net periodic benefit costs reclassified to net loss | | — | | — | ||||||||
Other comprehensive loss before income taxes | ( | — | ( | ( | ||||||||
Income taxes related to other comprehensive loss | — | — | — | — | ||||||||
Other comprehensive loss | ( | — | ( | ( | ||||||||
Other comprehensive income attributable to noncontrolling interest | — | — | — | — | ||||||||
Other comprehensive loss attributable to controlling interest | ( | — | ( | ( | ||||||||
Total comprehensive loss | ( | ( | ( | ( | ||||||||
Total comprehensive income attributable to noncontrolling interest | — | — | — | — | ||||||||
Total comprehensive loss attributable to controlling interest | $ | ( | $ | ( | $ | ( | $ | ( | ||||
See accompanying notes.
- 2 -
TRANSOCEAN LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions, except share data)
(Unaudited)
June 30, | December 31, | ||||||
| 2024 |
| 2023 |
| |||
Assets | |||||||
Cash and cash equivalents |
| $ | | $ | | ||
Accounts receivable, net of allowance of $ | | | |||||
Materials and supplies, net of allowance of $ | | | |||||
Restricted cash and cash equivalents | | | |||||
Other current assets | | | |||||
Total current assets | | | |||||
Property and equipment | | | |||||
Less accumulated depreciation | ( | ( | |||||
Property and equipment, net | | | |||||
Contract intangible assets | — | | |||||
Deferred tax assets, net | | | |||||
Other assets | | | |||||
Total assets |
| $ | | $ | | ||
Liabilities and equity | |||||||
Accounts payable |
| $ | | $ | | ||
Accrued income taxes | | | |||||
Debt due within one year | | | |||||
Other current liabilities | | | |||||
Total current liabilities | | | |||||
Long-term debt | | | |||||
Deferred tax liabilities, net | | | |||||
Other long-term liabilities | | | |||||
Total long-term liabilities | | | |||||
Commitments and contingencies | |||||||
Shares, $ | |||||||
and | |||||||
| | ||||||
Additional paid-in capital | | | |||||
Accumulated deficit | ( | ( | |||||
Accumulated other comprehensive loss | ( | ( | |||||
Total controlling interest shareholders’ equity | | | |||||
Noncontrolling interest | | | |||||
Total equity | | | |||||
Total liabilities and equity |
| $ | | $ | | ||
See accompanying notes.
- 3 -
TRANSOCEAN LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(in millions)
(Unaudited)
Three months ended | Six months ended | ||||||||||||
June 30, | June 30, | ||||||||||||
| 2024 |
| 2023 |
| 2024 |
| 2023 |
| |||||
Shares | |||||||||||||
Balance, beginning of period |
| $ | | $ | | $ | | $ | | ||||
Issuance of shares | | | | | |||||||||
Balance, end of period | | $ | | $ | | $ | | ||||||
Additional paid-in capital | |||||||||||||
Balance, beginning of period | $ | | $ | | $ | | $ | | |||||
Share-based compensation | | | | | |||||||||
Issuance of shares | | | | | |||||||||
Balance, end of period | $ | | $ | | $ | | $ | | |||||
Accumulated deficit | |||||||||||||
Balance, beginning of period | $ | ( | $ | ( | $ | ( | $ | ( | |||||
Net loss attributable to controlling interest | ( | ( | ( | ( | |||||||||
Balance, end of period | $ | ( | $ | ( | $ | ( | $ | ( | |||||
Accumulated other comprehensive loss | |||||||||||||
Balance, beginning of period | $ | ( | $ | ( | $ | ( | $ | ( | |||||
Other comprehensive loss attributable to controlling interest | ( | — | ( | ( | |||||||||
Balance, end of period | $ | ( | $ | ( | $ | ( | $ | ( | |||||
Total controlling interest shareholders’ equity | |||||||||||||
Balance, beginning of period | $ | | $ | | $ | | $ | | |||||
Total comprehensive loss attributable to controlling interest | ( | ( | ( | ( | |||||||||
Share-based compensation | | | | | |||||||||
Issuance of shares | | | | | |||||||||
Balance, end of period | $ | | $ | | $ | | $ | | |||||
Noncontrolling interest | |||||||||||||
Balance, beginning of period | $ | | $ | | $ | | $ | | |||||
Balance, end of period | $ | | $ | | $ | | $ | | |||||
Total equity | |||||||||||||
Balance, beginning of period | $ | | $ | | $ | | $ | | |||||
Total comprehensive loss | ( | ( | ( | ( | |||||||||
Share-based compensation | | | | | |||||||||
Issuance of shares | | | | | |||||||||
Balance, end of period | $ | | $ | | $ | | $ | | |||||
See accompanying notes.
- 4 -
TRANSOCEAN LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(Unaudited)
Six months ended | |||||||
June 30, | |||||||
| 2024 |
| 2023 |
| |||
Cash flows from operating activities | |||||||
Net loss |
| $ | ( | $ | ( | ||
Adjustments to reconcile to net cash provided by operating activities: | |||||||
Amortization of contract intangible asset | | | |||||
Depreciation and amortization | | | |||||
Share-based compensation expense | | | |||||
Loss on impairment of assets | | | |||||
Loss on impairment of investment in unconsolidated affiliate | | — | |||||
Loss on disposal of assets, net | | | |||||
Fair value adjustment to bifurcated compound exchange feature | ( | | |||||
Amortization of debt-related balances, net | | | |||||
(Gain) loss on retirement of debt | ( | | |||||
Deferred income tax expense (benefit) | ( | | |||||
Other, net | ( | | |||||
Changes in deferred revenues, net | | | |||||
Changes in deferred costs, net | ( | ( | |||||
Changes in other operating assets and liabilities, net | ( | ( | |||||
Net cash provided by operating activities | | | |||||
Cash flows from investing activities | |||||||
Capital expenditures | ( | ( | |||||
Investment in loan to unconsolidated affiliate | ( | — | |||||
Investment in equity of unconsolidated affiliate | — | ( | |||||
Proceeds from disposal of assets, net | | | |||||
Cash acquired in acquisition of unconsolidated affiliate | | — | |||||
Net cash used in investing activities | ( | ( | |||||
Cash flows from financing activities | |||||||
Repayments of debt | ( | ( | |||||
Proceeds from issuance of debt, net of issue costs | | | |||||
Other, net | ( | ( | |||||
Net cash provided by (used in) financing activities | ( | | |||||
Net increase (decrease) in unrestricted and restricted cash and cash equivalents | ( | | |||||
Unrestricted and restricted cash and cash equivalents, beginning of period | | | |||||
Unrestricted and restricted cash and cash equivalents, end of period |
| $ | | $ | | ||
See accompanying notes.
- 5 -
TRANSOCEAN LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1—Business
Transocean Ltd. (together with its subsidiaries and predecessors, unless the context requires otherwise, “Transocean,” “we,” “us” or “our”) is a leading international provider of offshore contract drilling services for oil and gas wells. As of June 30, 2024, we owned or had partial ownership interests in and operated a fleet of
Note 2—Significant Accounting Policies
Presentation—We prepared our accompanying unaudited condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States (“U.S.”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X promulgated by the U.S. Securities and Exchange Commission. Pursuant to such rules and regulations, these financial statements do not include all disclosures required by accounting principles generally accepted in the U.S. for complete financial statements. The condensed consolidated financial statements reflect all adjustments, which are, in the opinion of management, necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods. Such adjustments are considered to be of a normal recurring nature unless otherwise noted. Operating results for the three and six months ended June 30, 2024, are not necessarily indicative of the results that may be expected for the year ending December 31, 2024, or for any future period. The accompanying condensed consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements and notes thereto as of December 31, 2023 and 2022, and for each of the three years in the period ended December 31, 2023, included in our annual report on Form 10K filed on February 21, 2024.
Accounting estimates—To prepare financial statements in accordance with accounting principles generally accepted in the U.S., we must make judgments by applying estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosures of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates and assumptions, including those related to our income taxes, property and equipment, equity investments, contingencies, allowance for excess materials and supplies, postemployment benefit plans and share-based compensation. We base our estimates and assumptions on historical experience and other factors that we believe are reasonable. Actual results could differ from such estimates.
Fair value measurements—We estimate fair value at an exchange price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. Our valuation techniques require inputs that we categorize using a three-level hierarchy, from highest to lowest level of observable inputs, as follows: (1) significant observable inputs, including unadjusted quoted prices for identical assets or liabilities in active markets (“Level 1”), (2) significant other observable inputs, including direct or indirect market data for similar assets or liabilities in active markets or identical assets or liabilities in less active markets (“Level 2”) and (3) significant unobservable inputs, including those that require considerable judgment for which there is little or no market data (“Level 3”). When a valuation requires multiple input levels, we categorize the entire fair value measurement according to the lowest level of input that is significant to the measurement even though we may have also utilized significant inputs that are more readily observable.
Note 3—Accounting Standards Updates
Recently issued accounting standards updates not yet adopted
Segment reporting—Effective for the year ending December 31, 2024, we will adopt the accounting standards update that requires incremental disclosures about a public entity’s reportable segments but does not change the definition or guidance for determining reportable segments. The update, which explicitly applies to entities such as us with a single reportable segment, requires disclosure of the significant expense categories and amounts that are regularly provided to the chief operating decision-maker and included in the reported measure of segment profit or loss. Additionally, the update requires disclosures about the individual or the group or committee identified as the chief operating decision-maker. We will provide the new disclosures, as required, in our annual report for the year ending December 31, 2024 and interim periods thereafter with retrospective application to all periods presented, unless impracticable. Although our adoption of the update will require us to augment certain disclosures in the notes to consolidated financial statements, we do not expect such adoption to have a material effect on our consolidated statements of financial position, operations or cash flows.
Income taxes—Effective no later than January 1, 2025, we will adopt the accounting standards update that requires significant additional disclosures intended to enhance the transparency and decision usefulness of income tax disclosures, particularly in the rate reconciliation table and disclosures about income taxes paid. The new guidance will be applied prospectively and permits, but does not require, retrospective application. The update, which permits early adoption, is effective for annual periods beginning after December 15, 2024. We continue to evaluate the requirements. Although we expect our adoption will require us to augment certain disclosures in our notes to consolidated financial statements, we do not expect our adoption to have a material effect on our consolidated statements of financial position, operations or cash flows.
- 6 -
TRANSOCEAN LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS─continued
(Unaudited)
Note 4—Unconsolidated Affiliates
Overview—In the six months ended June 30, 2024 and 2023, we recognized a gain of $
Acquisition—At December 31, 2023, we held a
Contribution—In February 2023, we made a cash contribution of $
Related party transactions—In the six months ended June 30, 2024 and 2023, we received an aggregate cash payment of $
Note 5—Revenues
Overview—Under most of our drilling contracts with customers, our drilling services represent a single performance obligation that is satisfied over time, the duration of which varies by contract. As of June 30, 2024, the drilling contract with the longest expected remaining duration, excluding unexercised options, extends through August 2029.
Disaggregation—Our contract drilling revenues, disaggregated by asset group and by country in which they were earned, were as follows (in millions):
Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||||||||||||||||
| 2024 | 2023 |
| 2024 | 2023 |
| |||||||||||||||||||||||||||||||
| Ultra- |
| Harsh |
| Ultra- |
| Harsh |
|
| Ultra- |
| Harsh |
| Ultra- |
| Harsh |
|
| |||||||||||||||||||
| deepwater |
| environment |
| deepwater |
| environment |
|
| deepwater |
| environment |
| deepwater |
| environment |
|
| |||||||||||||||||||
| floaters |
| floaters |
| Total | floaters |
| floaters |
| Total |
| floaters |
| floaters |
| Total | floaters |
| floaters |
| Total |
| |||||||||||||||
U.S. |
| $ | | $ | — | $ | | $ | | $ | — | $ | |
| $ | | $ | — | $ | | $ | | $ | — | $ | |
| ||||||||||
Brazil | | — | | | — | | | — | | | — | | |||||||||||||||||||||||||
Norway | — | | | — | | | — | | | — | | | |||||||||||||||||||||||||
Other countries (a) | | | | | | | | | | | | | |||||||||||||||||||||||||
Total contract drilling revenues |
| $ | | $ | | $ | | $ | | $ | | $ | |
| $ | | $ | | $ | | $ | | $ | | $ | |
| ||||||||||
Contract liabilities—Contract liabilities for our contracts with customers were as follows (in millions):
June 30, | December 31 | ||||||
| 2024 |
| 2023 |
| |||
Deferred contract revenues, recorded in other current liabilities |
| $ | | $ | | ||
Deferred contract revenues, recorded in other long-term liabilities | | | |||||
Total contract liabilities |
| $ | | $ | | ||
- 7 -
TRANSOCEAN LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS─continued
(Unaudited)
Significant changes in contract liabilities were as follows (in millions):
Six months ended June 30, | |||||||
| 2024 |
| 2023 |
| |||
Total contract liabilities, beginning of period | $ | | $ | | |||
Decrease due to recognition of revenues for goods and services | ( | ( | |||||
Increase due to goods and services transferred over time | | | |||||
Total contract liabilities, end of period | $ | | $ | | |||
Pre-operating costs—In the three and six months ended June 30, 2024, we recognized pre-operating costs of $
Note 6—Long-Lived Assets
Construction work in progress—The changes in our construction work in progress were as follows (in millions):
Six months ended | |||||||
June 30, | |||||||
| 2024 |
| 2023 |
| |||
Construction work in progress, beginning of period |
| $ | | $ | | ||
Capital expenditures | |||||||
Newbuild construction program | | | |||||
Other equipment and construction projects | | | |||||
Total capital expenditures | | | |||||
Changes in accrued capital additions | | ( | |||||
Property and equipment placed into service | |||||||
Newbuild construction program | ( | ( | |||||
Other equipment and construction projects | ( | ( | |||||
Construction work in progress, end of period |
| $ | | $ | | ||
Acquisition—In June 2024, we acquired $
Impairments—In June 2024, we committed to the sale of the ultra-deepwater floater Deepwater Nautilus and related assets for expected aggregate net cash proceeds of $
In June 2023, we committed to the sale of the harsh environment floaters Paul B. Loyd, Jr. and Transocean Leader and related assets for aggregate net cash proceeds of $
We measured the impairment of the rigs and related assets as the amount by which the carrying amount exceeded the estimated fair value less costs to sell. We estimated the fair value of the assets using significant other observable inputs, representative of Level 2 fair value measurements, including binding contracts for the sale of the rigs and related assets.
Disposals—In February 2024, in connection with our efforts to dispose of non-strategic assets, we completed the sale of the harsh environment floaters Paul B. Loyd, Jr. and Transocean Leader, together with related assets for aggregate net cash proceeds of $
In February 2023, in connection with our investment in a noncontrolling ownership interest in GSR, we made a non-cash contribution of the cold stacked ultra-deepwater floater Ocean Rig Olympia and related assets. In the six months ended June 30, 2023, we recognized a loss of $
Assets held for sale—At June 30, 2024, the aggregate carrying amount of our assets held for sale, including the ultra-deepwater floater Deepwater Nautilus and related assets, was $
- 8 -
TRANSOCEAN LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS─continued
(Unaudited)
carrying amount of our assets held for sale, including Paul B. Loyd, Jr. and Transocean Leader and related assets, was $
Subsequent event—In July 2024, we completed the sale of Deepwater Nautilus for aggregate net cash proceeds of $