Transocean(RIG) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Transocean reported a significant net loss of $938 million in Q2 2025, primarily due to a $1.14 billion asset impairment Condensed Consolidated Statements of Operations Q2 2025 saw contract drilling revenues rise to $988 million, but a $1.14 billion asset impairment resulted in a $938 million net loss Condensed Consolidated Statements of Operations (Q2 & H1 2025 vs 2024) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Contract drilling revenues | $988 million | $861 million | $1,894 million | $1,624 million | | Operating and maintenance | $599 million | $534 million | $1,217 million | $1,057 million | | Loss on impairment of assets | ($1,136) million | ($143) million | ($1,136) million | ($143) million | | Operating loss | ($964) million | ($59) million | ($900) million | ($62) million | | Net loss attributable to controlling interest | ($938) million | ($123) million | ($1,017) million | ($25) million | | Loss per share, basic and diluted | ($1.06) | ($0.15) | ($1.15) | ($0.03) | Condensed Consolidated Balance Sheets Total assets decreased to $17.81 billion by June 30, 2025, primarily due to reduced property and equipment, leading to a decline in total equity Condensed Consolidated Balance Sheet Highlights | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $377 million | $560 million | | Total current assets | $2,000 million | $2,452 million | | Property and equipment, net | $14,752 million | $15,831 million | | Total assets | $17,811 million | $19,371 million | | Debt due within one year | $666 million | $686 million | | Long-term debt | $5,885 million | $6,195 million | | Total liabilities | $8,457 million | $9,086 million | | Total equity | $9,354 million | $10,285 million | Condensed Consolidated Statements of Cash Flows Net cash from operating activities significantly improved to $154 million in H1 2025, while cash used in financing activities increased due to lower debt issuance Six Months Ended June 30, Cash Flow Summary | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $154 million | $47 million | | Net cash used in investing activities | ($70) million | ($114) million | | Net cash used in financing activities | ($253) million | ($53) million | | Net decrease in cash and cash equivalents | ($169) million | ($120) million | Notes to Condensed Consolidated Financial Statements Notes detail a $1.14 billion asset impairment, revenue drivers, debt management through bond exchanges, and ongoing legal matters - As of June 30, 2025, the company's fleet consisted of 32 mobile offshore drilling units, including 24 ultra-deepwater floaters and eight harsh environment floaters[19] Contract Drilling Revenues by Asset Group (Six Months Ended June 30) | Asset Group | 2025 | 2024 | | :--- | :--- | :--- | | Ultra-deepwater floaters | $1,357 million | $1,175 million | | Harsh environment floaters | $537 million | $449 million | | Total | $1,894 million | $1,624 million | - In Q2 2025, the company recognized a $1.14 billion impairment loss related to four ultra-deepwater floaters classified as held for sale[30][31] - In June and July 2025, holders exchanged $157 million of 4.00% Exchangeable Bonds for 59.4 million shares, resulting in a $24 million loss in Q2 2025 and an expected $56 million loss in Q3 2025[43][59] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management maintains a positive long-term outlook for offshore drilling, despite near-term rig utilization pressure, with Q2 2025 results impacted by a $1.14 billion asset impairment Outlook The company maintains a positive long-term outlook for offshore drilling, driven by energy demand, but anticipates some rig utilization pressure into 2026 - The industry outlook is positive, with forecasts indicating hydrocarbons will remain a critical energy source, driving long-term demand for oil and gas[75] - Management expects increased investment in offshore exploration and development due to rising energy demand and accelerating depletion of existing reserves[76][77] - Despite a strong long-term outlook, the company anticipates some pressure on rig utilization into 2026, potentially leading to the scrapping of less competitive assets[80] Performance and Other Key Indicators Total contract backlog stood at $7.2 billion as of July 2025, with Q2 2025 showing improved average daily revenue and rig utilization Contract Backlog (in millions) | Date | Ultra-deepwater floaters | Harsh environment floaters | Total contract backlog | | :--- | :--- | :--- | :--- | | July 16, 2025 | $5,468 | $1,758 | $7,226 | | April 16, 2025 | $6,040 | $1,886 | $7,926 | | February 12, 2025 | $6,363 | $1,965 | $8,328 | Key Performance Indicators (Q2 2025 vs Q2 2024) | Indicator | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Average Daily Revenue (Total Fleet) | $458,600 | $438,300 | | Revenue Efficiency (Total Fleet) | 96.6% | 96.9% | | Rig Utilization (Total Fleet) | 67.3% | 57.8% | Operating Results Q2 2025 contract drilling revenues increased to $988 million, but a $1.14 billion asset impairment significantly widened the operating loss to $964 million - Q2 2025 contract drilling revenues rose by $127 million year-over-year, primarily due to increased activity, higher average daily revenues, and increased utilization[90][91] - The significant increase in operating loss for Q2 2025 was almost entirely attributable to the $1.136 billion loss on impairment of held-for-sale assets[90][95] - Q2 2025 interest expense increased by $38 million year-over-year, mainly due to a $40 million change in the fair value of a bifurcated compound exchange feature on certain debt[90][97] Liquidity and Capital Resources The company maintains liquidity through cash from operations and a $510 million secured credit facility, actively managing its capital structure through debt exchanges - As of June 30, 2025, the company had $377 million in unrestricted cash and cash equivalents[123] - The company has a $510 million Secured Credit Facility maturing in June 2028, with $487 million of available borrowing capacity as of June 30, 2025[38][124] - The company may use cash, asset sale proceeds, or access capital markets to pursue liability management transactions, including purchasing or exchanging its debt and equity securities[128] Item 3. Quantitative and Qualitative Disclosures About Market Risk Primary market risks include interest rates on long-term debt, equity price risk from exchangeable bonds, and currency fluctuations, with total debt at $6.65 billion principal Fixed-Rate Debt Maturities as of June 30, 2025 (in millions) | Twelve months ending June 30, | Principal Amount | | :--- | :--- | | 2026 | $686 | | 2027 | $1,402 | | 2028 | $607 | | 2029 | $1,147 | | 2030 | $729 | | Thereafter | $2,083 | | Total | $6,654 | - The fair value of outstanding debt decreased from $6.89 billion at year-end 2024 to $6.24 billion at June 30, 2025, due to market price changes, repayments, and bond exchanges[141] Item 4. Controls and Procedures Disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[143] - No changes occurred during the quarter that materially affected the company's internal control over financial reporting[144] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is involved in various legal matters, including asbestos litigation and a resolved Clean Water Act consent decree, with no expected material adverse effect - The company is a defendant in multiple lawsuits related to alleged asbestos exposure, which it intends to defend vigorously[54][55] - A subsidiary entered into a consent decree with the DOJ and EPA in January 2024 to resolve alleged Clean Water Act violations, agreeing to an immaterial civil penalty and corrective actions[149] Item 1A. Risk Factors No material changes to risk factors were reported for the period, consistent with prior disclosures - No material changes to risk factors were reported for the period[151] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company did not repurchase equity securities in Q2 2025, with approximately $4.09 billion remaining under its share repurchase program Issuer Purchases of Equity Securities (Q2 2025) | Period | Total number of shares purchased | Approximate dollar value of shares that may yet be purchased under the plans or programs | | :--- | :--- | :--- | | April 2025 | 0 | $4,089 million | | May 2025 | 0 | $4,089 million | | June 2025 | 0 | $4,089 million | Item 3. Defaults Upon Senior Securities Not applicable; the company reported no defaults upon senior securities Item 4. Mine Safety Disclosures Not applicable Item 5. Other Information No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the second quarter of 2025 - No director or officer adopted or terminated a Rule 10b5-1 trading plan during the quarter[157] Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and interactive data files