Transocean Loss Narrower Than Estimates in Q1, Revenues Beat

Core Viewpoint - Transocean Ltd. reported a narrower adjusted net loss in Q1 2025 compared to estimates, but the loss was wider than the previous year, primarily due to increased costs and expenses [1]. Financial Performance - Total adjusted revenues reached $906 million, exceeding the Zacks Consensus Estimate of $886 million and reflecting an 18.7% increase from $763 million in the prior year [2]. - The ultra-deepwater floaters contributed 73% to net contract drilling revenues, while harsh environment floaters accounted for 27% [3]. - Revenues from ultra-deepwater floaters were $658 million, and from harsh environment floaters were $248 million, compared to $569 million and $194 million in the previous year [4]. Revenue Efficiency and Day Rates - Revenue efficiency improved to 95.5%, up from 93.5% in the previous quarter and 92.9% year-over-year [5]. - Average day rates increased to $443,600 from $408,200 in the year-ago quarter, although it fell short of the model prediction of $446,300 [6]. - Fleet utilization rate rose to 63.4%, up from 53.7% in the prior year [7]. Costs and Capital Expenditures - Total costs and expenses were reported at $844 million, an 11% increase from $760 million in the previous year [8]. - Operating and maintenance expenses rose to $618 million from $523 million, while general and administrative expenses decreased to $50 million from $52 million [9]. - Capital investments for the quarter were $60 million, with cash used in operating activities amounting to $26 million, resulting in a negative free cash flow of $34 million [10]. Balance Sheet and Debt - As of March 31, 2025, cash and cash equivalents stood at $263 million, with long-term debt at $5.9 billion and a debt-to-capitalization ratio of 36.8% [11]. Guidance - For Q2 2025, contract drilling revenues are expected to be between $970 million and $990 million, with O&M expenses projected between $610 million and $630 million [12]. - For the full year, contract drilling revenues are anticipated to be between $3.85 billion and $3.95 billion, with a reduction in capital expenditure guidance from $130 million to $115 million [13].