Transocean(RIG)2023-02-22 18:52Financial Data and Key Metrics Changes - For Q4 2022, Transocean reported adjusted EBITDA of 625 million, resulting in an adjusted EBITDA margin of approximately 20% [5][28] - The company ended Q4 2022 with a total liquidity of approximately 683 million [29][34] - The net loss attributable to controlling interest was 0.48 per diluted share, with an adjusted net loss of 625 million, with an average day rate of 423 million, below guidance due to lower in-service maintenance expenses [29] Market Data and Key Metrics Changes - Active drillship utilization is expected to remain at or above 97% for the next two years, with demand for rigs and services anticipated to remain elevated [19][20] - Brazil is leading incremental demand for offshore drilling services, with potential for up to 19 floater awards, driving higher day rates which have increased by 117% from 2020 to 2022 [21][22] Company Strategy and Development Direction - The company is focused on maintaining a disciplined approach to rig reactivations, ensuring that contracts cover reactivation costs and provide suitable returns [39][41] - Transocean is investing in deep-sea mineral exploration, diversifying its operations and contributing to a lower carbon economy [10][10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the offshore drilling industry's recovery, with expectations for increased drilling activity and day rates [25][26] - The company anticipates that the number of wells drilled offshore will increase by nearly 15% in 2023, with Brazil expected to remain a significant source of demand [20][21] Other Important Information - The company has secured 4 billion [6] - Transocean has taken several liability management actions to improve liquidity, including extending credit facilities and refinancing senior notes [27][28] Q&A Session Summary Question: What is Transocean's position on rig reactivations? - Management clarified that reactivations will only occur if customers cover the costs and provide suitable returns, potentially leading to a later reactivation compared to peers [39][40] Question: How is the harsh environment market developing? - Management noted that several rigs have moved out of Norway to other regions, and they expect to see increased demand for high-efficiency drilling packages in South America [44][45] Question: What is the outlook for multi-year contracts from majors? - Management indicated that while Petrobras is moving quickly to secure rigs, they expect majors to also begin locking in multi-year contracts as supply diminishes [48][49] Question: Are there expected increases in operational costs? - Management acknowledged that inflation and a tight labor market are leading to cost increases in the range of 5% to 8% for offshore crews and operational expenses [50][51] Question: What is the strategy for managing the balance sheet? - Management emphasized the goal of simplifying the balance sheet and using organic cash flows to deleverage, focusing on reducing various types of debt over time [55][56]