Transocean Ltd

Previous wording

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 July 24, 2024, we owned or had partial ownership interests in and operated 36 mobile offshore drilling units, consisting of 28 ultra-deepwater floaters and eight harsh environment floaters.

Current wording

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 October 24, 2024, we owned or had partial ownership interests in and operated 34 mobile offshore drilling units, consisting of 26 ultra-deepwater floaters and eight harsh environment floaters.

Previous wording

Acquisition—In June 2024, we transferred noncash consideration with an aggregate fair value of $431 million, including $130 million aggregate principal amount of the 8.00% senior notes due February 2027 (the “8.00% Senior Notes”) and 55.5 million Transocean Ltd. shares, to acquire the outstanding 67.0 percent ownership interest in Orion Holdings (Cayman) Limited (together with its subsidiary, “Orion”), the Cayman Islands company that owns the harsh environment floaterTransocean Norge, as a result, Orion became our wholly owned subsidiary. See “—Operating Results,” “—Liquidity and Capital Resources—Sources and uses of liquidity.”

Current wording

Acquisition—In June 2024, we transferred noncash consideration with an aggregate fair value of $431 million, including $130 million aggregate principal amount of the 8.00% senior notes due February 2027 (the “8.00% Senior Notes”) and 55.5 million Transocean Ltd. shares, to acquire the outstanding 67.0 percent ownership interest in Orion Holdings (Cayman) Limited (together with its subsidiary, “Orion”), the Cayman Islands company that owns the harsh environment floaterTransocean Norge, as a result, Orion became our wholly owned subsidiary. See “—Operating Results” and “—Liquidity and Capital Resources—Sources and uses of liquidity.”

Previous wording

Disposal of assets held for sale—In February 2024, we completed the sale of the harsh environment floatersPaul B. Loyd, Jr. andTransocean Leader, together with related assets for aggregate net cash proceeds of $49 million, including $6 million received as a deposit in the year ended December 31, 2023. See “—Operating Results,” “—Liquidity and Capital Resources—Sources and uses of liquidity.”

Current wording

Disposal of assets—In February 2024, we completed the sale of the harsh environment floatersPaul B. Loyd, Jr. andTransocean Leader, together with related assets, for aggregate net cash proceeds of $49 million, including $6 million received as a deposit in the year ended December 31, 2023. See “—Operating Results” and “—Liquidity and Capital Resources—Sources and uses of liquidity.”

Previous wording

In June 2024, we committed to the sale of the ultra-deepwater floaterDeepwater Nautilus and related assets. In the three and six months ended June 30, 2024, we recognized a loss of $143 million ($138 million or $0.17 per diluted share, net of tax) associated with the impairment of the rig and related assets, which we determined were impaired at the time that we classified the assets as held for sale. In July 2024, we completed the sale for aggregate net cash proceeds of $53 million, including $5 million received as a deposit in June 2024. See “—Operating Results,” “—Liquidity and Capital Resources—Sources and uses of liquidity.”

Current wording

In July 2024, we completed the sale of the ultra-deepwater floaterDeepwater Nautilus and related assets for aggregate net cash proceeds of $53 million, including $5 million received as a deposit in June 2024. In the nine months ended September 30, 2024, we recognized a loss of $143 million ($138 million or $0.15 per diluted share, net of tax) associated with the impairment of the rig and related assets, which we determined were impaired at the time that we classified the assets as held for sale. See “—Operating Results,” “—Liquidity and Capital Resources—Sources and uses of liquidity.”

Previous wording

Secured credit facility—In April 2024, we amended the credit agreement that established our secured credit facility (as amended from time to time, the “Secured Credit Facility”) to, among other things, (a) extend the maturity date from to June 22, 2025 to June 22, 2028 and (b) reduce the borrowing capacity from $600 million to $576 million through June 22, 2025, and thereafter reduce the borrowing capacity to $510 million through June 22, 2028. See “—Liquidity and Capital Resources—Sources and uses of liquidity.”

Current wording

Secured credit facility—In April 2024, we amended the credit agreement that established our secured credit facility (as amended from time to time, the “Secured Credit Facility”) to, among other things, (a) extend the maturity date from June 22, 2025 to June 22, 2028 and (b) reduce the borrowing capacity from $600 million to $576 million through June 22, 2025, and thereafter reduce the borrowing capacity to $510 million through June 22, 2028. See “—Liquidity and Capital Resources—Sources and uses of liquidity.”

Previous wording

Debt tender offers—In April 2024, we made an aggregate cash payment of $886 million, including related costs, to complete a tender offer (the “Tender Offers”) for $596 million and $249 million aggregate principal amount of the validly tendered 11.50% senior guaranteed notes due January 2027 (the “11.50% Senior Guaranteed Notes”) and the 7.25% senior notes due November 2025 (the “7.25% Senior Notes”), respectively. See “—Liquidity and Capital Resources—Sources and uses of liquidity.”

Current wording

Debt tender offers—In April 2024, we made an aggregate cash payment of $886 million, including related costs, to complete tender offers (the “Tender Offers”) for $596 million and $249 million aggregate principal amount of the validly tendered 11.50% senior guaranteed notes due January 2027 (the “11.50% Senior Guaranteed Notes”) and the 7.25% senior notes due November 2025 (the “7.25% Senior Notes”), respectively. See “—Liquidity and Capital Resources—Sources and uses of liquidity.”

Previous wording

Debt redemption—In April 2024, we made an aggregate cash payment of $105 million to redeem the remaining $105 million aggregate principal amount of the 7.25% Senior Notes outstanding following the completion of the Tender Offers. Additionally, we made an aggregate cash payment of $658 million, including related costs, to fully redeem $569 million aggregate principal amount of the 7.50% senior notes due January 2026 and partially redeem $87 million aggregate principal amount of the 8.00% Senior Notes. In July 2024, we made a cash payment of $99 million to complete the redemption of $91 million aggregate remaining principal amount of the 11.50% Senior Guaranteed Notes. See “—Liquidity and Capital Resources—Sources and uses of liquidity.”

Current wording

Debt redemption—In April 2024, we made an aggregate cash payment of $658 million, including related costs, to fully redeem $569 million aggregate principal amount of the 7.50% senior notes due January 2026 and partially redeem $87 million aggregate principal amount of the 8.00% Senior Notes. In the nine months ended September 30, 2024, we made an aggregate cash payment of $204 million to redeem the remaining $105 million aggregate principal amount of the 7.25% Senior Notes and $91 million aggregate principal amount of the 11.50% Senior Guaranteed Notes outstanding following the completion of the Tender Offers. See “—Liquidity and Capital Resources—Sources and uses of liquidity.”

Previous wording

With deepwater and harsh environment fields generating favorable economic returns and relatively lower carbon intensity than other hydrocarbon sources, we expect a significant portion of the required spending in fossil fuel development will continue to be allocated to deepwater and harsh environment projects. Although the price for oil may continue to exhibit volatility in response to several factors outside of our control, including uncertainty about future output from the major oil and gas producing countries, interest rate changes, geopolitical events and global economic growth, we nevertheless expect prices to remain at levels that are robustly supportive of investment in deepwater and harsh environment exploration and development projects.

Current wording

With deepwater and harsh environment fields generating favorable economic returns and relatively lower carbon intensity than other hydrocarbon sources, we expect a significant portion of the required spending in fossil fuel development will continue to be allocated to deepwater and harsh environment projects. Although the price for oil may continue to exhibit volatility in response to factors outside of our control, including uncertainty about future output from the major oil and gas producing countries, interest rate changes, geopolitical events and global economic growth, we nevertheless expect prices to remain at levels that continue to be supportive of investment in deepwater and harsh environment exploration and development projects.

Previous wording

Significantly reduced offshore contracting activity during the previous downcycle has also resulted in a much smaller marketable global fleet of floating rigs available to meet the current upcycle in expected customer demands, specifically with respect to the highest specification drilling units preferred by many of our customers for their projects. Marketable supply and demand for deepwater and harsh environment rigs is more balanced, and customers have been planning further into the future to ensure availability of rigs for their drilling programs and are signing contracts with longer lead times and durations, as well as higher dayrates. Our customers continue to pursue offshore projects in deepwater and harsh environments where rates of return and production volumes are anticipated to be very attractive, which is reflected in the resumption of postponed projects, commencement of new drilling and exploration campaigns and extensions of current drilling campaigns.

Current wording

Significantly reduced offshore contracting activity during the previous downcycle has also resulted in a smaller marketable global fleet of floating rigs available to meet the current upcycle in expected customer demands, specifically with respect to the highest specification drilling units preferred by many of our customers for their projects. Marketable supply and demand for ultra-deepwater and harsh environment rigs is more balanced, and our customers are planning further into the future to ensure availability of rigs for their drilling programs and are signing contracts with longer lead times and durations, as well as higher dayrates. Our customers continue to pursue offshore projects in deepwater and harsh environments where rates of return and production volumes are anticipated to be very attractive, which is reflected in the resumption of postponed projects, commencement of new drilling and exploration campaigns and extensions of current drilling campaigns.

Previous wording

Offshore drilling activity remains robust in every major ultra-deepwater geographic sector. Several new exploration and development programs have commenced as our customers return their focus to reserve replacement. Consequently, tendering activity improved meaningfully during 2023. Several multi-year tenders and direct negotiations for work in Brazil, West Africa, North America and Australia were awarded and many tenders in these sectors remain active and are still expected to be awarded in 2024.

Current wording

Offshore drilling activity remains robust in every major deepwater geographic sector. Several new exploration and development programs have commenced as our customers return their focus to reserve replacement. Consequently, tendering activity improved meaningfully during 2023. Several multi-year tenders and direct negotiations for work in Brazil, West Africa, North America and Australia were awarded and many tenders in these sectors remain active and are still expected to be awarded in the final quarter of 2024.

Previous wording

In Norway, the largest market for harsh environment rigs, we anticipate demand will accelerate and extend through at least 2028. Several rigs have departed the region to work in other emerging harsh environment regions that require high-specification, high-efficiency semisubmersibles. Contract durations, including subsequent extensions, on most of these units along with other factors affecting supply and demand for drilling rigs are likely to have a favorable influence on dayrates and contracting terms as competition increases for high-specification, high-efficiency semisubmersibles.

Current wording

In Norway, the largest region for harsh environment rigs, we anticipate demand will accelerate and extend through at least 2028. Several rigs have departed the region to work in other emerging harsh environment regions that require high-specification, high-efficiency semisubmersibles. Contract durations, including subsequent extensions, on most of these units along with other factors affecting supply and demand for drilling rigs are likely to have a favorable influence on dayrates and contracting terms as competition increases for high-specification, high-efficiency semisubmersibles.

Previous wording

As we project that this demand for both our asset groups will be sustained in the coming years, and as there are now fewer high-specification offshore drilling rigs capable of operating in these markets, we believe this demand may prompt the reactivation of cold stacked rigs and the delivery of remaining stranded newbuild assets.

Current wording

As we project that this demand for both our asset groups will be sustained in the coming years, and as there are now fewer high-specification offshore drilling rigs capable of operating, we believe this demand may prompt the reactivation of cold stacked rigs and the delivery of remaining stranded newbuild assets.

Previous wording

Fleet status—We refer to the availability of our rigs in terms of the uncommitted fleet rate. The uncommitted fleet rate is defined as the number of uncommitted days divided by the total number of rig calendar days in the measurement period, expressed as a percentage. An uncommitted day is defined as a calendar day during which a rig is idle or stacked, is not contracted to a customer and is not committed to a shipyard. The uncommitted fleet rates exclude the effect of priced options. As of July 24, 2024, the uncommitted fleet rates for the remainder of 2024 and each of the four years in the period ending December 31, 2028 were as follows:

Current wording

Fleet status—We refer to the availability of our rigs in terms of the uncommitted fleet rate. The uncommitted fleet rate is defined as the number of uncommitted days divided by the total number of rig calendar days in the measurement period, expressed as a percentage. An uncommitted day is defined as a calendar day during which a rig is idle or stacked, is not contracted to a customer and is not committed

Previous wording

The contractual operating dayrate may be higher than the actual dayrate we ultimately receive because an alternative contractual dayrate, such as a waiting-on-weather rate, repair rate, standby rate or force majeure rate, may apply under certain circumstances. The contractual operating dayrate may also be higher than the actual dayrate we ultimately receive because of a number of factors, including rig downtime or suspension of operations. In certain contracts, the actual dayrate may be reduced to zero if, for example, repairs extend beyond a stated period of time.

Current wording

The contractual operating dayrate may be higher than the actual dayrate we ultimately receive because an alternative contractual dayrate, such as a waiting-on-weather rate, repair rate, standby rate or force majeure rate, may apply under certain circumstances. The contractual operating dayrate may also be higher than the actual dayrate we ultimately receive because of a number of factors, including rig downtime, suspension of operations and other factors. In certain contracts, the actual dayrate may be reduced to zero if, for example, repairs extend beyond a stated period of time.

Previous wording

Revenue efficiency—We believe revenue efficiency measures our ability to ultimately convert our contract backlog into revenues. 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. The revenue efficiency rates for our fleet were as follows:

Current wording

Revenue efficiency—We believe revenue efficiency measures our ability to ultimately convert our contract backlog into revenues. 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

Previous wording

Contract drilling revenues—Contract drilling revenues increased for the six months ended June 30, 2024, compared to the six months ended June 30, 2023, primarily due to the following: (a) approximately $145 million resulting from higher average daily revenues, (b) approximately $60 million resulting from the operations of our two newbuild ultra-deepwater floatersDeepwater Titan andDeepwater Aquila, (c) approximately $55 million resulting from increased activity for the operations of the harsh environment floaterTransocean Norge, (d) approximately $30 million resulting from decreased amortization of contract intangible assets and (e) approximately $15 million resulting from increased utilization. These increases were partially offset by the following: (a) approximately $20 million resulting from early termination fees in the six months ended June 30, 2023 with no comparable activity in the current-year period, (b) approximately $15 million resulting from the operations of the harsh environment floaterPaul B. Loyd, Jr., the sale of which we completed in February 2024, (c) approximately $10 million resulting from decreased reimbursement revenues and (d) approximately $10 million resulting from decreased revenue efficiency for the comparable active fleet.

Current wording

Contract drilling revenues—Contract drilling revenues increased for the three months ended September 30, 2024, compared to the three months ended September 30, 2023, primarily due to the following: (a) approximately $210 million resulting from increased utilization, (b) approximately $55 million resulting from improved average daily revenues, (c) approximately $35 million resulting from operations of our newbuild ultra-deepwater floaterDeepwater Aquila and (d) approximately $10 million resulting from decreased amortization of contract intangible assets. These increases were partially offset by the following: (a) approximately $55 million resulting from rigs sold or classified as held for sale, (b) approximately $15 million resulting from early termination fees in the three months ended September 30, 2023 with no comparable activity in the current-year period and (c) approximately $5 million resulting from lower reimbursement revenues.

Previous wording

Costs and expenses—Operating and maintenance costs and expenses increased for the three months ended June 30, 2024, compared to the three months ended June 30, 2023, primarily due to the following: (a) approximately $50 million resulting from increased operating activity, (b) approximately $20 million resulting from the effect of inflation on personnel and other operating costs, (c) approximately $15 million resulting from the operations of our newbuild ultra-deepwater floatersDeepwater Titan andDeepwater Aquila, (d) approximately $15 million resulting from the operations of the harsh environment floaterTransocean Norge, (e) approximately $10 million resulting from

Current wording

Costs and expenses—Operating and maintenance costs and expenses increased for the three months ended September 30, 2024, compared to the three months ended September 30, 2023, primarily due to the following: (a) approximately $95 million resulting from increased operating activity, (b) approximately $20 million resulting from the operations of our newbuild ultra-deepwater floaterDeepwater Aquila, (c) approximately $20 million resulting from incremental in-service costs related to additional services and (d) approximately $15 million resulting from the effect of inflation on personnel and other operating costs. These increases were partially offset by the following: (a) approximately $55 million resulting from rigs sold or classified as held for sale, (b) approximately $40 million resulting from lower costs incurred during contract preparation, (c) approximately $10 million resulting from the operations of the harsh environment floaterTransocean Norge and (d) approximately $5 million resulting from lower reimbursable costs.

Previous wording

General and administrative costs and expenses increased for the six months ended June 30, 2024, compared to the six months ended June 30, 2023, primarily due to (a) approximately $11 million of increased personnel costs, primarily resulting from costs associated with the early retirement of certain personnel and (b) approximately $8 million resulting from increased legal and professional fees.

Current wording

General and administrative costs and expenses increased for the three months ended September 30, 2024, compared to the three months ended September 30, 2023, primarily due to approximately $5 million resulting from increased personnel costs.

Previous wording

Other income and expense—Interest expense, net of amounts capitalized, decreased in the three months ended June 30, 2024, compared to the three months ended June 30, 2023, primarily due to the following: (a) $115 million decreased interest resulting from the change to the fair value of the bifurcated compound exchange feature embedded in the indenture governing the 4.625% senior guaranteed exchangeable bonds due September 2029 (“4.625% Senior Guaranteed Exchangeable Bonds”) and (b) $19 million decreased interest resulting from debt repaid as scheduled or early retired, partially offset by, (c) $37 million increased interest resulting from debt issued since June 2023 and (d) $5 million increased interest resulting from reduced interest costs capitalized for our newbuild construction program.

Current wording

Other income and expense—Interest expense, net of amounts capitalized, decreased in the three months ended September 30, 2024, compared to the three months ended September 30, 2023, primarily due to the following: (a) $167 million decreased interest resulting from the change to the fair value of the bifurcated compound exchange feature embedded in the indenture governing the 4.625% senior guaranteed exchangeable bonds due September 2029 (“4.625% Senior Guaranteed Exchangeable Bonds”) and (b) $23 million decreased interest resulting from debt repaid as scheduled or early retired, partially offset by, (c) $44 million increased interest resulting from debt issued.

Previous wording

Other income, net, decreased in the three months ended June 30, 2024, compared to the three months ended June 30, 2023, primarily due to (a) reduced income of $8 million related to our dual-activity patent, (b) reduced gains of $5 million resulting from net changes to currency exchange rates, partially offset by (c) increased income of $5 million associated with the equity investments in our unconsolidated affiliates.

Current wording

Other income, net, decreased in the three months ended September 30, 2024, compared to the three months ended September 30, 2023, primarily due to (a) decreased income of $8 million related to our dual-activity patent, partially offset by (c) decreased losses of $3 million related to our equity investments in unconsolidated affiliates.

Previous wording

Income tax expense or benefit—In the three months ended June 30, 2024 and 2023, our effective tax rate was 474.5 percent and 8.8 percent, respectively, based on income or loss before income tax expense or benefit. In the three months ended June 30, 2024 and 2023, the effect of various discrete period tax items was a net tax benefit of $7 million and $1 million, respectively. In the three months ended June 30, 2024, such discrete items included changes to deferred taxes due to a loss on the impairment of assets. In the three months ended June 30, 2023, such discrete items included expiration of various uncertain tax positions, changes to valuation allowances and changes to deferred tax expense due to new rig operations. In the three months ended June 30, 2024 and 2023, our effective tax rate, excluding discrete items, was 416.3 percent and 11.7 percent, respectively, based on income or loss before income tax expense or benefit.

Current wording

Income tax benefit—In the three months ended September 30, 2024 and 2023, our effective tax rate was 6.0 percent and 16.3 percent, respectively, based on loss before income tax benefit. In the three months ended September 30, 2024 and 2023, the effect of various discrete period tax items was a net tax benefit of $50 million and $65 million, respectively. In the three months ended September 30, 2024, such discrete items included changes to deferred taxes resulting from asset impairments and changes to valuation allowances. In the three months ended September 30, 2023, such discrete items included settlement of various uncertain tax positions and changes to valuation allowances. In the three months ended September 30, 2024 and 2023, our effective tax rate, excluding discrete items, was 22.5 percent and (8.7) percent, respectively, based on loss before income tax benefit.

Previous wording

Contract drilling revenues—Contract drilling revenues increased for the three months ended June 30, 2024, compared to the three months ended June 30, 2023, primarily due to the following: (a) approximately $65 million resulting from higher average daily revenues, (b) approximately $40 million resulting from increased utilization, (c) approximately $35 million resulting from the operations of our newbuild ultra-deepwater floatersDeepwater Titan andDeepwater Aquila, (d) approximately $20 million resulting from the operations of the harsh environment floaterTransocean Norge and (e) approximately $20 million resulting from decreased amortization of contract intangible assets. These increases were partially offset by the following: (a) approximately $20 million resulting from early termination fees in the three months ended June 30, 2023 with no comparable activity in the current-year period, (b) approximately $15 million resulting from the harsh environment floaterPaul B. Loyd, Jr., the sale of which we completed in February 2024, and (c) approximately $15 million resulting from reimbursement revenues.

Current wording

Contract drilling revenues—Contract drilling revenues increased for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, primarily due to the following: (a) approximately $305 million resulting from increased utilization, (b) approximately $215 million resulting from improved average daily revenues, (c) approximately $100 million resulting from the operations of our newbuild ultra-deepwater floatersDeepwater Titan andDeepwater Aquila, (d) approximately $60 million resulting from increased activity for the operations of the harsh environment floaterTransocean Norge and (e) approximately $40 million resulting from decreased amortization of contract intangible assets. These increases were partially offset by the following: (a) approximately $185 million resulting from rigs sold or classified as held for sale, (b) approximately $35 million resulting from early termination fees in the nine months ended September 30, 2023 with no comparable activity in the current-year period and (c) approximately $20 million resulting from decreased revenue efficiency for the comparable active fleet.

Previous wording

Costs and expenses—Operating and maintenance costs and expenses increased for the six months ended June 30, 2024, compared to the six months ended June 30, 2023, primarily due to the following: (a) approximately $65 million resulting from increased operating activity, (b) approximately $40 million resulting from the effect of inflation on personnel and other operating costs, (c) approximately $40 million resulting from the operations of the harsh environment floaterTransocean Norge, (d) approximately $30 million resulting from the operations of our newbuild ultra-deepwater floatersDeepwater Titan andDeepwater Aquila, (e) approximately $15 million resulting from higher contract preparation costs and (f) approximately $5 million resulting from increased costs associated with the early retirement of certain personnel. These increases were partially offset by the following: (a) approximately $15 million resulting from favorable settlements of various litigation and contingencies, (b) approximately $10 million resulting from lower reimbursable costs, (c) approximately $10 million resulting from the operations of the harsh environment floaterPaul B. Loyd, Jr., the sale of which we completed in February 2024, and (d) approximately $5 million resulting from lower in-service maintenance costs for the comparable fleet.

Current wording

Costs and expenses—Operating and maintenance costs and expenses increased for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, primarily due to the following: (a) approximately $150 million resulting from increased operating activity, (b) approximately $55 million resulting from the effect of inflation on personnel and other operating costs, (c) approximately $50 million resulting from the operations of our newbuild ultra-deepwater floatersDeepwater Titan andDeepwater Aquila, (d) approximately $50 million resulting from incremental in-service costs related to additional services, (e) approximately $40 million resulting from the operations of the harsh environment floaterTransocean Norge, (f) approximately $25 million resulting from increased in-service maintenance costs for the comparable fleet, (g) approximately $15 million resulting from out-of-service costs and (h) approximately $10 million resulting from increased costs associated with early retirement of certain personnel. These increases were partially offset by the following: (a) approximately $140 million resulting from rigs sold or classified as held for sale, (b) approximately $25 million resulting from lower costs incurred during contract preparation, (c) approximately $15 million resulting from favorable settlements of various litigation and contingencies and (d) approximately $10 million resulting from favorable currency exchange rates.

Previous wording

General and administrative costs and expenses increased for the three months ended June 30, 2024, compared to the three months ended June 30, 2023, primarily due to (a) approximately $6 million resulting from increased personnel costs, primarily resulting from costs associated with the early retirement of certain personnel and (b) approximately $6 million resulting from legal and professional fees.

Current wording

General and administrative costs and expenses increased for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, primarily due to (a) approximately $16 million resulting from increased personnel costs, primarily resulting from costs associated with the early retirement of certain personnel, and (b) approximately $10 million resulting from increased legal and professional fees.

Previous wording

Loss on impairment or disposal of assets—In the six months ended June 30, 2024, we recognized a loss of $143 million, associated with the impairment ofDeepwater Nautilus and related assets. In the six months ended June 30, 2023, we recognized a loss of $53 million, associated with the impairment ofPaul B. Loyd, Jr. andTransocean Leader, together with related assets.

Current wording

Loss on impairment or disposal of assets—In the nine months ended September 30, 2024, we recognized a loss of $772 million associated with the impairment ofDeepwater Nautilus,* Development Driller III* andDiscoverer Inspiration, together with related assets. In the nine months ended September 30, 2023, we recognized a loss of $58 million associated with the impairment ofPaul B. Loyd, Jr. andTransocean Leader, together with related assets.

Previous wording

In the six months ended June 30, 2023, we recognized a loss of $169 million associated with our non-cash contribution of the ultra-deepwater drillshipOcean Rig Olympia and related assets for a noncontrolling ownership interest in an unconsolidated affiliate. In the

Current wording

In the nine months ended September 30, 2023, we recognized a loss of $169 million associated with our non-cash contribution of the ultra-deepwater drillshipOcean Rig Olympia and related assets for a noncontrolling ownership interest in an unconsolidated affiliate. In the nine months ended September 30, 2024 and 2023, we recognized an aggregate net loss of $10 million and $4 million, respectively, associated with the disposal of assets unrelated to rig sales.

Previous wording

Other income and expense—Interest expense, net of amounts capitalized, decreased in the six months ended June 30, 2024, compared to the six months ended June 30, 2023, primarily due to the following: (a) approximately $258 million decreased interest resulting from the fair value adjustment of the bifurcated compound exchange feature embedded in the indenture governing the 4.625% Senior Guaranteed Exchangeable Bonds and (b) approximately $30 million decreased interest resulting from debt repaid as scheduled or early retired, partially offset by, (c) approximately $52 million increased interest resulting from debt issued since January 2023 and (d) $18 million increased interest resulting from reduced interest costs capitalized for our newbuild construction program.

Current wording

Other income and expense—Interest expense, net of amounts capitalized, decreased in the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, primarily due to the following: (a) $425 million decreased interest resulting from the fair value adjustment of the bifurcated compound exchange feature embedded in the indenture governing the 4.625% Senior Guaranteed Exchangeable Bonds and (b) approximately $51 million decreased interest resulting from debt repaid as scheduled or early retired, partially offset by, (c) approximately $95 million increased interest resulting from debt issued and (d) $18 million increased interest resulting from reduced interest costs capitalized for our newbuild construction program.

Previous wording

In the six months ended June 30, 2024, we recognized a net gain on retirement of debt as follows: (a) an aggregate net gain of $144 million resulting from retirement of notes validly tendered in the Tender Offers, partially offset by (b) an aggregate net loss of $4 million associated with the redemption and early retirement of $761 million aggregate principal amount of our debt securities. In the six months ended June 30, 2023, we recognized an aggregate net loss of $32 million associated with the redemption and early retirement of $1.38 billion aggregate principal amount of our debt securities.

Current wording

In the nine months ended September 30, 2024, we recognized a net gain on retirement of debt as follows: (a) a net gain of $144 million resulting from retirement of notes validly tendered in the Tender Offers and (b) a net gain of $17 million associated with the redemption of $852 million aggregate principal amount of our debt securities. In the nine months ended September 30, 2023, we recognized a net loss of $32 million associated with the redemption of $1.38 billion aggregate principal amount of our debt securities.

Previous wording

Income tax expense or benefit—In the six months ended June 30, 2024 and 2023, our effective tax rate was 57.8 percent and (5.9) percent, respectively, based on loss before income tax expense or benefit. In the six months ended June 30, 2024 and 2023, the effect of various discrete period tax items was a net tax benefit of $128 million and $12 million, respectively. In the six months ended June 30, 2024, such discrete items included changes to deferred taxes due to rig ownership changes, rig movement and contract expirations across multiple jurisdictions. In the six months ended June 30, 2023, such discrete items included expiration of various uncertain tax positions, changes to deferred taxes due to new rig operations and changes to valuation allowances. In the six months ended June 30, 2024 and 2023, our effective tax rate, excluding discrete items, was (179.3) percent and (14.0) percent, respectively, based on loss before income tax expense or benefit.

Current wording

Income tax benefit—In the nine months ended September 30, 2024 and 2023, our effective tax rate was 11.3 percent and 0.9 percent, respectively, based on loss before income tax benefit. In the nine months ended September 30, 2024 and 2023, the effect of various discrete period tax items was a net tax benefit of $178 million and $77 million, respectively. In the nine months ended September 30, 2024, such discrete items included changes to deferred taxes resulting from operational and structural changes related to rig movements and asset impairments, changes to valuation allowances and settlements of various uncertain tax positions. In the nine months ended September 30, 2023, such discrete items included settlement and expirations of various uncertain tax positions, changes to valuation allowance and changes to deferred taxes due to new rig operations. In the nine months ended September 30, 2024 and 2023, our effective tax rate, excluding discrete items, was 364.0 percent and (11.7) percent, respectively, based on loss before income tax benefit.

Previous wording

In the six months ended June 30, 2024, our primary sources of cash were net cash proceeds from issuance of debt, disposal of assets and cash provided by operating activities. Our primary uses of cash were repayments of debt and capital expenditures.

Current wording

In the nine months ended September 30, 2024, our primary sources of cash were net cash proceeds from issuance of debt, disposal of assets and cash provided by operating activities. Our primary uses of cash were debt repayments and capital expenditures.

Previous wording

Net cash provided by operating activities decreased primarily due to (a) increased cash paid to suppliers, (b) increased cash paid for interest and income taxes and (c) increased cash paid to employees, partially offset by (d) increased cash collected from customers.

Current wording

Net cash provided by operating activities increased primarily due to increased cash collected from customers, partially offset by increased cash paid to suppliers.

Previous wording

Net cash used in investing activities decreased primarily due to (a) increased proceeds from disposal of assets and (b) reduced cash invested in the debt and equity of our unconsolidated affiliates, partially offset by (c) increased cash paid for capital expenditures.

Current wording

Net cash used in investing activities decreased primarily due to increased proceeds from disposal of one ultra-deepwater floater and two harsh environment floaters in the nine months ended September 30, 2024.

Previous wording

Net cash used in financing activities increased primarily due to (a) increased net cash used to early retire $1.61 billion aggregate principal amount of certain of our debt securities in the six months ended June 30, 2024 compared to $1.38 billion aggregate principal amount of certain of our debt securities in the prior year period, partially offset by (b) increased net cash proceeds from the issuance of $900 million aggregate principal amount of 8.25% Senior Notes and $900 million aggregate principal amount of 8.50% Senior Notes in the six months ended June 30, 2024 compared to net cash proceeds from the issuance of $1.175 billion aggregate principal amount of 8.75% senior secured notes due February 2030 and $525 million aggregate principal amount of 8.375% senior secured notes due February 2028 in the prior year period.

Current wording

Net cash used in financing activities increased primarily due to (a) increased net cash used to early retire $1.70 billion aggregate principal amount of certain of our debt securities in the nine months ended September 30, 2024 compared to $1.38 billion aggregate principal amount of certain of our debt securities in the prior-year period, partially offset by (b) increased net cash proceeds from the issuance of $900 million aggregate principal amount of 8.25% Senior Notes and $900 million aggregate principal amount of 8.50% Senior Notes in the nine months ended September 30, 2024 compared to net cash proceeds from the issuance of $1.175 billion aggregate principal amount of 8.75% senior secured notes due February 2030 and $525 million aggregate principal amount of 8.375% senior secured notes due February 2028 in the prior-year period.

Previous wording

Overview—We expect to use existing unrestricted cash balances, cash flows from operating activities, borrowings under our Secured Credit Facility or proceeds from the disposal of assets, the issuance of debt or shares to fulfill anticipated near-term obligations, which may include capital expenditures, working capital and other operational requirements, scheduled debt maturities, or other debt-related deposits or reservations of unrestricted cash, or make other payments. At June 30, 2024, we had $475 million in unrestricted cash and cash equivalents and $400 million in restricted cash and cash equivalents. We have generated positive cash flows from operating activities over recent years and, although we cannot provide assurances, we expect that such cash flows will continue to be positive over the next year. For example, among other factors, if we incur costs for reactivation or contract preparation of multiple rigs or to otherwise assure the marketability of our fleet or general economic, financial, industry or business conditions deteriorate, our cash flows from operations may be reduced or negative.

Current wording

Overview—We expect to use existing unrestricted cash balances, cash flows from operating activities, borrowings under our Secured Credit Facility or proceeds from the disposal of assets, the issuance of debt or shares to fulfill anticipated near-term obligations, which may include capital expenditures, working capital and other operational requirements, scheduled debt maturities, or other debt-related deposits or reservations of unrestricted cash, or make other payments. At September 30, 2024, we had $435 million in unrestricted cash and cash equivalents and $365 million in restricted cash and cash equivalents. We have generated positive cash flows from operating activities over recent years and, although we cannot provide assurances, we expect that such cash flows will continue to be positive over the next year. For example, among other factors, if we incur costs for reactivation or contract preparation of multiple rigs or to otherwise assure the marketability of our fleet or general economic, financial, industry or business conditions deteriorate, our cash flows from operations may be reduced or negative.

Previous wording

We also have a Secured Credit Facility that provides us with a borrowing capacity of $576 million through June 22, 2025 and $510 million through its maturity on June 22, 2028. Our Secured Credit Facility, which is secured by, among other things, a lien on nine of our ultra-deepwater floaters and two of our harsh environment floaters, contains certain restrictive covenants, including a minimum guarantee coverage ratio of 3.0 to 1.0, a minimum collateral coverage ratio of 2.1 to 1.0 and a minimum liquidity requirement of $200 million, among others. The Secured Credit Facility also restricts the ability of Transocean Ltd. and certain of our subsidiaries to, among other things, merge, consolidate or otherwise make changes to the corporate structure, incur liens, incur additional indebtedness, enter into transactions with affiliates and permits, subject to certain conditions, the ability to pay dividends and repurchase our shares. For more information about our Secured Credit Facility, as well as our outstanding debt and debt transactions, see Notes to Condensed Consolidated Financial Statements—Note 7—Debt.

Current wording

We have a Secured Credit Facility that provides us with a borrowing capacity of $576 million through June 22, 2025 and $510 million through its maturity on June 22, 2028. Our Secured Credit Facility, which is secured by, among other things, a lien on eight of our ultra-deepwater floaters and two of our harsh environment floaters, contains certain restrictive covenants, including a minimum guarantee coverage ratio of 3.0 to 1.0, a minimum collateral coverage ratio of 2.1 to 1.0 and a minimum liquidity requirement of $200 million, among others. The Secured Credit Facility also restricts the ability of Transocean Ltd. and certain of our subsidiaries to, among other things, merge, consolidate or otherwise make changes to the corporate structure, incur liens, incur additional indebtedness, enter into transactions with affiliates and permits, subject to certain conditions, the ability to pay dividends and repurchase our shares. For more information about our Secured Credit Facility, as well as our outstanding debt and debt transactions, see Notes to Condensed Consolidated Financial Statements—Note 7—Debt.

Previous wording

Although we currently anticipate relying on these sources of liquidity, including cash flows from operating activities and borrowings under our Secured Credit Facility, among others, we may in the future consider establishing additional financing arrangements with banks or other capital providers, including shipyard loans, and subject to market conditions and other factors, we may be required to provide collateral for any such future financing arrangements. Additionally, our secured indentures include collateral rig leverage ratios, and in the past, during periods when certain of these rigs have experienced reduced levels of operating efficiency or utilization, we have deposited unrestricted cash into the applicable debt service reserve account to maintain compliance with the applicable covenant. We may in the future deposit a portion of our unrestricted cash or, in lieu thereof, take other actions, including seeking covenant relief or other consents of holders of certain of our secured debt, as applicable.

Current wording

Although we currently anticipate relying on these sources of liquidity, including cash flows from operating activities and borrowings under our Secured Credit Facility, among others, we may in the future consider establishing additional financing arrangements with banks or other capital providers, and subject to market conditions and other factors, we may be required to provide collateral for any such future financing arrangements. Our secured indentures include collateral rig leverage ratios, and in the past, during periods when certain of these rigs have experienced reduced levels of operating efficiency or utilization, we have deposited unrestricted cash into the applicable debt service reserve account to maintain compliance with the applicable covenant. We may in the future deposit a portion of our unrestricted cash or, in lieu thereof, take other actions, including seeking covenant relief or other consents of holders of certain of our secured debt, as applicable.

Previous wording

Debt and equity markets—From time to time, we seek to access the capital markets, including with respect to potential liability management transactions. For example, we have completed multiple debt and equity transactions, including the redemption, exchanges and retirement of existing debt, in connection with our ongoing efforts to prudently manage our capital structure and improve our liquidity

Current wording

Debt and equity markets—From time to time, we seek to access the capital markets, including with respect to potential liability management transactions. For example, we have completed multiple debt and equity transactions, including tender offers, redemptions, exchanges and retirement of existing debt, in connection with our ongoing efforts to prudently manage our capital structure and improve our

Previous wording

position. Subject to then-existing market conditions and our expected liquidity needs, among other factors, we may use existing unrestricted cash balances, our cash flows from operating activities, or proceeds from asset sales to pursue liability management transactions, including among others, purchasing or exchanging any of our debt or equity-linked securities in the open market, in privately negotiated transactions, or through tender or exchange offers, or by redeeming any of our outstanding debt securities pursuant to the terms of the applicable governing document, if applicable. Any future purchases, exchanges or other transactions may be on the same terms or on terms that are more or less favorable to holders than the terms of any prior transaction. We can provide no assurance as to which, if any, of these alternatives, or combinations thereof, we may choose to pursue in the future, if at all, or as to the timing with respect to any future transactions. For more information about our previous debt issuance, exchange, repayment, redemption and retirement transactions during each of the six-month periods ended June 30, 2024 and 2023, see Notes to Condensed Consolidated Financial Statements—Note 7—Debt.

Current wording

liquidity position. Subject to then-existing market conditions and our expected liquidity needs, among other factors, we may use existing unrestricted cash balances, cash flows from operating activities, or proceeds from asset sales to pursue liability management transactions, including among others, purchasing or exchanging any of our debt or equity-linked securities in the open market, in privately negotiated transactions, or through tender or exchange offers, or by redeeming any of our outstanding debt securities pursuant to the terms of the applicable governing document, if applicable. Any future purchases, exchanges or other transactions may be on the same terms or on terms that are more or less favorable to holders than the terms of any prior transaction. We can provide no assurance as to which, if any, of these alternatives, or combinations thereof, we may choose to pursue in the future, if at all, or as to the timing with respect to any future transactions. For more information about our previous debt issuance, exchange, repayment, redemption and retirement transactions, see Notes to Condensed Consolidated Financial Statements—Note 7—Debt.

Previous wording

In June 2024, we completed construction of the ultra-deepwater drillshipDeepwater Aquila, and she commenced operations under her drilling contract. The seventh generation, high-specification drillship is equipped with our patented dual activity, a 1,400 short-ton hookload, large deck space, high load capacities and is dual-stack ready. As of June 30, 2024, the total estimated costs required to complete the full scope of the construction project for the rig and related assets were $440 million. As of June 30, 2024, we had made capital expenditures or other capital additions of $399 million, and the remaining expenditures are expected to be incurred and paid in the year ending December 31, 2024.

Current wording

In June 2024, we completed construction of the ultra-deepwater drillshipDeepwater Aquila, and it commenced operations under its drilling contract. The seventh generation, high-specification drillship is equipped with our patented dual activity, a 1,400 short-ton hookload, large deck space, high load capacities and is dual-stack ready. As of September 30, 2024, the full scope of the construction project for the rig and related assets was substantially completed for a total cost of approximately $440 million.

Previous wording

From time to time, we may also review the possible disposition of certain drilling assets. During the six months ended June 30, 2024, we completed the sale of two harsh environment floaters, and in July 2024, we completed the sale of an ultra-deepwater floater. Considering market conditions, we have previously committed to plans to sell certain lower specification drilling units for scrap value, and we may identify additional lower-specification drilling units to be sold for scrap, recycling or alternative purposes. See Notes to Condensed Consolidated Financial Statements—Note 6—Long Lived Assets.

Current wording

From time to time, we may also review the possible disposition of certain drilling assets. During the nine months ended September 30, 2024, we completed the sale of one ultra-deepwater floater and two harsh environment floaters, and we committed to the sale of two additional ultra-deepwater floaters. Considering market conditions, we have previously committed to plans to sell certain lower specification drilling units for scrap value, and we may identify additional lower-specification drilling units to be sold for scrap, recycling or alternative purposes. See Notes to Condensed Consolidated Financial Statements—Note 6—Long-Lived Assets.