Transocean Ltd.

Previous wording

◾changes in political, social and economic conditions;

Current wording

◾changes in political, social and economic conditions, including the effects of political and military disputes;

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 April 22, 2025, 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.

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 July 29, 2025, we owned or had partial ownership interests in and operated 32 mobile offshore drilling units, consisting of 24 ultra-deepwater floaters and eight harsh environment floaters.

Previous wording

Drilling market—Our industry outlook remains positive, informed by numerous long-term forecasts that indicate hydrocarbons will continue to be a critical source of energy for the foreseeable future, despite the significant relative growth in alternative energy technologies. Economic forecasts also project that the many countries that are not members of the Organization for Economic Co-operation and Development will continue to experience rapid population growth and improving standards of living, which will compound the increase in energy demand well into the future. As a result, governments globally are rapidly revising their energy strategies to emphasize the expansion of energy sources rather than transitioning away from fossil fuels. This distinct trend acknowledges the requirement for accessible, reliable, cost-effective and transportable energy. We expect that this trend will contribute to robust, long-term demand for oil and gas.

Current wording

Drilling market—Our industry outlook remains positive, informed by numerous long-term forecasts that indicate hydrocarbons will continue to be a critical source of energy for the foreseeable future, despite the significant relative growth in alternative energy technologies. Economic forecasts also project that many countries that are not members of the Organization for Economic Co-operation and Development will continue to experience rapid population growth and improving standards of living, which, with the addition of energy intensive new technologies, such as artificial intelligence, will compound the increase in energy demand well into the future. As a result, governments globally are rapidly revising their energy strategies to emphasize and secure expanded sources of energy rather than transitioning away from fossil fuels. These actions reflect a distinct trend that acknowledges the continuing need for accessible, reliable, cost-effective and transportable energy. We expect that this trend will continue and contribute to robust, long-term demand for oil and gas.

Previous wording

In addition to increased demand, the existing supply of oil and gas is depleting more rapidly than forecasted and requires replenishment. This is the result of the significant underinvestment in new exploration and field development projects by oil and gas producers over the last several years. We believe the combination of greater energy demand and the accelerating decline of existing reserves will result in oil and gas producers materially increasing their investment in exploration and development activities.

Current wording

In addition to steadily increasing demand, the existing supply of oil and gas is depleting more rapidly than forecasted and requires replenishment. This is the result of the significant underinvestment in new exploration and field development projects by oil and gas producers over the last several years. We believe the combination of greater energy demand and the accelerating decline of existing reserves will result in oil and gas producers focusing on materially increasing their investment in exploration and development activities offshore, including in harsh environment and deepwater market sectors.

Previous wording

Deepwater and harsh environment fields generate favorable economic returns and, versus other sources of hydrocarbons, have sizable and sustainable production volumes with relatively lower carbon intensity. Given this, we expect a significant portion of the spending in fossil fuel development will continue to be allocated to deepwater and harsh environment projects. Although the price of oil is likely to continue to exhibit volatility in response to numerous factors, including uncertainty about future output from the major oil and gas producing countries, geopolitical events, governmental economic policies and regulations, and global economic growth, we nevertheless expect project economics to remain at levels that are solidly supportive of investment in deepwater and harsh environment exploration and development projects.

Current wording

We expect the price of oil will continue to exhibit volatility in response to numerous factors, including uncertainty about future output from the major oil and gas producing countries, geopolitical events, governmental economic policies and regulations, and global economic growth. Nevertheless, we expect project economics to remain at levels that are solidly supportive of investment in deepwater and harsh environment exploration and development projects. This is due, in part, to the favorable economic returns generated by deepwater and harsh environment fields, which have sizable and sustainable production volumes with relatively lower carbon intensity compared to other

Previous wording

Significantly reduced offshore contracting activity during the previous downcycle led to the scrapping of uncompetitive rigs, resulting in a smaller global fleet available to meet the long-term demands by our customers. We believe that the marketable supply of and demand for ultra-deepwater and harsh environment rigs will remain relatively balanced in the longer run, including the high-specification rigs preferred by many of our customers for their projects. We currently expect some increased pressure on utilization into 2026, as a number of our competitors’ rigs have yet to obtain new commitments for rigs concluding existing contracts.

Current wording

We believe that the marketable supply of and demand for ultra-deepwater and harsh environment rigs will remain balanced with respect to the high-specification rigs preferred by many of our customers for their projects. We currently expect some increased pressure on rig utilization into 2026 for various reasons, including operators’ strategic decisions that impact project-specific timelines. This utilization pressure could continue to result in the scrapping of less competitive assets.

Previous wording

While the long-term outlook for offshore drilling activity remains robust in every major deepwater geographic sector, our customers continue to be disciplined in their investment of capital and are focused on project execution. Tendering activity improved during 2024 in the Golden Triangle, which comprises North America, South America and West Africa. We currently expect contracts for many of these projects to be awarded in late 2025 and 2026.

Current wording

While the long-term outlook for offshore drilling activity remains robust in every major deepwater geographic sector, our customers continue to be disciplined in their investment of capital. As anticipated, tendering activity and contract awards have improved in the second quarter of 2025, and additional contracts are expected to be awarded in late 2025 or early 2026 for work commencing in late 2026 or 2027.

Previous wording

We currently anticipate demand to begin to accelerate in Norway, the largest region for harsh environment rigs, in late 2026 and extend through the end of the decade. Several of the high-specification semisubmersible rigs that departed the region to work in other emerging harsh environment regions may ultimately return to fulfill the anticipated increase in demand in Norway. Contract durations, including subsequent extensions on most of these units, along with other factors affecting supply and demand for drilling rigs, are likely to continue to have a favorable influence on dayrates and contracting terms as competition increases for high-specification semisubmersibles.

Current wording

We currently anticipate demand to begin to accelerate in Norway, the largest region for harsh environment rigs, in late 2026 and extend through the end of the decade. Several of the high-specification semisubmersible rigs that departed the region to work in other emerging harsh environment regions may ultimately return to fulfill the anticipated increase in demand in Norway. Current contract durations, including subsequent extensions applicable to most of these rigs, along with other factors affecting supply and demand for drilling rigs referenced above, are likely to continue to have a favorable influence on contracting activities.

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

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 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:

Previous wording

Contract drilling revenues—Contract drilling revenues increased for the three months ended March 31, 2025, compared to the three months ended March 31, 2024, primarily due to the following: (a) approximately $45 million resulting from increased utilization, (b) approximately $35 million resulting from higher revenue efficiency for the fleet, (c) approximately $30 million resulting from higher average daily revenues, and (d) approximately $30 million resulting from increased activity for the operations of the newbuild ultra-deepwater floaterDeepwater Aquila.

Current wording

Contract drilling revenues—Contract drilling revenues increased for the three months ended June 30, 2025, compared to the three months ended June 30, 2024, primarily due to the following: (a) approximately $40 million resulting from increased activity for the operations of the newbuild ultra-deepwater floaterDeepwater Aquila, (b) approximately $35 million resulting from higher average daily revenues, (c) approximately $25 million resulting from increased utilization, (d) approximately $20 million resulting from increased reimbursement revenues and (e) approximately $5 million resulting from improved revenue efficiency for the remaining fleet.

Previous wording

Depreciation and amortization expense decreased for the three months ended March 31, 2025, compared to the three months ended March 31, 2024, primarily due to (a) $15 million resulting from rigs sold or classified as held for sale, partially offset by (b) $9 million resulting from one newbuild ultra-deepwater floater, one acquired harsh environment floater and other property and equipment placed into service.

Current wording

Depreciation and amortization expense decreased for the three months ended June 30, 2025, compared to the three months ended June 30, 2024, primarily due to (a) $19 million resulting from rigs sold or classified as held for sale, partially offset by (b) $11 million resulting from one acquired harsh environment floater, one newbuild ultra-deepwater floater and other equipment placed into service.

Previous wording

Income tax expense or benefit—In the three months ended March 31, 2025 and 2024, our effective tax rate was (95.8) percent and 206.0 percent, respectively, based on loss before income tax expense or benefit. In the three months ended March 31, 2025 and 2024, the effect of various discrete period tax items was a net tax expense of $14 million and a net tax benefit of $121 million, respectively. In the three months ended March 31, 2025, such discrete items included changes to various uncertain tax positions and valuation allowances. In the three months ended March 31, 2024, such discrete items included changes to deferred taxes due to rig ownership changes, as well as rig movement and contract expirations across multiple jurisdictions. In the three months ended March 31, 2025 and 2024, our effective tax rate, excluding discrete items, was (62.3) percent and 76.9 percent, respectively, based on loss before income tax expense or benefit.

Current wording

Income tax expense or benefit—In the three months ended June 30, 2025 and 2024, our effective tax rate was 14.2 percent and 474.5 percent, respectively, based on income or loss before income tax expense or benefit. In the three months ended June 30, 2025 and 2024, the effect of various discrete period tax items was a net tax benefit of $203 million and $7 million, respectively. In the three months ended June 30, 2025, such discrete items included changes to various uncertain tax positions, valuation allowances and rig-basis changes related to impairment. 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, 2025 and 2024, our effective tax rate, excluding discrete items, was 70.0 percent and 416.3 percent, respectively, based on income before income tax expense.

Previous wording

Due to our operating activities and organizational structure, our income tax expense or benefit does not change proportionally with our income or loss before income taxes. We may have subsidiaries with tax expense on taxable earnings that exceeds the tax benefits in other jurisdictions, or vice versa, which sometimes results in a negative effective tax rate or unusually large effective tax rates relative to consolidated income or loss before income tax expense or benefit. Our earnings are unevenly distributed across jurisdictions and may experience variability in timing among interim periods throughout the year and such variability many influence the allocation of income tax expense or benefit to the respective interim period. The annual effective tax rate used to allocate income tax expense or benefit to interim periods may also be influenced by the removal of loss jurisdictions from the calculations. Our rig operating structures further complicate our tax calculations, especially in instances where we have more than one operating structure for the taxing jurisdiction and, thus, more than one method of calculating taxes depending on the operating structure utilized by the rig under the contract.

Current wording

Due to our operating activities and organizational structure, our income tax expense or benefit does not change proportionally with our income or loss before income taxes. We may have subsidiaries with tax expense on taxable earnings that exceeds the tax benefits in other jurisdictions, or vice versa, which sometimes results in a negative effective tax rate or unusually large effective tax rates relative to consolidated income or loss before income tax expense or benefit. Our earnings are unevenly distributed across jurisdictions and may experience variability in timing among interim periods throughout the year and such variability may influence the allocation of income tax expense or benefit to the respective interim period. The annual effective tax rate used to allocate income tax expense or benefit to interim periods may also be influenced by the removal of loss jurisdictions from the calculations. Our rig operating structures further complicate our tax calculations, especially in instances where we have more than one operating structure for the taxing jurisdiction and, thus, more than one method of calculating taxes depending on the operating structure utilized by the rig under the contract.

Previous wording

Costs and expenses—Operating and maintenance costs and expenses increased for the three months ended March 31, 2025, compared to the three months ended March 31, 2024, primarily due to the following: (a) approximately $30 million resulting from increased activity for the operations of our active fleet, (b) a non-cash loss of $34 million in the current quarter resulting from an unfavorable legal outcome, (c) approximately $20 million resulting from the operations of our newbuild ultra-deepwater floaterDeepwater Aquila, (d) approximately $20 million resulting from the effect of inflation on personnel and other operating costs, and (e) approximately $10 million resulting from incremental in service costs related to additional services and contract preparation cost recognition. These increases were partially offset by the following: (a) approximately $10 million resulting from rigs classified as held for sale and (b) approximately $10 million favorable currency exchange rates.

Current wording

Costs and expenses—Operating and maintenance costs and expenses increased for the six months ended June 30, 2025, compared to the six months ended June 30, 2024, primarily due to the following: (a) approximately $80 million resulting from increased activity for the operations of our active fleet, (b) approximately $35 million resulting from the operations of our newbuildDeepwater Aquila, (c) a non-cash loss of $34 million in the current period resulting from an unfavorable legal outcome, (d) approximately $25 million resulting from increased reimbursable costs and (e) approximately $20 million resulting from the effect of inflation on personnel and other operating costs. These increases were partially offset by the following: (a) approximately $25 million resulting from rigs classified as held for sale or sold, (b) approximately $10 million resulting from favorable currency exchange rates and (c) approximately $5 million resulting from costs associated with the early retirement of certain personnel in the six months ended June 30, 2024.

Previous wording

Other income and expense—Interest expense, net of amounts capitalized, decreased in the three months ended March 31, 2025, compared to the three months ended March 31, 2024, primarily due to the following: (a) $28 million decreased interest resulting from debt repaid as scheduled or early retired, (b) $26 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, partially offset by (c) $40 million increased interest resulting from debt issued and (d) $7 million increased interest resulting from reduced interest costs capitalized following completion of our newbuild construction program.

Current wording

Other income and expense—Interest expense, net of amounts capitalized, increased in the six months ended June 30, 2025, compared to the six months ended June 30, 2024, primarily due to the following: (a) $49 million increased interest resulting from debt issued in the earlier year, (b) $15 million increased interest resulting from interest costs capitalized for our newbuild construction program completed in the earlier year and (c) $14 million increased interest resulting from changes to the fair value of the bifurcated compound exchange feature embedded in the indenture governing the 4.625% Exchangeable Bonds, partially offset by (d) $42 million decreased interest resulting from debt repaid as scheduled or early retired.

Previous wording

In the three months ended March 31, 2025, our primary sources of cash were net cash provided by operating activities. Our primary uses of cash were debt repayments and capital expenditures.

Current wording

In the six months ended June 30, 2025, our primary source of cash was net cash provided by operating activities. Our primary uses of cash were debt repayments and capital expenditures.

Previous wording

Net cash provided by operating activities increased primarily due to (a) increased cash collected from customers, partially offset by (b) increased cash paid to employees.

Current wording

Net cash provided by operating activities increased primarily due to (a) increased cash received from customers, partially offset by (b) increased cash paid for interest.

Previous wording

Net cash used in investing activities increased primarily due to (a) reduced proceeds from disposal of assets, partially offset by (b) reduced capital expenditures.

Current wording

Net cash used in investing activities decreased primarily due to (a) reduced capital expenditures, resulting principally from the completion of our newbuild construction program in the earlier year, partially offset by (b) reduced proceeds from disposal of assets.

Previous wording

Net cash used in financing activities increased primarily due to increased cash used to repay debt.

Current wording

Net cash used in financing activities increased primarily due to (a) net cash proceeds from the issuance of $900 million aggregate principal amount of 8.25% senior notes due May 2029 and $900 million aggregate principal amount of 8.50% senior secured notes due May 2031 in the earlier year with no comparable activity in the current-year period, partially offset by (b) decreased cash used to repay debt, resulting principally from the early retirement of $1.61 billion aggregate principal amount of certain of our debt securities 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, proceeds from the disposal of assets or proceeds from 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. At March 31, 2025, we had $263 million in unrestricted cash and cash equivalents and $428 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, proceeds from the disposal of assets or proceeds from 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. At June 30, 2025, we had $377 million in unrestricted cash and cash equivalents and $395 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 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, and subject to certain conditions, pay dividends and repurchase our shares. For more information about our Secured Credit Facility and our outstanding debt instruments, see Notes to Condensed Consolidated Financial Statements—Note 6—Debt.

Current wording

We have a Secured Credit Facility that provides us with a borrowing capacity of $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,

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, 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 during periods, such as in the current quarter,

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 during periods, such as in the three months ended March 31, 2025, 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 tender offers, redemptions, exchanges and retirement of existing debt, in connection with our ongoing efforts to prudently manage our capital structure and improve our 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, equity 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 debt and equity transactions, see Notes to Condensed Consolidated Financial Statements—Note 6—Debt.

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 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, equity 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 debt and equity transactions, see Notes to Condensed Consolidated Financial Statements—Note 6—Debt and Note 10—Equity.

Previous wording

From time to time, we may also review the possible disposition of certain drilling assets. As of March 31, 2025, we have classified as held for sale two ultra-deepwater floaters, for which we continue to pursue opportunities for the disposal of the rigs and related assets. 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 5—Long-Lived Assets.

Current wording

From time to time, we may review the possible disposition of certain drilling assets. As of June 30, 2025, we have classified as held for sale four ultra-deepwater floaters, together with related assets. We have committed to sell these drilling units for recycling, and considering market conditions, 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 5—Long-Lived Assets.