Transocean Ltd.
For the period ended Sep 30, 2026. Filed Nov 3, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2026 · Filed Nov 3, 2026
RIG$5.24+2.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-06-30; filed 2026-08-07.
0001451505-26-000061
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital ResourcesCurrent report: 10-Q
Period ended 2026-09-30; filed 2026-11-03.
0001451505-26-000085
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital ResourcesThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 114 previous paragraphs and 120 current paragraphs.
68 unchanged; 39 reworded; 10 added; 4 removed; 3 previous and 3 current paragraphs rearranged.
Tables are not compared: 13 previous and 12 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (10)
Current report
◾our expectations regarding the timing, completion and anticipated benefits of the proposed business combination (the “Business Combination”) with Valaris Limited, an exempted company limited by shares incorporated under the laws of Bermuda (“Valaris”);
Current report
◾the Amended and Restated Credit Agreement, as defined in this periodic report, including its expected effectiveness upon the closing of the Business Combination and the terms thereof, and availability of borrowings under the Secured Credit Facility established thereunder;
Current report
Amended and Restated Credit Agreement—In October 15, 2026, we entered into an amended and restated bank credit agreement (the “Amended and Restated Credit Agreement”), which, upon its effectiveness, will amend and restate the existing credit agreement dated June 22, 2018 (the “Existing Credit Agreement”) that established our secured credit facility (the “Secured Credit Facility”) to, among other things, (a) extend the scheduled maturity date to October 2031 from June 2028, (b) increase the total amount of revolving commitments thereunder to $750 million from $510 million and (c) modify certain covenants and other terms thereunder. The effectiveness of the Amended and Restated Credit Agreement is subject to the closing of the Business Combination and the satisfaction or waiver of other customary conditions. See “—Liquidity and Capital Resources.”
Current report
Disposal of investment in unconsolidated affiliate—In the three and nine months ended September 30, 2026, we completed the sale of our equity investment in Enhanced Well Technologies Group AS for cash proceeds of $39 million and recognized a gain of $19 million. See Notes to Condensed Consolidated Financial Statements—Note 4—Unconsolidated Affiliate.
Current report
Benefit plan termination—In September 2026, we completed steps to effectuate the termination of our U.S. qualified defined benefit plan with the purchase of an insurance buy-out contract under which the insurance company assumed all benefit obligations under the plan. In the three and nine months ended September 30, 2026, as a result of the transaction, we recognized a non-cash loss of $101 million ($62 million, net of tax) associated with the settlement of such benefit obligations. See Notes to Condensed Consolidated Financial Statements—Note 8—Benefit Plan.
Current report
In the three months ended September 30, 2026, rig utilization decreased as a result of three rigs that were idle or preparing for their next contract during the period.
Current report
Other expense, net, increased in the three months ended September 30, 2026, compared to the three months ended September 30, 2025, primarily due to (a) increased net periodic benefit costs of $101 million, primarily associated with the termination of our
Current report
Nine months ended September 30, 2026 compared to the nine months ended September 30, 2025
Current report
the following decreases: (a) a non-cash net loss of $24 million recognized in the earlier period resulting from certain legal outcomes, (b) approximately $20 million resulting from rigs sold, (c) approximately $10 million resulting from asset maintenance costs, (d) approximately $5 million resulting from in-service costs related to additional services and contract preparation cost recognition and (e) approximately $5 million resulting from rig utilization for the comparable fleet.
Current report
On October 15, 2026, we entered into the Amended and Restated Credit Agreement, which, upon its effectiveness, will amend and restate the bank credit agreement that established our Secured Credit Facility to, among other things, (a) extend the scheduled maturity date to October 2031 from June 2028, (b) increase the total amount of revolving commitments thereunder to $750 million from $510 million and (c) modify certain covenants and other terms thereunder. Under the Amended and Restated Credit Agreement, borrowings will continue to be guaranteed by Transocean Ltd. and certain subsidiaries and secured by certain drilling rigs and related collateral. The effectiveness of the Amended and Restated Credit Agreement is subject to the closing of the Business Combination and the satisfaction or waiver of other conditions customary for a secured credit facility. We expect the Amended and Restated Credit Agreement to become effective upon the closing of the Business Combination or shortly thereafter; however, we can provide no assurance as to whether or when the Business Combination will close or whether the other conditions to effectiveness will be satisfied or waived. Until the Amended and Restated Credit Agreement becomes effective, our Existing Credit Agreement will remain in full force and effect on its current terms, as described above, and we expect to continue to have access to borrowings thereunder, subject to its terms. The lenders’ commitments under the Amended and Restated Credit Agreement will automatically terminate if the conditions to its effectiveness are not satisfied or waived by May 9, 2027, and, unless otherwise amended or refinanced, our Existing Credit Agreement would remain in effect in accordance with its terms, including its scheduled maturity in June 2028. For more information about our Secured Credit Facility, the Existing Credit Agreement, the Amended and Restated Credit Agreement and our outstanding debt instruments, see Notes to Condensed Consolidated Financial Statements—Note 7—Debt.
Removed paragraphs (4)
Previous report
In June 2026, we entered into an agreement with Equinor ASA, conditional upon receipt of license approvals, for three harsh environment semisubmersible rigs. The contract, once approved, represents $1.0 billion of incremental contract backlog, excluding additional services, which is not included in the contract backlog presented above.
Previous report
Disposal of assets—In the three months ended June 30, 2026 and 2025, we recognized a net loss and a net gain, respectively, on disposal of assets unrelated to rig sales.
Previous report
Six months ended June 30, 2026 compared to the six months ended June 30, 2025
Previous report
Disposal of assets—In the six months ended June 30, 2026, we recognized a net gain of $4 million associated with the disposal of two ultra-deepwater drillships and related assets. In the six months ended June 30, 2026 and 2025, we recognized a net loss of $2 million and a net gain of $9 million, respectively, on disposal of assets unrelated to rig sales.
Reworded paragraphs (39)
Previous wording
◾the availability of borrowings under our Secured Credit Facility, as well as the timing of any amendments thereto; and
Current wording
◾the availability of borrowings under our Secured Credit Facility, as well as the timing of any amendments thereto, including the satisfaction or waiver of the conditions to effectiveness of the Amended and Restated Credit Agreement not within our control; and
Previous wording
Agreement to acquire Valaris—On February 9, 2026, we and Valaris entered into a Business Combination Agreement (the "Agreement") providing for the Business Combination. Pursuant to the Agreement, and on the terms and subject to the conditions thereof, we will acquire all of the issued and outstanding common shares, par value $0.01 each, of Valaris (the “Valaris Shares”) in exchange for Transocean Ltd. shares, par value $0.10 each, at an exchange ratio of 15.235 Transocean Ltd. shares for each Valaris Share. See Notes to Consolidated Financial Statements—Note 1—Business.
Current wording
Agreement to acquire Valaris—On February 9, 2026, we and Valaris entered into a Business Combination Agreement (the "Agreement") providing for the Business Combination. Pursuant to the Agreement, and on the terms and subject to the conditions thereof, we will acquire all of the issued and outstanding common shares, par value $0.01 each, of Valaris (the “Valaris Shares”) in exchange for Transocean Ltd. shares, par value $0.10 each, at an exchange ratio of 15.235 Transocean Ltd. shares for each Valaris Share. See Notes to Condensed Consolidated Financial Statements—Note 1—Business.
Previous wording
Disposal of assets—In the six months ended June 30, 2026, we completed the sale of the ultra-deepwater drillshipsDeepwater Championand* *Discoverer India, together with related assets, for aggregate net cash proceeds of $27 million, including $3 million received as a deposit in the year ended December 31, 2025. In July 2026, we completed the sale of the harsh environment semisubmersibleHenry Goodrich, together with related assets, for net cash proceeds of $3 million. See “—Liquidity and Capital Resources.”
Current wording
Disposal of assets—In the nine months ended September 30, 2026, we completed the sale of the ultra-deepwater drillshipsDeepwater Champion,*Discoverer India and the harsh environment semisubmersibleHenry Goodrich,* together with related assets, for aggregate net cash proceeds of $30 million. See Notes to Condensed Consolidated Financial Statements—Note 6—Long-Lived Assets.
Previous wording
Debt redemption—In March 2026, we made a cash payment of $365 million, including an early redemption premium, to retire the outstanding $358 million aggregate principal amount of the 8.375% senior secured notes due February 2028 (the “8.375% Senior Secured Notes”). See “—Liquidity and Capital Resources.”
Current wording
Debt redemption—In March 2026, we made a cash payment of $365 million, including an early redemption premium, to retire the outstanding $358 million aggregate principal amount of the 8.375% senior secured notes due February 2028 (the “8.375% Senior Secured Notes”). In October 2026, we made a cash payment of $168 million, including an early redemption premium, to retire the outstanding $165 million aggregate principal amount of the 8.00% senior secured notes due September 2028. See “—Liquidity and Capital Resources” and Notes to Condensed Consolidated Financial Statements—Note 7—Debt.
Previous wording
Exercised warrants—In April 2026, we issued 9.7 million Transocean Ltd. shares as net settlement of 22.2 million warrants exercised by holders to purchase our shares. See “—Liquidity and Capital Resources.”
Current wording
Exercised warrants—In April 2026, we issued 9.7 million Transocean Ltd. shares as net settlement of 22.2 million warrants exercised by holders to purchase our shares. See Notes to Condensed Consolidated Financial Statements—Note 12—Equity.
Previous wording
Drilling market—Our industry outlook remains positive, supported by numerous long-term forecasts indicating that hydrocarbons will continue to be the dominant source of energy for the foreseeable future. Indeed, many operators are increasingly redirecting capital investment to the exploration and production of oil and gas, and away from non-core activities. While we expect our customers to continue to be disciplined in their deployment of capital, and we believe that they will continue to invest an increasing portion of their budgets in offshore drilling, and particularly in deepwater, where resource potential, production longevity, and project economics are favorable, to achieve their production and reserve replacement targets.
Current wording
Drilling market—Our industry outlook remains positive, supported by numerous long-term forecasts indicating that hydrocarbons will continue to be the dominant source of energy for the foreseeable future. Indeed, many operators are increasingly redirecting capital investment to the exploration and production of oil and gas, and away from non-core activities. While we expect our customers to remain disciplined in their deployment of capital we believe that, to achieve their production and reserve replacement targets, they will continue to invest an increasing portion of their budgets in offshore drilling, and particularly in deepwater, where resource potential, production longevity, and project economics are favorable.
Previous wording
Although hydrocarbon prices remain sensitive to geopolitical events, macroeconomic conditions and policy decisions, and short-term supply fluctuations, we expect the overall economics of deepwater and harsh-environment projects to remain attractive. These fields continue to generate competitive economic returns and are generally of lower carbon intensity compared to many other hydrocarbon sources.
Current wording
Although hydrocarbon prices remain sensitive to geopolitical events, macroeconomic conditions and policy decisions, and short-term supply fluctuations, we expect the overall economics of deepwater and harsh-environment projects to remain attractive. These resources continue to generate competitive economic returns and are generally of lower carbon intensity compared to many other hydrocarbon sources.
Previous wording
Consistent with our prior expectations, overall tendering activity and contract awards increased during the first half of 2026 and additional contract awards are anticipated for projects commencing in 2027 and 2028. Demand for ultra-deepwater rigs remains robust and is expanding geographically, with incremental opportunities emerging, for example, in West Africa, the Mediterranean Sea, Southeast Asia and India. High-specification drillships that have historically operated in the U.S. Gulf or Brazil are expected to mobilize to these regions as contract durations and commercial conditions become increasingly attractive.
Current wording
Consistent with our prior expectations, overall tendering activity and contract awards increased during the first half of 2026, and we have continued to see many contract awards in the second half of 2026 for activity starting in 2027 and 2028. We anticipate additional contract awards for projects commencing in 2027 and 2028 to be announced in the coming quarters. Demand for ultra-deepwater rigs remains robust and is expanding geographically, with incremental opportunities emerging, for example, in West Africa, the Mediterranean Sea, Southeast Asia and India. High-specification drillships that have historically operated in the U.S. Gulf are expected to mobilize to these regions as contract durations and commercial conditions become increasingly attractive.
Previous wording
Similarly, we expect demand for harsh environment rigs to remain strong through the end of the decade, driven primarily by activity in Norway – the largest market for these units – and by opportunities emerging in new geographies suited for harsh-environment capable rigs. Several high-specification semisubmersible rigs that previously mobilized to other harsh environment regions, such as Namibia, the Black Sea, and Australia, have or are expected to return to the Norwegian North Sea as project requirements and market conditions continue to improve.
Current wording
Similarly, we expect demand for harsh environment rigs to remain strong through the end of the decade, driven primarily by activity in Norway – the largest market for these units – and by opportunities emerging in new geographies suited for harsh-environment capable rigs. Several high-specification semisubmersible rigs that previously mobilized to other harsh environment regions, such as the Black Sea, and Australia, have or are expected to return to the Norwegian North Sea as project requirements and market conditions continue to improve.
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, or 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, or
Previous wording
Our average daily revenue fluctuates relative to market conditions and our revenue efficiency. The average daily revenue may be affected by incentive performance bonuses or penalties or demobilization fee revenues. Revenues for a newbuild unit are included in the calculation when the rig commences operations upon acceptance by the customer. We remove a rig from the calculation upon disposal or classification as held for sale, unless we continue to operate the rig, in which case we remove the rig upon completion or novation of the contract.
Current wording
Our average daily revenue fluctuates relative to market conditions and our revenue efficiency. The average daily revenue may be affected by incentive performance bonuses or penalties or demobilization fee revenues. We remove a rig from the calculation upon disposal or classification as held for sale, unless we continue to operate the rig, in which case we remove the rig upon completion or novation of the contract.
Previous wording
Our revenue efficiency rate varies due to revenues earned under alternative contractual dayrates, such as a waiting-on-weather rate, repair rate, standby rate, force majeure rate or zero rate, that may apply under certain circumstances. Our revenue efficiency rate is also affected by incentive performance bonuses or penalties. We include newbuilds in the calculation when the rigs commence operations upon acceptance by the customer. We exclude rigs that are not operating under contract, such as those that are stacked.
Current wording
Our revenue efficiency rate varies due to revenues earned under alternative contractual dayrates, such as a waiting-on-weather rate, repair rate, standby rate, force majeure rate or zero rate, that may apply under certain circumstances. Our revenue efficiency rate is also affected by incentive performance bonuses or penalties. We exclude rigs that are not operating under contract, such as those that are stacked.
Previous wording
Our rig utilization rate declines as a result of idle and stacked rigs and during shipyard, contract preparation and mobilization periods. We include newbuilds in the calculation when the rigs commence operations upon acceptance by the customer. We remove a rig from the calculation upon disposal or classification as held for sale, unless we continue to operate the rig, in which case we remove the rig upon completion or novation of the contract. Accordingly, our rig utilization can increase when we remove idle or stacked units from our fleet.
Current wording
Our rig utilization rate declines as a result of idle and stacked rigs and during shipyard, contract preparation and mobilization periods. We remove a rig from the calculation upon disposal or classification as held for sale, unless we continue to operate the rig, in which case we remove the rig upon completion or novation of the contract. Accordingly, our rig utilization can increase when we remove idle or stacked units from our fleet.
Previous wording
Contract drilling revenues—Contract drilling revenues increased for the six months ended June 30, 2026, compared to the six months ended June 30, 2025, primarily due to the following: (a) approximately $80 million resulting from higher average daily revenues, (b) approximately $30 million resulting from increased utilization, (c) approximately $25 million resulting from increased reimbursement revenues, and (d) approximately $20 million resulting from improved revenue efficiency for the active fleet.
Current wording
Contract drilling revenues—Contract drilling revenues decreased for the three months ended September 30, 2026, compared to the three months ended September 30, 2025, primarily due to the following decreases: (a) approximately $95 million resulting from rig utilization for the comparable fleet and (b) approximately $10 million resulting from revenue efficiency for the active fleet. These decreases were partially offset by the following increases: (a) approximately $10 million resulting from reimbursement revenues and (b) approximately $5 million resulting from average daily revenues.
Previous wording
Costs and expenses—Operating and maintenance costs and expenses increased for the three months ended June 30, 2026, compared to the three months ended June 30, 2025, primarily due to the following increases: (a) approximately $15 million resulting from personnel costs and (b) approximately $10 million resulting from reimbursable costs. These increases were partially offset by the following decreases: (a) approximately $5 million resulting from rigs sold, (b) approximately $5 million resulting from lower in-service costs related to additional services and contract preparation cost recognition, and (c) approximately $5 million resulting from lower asset maintenance costs.
Current wording
Costs and expenses—Operating and maintenance costs and expenses increased for the three months ended September 30, 2026, compared to the three months ended September 30, 2025, primarily due to the following increases: (a) approximately $10 million resulting from reimbursable costs, (b) non-cash income of $10 million recognized in the earlier period resulting from a favorable legal outcome, (c) approximately $5 million resulting from asset maintenance costs and (d) approximately $5 million resulting from personnel costs. These increases were partially offset by the following decreases: (a) approximately $10 million resulting from rigs sold and (b) approximately $10 million resulting from in-service costs related to additional services and contract preparation cost recognition and (c) approximately $5 million resulting from rig utilization for the comparable fleet.
Previous wording
Depreciation and amortization expense decreased for the three months ended June 30, 2026, compared to the three months ended June 30, 2025, primarily due to a $30 million reduction resulting from rigs sold or classified as held for sale.
Current wording
Depreciation and amortization expense decreased for the three months ended September 30, 2026, compared to the three months ended September 30, 2025, primarily resulting from rigs sold or classified as held for sale.
Previous wording
General and administrative costs and expenses increased for the six months ended June 30, 2026, compared to the six months ended June 30, 2025, primarily due to the following (a) $17 million of acquisition costs and (b) $3 million of integration costs, both of which recognized in the current-year period with no comparable activity in the earlier year, partially offset by (c) $9 million resulting from decreased personnel costs and (d) $3 million of decreased legal and professional fees.
Current wording
General and administrative costs and expenses increased for the three months ended September 30, 2026, compared to the three months ended September 30, 2025, primarily due to $10 million of acquisition costs recognized in the current-year period with no comparable activity in the earlier year and $4 million of increased legal and professional fees unrelated to acquisition costs.
Previous wording
Other income and expense—Interest expense decreased in the three months ended June 30, 2026, compared to the three months ended June 30, 2025, primarily due to the following: (a) $105 million decreased interest resulting from changes 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 (the “4.625% Exchangeable Bonds”) and (b) $36 million decreased interest resulting from debt repaid as scheduled or early retired, partially offset by (c) $10 million increased interest resulting from debt issued in the earlier year.
Current wording
Other income and expense—Interest expense decreased in the three months ended September 30, 2026, compared to the three months ended September 30, 2025, primarily due to the following: (a) $39 million decreased interest resulting from debt repaid as scheduled or early retired, partially offset by (b) $10 million increased interest resulting from debt issued in the earlier year and (c) $8 million increased interest resulting from changes 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 (the “4.625% Exchangeable Bonds”).
Previous wording
Other expense, net, decreased in the three months ended June 30, 2026, compared to the three months ended June 30, 2025, primarily due to a loss of $24 million associated with the issuance of additional Transocean Ltd. shares to certain holders of 4.00% senior guaranteed exchangeable bonds due December 2025 (the “4.00% Exchangeable Bonds”) in the earlier year with no comparable activity in the current-year period.
Current wording
U.S. qualified defined benefit plan completed in the current-year period, partially offset by (b) a loss of $75 million associated with the issuance of additional Transocean Ltd. shares to certain holders of the 4.00% senior guaranteed exchangeable bonds due December 2025 (the “4.00% Exchangeable Bonds”) in the earlier year and (c) increased income of $19 million associated with our investments in the debt and equity of unconsolidated affiliates, primarily related to a gain on disposal of one of our equity investments in the current-year period.
Previous wording
Income tax expense or benefit—In the three months ended June 30, 2026 and 2025, our effective tax rate was 7.8% percent and 14.2 percent, respectively, based on income or loss before income taxes. In the three months ended June 30, 2026 and 2025, the effect of various discrete period tax items was a net tax benefit of $24 million and $203 million, respectively. In the three months ended June 30, 2026, such discrete items were primarily related to valuation allowance adjustments. 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, 2026 and 2025, our effective tax rate, excluding discrete items, was 19.4 percent and 70.0 percent, respectively, based on income before income taxes.
Current wording
Income tax expense or benefit—In the three months ended September 30, 2026 and 2025, our effective tax rate was 133.5 percent and (1.4) percent, respectively, based on income or loss before income taxes. In the three months ended September 30, 2026 and 2025, the effect of various discrete period tax items was a net tax benefit of $134 million and $6 million, respectively. In the three months ended September 30, 2026, such discrete items included changes to operating structures, various uncertain tax positions and valuation allowances, as well as the termination of our U.S. qualified defined benefit plan. In the three months ended September 30, 2025, such discrete items included changes to various uncertain tax positions, valuation allowances, rig ownership changes and rig basis changes related to impairments. In the three months ended September 30, 2026 and 2025, our effective tax rate, excluding discrete items, was 97.5 percent and 34.8 percent, respectively, based on income before income taxes.
Previous wording
Contract drilling revenues—Contract drilling revenues decreased for the three months ended June 30, 2026, compared to the three months ended June 30, 2025, primarily due to approximately $50 million resulting from decreased rig utilization for the comparable fleet, considering six idle rigs in the earlier-year utilization rate that were classified as held for sale and sold subsequent to June 30, 2025. This decrease was partially offset by the following increases: (a) approximately $15 million resulting from higher average daily revenues, (b) approximately $10 million resulting from increased reimbursement revenues, and (c) approximately $5 million resulting from improved revenue efficiency for the active fleet.
Current wording
Contract drilling revenues—Contract drilling revenues increased for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025, primarily due to the following increases: (a) approximately $80 million resulting from average daily revenues, (b) approximately $35 million resulting from reimbursement revenues and (c) approximately $5 million resulting from revenue efficiency for the active fleet, partially offset by (d) approximately $60 million resulting from decreased rig utilization for the comparable fleet, considering seven idle rigs in the earlier year utilization that were classified as held for sale and sold since January 1, 2025.
Previous wording
Costs and expenses—Operating and maintenance costs and expenses decreased for the six months ended June 30, 2026, compared to the six months ended June 30, 2025, primarily due to the following: (a) a non-cash loss of $34 million in the earlier year resulting from an unfavorable legal outcome, (b) approximately $10 million resulting from rigs sold, and (c) approximately $10 million resulting from lower asset maintenance costs. These decreases were partially offset by the following increases: (a) approximately $25 million resulting from reimbursable costs and (b) approximately $25 million resulting from personnel costs.
Current wording
Costs and expenses—Operating and maintenance costs and expenses increased for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025, primarily due to the following increases: (a) approximately $35 million resulting from reimbursable costs and (b) approximately $35 million resulting from personnel costs. These increases were partially offset by
Previous wording
Depreciation and amortization expense decreased for the six months ended June 30, 2026, compared to the six months ended June 30, 2025, primarily due to a $64 million reduction resulting from rigs sold or classified as held for sale.
Current wording
Depreciation and amortization expense decreased for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025, primarily due to a decrease of $79 million resulting from rigs sold or classified as held for sale.
Previous wording
General and administrative costs and expenses increased for the three months ended June 30, 2026, compared to the three months ended June 30, 2025, primarily due to the following: (a) $11 million of acquisition costs and (b) $3 million of integration costs, both of which recognized in the current-year period with no comparable activity in the earlier year, partially offset by (c) $7 million resulting from decreased personnel costs.
Current wording
General and administrative costs and expenses increased for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025, primarily due to the following (a) $27 million of acquisition costs and (b) $4 million of integration costs, both of which were recognized in the current-year period with no comparable activity in the earlier year, partially offset by (c) $10 million resulting from decreased personnel costs.
Previous wording
Impairment of assets—In the three months ended June 30, 2025, we recognized a loss on impairment of the ultra-deepwater floatersDiscoverer Luanda and* GSF Development Driller I*,* together with related assets, which we determined were impaired at the time we classified them as held for sale, and the ultra-deepwater floatersDevelopment Driller III* andDiscoverer Inspiration, together with related assets, which were previously classified as held for sale and determined to be further impaired.
Current wording
Impairment of assets—In the nine months ended September 30, 2025, we recognized a loss on impairment of the ultra-deepwater floatersDeepwater Champion, Discoverer Americas, Discoverer Clear Leader, Discoverer India, Discoverer Luanda, GSF Development Driller Iand the harsh environment floaterHenry Goodrich,* together with related assets, which we determined were impaired at the time we classified them as held for sale, and the ultra-deepwater floatersDevelopment Driller III* andDiscoverer Inspiration, together with related assets, which were previously classified as held for sale and determined to be further impaired.
Previous wording
Other income and expense—Interest expense increased in the six months ended June 30, 2026, compared to the six months ended June 30, 2025, primarily due to the following: (a) $84 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, (b) $20 million increased interest resulting from debt issued in the earlier year, partially offset by (c) $80 million decreased interest resulting from debt repaid as scheduled or early retired.
Current wording
Other income and expense—Interest expense increased in the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025, primarily due to the following: (a) $92 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, (b) $30 million increased interest resulting from debt issued in the earlier year, partially offset by (c) $120 million decreased interest resulting from debt repaid as scheduled or early retired.
Previous wording
In the six months ended June 30, 2026, we recognized a loss on retirement of the 8.375% Senior Secured Notes.
Current wording
In the nine months ended September 30, 2026, we recognized a loss on retirement of the 8.375% Senior Secured Notes.
Previous wording
Other income, net, increased in the six months ended June 30, 2026, compared to the six months ended June 30, 2025, primarily due to the following: (a) a loss of $24 million associated with the issuance of additional Transocean Ltd. shares to certain holders of the 4.00% Exchangeable Bonds in the earlier year with no comparable activity in the current-year period and (b) increased income of $5 million associated with our investments in the debt and equity of unconsolidated affiliates.
Current wording
Other expense, net, decreased in the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025, primarily due to the following: (a) a loss of $99 million associated with the issuance of additional Transocean Ltd. shares to certain holders of the 4.00% Exchangeable Bonds in the earlier year with no comparable activity in the current-year period and (b) increased income of $28 million associated with our investments in the debt and equity of unconsolidated affiliates, primarily related to a gain on disposal of one of our equity investments in the current-year period, partially offset by (c) increased net periodic benefit costs of $104 million, primarily associated with the termination of our U.S. qualified defined benefit plan completed in the current-year period.
Previous wording
Income tax expense or benefit—In the six months ended June 30, 2026 and 2025, our effective tax rate was (19.8) percent and 10.3 percent, respectively, based on income or loss before income taxes. In the six months ended June 30, 2026 and 2025, the effect of various discrete period tax items was a net tax benefit of $137 million and $189 million, respectively. In the six months ended June 30, 2026, such discrete items included changes to operating structures and valuation allowances. In the six 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 six months ended June 30, 2026 and 2025, our effective tax rate, excluding discrete items, was 42.8 percent and 268.9 percent, respectively, based on income or loss before income taxes.
Current wording
Income tax expense or benefit—In the nine months ended September 30, 2026 and 2025, our effective tax rate was (112.3) percent and 3.0 percent, respectively, based on income or loss before income taxes. In the nine months ended September 30, 2026 and 2025, the effect of various discrete period tax items was a net tax benefit of $271 million and $195 million, respectively. In the nine months ended September 30, 2026, such discrete items included changes to operating structures, various uncertain tax positions and valuation allowances, as well as the termination of our U.S. qualified defined benefit plan. In the nine months ended September 30, 2025, such discrete items included changes to various uncertain tax positions, valuation allowances, rig ownership changes and rig basis changes related to impairments. In the nine months ended September 30, 2026 and 2025, our effective tax rate, excluding discrete items, was 49.9 percent and 86.6 percent, respectively, based on income or loss before income taxes.
Previous wording
In the six months ended June 30, 2026, our primary source of cash was net cash provided by operating activities. Our primary uses of cash were debt repayments and capital expenditures.
Current wording
In the nine months ended September 30, 2026, our primary source of cash was net cash provided by operating activities and our primary uses of cash were debt repayments and capital expenditures.
Previous wording
Net cash used in investing activities decreased primarily due to (a) decreased capital expenditures, (b) increased proceeds from disposal of assets, primarily resulting from the completion of the sale of two ultra-deepwater floaters in the current-year period, and (c) proceeds from disposal of an investment in a note receivable from an unconsolidated affiliate in the current-year period relative to proceeds from disposal of an investment in equity of an unconsolidated affiliate in the earlier year.
Current wording
Net cash used in investing activities increased primarily due to (a) deposits to short-term investments in the current-year period and (b) decreased proceeds from disposal of assets, primarily resulting from the completion of the sale of two ultra-deepwater floaters and one harsh environment semisubmersible in the current-year period compared to the sale of four ultra-deepwater floaters in the prior-year period, partially offset by (c) proceeds from disposal of investments in debt and equity of unconsolidated affiliates, primarily related to the disposal of an equity investment in Enhanced Well Technologies Group AS in the current-year period.
Previous wording
Net cash used in financing activities increased primarily due to increased cash used to repay debt, primarily resulting from the redemption of the outstanding $358 million aggregate principal amount of the 8.375% Senior Secured Notes in current-year period.
Current wording
Net cash used in financing activities increased primarily due to (a) net proceeds from the issuance of Transocean Ltd. shares in a secondary offering in the earlier year and (b) increased cash used to repay debt, primarily resulting from the redemption of the outstanding $358 million aggregate principal amount of the 8.375% Senior Secured Notes in the current-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 installments and maturities or other debt-related deposits or reservations of unrestricted cash. At June 30, 2026, we had $509 million in unrestricted cash and cash equivalents and $286 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 installments and maturities or other debt-related deposits or reservations of unrestricted cash. At September 30, 2026, we had $499 million in unrestricted cash and cash equivalents and $285 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 $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 drillships and two of our harsh environment semisubmersibles, 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, us to 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
Under the Existing Credit Agreement, we have a Secured Credit Facility that provides us with a borrowing capacity of $510 million through its maturity in June 2028. Borrowings are guaranteed by Transocean Ltd. and certain subsidiaries and secured by, among other things, a lien on eight of our ultra-deepwater drillships and two of our harsh environment semisubmersibles. The Existing Credit Agreement also contains certain restrictive covenants, including a minimum guarantee coverage ratio of 3.0 to 1.0, a minimum collateral coverage ratio
Previous wording
Debt and equity markets—From time to time, we seek to access the capital markets in connection with our ongoing efforts to prudently manage our capital structure and improve our liquidity position. For example, we have completed multiple debt and equity transactions, including tender offers, redemptions, exchanges and retirement of existing debt. Subject to then-existing market conditions and our expected liquidity needs, among other factors, we may also use existing unrestricted cash balances, cash flows from operating activities, or proceeds from asset sales to manage our capital structure, including by purchasing or exchanging any of our debt or equity 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
Current wording
Debt and equity markets—From time to time, we seek to access the capital markets in connection with our ongoing efforts to prudently manage our capital structure and improve our liquidity position. For example, we have completed multiple debt and equity transactions, including tender offers, redemptions, exchanges and retirement of existing debt. Subject to then-existing market conditions and our expected liquidity needs, among other factors, we may also use existing unrestricted cash balances, cash flows from operating activities, or proceeds from asset sales to manage our capital structure, including by purchasing or exchanging any of our debt or equity 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 7—Debt and Note 12—Equity.
Previous wording
Drilling fleet—From time to time, we review possible acquisitions of businesses and drilling rigs, as well as noncontrolling ownership interests in other companies, and we may make significant future capital commitments for such purposes. We may also consider investments related to major rig upgrades, new rig construction, or the acquisition of a rig under construction. Any such acquisition or investment has involved, and in the future could involve, the payment by us of a substantial amount of cash or the issuance of a substantial number of additional shares or other securities. Our failure to subsequently secure drilling contracts in these instances, if not already secured, could have an adverse effect on our results of operations or cash flows. For information about our Agreement to acquire Valaris, see Notes to Consolidated Financial Statements—Note 1—Business.
Current wording
Drilling fleet—From time to time, we review possible acquisitions of businesses and drilling rigs, as well as noncontrolling ownership interests in other companies, and we may make significant future capital commitments for such purposes. We may also consider investments related to major rig upgrades, new rig construction, or the acquisition of a rig under construction. Any such acquisition or investment has involved, and in the future could involve, the payment by us of a substantial amount of cash or the issuance of a substantial number of additional shares or other securities. Our failure to subsequently secure drilling contracts in these instances, if not already secured, could have an adverse effect on our results of operations or cash flows. For information about our Agreement to acquire Valaris, see Notes to Condensed Consolidated Financial Statements—Note 1—Business.
Previous wording
From time to time, we may review the possible disposition of certain drilling assets. In the six months ended June 30, 2026, we completed the disposal of two ultra-deepwater drillships, together with related assets, in sales for recycling. In July 2026, we completed the sale of one harsh environment semisubmersible and related assets in a sale for recycling. 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.
Current wording
From time to time, we may review the possible disposition of certain drilling assets. In the nine months ended September 30, 2026, we completed the disposal of two ultra-deepwater drillships and one harsh environment semisubmersible, together with related assets, in sales for recycling. Depending on market conditions and expectations, 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.
Previous wording
Contractual obligations and other commercial commitments—As of June 30, 2026, with exception to our redemption and early retirement of the outstanding $358 million aggregate principal amount of the 8.375% Senior Secured Notes, there have been no material changes to our contractual obligations or other commercial commitments as previously disclosed in “Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our annual report on Form 10-K for the year ended December 31, 2025. For additional information about our debt obligations, including scheduled maturities and early retirement, see Notes to Condensed Consolidated Financial Statements—Note 6—Debt.
Current wording
Contractual obligations and other commercial commitments—As of September 30, 2026, with exception to (a) our redemption and early retirement of the outstanding $358 million aggregate principal amount of the 8.375% Senior Secured Notes and (b) the termination of our U.S. qualified defined benefit plan, there have been no material changes to our contractual obligations or other commercial commitments as previously disclosed in “Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our annual report on Form 10-K for the year ended December 31, 2025. For additional information about our debt obligations, including scheduled maturities and early retirement, see Notes to Condensed Consolidated Financial Statements—Note 7—Debt. For additional information about our benefit plan obligations, see Notes to Condensed Consolidated Financial Statements—Note 8—Benefit Plan.
Previous wording
From time to time, as a result of these changes, we may revise previously evaluated tax positions, which could cause us to adjust our recorded tax assets and liabilities. Tax authorities in certain jurisdictions are examining our tax returns and, in some cases, have issued assessments. We intend to defend our tax positions vigorously. Although we can provide no assurance as to the outcome of the aforementioned changes, examinations or assessments, we do not expect the ultimate liability to have a material adverse effect on our financial position or results of operations; however, it could have a material adverse effect on our cash flows. See Notes to Condensed Consolidated Financial Statements—Note 7—Income Taxes.
Current wording
We conduct operations through our various subsidiaries in countries throughout the world. Each country has its own tax regimes with varying nominal rates, deductions and tax attributes that are subject to changes resulting from new legislation, interpretation or guidance. From time to time, as a result of these changes, we may revise previously evaluated tax positions, which could cause us to adjust our recorded tax assets and liabilities. Tax authorities in certain jurisdictions are examining our tax returns and, in some cases, have issued assessments. We intend to defend our tax positions vigorously. Although we can provide no assurance as to the outcome of the aforementioned changes, examinations or assessments, we do not expect the ultimate liability to have a material adverse effect on our financial position or results of operations; however, it could have a material adverse effect on our cash flows. See Notes to Condensed Consolidated Financial Statements—Note 9—Income Taxes.
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
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 report — wording carried from elsewhere
Impairment of assets—In the three months ended September 30, 2025, we recognized a loss on impairment of the ultra-deepwater floatersDeepwater Champion, Discoverer Americas, Discoverer Clear Leaderand* Discoverer Indiaand the harsh environment floaterHenry Goodrich* together with related assets, which we determined were impaired at the time we classified them as held for sale.
Current report — wording carried from elsewhere
of 2.1 to 1.0 and a minimum liquidity requirement of $200 million, among others. The Existing Credit Agreement 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, us to pay dividends and repurchase our shares.
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
Impairment of assets—In the six months ended June 30, 2025, we recognized a loss on impairment ofDiscoverer Luanda and* GSF Development Driller I*,* together with related assets, which we determined were impaired at the time we classified them as held for sale, andDevelopment Driller III* andDiscoverer Inspiration, together with related assets, which were previously classified as held for sale and determined to be further impaired.
Previous report — wording carried elsewhere
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 report — wording carried elsewhere
We conduct operations through our various subsidiaries in countries throughout the world. Each country has its own tax regimes with varying nominal rates, deductions and tax attributes that are subject to changes resulting from new legislation, interpretation or guidance.