Transocean Ltd. — Second Quarter 2026 Earnings Summary

Financial Performance

• Contract drilling revenues were $966 million, down $22 million (2.2%) year-over-year from $988 million in Q2 2025 and down $115 million (10.6%) sequentially from $1,081 million in Q1 2026.
• Net income was $170 million, or $0.04 per diluted share, compared to a net loss of $938 million, or $1.06 per diluted share, in Q2 2025.
• Adjusted EBITDA was $312 million, reflecting a margin of 32.2%, down from $344 million (34.9% margin) in Q2 2025 and down from $440 million (40.7% margin) in Q1 2026.
• Operating and maintenance expenses were $608 million, up $9 million year-over-year from $599 million in Q2 2025.
• Net cash provided by operating activities was $236 million, up $108 million year-over-year from $128 million in Q2 2025.
• Free cash flow was $212 million, calculated as net cash from operations less capital expenditures of $24 million, up $108 million year-over-year from $104 million in Q2 2025.
• Total debt principal amount ended the period at $5,107 million, down $1,547 million year-over-year from $6,654 million in Q2 2025.
• Net debt was $4,312 million, with a Net Debt to Adjusted EBITDA ratio of 2.8x, down from 4.7x in Q2 2025.
• Revenue efficiency was 97.0%, up from 96.6% in Q2 2025.

Guidance and Future Outlook

• Full-year 2026 contract drilling revenue guidance is $3,900–$3,975 million.
• Third quarter 2026 contract drilling revenue guidance is $920–$960 million.
• Full-year 2026 operating and maintenance expense guidance is $2,325–$2,400 million.
• Full-year 2026 capital expenditures guidance is $150 million.
• Full-year 2026 cash taxes guidance is $55–$60 million.
• Full-year 2026 total liquidity guidance is $1,250–$1,350 million.
• Management expects industry utilization for deepwater and harsh environment assets to move well into the 90% range during 2027.
• Management anticipates demand for highest specification rigs to increase in coming years.

Business Segments and Product Lines

• The company added $292 million in contract backlog with a weighted average dayrate of approximately $461,000.
• Total contract backlog was approximately $6.7 billion as of August 5, 2026, excluding $1.0 billion of backlog for work with Equinor pending license partner approvals.
• The company secured a $1.0 billion agreement with Equinor for three harsh environment semisubmersibles.
• Recent contract awards were secured across Norway, Australia, the U.S. Gulf, and the Ivory Coast.
• Ultra-deepwater floaters generated $623 million in revenue for the quarter, while harsh environment floaters generated $343 million.
• The fleet consists of 27 mobile offshore drilling units: 20 ultra-deepwater drillships and seven harsh environment semisubmersibles.
• Total fleet average rig utilization was 78.2% for the quarter, up from 67.3% in Q2 2025.

Market and Competitive Landscape

• Customers continue to secure rig capacity, evidenced by recent contract awards and the Equinor agreement.
• The company operates the highest specification floating offshore drilling fleet in the world, specializing in ultra-deepwater and harsh environment drilling.
• Revenue efficiency remained strong at 97.0%, indicating high asset utilization relative to maximum potential revenue.

Risks and Challenges

• Contract drilling revenues were lower sequentially, primarily due to the expected decrease in rig utilization for the quarter.
• Forward-looking statements are subject to risks including fluctuations in oil and gas prices, exploration success, operating hazards, international operations risks, and the timing of the proposed business combination with Valaris Limited.
• Actual results may differ materially from forward-looking statements due to inherent uncertainties and changes in circumstances.

Management Commentary and Tone

• CEO Keelan Adamson stated the company delivered a strong second quarter supported by 97% revenue efficiency and solid adjusted EBITDA margins.
• Management emphasized a commitment to creating value through the cycle by optimizing fleet value, generating industry-leading free cash flow, and enhancing capital structure.
• Management expressed confidence that Transocean is well-positioned to deliver long-term value for shareholders due to its differentiated fleet, strong execution capabilities, and improving financial flexibility.

Other Key Points

• The company ended the period with total liquidity of more than $1.3 billion, including the undrawn revolving credit facility.
• Interest expense, excluding the $134 million effect of the bifurcated exchange feature of the 4.625% Exchangeable Bonds due 2029, was $114 million.
• Cash taxes paid, net of tax refunds of $22 million, were $10 million.
• The company issued its Fleet Status Report, noting five new fixtures added since the May 2026 report.
• The company is pursuing a proposed business combination with Valaris Limited.