Transocean Ltd. — Third Quarter 2026 Earnings Summary

Financial Performance:

• Contract drilling revenues were $937 million, a decrease of $91 million (9%) year-over-year from $1,028 million in Q3 2025, and a decrease of $29 million sequentially from $966 million in Q2 2026.
• Net income was $26 million ($0.02 per diluted share), compared to a net loss of $1,923 million ($2.00 per diluted share) in Q3 2025 and net income of $170 million ($0.15 per basic share) in Q2 2026.
• Adjusted EBITDA was $313 million, representing a 33.4% margin, down from $397 million (38.7% margin) in Q3 2025 and up slightly from $312 million (32.2% margin) in Q2 2026.
• Operating and maintenance expense was $589 million, an increase of $5 million year-over-year from $584 million and a decrease of $19 million sequentially from $608 million.
• Net cash provided by operating activities was $174 million, down $72 million year-over-year from $246 million and down $62 million sequentially from $236 million.
• Free cash flow was $131 million, calculated as net cash from operations of $174 million less capital expenditures of $43 million.
• Total debt principal amount ended the period at $4,975 million, a decrease of $1,322 million year-over-year from $6,297 million and a decrease of $132 million sequentially from $5,107 million.
• Total liquidity was $1.3 billion, including $510 million in an undrawn revolving credit facility.

Guidance and Future Outlook:

• Guidance for Q4 2026 contract drilling revenues is $915–$965 million.
• Full year 2026 contract drilling revenue guidance is $3,900–$3,950 million.
• Preliminary guidance for full year 2027 contract drilling revenues is $3,850–$4,000 million.
• Fleet-wide revenue efficiency is guided at 96.50% for Q4 2026, full year 2026, and full year 2027.
• Full year 2026 operating and maintenance expense guidance is $2,350–$2,400 million; preliminary 2027 guidance is $2,375–$2,500 million.
• Full year 2026 general and administrative expense guidance is $185–$190 million; preliminary 2027 guidance is $180–$190 million.
• Full year 2026 interest expense guidance is $500 million; preliminary 2027 guidance is $415 million.
• Full year 2026 capital expenditures guidance is $145 million; preliminary 2027 guidance is $130–$140 million.
• Total liquidity at year-end 2026 is guided at $1,300 million; preliminary 2027 guidance is $1,500–$1,700 million.

Business Segments and Product Lines:

• Contract backlog increased by $2.0 billion in the quarter to approximately $8.0 billion as of November 2, 2026, with a weighted average dayrate of about $423,000.
• 2027 contract coverage improved to approximately 95%.
• The company added nine new fixtures since its August 2026 report.
• Ultra-deepwater floaters generated $590 million in revenue for Q3 2026, down from $696 million in Q3 2025.
• Harsh environment floaters generated $347 million in revenue for Q3 2026, up from $332 million in Q3 2025.
• Total fleet average rig utilization was 74.7% in Q3 2026, down from 76.0% in Q3 2025.
• Revenue efficiency was 96.8% for the total fleet in Q3 2026, down from 97.5% in Q3 2025.

Market and Competitive Landscape:

• The company focuses on ultra-deepwater and harsh environment drilling services.
• The company operates a fleet of 27 mobile offshore drilling units, consisting of 20 ultra-deepwater drillships and seven harsh environment semisubmersibles.
• New deepwater and harsh-environment awards contributed to the backlog increase.

Risks and Challenges:

• Forward-looking statements are subject to risks including fluctuations in oil and gas prices, exploration success by producers, operating hazards, delays, and international operation risks.
• Risks include the timing, completion, and anticipated benefits of the proposed business combination with Valaris Limited.
• Actual results may differ materially from forward-looking statements due to changes in market conditions, regulatory actions, or other factors.

Management Commentary and Tone:

• CEO Keelan Adamson stated the company delivered solid operating results and significantly strengthened forward contract visibility.
• Management highlighted that strong cash flow enabled the early retirement of $200 million of debt associated with the Deepwater Aquila notes.
• Priorities remain safe and reliable customer service, maximizing the conversion of backlog into cash flow, and reducing debt.
• With all regulatory approvals obtained, the company is focused on integration planning for the Valaris closing expected on December 1, 2026, and capturing $200 million in identified annual synergies.

Other Key Points:

• The company retired $200 million of debt associated with the Deepwater Aquila notes ahead of schedule.
• The Valaris business combination closing is expected on December 1, 2026.
• Interest expense, excluding the $22 million effect of the bifurcated exchange feature of the 4.625% Exchangeable Bonds due 2029, was $112 million in Q3 2026.
• Cash taxes paid, net of $9 million in tax refunds, were $7 million.
• The company reported a loss on impairment of assets of $0 in Q3 2026, compared to $1,913 million in Q3 2025.
• Adjusted net income for Q3 2026 was $1 million.
• The company hosts a conference call and webcast on November 3, 2026.