• Total contract drilling revenues were $759 million (total adjusted contract drilling revenues of $807 million), compared with $792 million in the fourth quarter of 2019 (total adjusted contract drilling revenues of $839 million);
  • Revenue efficiency(1) was 94.4%, compared with 96.2% in the prior quarter;
  • Operating and maintenance expense was $540 million, compared with $575 million in the prior period;
  • Net loss attributable to controlling interest was $392 million, $0.64 per diluted share, compared with net loss attributable to controlling interest of $51 million, $0.08 per diluted share, in the fourth quarter of 2019;
  • Adjusted net loss was $187 million, $0.30 per diluted share, excluding $205 million of net unfavorable items. This compares with adjusted net loss of $263 million, $0.43 per diluted share, in the previous quarter;
  • Adjusted EBITDA was $235 million, compared with adjusted EBITDA of $223 million in the prior quarter; and
  • Contract backlog was $9.6 billion as of the April 2020 Fleet Status Report.

STEINHAUSEN, Switzerland, April 29, 2020 (GLOBE NEWSWIRE) -- Transocean Ltd. (NYSE: RIG) today reported net loss attributable to controlling interest of $392 million, $0.64 per diluted share, for the three months ended March 31, 2020.

First quarter 2020 results included net unfavorable items of $205 million, or $0.34 per diluted share, as follows:

  • $167 million, $0.28 per diluted share, loss on impairment of assets; and
  • $57 million, $0.09 per diluted share, loss on retirement of debt.

These unfavorable items were partially offset by:

  • $19 million, $0.03 per diluted share, related to discrete tax items.

After consideration of these net unfavorable items, first quarter 2020 adjusted net loss was $187 million, or $0.30 per diluted share.

Contract drilling revenues for the three months ended March 31, 2020, decreased sequentially by $33 million, primarily due to reduced activity related to rigs that were idle and lower revenue efficiency. These decreases were partially offset by a full quarter of revenues from the recently reactivated ultra‑deepwater floaters Deepwater Mykonos and Deepwater Corcovado.

First quarter 2020 results reflected a non-cash revenue reduction of $48 million, compared to $47 million in the prior quarter, from contract intangible amortization associated with the Songa and Ocean Rig acquisitions.

Operating and maintenance expense was $540 million, compared with $575 million in the prior quarter. The sequential decrease was the result of lower in-service maintenance cost across our fleet, activation costs in the prior quarter, and reduced activity due to lower utilization. This was partially offset by higher expense reimbursed by our customers and higher severance cost.

General and administrative expense was $43 million, as compared to $54 million in the fourth quarter of 2019. The decrease was primarily due to legal, professional and advisory fees incurred in the fourth quarter that were not repeated in the first quarter.

Interest expense, net of amounts capitalized, was $160 million, in line with the fourth quarter. Interest income was $9 million, compared with $10 million in the previous quarter.

The Effective Tax Rate(2) was 1.1%, down from 30.3% in the prior quarter. The decrease was primarily due to various discrete period tax items, including the carryback of net operating losses in the U.S. as a result of the Coronavirus Aid, Relief and Economic Security Act, settlements and expirations of uncertain tax positions, gains and losses on currency exchange rates and changes in valuation allowance. The Effective Tax Rate excluding discrete items was (9.5)% compared to (47.2)% in previous quarter.

Cash flows used in operating activities were $48 million, compared to cash provided by operating activities of $147 million in the prior quarter. The first quarter cash used in operating activities increased sequentially from operating cash generated in the fourth quarter, during which we experienced a high level of collections. This was primarily a result of more normalized collections on customer receivables combined with increased cash used in our operations including the timing of interest disbursements and payments as well as tax withholdings and tax payments in a number of non-U.S. jurisdictions.

First quarter 2020 capital expenditures of $107 million decreased primarily due to reduced expenditures for the reactivation of two rigs and leasehold improvements, partially offset by increased expenditures for our newbuild rigs under construction. This compares with $128 million in the previous quarter.

“With the challenges we confronted related to COVID-19, I am very proud of the strong quarterly financial results we delivered,” said Jeremy Thigpen, President and Chief Executive Officer. “Through outstanding effort across our entire organization, we delivered revenue in line with our guidance, and at lower than projected costs; even with the additional hurdles we overcame crewing and equipping our rigs to meet their contractual requirements for our customers. Looking forward, we recognize the dramatic decline in oil prices, coupled with the continued uncertainties surrounding the containment of COVID-19, and the resumption of the global economy, will invariably delay the contracting activity that we expected in 2020. However, with our industry-leading backlog and proven track record for managing costs, we expect to continue to deliver industry-best margins. With continued strong operating performance, and the prudent management of our liquidity, Transocean is well-positioned to continue delivering the highest level of service while keeping our employees and our customers safe.”

Non-GAAP Financial Measures

We present our operating results in accordance with accounting principles generally accepted in the U.S. (U.S. GAAP). We believe certain financial measures, such as Adjusted Contract Drilling Revenues, EBITDA, Adjusted EBITDA and Adjusted Net Income, which are non-GAAP measures, provide users of our financial statements with supplemental information that may be useful in evaluating our operating performance. We believe that such non-GAAP measures, when read in conjunction with our operating results presented under U.S. GAAP, can be used to better assess our performance from period to period and relative to performance of other companies in our industry, without regard to financing methods, historical cost basis or capital structure. Such non-GAAP measures should be considered as a supplement to, and not as a substitute for, financial measures prepared in accordance with U.S. GAAP.

All non-GAAP measure reconciliations to the most comparative U.S. GAAP measures are displayed in quantitative schedules on the company’s website at: www.deepwater.com.

About Transocean

Transocean is a leading international provider of offshore contract drilling services for oil and gas wells. The company specializes in technically demanding sectors of the global offshore drilling business with a particular focus on ultra-deepwater and harsh environment drilling services, and believes that it operates one of the most versatile offshore drilling fleets in the world.

Transocean owns or has partial ownership interests in, and operates a fleet of 41 mobile offshore drilling units consisting of 28 ultra-deepwater floaters, 12 harsh environment floaters and one midwater floater. In addition, Transocean is constructing two ultra-deepwater drillships.

For more information about Transocean, please visit: www.deepwater.com.

Conference Call Information

Transocean will conduct a teleconference starting at 9 a.m. EDT, 3 p.m. CEST, on Thursday, April 30, 2020, to discuss the results. To participate, dial +1 323-994-2082 and refer to conference code 7191786 approximately 10 minutes prior to the scheduled start time.

The teleconference will be simulcast in a listen-only mode at: www.deepwater.com, by selecting Investors, News, and Webcasts. Supplemental materials that may be referenced during the teleconference will be available at: www.deepwater.com, by selecting Investors, Financial Reports.

A replay of the conference call will be available after 12 p.m. EDT, 6 p.m. CEST, on April 30, 2020. The replay, which will be archived for approximately 30 days, can be accessed at +1 719-457-0820, passcode 7191786 and pin 6698. The replay will also be available on the company’s website.

Forward-Looking Statements

The statements described herein that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements could contain words such as "possible," "intend," "will," "if," "expect," or other similar expressions. Forward-looking statements are based on management’s current expectations and assumptions, and are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. As a result, actual results could differ materially from those indicated in these forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, estimated duration of customer contracts, contract dayrate amounts, future contract commencement dates and locations, planned shipyard projects and other out-of-service time, sales of drilling units, timing of the company’s newbuild deliveries, operating hazards and delays, risks associated with international operations, actions by customers and other third parties, the fluctuation of current and future prices of oil and gas, the global and regional supply and demand for oil and gas, the intention to scrap certain drilling rigs, the success of our business following prior acquisitions, the effects of the spread of and mitigation efforts by governments, businesses and individuals related to contagious illnesses, such as COVID-19, and other factors, including those and other risks discussed in the company's most recent Annual Report on Form 10-K for the year ended December 31, 2019, and in the company's other filings with the SEC, which are available free of charge on the SEC's website at: www.sec.gov. Should one or more of these risks or uncertainties materialize (or the other consequences of such a development worsen), or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or expressed or implied by such forward-looking statements. All subsequent written and oral forward-looking statements attributable to the company or to persons acting on our behalf are expressly qualified in their entirety by reference to these risks and uncertainties. You should not place undue reliance on forward-looking statements. Each forward-looking statement speaks only as of the date of the particular statement, and we undertake no obligation to publicly update or revise any forward-looking statements to reflect events or circumstances that occur, or which we become aware of, after the date hereof, except as otherwise may be required by law. All non-GAAP financial measure reconciliations to the most comparative GAAP measure are displayed in quantitative schedules on the company’s website at: www.deepwater.com.

This press release, or referenced documents, do not constitute an offer to sell, or a solicitation of an offer to buy, any securities, and do not constitute an offering prospectus within the meaning of article 652a or article 1156 of the Swiss Code of Obligations. Investors must rely on their own evaluation of Transocean and its securities, including the merits and risks involved. Nothing contained herein is, or shall be relied on as, a promise or representation as to the future performance of Transocean.

Notes
  
(1)Revenue efficiency is defined as actual contract drilling 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, excluding revenues for contract terminations and reimbursements, the drilling unit could earn for the measurement period, excluding amounts related to incentive provisions. See the accompanying schedule entitled “Revenue Efficiency.”
  
(2)Effective Tax Rate is defined as income tax expense divided by income before income taxes. See the accompanying schedule entitled “Supplemental Effective Tax Rate Analysis.”
  

Analyst Contacts:
Bradley Alexander
+1 713-232-7515

Lexington May
+1 832-587-6515

Media Contact:
Pam Easton
+1 713-232-7647

 
TRANSOCEAN LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share data)
(Unaudited)
      
 Three months ended
 March 31, 
 2020 2019
      
Contract drilling revenues$ 759  $ 754 
      
Costs and expenses     
Operating and maintenance  540    508 
Depreciation and amortization  206    217 
General and administrative  43    49 
   789    774 
Loss on impairment  (168)   — 
Gain (loss) on disposal of assets, net  (1)   7 
Operating loss  (199)   (13)
      
Other income (expense), net     
Interest income  9    10 
Interest expense, net of amounts capitalized  (160)   (166)
Loss on retirement of debt  (57)   (18)
Other, net  12    8 
   (196)   (166)
Loss before income tax benefit  (395)   (179)
Income tax benefit  (4)   (8)
      
Net loss   (391)   (171)
Net income attributable to noncontrolling interest  1    — 
Net loss attributable to controlling interest$ (392) $ (171)
      
Loss per share     
Basic$ (0.64) $ (0.28)
Diluted$ (0.64) $ (0.28)
      
Weighted-average shares outstanding      
Basic  614    611 
Diluted  614    611 
        


TRANSOCEAN LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except share data)
(Unaudited)
      
 March 31,  December 31,
 2020 2019
      
Assets     
Cash and cash equivalents$ 1,483  $ 1,790 
Accounts receivable, net of allowance of $2 at March 31, 2020  654    654 
Materials and supplies, net of allowance of $127 at March 31, 2020 and December 31, 2019  459    479 
Restricted cash accounts and investments  531    558 
Other current assets  164    159 
Total current assets  3,291    3,640 
      
Property and equipment  23,935    24,281 
Less accumulated depreciation  (5,355)   (5,434)
Property and equipment, net  18,580    18,847 
Contract intangible assets  560    608 
Deferred income taxes, net  20    20 
Other assets  1,000    990 
Total assets$ 23,451  $ 24,105 
      
Liabilities and equity     
Accounts payable$ 244  $ 311 
Accrued income taxes  41    64 
Debt due within one year  581    568 
Other current liabilities  728    781 
Total current liabilities  1,594    1,724 
      
Long-term debt  8,576    8,693 
Deferred income taxes, net  277    266 
Other long-term liabilities  1,529    1,555 
Total long-term liabilities  10,382    10,514 
      
Commitments and contingencies     
      
Shares, CHF 0.10 par value, 641,063,270 authorized, 140,976,550 conditionally authorized, 617,970,525 issued     
and 614,545,303 outstanding at March 31, 2020, and 639,674,422 authorized, 142,365,398 conditionally     
authorized, 617,970,525 issued and 611,871,374 outstanding at December 31, 2019  60    59 
Additional paid-in capital  13,431    13,424 
Accumulated deficit  (1,691)   (1,297)
Accumulated other comprehensive loss  (331)   (324)
Total controlling interest shareholders’ equity  11,469    11,862 
Noncontrolling interest  6    5 
Total equity  11,475    11,867 
Total liabilities and equity$ 23,451  $ 24,105 
 


TRANSOCEAN LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
      
 Three months ended
 March 31, 
 2020 2019
Cash flows from operating activities     
Net loss$ (391) $ (171)
Adjustments to reconcile to net cash provided by operating activities:     
Contract intangible asset amortization  48    45 
Depreciation and amortization  206    217 
Share-based compensation expense  8    9 
Loss on impairment  168    — 
(Gain) loss on disposal of assets, net  1    (7)
Loss on retirement of debt  57    18 
Deferred income tax expense (benefit)  10    (19)
Other, net  18    11 
Changes in deferred revenues, net  5    1 
Changes in deferred costs, net  (11)   (1)
Changes in other operating assets and liabilities, net  (167)   (154)
Net cash used in operating activities  (48)   (51)
      
Cash flows from investing activities     
Capital expenditures  (107)   (52)
Proceeds from disposal of assets, net  1    12 
Investments in unconsolidated affiliates  (6)   (60)
Proceeds from maturities of unrestricted and restricted investments  —    123 
Net cash provided by (used in) investing activities  (112)   23 
      
Cash flows from financing activities     
Proceeds from issuance of debt, net of discounts and issue costs  743    540 
Repayments of debt  (909)   (616)
Other, net  (9)   (15)
Net cash used in financing activities  (175)   (91)
      
Net decrease in unrestricted and restricted cash and cash equivalents  (335)   (119)
Unrestricted and restricted cash and cash equivalents, beginning of period  2,349    2,589 
Unrestricted and restricted cash and cash equivalents, end of period$ 2,014  $ 2,470 
        


TRANSOCEAN LTD. AND SUBSIDIARIES
FLEET OPERATING STATISTICS
         
 Three months ended
 March 31,  December 31, March 31, 
Contract Drilling Revenues (in millions)2020 2019 2019
Contract drilling revenues        
Ultra-deepwater floaters$ 528 $ 502 $ 476
Harsh environment floaters  220   278   258
Deepwater floaters  —   —   7
Midwater floaters  11   12   13
Total contract drilling revenues$ 759 $ 792 $ 754


 Three months ended
 March 31,  December 31, March 31, 
Average Daily Revenue (1)2020 2019 2019
Ultra-deepwater floaters$ 332,600 $ 336,800 $ 339,900
Harsh environment floaters  303,100   307,700   286,300
Midwater floaters  112,600   119,400   88,600
Total drilling fleet$ 314,900   317,700 $ 306,500


 Three months ended
 March 31,  December 31, March 31, 
Utilization (2)2020 2019 2019
Ultra-deepwater floaters 61%  56%  47%
Harsh environment floaters 63%  76%  80%
Midwater floaters 39%  33%  40%
Total drilling fleet 60%  61%  56%


 Three months ended
 March 31,  December 31, March 31, 
Revenue Efficiency (3)2020 2019 2019
Ultra-deepwater floaters 97%  98%  100%
Harsh environment floaters 89%  94%  94%
Midwater floaters 87%  91%  92%
Total drilling fleet 94%  96%  98%
         
(1) Average daily revenue is defined as contract drilling revenues earned per operating day. An operating day is defined as a calendar day during which a rig is contracted to earn a dayrate during the firm contract period after commencement of operations.
         
(2) Rig utilization is defined as the total number of operating days divided by the total number of available rig calendar days in the measurement period, expressed as a percentage.
         
(3) Revenue efficiency is defined as actual contract drilling 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, excluding revenues for contract terminations and reimbursements, the drilling unit could earn for the measurement period, excluding amounts related to incentive provisions.
 


TRANSOCEAN LTD. AND SUBSIDIARIES
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS
ADJUSTED NET INCOME (LOSS) AND ADJUSTED DILUTED EARNINGS (LOSS) PER SHARE
(In millions, except per share data)
                     
 YTD
 
 03/31/20
 
Adjusted Net Loss    
Net loss attributable to controlling interest, as reported$ (392) 
Loss on impairment of assets  167  
Loss on retirement of debt  57  
Discrete tax items  (19) 
Net loss, as adjusted$ (187) 
   
Adjusted Diluted Loss Per Share:  
Diluted loss per share, as reported$ (0.64) 
Loss on impairment of assets  0.28  
Loss on retirement of debt  0.09  
Discrete tax items  (0.03) 
Diluted loss per share, as adjusted$ (0.30) 


 YTD QTD YTD QTD YTD QTD YTD 
 12/31/19 12/31/19 09/30/19 09/30/19 06/30/19 06/30/19 03/31/19 
Adjusted Net Loss                            
Net loss attributable to controlling interest, as reported$ (1,255) $ (51) $ (1,204) $ (825) $ (379) $ (208) $ (171) 
Acquisition and restructuring costs  6    5    1    —    1    1    —  
Gain on bargain purchase  (11)   —    (11)   —    (11)   (9)   (2) 
Loss on impairment of assets  609    25    584    583    1    1    —  
(Gain) loss on disposal of assets, net  5    (2)   7    6    1    2    (1) 
Gain on terminated construction contracts  (132)   (132)   —    —    —    —    —  
Loss on retirement of debt  41    2    39    12    27    9    18  
Discrete tax items and other, net  (150)   (110)   (40)   (10)   (30)   (5)   (25) 
Net loss, as adjusted$ (887) $ (263) $ (624) $ (234) $ (390) $ (209) $ (181) 
                             
Adjusted Diluted Loss Per Share:                    
Diluted loss per share, as reported$ (2.05) $ (0.08) $ (1.97) $ (1.35) $ (0.62) $ (0.34) $ (0.28) 
Acquisition and restructuring costs  0.01    0.01    —    —    —    —    —  
Gain on bargain purchase  (0.02)   —    (0.02)   —    (0.02)   (0.01)   —  
Loss on impairment of assets  0.99    0.04    0.97    0.96    —    —    —  
(Gain) loss on disposal of assets, net  0.01    —    0.01    0.01    —    —    —  
Gain on terminated construction contracts  (0.22)   (0.22)   —    —    —    —    —  
Loss on retirement of debt  0.07    —    0.06    0    0    0    0.03  
Discrete tax items and other, net  (0.24)   (0.18)   (0.07)   (0.02)   (0.05)   —    (0.05) 
Diluted loss per share, as adjusted$ (1.45) $ (0.43) $ (1.02) $ (0.38) $ (0.64) $ (0.34) $ (0.30) 
 


TRANSOCEAN LTD. AND SUBSIDIARIES
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS
ADJUSTED CONTRACT DRILLING REVENUES
EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION AND RELATED MARGINS
(In millions, except percentages) 
    
    
 YTD 
 03/31/20 
    
Contract drilling revenues$ 759  
Contract intangible amortization  48  
Adjusted Contract Drilling Revenues$ 807  
    
Net loss$ (391) 
Interest expense, net of interest income  151  
Income tax benefit  (4) 
Depreciation and amortization  206  
Contract intangible amortization  48  
EBITDA  10  
    
Loss on impairment of assets  168  
Loss on retirement of debt  57  
Adjusted EBITDA$ 235  
    
    
EBITDA margin  1 %
Adjusted EBITDA margin  29 %


 YTD QTD YTD QTD YTD QTD YTD 
 12/31/19 12/31/19 09/30/19 09/30/19 06/30/19 06/30/19 03/31/19 
                      
Contract drilling revenues$ 3,088  $ 792  $ 2,296  $ 784  $ 1,512  $ 758  $ 754  
Contract intangible amortization  187    47    140    48    92    47    45  
Adjusted Contract Drilling Revenues$ 3,275  $ 839  $ 2,436  $ 832  $ 1,604  $ 805  $ 799  
                      
Net loss$ (1,257) $ (55) $ (1,202) $ (825) $ (377) $ (206) $ (171) 
Interest expense, net of interest income  617    150    467    155    312    156    156  
Income tax expense (benefit)  59    (24)   83    54    29    37    (8) 
Depreciation and amortization  855    207    648    212    436    219    217  
Contract intangible amortization  187    47    140    48    92    47    45  
EBITDA  461    325    136    (356)   492    253    239  
                      
Acquisition and restructuring costs  6    5    1    —    1    1    —  
Loss on impairment of assets  609    25    584    583    1    1    —  
(Gain) loss on disposal of assets, net  5    (2)   7    6    1    2    (1) 
Gain on bargain purchase  (11)   —    (11)   —    (11)   (9)   (2) 
Loss on retirement of debt  41    2    39    12    27    9    18  
Gain on termination of construction contracts  (132)   (132)   —    —    —    —    —  
Adjusted EBITDA  979    223    756    245    511    257    254  
                      
                      
EBITDA margin  14 %  39 %  6 %  (43)%  31 %  31 %  30 %
Adjusted EBITDA margin  30 %  27 %  31 %  29 %  32 %  32 %  32 %
                      


TRANSOCEAN LTD. AND SUBSIDIARIES
SUPPLEMENTAL EFFECTIVE TAX RATE ANALYSIS
(In millions, except tax rates)
          
 Three months ended  
 March 31,  December 31, March 31,  
 2020 2019 2019 
Loss before income taxes$ (395) $ (79) $ (179) 
Acquisition and restructuring costs  —    5    —  
Gain on bargain purchase  —    —    (2) 
Loss on impairment of assets  168    25    —  
Gain on disposal of assets, net  —    (2)   (1) 
Gain on terminated construction contracts  —    (132)   —  
Loss on retirement of debt  57    2    18  
Adjusted loss before income taxes$ (170) $ (181) $ (164) 
          
Income tax benefit$ (4) $ (24) $ (8) 
Acquisition and restructuring costs  —    —    —  
Gain on bargain purchase  —    —    —  
Loss on impairment of assets  1    —    —  
Gain on disposal of assets, net  —    —    —  
Gain on terminated construction contracts  —    —    —  
Loss on retirement of debt  —    —    —  
Changes in estimates (1)  19    110    25  
Adjusted income tax expense$ 16  $ 86  $ 17  
          
Effective Tax Rate (2)  1.1 %  30.3 %  4.5 
          
Effective Tax Rate, excluding discrete items (3)  (9.5)%  (47.2)%  (10.6)%
          
(1) Our estimates change as we file tax returns, settle disputes with tax authorities or become aware of other events and include changes in (a) deferred taxes, (b) valuation allowances on deferred taxes and (c) other tax liabilities.
          
(2) Our effective tax rate is calculated as income tax expense divided by income before income taxes.
          
(3) Our effective tax rate, excluding discrete items, is calculated as income tax expense, excluding various discrete items (such as changes in estimates and tax on items excluded from income before income taxes), divided by income before income tax expense, excluding gains and losses on sales and similar items pursuant to the accounting standards for income taxes related to estimating the annual effective tax rate.