Transocean Ltd. Reports Fourth Quarter and Full Year 2022 Results

• Total contract drilling revenues were $606 million, compared to $691 million in the third quarter of 2022 (total adjusted contract drilling revenues of $625 million, compared to $730 million in the third quarter of 2022);
  
• Revenue efficiency⁽¹⁾ was 98.0%, compared to 95.0% in the prior quarter;
• Operating and maintenance expense was $423 million, compared to $411 million in the prior period;
• Net loss attributable to controlling interest was $350 million, $0.48 per diluted share, compared to $28 million, $0.04 per diluted share, in the third quarter of 2022;
• Adjusted EBITDA was $140 million, compared to $268 million in the prior quarter; and
• Contract backlog was $8.5 billion as of the February 2023 Fleet Status Report.

STEINHAUSEN, Switzerland, Feb. 21, 2023 (GLOBE NEWSWIRE) -- Transocean Ltd. (NYSE: RIG) today reported a net loss attributable to controlling interest of $350 million, $0.48 per diluted share, for the three months ended December 31, 2022.

Fourth quarter results included net favorable items of $6 million, or $0.01 per diluted share as follows:

• $5 million, $0.01 per diluted share, discrete tax items; and
• $1 million gain on retirement of debt.

After consideration of these net favorable items, fourth quarter 2022 adjusted net loss was $356 million, $0.49 per diluted share.

Contract drilling revenues for the three months ended December 31, 2022, decreased sequentially by $85 million to $606 million, primarily due to reduced activity for five rigs that were idle in the fourth quarter, partially offset by higher revenue efficiency and revenues earned by the newbuild ultra-deepwater floater Deepwater Atlas, which commenced operations in October 2022.

Contract intangible amortization represented a non-cash revenue reduction of $19 million. The reduction, compared to $39 million in the prior period, resulted from the accelerated recognition of remaining contract intangible for Transocean Equinox following the customer’s early termination of the drilling contract in the third quarter 2022.

Operating and maintenance expense was $423 million, compared with $411 million in the prior quarter. The sequential increase was primarily due to higher maintenance cost across our fleet and the commencement of operations of the newbuild Deepwater Atlas, partially offset by reduced activity from rigs that became idle in the fourth quarter.

General and administrative expense was $55 million, up from $42 million in the third quarter of 2022. The increase was primarily due to increased personnel costs and increased legal, professional fees and advisory fees.

Interest expense, net of amounts capitalized, was $263 million, compared with $96 million in the prior quarter. The increase was primarily due to a non-cash loss of $157 million associated with a fair value adjustment of the bifurcated exchange feature embedded in our exchangeable bonds issued in the third quarter. Interest income was $12 million, compared with $9 million in the previous quarter.

The Effective Tax Rate⁽²⁾ was (11.0)% in the current quarter and 16.3% in the prior quarter. The change in the rate was primarily due to incurring over half of the actual earnings for the year in the current quarter. The Effective Tax Rate excluding discrete items was (12.6)% compared to (1.2)% in the previous quarter.

Cash provided by operating activities was $178 million, compared to $230 million in the prior quarter. The sequential decrease is primarily due to increased payments for accounts payable and income taxes, partially offset by the timing of interest payments.

Fourth quarter 2022 capital expenditures of $409 million, compared to $87 million in the prior quarter, were primarily related to our newbuild drillships under construction, including the cash component of the final milestone payment for the delivery of Deepwater Titan in December 2022.

“Looking back, 2022 will be remembered as a pivotal year in Transocean’s history,” said Chief Executive Officer, Jeremy Thigpen. “During the year, we continued to high-grade our fleet through the deployment of innovative technologies and the delivery of the industry’s only two 8^th generation drillships, Deepwater Atlas and Deepwater Titan. Perhaps most importantly, we secured approximately $4 billion in incremental backlog, our largest annual backlog addition since prior to the industry downturn in 2014.”

Thigpen concluded, “As an industry, it is clear that we have finally emerged from eight exceptionally challenging years and are now in the early stages of what we believe will be a multi-year upcycle. To maximize value for our shareholders during this upcycle, Transocean will continue to secure high-quality backlog, maintain our acute focus on operational excellence, exercise capital discipline, and take the necessary steps to right-size our balance sheet.”

Full Year 2022

For the year ended December 31, 2022, net loss attributable to controlling interest totaled $621 million, or $0.89 per diluted share. Full year results included $27 million, or $0.04 per diluted share, net favorable items listed as follows:

• $19 million, $0.03 per diluted share, related to discrete tax items; and
• $8 million, $0.01 per diluted share, gain on retirement of debt.

After consideration of these net favorable items, adjusted net loss for 2022 was $648 million, $0.93 per diluted share.

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.transoceandrilling.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 operates the highest specification floating offshore drilling fleet in the world.

Transocean owns or has partial ownership interests in and operates a fleet of 37 mobile offshore drilling units consisting of 27 ultra-deepwater floaters and 10 harsh environment floaters. In addition, Transocean is constructing one ultra-deepwater drillship and holds a noncontrolling ownership interest in a company that is constructing one ultra-deepwater drillship.

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

Conference Call Information

Transocean will conduct a teleconference starting at 9 a.m. EST, 3 p.m. CET, on Wednesday, February 22, 2023, to discuss the results. To participate, dial +1 785-424-1226 and refer to conference code 401741 approximately 15 minutes prior to the scheduled start time.

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

A replay of the conference call will be available after 12 p.m. EST, 6 p.m. CET, on Wednesday, February 22, 2023. The replay, which will be archived for approximately 30 days, can be accessed at +1 402-220-1175, passcode 401741. 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, 2021, 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.transoceandrilling.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 the Swiss Financial Services Act (“FinSA”) or advertising within the meaning of the FinSA. 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

Analyst Contact:
Alison Johnson
+1 713-232-7214

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

Transocean Ltd.