UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark one)
For the quarterly period ended
OR
For the transition period from _____ to _____
Commission file number
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices) | (Zip Code) |
(Registrant’s telephone number, including area code) | |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading symbol | Name of each exchange on which registered |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of April 25, 2023,
PART I. FINANCIAL INFORMATION
Item I. | Financial Statements |
TRANSOCEAN LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share data)
(Unaudited)
Three months ended | |||||||
March 31, | |||||||
| 2023 |
| 2022 |
| |||
Contract drilling revenues | $ | | $ | | |||
Costs and expenses | |||||||
Operating and maintenance | | | |||||
Depreciation and amortization | | | |||||
General and administrative | | | |||||
| | ||||||
Gain (loss) on disposal of assets, net | ( | | |||||
Operating loss | ( | ( | |||||
Other income (expense), net | |||||||
Interest income | | | |||||
Interest expense, net of amounts capitalized | ( | ( | |||||
Loss on retirement of debt | ( | — | |||||
Other, net | | | |||||
( | ( | ||||||
Loss before income tax expense | ( | ( | |||||
Income tax expense | | | |||||
Net loss | ( | ( | |||||
Net income attributable to noncontrolling interest | — | — | |||||
Net loss attributable to controlling interest | $ | ( | $ | ( | |||
Loss per share, basic and diluted | $ | ( | $ | ( | |||
Weighted-average shares, basic and diluted | | |
See accompanying notes.
- 1 -
TRANSOCEAN LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in millions)
(Unaudited)
Three months ended | |||||||
March 31, | |||||||
| 2023 |
| 2022 |
| |||
Net loss | $ | ( | $ | ( | |||
Net income attributable to noncontrolling interest | — | — | |||||
Net loss attributable to controlling interest | ( | ( | |||||
Components of net periodic benefit costs before reclassifications | ( | ( | |||||
Components of net periodic benefit costs reclassified to net loss | — | | |||||
Other comprehensive loss before income taxes | ( | ( | |||||
Income taxes related to other comprehensive loss | — | — | |||||
Other comprehensive loss | ( | ( | |||||
Other comprehensive income attributable to noncontrolling interest | — | — | |||||
Other comprehensive loss attributable to controlling interest | ( | ( | |||||
Total comprehensive loss | ( | ( | |||||
Total comprehensive income attributable to noncontrolling interest | — | — | |||||
Total comprehensive loss attributable to controlling interest | $ | ( | $ | ( |
See accompanying notes.
- 2 -
TRANSOCEAN LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions, except share data)
(Unaudited)
March 31, | December 31, | ||||||
| 2023 |
| 2022 |
| |||
Assets | |||||||
Cash and cash equivalents |
| $ | | $ | | ||
Accounts receivable, net of allowance of $ | | | |||||
Materials and supplies, net of allowance of $ | | | |||||
Restricted cash and cash equivalents | | | |||||
Other current assets | | | |||||
Total current assets | | | |||||
Property and equipment | | | |||||
Less accumulated depreciation | ( | ( | |||||
Property and equipment, net | | | |||||
Contract intangible assets | | | |||||
Deferred tax assets, net | | | |||||
Other assets | | | |||||
Total assets |
| $ | | $ | | ||
Liabilities and equity | |||||||
Accounts payable |
| $ | | $ | | ||
Accrued income taxes | | | |||||
Debt due within one year | | | |||||
Other current liabilities | | | |||||
Total current liabilities | | | |||||
Long-term debt | | | |||||
Deferred tax liabilities, net | | | |||||
Other long-term liabilities | | | |||||
Total long-term liabilities | | | |||||
Commitments and contingencies | |||||||
Shares, CHF | |||||||
and | |||||||
authorized, | | | |||||
Additional paid-in capital | | | |||||
Accumulated deficit | ( | ( | |||||
Accumulated other comprehensive loss | ( | ( | |||||
Total controlling interest shareholders’ equity | | | |||||
Noncontrolling interest | | | |||||
Total equity | | | |||||
Total liabilities and equity |
| $ | | $ | |
See accompanying notes.
- 3 -
TRANSOCEAN LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(in millions)
(Unaudited)
March 31, | |||||||
| 2023 |
| 2022 |
| |||
Shares | |||||||
Balance, beginning of period |
| $ | | $ | | ||
Issuance of shares | | | |||||
Balance, end of period | $ | | $ | | |||
Additional paid-in capital | |||||||
Balance, beginning of period | $ | | $ | | |||
Share-based compensation | | | |||||
Issuance of shares | ( | | |||||
Balance, end of period | $ | | $ | | |||
Accumulated deficit | |||||||
Balance, beginning of period | $ | ( | $ | ( | |||
Net loss attributable to controlling interest | ( | ( | |||||
Balance, end of period | $ | ( | $ | ( | |||
Accumulated other comprehensive loss | |||||||
Balance, beginning of period | $ | ( | $ | ( | |||
Other comprehensive loss attributable to controlling interest | ( | ( | |||||
Balance, end of period | $ | ( | $ | ( | |||
Total controlling interest shareholders’ equity | |||||||
Balance, beginning of period | $ | | $ | | |||
Total comprehensive loss attributable to controlling interest | ( | ( | |||||
Share-based compensation | | | |||||
Issuance of shares | — | | |||||
Balance, end of period | $ | | $ | | |||
Noncontrolling interest | |||||||
Balance, beginning of period | $ | | $ | | |||
Balance, end of period | $ | | $ | | |||
Total equity | |||||||
Balance, beginning of period | $ | | $ | | |||
Total comprehensive loss | ( | ( | |||||
Share-based compensation | | | |||||
Issuance of shares | — | | |||||
Balance, end of period | $ | | $ | |
See accompanying notes.
- 4 -
TRANSOCEAN LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(Unaudited)
Three months ended | |||||||
March 31, | |||||||
| 2023 |
| 2022 |
| |||
Cash flows from operating activities | |||||||
Net loss |
| $ | ( | $ | ( | ||
Adjustments to reconcile to net cash used in operating activities: | |||||||
Contract intangible asset amortization | | | |||||
Depreciation and amortization | | | |||||
Share-based compensation expense | | | |||||
(Gain) loss on disposal of assets, net | | ( | |||||
Fair value adjustment to bifurcated compound exchange feature | | — | |||||
Loss on retirement of debt | | — | |||||
Deferred income tax expense | | | |||||
Other, net | | | |||||
Changes in deferred revenues, net | | ( | |||||
Changes in deferred costs, net | ( | ( | |||||
Changes in other operating assets and liabilities, net | ( | ( | |||||
Net cash used in operating activities | ( | ( | |||||
Cash flows from investing activities | |||||||
Capital expenditures | ( | ( | |||||
Investments in equity of unconsolidated affiliates | ( | ( | |||||
Proceeds from disposal of assets, net | | | |||||
Net cash used in investing activities | ( | ( | |||||
Cash flows from financing activities | |||||||
Repayments of debt | ( | ( | |||||
Proceeds from issuance of debt, net of issue costs | | — | |||||
Proceeds from issuance of shares, net of issue costs | — | | |||||
Other, net | — | ( | |||||
Net cash provided by (used in) financing activities | | ( | |||||
Net decrease in unrestricted and restricted cash and cash equivalents | ( | ( | |||||
Unrestricted and restricted cash and cash equivalents, beginning of period | | | |||||
Unrestricted and restricted cash and cash equivalents, end of period |
| $ | | $ | |
See accompanying notes.
- 5 -
TRANSOCEAN LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1—Business
Transocean Ltd. (together with its subsidiaries and predecessors, unless the context requires otherwise, “Transocean,” “we,” “us” or “our”) is a leading international provider of offshore contract drilling services for oil and gas wells. As of March 31, 2023, we owned or had partial ownership interests in and operated a fleet of
Note 2—Significant Accounting Policies
Presentation—We prepared our accompanying unaudited condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States (“U.S.”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the U.S. Securities and Exchange Commission. Pursuant to such rules and regulations, these financial statements do not include all disclosures required by accounting principles generally accepted in the U.S. for complete financial statements. The condensed consolidated financial statements reflect all adjustments, which are, in the opinion of management, necessary for a fair presentation of financial position, results of operations and cash flows for the interim periods. Such adjustments are considered to be of a normal recurring nature unless otherwise noted. Operating results for the three months ended March 31, 2023, are not necessarily indicative of the results that may be expected for the year ending December 31, 2023, or for any future period. The accompanying condensed consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements and notes thereto as of December 31, 2022 and 2021, and for each of the three years in the period ended December 31, 2022, included in our annual report on Form 10-K filed on February 23, 2023.
Accounting estimates—To prepare financial statements in accordance with accounting principles generally accepted in the U.S., we must make judgments by applying estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosures of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates and assumptions, including those related to our income taxes, property and equipment, equity investments, contingencies, allowance for excess materials and supplies, intangibles, postemployment benefit plans and share-based compensation. We base our estimates and assumptions on historical experience and other factors that we believe are reasonable. Actual results could differ from such estimates.
Fair value measurements—We estimate fair value at an exchange price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. Our valuation techniques require inputs that we categorize using a three-level hierarchy, from highest to lowest level of observable inputs, as follows: (1) significant observable inputs, including unadjusted quoted prices for identical assets or liabilities in active markets (“Level 1”), (2) significant other observable inputs, including direct or indirect market data for similar assets or liabilities in active markets or identical assets or liabilities in less active markets (“Level 2”) and (3) significant unobservable inputs, including those that require considerable judgment for which there is little or no market data (“Level 3”). When a valuation requires multiple input levels, we categorize the entire fair value measurement according to the lowest level of input that is significant to the measurement even though we may have also utilized significant inputs that are more readily observable.
Note 3—Unconsolidated Affiliates
We hold noncontrolling equity investments in various unconsolidated companies. In February 2023, we made a cash contribution of $
During the three months ended March 31, 2023, we incurred costs of approximately $
- 6 -
TRANSOCEAN LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS─continued
(Unaudited)
Note 4—Revenues
Overview—Our drilling services represent a single performance obligation under most of our drilling contracts with customers that is satisfied over time, the duration of which varies by contract. As of March 31, 2023, the drilling contract with the longest expected remaining duration, excluding unexercised options, extends through July 2029.
Disaggregation—Our contract drilling revenues, disaggregated by asset group and by country in which they were earned, were as follows (in millions):
| Three months ended March 31, 2023 | Three months ended March 31, 2022 |
| ||||||||||||||||
| Ultra- |
| Harsh |
| Ultra- |
| Harsh |
|
| ||||||||||
| deepwater |
| environment |
| deepwater |
| environment |
|
| ||||||||||
| floaters |
| floaters |
| Total | floaters |
| floaters |
| Total |
| ||||||||
U.S. |
| $ | | $ | — | $ | | $ | | $ | — | $ | |
| |||||
Norway | — | | | — | | | |||||||||||||
Other countries (a) | | | | | | | |||||||||||||
Total contract drilling revenues |
| $ | | $ | | $ | | $ | | $ | | $ | |
|
Contract liabilities—Contract liabilities for our contracts with customers were as follows (in millions):
March 31, | December 31, | ||||||
| 2023 |
| 2022 |
| |||
Deferred contract revenues, recorded in other current liabilities |
| $ | | $ | | ||
Deferred contract revenues, recorded in other long-term liabilities | | | |||||
Total contract liabilities |
| $ | | $ | |
Significant changes in contract liabilities were as follows (in millions):
Three months ended | |||||||
March 31, | |||||||
| 2023 |
| 2022 |
| |||
Total contract liabilities, beginning of period | $ | | $ | | |||
Decrease due to recognition of revenues for goods and services | ( | ( | |||||
Increase due to goods and services transferred over time | | | |||||
Total contract liabilities, end of period | $ | | $ | |
Pre-operating costs—In the three months ended March 31, 2023 and 2022, we recognized pre-operating costs of $
Note 5—Long-Lived Assets
Construction work in progress—The changes in our construction work in progress were as follows (in millions):
Three months ended | |||||||
March 31, | |||||||
| 2023 |
| 2022 |
| |||
Construction work in progress, beginning of period |
| $ | | $ | | ||
Capital expenditures | |||||||
Newbuild construction program | | | |||||
Other equipment and construction projects | | | |||||
Total capital expenditures | | | |||||
Changes in accrued capital additions | ( | ( | |||||
Property and equipment placed into service | ( | ( | |||||
Construction work in progress, end of period |
| $ | | $ | |
Disposal—In February 2023, in connection with our investment in a noncontrolling ownership interest in GSR, we made a non-cash contribution of the cold stacked ultra-deepwater floater Ocean Rig Olympia and related assets, and in the three months ended March 31, 2023, we recognized a loss of $
- 7 -
TRANSOCEAN LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS─continued
(Unaudited)
Note 6—Debt
Overview
Outstanding debt—The aggregate principal amounts and aggregate carrying amounts, including the contractual interest payments of previously restructured debt, a bifurcated compound exchange feature, and unamortized debt-related balances, such as discounts, premiums and issue costs, were as follows (in millions):
Principal amount | Carrying amount |
| ||||||||||||
March 31, | December 31, |
| March 31, | December 31, |
| |||||||||
| 2023 |
| 2022 |
|
| 2023 |
| 2022 |
| |||||
$ | — | $ | | $ | — | $ | | |||||||
— | | — | | |||||||||||
— | | — | | |||||||||||
— | | — | | |||||||||||
— | | — | | |||||||||||
— | | — | | |||||||||||
| | | | |||||||||||
| | | | |||||||||||
| | | | |||||||||||
| | | | |||||||||||
| | | | |||||||||||
| | | | |||||||||||
| | | | |||||||||||
| | | | |||||||||||
| | | | |||||||||||
| | | | |||||||||||
| — | | — | |||||||||||
| | | | |||||||||||
| | | | |||||||||||
| — | | — | |||||||||||
| | | | |||||||||||
| | | | |||||||||||
| | | | |||||||||||
Total debt | | | | | ||||||||||
Less debt due within one year | ||||||||||||||
— | | — | | |||||||||||
— | | — | | |||||||||||
— | | — | | |||||||||||
— | | — | | |||||||||||
— | | — | | |||||||||||
— | | — | | |||||||||||
— | — | | | |||||||||||
— | — | | | |||||||||||
| | | | |||||||||||
| | | | |||||||||||
| — | | — | |||||||||||
Total debt due within one year | | | | | ||||||||||
Total long-term debt |
| $ | | $ | |
| $ | | $ | |
- 8 -
TRANSOCEAN LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS─continued
(Unaudited)
Scheduled maturities—At March 31, 2023, scheduled maturities of our debt, including the principal installments and other installments, representing the contractual interest payments of previously restructured debt, were as follows (in millions):
| Principal |
| Other |
|
| |||||
| installments |
| installments |
| Total |
| ||||
Twelve months ending March 31, | ||||||||||
2024 | $ | | $ | | $ | | ||||
2025 | | | | |||||||
2026 | | | | |||||||
2027 | | | | |||||||
2028 | | — | | |||||||
Thereafter | | — | | |||||||
Total installments of debt | $ | | $ | | | |||||
Total unamortized debt-related balances, net | ( | |||||||||
Bifurcated compound exchange feature, at estimated fair value | | |||||||||
Total carrying amount of debt | $ | |
Credit agreement
Secured Credit Facility—As of March 31, 2023, we have a secured revolving credit facility established under a bank credit agreement (as amended from time to time, the “Secured Credit Facility”), which provides us with borrowing capacity of $
Exchangeable bonds
Exchange terms—At March 31, 2023, the (a) current exchange rates, expressed as the number of Transocean Ltd. shares per $1,000 note, (b) implied exchange prices per Transocean Ltd. share and (c) aggregate shares, expressed in millions, issuable upon exchange of our exchangeable bonds were as follows:
Implied | ||||||||||
| Exchange |
| exchange |
| Shares |
| ||||
| rate |
| price |
| issuable |
| ||||
| | | ||||||||
| | | ||||||||
|