Transocean Ltd. (NYSE: RIG) today reported a net loss attributable
to controlling interest of $497 million, $0.81 per
diluted share, for the three months ended June 30, 2020.
Second quarter 2020 results included net unfavorable items of
$496 million, or $0.81 per diluted share, as follows:
- $430 million, $0.70 per diluted share, loss on
impairment of assets
- $59 million, $0.10 per diluted share, loss on
impairment of an investment in an unconsolidated affiliate
- $10 million, $0.02 per diluted share, related to
discrete tax items; and
- $1 million in restructuring costs.
These unfavorable items were partially offset by:
- $4 million, $0.01 per diluted share, gain on
retirement of debt.
After consideration of these net unfavorable items,
second quarter 2020 adjusted net loss was $1 million.
Contract drilling revenues for the three months ended
June 30, 2020, increased sequentially by $171 million,
primarily due to $177 million of revenues recognized in second
quarter 2020, resulting from a settlement agreement with a customer
for performance disputes.
Additionally, the second quarter was favorably impacted by
higher revenue efficiency, and an early termination fee of
$21 million for Paul B. Loyd Jr., offset by lower
revenues due to reductions in dayrates and a non-cash revenue
reduction of $53 million, compared to $48 million in the
prior quarter, from contract intangible amortization associated
with the Songa and Ocean Rig acquisitions.
Operating and maintenance expense was $525 million,
compared with $540 million in the prior quarter. The
sequential decrease was the result of lower in-service maintenance
cost across our fleet, partially offset by $30 million of
higher costs related to the COVID-19 pandemic.
General and administrative expense was $45 million, as
compared to $43 million in the first quarter of 2020.
Interest expense, net of amounts capitalized, was
$153 million, compared with $160 million, in the prior
quarter. Interest income was $4 million, compared with
$9 million in the previous quarter.
The Effective Tax Rate(2) was (6.8)%, down from 1.1% in the
prior quarter. The decrease was primarily due to various discrete
period tax items, including revenues recognized for settlement of
disputes. The Effective Tax Rate excluding discrete items was
(15.0)% compared to (9.5)% in previous quarter.
Net cash provided by (used in) operating activities were
$87 million, compared to $(48) million in the prior
quarter. The second quarter cash provided by operating activities
increased primarily due to collections of certain receivables and
decreased income tax payments.
Second quarter 2020 capital expenditures of $46 million
decreased primarily due to reduced expenditures for our newbuild
rigs under construction. This compares with $107 million in
the previous quarter.
"I recognize and thank the entire Transocean team for producing
strong second quarter operating and financial results during these
unprecedented times," said Jeremy Thigpen, President and Chief
Executive Officer. "Our revenue efficiency of 97% demonstrates our
unwavering commitment to delivering reliable and efficient
operations for our customers, while keeping personnel on our rigs
safe and healthy.”
Thigpen added, “Furthermore, we are excited to have secured a
contract, subject to a final investment decision by our customers,
that will result in upgrading Deepwater Atlas into the industry’s
second 20,000 PSI ultra-deepwater drillship. This contract is
meaningful as it moves us closer towards securing backlog for our
remaining newbuild drillship, and clearly demonstrates our
customer’s confidence in Transocean as the undisputed leader in
ultra-deepwater drilling.”
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 39 mobile offshore drilling units
consisting of 27 ultra-deepwater floaters and 12 harsh
environment floaters. 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, July 30, 2020, to discuss
the results. To participate, dial +1 334-777-6978 and refer to
conference code 9017399 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 Thursday, July 30,
2020. The replay, which will be archived for approximately
30 days, can be accessed at +1 719-457-0820,
passcode 9017399 and pin 5449. 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
- 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.”
- 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 |
|
Six months ended |
|
|
|
June 30, |
|
June 30, |
|
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contract drilling revenues |
|
$ |
930 |
|
|
$ |
758 |
|
|
$ |
1,689 |
|
|
$ |
1,512 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating and maintenance |
|
|
525 |
|
|
|
510 |
|
|
|
1,065 |
|
|
|
1,018 |
|
|
Depreciation and amortization |
|
|
196 |
|
|
|
219 |
|
|
|
402 |
|
|
|
436 |
|
|
General and administrative |
|
|
45 |
|
|
|
45 |
|
|
|
88 |
|
|
|
94 |
|
|
|
|
|
766 |
|
|
|
774 |
|
|
|
1,555 |
|
|
|
1,548 |
|
|
Loss on impairment |
|
|
(429 |
) |
|
|
(1 |
) |
|
|
(597 |
) |
|
|
(1 |
) |
|
Gain (loss) on disposal of assets, net |
|
|
1 |
|
|
|
(10 |
) |
|
|
— |
|
|
|
(3 |
) |
|
Operating loss |
|
|
(264 |
) |
|
|
(27 |
) |
|
|
(463 |
) |
|
|
(40 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense), net |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
4 |
|
|
|
12 |
|
|
|
13 |
|
|
|
22 |
|
|
Interest expense, net of amounts capitalized |
|
|
(153 |
) |
|
|
(168 |
) |
|
|
(313 |
) |
|
|
(334 |
) |
|
Gain (loss) on retirement of debt |
|
|
4 |
|
|
|
(9 |
) |
|
|
(53 |
) |
|
|
(27 |
) |
|
Other, net |
|
|
(56 |
) |
|
|
23 |
|
|
|
(44 |
) |
|
|
31 |
|
|
|
|
|
(201 |
) |
|
|
(142 |
) |
|
|
(397 |
) |
|
|
(308 |
) |
|
Loss before income tax expense |
|
|
(465 |
) |
|
|
(169 |
) |
|
|
(860 |
) |
|
|
(348 |
) |
|
Income
tax expense |
|
|
32 |
|
|
|
37 |
|
|
|
28 |
|
|
|
29 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
(497 |
) |
|
|
(206 |
) |
|
|
(888 |
) |
|
|
(377 |
) |
|
Net income attributable to noncontrolling interest |
|
|
— |
|
|
|
2 |
|
|
|
1 |
|
|
|
2 |
|
|
Net loss attributable to controlling interest |
|
$ |
(497 |
) |
|
$ |
(208 |
) |
|
$ |
(889 |
) |
|
$ |
(379 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.81 |
) |
|
$ |
(0.34 |
) |
|
$ |
(1.45 |
) |
|
$ |
(0.62 |
) |
|
Diluted |
|
$ |
(0.81 |
) |
|
$ |
(0.34 |
) |
|
$ |
(1.45 |
) |
|
$ |
(0.62 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
615 |
|
|
|
612 |
|
|
|
615 |
|
|
|
612 |
|
|
Diluted |
|
|
615 |
|
|
|
612 |
|
|
|
615 |
|
|
|
612 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TRANSOCEAN LTD. AND SUBSIDIARIES |
CONDENSED CONSOLIDATED BALANCE SHEETS |
(In millions, except share data) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
June 30, |
|
December 31, |
|
|
|
2020 |
|
2019 |
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
1,511 |
|
|
$ |
1,790 |
|
|
Accounts receivable, net of
allowance of $2 at June 30, 2020 |
|
|
703 |
|
|
|
654 |
|
|
Materials and supplies, net of
allowance of $122 and $127 at June 30, 2020 and December 31, 2019,
respectively |
|
|
457 |
|
|
|
479 |
|
|
Restricted cash accounts and investments |
|
|
437 |
|
|
|
558 |
|
|
Other current assets |
|
|
176 |
|
|
|
159 |
|
|
Total current assets |
|
|
3,284 |
|
|
|
3,640 |
|
|
|
|
|
|
|
|
|
|
Property and equipment |
|
|
23,318 |
|
|
|
24,281 |
|
|
Less accumulated depreciation |
|
|
(5,309 |
) |
|
|
(5,434 |
) |
|
Property and equipment, net |
|
|
18,009 |
|
|
|
18,847 |
|
|
Contract intangible
assets |
|
|
507 |
|
|
|
608 |
|
|
Deferred income taxes, net |
|
|
17 |
|
|
|
20 |
|
|
Other assets |
|
|
1,008 |
|
|
|
990 |
|
|
Total assets |
|
$ |
22,825 |
|
|
$ |
24,105 |
|
|
|
|
|
|
|
|
|
|
Liabilities and
equity |
|
|
|
|
|
|
|
Accounts payable |
|
$ |
264 |
|
|
$ |
311 |
|
|
Accrued income taxes |
|
|
42 |
|
|
|
64 |
|
|
Debt due within one year |
|
|
578 |
|
|
|
568 |
|
|
Other current liabilities |
|
|
704 |
|
|
|
781 |
|
|
Total current liabilities |
|
|
1,588 |
|
|
|
1,724 |
|
|
|
|
|
|
|
|
|
|
Long-term debt |
|
|
8,480 |
|
|
|
8,693 |
|
|
Deferred income taxes, net |
|
|
294 |
|
|
|
266 |
|
|
Other
long-term liabilities |
|
|
1,476 |
|
|
|
1,555 |
|
|
Total long-term liabilities |
|
|
10,250 |
|
|
|
10,514 |
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares, CHF 0.10 par value,
824,648,925 authorized, 142,365,398 conditionally authorized,
639,674,414 issued |
|
|
|
|
|
|
|
and 614,612,545 outstanding at June 30, 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 |
|
|
13,438 |
|
|
|
13,424 |
|
|
Accumulated deficit |
|
|
(2,188 |
) |
|
|
(1,297 |
) |
|
Accumulated other comprehensive loss |
|
|
(329 |
) |
|
|
(324 |
) |
|
Total controlling interest shareholders’ equity |
|
|
10,981 |
|
|
|
11,862 |
|
|
Noncontrolling interest |
|
|
6 |
|
|
|
5 |
|
|
Total equity |
|
|
10,987 |
|
|
|
11,867 |
|
|
Total liabilities and equity |
|
$ |
22,825 |
|
|
$ |
24,105 |
|
|
|
|
|
|
|
|
|
|
|
|
|
TRANSOCEAN LTD. AND SUBSIDIARIES |
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
(In millions) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
Six months ended |
|
|
|
June 30, |
|
|
|
2020 |
|
2019 |
|
Cash flows from
operating activities |
|
|
|
|
|
|
|
Net loss |
|
$ |
(888 |
) |
|
$ |
(377 |
) |
|
Adjustments to reconcile to net cash provided by operating
activities: |
|
|
|
|
|
|
|
Contract intangible asset amortization |
|
|
101 |
|
|
|
92 |
|
|
Depreciation and amortization |
|
|
402 |
|
|
|
436 |
|
|
Share-based compensation expense |
|
|
15 |
|
|
|
19 |
|
|
Loss on impairment |
|
|
597 |
|
|
|
1 |
|
|
Loss on impairment of investment in unconsolidated affiliate |
|
|
59 |
|
|
|
— |
|
|
Loss on disposal of assets, net |
|
|
— |
|
|
|
3 |
|
|
Loss on retirement of debt |
|
|
53 |
|
|
|
27 |
|
|
Deferred income tax expense |
|
|
30 |
|
|
|
109 |
|
|
Other, net |
|
|
32 |
|
|
|
11 |
|
|
Changes in deferred revenues, net |
|
|
(10 |
) |
|
|
4 |
|
|
Changes in deferred costs, net |
|
|
(4 |
) |
|
|
(6 |
) |
|
Changes in other operating assets and liabilities, net |
|
|
(348 |
) |
|
|
(217 |
) |
|
Net
cash provided by operating activities |
|
|
39 |
|
|
|
102 |
|
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities |
|
|
|
|
|
|
|
Capital expenditures |
|
|
(153 |
) |
|
|
(138 |
) |
|
Proceeds from disposal of assets, net |
|
|
3 |
|
|
|
40 |
|
|
Investments in unconsolidated affiliates |
|
|
(6 |
) |
|
|
(62 |
) |
|
Proceeds from maturities of unrestricted and restricted
investments |
|
|
— |
|
|
|
123 |
|
|
Other, net |
|
|
— |
|
|
|
3 |
|
|
Net
cash used in investing activities |
|
|
(156 |
) |
|
|
(34 |
) |
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities |
|
|
|
|
|
|
|
Proceeds from issuance of debt, net of discounts and issue
costs |
|
|
743 |
|
|
|
1,056 |
|
|
Repayments of debt |
|
|
(1,009 |
) |
|
|
(834 |
) |
|
Other, net |
|
|
(18 |
) |
|
|
(26 |
) |
|
Net
cash provided by (used in) financing activities |
|
|
(284 |
) |
|
|
196 |
|
|
|
|
|
|
|
|
|
|
Net
increase (decrease) in unrestricted and restricted cash and cash
equivalents |
|
|
(401 |
) |
|
|
264 |
|
|
Unrestricted and restricted cash and cash equivalents, beginning of
period |
|
|
2,349 |
|
|
|
2,589 |
|
|
Unrestricted and restricted cash and cash equivalents, end of
period |
|
$ |
1,948 |
|
|
$ |
2,853 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TRANSOCEAN LTD. AND SUBSIDIARIES |
|
FLEET OPERATING STATISTICS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
Six months ended |
|
|
|
June 30, |
|
March 31, |
|
June 30, |
|
June 30, |
|
June 30, |
|
Contract Drilling
Revenues (in millions) |
|
2020 |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
Contract drilling
revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ultra-deepwater floaters |
|
$ |
636 |
|
$ |
528 |
|
$ |
486 |
|
$ |
1,164 |
|
$ |
962 |
|
Harsh environment floaters |
|
|
293 |
|
|
220 |
|
|
251 |
|
|
513 |
|
|
509 |
|
Deepwater floaters |
|
|
— |
|
|
— |
|
|
1 |
|
|
— |
|
|
7 |
|
Midwater floaters |
|
|
1 |
|
|
11 |
|
|
20 |
|
|
12 |
|
|
34 |
|
Total contract drilling
revenues |
|
$ |
930 |
|
$ |
759 |
|
$ |
758 |
|
$ |
1,689 |
|
$ |
1,512 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
Six months ended |
|
|
|
June 30, |
|
March 31, |
|
June 30, |
|
June 30, |
|
June 30, |
|
Average Daily Revenue
(1) |
|
2020 |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
Ultra-deepwater floaters |
|
$ |
296,500 |
|
$ |
332,600 |
|
$ |
335,400 |
|
$ |
314,800 |
|
$ |
337,600 |
|
Harsh environment
floaters |
|
|
331,900 |
|
|
303,100 |
|
|
301,700 |
|
|
317,000 |
|
|
293,700 |
|
Midwater floaters |
|
|
99,400 |
|
|
112,600 |
|
|
163,700 |
|
|
111,400 |
|
|
122,200 |
|
Total drilling fleet |
|
$ |
307,800 |
|
|
314,900 |
|
$ |
314,900 |
|
$ |
311,300 |
|
$ |
310,700 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
Six months ended |
|
|
|
June 30, |
|
March 31, |
|
June 30, |
|
June 30, |
|
June 30, |
|
Utilization
(2) |
|
2020 |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
Ultra-deepwater floaters |
|
61 |
% |
|
61 |
% |
|
50 |
% |
|
61 |
% |
|
48 |
% |
|
Harsh environment
floaters |
|
80 |
% |
|
63 |
% |
|
76 |
% |
|
71 |
% |
|
78 |
% |
|
Midwater floaters |
|
25 |
% |
|
39 |
% |
|
39 |
% |
|
37 |
% |
|
40 |
% |
|
Total drilling fleet |
|
66 |
% |
|
60 |
% |
|
56 |
% |
|
63 |
% |
|
56 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
Six months ended |
|
|
|
June 30, |
|
March 31, |
|
June 30, |
|
June 30, |
|
June 30, |
Revenue Efficiency
(3) |
|
|
2020 |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Ultra-deepwater floaters |
|
|
98 |
% |
|
97 |
% |
|
98 |
% |
|
98 |
% |
|
99 |
% |
Harsh environment
floaters |
|
|
97 |
% |
|
89 |
% |
|
95 |
% |
|
93 |
% |
|
95 |
% |
Midwater floaters |
|
|
79 |
% |
|
87 |
% |
|
130 |
% |
|
86 |
% |
|
111 |
% |
Total drilling fleet |
|
|
97 |
% |
|
94 |
% |
|
98 |
% |
|
96 |
% |
|
98 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Average daily revenue is defined as contract drilling revenues,
excluding revenues for contract terminations, reimbursements and
contract intangible amortization, 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 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 |
|
QTD |
|
YTD |
|
|
|
06/30/20 |
|
06/30/20 |
|
03/31/20 |
|
Adjusted Net
Loss |
|
|
|
|
|
|
|
|
|
|
Net loss attributable to controlling interest, as reported |
|
$ |
(889 |
) |
|
$ |
(497 |
) |
|
$ |
(392 |
) |
|
Restructuring costs |
|
|
1 |
|
|
|
1 |
|
|
|
— |
|
|
Loss on impairment of investment in unconsolidated affiliate |
|
|
59 |
|
|
|
59 |
|
|
|
— |
|
|
Loss on impairment of assets |
|
|
597 |
|
|
|
430 |
|
|
|
167 |
|
|
(Gain) loss on retirement of debt |
|
|
53 |
|
|
|
(4 |
) |
|
|
57 |
|
|
Discrete tax items |
|
|
(9 |
) |
|
|
10 |
|
|
|
(19 |
) |
|
Net loss, as adjusted |
|
$ |
(188 |
) |
|
$ |
(1 |
) |
|
$ |
(187 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Diluted Loss
Per Share: |
|
|
|
|
|
|
|
|
|
|
Diluted loss per share, as
reported |
|
$ |
(1.45 |
) |
|
$ |
(0.81 |
) |
|
$ |
(0.64 |
) |
|
Restructuring costs |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Loss on impairment of investment in unconsolidated affiliate |
|
|
0.10 |
|
|
|
0.10 |
|
|
|
— |
|
|
Loss on impairment of assets |
|
|
0.97 |
|
|
|
0.70 |
|
|
|
0.28 |
|
|
(Gain) loss on retirement of debt |
|
|
0.09 |
|
|
|
(0.01 |
) |
|
|
0.09 |
|
|
Discrete tax items |
|
|
(0.02 |
) |
|
|
0.02 |
|
|
|
(0.03 |
) |
|
Diluted loss per share, as adjusted |
|
$ |
(0.31 |
) |
|
$ |
— |
|
|
$ |
(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 |
|
|
|
0.02 |
|
|
|
0.05 |
|
|
|
0.01 |
|
|
|
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 |
|
QTD |
|
YTD |
|
|
|
06/30/20 |
|
06/30/20 |
|
03/31/20 |
|
|
|
|
|
|
|
|
|
|
|
|
Contract drilling revenues |
|
$ |
1,689 |
|
|
$ |
930 |
|
|
$ |
759 |
|
|
Contract intangible amortization |
|
|
101 |
|
|
|
53 |
|
|
|
48 |
|
|
Adjusted Contract Drilling Revenues |
|
$ |
1,790 |
|
|
$ |
983 |
|
|
$ |
807 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(888 |
) |
|
$ |
(497 |
) |
|
$ |
(391 |
) |
|
Interest expense, net of interest income |
|
|
300 |
|
|
|
149 |
|
|
|
151 |
|
|
Income tax expense (benefit) |
|
|
28 |
|
|
|
32 |
|
|
|
(4 |
) |
|
Depreciation and amortization |
|
|
402 |
|
|
|
196 |
|
|
|
206 |
|
|
Contract intangible amortization |
|
|
101 |
|
|
|
53 |
|
|
|
48 |
|
|
EBITDA |
|
|
(57 |
) |
|
|
(67 |
) |
|
|
10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring costs |
|
|
1 |
|
|
|
1 |
|
|
|
— |
|
|
Loss on impairment of assets |
|
|
597 |
|
|
|
429 |
|
|
|
168 |
|
|
(Gain) loss on retirement of debt |
|
|
53 |
|
|
|
(4 |
) |
|
|
57 |
|
|
Loss on impairment of investment in unconsolidated affiliate |
|
|
59 |
|
|
|
59 |
|
|
|
— |
|
|
Adjusted EBITDA |
|
$ |
653 |
|
|
$ |
418 |
|
|
$ |
235 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA margin |
|
|
(3 |
) |
% |
|
(7 |
) |
% |
|
1 |
|
% |
Adjusted EBITDA margin |
|
|
36 |
|
% |
|
43 |
|
% |
|
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 |
|
Six months ended |
|
|
|
June 30, |
|
March 31, |
|
June 30, |
|
June 30, |
|
June 30, |
|
|
|
2020 |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
Loss before income taxes |
|
$ |
(465 |
) |
|
$ |
(395 |
) |
|
$ |
(169 |
) |
|
$ |
(860 |
) |
|
$ |
(348 |
) |
|
Acquisition and restructuring costs |
|
|
1 |
|
|
|
— |
|
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
|
Gain on bargain purchase |
|
|
— |
|
|
|
— |
|
|
|
(9 |
) |
|
|
— |
|
|
|
(11 |
) |
|
Loss on impairment of assets |
|
|
429 |
|
|
|
168 |
|
|
|
1 |
|
|
|
597 |
|
|
|
1 |
|
|
Loss on impairment of investment in unconsolidated affiliate |
|
|
59 |
|
|
|
— |
|
|
|
— |
|
|
|
59 |
|
|
|
— |
|
|
Loss on disposal of assets, net |
|
|
— |
|
|
|
— |
|
|
|
2 |
|
|
|
— |
|
|
|
1 |
|
|
(Gain) loss on retirement of debt |
|
|
(4 |
) |
|
|
57 |
|
|
|
9 |
|
|
|
53 |
|
|
|
27 |
|
|
Adjusted income (loss) before
income taxes |
|
$ |
20 |
|
|
$ |
(170 |
) |
|
$ |
(165 |
) |
|
$ |
(150 |
) |
|
$ |
(329 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues recognized for the settlement of disputes |
|
|
(157 |
) |
|
|
|
|
|
|
|
|
(157 |
) |
|
|
|
|
Adjusted income (loss) before
income taxes for determining effective tax rate |
|
|
(137 |
) |
|
|
|
|
|
|
|
|
(307 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
(benefit) |
|
$ |
32 |
|
|
$ |
(4 |
) |
|
$ |
37 |
|
|
$ |
28 |
|
|
$ |
29 |
|
|
Acquisition and restructuring costs |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Gain on bargain purchase |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Loss on impairment of assets |
|
|
(1 |
) |
|
|
1 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Loss on impairment of investment in unconsolidated affiliate |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Loss on disposal of assets, net |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
(Gain) loss on retirement of debt |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Changes in estimates (1) |
|
|
(8 |
) |
|
|
19 |
|
|
|
5 |
|
|
|
11 |
|
|
|
30 |
|
|
Revenues recognized for the settlement of disputes |
|
|
(2 |
) |
|
|
— |
|
|
|
— |
|
|
|
(2 |
) |
|
|
— |
|
|
Adjusted income tax expense
(2) |
|
$ |
21 |
|
|
$ |
16 |
|
|
$ |
42 |
|
|
$ |
37 |
|
|
$ |
59 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective Tax
Rate (3) |
|
|
(6.8 |
) |
% |
|
1.1 |
|
% |
|
(21.9 |
) |
% |
|
(3.2 |
) |
% |
|
(8.3 |
) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective Tax Rate,
excluding discrete items (4) |
|
|
(15.0 |
) |
% |
|
(9.5 |
) |
% |
|
(25.4 |
) |
% |
|
(12.0 |
) |
% |
|
(18.0 |
) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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) The three
months ended June 30, 2020 included $32 million of additional tax
expense, reflecting the cumulative effect of an increase |
|
in the annual
effective tax rate from the previous quarter estimate. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3) Our effective
tax rate is calculated as income tax expense divided by income
before income taxes. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4) 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. |
|
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