Transocean Ltd.

What they do

Transocean contracts mobile offshore drilling rigs, related equipment and work crews to drill oil and gas wells, reporting as a single operating segment. Its fleet consists of 20 ultra-deepwater drillships and seven harsh environment semisubmersibles, with 18 drillships featuring dual-activity technology and two equipped with 1,700 short ton hoisting capacity. Ultra-deepwater floaters drill in water depths of 4,500 feet or greater, while harsh environment semisubmersibles operate in depths between 1,500 and 10,000 feet.

Revenue drivers

• Ultra-deepwater floaters — Drillships contracted to drill oil and gas wells in water depths of 4,500 feet or greater; the fleet included 20 ultra-deepwater drillships as of February 17, 2026.
• Harsh environment floaters — Semisubmersibles capable of drilling in harsh environments in water depths between 1,500 and 10,000 feet; the fleet included seven such units as of February 17, 2026.
• Contract backlog — Revenue is generated from contracted drilling days; in 2Q26 the company added $292 million in backlog at a weighted average dayrate of about $461,000.

Recent performance

Second quarter 2026 contract drilling revenues were $966 million, down from $1,081 million sequentially and $988 million a year earlier, with revenue efficiency of 97.0%. Net income was $170 million, or $0.04 per diluted share, compared to $71 million in 1Q26 and a $938 million loss in 2Q25. Adjusted EBITDA was $312 million (32.2% margin), down from $440 million in 1Q26. Operating cash flow was $236 million and free cash flow was $212 million after $24 million of capital expenditures. The company ended the period with total liquidity of more than $1.3 billion, including the undrawn revolving credit facility.

Strategy

On February 9, 2026, Transocean and Valaris entered a Business Combination Agreement under which Transocean will acquire all Valaris common shares at an exchange ratio of 15.235 Transocean shares per Valaris share. The company has been disposing of older assets: in the six months ended June 30, 2026 it sold the drillships Deepwater Champion and Discoverer India for $27 million net, and in July 2026 sold the semisubmersible Henry Goodrich for $3 million net. In March 2026 it redeemed the $358 million principal amount of 8.375% senior secured notes due 2028 for $365 million including premium, and in April 2026 issued 9.7 million shares in net settlement of 22.2 million exercised warrants. In 2025 it recognized a $3.05 billion aggregate held-for-sale impairment loss on six ultra-deepwater floaters and one harsh environment floater, plus two previously held-for-sale ultra-deepwater floaters, and completed sales of six ultra-deepwater floaters for $71 million net.

Risks

• Fleet impairment risk — In 2025 Transocean recognized a $3.05 billion aggregate impairment loss on floaters classified as held for sale, contributing to a full-year net loss of $2.92 billion.
• Uncommitted fleet rate rising — As of August 5, 2026, the uncommitted fleet rate for ultra-deepwater floaters rises from 26% for the remainder of 2026 to 93% by 2030, and for harsh environment floaters from 3% to 93% over the same period.
• Leverage and refinancing — Long-term debt was $9.06 billion on the latest balance sheet shown (2020-06-30), against $509.0 million of cash and equivalents at June 30, 2026.
• Regulatory and legal exposure — A January 3, 2024 civil consent decree with the DOJ and EPA resolved Clean Water Act permit claims tied to seven drillships, requiring corrective actions, an independent auditor and possible stipulated penalties for non-compliance.

Outlook

Management says the industry outlook remains positive, citing long-term forecasts that hydrocarbons will remain the dominant energy source and customers redirecting capital to offshore drilling, particularly deepwater. The company expects demand for ultra-deepwater rigs to expand geographically into West Africa, the Mediterranean, Southeast Asia and India, and harsh environment demand to stay strong through the end of the decade, driven by Norway. CEO Keelan Adamson said industry utilization for deepwater and harsh environment assets is projected to move well into the 90% range during 2027. Transocean reported $1.0 billion of contract awards with Equinor for three harsh environment semisubmersibles and noted recent awards across Norway, Australia, the U.S. Gulf and the Ivory Coast.