Q2 2026 Transocean Ltd Earnings Call

August 6, 2026

Speaker #1: Please stand by. Your meeting is about to begin. Hello. And welcome, everyone, joining today's Q2, 2026 Transocean Earnings Call. At this time, all participants are in a listen-only mode.

Operator: Hello and welcome everyone joining today's Q2 2026 Transocean Earnings Call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question-and-answer session.

Speaker #1: Later, you will have the opportunity to ask questions during the question-and-answer session. To register to ask a question at any time, please press star one on your telephone keypad.

Operator 3: To register to ask a question at any time, please press star one on your telephone keypad. Please note this call is being recorded and we are standing by if you should need any assistance. It is now my pleasure to turn the meeting over to David Keddington, Vice President and Treasurer. Please go ahead.

Operator: To register to ask a question at any time, please press star one on your telephone keypad. Please note this call is being recorded and we are standing by if you should need any assistance. It is now my pleasure to turn the meeting over to David Keddington, Vice President and Treasurer. Please go ahead.

Speaker #1: Please note this call is being recorded, and we are standing by if you should need any assistance. It is now my pleasure to turn the meeting over to David Caddington, Vice President and Treasurer.

Speaker #1: Please go ahead.

Speaker #2: Thank you, Madison, and good morning, everyone. Welcome to Transocean's second quarter earnings call. Leading today's call will be Transocean's President and Chief Executive Officer Keelan Adamson.

David Keddington: Thank you, Madison. Good morning, everyone. Welcome to Transocean's Q2 earnings call. Leading today's call will be Transocean's President and Chief Executive Officer, Keelan Adamson. Keelan will be joined by Chief Financial Officer, Thad Vayda, and Chief Commercial Officer, Roddy Mackenzie. In addition to the comments that will be shared on today's call, we'd like to direct you to our earnings release, fleet status report, and associated 8-Ks filed yesterday that contain additional information, all of which is available on Transocean's website at www.deepwater.com. Following our prepared remarks, we will open the conference line for questions. Please limit your inquiries to one question and one follow-up to allow us to hear from more participants. I'd like to remind everyone that today's call will include forward-looking statements, which are subject to risks and uncertainties that could cause actual results to differ materially.

David Keddington: Thank you, Madison. Good morning, everyone. Welcome to Transocean's Q2 Earnings Call. Leading today's call will be Transocean's President and Chief Executive Officer, Keelan Adamson. Keelan will be joined by Chief Financial Officer, Thad Vayda, and Chief Commercial Officer, Roddy Mackenzie. In addition to the comments that will be shared on today's call, we'd like to direct you to our earnings release, fleet status report, and associated 8-Ks filed yesterday that contain additional information, all of which is available on Transocean's website at www.deepwater.com. Following our prepared remarks, we will open the conference line for questions. Please limit your inquiries to one question and one follow-up to allow us to hear from more participants. I'd like to remind everyone that today's call will include forward-looking statements, which are subject to risks and uncertainties that could cause actual results to differ materially.

Speaker #2: Keelan will be joined by Chief Financial Officer Thad Veda and Chief Commercial Officer Roddy McKenzie. In addition to the comments that will be shared on today's call, we'd like to direct you to our earnings release, fleet status report, and associated 8Ks filed yesterday that contain additional information, all of which is available on Transocean's website at www.deepwater.com.

Speaker #2: Following our prepared remarks, we will open the conference line for questions. Please limit your inquiries to one question and one follow-up to allow us to hear from more participants.

Speaker #2: I'd like to remind everyone that today's call will include forward-looking statements, which are subject to risks and uncertainties that could cause actual results to differ materially.

Speaker #2: With that, I'll hand the call over to Transocean's CEO, Keelan Adamson.

David Keddington: With that, I'll hand the call over to Transocean CEO, Keelan Adamson.

Speaker #3: Good morning, everyone. Thanks for joining us. This is what I will cover today: first, I'll summarize our operational performance, next, I'll provide some thoughts on the industry and market, and why we continue to see strong demand for our assets.

Keelan Adamson: Good morning, everyone. Thanks for joining us. This is what I will cover today. First, I'll summarize our operational performance. Next, I'll provide some thoughts on the industry and market and why we continue to see strong demand for our assets. Lastly, I will update you on our Valaris acquisition, which we expect to close later this year. Let's get started. The Transocean team again delivered exceptional operational performance in Q2, beating our guidance on both revenue and cost, and generating a solid adjusted EBITDA margin of 32%. During the quarter, our fleet uptime was an exceptional 98%, an important driver in our continued focus to deliver superior customer service. At quarter end, net debt approximated $4.3 billion, a significant decrease of nearly $1.7 billion in the past 18 months.

Speaker #3: And lastly, I will update you on our Volaris acquisition, which we expect to close later this year. Let's get started. The Transocean team again delivered exceptional operational performance in the second quarter, beating our guidance on both revenue and cost, and generating a solid adjusted EBITDA margin of 32%.

Speaker #3: During the quarter, our fleet uptime was an exceptional 98%. An important driver in our continued focus to deliver superior customer service. At quarter end, net debt approximated 4.3 billion dollars, a significant decrease of nearly 1.7 billion dollars in the past 18 months.

Speaker #3: We also strengthened backlog by about $300 million, securing work for several of our assets with near-term availability. This figure excludes $1 billion in prospective backlog awarded by Equinor and pending approval by its partners, which we expect to receive in Q3.

Keelan Adamson: We also strengthened backlog by about $300 million, securing work for several of our assets with near-term availability. This figure excludes a $1 billion in prospective backlog awarded by Equinor and pending approval by its partners, which we expect to receive in Q3. Including this Equinor work, we have added $3.1 billion in contracts this year so far, a very positive indication. With the exception of the KG2, which is currently bid on multiple opportunities, all our active drillships are now on contract or mobilizing to new contracts, improving our coverage to 94% for the remainder of 2026 and 81% for 2027. In the US Gulf, we recently extended the Deepwater Conqueror with its current customer at the same rate. The Deepwater Proteus, which was briefly idle, is now contracted and has commenced operations.

Speaker #3: Including this Equinor work, we have added 3.1 billion dollars in contracts this year so far, a very positive indication. With the exception of the KG2, which is currently bid on multiple opportunities, all our active drill ships are now on contract or mobilizing to new contracts.

Speaker #3: Improving our coverage to 94% for the remainder of 2026 and 81% for 2027. In the US Gulf, we recently extended the deep water conquer with its current customer, the same rate.

Speaker #3: The deep water Proteus, which was briefly idle, is now contracted and has commenced operations. As we had speculated on our Q1's earnings call, in the context of higher commodity prices, this EMP operator has taken advantage of an open period on this high-performing rig to accomplish more work in 2026 than originally planned.

Keelan Adamson: As we had speculated on our Q1's earnings call, in the context of higher commodity prices, this E&P operator has taken advantage of an open period on this high-performing rig to accomplish more work in 2026 than originally planned. Both rigs are expected to continue working in the US Gulf into early 2027. Finally, the Deepwater Skyros has been extended by her customer to perform additional appraisal work on a recently announced discovery in the Ivory Coast. This work allows the rig to move directly to our next contract in Australia with limited off-hire time related to contract preparation and mobilization. In addition to drillship utilization and tightening in 2027, the outlook for high-specification, harsh environment assets is very robust well into 2028. Supported by the announcement of new fixtures for several of our rigs.

Speaker #3: Both rigs are expected to continue working in the US Gulf into early 2027. Finally, the deep water Skyros has been extended by her customer to perform additional appraisal work on a recently announced discovery in the Ivory Coast.

Speaker #3: This work allows the rig to move directly to our next contract in Australia with limited off-hire time related to contract preparation and mobilization. In addition to drillship utilization and tightening in 2027, the outlook for high-specification, harsh-environment assets is very robust well into 2028, supported by the announcement of new fixtures for several of our rigs.

Speaker #3: In Norway, the Transocean Norgay was awarded a 5-well contract by Harbor Energy, adding about 149 million dollars of backlog. The program is expected to commence in the first quarter of 2028.

Keelan Adamson: In Norway, the Transocean Norge was awarded a five-well contract by Harbour Energy, adding about $149 million of backlog. The program is expected to commence in Q1 2028. Notably, we entered into an agreement with Equinor for 7 years of work on three of our Cat D harsh environment semis, the Transocean Enabler, Transocean Encourage, and Transocean Endurance. We are pleased to have the opportunity to strategically relocate the Endurance from Australia to Norway. For these fixtures, the base day rate, excluding third-party services, will likely exceed $400,000 a day when the contracts commence as a result of escalation provisions. The Transocean Spitsbergen is now the only Transocean harsh environment semi available in Norway before 2029, and she is scheduled to complete her existing contract at the end of 2027.

Speaker #3: Notably, we entered into an agreement with Equinor for 7 years of work on 3 of our CAT D harsh environment semis, the Transocean Enabler, Transocean Encourage, and Transocean Endurance.

Speaker #3: We are pleased to have the opportunity to strategically relocate the Endurance from Australia to Norway. For these fixtures, the base day rate, excluding third-party services, will likely exceed 400,000 dollars a day when the contracts commence, as a result of escalation provisions.

Speaker #3: The Transocean Spitzbergen is now the only Transocean harsh environment semi available in Norway before 2029, and she is scheduled to complete her existing contract at the end of 2027.

Speaker #3: In Australia, the Transocean Equinox was awarded a 2-well contract with Santos, adding approximately 360 million dollars, 360 sorry, 36 million dollars of backlog. The program should commence in the second quarter of 2027.

Keelan Adamson: In Australia, the Transocean Equinox was awarded a two-well contract with Santos, adding approximately $36 million of backlog. The program should commence in Q2 2027. If all options are exercised, this rig continue with this customer through most of 2027 as well. We are encouraged by the fact that operators are beginning to make awards for multi-year offshore programs. Importantly, they are doing this while remaining disciplined, but with a reprioritization of capital towards offshore and deepwater activities, supporting our constructive outlook. As rig availability tightens, we expect customers to continue securing rigs for longer durations to ensure they have access to the required rig capacity for their upcoming programs. Once again, this supports our view that we are in a constructive period for the deepwater drilling sector. Operators are also starting to allocate more rig time to exploration and appraisal activities.

Speaker #3: If all options are exercised, this rig could continue with this customer through most of 2027 as well. We are encouraged by the fact that operators are beginning to make awards for multi-year offshore programs; importantly, they are doing this while remaining disciplined, but with a reprioritization of capital towards offshore and deep water activities.

Speaker #3: Supporting our constructive outlook. As rig availability tightens, we expect customers to continue securing rigs for longer durations to ensure they have access to the required rig capacity for their upcoming programs.

Speaker #3: Once again, this supports our view that we are in a constructive period for the deep water drilling sector. Operators are also starting to allocate more rig time to exploration and appraisal activities.

Speaker #3: Rystad Energy recently cited that the number of countries with at least one exploration well is on the rise. From 35 in 2025 to an estimated 51 by 2028, a 65% increase.

Keelan Adamson: Rystad Energy recently cited that the number of countries with at least one exploration well is on the rise from 35 in 2025 to an estimated 51 by 2028, a 65% increase. This geographic expansion is significant, and we expect customers to grow their portfolios in less developed regions in the coming years. Our customers select suppliers offering products and services that best align with their value creation objectives. This is where Transocean is distinctly advantaged, offering the optimal combination of differentiated assets, people, and processes to deliver exceptional service in the form of highly reliable, efficient operations that consistently exceed customer expectations. We look forward to delivering similar performance across a broader fleet and a customer base when the Valaris transaction is concluded. I'll now take you through an overview of market opportunities around the world.

Speaker #3: This geographic expansion is significant. And we expect customers to grow their portfolios in less developed regions in the coming years. Our customers select suppliers offering products and services that best align with their value creation objectives.

Speaker #3: This is where Transocean is distinctly advantaged, offering the optimal combination of differentiated assets, people, and processes to deliver exceptional service in the form of highly reliable, efficient operations that consistently exceed customer expectations.

Speaker #3: We look forward to delivering similar performance across a broader fleet and customer base when the Volaris transaction is concluded. I'll now take you through an overview of market opportunities around the world.

Speaker #3: We saw a high number of contract awards and tendering opportunities in the first half of the year. S&P, Petra Data, cited almost 100 rig years added year-to-date, and operators are evaluating approximately 40 open tenders, representing another 75 to 80 additional rig years.

Keelan Adamson: We saw a high number of contract awards and tendering opportunities in H1 of the year. S&P Petrodata cited almost 100 rig years added year to date, and operators are evaluating approximately 40 open tenders, representing another 75 to 80 additional rig years. These statistics underpin our expectation for deepwater utilization to approach at 100% by the end of 2027, with several rigs relocating from well-established areas to emerging regions to meet incremental rig demand. Looking first at the US Gulf, long-term demand fundamentals remain constructive, with several operators securing capacity for future activity. As demand levels rise globally, we are also seeing strong overseas interest in US units that currently don't have long-term commitments. We believe the number of deepwater rigs in the US will continue to decline in the short term, with 2 to 4 units already scheduled or expected to depart the region.

Speaker #3: These statistics underpin our expectation for deep water utilization to approach a 100% by the end of 2027, with several rigs relocating from well-established areas to emerging regions to meet incremental rig demand.

Speaker #3: Looking first at the US Gulf, long-term demand fundamentals remain constructive, with several operators securing capacity for future activity. As demand levels rise globally, we are also seeing strong overseas interest in US units that currently don't have long-term commitments.

Speaker #3: We believe the number of deep water rigs in the US will continue to decline in the short term, with 2 to 4 units already scheduled or expected to depart the region.

Speaker #3: This redistribution of global rig supply will satisfy increasing contract requirements in other geographies. In Brazil, Petrobras recently completed one of its largest contracting cycles in years, and continues to evaluate future rig requirements for its major development projects.

Keelan Adamson: This redistribution of global rig supply will satisfy increasing contract requirements in other geographies. In Brazil, Petrobras recently completed one of its largest contracting cycles in years and continues to evaluate future rig requirements for its major development projects. Supported by IOC demand, the overall rig count in Brazil is expected to remain stable between 30 to 33 rigs over the next five years. Africa is reestablishing itself as a key deepwater region. Operator activity continues to grow across multiple basins, which should drive the rig count from roughly 15 units to at least 20 to 25 units over the next 18 months. Multi-year awards are expected in Ghana, Mozambique, Namibia, and Nigeria, fueled by an uptick in recent discoveries and work resulting from successful exploration campaigns over the past few years.

Speaker #3: Supported by IOC demand, the overall rig count in Brazil is expected to remain stable, between 30 to 33 rigs over the next 5 years.

Speaker #3: Africa is reestablishing itself as a key deep water region. Operator activity continues to grow across multiple basins, which should drive the rig count from roughly 15 units to at least 20 to 25 units over the next 18 months.

Speaker #3: Multi-year awards are expected in Ghana, Mozambique, Namibia, and Nigeria, fueled by an uptick in recent discoveries and work resulting from successful exploration campaigns over the past few years.

Speaker #3: In the MED, with recent contracts for drilling programs starting in 2027, and a number of new discoveries that will call on rig capacity, we expect the future rig count to increase to around 10 to 12 units.

Keelan Adamson: In the Med, with recent contracts for drilling programs starting in 2027 and a number of new discoveries that will call on rig capacity, we expect the future rig count to increase to around 10 to 12 units. In Southeast Asia and India, we expect domestic exploration and production initiatives to drive a material increase in activity beginning in 2027. Indonesia, for example, could potentially add 10 rig years across five rig lines to a region that currently has only 1 rig operating. India is expected to expand activity by up to four drill ships in 2027, potentially adding around 10 incremental rig years. In Norway, utilization of high-specification, harsh environment semi-submersibles is strong through 2028, supported by recent awards from Vår Energi, Equinor, and Aker BP.

Speaker #3: In Southeast Asia and India, we expect domestic exploration and production initiatives to drive a material increase in activity beginning in 2027. Indonesia, for example, could potentially add 10 rig years across 5 rig lines to a region that currently has only 1 rig operating.

Speaker #3: India is expected to expand activity by up to 4 drill ships in 2027, potentially adding around 10 incremental rig years. In Norway, utilization of high specification harsh environment semi-submersibles is strong, through 2028, supported by recent awards from Var Energy, Equinor, and Aker BP.

Speaker #3: Most operators are already in the market to secure capacity from 2028 onward, suggesting that future utilization for this region should remain near 100%. Additionally, work in Canada for Equinor and Synovus could further tighten harsh environment supply in 2028 onward.

Keelan Adamson: Most operators are already in the market to secure capacity from 2028 onward, suggesting that future utilization for this region should remain near 100%. Additionally, work in Canada for Equinor and Cenovus could further tighten harsh environment supply in 2028 onward. In summary, the combination of sanctioned development programs, increased exploration spending, and major discoveries continues to drive a compelling outlook for deepwater and harsh environment offshore drilling. A quick update on the Valaris transaction, which is expected to close in Q4. We continue to operate as separate companies but are rapidly advancing integration planning and have recently achieved some key milestones. In June, we received CFIUS approval satisfying an important US national security clearance condition. Recall that we required regulatory clearance from a total of seven jurisdictions, and we have previously received clearance from Saudi Arabia and Trinidad and Tobago.

Speaker #3: In summary, the combination of sanctioned development programs increased exploration spending and major discoveries continues to drive a compelling outlook for deep water and harsh environment offshore drilling.

Speaker #3: Now, a quick update on the Volaris transaction, which is expected to close in the fourth quarter. We continue to operate as separate companies. But our rapidly advancing integration planning and have recently achieved some key milestones.

Speaker #3: In June, we received Cepheus approval, satisfying an important US national security clearance condition. Recall that we required regulatory clearance from a total of 7 jurisdictions, and we have previously received clearance from Saudi Arabia and Trinidad and Tobago.

Speaker #3: In July, we received clearance from Egypt and Australia, and just yesterday we received clearance from Angola. Currently, we continue to await clearance in 2 countries: Brazil and the US.

Keelan Adamson: In July, we received clearance from Egypt and Australia. Just yesterday, we received clearance from Angola. Currently, we continue to await clearance in two countries, Brazil and the US. Both are progressing as expected. We continue to believe that this combination will benefit customers and shareholders alike. I'll now hand the call over to Thad for comments on the quarter and our guidance. Thad?

Speaker #3: Both are progressing, as expected. We continue to believe that this combination will benefit customers and shareholders alike. I'll now hand the call over to Thad for comments on the quarter and our guidance.

Speaker #3: Thad?

Speaker #2: Thanks, Keelan, and good day, everyone. As Keelan highlighted, our second quarter financial results reflect strong operating performance and also exceeded the guidance we provided to you in May.

R. Thaddeus Vayda: Thanks, Keelan, and good day, everyone. As Keelan highlighted, our Q2 financial results reflect strong operating performance and also exceeded the guidance we provided to you in May. Revenue for the Q2 was $966 million at the upper end of our guidance range and primarily the result of the Deepwater Skyros continuing to work the entire quarter, one month longer than we forecast, and additional recharge revenue. Contractual cost escalation provisions becoming effective for certain rigs also contributed. O&M expense was $608 million, and capital expenditures were $24 million, both below the low end of our guidance ranges, primarily due to timing and deferrals in maintenance and out-of-service expenditures. At $56 million, G&A exceeded our guidance. However, this figure includes about $11 million of acquisition costs associated with the Valaris transaction.

Thad Vayda: Thanks, Keelan, and good day, everyone. As Keelan highlighted, our Q2 financial results reflect strong operating performance and also exceeded the guidance we provided to you in May. Revenue for the Q2 was $966 million at the upper end of our guidance range and primarily the result of the Deepwater Skyros continuing to work the entire quarter, one month longer than we forecast, and additional recharge revenue. Contractual cost escalation provisions becoming effective for certain rigs also contributed. O&M expense was $608 million, and capital expenditures were $24 million, both below the low end of our guidance ranges, primarily due to timing and deferrals in maintenance and out-of-service expenditures. At $56 million, G&A exceeded our guidance. However, this figure includes about $11 million of acquisition costs associated with the Valaris transaction.

Speaker #2: Revenue for the second quarter was $966 million, at the upper end of our guidance range, and primarily the result of the deep water scurros continuing to work the entire quarter, one month longer than we forecast, and additional recharge revenue.

Speaker #2: Contractual cost escalation provisions becoming effective for certain rigs also contributed. O&M expense was $608 million, and capital expenditures were $24 million, both below the low end of our guidance ranges, primarily due to timing and deferrals in maintenance and out-of-service expenditures.

Speaker #2: At $56 million, G&A exceeded our guidance; however, this figure includes about $11 million of acquisition costs associated with the Volaris transaction. Adjusting for this expense, our result is in line at a quarterly run rate of about $45 million.

R. Thaddeus Vayda: Adjusting for this expense, our result is in line at a quarterly run rate of about $45 million. Our adjusted EBITDA was $312 million, implying margin of about 32%. Free cash flow of $212 million carried a margin of 22%, which, while primarily the product of strong operational performance, was complemented by favorable changes in working capital. Recall that last quarter's cash flow was detrimentally affected by the timing of both collections and payments. Our trailing 12-month net debt to EBITDA ratio, inclusive of restricted cash primarily for debt repayment, is now 2.8 times, a more than two turn improvement when contrasted with the 5.2 times ratio at the beginning of 2025. We finished the quarter with about $510 million in unrestricted cash, up sequentially from $330 million. Our total liquidity, inclusive of the undrawn revolving credit facility, was approximately $1.3 billion.

Thad Vayda: Adjusting for this expense, our result is in line at a quarterly run rate of about $45 million. Our adjusted EBITDA was $312 million, implying margin of about 32%. Free cash flow of $212 million carried a margin of 22%, which, while primarily the product of strong operational performance, was complemented by favorable changes in working capital. Recall that last quarter's cash flow was detrimentally affected by the timing of both collections and payments. Our trailing 12-month net debt to EBITDA ratio, inclusive of restricted cash primarily for debt repayment, is now 2.8 times, a more than two turn improvement when contrasted with the 5.2 times ratio at the beginning of 2025. We finished the quarter with about $510 million in unrestricted cash, up sequentially from $330 million. Our total liquidity, inclusive of the undrawn revolving credit facility, was approximately $1.3 billion.

Speaker #2: Our adjusted EBITDA was $312 million, implying a margin of about 32%. Free cash flow of $212 million carried a margin of 22%, which, while primarily the product of strong operational performance, was complemented by favorable changes in working capital.

Speaker #2: Recall that last quarter's cash flow was detrimentally affected by the timing of both collections and payments. Our trailing 12-month net debt to EBITDA ratio, inclusive of restricted cash primarily for debt repayment, is now 2.8 times, a more than 2-turn improvement when contrasted with the 5.2 times ratio at the beginning of 2025.

Speaker #2: We finished the quarter with about $510 million in unrestricted cash, up sequentially from $330 million. Our total liquidity, inclusive of the undrawn revolving credit facility, was approximately $1.3 billion.

Speaker #2: We intend to use some of this cash to reduce leverage and continue to simplify the balance sheet. In this regard, we expect a call the remaining $200 million of outstanding principal on our 8% deep water Aquila notes at the end of the third quarter, after the next reduction in the notes call premium.

R. Thaddeus Vayda: We intend to use some of this cash to reduce leverage and continue to simplify the balance sheet. In this regard, we expect to call the remaining $200 million of outstanding principal on our 8% Deepwater Aquila notes at the end of the Q3 after the next reduction in the notes call premium. Including this early retirement, which will save approximately $22 million in interest expense through maturity, we expect to end the year with less than $4.8 billion of gross debt. We also forecast our total liquidity to be $1.25 to 1.35 billion. Excuse me. Over the next 12 months, we will consider refinancing additional secure debt into unsecured instruments, reflecting improved debt capital market conditions and the tight trading levels observed in our debt complex over the last several quarters.

Thad Vayda: We intend to use some of this cash to reduce leverage and continue to simplify the balance sheet. In this regard, we expect to call the remaining $200 million of outstanding principal on our 8% Deepwater Aquila notes at the end of the Q3 after the next reduction in the notes call premium. Including this early retirement, which will save approximately $22 million in interest expense through maturity, we expect to end the year with less than $4.8 billion of gross debt. We also forecast our total liquidity to be $1.25 to 1.35 billion. Excuse me. Over the next 12 months, we will consider refinancing additional secure debt into unsecured instruments, reflecting improved debt capital market conditions and the tight trading levels observed in our debt complex over the last several quarters.

Speaker #2: Including this early retirement, which will save approximately $22 million in interest expense through maturity, we expect to end the year with less than $4.8 billion of gross debt.

Speaker #2: We also forecast our total liquidity to be $1.25 to $1.35 billion. Excuse me. Over the next 12 months, we will consider refinancing additional secure debt into unsecured instruments, reflecting improved debt/capital market conditions and a tight trading levels observed in our debt complex over the last several quarters.

Speaker #2: As you probably know, we recently earned ratings upgrades from both S&P and Moody's to B- and B2, respectively, and were on positive outlook for further upgrades, pending the closing of the Volaris acquisition.

R. Thaddeus Vayda: As you probably know, we recently earned ratings upgrades from both S&P and Moody's to B minus and B2 respectively, and we're on positive outlook for further upgrades pending the closing of the Valaris acquisition. You'll note in our earnings release that we've increased our 2026 revenue guidance to reflect contract extensions on several rigs that we previously expected to roll off this year, as well as the new contract on the Deepwater Proteus. Similar to last quarter, the upper end of our guidance range assumes that existing contracts continue longer than shown in our fleet status report, with the low end reflecting certain contractual options not being exercised by our customers. As a result of this incremental activity, we have also increased our full-year cost guidance slightly. G&A guidance of $170 to 180 million for the full year is unchanged since the last update.

Thad Vayda: As you probably know, we recently earned ratings upgrades from both S&P and Moody's to B minus and B2 respectively, and we're on positive outlook for further upgrades pending the closing of the Valaris acquisition. You'll note in our earnings release that we've increased our 2026 revenue guidance to reflect contract extensions on several rigs that we previously expected to roll off this year, as well as the new contract on the Deepwater Proteus. Similar to last quarter, the upper end of our guidance range assumes that existing contracts continue longer than shown in our fleet status report, with the low end reflecting certain contractual options not being exercised by our customers. As a result of this incremental activity, we have also increased our full-year cost guidance slightly. G&A guidance of $170 to 180 million for the full year is unchanged since the last update.

Speaker #2: You'll note in our earnings release that we've increased our 2026 revenue guidance to reflect contract extensions on several rigs that we previously expected to roll off this year, as well as a new contract on the deep water Proteus.

Speaker #2: Similar to last quarter, the upper end of our guidance range assumes that existing contracts continue longer than shown in our fleet status report, with the low end reflecting certain contractual options not being exercised by our customers.

Speaker #2: As a result of this incremental activity, we have also increased our full-year cost guidance slightly. G&A guidance of $170 to $180 million for the full year is unchanged since the last update.

Speaker #2: However, this range ignores transaction-related costs, which would typically be excluded from adjusted EBITDA. I also note that our full-year interest expense guidance of approximately $475 million consists of Q1 and Q2 results that include the rather unpredictable mark-to-market effect of the bifurcated exchange feature and our 2029 exchangeable bonds, plus our forecast for second-half interest expense approximately $113 million per quarter, which is unadjusted for any effects of these bonds.

R. Thaddeus Vayda: However, this range ignores transaction-related costs, which would typically be excluded from adjusted EBITDA. I also note that our full-year interest expense guidance of approximately $475 million consists of Q1 and Q2 results that include the rather unpredictable mark-to-market effect of the bifurcated exchange feature and our 2029 exchangeable bonds, plus our forecast for H2 interest expense, approximately $113 million per quarter, which is unadjusted for any effects of these bonds. Revisiting a topic we discussed last quarter, we are observing only minor inflationary frictions, mainly in logistics and fuel, despite the persistent conflict in the Middle East. Fuel costs remain 20% to 40% above pre-war levels, but I remind you that we are typically only responsible for fuel when our rigs are off-hire, limiting the impact on our costs. Logistics costs have also increased slightly but are not materially affecting our O&M expenditures.

Thad Vayda: However, this range ignores transaction-related costs, which would typically be excluded from adjusted EBITDA. I also note that our full-year interest expense guidance of approximately $475 million consists of Q1 and Q2 results that include the rather unpredictable mark-to-market effect of the bifurcated exchange feature and our 2029 exchangeable bonds, plus our forecast for H2 interest expense, approximately $113 million per quarter, which is unadjusted for any effects of these bonds. Revisiting a topic we discussed last quarter, we are observing only minor inflationary frictions, mainly in logistics and fuel, despite the persistent conflict in the Middle East. Fuel costs remain 20% to 40% above pre-war levels, but I remind you that we are typically only responsible for fuel when our rigs are off-hire, limiting the impact on our costs. Logistics costs have also increased slightly but are not materially affecting our O&M expenditures.

Speaker #2: Revisiting a topic we discussed last quarter, we are observing only minor inflationary frictions mainly in logistics and fuel, despite the persistent conflict in the Middle East.

Speaker #2: Fuel costs remain 20% to to 40% above pre-war levels, but I remind you that we are typically only responsible for fuel when our rigs are off-higher, limiting the impact on our costs.

Speaker #2: Logistics costs have also increased slightly, but are not materially affecting our O&M expenditures. Finally, while we will monitor the effect of the latest Europe tariffs, at the present time we do not anticipate that they will have a meaningful impact on our cost structure.

R. Thaddeus Vayda: Finally, while we will monitor the effect of the latest US tariffs, at the present time, we do not anticipate that they will have a meaningful impact on our cost structure. This concludes my prepared remarks. Keelan?

Thad Vayda: Finally, while we will monitor the effect of the latest US tariffs, at the present time, we do not anticipate that they will have a meaningful impact on our cost structure. This concludes my prepared remarks. Keelan?

Speaker #2: This concludes my prepared remarks, Keelan.

Speaker #1: Before opening the line for questions, let me recap today's highlights. Transocean is executing exceptionally well today across the enterprise. Our people continue to provide our customers with superior service from the industry's highest spec fleet.

Keelan Adamson: Before opening the line for questions, let me recap today's highlights. Transocean is executing exceptionally well today across the enterprise. Our people continue to provide our customers with superior service from the industry's highest spec fleet. As a result, we have successfully filled most of our open availability in 2026, allowing us to enhance our full-year outlook. Supply disruptions around the world, continued growth in oil and gas CapEx, and strong demand for our rigs all reinforce our view that we are in a multi-year upcycle for offshore drilling. The combination of Transocean and Valaris will further enhance our ability to provide superior service to our customers in all key oil and gas producing regions, and deliver exceptional value to shareholders. We will now open the line for questions.

Speaker #1: As a result, we have successfully filled most of our open availability in 2026, allowing us to enhance our full-year outlook. Supply disruptions around the world continued growth in oil and gas capex and strong demand for our rigs all reinforce our view that we are in a multi-year upcycle for offshore drilling.

Speaker #1: The combination of Transocean and Volaris will further enhance our ability to provide superior service to our customers in all key oil and gas-producing regions, and deliver exceptional value to shareholders.

Speaker #1: We'll now open the line for questions.

Speaker #3: Thank you. If you'd like to ask a question, press star 1 on your keypad. To leave the queue at any time, press star 2.

Operator 3: Thank you. If you would like to ask a question, press star one on your keypad. To leave the queue at any time, press star two. Once again, that is star one to ask a question. We will take our first question from Eddie Kim with Barclays. Please go ahead, your line is now open.

Operator: Thank you. If you would like to ask a question, press star one on your keypad. To leave the queue at any time, press star two. Once again, that is star one to ask a question. We will take our first question from Eddie Kim with Barclays. Please go ahead, your line is now open.

Speaker #3: Once again, that is star 1 to ask a question. And we will take our first question from Eddie Kim with Barclays. Please go ahead.

Speaker #3: Your line is now open.

Speaker #1: Hi, good morning. So your outlook was very constructive, with the expectation to see utilization of high-spec rigs exceeding 90% next year, and approaching 100% by the end of next year.

Eddie Kim: Hi, good morning. Your outlook was very constructive with the expectation to see utilization of high-spec rigs exceeding 90% next year, and approaching 100% by the end of next year. It also feels like leading-edge day rates are now firmly in the mid $400, as indicated by your recent contract announcements, as well as from your peers. Is there any reason to believe that leading-edge day rates shouldn't continue to move higher next year, just given the tightness in the market? If not, what would be the potential roadblocks from preventing that from happening?

Speaker #1: It also feels like leading-edge day rates are now firmly in the sort of mid-400s, as indicated by your recent contract announcements, as well as from your peers.

Speaker #1: Is there any reason to believe that leading-edge day rates shouldn't continue to move higher next year, just given the tightness in the market? And if not, what would be the potential roadblocks from preventing that from happening?

Speaker #2: Hey, Eddie. This is Roddy. Yeah, so the first thing that we're seeing now is the kind of the filling of white space and that diminished availability.

Roddie Mackenzie: Hey, Eddie, this is Roddy. The first thing that we're seeing now is the filling of white space and that diminished availability. The second thing that we're in the mode of here is we're beginning to observe a lot of repositioning of the fleet, as Keelan mentioned in his comments. That's really going to help get the rigs in the right spots for the long term. As those two things happen, clearly we enter an improved business environment, and we also get to lower costs because we've got rigs in the right places, and we're not moving rigs anymore. I think you're going to see an improved business environment in general over the next 12 to 18 months.

Speaker #2: And then the second kind of thing that we're in the mood of here is we're beginning to observe a lot of repositioning of the fleet, as Keelan mentioned in his comments.

Speaker #2: And that's really going to help get the rigs in the right spots for the long term. And as those two things happen, then clearly we enter an improved business environment.

Speaker #2: We also get to lower costs because we've got rigs in the right places. And we're not moving rigs anymore, so I think you're going to see an improved business environment in general, over the next 12 to 18 months.

Speaker #1: Yeah, Eddie. And maybe just a quick add from myself. Our customers are obviously very focused on project execution, and they want to ensure that they're working with partners that can deliver against those expectations.

Keelan Adamson: Yeah, Eddie, maybe just a quick add from myself. Our customers are obviously very focused on project execution. They want to ensure that they're working with partners that can deliver against those expectations. We're well-positioned in that regard with our fleet and the way we perform. As the market tightens, we're looking at utilization to stack and see how the industry fleet looks over a period of time. It's a supply and demand balance. It's when the customers want to come for the work, and at the end of the day, we'll see where that takes us when it comes to rates.

Speaker #1: We're well positioned in that regard, with our fleet and the way we perform. And as the market tightens and we're looking at utilization to stack, and see how the fleet, the industry fleet, looks over a period of time.

Speaker #1: And it's a supply and demand balance that is when the customers want to come for the work. And at the end of the day, we'll see where that takes us when it comes to rates.

Speaker #4: Got it. Great. Thanks for that, caller. Speaking of repositioning of rigs, I just want to touch on the Cat D rigs that you signed up with Equinor.

Eddie Kim: Got it. Great. Thanks for that color. Speaking of repositioning of rigs, just want to touch on the Cat D rigs that you signed up with Equinor. A few years ago, you moved a couple of those Cat D rigs from Norway to Australia. Now they're moving back to Norway. Is this a sign of increasing demand in Norway or softening demand in Australia? Or maybe a little bit of both?

Speaker #4: So a few years ago, you moved a couple of those CAT D rigs from Norway to Australia. Now they're moving back to Norway. Is this a sign of increasing demand in Norway, or softening demand in Australia?

Speaker #4: Or maybe a little bit of both?

Speaker #2: Yeah, I think the movement in the first place was because the Norwegian market had gone soft, no question. So several years ago, that was a reality for us.

Roddie Mackenzie: Yeah, I think the movement in the first place was because the Norwegian market had gone soft, no question. Several years ago, that was a reality for us. The beauty of this fleet is they are genuinely attractive all over the world. That's the nature of running a fleet of this level of specification. Specifically, those rigs that are coming back, this is an indication of how strong the market is in Norway. It's a very attractive market for us for many years, but particularly now as this is the beginning of seeing so many more long-term contracts on offer. Strategically moving the rigs back to long-term contracts is great. We're very excited about the deal, and so is our customer. The headline rate was very important to them, but there was also some pretty significant improvements for us.

Speaker #2: The beauty of this fleet is they are genuinely attractive, all over the world. So the nature of running a fleet of this level of specification.

Speaker #2: Specifically, those rigs that are coming back—this is an indication of how strong the market is in Norway. It’s been a very attractive market for us for many years, but particularly now, as this is kind of the beginning of seeing so many more long-term contracts on offer.

Speaker #2: So strategically moving the rigs back to long-term contracts is great. We're very excited about the deal. And so is our customer. The headline rate was very important to them, but there was also some pretty significant improvements for us.

Speaker #2: So we think about these kind of long-term opportunities as making sure they generate as much cash as possible. So contract improvements, escalation provisions, and the exclusion of any third-party services in those numbers plus the fact that it's seven years of backlog make that an extremely attractive move for us.

Roddie Mackenzie: We think about these long-term opportunities as making sure they generate as much cash as possible. Contract improvements, escalation provisions, and the exclusion of any third-party services in those numbers, plus the fact that it's 7 years of backlog, make that an extremely attractive move for us. It's definitely a case of Norway is offering some very attractive terms and conditions, and duration of contract at the moment.

Speaker #2: So it's definitely a case of Norway is offering some very attractive terms and conditions, and duration of contract at the moment.

Speaker #1: Yeah, maybe just one more piece on that. I mean, obviously, Equinor have objectives to maintain production at current levels, right through to 2035 against a backdrop of declining productions.

Keelan Adamson: Yeah, maybe just one more piece on that. Obviously, Equinor have objectives to maintain production at current levels right through to 2035 against a backdrop of declining production. There's a lot of work in Norway, and that's definitely been a pickup since we moved those rigs out of the area. It really is about Norway and not the rest of the world.

Speaker #1: So there's a lot of work in Norway, and that's definitely been a pickup since we moved those rigs out of the area. So it really is about Norway and not the rest of the world.

Speaker #4: Got it. Great. Thanks for all that, Caller. I'll turn it back.

Eddie Kim: Got it. Great. Thanks for all that color. I'll turn it back.

Speaker #3: Thank you. And we'll move to next to Greg Lewis with BTIG. Please go ahead. Your line is now open.

Operator 3: Thank you. We'll move next to Greg Lewis with BTIG. Please go ahead, your line is now open.

Operator: Thank you. We'll move next to Greg Lewis with BTIG. Please go ahead, your line is now open.

Speaker #5: Yeah, hey. Thank you, and good morning, and thanks for taking my questions. I wanted to talk a little bit more about the opportunity set in Southeast Asia and in the it sounds like we could see multiple rigs start multiple floater startup in that part of the world.

Greg Lewis: Yeah. Hey, thank you, and good morning, and thanks for taking my questions. I wanted to talk a little bit more about the opportunity set in Southeast Asia, and it sounds like we could see multiple floaters start up in that part of the world. I guess my question is around really, clearly there's a bifurcation between sixth and seventh gen rigs. Traditionally, India and parts of Southeast Asia have been sixth gen. It looks like the sixth gen market is about to get pretty tight pretty quickly as those go higher. I guess what I'm wondering is, could we start to see sixth gen, seventh gen pricing converge?

Speaker #5: I mean, I guess my question is around, really, clearly there's a bifurcation between sixth and seventh-gen rigs. Traditionally, Indian and parts of Southeast Asia have been sixth-gen.

Speaker #5: It looks like the sixth-gen market is about to get pretty tight, pretty quickly as those go higher. So I guess what I'm wondering is, could we start to see sixth-gen, seventh-gen pricing converge?

Speaker #2: That's a very interesting question. So you're probably well aware Greg that our strategy has been to make sure that we fully utilize those sixth-gen assets.

Roddie Mackenzie: That's a very interesting question. You're probably well aware, Greg, that our strategy has been to make sure that we fully utilize those sixth-gen assets. Of course, the fixtures that we made in Brazil earlier this year were a very solid step on that track. Yes, traditionally, Southeast Asia has indeed consumed a lot of sixth-gen rigs, but I think at this stage in the game, it doesn't really matter between sixth and seventh gen, where they go. I think they're capable of going anywhere in the world and will perform well in all of these prospects. To your point about Southeast Asia, there's a lot of stuff going on. Indonesia has multiple tenders, Malaysia, Brunei, to mention just a few, and of course, India being a very big opportunity here. ONGC just opened their multi-rig tender, and there aren't that many rigs on offer.

Speaker #2: Of course, the fixtures that we made in Brazil earlier this year were a very solid step on that track. Yes, traditionally, Southeast Asia has indeed consumed a lot of sixth-gen rigs, but I think at this stage in the game, it doesn't really matter between sixth and seventh-gen where they go.

Speaker #2: I think they're capable of going anywhere in the world, and we'll perform well on all of these prospects. So to your point about Southeast Asia, I mean, there's a lot of stuff going on.

Speaker #2: Indonesia has multiple tenders. Malaysia, Brunei, to mention just a few. And of course, India being a very big opportunity here. ONGC just opened their multi-rig tender and they aren't that many rigs on offer.

Speaker #2: So I think it's already tightening up. I don't think you see a huge difference in those day rates. Certainly, from our point of view, we're very keen to perhaps be slightly counter-cyclical here, that it would be great in this upturn that we're in to have some of the higher specification rigs available to us to take advantage of that later in the game.

Roddie Mackenzie: I think it's already tightening up. I don't think you see a huge difference in those day rates. Certainly from our point of view, we're very keen to perhaps be slightly countercyclical here, that it would be great in this upturn that we're in, to have some of the higher specification rigs available to us to take advantage of that later in the game. As you know, traditionally, a lot of high-spec rigs are the first to get booked up. We're trying to balance that out a little bit because we have a very capable sixth-gen fleet. They're doing a fantastic job for the customers, and they're very fit for purpose. To your point about Southeast Asia, it really is blowing up in terms of contracting, and we're very pleased if we have the opportunity to place some more sixth-gen rigs there.

Speaker #2: As you know, traditionally, a lot of high-spec rigs are the first to get booked up. But we're trying to balance that out a little bit because we have a very, very capable sixth-gen fleet.

Speaker #2: They're doing a fantastic job for the customers, and they're very fit for purpose. So to your point about Southeast Asia, it really is blowing up in terms of contracting and we're very pleased if we have the opportunity to place some more sixth-gen rigs there.

Speaker #5: Okay, great. And then realizing we're not disclosing rates on there's like a price there was a price option, I guess what my question is around, as we think about price options, and whether we're let's assume we're not disclosing those rates, which is why I've asked the question.

Greg Lewis: Okay, great. Realizing we're not disclosing rates, there was a priced option. I guess what my question is around, as we think about priced options, let's assume we're not disclosing those rates, which is why I've asked the question. I guess at a minimum, when we think about priced options, should we assume that they're flattish, or more likely upward? Or could we actually be seeing priced options in out-years at lower rates?

Speaker #5: I mean, I guess at a minimum, when we think about price options, should we assume that they're flattish or more likely up, or could we actually be seeing price options in out years at lower rates?

Speaker #2: Yeah, I wouldn't necessarily say they're flattish. I can't really say a lot about that for obvious reasons, but I would think about it in terms of the provisions and what have you in the contracts mean that those options are going to be very satisfactory to us in the long run.

Roddie Mackenzie: Yeah, I wouldn't necessarily say they're flattish. I can't really say a lot about that for obvious reasons, but I would think about it in terms of the provisions and what have you, and the contracts mean that those options are going to be very satisfactory to us in the long run. I'll just leave it at that.

Speaker #2: I'll just kind of leave it at that.

Speaker #5: Okay, perfect. Thank you very much.

Greg Lewis: Okay, perfect. Thank you very much.

Speaker #3: Thank you. And we will move next to Keith Beckman with Pickering Energy Partners. Please go ahead. Your line is now open.

Operator 3: Thank you. We will move next to Keith Beckmann with Pickering Energy Partners. Please go ahead. Your line is now open.

Operator: Thank you. We will move next to Keith Beckmann with Pickering Energy Partners. Please go ahead. Your line is now open.

Speaker #6: Hey, good morning. And thanks for taking my question. I just kind of wanted to ask around, and you guys gave very helpful commentary. We're kind of around the globe, but I wanted to ask maybe more particularly around the Gulf into next year.

Keith Beckmann: Good morning, and thanks for taking my question. I just wanted to ask around. You guys gave very helpful commentary around the globe, but I wanted to ask maybe more particularly around the Gulf into next year. You guys did a really good job at winning some awards here this year to fill up capacity. Some of that stuff's rolling off in early 2027. I think you guys expect the Gulf to be down a little bit from commentary earlier into next year. Where do you think those rigs potentially land? Do you think they move to West Africa? Potentially some of yours in particular potentially getting extended. Just trying to get a sense on maybe how you're thinking about your fleet and then maybe more macro-wise as well.

Speaker #6: You guys did a really good job at winning some awards here this year at Philip Capacity. Some of that stuff's rolling off in early '27.

Speaker #6: I think you guys expect the Gulf to be down a little bit from commentary area earlier into next year. Where do you think those rigs potentially land?

Speaker #6: Do you think they move to West Africa or potentially some of yours in particular potentially get extended? Just trying to get a sense on maybe how you're thinking about your fleet and then maybe more macro-wise as well.

Speaker #2: Yeah, so I think to your point there, we're very pleased to extend a couple of rigs in the Gulf. This quarter, again, a lot of those things are kind of in the pipeline for some time.

Roddie Mackenzie: Yeah. I think to your point there, we're very pleased to extend a couple of rigs in the Gulf this quarter. Again, a lot of those things are in the pipeline for some time. We do think that the fleet that's in the Gulf is typically very attractive in any basin. What we're seeing is that, as long as those rigs are performing well, they've got solid opportunities elsewhere. If we get towards the end of these programs, then it's a relatively easy pivot to move them on to the next location. That's the point that Keelan was making about the redistribution of the fleet, is that we've already seen that. Even with a couple of our rigs, we've moved these high-spec rigs to other jurisdictions, and we expect them to do real well there as well.

Speaker #2: We do think that the fleet that's in the Gulf is typically very, very attractive in any basin. So what we're seeing is that as long as those rigs are performing well, they've got solid opportunities elsewhere.

Speaker #2: So if we get towards the end of these programs, then it's a relatively easy pivot to move them onto the next location. So that's kind of the point that Keelan was making about the redistribution of the fleet, is that we've already seen that.

Speaker #2: So even with a couple of our rigs, we've moved these high-spec rigs to other jurisdictions, and we expect them to do real well there as well.

Speaker #2: Certainly, there's the potential for more of that to happen in the Gulf. As a few of them are rolling off, although I did see, I think, just this week there was another one of the sea drill rigs was extended to stay here, which is good.

Roddie Mackenzie: Certainly, there's the potential for more of that to happen in the Gulf, as a few of them are rolling off. Although I did see, I think, just this week, one of the Seadrill rigs was extended to stay here, which is good. I think you see a little shuffling of the deck there. I don't think we are going to experience much white space on that at all. We're quite happy to see that happen.

Speaker #2: But I think you see a little shuffling of the deck there. But I don't think we're going to experience much white space on that at all.

Speaker #2: So, we're quite happy to see that happen.

Speaker #4: Yeah, Keith, I mean, we've got rigs moving out; we've got rigs moving in. I mean, the long-term prospects for the U.S. Gulf are very strong.

Keelan Adamson: Yeah, Keith, we've got rigs moving out, we've got rigs moving in. The long-term prospects for the US Gulf are very strong, obviously with Paleogene and many of the prospects that are out there. It will always be a good basin. I think it's just a bit of a timing thing more than anything else. West Africa is picking up and Asia and India, and that area is picking up as well. These assets that have availability will move to satisfy those requirements. As we said, it's a little balancing, but long-term, it's still a very productive area to be, very constructive area to be in the US Gulf.

Speaker #4: Obviously, with Paleogene and many of the prospects that are out there. So it will always be a good basin. I think it's just a bit of a timing thing more than anything else.

Speaker #4: West Africa is picking up, and Asia and India and that area is picking up as well. And so there's only these assets that have availability will move.

Speaker #4: To satisfy those requirements. So it's, as we said, it's a little balancing, but long-term, it's still a very productive area to be very constructive area to be in the US Gulf.

Speaker #6: Awesome. I really appreciate that. And then my follow-up question is just, are you guys seeing any change in operator behavior, kind of assuming this stronger 2027 recovery that we agree with here?

Keith Beckmann: Awesome. I really appreciate that. My follow-up question is, are you guys seeing any change in operator behavior, assuming this stronger 2027 recovery that we agree with here? Are they trying to lock in rigs for longer term, potentially what may be better day rates? The follow-up to that is, do you think energy security is still a topic of conversation with a lot of these NOCs here, and does that potentially push projects up the pipeline from what you guys have seen at all, or maybe a little bit more urgency there?

Speaker #6: Whether trying to lock in rigs for longer-term potentially, what maybe better day rates, and then the follow-up to that is, do you think energy security is still kind of a topic of conversation with a lot of these NOCs here, and is that potentially push projects up the pipeline from what you guys have seen at all, or maybe a little bit more urgency there?

Speaker #4: Yeah, Keith, I'll take that. You're absolutely spot on. What we're seeing right now is somewhat typical of what we see at the start of these upcycles, and where our NOCs are typically the first to move.

Keelan Adamson: Yeah, Keith, I'll take that. You're absolutely spot on. What we're seeing right now is somewhat typical of what we see at the start of these up cycles and where our NOCs are typically the first to move. They typically have the most term to offer. They can secure good deals on a number of assets. Petrobras obviously is a great example of that. Equinor, the deal we just did with them, Eni are moving as well. What you start to see is the NOCs moving at the beginning and taking volume and ensuring that they get a competitive deal for that. The majors obviously are really disciplined, and they're going to manage their portfolios as they best see fit and address their priorities accordingly. I think we're seeing that play out at this point in time. It's exactly as you indicate.

Speaker #4: They typically have the most term to offer. They can secure good deals. On a number of assets, Petrobras obviously is a great example of that.

Speaker #4: Equinor, the deal we just did with them, E&I are moving as well. And so what you start to see is the NOCs moving at the beginning.

Speaker #4: And taking volume and ensuring that they get a competitive deal for that. And then the majors obviously are really disciplined. And they're going to manage their portfolios as they best see fit.

Speaker #4: And address their priorities accordingly. And I think we're seeing that play out at this point in time. It's exactly as you indicate. Roddy, do you have anything you want to add?

Keelan Adamson: Roddy, do you have anything you want to add?

Speaker #2: Yeah, but just to add, you mentioned there about the energy security. That definitely plays into a kind of a shift towards domestic production. But I want to make it really clear.

Roddie Mackenzie: Just to add on, you mentioned there about the energy security. That definitely plays into a shift towards domestic production, but I want to make it really clear. So far, we've had a fabulous year in terms of contracting over $3 billion worth of rig time already, but none of that was predicated on elevated oil prices. All of those fixtures are predicated on breakevens that are calculated in $30, $40 range. None of the operators today are executing on a higher oil price. They are very disciplined in that regard. I think what you're seeing is the shift of capital towards deepwater is in a disciplined manner. That speaks really well for the long term, because it means that the decisions that are being made today that are tightening up our market are decisions that will last through ups and downs of the oil price.

Speaker #2: So far, we've had a fabulous year in terms of contracting over $3 billion worth of rig time already. But none of that was predicated on elevated oil prices.

Speaker #2: All of those fixtures are predicated on break-evens that are calculated in 30, 40-dollar range. Nobody, none of the operators today are executing on a higher oil price.

Speaker #2: They are very disciplined in that regard. So I think what you're seeing is the shift of capital towards deep water is in a disciplined manner.

Speaker #2: So that speaks really well for the long term because it means that the decisions that are being made today that are tightening up our market are decisions that will last through ups and downs of the oil price.

Speaker #2: So I think it's a really important distinction to make is that energy security is definitely a factor, but all of the stuff that we're seeing and we're expecting that there could be up to 150 rig years awarded across the fleets this year, that's a very substantial number, bigger than it's been in a number of years.

Roddie Mackenzie: I think it's a really important distinction to make is that energy security is definitely a factor, all of the stuff that we're seeing, and we're expecting that there could be up to 150 rig years awarded across the fleets this year. That's a very substantial number, bigger than it's been in a number of years. It's not predicated on short-term oil prices. This is predicated on a long-term view of very conservative, disciplined investing by our customers, which we welcome.

Speaker #2: But it's not predicated on short-term oil prices. This is predicated on a long-term view of very conservative, disciplined investing by our customers, which we welcome.

Speaker #6: Awesome. I really appreciate it, Joel. I'll turn it back.

Keith Beckmann: I really appreciate it. I'll turn it back.

Speaker #1: Thank you. And we'll move next to Frederick Stemma with Larkson Securities. Please go ahead.

Operator 3: Thank you. We'll move next to Fredrik Stene with Clarksons Securities. Please go ahead.

Operator: Thank you. We'll move next to Fredrik Stene with Clarksons Securities. Please go ahead.

Speaker #7: Hey, Keelan, team, and thank you for taking my questions. Congratulations first and foremost on a strong quarter and super happy to hear that the work on the lorry steel is progressing well as well.

Fredrik Stene: Hey, Keelan, team, thank you for taking my questions. Congratulations first and foremost on a strong quarter, and super happy to hear that the work on the Valaris deal is progressing well as well. I wanted to touch a bit on specific rigs. You have already kind of talked a bit about the Gulf with the Conqueror and Proteus, which you seem very optimistic about. With the backdrop you gave on Norway in particular, maybe on the strengths that we're seeing there on the harsh environment market, how do you, for example, tend to go about the Spitsbergen, which is the rig that you have available first?

Speaker #7: I wanted to touch a bit on specific rigs. You have already kind of talked a bit about the Gulf with the Conqueror and Proteus which you've seen very optimistic about.

Speaker #7: But with the backdrop you gave on Norway in particular, maybe on the strengths that we're seeing there, on the harsh environment market, how do you, for example, tend to go about the Spitzbergen, which is your rig that you have available first?

Speaker #7: Do you think the strength there is enough to see that rig potentially extended with a contract award this year, or are you trying to play it cool and potentially get more of an upside if the market squeezes even higher?

Fredrik Stene: Do you think the strength there is enough to see that rig potentially extended with a contract to work this year, or are you trying to play it cool and potentially get more of an upside if the market squeezes even higher?

Speaker #2: I think we're always trying to play it cool. But realistically about the Spitzbergen, yeah, great rig. Doing a fabulous job for Equinor, love working for Equinor there.

Roddie Mackenzie: I think we're always trying to play it cool. Realistically about the Spitsbergen, yeah, great rig, doing a fabulous job for Equinor, love working for Equinor there. It's always our preference to keep the rigs exactly where they are and continue on with the customers they're with. We're in constant dialogue with Equinor on a number of different things as you saw our recent announcement. Yep, definitely our preference to keep it with Equinor and continue that relationship. It's gone really well so far.

Speaker #2: It's always our preference to keep the rigs exactly where they are and continue on with the customers they're with. We're in constant dialogue with Equinor on a number of different things.

Speaker #2: As you saw, our recent announcement. So yep, definitely our preference to keep it with Equinor. And continue that relationship's gone really well so far.

Speaker #7: All right. Thanks, Roddy. And also wanted to touch upon the Mykonos, which we're keeping now with a non-Petrobras company in Brazil, given your outlook on that region and country maybe in particular, do you think it's possible that that will be kept in Brazil as well, or is that one of those rigs that you might move yourself to potentially satisfy demand in West Africa, Southeast Asia, just interested to hear any color on leads and work that you might be looking at with that particular unit?

Fredrik Stene: All right. Thanks, Roddy. Also wanted to touch upon the Mykonos, which you're keeping now with a non-Petrobras company in Brazil. Given your outlook on that region and country maybe in particular, do you think it's possible that that will be kept in Brazil as well, or is that one of those rigs that you might move yourself to potentially satisfy demand in West Africa, Southeast Asia? Just interested to hear any color on leads and work that you might be looking at for that particular unit.

Speaker #2: Yeah, good question. So Brazil has gone through a massive contracting effort in the last year. Including the Mykonos with non-Petrobras operator. Yeah, there's a distinct possibility that continues there.

Roddie Mackenzie: Yeah, good question. Brazil has gone through a massive contracting effort in the last year, including the Mykonos, with a non-Petrobras operator. Yeah, there's a distinct possibility that continues there. It's also very interesting that that class of rig is ideally suited to a lot of the work that's come up in Southeast Asia. India, for example, she would be a great candidate for India for some of the tenders that are coming up. Again, it's always our preference to keep the rigs where they are, but we'll just have to wait and see how that plays out. I don't think she will have any shortage of opportunities elsewhere if, for whatever reason, Brazil doesn't follow through on that. I do think there's a pretty high desire to keep her in Brazil.

Speaker #2: But it's also very interesting that that class of rig is ideally suited to a lot of the work that's come up in Southeast Asia, and India, for example, she would be a great candidate for India for some of the tenders that are coming up.

Speaker #2: Again, it's always our preference to keep the rigs where they are. But we'll just have to wait and see how that plays out. But I don't think she will have any shortage of opportunities elsewhere.

Speaker #2: If for whatever reason Brazil doesn't follow through on that, but I do think there's a pretty high desire to keep her in Brazil.

Speaker #7: Thank you. And maybe just one last quick one for Sad, if possible. You guys have been working diligently to be as cost-efficient as you can.

Fredrik Stene: Thank you. Maybe just one last quick one for Thad, if possible. You guys have been working diligently to be as cost-efficient as you can lately, obviously the Q2 you did very well on the cost side. I was wondering if you had any updated commentary on how that cost work is progressing. Now I'm talking about Transocean standalone, first and foremost. Maybe second, if you have, during the integration planning, identified any more cost savings opportunities when the deal closes. Thanks.

Speaker #7: Lately, and obviously the second quarter, you did very well on the cost side. I was wondering if you had any updates, commentary on how that cost working is progressing and now I'm talking about Transocean standalone first and foremost.

Speaker #7: And maybe second, if you have, during the integration planning, identified any more cost savings opportunities when the deal closes. Thanks.

Speaker #2: So second question first. Got no additional comments or guidance with respect to the combination. We are moving ahead with all of the integration and certainly we're finding new opportunities that we didn't think existed prior to the process.

R. Thaddeus Vayda: Second question first. Got no additional comments or guidance with respect to the combination. We are moving ahead with all of the integration, certainly we're finding new opportunities that we didn't think existed prior to the process. As we get closer to consummation of that transaction, we'll provide additional information. With respect to Transocean on a standalone basis, all of the cost savings initiatives have been implemented. We are seeing the results in our liquidity, it's facilitating additional reduction in debt going forward. We are, as I said, sort of on the road to about $200 to $250 million in aggregate between 2026 and 2027. It is, as you would expect, sort of a constant battle to make sure that we are saving everywhere that we possibly can. We have been, I think, pretty successful in achieving our goals.

Thad Vayda: Second question first. Got no additional comments or guidance with respect to the combination. We are moving ahead with all of the integration, certainly we're finding new opportunities that we didn't think existed prior to the process. As we get closer to consummation of that transaction, we'll provide additional information. With respect to Transocean on a standalone basis, all of the cost savings initiatives have been implemented. We are seeing the results in our liquidity, it's facilitating additional reduction in debt going forward. We are, as I said, sort of on the road to about $200 to $250 million in aggregate between 2026 and 2027. It is, as you would expect, sort of a constant battle to make sure that we are saving everywhere that we possibly can. We have been, I think, pretty successful in achieving our goals.

Speaker #2: But as we get closer to consummation of that transaction, we'll provide additional information. With respect to Transocean on a standalone basis, all of the cost savings initiatives have been implemented.

Speaker #2: We are seeing the results in our liquidity and its facilitating additional reduction in debt going forward. We are as I said, sort of on the road to about 200, 250 million dollars in aggregate between 2026 and 2027.

Speaker #2: It is, as you would expect, sort of a constant battle to make sure that we are saving everywhere that we possibly can. But we have been I think pretty successful in achieving our goals.

Speaker #2: Now, as we move towards the end of 2027, since some of the cost savings are associated with deferrals and things of that nature, we're going to have to find economize on just to make sure that we can maintain the cost structure that we have today.

R. Thaddeus Vayda: As we move towards the end of 2027, since some of the cost savings are associated with deferrals and things of that nature, we're going to have to find other areas to economize on just to make sure that we can maintain the cost structure that we have today.

Thad Vayda: As we move towards the end of 2027, since some of the cost savings are associated with deferrals and things of that nature, we're going to have to find other areas to economize on just to make sure that we can maintain the cost structure that we have today.

Speaker #7: All right. Thank you so much, for the answer. Have a good day all. That's it from me.

Fredrik Stene: All right. Thank you so much for the answers. Have a good day all. That's it for me.

Speaker #6: Thanks, Frederick.

Keelan Adamson: Thanks, Fredrik.

Speaker #1: Thank you. And we'll move next to Noel Parks with Tui Brothers. Please go ahead. Your line is now open.

Operator 3: Thank you. We'll move next to Noel Parks with Tuohy Brothers. Please go ahead. Your line is now open.

Operator: Thank you. We'll move next to Noel Parks with Tuohy Brothers. Please go ahead. Your line is now open.

Speaker #4: All right. Great. Thanks. I just wondered if you could maybe talk a little bit more about what you're seeing. You were noting expected tendering activity in Ghana, Mozambique, Namibia, and Nigeria.

Noel Parks: Great, thanks. I just wondered if you could maybe talk a little bit more about what you're seeing. You were noting expected tender activity in Ghana, Mozambique, Namibia, and Nigeria. I guess similar to some of the other regional questions you've been discussing, what do you think Transocean's and sort of the industry's ability to sort of meet the needs of projects there within sort of the other competing regions?

Speaker #4: And I guess similar to some of the other regional questions you've been discussing, what do you think Transocean and sort of the industries ability to sort of meet the needs of projects there within sort of the other competing regions?

Speaker #2: Yeah, yeah. Quite happy to fill in some of the details on that. What I see is so Africa in general is actually the largest growth region that we have on our chart today.

Roddie Mackenzie: Yeah. Quite happy to fill in some of the details on that. What I'd say is, Africa in general is actually the largest growth region that we have on our chart today. As we go through the list of opportunities, we're looking at 12 plus multiyear developments that are going to require rigs. There's at least six long-term tenders that are ongoing right now. I won't go through all the details, but you're basically looking at every country that you mentioned, plus a couple of others have something going on in terms of incremental rig demand. It's very encouraging to see, because a lot of the stuff is the long-term stuff. When we think about where we are overall, we're definitely on average greater than a year for each one of the prospects that we're looking at.

Speaker #2: So as we go through the list of opportunities, we're looking at 12-plus multi-year developments that are going to require rigs. There's at least six long-term tenders that are ongoing right now.

Speaker #2: And I won't go through all the details, but I mean, you're basically looking at every country that you mentioned plus a couple of others have something going on in terms of incremental rig demand.

Speaker #2: So it's very encouraging to see because a lot of the stuff is the long-term stuff. So when we think about where we are overall, we're definitely on average greater than a year for each one of the prospects that we're looking at and in West Africa, it's kind of even more so.

Roddie Mackenzie: In West Africa, it's kind of even more so. I think some of the shorter stuff is maybe one year long, but we're looking at at least a half dozen opportunities that are two or more years, some as long as three and four years. Just overall, yes, there's already been some awards in Nigeria. There's more to come. There's potentially three, four rigs to add there. There's a lot going on in Mozambique. There's at least a couple or three potential opportunities there. You go into the details of some of the other places, it's changing certainly on a monthly basis, if not a weekly basis. Yeah, real strong in West Africa just now. I do think when we were describing the whole redistribution of the fleet, there's a distinct possibility that some of the idle rigs today will end up over there.

Speaker #2: So I think some of the shorter stuff is maybe like one year long, but we're looking at at least a half dozen opportunities that are two or more years some as long as three and four years.

Speaker #2: So just overall, yes, there's already been some awards in Nigeria. There's more to come. There's potentially three, four rigs to add there. There's a lot going on in Mozambique.

Speaker #2: There are at least a couple, maybe three, potential opportunities there. Then, as you go into the details of some of the other places, it's changing certainly on a monthly basis, if not a weekly basis.

Speaker #2: So yeah, real strong in West Africa just now. And I do think when we were describing the whole redistribution of the fleet, there's a distinct possibility that some of the idle rigs today will end up over there.

Speaker #2: So, all good on the West Africa front.

Roddie Mackenzie: All good on the West Africa front.

Speaker #4: Terrific. And that statistic you mentioned, 35 countries looking to do some sort of exploration or appraisal. Rising to 51. I just wonder if you could kind of maybe characterize the plays that are the motivation behind many of these.

Noel Parks: Terrific. That statistic you mentioned, 35 countries looking to do some sort of exploration or appraisal rising to 51. I just wondered if you could kind of maybe characterize the plays that are the motivation behind many of these. I'm just wondering roughly what proportion you would guess are essentially just picking up on past discoveries that didn't get funded for further exploration versus maybe new concepts that have been arrived at through better 3D seismic or reprocessing and so forth.

Speaker #4: I'm just wondering roughly what proportion you would guess are essentially just picking up on past discoveries that didn't get funded for further exploration versus maybe new concepts that have been arrived at through better 3D seismic or reprocessing and so forth.

Speaker #2: Yep. Hey, so look, there’s been a relatively strong period of exploration success over the last 12 months, which is good. But don’t forget we’ve kind of gone through a relatively down period in our market.

Roddie Mackenzie: Yep. Hey, look, there's been a relatively strong period of exploration success over the last 12 months, which is good. Don't forget, we've kind of gone through a relatively down period in our market. Of course, during that time, you had many of the operators have great prospects in the wings, so there's kind of prospects on the shelf, so to speak. As the outlook overall for global oil and gas consumption has improved, that's just allowed a lot of those things to come to the fore. I would describe it as genuinely a mixed bag. There's probably several of these developments, Namibia springs to mind, that the number of discoveries made a few years ago, now there's developments ongoing there.

Speaker #2: And, of course, during that time, you had many of the operators have great prospects in the wings. So there's kind of like prospects on the shelf, so to speak, and as the outlook overall for global oil and gas consumption has improved, that's just allowed a lot of those things to come to the fore.

Speaker #2: So I would describe it as genuinely a mixed bag. There’s probably several of these developments—Namibia springs to mind—the number of discoveries made a few years ago, and now there’s developments ongoing there.

Speaker #2: So whether that's something that attracts some of our rigs or perhaps more likely some of our competitors' rigs move to Namibia, there's also a number of exploration successes elsewhere most recently we just talked about the Ivory Coast, for example.

Roddie Mackenzie: Whether that's something that attracts some of our rigs or perhaps more likely some of our competitors' rigs move to Namibia, there's also a number of exploration successes elsewhere. Most recently, we just talked about the Ivory Coast, for example. As we went through all those countries there, I think you could probably say there has been a new discovery in one of those countries, in almost every single one, if not in the last 12 months, certainly in the previous upcycle that's now coming to the market. I'd say you got a pretty good split on that.

Speaker #2: So, as we went through all those countries there, I think you could probably say there has been a new discovery in one of those countries in almost every single one. If not in the last 12 months, certainly in the previous upcycle that's now coming to the market.

Speaker #2: So I'd say you got a pretty good split on that.

Speaker #4: Great. Thanks a lot.

Noel Parks: Great. Thanks a lot.

Speaker #1: Thank you. And we'll take our next question from Jeff Lovelong with TPH Research. Please go ahead. Your line is now open.

Operator 3: Thank you. We'll take our next question from Jeff LeBlanc with the TPH & Co. Research. Please go ahead, your line is now open.

Operator: Thank you. We'll take our next question from Jeff LeBlanc with the TPH & Co. Research. Please go ahead, your line is now open.

Speaker #5: Good morning, Keelan and team. Thank you for taking my question. I wanted to see if you could talk about drawing efficiency gains and how you expect to continue efficiency gains could impact future flutter demand.

Jeff LeBlanc: Good morning, Keelan and team. Thank you for taking my question. I wanted to see if you could talk about drilling efficiency gains and how you expect continued efficiency gains could impact future floater demand. Thank you.

Speaker #5: Thank you.

Speaker #7: Hi, good morning, Jeff. I think your question is around drilling efficiency and how that impacts future growth. Yeah, I would simply say this is probably the single most focused area of the drilling community and the customers with respect to delivering against these project execution imperatives that our customers have, right?

Keelan Adamson: Hi. Good morning, Jeff. I think your question is around drilling efficiency and how that impacts future growth.

Jeff LeBlanc: Yes.

Keelan Adamson: Yeah, I would simply say, this is probably the single most focused area of the drilling community and the customers with respect to delivering against these project execution imperatives that our customers have, right? In a world of a disciplined capital allocation, having confidence in our ability to deliver against those projects reliably and none of them are easy, they're all challenging, there is a real push to ensure that we can drive more and more efficiency from the industry fleet. I think the areas of automation are developing by the day. We, for one, are installing automation across our fleet on the drill floors. It drives greater consistency and performance efficiency and a lot more predictability.

Speaker #7: So, in a world of disciplined capital allocation, having confidence in our ability to deliver against those projects reliably—and none of them are easy.

Speaker #7: They're all challenging. There is a real push to ensure that we can drive more and more efficiency from the industry fleet. I think the areas of automation are developing by the day.

Speaker #7: And we for one are installing automation across our fleet on the drill floors. It drives greater consistency. And performance efficiency and a lot more predictability and ensures that not only are we drilling efficiently, but our people are doing what they need to do operationally and keeping an eye on all aspects of the operation as opposed to just operating equipment.

Keelan Adamson: Ensures that not only are we drilling efficiently, but our people are doing what they need to do operationally and keeping an eye on all aspects of the operation as opposed to just operating equipment. I think it's a really great development for our industry. It's going to drive an awful lot more efficiency. Of course, the more efficient we are, the more capital that will be allocated against the business. We're finding that on the back of our performance, we're getting more work. We're not drilling ourself out of work. We're finding that that is enabling more opportunities. I think this is an important point in time as we move into this constructive upcycle that we're able to deliver that level of performance across a wide fleet. It's not based on an individual rig performance basis. It's based on a standard operating procedure.

Speaker #7: I think it's a really great development for our industry. It's going to drive an awful lot more efficiency. And, of course, the more efficient we are, the more capital that will be allocated against the business.

Speaker #7: And we're finding that on the back of our performance, we're getting more work. We're not drilling ourself out of work. We're finding that that is enabling more opportunities.

Speaker #7: And I think this is an important point in time, as we move into this constructive upcycle, that we're able to deliver that level of performance across a wide fleet.

Speaker #7: It's not based on an individual rig performance basis. It's based on a standard operating procedure. It's based on using tools like automation and technology.

Keelan Adamson: It's based on using tools like automation and technology that really drive a consistent delivery. We want to be predictable. We want to be a high-performing, predictable service to our customers, and I think our customers appreciate that, and it's very helpful in the investment thesis and investment decisions that our major customers go through to determine whether to unlock some capital for these developments. Then free up capital, importantly, for reserve replacement objectives in exploration and appraisal. I think it's a really important point in time, and we embrace it fully and we're seeing the benefits of it.

Speaker #7: That really drive a consistent delivery. We want to be predictable. We want to be high-performing, predictable. Service to our customers. And I think our customers appreciate that.

Speaker #7: And it's very helpful in the investment thesis and investment decisions that our major customers go through to determine whether to unlock some capital for these developments.

Speaker #7: And then free up capital, importantly, for reserve replacement objectives in exploration and appraisal. So I think it's a really important point in time, and we embrace it fully, and we're seeing the benefits of it.

Speaker #2: Yeah, I'll just add on top of that to say S&P recently said that they expect deepwater production to increase by about 60% from 2024 levels into 2030, which is great, but that's driven exactly by the stuff that Keelan is describing.

Roddie Mackenzie: Yeah, I'll just add on top of that to say, S&P recently said that they expect deepwater production to increase by about 60% from 2024 levels into 2030, which is great, but that's driven exactly by the stuff that Keelan's describing. Our ability to execute on this stuff in a much more efficient manner, A, produces more from these basins, but it absolutely drives activity. We unlock stuff because we are more efficient at that. We're all violently aligned on that with our customers and the other operators of drilling rigs to deliver that best possible value deepwater.

Speaker #2: So our ability to execute on this stuff in a much more efficient manner, A, produces more from these basins, but it absolutely drives activity.

Speaker #2: We unlock stuff because we are more efficient than that. So we're all violently aligned on that with our customers. And the other operators of drilling rigs to deliver that best possible value, deep water.

Speaker #5: Okay, thank you very much. I'll hand the call back to the operator. Thank you.

Jeff LeBlanc: Okay. Thank you very much. I'll hand the call back to the operator. Thank you.

Speaker #4: Thanks, Jeff.

Keelan Adamson: Thanks, Jeff.

Speaker #1: Thank you. At this time, this concludes our question-and-answer session. I will now turn the meeting back to David Caddington for any additional or closing remarks.

Operator 3: Thank you. At this time, this concludes our question and answer session. I will now turn the meeting back to David Keddington for any additional or closing remarks.

Operator: Thank you. At this time, this concludes our question and answer session. I will now turn the meeting back to David Keddington for any additional or closing remarks.

Speaker #5: All right. Thanks. We'd like to thank everyone who participated in our earnings call today, and we invite you to follow up with us for any additional inquiries.

David Keddington: All right. Thanks. We'd like to thank everyone who participated in our earnings call today, and we invite you to follow up with us for any additional inquiries. With that, we'll close the call.

Speaker #5: With that, we'll close the call.

Operator 3: This concludes today's meeting. We appreciate your time and participation. You may now disconnect. Thank you.

Operator: This concludes today's meeting. We appreciate your time and participation. You may now disconnect. Thank you.

Q2 2026 Transocean Ltd Earnings Call

Request DemoDemo

Transocean

Earnings