Transocean Ltd (Switzerland)

Welcome to the third quarter 2025 Transocean earnings call. At this time all participants are in a listen only mode. Later you'll have the opportunity to ask questions during the question and answer session. You may register to ask a question over the phone at any time by pressing the star and one on your telephone. Please keep in mind today's call will be recorded and we will be standing by if you should need any assistance. It is now my pleasure to turn today's conference over to your Director of Investor Relations, Alison Johnson.

Thank you, David. Good morning, and welcome to Transocean's third quarter 2025 earnings conference call. A copy of our press release covering financial results, along with supporting statements and schedules, including reconciliations and disclosures regarding non-GAAP financial measures, are posted on our website at deepwater.com. Joining me on this morning's call are Keelan Adamson, President and Chief Executive Officer, Thad Veda, Executive Vice President and Chief Financial Officer, and Roddy McKenzie, Executive Vice President and Chief Commercial Officer. During the course of this call, Transocean Management may make certain forward-looking statements regarding various matters related to our business and company that are not historical facts. Such statements are based upon current expectations and certain assumptions and therefore are subject to certain risks and uncertainties. Many factors could cause actual results to differ materially. Please refer to our SEC filings for our forward-looking statements and for more information regarding certain risks and uncertainties that could impact our future results. Also, please note that the company undertakes no duty to update or revise forward-looking statements. Following Keelan and Thad's prepared comments, we will conduct a question and answer session with our team. During this time, to give more participants an opportunity to speak, please limit yourself to one initial question and one follow-up. Thank you very much. I'll now turn the call over to Keelan.

Thanks, Alison, and welcome everyone to our third quarter conference call. We posted a strong third quarter, demonstrating our collective focus on delivering superior operational performance to our customers. and I extend my sincere thanks to all of our crews offshore and our operation teams onshore without whom these excellent results would not be possible. Additionally, we have made notable progress in recent months, reducing our operating costs as evidenced by our strong free cash flow generation in the period and our simplified and improved capital structure. We completed several important capital markets transactions that advanced our deleveraging efforts and further reduced interest expense to better position the company for the long-term benefit of our shareholders. Thad will provide more detail, but as the result of our ongoing cost control initiatives and these transactions, we have achieved several important results. First, by the end of 2025, we will have reduced our debt by approximately $1.2 billion versus our scheduled maturities of $714 million. We believe that a stronger and more flexible balance sheet is essential to improving total shareholder return, making accelerated deleveraging one of our key objectives. Second, these transactions allowed us to convert one tranche of secured debt to unsecured debt, reducing restricted cash balances that are now being used more efficiently and releasing the deepwater Poseidon, which is among our highest specification and most capable rigs from the collateral pool. Third, our annualized interest expense will now be reduced by approximately $87 million versus 2025, with these savings expected to be used for further opportunistic debt reduction. And lastly, we have significantly improved our debt maturity profile and materially reduced our 2027 obligations. Today, we currently expect to meet our remaining scheduled maturities with cash flow from operations. we will include a slide in our corporate presentation that illustrates this improvement. We are pleased with the significant progress we have made on our balance sheet so far this year, and there is more work to be done. I will remind our listeners that in addition to providing industry-leading offshore drilling services to our customers, these actions and outcomes are consistent with our previously articulated objectives of reducing debt, reducing interest expense, and simplifying our capital structure. Turning to asset strategy, we continue to refine the composition of our fleet. After a fulsome analysis of the option value of our coal stack assets, we announced our intention to dispose of four drill ships and one harsh environment semi-submersible from our stacked fleet. Overall, we will retire nine rigs, including the four announced last quarter, a process that should be complete by mid-2026. Our fleet now consists of 24 contracted ultra-deepwater drill ships and high-specification harsh environment semi-submersibles, as well as three higher-specification 7th Gen ultra-deepwater drill ships currently cold-stacked in Greece. We have been deliberate in the rationalization of our fleet to maintain a portfolio of the highest specification, most marketable and competitive assets in the industry. The decision to retire these older assets better aligns the company with evolving customer needs while supporting a more balanced industry supply-demand dynamic. With respect to rig contracting, and as we expected, our customers exercised some priced options. In the U.S. Gulf, following the announcement of its final investment decision on the Tiber-Guadalupe development, BP exercised its one-year $635,000 per day priced option for the Deepwater Atlas. The program is expected to contribute approximately 232 million in backlog and will keep the rig operating with BP through the second quarter of 2030. We are grateful for the continued confidence BP places in us to execute its paleogene programs. In Brazil, Petrobras exercised the first of its two options for the Deepwater Mykonos. The program extends the rig's firm term into early 2026. Moving now to the broader market environment. Given global macro uncertainties and its impact on commodity prices, our customers continue to exhibit capital discipline, prioritizing free cash flow for debt reduction, returning capital to shareholders, and taking a measured approach to the amount of capital that they commit to exploration and development activities. They have also been reducing costs by restructuring their organizations, and have largely been sustaining reserves and production levels through acquisitions and consolidation. This has resulted in deferred near-term demand for drilling services and, as expected, a slower pace of contracting. However, industry projections continue to suggest that upstream investment in offshore will increase, particularly in the deepwater segment. Indeed, a number of independent organizations recently observed that the significant decline in operators' reserve to production ratios resulting from their capital discipline is not sustainable, a view with which we agree. We believe that their efforts to improve this metric will lead to meaningful increases in offshore drilling activity. Notably, and perhaps to the greatest extent we have heard over the past decade, many customers are now indicating a necessity to increase their exploration activity to address this emerging supply imbalance. Multiple third parties project that demand for deep-water rigs will significantly increase in the coming years, and we are encouraged by recent conversations with customers and anticipate contract awards for more programs later this quarter and into 2026. Based upon known tenders, programs, and contract options, we expect the number of contracted floaters to grow by approximately 10% in the next 18 months. Looking regionally in the U.S. Gulf, activity is stable as operators continue to extend utilization of rigs they already have on contract. Additionally, three short-term programs with independent operators are expected to be awarded in the fourth quarter, with one more tender to be released before year-end. In Brazil, we anticipate the Petrobras, Buzios and Mero tenders and Shell's Gado de Madre tender will be publicly awarded in the coming weeks for a total of 23 years of firm work requiring six rigs. We believe that these programs will mostly be satisfied with rigs currently in country. In Africa, we still anticipate demand could increase the working rig count by at least three rigs through 2027. In Nigeria, the Exxon and Chevron tenders for multi-year developments are well underway, and Total's new tender is expected to be released in the coming months. In the Ivory Coast, we believe ENI's release of its tender for the multi-year Balin Phase 3 development commencing early 2027 is imminent. In Angola, the rig count is expected to remain relatively stable. Azul Energy recently released an expression of interest for two rigs commencing late 2026, and Shell will go back to the country after many years out by starting a new exploration campaign in 2027. We now expect there will be five drill ships and one semi-submersible working in country by 2027. In Namibia, most of the operators that are currently active will continue to drill exploration and appraisal wells in 2026 through 2027. We expect the first major development program will be tendered for two rigs to begin in 2028. And finally, in Mozambique, ENI's tender is progressing, with Exxon and Total's tenders anticipated to be released soon. I also note that Total recently lifted force majeure from their $20 billion LNG project there, a decidedly positive development for Mozambique's economic development and for investor confidence as the country continues to develop its energy resources. In the Mediterranean, current opportunities could require up to two incremental rigs in the next two years with programs from a number of the major operators as well as local independent energy. Moving further east to India, The ONGC tender for one drill ship with a mid-2026 commencement is in progress. And elsewhere in Asia, there are a number of market inquiries, including two in Indonesia, for multi-year programs starting in 2027. In Australia, Chevron's Gorgon Phase 3 tender is progressing toward award, which we currently expect in the first quarter of next year. We anticipate there will be one drill ship and two semi-submersibles working in country in 2027. In Norway, utilization of the high-specification harsh environment semi-submersible fleet is expected to remain robust through 2027, as the award for Equinor's rig tender is expected imminently. This and other projects have commencements in 2027, many of which will utilize contract extensions of the current fleet. Based upon current plan programs, in 2027, the drill ship and harsh environment semi-submersible markets are projected to reach active utilization utilization of above 95% and close to 100% respectively. Operationally, we continue to deliver strong safety and reliability performance for our customers. Indeed, in September, we posted revenue efficiency of 100% and delivered 97.5% for the entire third quarter. Responsible for these achievements is a uniquely qualified and high-performing team that is focused on delivering the professional and disciplined experience to which our customers have grown accustomed. Through rigorous procedural discipline, we've built an operational framework that enables us to deliver the same standard of performance on every Transocean rig, regardless of where it is operating. I am also very proud that we continue to set industry first. We recently ran the heaviest casing string on record at a hook load of approximately 2.85 million pounds using our eighth generation drill ship, the Deepwater Titan. This achievement showcases what can be delivered with this highly capable generation of asset, unlocking significant well construction and production efficiencies for our customer. In conclusion, we remain focused on optimizing the value of our assets and services while maintaining a disciplined approach to deploying our high specification fleet. Our priority is to best serve our customers and continue to generate strong cash flow, supporting our ongoing efforts to strengthen the balance sheet and increase the value of our equity. We will continue to take steps to optimize our capital structure and financial flexibility. I'll now turn it over to Thad for further discussion on our transactions, our results, and guidance. Thad?