Transocean Ltd (Switzerland)

and many more. Thank you very much. Operators are also starting to allocate more rig time to exploration and appraisal activities. Rijstad 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. We saw a high number of contract awards and tendering opportunities in the first half 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 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 two to four units already scheduled or expected to depart the region. 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 Robert Thaddeus Vayda, Jess Richards, Keelan Adamson, Roderick Mackenzie Thank you for joining us today. Thank you very much. Equinor, and Acker BP. 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. 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. 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 are rapidly advancing integration planning and have recently achieved some key milestones. In June, we received CFIUS approval satisfying an important U.S. 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. In July, we received clearance from Egypt and Australia, and just yesterday we received clearance from Angola. Currently, we continue to await clearance in two countries, Brazil and the U.S. 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? 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. Revenue for the second quarter was $966 million at the upper end of our guidance range and primarily the result of the deepwater skiros 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 Valeris transaction. 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%. Pre-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. 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 third quarter 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 Over the next 12 months, we will consider refinancing additional secured 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. As you probably know, we recently earned ratings upgrades from both S&P and Moody's to B- and B2, respectively, and we're on positive outlook for further upgrades, pending the closing of the Valeris 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 a 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. 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. 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 20-40% 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. 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 U.F. 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?

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 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. We'll now open the line for questions.

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. 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. Your line is now open.

Hi, good morning. The 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 sort of mid 400s 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? And if not, what would be the potential roadblocks from preventing that from happening?

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. And then the second kind of 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. And that's really going to help get the rigs in the right spots for the long term. And you know, as those two things happen, then clearly we enter like an improved business environment. 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.

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 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 their work. At the end of the day, we'll see where that takes us when it comes to rates.

Thanks for that color.

Speaking of repositioning of rigs, I just want to touch on the Cat D rigs that you signed up with Equinor. 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 or maybe a little bit of both?

Yeah, I think the 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. 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, specifically those rigs that are coming back, this is an indication of how strong the market is in Norway. Robert Thaddeus Vayda These long-term opportunities are 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. So it's definitely a case of Norway is offering some very attractive terms and conditions and duration of contract at the moment.

Maybe just one more piece on that. Obviously, Equinor have objectives to maintain production at current levels right through to 2035 against the backdrop of declining production. 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. Got it.

Great. Thanks for all that, Colin. I'll turn it back.

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

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, you know, it sounds like we could see multiple rigs start, multiple floaters start up in that part of the world. I mean, I guess my question is around really, you know, 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. So I guess what I'm wondering is, could we start to see 6th gen, 7th gen pricing converge?

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 6th gen assets. Of course, the fixtures that we made in Brazil earlier this year were a Thank you for joining us today. Malaysia, Brunei to mention just a few and of course India being a very big opportunity here you know ONGC just opened their multi-rig tender and they there aren't that many rigs on offer 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 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. 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 6th Gen fleet. 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 6th Gen rigs there.

Okay, great. And then realizing, you know, we're not disclosing rates on, you know, there was a price option. You know, I guess what my question is around is we think about priced options, you know, and whether we're, let's assume we're not disclosing those rates, which is why we, which is why I have to ask the question. I mean, I guess at a minimum, when we think about priced options, should we assume that they're flattish or more likely up or could we actually be seeing priced options and out years at lower rates?

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. I'll just kind of leave it at that. Okay, perfect. Thank you very much.

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

Keith Beckman Good morning, and thanks for taking my question. I just kind of wanted to ask around, and you guys gave very helpful commentary kind of around the globe, but I wanted to ask maybe more particularly around the Gulf in the next year. You guys did a really good job at winning some awards here this year in fill-up capacity. Some of that stuff's rolling off in early 27. I think you guys expect the Gulf to be down a little bit from commentary area earlier in the next year. Where do you think those rigs potentially land? Do you think they move to West Africa or potentially some of some of yours in particular, potentially an extended just trying to get a sense on maybe how you're thinking about your fleet and then maybe more macro wise as well?

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 in the pipeline for some time. We do think that the fleet that's in the Gulf is typically very, 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. So that's kind of the point that Keelan was making about the redistribution of the fleet is that we've already seen that. 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. Keelan Adamson

We've got rigs moving out, we've got rigs moving in. The long-term prospects for the U.S. Gulf are very strong, obviously with Pelagene and many of the prospects that are out there. It will always be a good base and 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. 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.

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? Are they trying to lock in Riggs for longer term, potentially what may be better day rates. And then, you know, the follow up to that is, you know, 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?

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, 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, E&I are moving as well. And so 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. and then the majors obviously are really disciplined and they're going to manage their portfolios as they best see fit 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?

Yeah, I would just add that you mentioned there about the energy security. That definitely plays into a kind of a shift towards domestic production. 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 break-evens that are calculated in $30, $40 range. None of the operators today are Thank you for joining us today. 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. 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.

I really appreciate y'all. I'll turn it back.

Thank you. And we'll move next to Fredrik Stemme with Larkson Securities. Please go ahead.

Hey Keelan and Tim, and thank you for taking my questions. Congratulations first and foremost on a strong quarter and I'm super happy to hear that the work on the Velaris deal is progressing well as well. I wanted to Let's touch a bit on specific rigs. You have already talked a bit about the Gulf, the Conqueror and the Apotheos, which you seem very optimistic about. 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 Spitzberg, which is the rig that you have 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?

I think we're always trying to play it cool, but realistically about the Spitsbergen, 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. So, yep, definitely our preference to keep it with Equinor and continue that relationship. It's gone really well so far.

Thanks, Robbie. I 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.

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. 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. 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 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.

Thank you. And maybe just one last quick one for Thaddeus, if possible. You've been working diligently to be as cost efficient as you can. Lately and obviously the second quarter you did very well on the cost side. I was wondering if you had any updated commentary on how that cost work is progressing and now I'm talking about TransOcean standalone first and foremost and maybe second if you have during the integration planning identified any more cost savings opportunities when the deal closes. Thanks.

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. 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. We are seeing the results in We are, as I said, sort of on the road to about $200, $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. But we have been, I think, pretty successful in achieving our goals now as we move towards At 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.

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

Thanks, Frederik.

Thank you. and we'll move next to Noel Parks with TUI Brothers. Please go ahead, your line is now open.

Great, thanks. I just wondered if you could maybe talk a little bit more about what you're seeing, noting expected tendering activity in Ghana, Mozambique, Namibia and Nigeria. And, you know, I guess similar to some of the other regional questions you've been What do you think TransOcean's and the industry's goal is to meet the needs of projects there within the other competing regions?

Yeah, quite happy to fill in some of the details on that. Africa in general is actually the largest growth region that we have on our chart today. So as we go through the list of opportunities, you know, we're looking at, you know, 12 plus multi-year developments that are going to require rigs. There's at least six long-term tenders that are ongoing right now. And I won't go through all the details, but I mean, you're basically looking at every country that you mentioned, plus a Robert Thaddeus Vayda At least a half dozen opportunities that are two or more years, some as long as three and four years. 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. There's at least a couple of three potential opportunities there. Then you go into the details of some of the other places, it's changing certainly on a monthly basis, if not a weekly basis. 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. So all good on the West Africa front.

Terrific. And 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 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.

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 and many others. During that time, many of the operators had great prospects in the wings. 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. Several of these developments, Namibia springs to mind that a number of discoveries made a few years ago and now there's developments ongoing there. Whether that's something that attracts some of our rigs or perhaps more likely some of our competitors rigs moved 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. So I'd say you got a pretty good split on that.

Great. Thanks a lot.

Thank you. and we'll take our next question from Jeff LeBlanc with TPH Research. Please go ahead. Your line is now open.

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 flutter demand. Thank you.

Hi. Good morning, Jeff. I think your question is around drilling efficiency and how that

Thank you for joining us today.

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. and you know we we for one are are installing automation across our fleet on the drill floors it drives greater consistency and performance efficiency and a lot more predictability um and 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 i think it's 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. And we're finding that on the back of our performance, we're getting more work. We're not drilling ourselves out of work. We're finding that that is enabling more opportunities. 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. 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 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 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.

Yeah, I'll just add on top of that to say, you know, S&P recently said that they expect deepwater production to increase by about 60% from 24 levels into 2030, which is great, but that's driven exactly by the stuff that Keelan is describing. So, you know, 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 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.

Okay, thank you very much. I'll hand the call back to the operator. Thank you. Thanks, Jeff.

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.

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.

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