Transocean Revenue Slips To $937 Million As Fewer Rigs Work, But Backlog Reaches $8.0 Billion
The driller added $2.0 billion of backlog, paid off $200 million of Deepwater Aquila debt early and expects the Valaris deal to close December 1.
Transocean, the offshore drilling contractor, said third-quarter contract drilling revenue fell to $937 million from $966 million in the second quarter and $1,028 million a year earlier, as fewer rigs were working. New awards nonetheless lifted its contract backlog to about $8.0 billion, the company said Monday.
Fewer rigs working, thinner earnings
Net income was $26 million, or $0.02 per diluted share, against a loss of $1,923 million a year earlier. It was down from $170 million in the second quarter. Adjusted net income, which strips out items such as acquisition costs and discrete tax items, was $1 million, compared with $158 million in the second quarter and $62 million a year earlier.
The company attributed the sequential revenue drop mainly to an expected decline in rig utilization. Fleet-wide utilization was 74.7%, against 78.2% in the second quarter and 76.0% a year earlier. Ultra-deepwater utilization fell to 67.6%, while harsh-environment rigs ran at 95.1%.
Adjusted EBITDA, the company's measure of operating earnings before interest, taxes and depreciation, was $313 million, a 33.4% margin, versus $397 million a year earlier.
Cash flow and a smaller debt pile
Free cash flow was $131 million after $43 million of capital spending. Total debt principal ended the quarter at $4,975 million, down from $5,107 million three months earlier and $6,297 million a year earlier. Liquidity stood at $1.3 billion, including an undrawn $510 million revolving credit facility.
CEO Keelan Adamson said strong cash flow let Transocean retire the remaining $200 million of debt tied to the Deepwater Aquila notes ahead of schedule.
$2.0 billion of new work
Transocean, which owns or has partial interests in 27 offshore rigs, 20 ultra-deepwater drillships and seven harsh-environment semisubmersibles, added nine fixtures since its August report. Together they carry about $2.0 billion of backlog at a weighted average dayrate of about $423,000, according to the fleet status report.
That includes final approval from Equinor in late September for three Norway semisubmersibles, Transocean Enabler, Encourage and Endurance, worth about $1.0 billion. Adamson said the awards improved 2027 contract coverage to approximately 95%.
For the fourth quarter, Transocean guided contract drilling revenue of $915 million to $965 million, and $3,900 million to $3,950 million for full-year 2026. Preliminary 2027 guidance is $3,850 million to $4,000 million.
Valaris closing set for December 1
With all regulatory approvals in hand, Adamson said the Valaris closing is expected on December 1, and the company is focused on integration planning and capturing $200 million in identified annual synergies.
Transocean hosts its earnings call at 9 a.m. EST on Tuesday.
Management says its priorities are converting backlog into cash flow and reducing debt, with the Valaris deal targeted to close December 1.
Sources
- 8-K Filing — Transocean Ltd. (RIG) — SEC EDGAR
- Exhibit rig-ex99d1.htm — Transocean Ltd. 8-K exhibit — SEC EDGAR
- Exhibit rig-ex99d2.htm — Transocean Ltd. 8-K exhibit — SEC EDGAR
- Transocean Ltd. Reports Third Quarter 2026 Results — globenewswire.com
- Transocean Ltd. Provides Quarterly Fleet Status Report — globenewswire.com
