Transocean reported third-quarter net income of $26 million as contract drilling revenue and cash flow declined from a year earlier. The offshore driller also added $2 billion in contract backlog, repaid $200 million of debt ahead of schedule and said its planned acquisition of Valaris is expected to close on Dec. 1, with regulatory approvals secured.
The new awards lifted backlog to about $8 billion and improved expected 2027 contract coverage to roughly 95%, the company said. Transocean is preparing to integrate Valaris and aims to capture $200 million in identified annual synergies.
Third-quarter results
- Revenue was $937 million, down $29 million from the second quarter and $91 million from a year earlier. The sequential decline was mainly due to lower rig utilization.
- Revenue efficiency was 96.8%, compared with 97.0% in the prior quarter and 97.5% a year earlier.
- Net income was $26 million, or 2 cents per diluted share. That compares with $170 million, or 4 cents per diluted share, in the second quarter and a $1.923 billion net loss a year earlier. Adjusted net income was $1 million, down from $158 million in the prior quarter and $62 million a year ago.
- Adjusted EBITDA was $313 million, roughly flat with the previous quarter but down from $397 million a year earlier. Its margin was 33.4%, versus 32.2% in the second quarter and 38.7% a year ago.
- Operating cash flow was $174 million, down from $236 million in the prior quarter and $246 million a year earlier. After $43 million in capital spending, free cash flow was $131 million.
- Operating and maintenance expense was $589 million, up $5 million from a year earlier but down $19 million sequentially. Interest expense, excluding a $22 million accounting effect related to the company’s 2029 exchangeable bonds, was $112 million, compared with $114 million in the prior quarter. Net cash taxes paid were $7 million.
Contracts, debt and Valaris
- Transocean added $2 billion in contract backlog at a weighted average dayrate of about $423,000. The company’s Nov. 2 fleet update reported nine new fixtures since its August report.
- The company said its backlog now stands at approximately $8 billion, with about 95% of 2027 contract capacity covered.
- Transocean repaid the remaining $200 million of debt associated with its Deepwater Aquila notes, ahead of schedule. Total debt at quarter-end was $4.975 billion, based on principal amount, down from $5.107 billion at the end of the second quarter and $6.297 billion a year earlier.
- Total liquidity was $1.3 billion, including $510 million available under its revolving credit facility.
- Transocean said all regulatory approvals for its Valaris transaction are in hand and expects the deal to close on Dec. 1. It is now focused on integration planning and pursuing $200 million in identified annual synergies.
The quarter showed solid operating performance and positive free cash flow, but revenue, adjusted EBITDA and cash generation were below year-ago levels. The added contracts strengthen forward revenue visibility, while the Valaris transaction remains a pending step toward the company’s stated integration and cost-savings plans.