Transocean Ltd.

Transocean said first-quarter contract drilling revenue was $1.08 billion. Adjusted EBITDA was $440 million, implying a margin of over 40%, and average daily revenue was $476,000, the highest in over a decade. Revenue efficiency was above 97% versus 90.5% guided, adding about $9 million, and $18 million came from early contract conclusion of the Deepwater Proteus. Operating and maintenance expense was $606 million, G&A was $49 million, cash flow from operations was $164 million, and free cash flow was $136 million after $28 million of capex. The company ended Q1 with $330 million of unrestricted cash, which rose to about $495 million by May 4. For standalone guidance, the upper end of full-year revenue was reduced by $50 million to $3.9 billion, capex was increased by $20 million, and management said total debt principal is about $5.1 billion, with at least $750 million of debt expected to be retired in 2026 and year-end principal around $4.9 billion, excluding capital lease obligations. Liquidity is expected to end 2026 at $1.25 billion to $1.35 billion, inclusive of the undrawn credit facility.

Keelan Adamson framed the quarter as proof that the market and Transocean’s fleet are both strengthening, pointing to 98% uptime, record-high daily revenue, and more than $1.6 billion of new backlog since February. He emphasized that recent geopolitical events mainly reinforce the long-term energy-security case for offshore and deepwater, not a short-term change in Transocean’s business. His tone was upbeat and confident on both the market and the Valaris acquisition, saying the regulatory process is proceeding as expected and the deal should close in 2026.

Thaddeus Vayda focused on the financial bridge from the quarter to full-year guidance. He noted the quarter beat February guidance, with revenue efficiency above 97%, operating and maintenance expense of $606 million, G&A of $49 million, CFO of $164 million, and free cash flow of $136 million. On capital structure, he said Transocean retired $358 million of debt tied to the Deepwater Titan notes, has about $5.1 billion of debt principal remaining, expects to retire at least $750 million of total debt in 2026, and ended Q1 with approximately $1.1 billion of total liquidity, or $1.25 billion to $1.35 billion expected at year-end on a standalone basis.

Analysts focused on whether the market could be as strong or stronger than 2023, and management said utilization is building toward nearly 100% by 2027, with award durations already nearly doubling. On Valaris, management said the DOJ second request is routine for a transaction of this size, does not change their closing expectations, and they still believe the deal fits the original timeline. They also said there are no immediate plans to reactivate cold-stacked rigs because the economics are not there yet; reactivation would likely cost $100 million to $150 million and take 12 to 15 months, and they would need a fully recoverable contract and near-100% drillship utilization to justify it.