GlobeNewswire Inc | Nov 2, 2020 04:34PM EST

November 02, 2020

-- Total contract drilling revenues were $773million (total adjusted contract drilling revenues of $830million), compared with $930million in the secondquarter of 2020 (total adjusted contract drilling revenues of $983 million); -- Revenue efficiency(1) was 96.6%, compared with 97.2% in the prior quarter; -- Operating and maintenance expense was $470million, compared with $525million in the prior period; -- Net income attributable to controlling interest was $359million, $0.51per diluted share, compared with net loss attributable to controlling interest of $497million, $0.81per diluted share, in the secondquarter of 2020; -- Adjusted net loss was $69million, $0.11per diluted share, excluding $428million of net favorable items. This compares with adjusted net loss of $1million, in the previous quarter; -- Adjusted EBITDA was $338million, compared with adjusted EBITDA of $418million in the prior quarter; and -- Contract backlog was $8.2billion as of the October2020 Fleet Status Report.

STEINHAUSEN, Switzerland, Nov. 02, 2020 (GLOBE NEWSWIRE) -- Transocean Ltd. (NYSE: RIG) today reported a net income attributable to controlling interest of $359million, $0.51per diluted share, for the three months ended September30, 2020.

Third quarter 2020 results included net favorable items of $428million, or $0.62per diluted share, as follows:

-- $449million, $0.65per diluted share, gain on restructuring and retirement of debt; and -- $45million, $0.07per diluted share, related to discrete tax items.

These favorable items were partially offset by:

-- $61million, $0.09per diluted share, loss on disposal of assets; and -- $5million, $0.01per diluted share, in restructuring costs.

After consideration of these net favorable items, thirdquarter 2020 adjusted net loss was $69million, $0.11per diluted share.

Contract drilling revenues for the three months ended September30, 2020, decreased sequentially by $157million, primarily due to $177million of revenues recognized in second quarter 2020 as a result of a legal settlement agreement with a customer for performance disputes, partially offset by higher revenues from increased utilization and an additional operating day.

Additionally, a non-cash revenue reduction of $57million, was recognized in the third quarter as a result of contract intangible amortization associated with the Songa and Ocean Rig acquisitions. This compared to $53million in the prior quarter.

Operating and maintenance expense was $470million, compared with $525million in the prior quarter. The sequential decrease was the result of decreased activity, lower costs related to the COVID-19 pandemic, and lower legal fees due to the aforementioned settlement in the third quarter, partially offset by higher in-service maintenance costs across our fleet.

General and administrative expense was $45million, in line with the second quarter of 2020.

Interest expense, net of amounts capitalized, was $145million, compared with $153million, in the prior quarter. Interest income was $6million, compared with $4million in the previous quarter.

The Effective Tax Rate(2) was(7.0)%, down from (6.8)% in the prior quarter. The decrease was primarily due to tax benefits for the carryback of net operating losses in the U.S. as a result of the Coronavirus Aid, Relief, and Economic Security Act, which included the release of valuation allowances previously recorded, settlements and expirations of uncertain tax positions, and adjustments to our deferred taxes for operating structural changes in the U.S. offset by tax expense for an increase in the withholding tax rate in Angola and an increase in pre-tax book income. The Effective Tax Rate excluding discrete items was (45.6)% compared to (15.0)% in previous quarter.

Net cash provided by operating activities were $81million, compared to $87million in the prior quarter.

Third quarter 2020 capital expenditures of $65million were primarily related to our newbuild drillships under construction coupled with capital upgrades for certain rigs in our fleet. This compares with $46million in the previous quarter.

Despite the challenges associated with COVID-19 and an active storm season in the Gulf of Mexico, we continued to operate at a high level in the third quarter, with strong uptime performance driving revenue efficiency in excess of 96%, resulting in quarterly Adjusted Revenue of $830 million, said JeremyThigpen, President and Chief Executive Officer. Importantly, through the efficient conversion of our industry leading $8.2 billion backlog, we delivered Adjusted EBITDA Margins of 41%, which enabled us to generate $81 million in Operating Cash Flows.

Thigpen added, With our backlog, strong operating performance, and our recent liability management transactions, we have sufficient liquidity to continue to invest in our workforce, our assets and the development of new and differentiating technologies. As we approach the end of the year, we are growing increasingly encouraged by the contracting activity that could unfold in the second half of 2021. Our highspecification fleet and our reputation for delivering safe, reliable and efficient operations will enable us to build upon our position as the leader in ultradeepwater and harsh environment drilling.

Non-GAAP Financial Measures

We present our operating results in accordance with accounting principles generally accepted in the U.S. (U.S. GAAP). We believe certain financial measures, such as Adjusted Contract Drilling Revenues, EBITDA, Adjusted EBITDA and Adjusted Net Income, which are non-GAAP measures, provide users of our financial statements with supplemental information that may be useful in evaluating our operating performance. We believe that such non-GAAP measures, when read in conjunction with our operating results presented under U.S. GAAP, can be used to better assess our performance from period to period and relative to performance of other companies in our industry, without regard to financing methods, historical cost basis or capital structure. Such non-GAAP measures should be considered as a supplement to, and not as a substitute for, financial measures prepared in accordance with U.S. GAAP.

All non-GAAP measure reconciliations to the most comparative U.S. GAAP measures are displayed in quantitative schedules on the companys website at: www.deepwater.com.

About Transocean

Transocean is a leading international provider of offshore contract drilling services for oil and gas wells. The company specializes in technically demanding sectors of the global offshore drilling business with a particular focus on ultra-deepwater and harsh environment drilling services, and believes that it operates one of the most versatile offshore drilling fleets in the world.

Transocean owns or has partial ownership interests in, and operates a fleet of 38mobile offshore drilling units consisting of 27ultra-deepwater floaters and 11harsh environment floaters. In addition, Transocean is constructing twoultra-deepwater drillships.

For more information about Transocean, please visit: www.deepwater.com.

Conference Call Information

Transocean will conduct a teleconference starting at 9a.m. EST, 3p.m. CET, on Tuesday, November3, 2020, to discuss the results. To participate, dial +1 334-323-0501 and refer to conference code 9072892 approximately 10minutes prior to the scheduled start time.

The teleconference will be simulcast in a listen-only mode at: www.deepwater.com, by selecting Investors, News, and Webcasts. Supplemental materials that may be referenced during the teleconference will be available at: www.deepwater.com, by selecting Investors, Financial Reports.

A replay of the conference call will be available after 12p.m. EST, 6p.m. CET, on Tuesday, November3, 2020. The replay, which will be archived for approximately 30days, can be accessed at +1 719-457-0820, passcode9072892 and pin 2562. The replay will also be available on the companys website.

Forward-Looking Statements

The statements described herein that are not historical facts are forward-looking statements within the meaning of Section27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements could contain words such as "possible," "intend," "will," "if," "expect," or other similar expressions. Forward-looking statements are based on managements current expectations and assumptions, and are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. As a result, actual results could differ materially from those indicated in these forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, estimated duration of customer contracts, contract dayrate amounts, future contract commencement dates and locations, planned shipyard projects and other out-of-service time, sales of drilling units, timing of the companys newbuild deliveries, operating hazards and delays, risks associated with international operations, actions by customers and other third parties, the fluctuation of current and future prices of oil and gas, the global and regional supply and demand for oil and gas, the intention to scrap certain drilling rigs, the success of our business following prior acquisitions, the effects of the spread of and mitigation efforts by governments, businesses and individuals related to contagious illnesses, such as COVID-19, and other factors, including those and other risks discussed in the company's most recent Annual Report on Form10-K for the year ended December31, 2019, and in the company's other filings with the SEC, which are available free of charge on the SEC's website at: www.sec.gov. Should one or more of these risks or uncertainties materialize (or the other consequences of such a development worsen), or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or expressed or implied by such forward-looking statements. All subsequent written and oral forward-looking statements attributable to the company or to persons acting on our behalf are expressly qualified in their entirety by reference to these risks and uncertainties. You should not place undue reliance on forward-looking statements. Each forward-looking statement speaks only as of the date of the particular statement, and we undertake no obligation to publicly update or revise any forward-looking statements to reflect events or circumstances that occur, or which we become aware of, after the date hereof, except as otherwise may be required by law. All non-GAAP financial measure reconciliations to the most comparative GAAP measure are displayed in quantitative schedules on the companys website at: www.deepwater.com.

This press release, or referenced documents, do not constitute an offer to sell, or a solicitation of an offer to buy, any securities, and do not constitute an offering prospectus within the meaning of the Swiss Financial Services Act (FinSA) or advertising within the meaning of the FinSA. Investors must rely on their own evaluation of Transocean and its securities, including the merits and risks involved. Nothing contained herein is, or shall be relied on as, a promise or representation as to the future performance of Transocean.

Notes

-- Revenue efficiency is defined as actual contract drilling revenues, excluding revenues for contract terminations and reimbursements, for the measurement period divided by the maximum revenue calculated for the measurement period, expressed as a percentage. Maximum revenue is defined as the greatest amount of contract drilling revenues, excluding revenues for contract terminations and reimbursements, the drilling unit could earn for the measurement period, excluding amounts related to incentive provisions. See the accompanying schedule entitled Revenue Efficiency. -- Effective Tax Rate is defined as income tax expense divided by income before income taxes. See the accompanying schedule entitled Supplemental Effective Tax Rate Analysis.

Analyst Contact:Lexington May+1 832-587-6515

Media Contact:Pam Easton+1 713-232-7647

TRANSOCEAN LTD. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Inmillions, except per share data)(Unaudited)

Three months ended Nine months ended September30, September30, 2020 2019 2020 2019 Contract drilling $ 773 $ 784 $ 2,462 $ 2,296 revenues Costs and expenses Operating and 470 547 1,535 1,565 maintenanceDepreciation and 190 212 592 648 amortizationGeneral and 45 45 133 139 administrative 705 804 2,260 2,352 Loss on impairment ? (583 ) (597 ) (584 )Loss on disposal of (64 ) (4 ) (64 ) (7 )assets, netOperating income 4 (607 ) (459 ) (647 )(loss) Other income (expense), netInterest income 6 11 19 33 Interest expense, netof amounts (145 ) (166 ) (458 ) (500 )capitalizedGain (loss) onrestructuring and 449 (12 ) 396 (39 )retirement of debtOther, net 21 3 (23 ) 34 331 (164 ) (66 ) (472 )Income (loss) before 335 (771 ) (525 ) )income tax expense (1,119Income tax expense (24 ) 54 4 83 (benefit) Net income (loss) 359 (825 ) (529 ) ) (1,202Net incomeattributable to ? ? 1 2 noncontrollinginterestNet income (loss) attributable to $ 359 $ (825 ) $ (530 ) $ (1,204 )controlling interest Earnings (loss) per shareBasic $ 0.58 $ ) $ (0.86 ) $ (1.97 ) (1.35Diluted $ 0.51 $ ) $ (0.86 ) $ (1.97 ) (1.35 Weighted-average shares outstandingBasic 616 613 615 612 Diluted 702 613 615 612

TRANSOCEAN LTD. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS(Inmillions, except share data)(Unaudited)

September30, December 31, 2020 2019 Assets Cash and cash equivalents $ 1,382 $ 1,790 Accounts receivable, net of allowance of $2 699 654 at September 30, 2020Materials and supplies, net of allowance of$118 and $127 at September 30, 2020 and 459 479 December 31, 2019, respectivelyRestricted cash accounts and investments 448 558 Other current assets 187 159 Total current assets 3,175 3,640 Property and equipment 23,038 24,281 Less accumulated depreciation (5,207 ) (5,434 )Property and equipment, net 17,831 18,847 Contract intangible assets 450 608 Deferred income taxes, net 19 20 Other assets 997 990 Total assets $ 22,472 $ 24,105 Liabilities and equity Accounts payable $ 214 $ 311 Accrued income taxes 42 64 Debt due within oneyear 640 568 Other current liabilities 655 781 Total current liabilities 1,551 1,724 Long-term debt 7,794 8,693 Deferred income taxes, net 294 266 Other long-term liabilities 1,430 1,555 Total long-term liabilities 9,518 10,514 Commitments and contingencies Shares, CHF 0.10 par value, 824,648,925authorized, 142,365,398 conditionally authorized, 639,674,414 issuedand 614,861,972 outstanding at September 30,2020, and 639,674,422 authorized, 142,365,398 conditionallyauthorized, 617,970,525 issued and 60 59 611,871,374 outstanding at December 31, 2019Additional paid-in capital 13,493 13,424 Accumulated deficit (1,829 ) (1,297 )Accumulated other comprehensive loss (327 ) (324 )Total controlling interest shareholders? 11,397 11,862 equityNoncontrolling interest 6 5 Total equity 11,403 11,867 Total liabilities and equity $ 22,472 $ 24,105

TRANSOCEAN LTD. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Inmillions)(Unaudited)

Nine months ended September30, 2020 2019 Cash flows from operating activities Net loss $ (529 ) $ ) (1,202Adjustments to reconcile to net cash provided by operating activities:Contract intangible asset amortization 158 140 Depreciation and amortization 592 648 Share-based compensation expense 24 28 Loss on impairment 597 584 Loss on impairment of investment in 59 ? unconsolidated affiliateLoss on disposal of assets, net 64 7 (Gain) loss on restructuring and retirement of (396 ) 39 debtDeferred income tax expense 28 139 Other, net 42 28 Changes in deferred revenues, net (45 ) 19 Changes in deferred costs, net 10 (21 )Changes in other operating assets and (484 ) (216 )liabilities, netNet cash provided by operating activities 120 193 Cash flows from investing activities Capital expenditures (218 ) (259 )Proceeds from disposal of assets, net 15 52 Investments in unconsolidated affiliates (17 ) (77 )Proceeds from maturities of unrestricted and ? 123 restricted investmentsOther, net ? 3 Net cash used in investing activities (220 ) (158 ) Cash flows from financing activities Proceeds from issuance of debt, net of 743 1,056 discounts and issue costsRepayments of debt ) ) (1,135 (1,189Other, net (27 ) (34 )Net cash used in financing activities (419 ) (167 ) Net decrease in unrestricted and restricted (519 ) (132 )cash and cash equivalentsUnrestricted and restricted cash and cash 2,349 2,589 equivalents, beginning of periodUnrestricted and restricted cash and cash $ 1,830 $ 2,457 equivalents, end of period

TRANSOCEAN LTD. AND SUBSIDIARIESFLEET OPERATING STATISTICS Three months ended Nine months ended September30, June September30, September30, September30, 30,ContractDrilling 2020 2020 2019 2020 2019Revenues (inmillions)Contractdrilling revenuesUltra-deepwater $ 490 $ 636 $ 493 $ 1,654 $ 1,455floatersHarshenvironment 283 293 281 796 790floatersDeepwater ? ? ? ? 7floatersMidwater ? 1 10 12 44floatersTotal contractdrilling $ 773 $ 930 $ 784 $ 2,462 $ 2,296revenues

Three months ended Nine months ended September30, June 30, September30, September30, September30,Average Daily 2020 2020 2019 2020 2019Revenue ^(1)Ultra-deepwater $ 329,300 $ 296,500 $ 339,400 $ 319,500 $ 338,200floatersHarshenvironment 372,500 331,900 298,300 334,400 295,300floatersMidwater ? 99,400 106,200 111,400 118,100floatersTotal drilling $ 343,500 307,800 $ 314,500 $ 321,800 $ 312,000fleet

Three months ended Nine months ended September30, June September30, September30, September30, 30,Utilization ^ 2020 2020 2019 2020 2019(2)Ultra-deepwater 60 % 61 % 51 % 61 % 49 %floatersHarshenvironment 75 % 80 % 79 % 72 % 78 %floatersMidwater ? % 25 % 33 % 37 % 38 %floatersTotal drilling 65 % 66 % 58 % 64 % 57 %fleet

Three months ended Nine months ended September30, June September30, September30, September30, 30,Revenue Efficiency ^(3) 2020 2020 2019 2020 2019Ultra-deepwater floaters 97 % 98 % 98 % 97 % 99 %Harsh environment floaters 96 % 97 % 96 % 94 % 95 %Midwater floaters ? % 79 % 79 % 86 % 102 %Total drilling fleet 97 % 97 % 97 % 96 % 98 % ^(1) Average daily revenue is defined as contract drilling revenues, excludingrevenues for contract terminations, reimbursements and contract intangibleamortization, earned per operating day. An operating day is defined as acalendar day during which a rig is contracted to earn a dayrate during the firmcontract period after commencement of operations. ^(2) Rig utilization is defined as the total number of operating days dividedby the total number of rig calendar days in the measurement period, expressedas a percentage. ^(3) Revenue efficiency is defined as actual contract drilling revenues,excluding revenues for contract terminations and reimbursements, for themeasurement period divided by the maximum revenue calculated for themeasurement period, expressed as a percentage. Maximum revenue is defined asthe greatest amount of contract drilling revenues, excluding revenues forcontract terminations and reimbursements, the drilling unit could earn for themeasurement period, excluding amounts related to incentive provisions.

TRANSOCEAN LTD. AND SUBSIDIARIESNON-GAAP FINANCIAL MEASURES AND RECONCILIATIONSADJUSTED NET INCOME (LOSS) AND ADJUSTED DILUTED EARNINGS (LOSS) PER SHARE(In millions, except per share data) YTD QTD YTD QTD YTD 09/30/20 09/30/20 06/30/20 06/30/20 03/31/20Adjusted Net Loss Net income (loss)attributable tocontrolling $ (530 ) $ 359 $ (889 ) $ (497 ) $ (392 )interest, asreportedRestructuring 6 5 1 1 ? costsLoss on impairmentof investment in 59 ? 59 59 ? unconsolidatedaffiliateLoss on impairment 597 ? 597 430 167 of assetsLoss on disposal 61 61 ? ? ? of assets, net(Gain) loss onrestructuring and (396 ) (449 ) 53 (4 ) 57 retirement of debtDiscrete tax items (54 ) (45 ) (9 ) 10 (19 )Net loss, as $ (257 ) $ (69 ) $ (188 ) $ (1 ) $ (187 )adjusted Adjusted Diluted Loss Per Share:Diluted earnings (loss) per share, $ (0.86 ) $ 0.51 $ (1.45 ) $ (0.81 ) $ (0.64 )as reportedRestructuring 0.01 0.01 ? ? ? costsLoss on impairmentof investment in 0.10 ? 0.10 0.10 ? unconsolidatedaffiliateLoss on impairment 0.97 ? 0.97 0.70 0.28 of assetsLoss on disposal 0.10 0.09 ? ? ? of assets, net(Gain) loss on restructuring and (0.65 ) (0.65 ) 0.09 (0.01 ) 0.09 retirement of debtDiscrete tax items ) ) ) 0.02 ) (0.09 (0.07 (0.02 (0.03Diluted loss per $ ) $ ) $ ) $ ? $ )share, as adjusted (0.42 (0.11 (0.31 (0.30

YTD QTD YTD QTD YTD QTD YTD 12/31/19 12/31/19 09/30/19 09/30/19 06/30/19 06/30/19 03/31/19AdjustedNet LossNet lossattributableto $ ) $ (51 ) $ ) $ (825 ) $ (379 ) $ (208 ) $ (171 )controlling (1,255 (1,204interest, asreportedAcquisitionand 6 5 1 ? 1 1 ? restructuringcostsGain onbargain (11 ) ? (11 ) ? (11 ) (9 ) (2 )purchaseLoss onimpairment of 609 25 584 583 1 1 ? assets(Gain) losson disposal 5 (2 ) 7 6 1 2 (1 )of assets,netGain onterminated (132 ) (132 ) ? ? ? ? ? constructioncontractsLoss onretirement of 41 2 39 12 27 9 18 debtDiscrete taxitems and (150 ) (110 ) (40 ) (10 ) (30 ) (5 ) (25 )other, netNet loss, as $ (887 ) $ (263 ) $ (624 ) $ (234 ) $ (390 ) $ (209 ) $ (181 )adjusted AdjustedDiluted Loss Per Share:Diluted loss per share, as $ (2.05 ) $ (0.08 ) $ (1.97 ) $ (1.35 ) $ (0.62 ) $ (0.34 ) $ (0.28 )reportedAcquisitionand 0.01 0.01 ? ? ? ? ? restructuringcostsGain on bargain (0.02 ) ? (0.02 ) ? (0.02 ) (0.01 ) ? purchaseLoss onimpairment of 0.99 0.04 0.97 0.96 ? ? ? assets(Gain) losson disposal 0.01 ? 0.01 0.01 ? ? ? of assets,netGain onterminated (0.22 ) ) ? ? ? ? ? construction (0.22contractsLoss onretirement of 0.07 ? 0.06 0.02 0.05 0.01 0.03 debtDiscrete tax items and (0.24 ) (0.18 ) (0.07 ) (0.02 ) (0.05 ) ? (0.05 )other, netDiluted loss per share, as $ (1.45 ) $ (0.43 ) $ (1.02 ) $ (0.38 ) $ (0.64 ) $ (0.34 ) $ (0.30 )adjusted

TRANSOCEAN LTD. AND SUBSIDIARIES NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS ADJUSTED CONTRACT DRILLING REVENUES EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION AND RELATED MARGINS(In millions, except percentages) YTD QTD YTD QTD YTD 09/30/20 09/30/20 06/30/20 06/30/20 03/31/20 Contract drilling $ 2,462 $ 773 $ 1,689 $ 930 $ 759 revenuesContractintangible 158 57 101 53 48 amortizationAdjusted Contract $ 2,620 $ 830 $ 1,790 $ 983 $ 807 Drilling Revenues Net income (loss) $ (529 ) $ 359 $ (888 ) $ ) $ ) (497 (391Interest expense,net of interest 439 139 300 149 151 incomeIncome tax expense 4 (24 ) 28 32 (4 ) (benefit)Depreciation and 592 190 402 196 206 amortizationContractintangible 158 57 101 53 48 amortizationEBITDA 664 721 (57 ) (67 ) 10 Restructuring 6 5 1 1 ? costsLoss on impairment 597 ? 597 429 168 of assetsLoss on disposal 61 61 ? ? ? of assets, net(Gain) loss on restructuring and (396 ) (449 ) 53 (4 ) 57 retirement of debtLoss on impairmentof investment in 59 ? 59 59 ? unconsolidatedaffiliateAdjusted EBITDA $ 991 $ 338 $ 653 $ 418 $ 235 EBITDA margin 25 % 87 % (3 ) % (7 ) % 1 %Adjusted EBITDA 38 % 41 % 36 % 43 % 29 %margin

YTD QTD YTD QTD YTD QTD YTD 12/31/19 12/31/19 09/30/19 09/30/19 06/30/19 06/30/19 03/31/19 Contractdrilling $ 3,088 $ 792 $ 2,296 $ 784 $ 1,512 $ 758 $ 754 revenuesContractintangible 187 47 140 48 92 47 45 amortizationAdjustedContract $ 3,275 $ 839 $ 2,436 $ 832 $ 1,604 $ 805 $ 799 DrillingRevenues Net loss $ ) $ (55 ) $ ) $ ) $ (377 ) $ ) $ ) (1,257 (1,202 (825 (206 (171Interestexpense, net 617 150 467 155 312 156 156 of interestincomeIncome taxexpense 59 (24 ) 83 54 29 37 (8 ) (benefit)Depreciationand 855 207 648 212 436 219 217 amortizationContractintangible 187 47 140 48 92 47 45 amortizationEBITDA 461 325 136 ) 492 253 239 (356 Acquisitionand 6 5 1 ? 1 1 ? restructuringcostsLoss onimpairment of 609 25 584 583 1 1 ? assets(Gain) losson disposal 5 (2 ) 7 6 1 2 (1 ) of assets,netGain onbargain (11 ) ? (11 ) ? (11 ) (9 ) (2 ) purchaseLoss onretirement of 41 2 39 12 27 9 18 debtGain ontermination of (132 ) (132 ) ? ? ? ? ? constructioncontractsAdjusted $ 979 $ 223 $ 756 $ 245 $ 511 $ 257 $ 254 EBITDA EBITDA margin 14 % 39 % 6 % (43 ) % 31 % 31 % 30 %Adjusted 30 % 27 % 31 % 29 % 32 % 32 % 32 %EBITDA margin

TRANSOCEAN LTD. AND SUBSIDIARIES SUPPLEMENTAL EFFECTIVE TAX RATE ANALYSIS (In millions, except tax rates) Three months ended Six months ended September30, June 30, September30, September30, September30, 2020 2020 2019 2020 2019 Income (loss) before income taxes $ 335 $ (465 ) $ (771 ) $ (525 ) $ (1,119 ) Acquisition and restructuring costs 5 1 ? 6 1 Gain on bargain purchase ? ? ? ? (11 ) Loss on impairment of assets ? 429 583 597 584 Loss on impairment of investment in ? 59 ? 59 ? unconsolidated affiliateLoss on disposal of assets, net 61 ? 6 61 7 (Gain) loss on restructuring and (449 ) (4 ) 12 (396 ) 39 retirement of debtAdjusted income (loss) before $ (48 ) $ 20 $ (170 ) $ (198 ) $ (499 ) income taxes Revenues recognized for the ? (157 ) (157 ) settlement of disputesAdjusted loss before income taxes (48 ) (137 ) (355 ) for determining effective tax rate Income tax expense (benefit) $ (24 ) $ 32 $ 54 $ 4 $ 83 Acquisition and restructuring costs ? ? ? ? ? Gain on bargain purchase ? ? ? ? ? Loss on impairment of assets ? (1 ) ? ? ? Loss on impairment of investment in ? ? ? ? ? unconsolidated affiliateLoss on disposal of assets, net ? ? ? ? ? (Gain) loss on restructuring and ? ? ? ? ? retirement of debtChanges in estimates (1) 43 (8 ) 10 54 40 Revenues recognized for the 2 (2 ) ? ? ? settlement of disputesAdjusted income tax expense (2) $ 21 $ 21 $ 64 $ 58 $ 123 Effective Tax Rate (3) (7.0 ) % (6.8 ) % (6.9 ) % (0.8 ) % (7.4 ) % Effective Tax Rate, excluding (45.6 ) % ) % (37.5 ) % (16.4 ) % (24.7 ) %discrete items (4) (15.0 (1) Our estimates change as we file tax returns, settle disputes with taxauthorities, or become aware of changes in laws and other events that have an effect on our (a) deferred taxes, (b) valuation allowances on deferred taxesand (c) other tax liabilities. (2) The three months ended September 30, 2020 included $14 million ofadditional tax expense, reflecting the cumulative effect of an increase in the annual effective tax rate from the previous quarter estimate. (3) Our effective tax rate is calculated as income tax expense divided by income before income taxes. (4) Our effective tax rate, excluding discrete items, is calculated as incometax expense, excluding various discrete items (such as changes in estimates andtax on items excluded from income before income taxes), divided by income before income tax expense, excluding gains and losses on sales and similaritems pursuant to the accounting standards for income taxes related toestimating the annual effective tax rate.