GlobeNewswire Inc | May 3, 2021 04:23PM EDT

May 03, 2021

-- Total contract drilling revenues were $653million (total adjusted contract drilling revenues of $709million), compared with $690million in the fourthquarter of 2020 (total adjusted contract drilling revenues of $747million); -- Revenue efficiency(1) was 97.4%, compared with 97.2% in the prior quarter; -- Operating and maintenance expense was $435million, compared with $465million in the prior period; -- Net loss attributable to controlling interest was $99million, $0.16per diluted share, compared with net loss attributable to controlling interest of $37million, $0.06per diluted share, in the fourthquarter of 2020; -- Adjusted EBITDA was $245million, compared with adjusted EBITDA of $210million in the prior quarter; and -- Contract backlog was $7.4billion as of the April2021 Fleet Status Report.

STEINHAUSEN, Switzerland, May 03, 2021 (GLOBE NEWSWIRE) -- Transocean Ltd. (NYSE: RIG) today reported a net loss attributable to controlling interest of $99million, $0.16per diluted share, for the three months ended March31, 2021.

First quarter 2021 results included net favorable items of $18million, or $0.03per diluted share, as follows:

-- $51million, $0.08per diluted share, gain on retirement of debt; and -- $27million, $0.05per diluted share, discrete tax items.

These favorable items were partially offset by:

-- $60million, $0.10per diluted share, loss on disposal of assets.

After consideration of these net favorable items, firstquarter 2021 adjusted net loss was $117million, $0.19per diluted share.

Contract drilling revenues for the three months ended March31, 2021 decreased sequentially by $37million to $653million, primarily due to the sale in the first quarter of one harsh environment rig previously operating in the fourth quarter 2020, two fewer calendar days in the first quarter, and reduced activities for ultra-deepwater units, which were stacked or idle, in Asia and North America. These decreases were partially offset by a lower loss of revenue associated with shipyard during the quarter.

A non-cash revenue reduction of $56million was recognized in the first quarter as a result of contract intangible amortization associated with the Songa and Ocean Rig acquisitions. This compares with $57million in the prior quarter.

Operating and maintenance expense was $435million, compared with $465million in the prior quarter. The sequential decrease was primarily the result of decreased activity, lower inservice maintenance cost, reduced shipyard activities, and lower allowance for excess materials and supplies.

General and administrative expense was $39million, down from $50million in the fourth quarter of 2020. The decrease was primarily due to legal, professional and advisory fees incurred in the fourth quarter that were not repeated in the first quarter and, to a lesser extent, reduced personnel costs.

Interest expense, net of amounts capitalized, was $115million, compared with $117million, in the prior quarter. Interest income was $3million, compared with $2million in the previous quarter.

The Effective Tax Rate(2) was17.8%, up from (147.9)% in the prior quarter. The increase was primarily due to various discrete items. The Effective Tax Rate excluding discrete items was (5.7)% compared to (39.9)% in previous quarter.

Cash flows provided by operating activities were $96million, compared to $278million in the prior quarter. This was primarily a result of reduced cash received from customers directly resulting from the reduced activity, combined with increased cash used due to the timing of interest payments and payroll-related payments.

First quarter 2021 capital expenditures of $59million were primarily related to our newbuild drillships under construction. This compares with $47million in the previous quarter.

During the quarter, our dedicated team of professionals continued to deliver safe, reliable and efficient operations for our customers, producing 35% Adjusted EBITDA Margin, and some of the strongest operating statistics in company history, said Jeremy Thigpen, President and Chief Executive Officer. It is this consistently strong performance that differentiates us in the eyes of our customers and enables us to efficiently convert our industry leading $7.4 billion backlog into cash.

Thigpen added: We are encouraged by the increasing number of customer inquiries for both harsh-environment and ultra-deepwater projects. And, as the global economy begins to emerge from the pandemic, we are optimistic that oil prices will remain constructive, driving an increase in contracting activity as we move through the year.

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 37mobile offshore drilling units consisting of 27ultra-deepwater floaters and 10harsh 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. EDT, 3p.m. CEST, on Tuesday, May4, 2021, to discuss the results. To participate, dial +1 334-323-0501 and refer to conference code4181646 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. EDT, 6p.m. CEST, on Tuesday, May4, 2021. The replay, which will be archived for approximately 30days, can be accessed at +1 719-457-0820, passcode4181646. 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, 2020, 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(1) 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(2) 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 March31, 2021 2020 Contract drilling revenues $ 653 $ 759 Costs and expenses Operating and maintenance 435 540 Depreciation and amortization 187 206 General and administrative 39 43 661 789 Loss on impairment ? (168 )Loss on disposal of assets, net (59 ) (1 )Operating loss (67 ) (199 ) Other income (expense), net Interest income 3 9 Interest expense, net of amounts capitalized (115 ) (160 )Gain (loss) on retirement of debt 51 (57 )Other, net 9 12 (52 ) (196 )Loss before income tax expense (119 ) (395 )Income tax benefit (21 ) (4 ) Net loss (98 ) (391 )Net income attributable to noncontrolling interest 1 1 Net loss attributable to controlling interest $ (99 ) $ (392 ) Loss per share, basic and diluted $ (0.16 ) $ (0.64 )Weighted average shares, basic and diluted 617 614

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

March31, December 31, 2021 2020 Assets Cash and cash equivalents $ 1,066 $ 1,154 Accounts receivable, net of allowance of $2 at March 511 583 31, 2021 and December 31, 2020Materials and supplies, net of allowance of $144 and$143 at March 31, 2021 and December 31, 2020, 433 434 respectivelyRestricted cash and cash equivalents 388 406 Other current assets 161 163 Total current assets 2,559 2,740 Property and equipment 23,020 23,040 Less accumulated depreciation (5,541 ) (5,373 )Property and equipment, net 17,479 17,667 Contract intangible assets 337 393 Deferred income taxes, net 11 9 Other assets 974 995 Total assets $ 21,360 $ 21,804 Liabilities and equity Accounts payable $ 189 $ 194 Accrued income taxes 29 28 Debt due within oneyear 524 505 Other current liabilities 561 659 Total current liabilities 1,303 1,386 Long-term debt 7,096 7,302 Deferred income taxes, net 319 315 Other long-term liabilities 1,302 1,366 Total long-term liabilities 8,717 8,983 Commitments and contingencies Shares, CHF 0.10 par value, 824,650,668 authorized,142,363,647 conditionally authorized, 639,676,165issuedand 617,288,705 outstanding at March 31, 2021, 60 60 and 824,650,660 authorized, 142,363,647conditionallyauthorized, 639,676,165 issued and615,140,276 outstanding at December 31, 2020Additional paid-in capital 13,508 13,501 Accumulated deficit (1,965 ) (1,866 )Accumulated other comprehensive loss (267 ) (263 )Total controlling interest shareholders? equity 11,336 11,432 Noncontrolling interest 4 3 Total equity 11,340 11,435 Total liabilities and equity $ 21,360 $ 21,804

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

Three months ended March31, 2021 2020Cash flows from operating activities Net loss $ (98 ) $ (391 )Adjustments to reconcile to net cash provided by operating activities:Contract intangible asset amortization 56 48 Depreciation and amortization 187 206 Share-based compensation expense 7 8 Loss on impairment ? 168 Loss on disposal of assets, net 59 1 (Gain) loss on retirement of debt (51 ) 57 Deferred income tax expense 2 10 Other, net 7 18 Changes in deferred revenues, net (37 ) 5 Changes in deferred costs, net 3 (11 )Changes in other operating assets and liabilities, (39 ) (167 )netNet cash provided by (used in) operating activities 96 (48 ) Cash flows from investing activities Capital expenditures (59 ) (107 )Proceeds from disposal of assets, net 6 1 Investments in unconsolidated affiliates ? (6 )Net cash used in investing activities (53 ) (112 ) Cash flows from financing activities Proceeds from issuance of debt, net of issue costs ? 743 Repayments of debt (139 ) (909 )Other, net (10 ) (9 )Net cash used in financing activities (149 ) (175 ) Net decrease in unrestricted and restricted cash and (106 ) (335 )cash equivalentsUnrestricted and restricted cash and cash 1,560 2,349 equivalents, beginning of periodUnrestricted and restricted cash and cash $ 1,454 $ 2,014 equivalents, end of period

TRANSOCEAN LTD. AND SUBSIDIARIESFLEET OPERATING STATISTICS Three months ended March31, December March31, 31,Contract Drilling Revenues (in 2021 2020 2020millions)Contract drilling revenues Ultra-deepwater floaters $ 436 $ 440 $ 528 Harsh environment floaters 217 250 220 Midwater floaters ? ? 11 Total contract drilling revenues $ 653 $ 690 $ 759

Three months ended March31, December 31, March31,Average Daily Revenue ^(1) 2021 2020 2020Ultra-deepwater floaters $ 371,600 $ 342,100 $ 332,600 Harsh environment floaters 377,800 357,500 303,100 Midwater floaters ? ? 112,600 Total fleet average daily revenue $ 373,700 347,500 $ 314,900

Three months ended March31, December 31, March31,Utilization ^(2) 2021 2020 2020Ultra-deepwater floaters 48 % 52 % 61 %Harsh environment floaters 65 % 74 % 63 %Midwater floaters ? % ? % 39 %Total fleet average rig utilization 53 % 58 % 60 %

Three months ended March31, December 31, March31,Revenue Efficiency ^(3) 2021 2020 2020Ultra-deepwater floaters 97 % 97 % 97 %Harsh environment floaters 98 % 98 % 89 %Midwater floaters ? % ? % 87 %Total fleet average revenue efficiency 97 % 97 % 94 % ^(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 03/31/21Adjusted Net Loss Net loss attributable to controlling interest, as reported $ (99 )Loss on disposal of assets, net 60 Gain on retirement of debt (51 )Discrete tax items (27 )Net loss, as adjusted $ (117 ) Adjusted Diluted Loss Per Share: Diluted loss per share, as reported $ (0.16 )Loss on disposal of assets, net 0.10 Gain on retirement of debt (0.08 )Discrete tax items (0.05 )Diluted loss per share, as adjusted $ (0.19 )

YTD QTD YTD QTD YTD QTD YTD 12/31/20 12/31/20 09/30/20 09/30/20 06/30/20 06/30/20 03/31/20Adjusted Net LossNet income(loss)attributable $ (567 ) $ (37 ) $ (530 ) $ 359 $ (889 ) $ (497 ) $ (392 )to controllinginterest, asreportedRestructuring 5 (1 ) 6 5 1 1 ? costsLoss onimpairment of 597 ? 597 ? 597 430 167 assetsLoss ondisposal of 61 ? 61 61 ? ? ? assets, netLoss onimpairment ofinvestment in 62 3 59 ? 59 59 ? unconsolidatedaffiliates(Gain) loss onrestructuring (533 ) (137 ) (396 ) (449 ) 53 (4 ) 57 and retirementof debtDiscrete tax (91 ) (37 ) (54 ) (45 ) (9 ) 10 (19 )itemsNet loss, as $ (466 ) $ (209 ) $ (257 ) $ (69 ) $ (188 ) $ (1 ) $ (187 )adjusted AdjustedDiluted Loss Per Share:Dilutedearnings(loss) per $ (0.92 ) $ (0.06 ) $ (0.86 ) $ 0.51 $ (1.45 ) $ (0.81 ) $ (0.64 )share, asreportedRestructuring 0.01 ? 0.01 0.01 ? ? ? costsLoss onimpairment of 0.97 ? 0.97 ? 0.97 0.70 0.28 assetsLoss ondisposal of 0.10 ? 0.10 0.09 ? ? ? assets, netLoss onimpairment ofinvestment in 0.10 ? 0.10 ? 0.10 0.10 ? unconsolidatedaffiliates(Gain) loss onrestructuring (0.87 ) (0.22 ) (0.65 ) (0.65 ) 0.09 (0.01 ) 0.09 and retirementof debtDiscrete tax (0.15 ) (0.06 ) (0.09 ) (0.07 ) (0.02 ) 0.02 (0.03 )itemsDiluted lossper share, as $ (0.76 ) $ (0.34 ) $ (0.42 ) $ (0.11 ) $ (0.31 ) $ ? $ (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 03/31/21 Contract drilling revenues $ 653 Contract intangible asset amortization 56 Adjusted Contract Drilling Revenues $ 709 Net loss $ (98 )Interest expense, net of interest income 112 Income tax benefit (21 )Depreciation and amortization 187 Contract intangible asset amortization 56 EBITDA 236 Loss on disposal of assets, net 60 Gain on retirement of debt (51 )Adjusted EBITDA $ 245 EBITDA margin 33 %Adjusted EBITDA margin 35 %

YTD QTD YTD QTD YTD QTD YTD 12/31/20 12/31/20 09/30/20 09/30/20 06/30/20 06/30/20 03/31/20 Contractdrilling $ 3,152 $ 690 $ 2,462 $ 773 $ 1,689 $ 930 $ 759 revenuesContractintangible 215 57 158 57 101 53 48 assetamortizationAdjustedContract $ 3,367 $ 747 $ 2,620 $ 830 $ 1,790 $ 983 $ 807 DrillingRevenues Net income $ (568 ) $ (39 ) $ (529 ) $ 359 $ (888 ) $ (497 ) $ (391 )(loss)Interestexpense, net 554 115 439 139 300 149 151 of interestincomeIncome taxexpense 27 23 4 (24 ) 28 32 (4 )(benefit)Depreciationand 781 189 592 190 402 196 206 amortizationContractintangible 215 57 158 57 101 53 48 assetamortizationEBITDA 1,009 345 664 721 (57 ) (67 ) 10 Restructuring 5 (1 ) 6 5 1 1 ? costsLoss onimpairment of 597 ? 597 ? 597 429 168 assetsLoss ondisposal of 61 ? 61 61 ? ? ? assets, net(Gain) loss onrestructuring (533 ) (137 ) (396 ) (449 ) 53 (4 ) 57 and retirementof debtLoss onimpairment ofinvestment in 62 3 59 ? 59 59 ? unconsolidatedaffiliatesAdjusted $ 1,201 $ 210 $ 991 $ 338 $ 653 $ 418 $ 235 EBITDA EBITDA margin 30 % 46 % 25 % 87 % (3 ) (7 ) 1 % % %Adjusted 36 % 28 % 38 % 41 % 36 % 43 % 29 %EBITDA margin

TRANSOCEAN LTD. AND SUBSIDIARIESSUPPLEMENTAL EFFECTIVE TAX RATE ANALYSIS(In millions, except tax rates) Three months ended March31, December March31, 31, 2021 2020 2020 Loss before income taxes $ (119 ) $ (16 ) $ (395 )Restructuring costs ? (1 ) ? Loss on impairment of assets ? ? 168 Loss on disposal of assets, net 60 ? ? Loss on impairment of investment in ? 3 ? unconsolidated affiliates(Gain) loss on retirement of debt (51 ) (137 ) 57 Adjusted loss before income taxes $ (110 ) $ (151 ) $ (170 ) Income tax expense (benefit) $ (21 ) $ 23 $ (4 )Restructuring costs ? ? ? Loss on impairment of assets ? ? 1 Loss on disposal of assets, net ? ? ? Loss on impairment of investment in ? ? ? unconsolidated affiliates(Gain) loss on retirement of debt ? ? ? Changes in estimates (1) 27 37 19 Adjusted income tax expense $ 6 $ 60 $ 16 Effective Tax Rate (2) 17.8 % ) 1.1 % (147.9 % Effective Tax Rate, excluding (5.7 )% (39.9 ) (9.5 )%discrete items (3) % (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 aneffect on our (a) deferred taxes, (b) valuation allowances on deferred taxesand (c) other tax liabilities. (2) Our effective tax rate is calculated as income tax expense divided byincome before income taxes. (3) 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 incomebefore 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.