10q10k10q10k.net

What changed in Transocean Ltd.'s 10-K — 2022 vs 2023

vs

Paragraph-level year-over-year comparison of Transocean Ltd.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+367 added−420 removedSource: 10-K (2024-02-21) vs 10-K (2023-02-23)

Top changes in Transocean Ltd.'s 2023 10-K

367 paragraphs added · 420 removed · 178 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

61 edited+7 added−10 removed50 unchanged
Biggest changeGulf ​ Discoverer Americas ​ (a) (b) ​ Drillship ​ 2009 ​ 12,000 ​ 40,000 ​ Stacked ​ Development Driller III ​ (a) (b) (h) ​ Semisubmersible ​ 2009 ​ 7,500 ​ 37,500 ​ Suriname ​ Petrobras 10000 ​ (a) (b) ​ Drillship ​ 2009 ​ 12,000 ​ 37,500 ​ Brazil ​ Discoverer Clear Leader ​ (a) (b) (c) ​ Drillship ​ 2009 ​ 12,000 ​ 40,000 ​ Stacked ​ Dhirubhai Deepwater KG1 ​ (a) ​ Drillship ​ 2009 ​ 12,000 ​ 35,000 ​ India ​ GSF Development Driller I ​ (a) (b) (h) ​ Semisubmersible ​ 2005 ​ 7,500 ​ 37,500 ​ Stacked ​ Deepwater Nautilus ​ (h) ​ Semisubmersible ​ 2000 ​ 8,000 ​ 30,000 ​ Stacked ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Harsh environment floaters (10) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Transocean Norge ​ (a) (h) (i) ​ Semisubmersible ​ 2019 ​ 10,000 ​ 40,000 ​ Norwegian N.
Biggest changeGulf ​ Ocean Rig Apollo ​ Drillship ​ 2015 ​ 1,250 ​ 12,000 ​ 40,000 ​ (a) (b) ​ Stacked ​ Ocean Rig Athena ​ Drillship ​ 2014 ​ 1,250 ​ 12,000 ​ 40,000 ​ (a) (b) ​ Stacked ​ Deepwater Skyros ​ Drillship ​ 2013 ​ 1,250 ​ 12,000 ​ 40,000 ​ (a) (b) ​ Angola ​ Ocean Rig Mylos ​ Drillship ​ 2013 ​ 1,250 ​ 12,000 ​ 40,000 ​ (a) (b) (e) ​ Stacked ​ Discoverer Inspiration ​ Drillship ​ 2010 ​ 1,130 ​ 12,000 ​ 40,000 ​ (a) (b) (e) ​ Idle ​ Discoverer India ​ Drillship ​ 2010 ​ 1,130 ​ 12,000 ​ 40,000 ​ (a) (b) ​ Stacked ​ Discoverer Americas ​ Drillship ​ 2009 ​ 1,130 ​ 12,000 ​ 40,000 ​ (a) (b) ​ Stacked ​ Discoverer Clear Leader ​ Drillship ​ 2009 ​ 1,130 ​ 12,000 ​ 40,000 ​ (a) (b) (e) ​ Stacked ​ Deepwater Corcovado ​ Drillship ​ 2011 ​ 1,000 ​ 10,000 ​ 35,000 ​ (a) (b) ​ Brazil ​ Deepwater Mykonos ​ Drillship ​ 2011 ​ 1,000 ​ 10,000 ​ 35,000 ​ (a) (b) ​ Brazil ​ Deepwater Orion ​ Drillship ​ 2011 ​ 1,000 ​ 10,000 ​ 35,000 ​ (a) (b) ​ Brazil ​ Deepwater Champion ​ Drillship ​ 2011 ​ 1,000 ​ 12,000 ​ 40,000 ​ (a) (b) ​ Stacked ​ Dhirubhai Deepwater KG2 ​ Drillship ​ 2010 ​ 1,000 ​ 12,000 ​ 35,000 ​ (a) ​ Brazil ​ Development Driller III ​ Semisubmersible ​ 2009 ​ 1,000 ​ 7,500 ​ 37,500 ​ (a) (b) (g) ​ Idle ​ Petrobras 10000 ​ Drillship ​ 2009 ​ 1,000 ​ 12,000 ​ 37,500 ​ (a) (b) ​ Brazil ​ Dhirubhai Deepwater KG1 ​ Drillship ​ 2009 ​ 1,000 ​ 12,000 ​ 35,000 ​ (a) ​ India ​ GSF Development Driller I ​ Semisubmersible ​ 2005 ​ 1,000 ​ 7,500 ​ 37,500 ​ (a) (b) (g) ​ Stacked ​ Deepwater Nautilus ​ Semisubmersible ​ 2000 ​ 1,000 ​ 8,000 ​ 30,000 ​ (g) ​ Stacked ​ Discoverer Luanda ​ Drillship ​ 2010 ​ 750 ​ 7,500 ​ 40,000 ​ (a) (b) ​ Stacked ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Harsh environment floaters (9) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Transocean Norge ​ Semisubmersible ​ 2019 ​ 1,000 ​ 10,000 ​ 40,000 ​ (a) (g) (h) ​ Norwegian N.
Under all of our current drilling contracts, our customers indemnify us for pollution damages in connection with reservoir fluids stemming from operations under the contract, and we indemnify our customers for pollution that originates above the surface of the water from the rig from substances in our control, such as diesel used onboard the rig or other fluids stored onboard the rig.
Under all of our current drilling contracts, our customers indemnify us for pollution damages in connection with reservoir fluids stemming from operations under the contract, and we indemnify our customers for pollution that originates above the surface of the water from the rig for substances in our control, such as diesel used or other fluids stored onboard the rig.
Some of these joint ventures or companies in which we are an investor are involved in researching and developing technology to improve efficiency, reliability, sustainability and safety for our drilling and other activities or are involved in businesses developed to support renewable or other energy alternatives. We may or may not control these partially owned companies.
Some of these companies or joint ventures in which we are an investor are involved in researching and developing technology to improve efficiency, reliability, sustainability and safety for our drilling and other activities or are involved in businesses developed to support renewable or other energy alternatives. We may or may not control these partially owned companies.
Drillships are generally better suited to operations in calmer sea conditions and typically do not operate in areas considered to be harsh environments. Our high-specification drillships are equipped with dynamic positioning thruster systems, which allows them to maintain position without anchors through the use of onboard propulsion and station-keeping systems.
Drillships are generally better suited to operations in calmer sea conditions and typically do not operate in areas considered to be harsh environments. All of our high-specification drillships are equipped with dynamic positioning thruster systems, which allows them to maintain position without anchors through the use of onboard propulsion and station-keeping systems.
Management’s Discussion and Analysis of Financial Condition and Results of Operations—Performance and Other Key Indicators .” Certain of our drilling contracts may be cancelable for the convenience of the customer, typically with the payment of an early termination payment. Such payments, however, may not fully compensate us for the loss of the contract.
Management’s Discussion and Analysis of Financial Condition and Results of Operations—Performance and Other Key Indicators .” Certain of our drilling contracts may be cancelable for the convenience of the customer, typically with payment of an early termination fee. Such payments, however, may not fully compensate us for the loss of the contract.
The actual cost to return to service, which in many instances could be - 2 - Table of Contents significant and could fluctuate over time, depends upon various factors, including the availability and cost of shipyard facilities, the cost of equipment and materials, the extent of repairs and maintenance that may ultimately be required, the length of time a rig has spent in stacking mode and time and cost of assembling and training crew.
The actual cost to return to service, which in many instances could be significant and could fluctuate over time, depends upon various factors, including the availability and cost of shipyard facilities, the cost of - 2 - Table of Contents equipment and materials, the extent of repairs, maintenance and commercial upgrades that may ultimately be required, the length of time a rig has spent in stacking mode and the time and cost of assembling and training crew.
Twenty-two drillships and two semisubmersibles in our existing fleet are, and our two drillships under construction will be, equipped with our patented dual-activity technology, which allows our rigs to perform simultaneous drilling tasks in a parallel rather than sequential manner, reducing well construction critical path activities and, thereby, improving efficiency in both exploration and development drilling.
Twenty-three drillships and two semisubmersibles in our existing fleet are, and our drillship under construction will be, equipped with our patented dual-activity technology, which allows our rigs to perform simultaneous drilling tasks in a parallel rather than sequential manner, reducing well construction critical path activities and, thereby, improving efficiency in both exploration and development drilling.
Risk Factors—Risks related to our laws, regulations and governmental compliance ;” ◾ “ Item 3. Legal Proceedings ;” ◾ “ Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Other Matters ;” ◾ “ Part II. Item 8. Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements—Note 10—Income Taxes ;” and ◾ “ Part II.
Risk Factors—Risks related to our laws, regulations and governmental compliance ;” ◾ “ Item 3. Legal Proceedings ;” ◾ “ Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Other Matters ;” ◾ “ Part II. Item 8. Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements—Note 11—Income Taxes ;” and ◾ “ Part II.
To date, we have not incurred material costs to comply with such governmental regulations, and we do not expect to make any material capital expenditures to support our continued compliance in the year ending December 31, 2023, or any other period contemplated at this time.
To date, we have not incurred material costs to comply with such governmental regulations, and we do not expect to make any material capital expenditures to support our continued compliance in the year ending December 31, 2024, or any other period contemplated at this time.
Driven by our continued focus on safety, we developed and, on five of our drilling units, deployed our patented HaloGuard ℠ system, which alarms, notifies and, if required, halts equipment to avoid injury to personnel who move into danger zones.
Driven by our continued focus on safety, we developed and, on eight of our drilling units, deployed our patented HaloGuard ℠ system, which alarms, notifies and, if required, halts equipment to avoid injury to personnel who move into danger zones.
You may also find on our website information related to our corporate governance, board committees and company code of business conduct and ethics. The SEC also maintains a website, www.sec.gov , which contains reports, proxy statements and other information regarding SEC registrants, including us.
You may also find on our website information related to our corporate governance, board committees and company code of business conduct and ethics. The SEC also maintains a website, www.sec.gov , which contains reports, proxy statements and other information regarding SEC - 7 - Table of Contents registrants, including us.
As a socially responsible company, we prioritize the protection of everyone aboard our rigs and in our facilities, the environment and our property at all work locations and during all operations. We require compliance with all local regulations and a comprehensive set of internal policies and procedures that govern our operations.
As a socially responsible company, we prioritize the protection of everyone aboard our rigs and in our facilities, the environment and our property at all work locations and during all operations. We require compliance with all local regulations and a comprehensive set of internal requirements that govern our operations.
Additionally, in 2021, we deployed on one of our ultra-deepwater drillships the first kinetic blowout stopper, a step-changing technology that promotes operations integrity and enterprise risk reduction through unrivaled shearing capability. In 2022, we deployed an offshore robotic riser bolting tool on two of our ultra-deepwater drillships, improving our ability to deliver safe and efficient operations to our customers.
Additionally, since 2021, we deployed on two of our ultra-deepwater drillships the first kinetic blowout stopper, a step-changing technology that promotes operations integrity and enterprise risk reduction through unrivaled shearing capability. Since 2022, we deployed an offshore robotic riser bolting tool on three of our ultra-deepwater drillships, improving our ability to deliver safe and efficient operations to our customers.
We consider these factors, together with market conditions, length of contract, dayrate and other contract terms, when deciding whether to return a stacked rig to service. We may not return some stacked rigs to work for drilling services. Drilling units —The following tables, presented as of February 9, 2023, provide certain specifications for our rigs.
We consider these factors, together with market conditions, length of contract, dayrate and other contract terms, when deciding whether to return a stacked rig to service. We may not return some stacked rigs to work for drilling services. Drilling units —The following tables, presented as of February 14, 2024, provide certain specifications for our rigs.
No other customers accounted for 10 percent or more of our consolidated operating revenues in the year ended December 31, 2022.
No other customers accounted for 10 percent or more of our consolidated operating revenues in the year ended December 31, 2023.
FIRST Shared Values and corporate culture —Our FIRST Shared Values serve as the foundation for our corporate culture and guide us to act ethically and responsibly as we strive to deliver value for our stakeholders and to maintain a safe and respectful work environment for our people. Our Shared Values are as follows: ◾ Focused .
FIRST Shared Values and corporate culture —Our FIRST Shared Values serve as the foundation for our corporate culture and guide us to act ethically and responsibly as we strive to deliver value for our stakeholders and to maintain a safe and respectful work environment for our people.
We recently deployed the first unit of Enhanced Drilling’s EC-Monitor system to an offshore installation, enabling highly accurate understanding of well fluid dynamics and improving the efficiency and accuracy of flow-checking and detecting flow anomalies.
In 2022, we deployed the first unit of Enhanced Drilling’s EC-Monitor system to an offshore installation, enabling highly accurate understanding of well fluid dynamics and improving the efficiency and accuracy of flow-checking and detecting flow anomalies.
Consequently, we cannot predict the future percentage of our revenues that will be derived from particular geographic areas. As of February 9, 2023, the drilling units in our fleet, including stacked and idle rigs, but excluding rigs under construction, were located in the U.S.
Consequently, we cannot predict the future percentage of our revenues that will be derived from particular geographic areas. As of February 14, 2024, the drilling units in our fleet, including stacked and idle rigs, but excluding rigs under construction, were located in the U.S.
Accordingly, we intend to reduce Scope 1 and Scope 2 greenhouse gas emissions intensity by 40 percent from 2019 levels by 2030. Achieving these targets will require investments over time that result in the development and implementation of new technologies, reduced fuel consumption and other initiatives that enable us to optimize power management capabilities.
Accordingly, we intend to reduce our greenhouse gas operating emissions intensity by 40 percent from 2019 levels by 2030. Achieving these targets will require investments over time that result in the development and implementation of new technologies, reduced fuel consumption and other initiatives that enable us to optimize power management capabilities.
At December 31, 2022, we held partial ownership interests in companies organized in the Cayman Islands, the U.S., Norway, Canada and other countries.
At December 31, 2023, we held partial ownership interests in companies organized in Belgium, the Cayman Islands, the U.S., Norway, Canada and other countries.
Additionally, as of February 9, 2023, the customers with the most significant aggregate amount of contract backlog associated with our drilling contracts were Shell, Petrobras and Chevron Corporation (together with its affiliates, “Chevron”), representing approximately 33 percent, 31 percent and 14 percent, respectively, of our total contract backlog. See “ Item 1A.
Additionally, as of February 14, 2024, the customers with the most significant aggregate amount of contract backlog associated with our drilling contracts were Petrobras, Shell and Chevron Corporation (together with its affiliates, “Chevron”), representing approximately 31 percent, 25 percent and 10 percent, respectively, of our total contract backlog. See “ Item 1A.
Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements— Note 1—Business , Note 4—Revenues and Note 6—Long-Lived Assets .” Drilling Fleet Overview —We provide contract drilling services using our fleet of mobile offshore drilling units, including both drillships and semisubmersibles, broadly referred to as floaters.
Item 8. Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements— Note 1—Business , Note 5—Revenues and Note 7—Long-Lived Assets .” Drilling Fleet Overview —We provide contract drilling services using our fleet of mobile offshore drilling units, including both drillships and semisubmersibles, broadly referred to as floaters.
Risk Factors—Risks related to our business—We rely heavily on a relatively small number of customers and the loss of a significant customer or a dispute that leads to the loss of a customer could have an adverse effect on our business. ” Human Capital Resources Worldwide workforce —As of December 31, 2022, we had a global workforce of approximately 5,340 individuals, including approximately 300 contractors, representing 57 nationalities.
Risk Factors—Risks related to our business—We rely heavily on a relatively small number of customers and the loss of a significant customer or a dispute that leads to the loss of a customer could have an adverse effect on our business. ” Human Capital Resources Worldwide workforce —As of December 31, 2023, we had a global workforce of approximately 5,800 individuals, including approximately 370 contractors, representing 53 nationalities.
Also, our customers indemnify us for consequential damages they incur, damage to the well or reservoir, loss of subsurface oil and gas and the cost of bringing the well under control.
Also, our customers indemnify us for consequential damages they incur, damage to the well or reservoir, loss of subsurface oil and gas and costs to bring the well under control.
However, because our drilling contracts are individually negotiated, the degree of indemnification we receive from our customers for the risks discussed above may vary from contract to contract based on market conditions, customer requirements existing when the contract was negotiated or other factors.
However, because our drilling contracts are individually negotiated, the degree of indemnification we receive from our customers for such risks and related costs may vary from contract to contract based on market conditions, customer requirements existing when the contract was negotiated or other factors.
As of December 31, 2022, approximately 43 percent of our total workforce, working primarily in Norway, Brazil and the U.K., are represented by, and some of our contracted labor work is subject to, collective bargaining agreements, substantially all of which are subject to annual salary negotiation.
As of December 31, 2023, approximately 42 percent of our total workforce, working primarily in Norway and Brazil, are represented by, and some of our contracted labor work is subject to, collective bargaining agreements, substantially all of which are subject to annual salary negotiation.
Drilling contracts generally provide for payment on a dayrate basis, typically with higher rates for periods when drilling operations are optimized and lower or zero rates for periods during which the drilling unit is mobilized or when drilling operations are interrupted, restricted by equipment breakdowns, adverse environmental conditions or otherwise.
Drilling contracts generally provide for payment on a dayrate basis, typically with higher rates for periods when drilling operations are optimized and, conversely, lower or zero rates for periods during which the drilling unit is not mobilized or when drilling operations are interrupted or restricted, whether due to equipment breakdowns, adverse environmental conditions, regulatory approvals or otherwise.
Item 8. Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements—Note 12—Commitments and Contingencies .” - 7 - Table of Contents Available Information Our website address is www.deepwater.com .
Item 8. Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements—Note 13—Commitments and Contingencies .” Available Information Our website address is www.deepwater.com .
Our shares are listed on the New York Stock Exchange under the ticker symbol “RIG.” For information about the revenues, operating income, assets and other information related to our business, our segments and the geographic areas in which we operate, see “ Part II. Item 7.
Our shares are listed on the New York Stock Exchange under the ticker symbol “RIG.” For information about the revenues, operating income, assets and other information related to our business and the geographic areas in which we operate, see “ Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations ” and “Part II.
For the year ended December 31, 2022, our most significant customers were Shell plc (together with its affiliates, “Shell”), Equinor ASA (together with its affiliates, “Equinor”) and Petróleo Brasileiro S.A. (together with its affiliates, “Petrobras”), representing approximately 33 percent, 25 percent and 11 percent, respectively, of our consolidated operating revenues.
For the year ended December 31, 2023, our most significant customers were Shell plc (together with its affiliates, “Shell”), Equinor ASA (together with its affiliates, “Equinor”), TotalEnergies SE (together with its affiliates, “TotalEnergies”) and Petróleo Brasileiro S.A. (together with its affiliates, “Petrobras”), representing approximately 27 percent, 16 percent, 12 percent and 11 percent, respectively, of our consolidated operating revenues.
At December 31, 2022, our contract backlog was approximately $8.34 billion, representing an increase of 26 percent and 4 percent, respectively, compared to the contract backlog at December 31, 2021 and 2020, which was $6.60 billion and $8.06 billion, respectively. See “ Part II. Item 7.
At December 31, 2023, our contract backlog was approximately $9.25 billion, representing an increase of 11 percent and 40 percent, respectively, compared to the contract backlog at December 31, 2022 and 2021, which was $8.34 billion and $6.60 billion, respectively. See “ Part II. Item 7.
Gulf ​ Deepwater Proteus ​ (a) (b) (c) (e) (g) ​ Drillship ​ 2016 ​ 12,000 ​ 40,000 ​ U.S. Gulf ​ Deepwater Thalassa ​ (a) (b) (c) (e) (g) ​ Drillship ​ 2016 ​ 12,000 ​ 40,000 ​ U.S.
Gulf ​ Deepwater Proteus ​ Drillship ​ 2016 ​ 1,400 ​ 12,000 ​ 40,000 ​ (a) (b) (e) (f) ​ U.S. Gulf ​ Deepwater Thalassa ​ Drillship ​ 2016 ​ 1,400 ​ 12,000 ​ 40,000 ​ (a) (b) (e) (f) ​ U.S.
Gulf of Mexico (nine units), Greece (seven units), the Norwegian North Sea (six units), Brazil (five units), Malaysia (three units), the United Kingdom (the “U.K.”) North Sea (three units), Angola (one unit), Canada (one unit), India (one unit) and Suriname (one unit).
Gulf of Mexico (ten units), Greece (seven units), Brazil (five units), the Norwegian North Sea (four units), Malaysia (three units), Australia (two units), Angola (one unit), Aruba (one unit), Canada (one unit), Cyprus (one unit), India (one unit) and the United Kingdom (the “U.K.”) North Sea (one unit).
Negotiations over annual salary or other labor matters could result in higher personnel or other costs or increased operational restrictions or disruptions. The outcome of any such negotiation generally affects the market for all offshore employees, not only union members. A failure to reach an agreement on certain key issues could result in strikes, lockouts or other work stoppages.
Negotiations over annual salary or other labor matters could result in higher personnel or other costs or increased operational restrictions or disruptions. The outcome of any such negotiation generally affects the market for all offshore employees, not only union members.
As of February 14, 2023, we owned or had partial ownership interests in and operated 37 mobile offshore drilling units, consisting of 27 ultra-deepwater floaters and 10 harsh environment floaters. Additionally, as of February 14, 2023, we were constructing one ultra-deepwater drillship and held a noncontrolling ownership interest in a company that is constructing one ultra-deepwater drillship.
As of February 14, 2024, we owned or had partial ownership interests in and operated 37 mobile offshore drilling units, consisting of 28 ultra-deepwater floaters and nine harsh environment floaters. Additionally, as of February 14, 2024, we were constructing one ultra-deepwater drillship.
Sea ​ Transocean Enabler ​ (a) (h) (i) ​ Semisubmersible ​ 2016 ​ 1,640 ​ 28,000 ​ Norwegian N. Sea ​ Transocean Encourage ​ (a) (h) (i) ​ Semisubmersible ​ 2016 ​ 1,640 ​ 28,000 ​ Norwegian N. Sea ​ Transocean Endurance ​ (a) (h) (i) ​ Semisubmersible ​ 2015 ​ 1,640 ​ 28,000 ​ Norwegian N.
Sea ​ Transocean Encourage ​ Semisubmersible ​ 2016 ​ 750 ​ 1,640 ​ 28,000 ​ (a) (g) (h) ​ Norwegian N.
Gulf ​ Deepwater Poseidon ​ (a) (b) (c) (e) (g) ​ Drillship ​ 2018 ​ 12,000 ​ 40,000 ​ U.S. Gulf ​ Deepwater Pontus ​ (a) (b) (c) (e) (g) ​ Drillship ​ 2017 ​ 12,000 ​ 40,000 ​ U.S. Gulf ​ Deepwater Conqueror ​ (a) (b) (c) (e) (g) ​ Drillship ​ 2016 ​ 12,000 ​ 40,000 ​ U.S.
Gulf ​ Deepwater Pontus ​ Drillship ​ 2017 ​ 1,400 ​ 12,000 ​ 40,000 ​ (a) (b) (e) (f) ​ U.S. Gulf ​ Deepwater Conqueror ​ Drillship ​ 2016 ​ 1,400 ​ 12,000 ​ 40,000 ​ (a) (b) (e) (f) ​ U.S.
Gulf ​ Deepwater Invictus ​ (a) (b) (c) (g) ​ Drillship ​ 2014 ​ 12,000 ​ 40,000 ​ U.S.
Gulf ​ Deepwater Asgard ​ Drillship ​ 2014 ​ 1,400 ​ 12,000 ​ 40,000 ​ (a) (b) (e) ​ U.S. Gulf ​ Deepwater Invictus ​ Drillship ​ 2014 ​ 1,400 ​ 12,000 ​ 40,000 ​ (a) (b) (e) ​ U.S.
At December 31, 2022, our global workforce was geographically distributed in 21 countries across five continents as follows: 38 percent in North America, 30 percent in Europe, 19 percent in South America, 8 percent in Asia and 5 percent in Africa.
At December 31, 2023, our global workforce was geographically distributed in 22 countries across six continents as follows: 38 percent in North America, 25 percent in Europe, 23 percent in South America, six percent in Asia, five percent in Africa and three percent in Australia.
We will always act with integrity and professionalism, honor our commitments, comply with laws and regulations, respect local cultures, and be fiscally responsible. Code of Integrity and Human Rights —We maintain a Code of Integrity and Human Rights Policy that applies to all our board members, executives, employees and business partners, including contractors, suppliers, vendors, investees and joint venture partners.
Code of Integrity and Human Rights —We maintain a Code of Integrity and Human Rights Policy that applies to all our board members, executives, employees and business partners, including contractors, suppliers, vendors, investees and joint venture partners.
In the years ended December 31, 2022 and 2021, our TRIR was 0.21 and 0.26, respectively, and our LTIR was 0.00 and 0.02, respectively. Environmental Responsibility We strive to deliver services in a manner that both minimizes the impact our business has on the environment and supports the interests of our stakeholders.
In the year ended December 31, 2023, our TRIR was 0.23 and our LTIR was 0.02, both calculations of which were based on 11.3 million labor hours. Environmental Responsibility We strive to deliver services in a manner that both minimizes the impact our business has on the environment and supports the interests of our stakeholders.
Fleet status —Depending on market conditions, we may idle or stack our non-contracted rigs. An idle rig is between drilling contracts, readily available for operations, and operating costs are typically at or near normal operating levels.
An idle rig is between drilling contracts, readily available for operations, and operating costs are typically at or near normal operating levels.
Six of our drillships and one of our drillships under construction include hybrid energy storage systems for enhanced drill floor equipment reliability, fuel and emissions savings as well as advanced generator protection for power plant reliability.
Seven of our drillships and our drillship under construction include hybrid energy storage systems for enhanced drill floor equipment reliability, fuel and emissions savings as well as advanced generator protection for power plant reliability. Twelve drillships in our existing fleet are outfitted with dual blowout preventers and triple liquid mud systems.
We have 22 ultra-deepwater drillships that are, and two ultra-deepwater drillships under construction that will be, equipped with our patented dual-activity technology.
We have two ultra-deepwater drillships that are equipped with an industry-leading, 1,700 short ton hoisting capacity. We have 23 ultra-deepwater drillships that are, and one ultra-deepwater drillship under construction that will be, equipped with our patented dual-activity technology.
We demonstrate our respect of human rights by maintaining a healthy and safe work environment, observing fair employment practices and providing competitive employment terms.
We demonstrate our respect of human rights by maintaining a healthy and safe work environment, observing fair employment practices and providing competitive employment terms. Practices such as modern slavery, child labor, forced or indentured servitude, and other human rights abuses are strictly prohibited.
Two of these four dual-activity units are custom-designed, high-capacity semisubmersible drilling rigs, equipped for year-round operations in harsh environments, such as those of the Norwegian continental shelf and sub-Arctic waters. Our floater fleet consists of ultra-deepwater floaters and harsh environment floaters that are designed with high-specification capabilities to operate in the technically demanding regions of the global offshore drilling business.
Four of our 12 semisubmersibles are equipped with dual-activity technology and also have mooring capability. Two of these four dual-activity units are custom-designed, high-capacity semisubmersible drilling rigs, equipped for year-round operations in harsh environments, such as those of the Norwegian continental shelf and sub-Arctic waters.
Attraction, development and retention —We aim to strategically cultivate a best-in-class workforce to offer the innovation, local knowledge and experience required of the world’s premier offshore drilling contractor. We seek to maintain our competitive advantage while benefitting our local communities by offering regionally competitive compensation and benefits packages, a technically challenging work environment, global opportunities, and rotational development programs.
We seek to maintain our competitive advantage while benefitting our local communities by offering regionally competitive compensation and benefits packages, a technically challenging work environment, global opportunities, and rotational development programs.
Ultra-deepwater floaters are equipped with high-pressure mud pumps and are capable of drilling in water depths of 4,500 feet or greater. Harsh environment floaters are capable of drilling in harsh environments in water depths between 1,500 and 10,000 feet and have greater displacement, which offers larger variable load capacity, more useable deck space and better motion characteristics.
Harsh environment floaters are capable of drilling in harsh environments in water depths between 1,500 and 10,000 feet and typically have greater displacement than other semisubmersibles, which offers larger variable load capacity, more useable deck space and better motion characteristics. Fleet status —Depending on market conditions, we may idle or stack our non-contracted rigs.
Sea ​ Transocean Equinox ​ (a) (h) (i) ​ Semisubmersible ​ 2015 ​ 1,640 ​ 28,000 ​ Idle ​ Transocean Spitsbergen ​ (a) (h) (i) (j) ​ Semisubmersible ​ 2010 ​ 10,000 ​ 30,000 ​ Norwegian N. Sea ​ Transocean Barents ​ (a) (h) (j) ​ Semisubmersible ​ 2009 ​ 10,000 ​ 30,000 ​ U.K. N.
Sea ​ Transocean Spitsbergen ​ Semisubmersible ​ 2010 ​ 1,000 ​ 10,000 ​ 30,000 ​ (a) (g) (h) (i) ​ Norwegian N.
(j) Dual activity. ​ - 3 - Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Water ​ Drilling ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ depth ​ depth ​ ​ ​ ​ ​ ​ ​ ​ ​ Expected ​ capacity ​ capacity ​ Contracted ​ Rig category and name Specifications Type completion (in feet) (in feet) location Rigs under construction (2) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ultra-deepwater floaters ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Deepwater Titan ​ (a) (b) (c) (d) ​ Drillship ​ 2Q2023 ​ 12,000 ​ 40,000 ​ U.S.
Loyd, Jr. and related assets. ​ - 3 - Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Hook ​ Water ​ Drilling ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ load ​ depth ​ depth ​ ​ ​ ​ ​ ​ ​ ​ ​ Expected ​ capacity ​ capacity ​ capacity ​ ​ ​ Contracted ​ Rig category and name Type completion (short tons) (feet) (feet) Specifications location Rigs under construction (1) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ultra-deepwater floaters ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Deepwater Aquila ​ Drillship ​ 2Q24 ​ 1,400 ​ 12,000 ​ 40,000 ​ (a) (b) (c) (d) ​ Brazil ​ (a) To be dynamically positioned.
Although most semisubmersible rigs are relocated with the assistance of tugs, some units are self-propelled and move between locations under their own power when afloat on pontoons. Four of our 13 semisubmersibles are equipped with dual-activity technology and also have mooring capability.
Semisubmersible floaters are capable of maintaining their position over a well either through dynamic positioning or the use of mooring systems. Although most semisubmersible rigs are relocated with the assistance of tugs, some units are self-propelled and move between locations under their own power when afloat on pontoons.
(e) To be equipped with main hoisting capacity of 1,400 short tons. Drilling Contracts Our offshore drilling services contracts are individually negotiated and vary in their terms and conditions. We obtain most of our drilling contracts through bidding processes in competition against other drilling services contractors and through direct negotiations with operators.
We obtain most of our drilling contracts through bidding processes in competition against other drilling services contractors and through direct negotiations with operators.
As of February 9, 2023, we owned all of the drilling rigs in our fleet noted in the tables below, except for the following: (1) the ultra-deepwater floater Petrobras 10000 , which is subject to a finance lease through August 2029, (2) the harsh environment floater Transocean Norge , which is owned through our 33 percent noncontrolling ownership interest in Orion Holdings (Cayman) Limited (together with its subsidiary, “Orion”), and (3) the newbuild ultra-deepwater drillship under construction, to be named Deepwater Aquila , which is owned through our noncontrolling ownership interest in Liquila Ventures Ltd.
As of February 14, 2024, we owned all of the drilling rigs in our fleet noted in the tables below, except for the following: (1) the ultra-deepwater floater Petrobras 10000 , which is subject to a finance lease through August 2029 and (2) the harsh environment floater Transocean Norge , which is owned through our noncontrolling equity ownership interest in Orion Holdings (Cayman) Limited (together with its subsidiary, “Orion”). ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ​ Hook ​ Water ​ Drilling ​ ​ ​ Contracted ​ ​ ​ ​ ​ entered ​ load ​ depth ​ depth ​ ​ ​ location or ​ ​ ​ ​ ​ service / ​ capacity ​ capacity ​ capacity ​ ​ ​ standby ​ Rig category and name Type upgraded (short tons) (in feet) (in feet) Specifications status Ultra-deepwater floaters (28) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Deepwater Titan ​ Drillship ​ 2023 ​ 1,700 ​ 12,000 ​ 40,000 ​ (a) (b) (c) ​ U.S.
In addition, our newbuild drillships under construction will be equipped with dynamic positioning thruster systems and industry-leading hoisting capacity. Semisubmersibles are floating vessels that can be partially submerged by means of a water ballast system such that the lower column sections and pontoons are below the water surface during drilling operations.
Semisubmersibles are floating vessels that can be partially submerged by means of a water ballast system such that the lower column sections and pontoons are below the water surface during drilling operations. Semisubmersibles are known for stability, making them well suited for operating in rough sea conditions.
We employ a data-driven approach by deploying technology, augmented by the size of our fleet, to expand our knowledge framework for sustainable process optimization.
We have installed automated drilling control systems on six harsh environment floaters, which materially improves our ability to safely and efficiently deliver wells to our customers. We utilize technology and employ a data-driven approach, augmented by the size of our fleet, to expand our knowledge framework for sustainable process optimization.
Practices such as modern slavery, child labor, forced or indentured servitude, and other human rights abuses are strictly prohibited. - 5 - Table of Contents Labor rights —We respect the labor rights of all individuals in our workforce, including the right to collective bargaining.
Labor rights —We respect the labor rights of all individuals in our workforce, including the right to collective bargaining.
(c) Two blowout preventers. (d) Equipped with two 15,000 psi blowout preventers, one of which is scheduled to be upgraded to a 20,000 psi blowout preventer. (e) Designed to accommodate a future upgrade to 20,000 psi blowout preventer(s). (f) Main hoisting capacity of 1,700 short tons. (g) Main hoisting capacity of 1,400 short tons. (h) Moored. (i) Automated drilling control.
(b) To be equipped with our patented dual activity. (c) To be equipped with main hoisting capacity of 1,400 short tons. (d) To be equipped with one 15,000 psi blowout preventer and designed to accommodate a future 20,000 psi blowout preventer. Drilling Contracts Our offshore drilling services contracts are individually negotiated and vary in their terms and conditions.
We develop and deploy industry-leading technology in the pursuit of delivering safer, more efficient and environmentally responsible drilling services. In addition to our patented dual-activity drilling technology, one of our drillships has, and one drillship under - 6 - Table of Contents construction will have, industry-leading 3.4 million-pound hoisting load capability.
We develop and deploy industry-leading technology in the pursuit of delivering safer, more efficient and environmentally responsible drilling services. Two of our drillships are equipped with 1,700 short ton hoisting capacity and 20,000 psi blowout preventers.
Sea ​ Henry Goodrich ​ (h) ​ Semisubmersible ​ 1985/2007 ​ 5,000 ​ 30,000 ​ Stacked ​ Transocean Leader ​ (h) ​ Semisubmersible ​ 1987/1997 ​ 4,500 ​ 25,000 ​ Stacked ​ Paul B. Loyd, Jr. ​ (h) ​ Semisubmersible ​ 1990 ​ 2,000 ​ 25,000 ​ U.K. N. Sea ​ (a) Dynamically positioned. (b) Patented dual activity.
Loyd, Jr. ​ Semisubmersible ​ 1990 ​ 750 ​ 2,000 ​ 25,000 ​ (g) (j) ​ U.K. N. Sea ​ (a) Dynamically positioned. (b) Patented dual activity. (c) Two 20,000 psi blowout preventers. (d) One 15,000 psi blowout preventer and one 20,000 psi blowout preventer. (e) Two 15,000 psi blowout preventers.
At December 31, 2022, among other equity investments, we held a 33 percent ownership interest in Orion, an unconsolidated Cayman Islands exempted company that owns the harsh environment semisubmersible Transocean Norge and we held a 20 percent ownership interest in Liquila, an unconsolidated Bermuda company formed to construct, own and operate the newbuild ultra-deepwater drillship Deepwater Aquila , which is currently under construction.
At December 31, 2023, among other equity investments, we held noncontrolling equity ownership interests in (1) Global Sea Mineral Resources NV, an unconsolidated Belgian company and leading developer of nodule collection technology, which is engaged in the development and exploration of deep-sea polymetallic nodules that contain metals critical to the growing renewable energy market, and (2) Orion, an unconsolidated Cayman Islands exempted company that owns the harsh environment semisubmersible Transocean Norge .
Seven of our harsh environment semisubmersibles are designed and constructed specifically to provide highly efficient performance in harsh environments. We have installed automated drilling control systems on six harsh environment floaters, which materially improves our ability to safely and efficiently deliver wells to our customers.
We also continue to develop and invest in technologies designed to optimize our performance, deliver ever improving operational integrity and reduce our greenhouse gas emissions. - 6 - Table of Contents Seven of our harsh environment semisubmersibles are designed and constructed specifically to provide highly efficient performance in harsh environments.
Removed
Management’s Discussion and Analysis of Financial Condition and Results of Operations ” and “Part II. Item 8.
Added
Our fleet consists of ultra-deepwater drillships and semisubmersibles and harsh environment semisubmersibles that are designed with high-specification capabilities to operate in the technically demanding regions of the global offshore drilling business. Ultra-deepwater floaters are equipped with high-pressure mud pumps and are capable of drilling in water depths of 4,500 feet or greater.
Removed
Semisubmersibles are known for stability, making them well suited for operating in rough sea conditions. Semisubmersible floaters are capable of maintaining their position over a well either through dynamic positioning or the use of mooring systems.
Added
Gulf ​ Deepwater Atlas ​ Drillship ​ 2022 ​ 1,700 ​ 12,000 ​ 40,000 ​ (a) (b) (d) ​ U.S. Gulf ​ Deepwater Poseidon ​ Drillship ​ 2018 ​ 1,400 ​ 12,000 ​ 40,000 ​ (a) (b) (e) (f) ​ U.S.
Removed
(together with its subsidiaries, “Liquila”). ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ​ Water ​ Drilling ​ Contracted ​ ​ ​ ​ ​ ​ ​ entered ​ depth ​ depth ​ location or ​ ​ ​ ​ ​ ​ ​ service / ​ capacity ​ capacity ​ standby ​ Rig category and name Specifications Type upgraded (in feet) (in feet) status Ultra-deepwater floaters (27) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Deepwater Atlas ​ (a) (b) (c) (d) (f) ​ Drillship ​ 2022 ​ 12,000 ​ 40,000 ​ U.S.
Added
Sea ​ Transocean Barents ​ Semisubmersible ​ 2009 ​ 1,000 ​ 10,000 ​ 30,000 ​ (a) (g) (i) ​ Romania ​ Transocean Enabler ​ Semisubmersible ​ 2016 ​ 750 ​ 1,640 ​ 28,000 ​ (a) (g) (h) ​ Norwegian N.
Removed
Gulf ​ Ocean Rig Apollo ​ (a) (b) ​ Drillship ​ 2015 ​ 12,000 ​ 40,000 ​ Stacked ​ Deepwater Athena ​ (a) (b) ​ Drillship ​ 2014 ​ 12,000 ​ 40,000 ​ Stacked ​ Deepwater Asgard ​ (a) (b) (c) (g) ​ Drillship ​ 2014 ​ 12,000 ​ 40,000 ​ U.S.
Added
Sea ​ Transocean Endurance ​ Semisubmersible ​ 2015 ​ 750 ​ 1,640 ​ 28,000 ​ (a) (g) (h) ​ Australia ​ Transocean Equinox ​ Semisubmersible ​ 2015 ​ 750 ​ 1,640 ​ 28,000 ​ (a) (g) (h) ​ Australia ​ Henry Goodrich ​ Semisubmersible ​ 1985/2007 ​ 750 ​ 5,000 ​ 30,000 ​ (g) ​ Stacked ​ Paul B.
Removed
Gulf ​ Deepwater Skyros ​ (a) (b) ​ Drillship ​ 2013 ​ 12,000 ​ 40,000 ​ Angola ​ Deepwater Mylos ​ (a) (b) (c) ​ Drillship ​ 2013 ​ 12,000 ​ 40,000 ​ Stacked ​ Deepwater Champion ​ (a) (b) ​ Drillship ​ 2011 ​ 12,000 ​ 40,000 ​ Stacked ​ Deepwater Corcovado ​ (a) (b) ​ Drillship ​ 2011 ​ 10,000 ​ 35,000 ​ Brazil ​ Deepwater Mykonos ​ (a) (b) ​ Drillship ​ 2011 ​ 10,000 ​ 35,000 ​ Brazil ​ Deepwater Orion ​ (a) (b) ​ Drillship ​ 2011 ​ 10,000 ​ 35,000 ​ Brazil ​ Discoverer India ​ (a) (b) ​ Drillship ​ 2010 ​ 12,000 ​ 40,000 ​ Stacked ​ Discoverer Luanda ​ (a) (b) ​ Drillship ​ 2010 ​ 7,500 ​ 40,000 ​ Stacked ​ Dhirubhai Deepwater KG2 ​ (a) ​ Drillship ​ 2010 ​ 12,000 ​ 35,000 ​ Brazil ​ Discoverer Inspiration ​ (a) (b) (c) ​ Drillship ​ 2010 ​ 12,000 ​ 40,000 ​ U.S.
Added
(f) Designed to accommodate a future upgrade to 20,000 psi blowout preventer(s). (g) Moored. (h) Automated drilling control. (i) Dual activity. (j) On February 15, 2024, we completed the sale of Paul B.
Removed
Gulf ​ Deepwater Aquila ​ (a) (b) (e) ​ Drillship ​ 3Q2023 ​ 10,000 ​ 40,000 ​ TBD ​ (a) To be dynamically positioned. (b) To be equipped with our patented dual activity. (c) To be equipped with two 20,000 psi blowout preventers. (d) To be equipped with main hoisting capacity of 1,700 short tons.
Added
A failure to reach an agreement on certain key issues could result in strikes, lockouts or other work stoppages. - 5 - Table of Contents Attraction, development and retention —We aim to strategically cultivate a best-in-class workforce to offer the innovation, local knowledge and experience required of the world’s premier offshore drilling contractor.
Removed
We will consistently exceed the expectations of customers, shareholders and employees. ◾ Innovative . We will continuously advance our position as technical leaders, and relentlessly pursue improvement in all that we do. ◾ Reliable .
Added
Five drillships in our existing fleet are designed to accept 20,000 psi blowout preventers in the future.
Removed
We will execute flawlessly by ensuring that our equipment, processes and systems always perform as and when intended, and that our people are properly trained and motivated. ◾ Safe . Above all else, we will protect each other, the environment and our assets. We will conduct our operations in an incident-free environment, all the time, everywhere. ◾ Trusted .
Removed
Eleven drillships in our existing fleet are, and one of our drillships under construction will be, outfitted with dual blowout preventers and triple liquid mud systems.
Removed
Six drillships in our existing fleet are designed to accept 20,000 psi blowout preventers in the future, and one of our drillships under construction will be equipped with dual 20,000 psi blowout preventers and related equipment. We also continue to develop and invest in technologies designed to optimize our performance, deliver ever improving operational integrity and reduce our carbon emissions.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

41 edited+7 added−3 removed91 unchanged
Biggest changeThese shipyard projects are subject to the risks of delay or cost overruns inherent in any such construction project resulting from numerous factors, including the following: ◾ complications arising from pandemics and epidemics, such severe influenza, coronaviruses and other highly communicable viruses or diseases, and associated government orders in the country where the rigs are being constructed or serviced and elsewhere; ◾ shipyard availability, failures and difficulties; ◾ shortages of equipment, materials or skilled labor; ◾ failure or delayed deliveries of significant materials or equipment for various reasons, including due to supplier shortages, constraints, disruption or quality issues; ◾ design and engineering problems, including those relating to the commissioning of newly designed equipment; ◾ latent damages or deterioration to hull, equipment and machinery in excess of engineering estimates and assumptions; ◾ unanticipated actual or purported change orders; ◾ disputes with shipyards and suppliers; ◾ availability of suppliers to recertify equipment for enhanced regulations; ◾ strikes, labor disputes and work stoppages; ◾ customer acceptance delays or delays in providing customer-supplied engineering, approvals or equipment; ◾ adverse weather conditions, including damage caused by such conditions; ◾ terrorist acts, war, piracy and civil unrest; ◾ unanticipated cost increases; and ◾ difficulty in obtaining necessary permits or approvals.
Biggest changeThese shipyard projects are subject to the risks of delays or cost overruns inherent in any such complex projects resulting from numerous factors, including the following: ◾ shipyard availability, failures and difficulties; ◾ shortages of equipment, materials or skilled labor; ◾ failure or delayed deliveries of significant materials or equipment for various reasons, including due to supplier shortages, constraints, disruption or quality issues; ◾ design and engineering problems, including those relating to the commissioning of newly designed equipment; ◾ latent damages or deterioration to hull, equipment and machinery in excess of engineering estimates and assumptions; ◾ unanticipated actual or purported change orders; ◾ disputes with shipyards and suppliers; ◾ availability of suppliers to recertify equipment for enhanced regulations; ◾ strikes, labor disputes and work stoppages; ◾ customer acceptance delays or delays in providing customer-supplied engineering, approvals or equipment; ◾ adverse weather conditions, including damage caused by such conditions; ◾ terrorist acts, war, piracy and civil unrest; ◾ complications arising from pandemics and epidemics, such severe influenza, coronaviruses and other highly communicable viruses or diseases, and associated government orders in the country where the rigs are being constructed or serviced and elsewhere; ◾ unanticipated cost increases; and ◾ difficulties in obtaining necessary permits or approvals or in completing necessary importation procedures.
In the event of termination of any of these drilling contracts, we may not be able to secure a replacement contract on as favorable terms, if at all. Our operations also rely on a significant supply of capital and consumable spare parts and equipment to maintain and repair our fleet.
In the event of termination of any of these drilling contracts, we may not be able to secure a replacement contract on as favorable terms, if at all. Our operations rely on a significant supply of capital and consumable spare parts and equipment to maintain and repair our fleet.
Our aspirations, goals, commitment targets and initiatives related to sustainability, including emissions reduction, and our public statements and disclosures regarding them, expose us to numerous risks. We have developed, and will continue to develop and set, goals, targets, and other objectives related to sustainability matters, including our commitment target to reduce greenhouse gas emissions intensity.
Our aspirations, goals, commitment targets and initiatives related to sustainability, including emissions reduction, and our public statements and disclosures regarding them, expose us to numerous risks. We have developed, and will continue to develop and set, goals, targets, and other objectives related to sustainability matters, including our commitment target to reduce greenhouse gas emissions operating intensity.
Such impacts may include, among others: ◾ causing a temporary shut-down of operations in case of an outbreak on one or more of our rigs; ◾ disrupting or restricting the ability of our suppliers, manufacturers and service providers to supply parts, equipment labor or services in the jurisdictions in which we operate or conduct shipyard activities including newbuild construction; ◾ causing us to incur increased costs, inefficiencies, and labor shortages as a result of precautionary measures taken to counteract a potential or actual outbreak, including testing and quarantining of offshore personnel; and ◾ being negatively affected by various actions by governmental authorities around the world designed to prevent or reduce the spread of an outbreak, such as imposing mandatory closures of all business facilities deemed to be non-essential, seeking voluntary closures of such facilities and imposing restrictions on, or issuing advisories with respect to, travel, business operations and public gatherings or interactions.
Such impacts may include, among others: ◾ causing a temporary shut-down of operations in case of an outbreak on one or more of our rigs; - 10 - Table of Contents ◾ disrupting or restricting the ability of our suppliers, manufacturers and service providers to supply parts, equipment labor or services in the jurisdictions in which we operate or conduct shipyard activities including newbuild construction; ◾ causing us to incur increased costs, inefficiencies, and labor shortages as a result of precautionary measures taken to counteract a potential or actual outbreak, including testing and quarantining of offshore personnel; and ◾ being negatively affected by various actions by governmental authorities around the world designed to prevent or reduce the spread of an outbreak, such as imposing mandatory closures of all business facilities deemed to be non-essential, seeking voluntary closures of such facilities and imposing restrictions on, or issuing advisories with respect to, travel, business operations and public gatherings or interactions.
This substantial level of debt and other obligations could have significant adverse consequences on our business and future prospects, including the following: ◾ we may be unable to obtain financing in the future to refinance our existing debt or for working capital, capital expenditures, acquisitions, debt service requirements, distributions, share repurchases, or other purposes; ◾ we may be unable to use operating cash flow in other areas of our business because we must dedicate a substantial portion of these funds to service the debt; ◾ we could become more vulnerable to general adverse economic and industry conditions, including increases in interest rates, particularly given our substantial indebtedness, some of which bears interest at variable rates; ◾ we may be unable to meet financial ratios in the agreements governing certain of our debt facilities and finance lease or satisfy certain other covenants and conditions included in our debt agreements, which could result in our inability to meet requirements for borrowings under our credit agreement or a default under these agreements, impose restrictions with respect to our access to certain of our capital, and trigger cross default provisions in our other debt instruments; ◾ if we default under the terms of our secured financing arrangements, the secured debtholders may, among other things, foreclose on the collateral securing the debt, including the applicable drilling units; ◾ we may be unable to obtain new investment or financing given recent ESG-influenced trends among many financial intermediaries, investors and other capital markets participants in reducing, or ceasing, lending to, or investing in, companies that operate in industries with higher perceived environmental exposure; and ◾ we may be less able to take advantage of significant business opportunities and to react to changes in market or industry conditions than our less levered competitors.
This substantial level of debt and other obligations could have significant adverse consequences on our business and future prospects, including the following: ◾ we may be unable to obtain financing in the future to refinance our existing debt or for working capital, capital expenditures, acquisitions, debt service requirements, distributions, share repurchases, or other purposes; ◾ we may be unable to use operating cash flows in other areas of our business because we must dedicate a substantial portion of these funds to service the debt; ◾ we could become more vulnerable to general adverse economic and industry conditions, including increases in interest rates, particularly given our substantial indebtedness, some of which bears interest at variable rates; ◾ we may be unable to meet financial ratios in the agreements governing certain of our debt facilities and finance lease or satisfy certain other covenants and conditions included in our debt agreements, which could result in our inability to meet requirements for borrowings under the Secured Credit Facility or a default under such agreements, impose restrictions with respect to our access to certain of our capital, and trigger cross default provisions in our other debt instruments; ◾ if we default under the terms of our secured financing arrangements, the secured debtholders may, among other things, foreclose on the collateral securing the debt, including the applicable drilling units; ◾ we may be unable to obtain new investment or financing given recent ESG-influenced trends among many financial intermediaries, investors and other capital markets participants in reducing, or ceasing, lending to, or investing in, companies that operate in industries with higher perceived environmental exposure; and ◾ we may be less able to take advantage of significant business opportunities and to react to changes in market or industry conditions than our less levered competitors.
Consistent with this dynamic, customers may delay or cancel many exploration and development programs, resulting in reduced demand for our services. Also, increased competition for customers’ drilling budgets could come from, among other areas, land-based energy markets worldwide.
Consistent with this dynamic, customers may delay or cancel many exploration and development programs, resulting in reduced demand for our services. Also, increased competition for customers’ drilling budgets could come from, among other areas, land-based energy markets and renewable energy projects worldwide.
During periods of low oil and natural gas price levels, new construction has resulted in an oversupply of rigs and has caused a subsequent decline in dayrates and rig utilization rates, sometimes for extended periods of time. In an oversupplied market, we may have limited bargaining power to negotiate on more favorable terms.
During periods of low oil and natural gas price levels, new construction has resulted in an oversupply of rigs and has caused a subsequent decline in dayrates and rig utilization rates, sometimes for extended periods of time. In - 8 - Table of Contents an oversupplied market, we may have limited bargaining power to negotiate on more favorable terms.
Although rig availability, service quality and technical capability are drivers of customer contract awards, bid pricing and intense price competition are often key determinants for which a qualified contractor is awarded a job. - 8 - Table of Contents The offshore drilling industry is highly cyclical and is impacted by oil and natural gas price levels and volatility.
Although rig availability, service quality and technical capability are drivers of customer contract awards, bid pricing and intense price competition are often key determinants for which a qualified contractor is awarded a job. The offshore drilling industry is highly cyclical and is impacted by oil and natural gas price levels and volatility.
Our ability to achieve any stated goal, commitment target, or objective, including with respect to emissions intensity reduction, is subject to numerous factors and conditions, some of which are outside of our control.
Our ability to achieve any stated goal, commitment target, or objective, including with respect to emissions intensity reduction, is subject to numerous factors and conditions, many of which are outside of our control.
Should a counterparty fail to honor its obligations under an agreement with us, we could sustain losses, which could have an adverse effect on our business and on our financial position, results of operations or cash flows. - 12 - Table of Contents Failure to recruit and retain personnel could hurt our operations.
Should a counterparty fail to honor its obligations under an agreement with us, we could sustain losses, which could have an adverse effect on our business and on our financial position, results of operations or cash flows. Failure to recruit and retain personnel could hurt our operations.
The introduction of new units delivered without contracts, combined with an increased number of rigs in the global market completing contracts and becoming idle, would intensify price competition.
The introduction of new units delivered without contracts, combined with an increased number of rigs in the global market completing contracts and becoming idle, may intensify price competition.
Oil and gas prices are extremely volatile and are affected by numerous factors, including the following: ◾ worldwide demand for oil and gas, including economic activity in the U.S., other large energy-consuming markets and in developing and emerging markets, which was significantly impacted by COVID-19 and the governmental, company and individual reactions thereto; ◾ the ability of the Organization of the Petroleum Exporting Countries (“OPEC”) to set and maintain production levels, productive spare capacity and pricing among its members; ◾ the level of production in non-OPEC countries; ◾ inventory levels, and the cost and availability of storage and transportation of oil, gas and their related products; ◾ the policies, laws and regulations of various governments regarding exploration and development of their oil and gas reserves and environmental matters, including those addressing alternative energy sources and the risks of global climate change; ◾ international sanctions on oil-producing countries, or the lifting of such sanctions; ◾ advances in exploration, development and production technology; ◾ the development, exploitation and market acceptance of alternative energy sources; ◾ the further development of shale technology to exploit oil and gas reserves; ◾ the discovery rate of new oil and gas reserves and the rate of decline of existing oil and gas reserves; ◾ accidents, adverse weather conditions, natural disasters and other similar incidents relating to the oil and gas industry; and ◾ the worldwide security and political environment, including uncertainty or instability resulting from an escalation or outbreak of armed hostilities, civil unrest, acts of terrorism, public health threats or other crises.
Oil and gas prices are extremely volatile and are affected by numerous factors, including the following: ◾ worldwide demand for oil and gas, including economic activity in the U.S., other large energy-consuming markets and in developing and emerging markets; ◾ the ability of the Organization of the Petroleum Exporting Countries (“OPEC”) to set and maintain production levels, productive spare capacity and pricing among its members; ◾ the level of production in non-OPEC countries; ◾ inventory levels, and the cost and availability of storage and transportation of oil, gas and their related products; ◾ the policies, laws and regulations of various governments regarding exploration and development of their oil and gas reserves and environmental matters, including those addressing alternative energy sources and the risks of global climate change; ◾ international sanctions on oil-producing countries, or the lifting of such sanctions; ◾ advances in exploration, development and production technology; ◾ the development, exploitation and market acceptance of alternative energy sources; ◾ the further development of shale technology to exploit oil and gas reserves; ◾ the discovery rate of new oil and gas reserves and the rate of decline of existing oil and gas reserves; ◾ accidents, adverse weather conditions, natural disasters and other similar incidents relating to the oil and gas industry; and ◾ the worldwide security and political environment, including uncertainty or instability resulting from an escalation or outbreak of armed hostilities, civil unrest, acts of terrorism, public health threats or other crises.
Excess amounts of local currency may also be exposed to the risk of currency exchange losses. Public and investor sentiment towards climate change, fossil fuels and other esg matters could adversely affect our business, cost of capital and the price of our stock and other securities.
Excess amounts of local currency may also be exposed to the risk of currency exchange losses. Changing sentiment towards climate change, fossil fuels and other esg matters could adversely affect our business, cost of capital and the price of our stock and other securities.
The occurrence of these events could result in the suspension of drilling operations, damage to or destruction of the equipment involved and injury to or death of rig personnel. Some experts believe global climate - 11 - Table of Contents change could increase the frequency and severity of these extreme weather conditions.
The occurrence of these events could result in the suspension of drilling operations, damage to or destruction of the equipment involved and injury to or death of rig personnel. Some experts believe global climate change could increase the frequency and severity of these extreme weather conditions.
Our long-term success will be impacted by our ability to effectively address the transition to renewable and other alternative energy sources, and our ability to respond to other climate-related business trends that could adversely impact the long-term demand for oil and natural gas and, ultimately, the demand for our services and products from our services.
Our long-term success will be impacted by our ability to effectively address the transition to renewable and other alternative energy sources, and our ability to respond to other climate-related business trends that could adversely impact the long-term demand for oil and - 13 - Table of Contents natural gas and, ultimately, the demand for our services and products from our services.
Our ability to renew expiring drilling contracts or obtain new drilling contracts depends on the prevailing or expected market conditions. As of February 9, 2023, we have 13 stacked or idle rigs. We also have seven existing drilling contracts for our rigs that are currently operating, which are scheduled to expire before December 31, 2023.
Our ability to renew expiring drilling contracts or obtain new drilling contracts depends on the prevailing or expected market conditions. As of February 14, 2024, we have 13 stacked or idle rigs. We also have three existing drilling contracts for our rigs that are currently operating, which are scheduled to expire before December 31, 2024.
Members of the investment community are also increasing their focus on environmental, social and governance (“ESG”) practices and disclosures, including practices and disclosures related to greenhouse gases and climate change, in the energy industry in particular, and diversity and inclusion initiatives and governance standards among public companies more generally.
Members of the investment community are also increasing their focus on environmental, social and governance (“ESG”) practices and disclosures, including those related to greenhouse gas emissions and climate change, in the energy industry in particular, and diversity and inclusion among public companies more generally.
As of December 31, 2022, approximately 43 percent of our total workforce, working primarily in Norway, Brazil and the U.K., are represented by, and some of our contracted labor work is subject to, collective bargaining agreements, substantially all of which are subject to annual salary negotiation.
As of December 31, 2023, approximately 42 percent of our total workforce, working primarily in Norway and Brazil, are represented by, and some of our contracted labor work is subject to, collective bargaining agreements, substantially all of which are subject to annual salary negotiation.
Public health threats, including pandemics and epidemics, such as the outbreak of COVID-19, new variants thereof, severe influenza, other coronaviruses and other highly communicable viruses or diseases, have impacted and may continue to impact our operations directly or indirectly, including by disrupting the operations of our business partners, suppliers and customers in ways that adversely impact our operations.
Public health threats, including pandemics and epidemics, severe influenza, coronaviruses and other highly communicable viruses or diseases, have impacted and may continue to impact our operations directly or indirectly, including by disrupting the operations of our business partners, suppliers and customers in ways that adversely impact our operations.
As of February 9, 2023, the customers with the most significant aggregate amount of contract backlog associated with our drilling contracts were Shell, Petrobras and Chevron, representing approximately 33 percent, 31 percent, and 14 percent, respectively, of our total contract backlog.
As of February 14, 2024, the customers with the most significant aggregate amount of contract backlog associated with our drilling contracts were Petrobras, Shell and Chevron, representing approximately 31 percent, 25 percent and 10 percent, respectively, of our total contract backlog.
Changing public sentiment concerning fossil fuels, aimed at the investment community, including investment advisors, sovereign wealth funds, public pension funds, universities and other groups, has prompted efforts to promote the divestment of shares of energy companies, as well as to pressure lenders and other financial services companies to limit or curtail activities with energy companies.
Changing sentiment among the public, regulators and non-governmental organizations concerning fossil fuels has prompted efforts aimed in part at the investment community, including investment advisors, sovereign wealth funds, public pension funds, universities and other groups, to discourage initial investments in and promote the divestment of shares of energy companies, as well as to pressure lenders and other financial services companies to limit or curtail activities with certain energy companies.
Our current backlog of contract drilling revenues may not be fully realized. At February 9, 2023, our contract backlog was approximately $8.54 billion.
Our current backlog of contract drilling revenues may not be fully realized. At February 14, 2024, our contract backlog was approximately $9.01 billion.
For the year ended December 31, 2022, our most significant customers were Shell, Equinor and Petrobras, representing approximately 33 percent, 25 percent and 11 percent, respectively, of our consolidated operating revenues.
For the year ended December 31, 2023, our most significant customers were Shell, Equinor, TotalEnergies and Petrobras, representing approximately 27 percent, 16 percent, 12 percent and 11 percent, respectively, of our consolidated operating revenues.
We have a variety of shipyard projects underway for our existing rigs at any given time. Additionally, as of February 14, 2023, we were constructing one ultra-deepwater drillship and held a noncontrolling ownership interest in a company that is constructing one ultra-deepwater drillship.
We have a variety of shipyard projects underway, at any given time, for our existing rigs at any given time, and as of February 14, 2024, we were constructing one ultra-deepwater drillship.
We generally do not carry insurance for loss of revenue, and certain other claims may also not be reimbursed by insurance carriers. Any such lack of reimbursement may cause us to incur substantial costs. In addition, we could decide to retain more risk in the future, resulting in higher risk of losses, which could be material.
As a result, we generally retain the risk for any losses in excess of these limits. We generally do not carry insurance for loss of revenue, and certain other claims may also not be reimbursed by insurance carriers. Any such lack of reimbursement may cause us to incur substantial costs.
Similarly, our failure or perceived failure to pursue or fulfill our sustainability-focused goals, targets, and objectives, to comply with ethical, environmental, or other standards, regulations, or expectations, or to satisfy various reporting standards with respect to these matters, within the timelines we announce, or at all, could adversely affect our business or reputation, as well as expose us to government enforcement actions and private litigation. ​ - 14 - Table of Contents Risks related to our indebtedness We have a substantial amount of debt, including secured debt, and we may lose the ability to obtain future financing and suffer competitive disadvantages.
Similarly, our failure or perceived failure to pursue or fulfill our sustainability-focused goals, targets, and objectives, to comply with ethical, environmental, or other standards, regulations, or expectations, or to satisfy various reporting standards with respect to these matters, within the timelines we announce, or at all, could adversely affect our business or reputation, as well as expose us to government enforcement actions and private litigation.
As a result, we may face - 10 - Table of Contents increasing pressure regarding our ESG disclosures and practices. Additionally, members of the investment community may screen companies such as ours for ESG sustainability performance before investing in our stock.
We may be subject in the future to additional reporting requirements that are developing in response to such increased focus and, as a result, we may face increasing pressure regarding our ESG disclosures and practices. Additionally, members of the investment community may screen companies such as ours for ESG sustainability performance before investing in our stock.
If we are unable to fund capital expenditures with our cash flows from operations or proceeds from sales of non-strategic assets, we may be required to either incur additional borrowings or raise capital through the sale of debt or equity securities, or additional financing arrangements with banks or other capital providers.
In the future, market conditions may not justify these expenditures or enable us to operate our older rigs profitably during the remainder of their economic lives. - 9 - Table of Contents If we are unable to fund capital expenditures with our cash flows from operations or proceeds from sales of non-strategic assets, we may be required to either incur additional borrowings or raise capital through the sale of debt or equity securities, or additional financing arrangements with banks or other capital providers.
A disruption in the deliveries from our suppliers, manufacturers or service providers, capacity constraints, production disruptions, price increases, quality control issues, recalls or other decreased availability of parts and equipment or ancillary services could adversely affect our ability to meet our commitments to customers, adversely impact our operations, increase our operating costs and result in increases in rig downtime and delays in the repair and maintenance of our fleet. - 13 - Table of Contents As part of our business strategies, We may pursue opportunities to strengthen and broaden our business that include acquisitions of businesses or drilling rigs, mergers or joint ventures or other investments, and such transactions would present various risks and uncertainties.
A disruption in the deliveries from our suppliers, manufacturers or service providers, capacity constraints, production disruptions, price increases, quality control issues, recalls or other decreased availability of parts and equipment or ancillary services could adversely affect our ability to meet our commitments to customers, adversely impact our operations, increase our operating costs and result in increases in rig downtime and delays in the repair and maintenance of our fleet.
We generally have no hull and machinery insurance coverage for damages caused by named storms in the U.S. Gulf of Mexico. We maintain per occurrence deductibles that generally range up to $10 million for various third-party liabilities, and we self-insure $50 million of the $750 million excess liability coverage through our wholly owned captive insurance company.
We maintain per occurrence deductibles - 11 - Table of Contents that generally range up to $10 million for various third-party liabilities, and we self-insure $50 million of the $750 million excess liability coverage through our wholly owned captive insurance company. We also retain the risk for any liability that exceeds our excess liability coverage.
Our inability to realize the full amount of our contract backlog may have an adverse effect on our financial position, results of operations or cash flows. - 9 - Table of Contents We must make substantial capital and operating expenditures to reactivate our stacked or idle fleet and to maintain our active fleet, and we may be required to make significant capital expenditures to maintain our competitiveness and to comply with laws and applicable regulations and standards of governmental authorities and organizations.
We must make substantial capital and operating expenditures to reactivate our stacked or idle fleet and to maintain our active fleet, and we may be required to make significant capital expenditures to maintain our competitiveness and to comply with laws and applicable regulations and standards of governmental authorities and organizations.
Legislation has been introduced in the U.S. Congress that could encourage additional unionization efforts in the U.S., as well as increase the chances that such efforts succeed. Additional unionization efforts, if successful, new collective bargaining agreements or work stoppages could materially increase our labor costs and operating restrictions. Our shipyard projects and operations are subject to delays and cost overruns.
Additional unionization efforts, if successful, new collective bargaining agreements or work stoppages could materially increase our labor costs and operating restrictions. - 12 - Table of Contents Our shipyard projects and operations are subject to delays and cost overruns.
If we or our securities are unable to meet the sustainability ESG standards or investment criteria set by these investors and funds, we may lose investors or investors may allocate a portion of their capital away from us, our cost of capital may increase, our stock price may be negatively impacted, the cost of capital associated with our securities offerings may increase and our reputation may be negatively affected.
As a result, there has been a proliferation of ESG focused investment funds seeking ESG oriented investment products. If we or our securities are unable to meet the sustainability ESG standards or investment criteria set by these investors and funds, we may lose investors or investors may allocate a portion of their capital away from us.
If a significant accident or other event occurs that is not fully covered by our insurance or by an enforceable or recoverable indemnity, the occurrence could adversely affect our financial position, results of operations or cash flows. The amount of our insurance may also be less than the related impact on enterprise value after a loss.
However, pollution and environmental risks generally are not completely insurable. If a significant accident or other event occurs that is not fully covered by our insurance or by an enforceable or recoverable indemnity, the occurrence could adversely affect our financial position, results of operations or cash flows.
For example, early in the fourth quarter of 2022, Transocean Equinox concluded the activities contemplated in its drilling contract prior to the end of the contract’s firm term that was previously expected late in the fourth quarter of 2022. The termination payment associated with the drilling contract would not fully compensate us for the early termination of the contract.
Such payments may not, however, fully compensate us for the loss of the contract. In the third quarter of 2023, as the most recent example, Development Driller III concluded the activities contemplated in its drilling contract prior to the end of the contract’s firm term that was previously expected early in the fourth quarter of 2023.
As of February 9, 2023, we have 13 uncontracted rigs, of which five have been out of service for greater than five years, and these rigs may remain out of service for extended periods of time. We also have a noncontrolling ownership interest in a company that has an uncontracted newbuild drillship under construction.
As of February 14, 2024, we have 13 uncontracted rigs, of which six have been out of service for greater than five years, and these rigs may remain out of service for extended periods of time.
Our insurance coverage will not in all situations provide sufficient funds to protect us from all liabilities that could result from our drilling operations. Our coverage includes annual aggregate policy limits. As a result, we generally retain the risk for any losses in excess of these limits.
The amount of our insurance may also be less than the related impact on enterprise value after a loss. Our insurance coverage will not in all situations provide sufficient funds to protect us from all liabilities that could result from our drilling operations. Our coverage includes annual aggregate policy limits.
At December 31, 2022 and 2021, our total debt was $7.35 billion and $7.17 billion, respectively, of which $2.19 billion and $2.30 billion, respectively, was secured. We have a bank credit agreement (as amended, the “Secured Credit Facility”), which is currently undrawn, the borrowings under which would be secured.
We have a bank credit agreement (as amended, the “Secured Credit Facility”), which is currently undrawn, the borrowings under which would be secured and guaranteed by certain of our subsidiaries.
Moreover, we may not be able to maintain adequate insurance in the future at rates that we consider reasonable or be able to obtain insurance against certain risks. Our drilling contracts may be terminated due to a number of events, and, during depressed market conditions, our customers may seek to repudiate or renegotiate their contracts.
Our drilling contracts may be terminated due to a number of events, and, during depressed market conditions, our customers may seek to repudiate or renegotiate their contracts. Certain of our drilling contracts with customers may be cancelable at the option of the customer upon payment of an early termination payment.
Certain of our drilling contracts with customers may be cancelable at the option of the customer upon payment of an early termination payment. Such payments may not, however, fully compensate us for the loss of the contract.
The termination payment associated with the drilling contract would not fully compensate us for the early termination of the contract.
These efforts have recently intensified, as demonstrated by the State of New York’s December 2020 announcement that it will be divesting the state’s Common Retirement Fund from fossil fuels by 2040. If this or similar divestment efforts are successful, our stock price and our ability to access capital markets may be negatively impacted.
If such efforts are successful, the market price of our shares and our ability to access capital markets may be negatively impacted.
Removed
In the future, market conditions may not justify these expenditures or enable us to operate our older rigs profitably during the remainder of their economic lives.
Added
Our inability to realize the full amount of our contract backlog may have an adverse effect on our financial position, results of operations or cash flows.
Removed
Over the past few years there has also been an acceleration in investor demand for ESG investing opportunities, and many large institutional investors have committed to increasing the percentage of their portfolios that are allocated towards ESG investments. As a result, there has been a proliferation of ESG focused investment funds seeking ESG oriented investment products.
Added
As a result, our cost of capital may increase, the market price of our shares or of our publicly traded debt securities may be negatively impacted and our reputation may also be negatively affected.
Removed
We also retain the risk for any liability that exceeds our excess liability coverage. However, pollution and environmental risks generally are not completely insurable.
Added
We generally have no hull and machinery insurance coverage for damages caused by named storms in the U.S. Gulf of Mexico.
Added
In addition, we could decide to retain more risk in the future, resulting in higher risk of losses, which could be material. Moreover, we may not be able to maintain adequate insurance in the future at rates that we consider reasonable or be able to obtain insurance against certain risks.
Added
Legislation has been introduced in the U.S. Congress that could encourage additional unionization efforts in the U.S., as well as increase the chances that such efforts succeed.
Added
As part of our business strategies, We may pursue opportunities to strengthen and broaden our business that include acquisitions of businesses or drilling rigs, mergers or joint ventures or other investments, and such transactions would present various risks and uncertainties.
Added
Risks related to our indebtedness We have a substantial amount of debt, including secured debt, and we may lose the ability to obtain future financing and suffer competitive disadvantages. At December 31, 2023, our total debt was $7.41 billion, of which $2.34 billion was secured.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

8 edited+3 added−1 removed5 unchanged
Biggest changeThe alleged violations, involving seven of our drillships, were identified by the U.S. - 21 - Table of Contents Environmental Protection Agency (“EPA”) following an initial inspection in 2018 of our compliance with the Permit and the CWA and relate to deficiencies with respect to records retention, reporting requirements, discharges, permit limits, inspections and maintenance, and the submission of monitoring reports.
Biggest changeEnvironmental Protection Agency (“EPA”) following an initial inspection in 2018 of our compliance with the Permit and the CWA and relate to deficiencies with respect to administrative monitoring and reporting obligations.
We can provide no assurance that our beliefs or expectations as to the outcome or effect of any lawsuit or claim or dispute will prove correct, and the eventual outcome of these matters could materially differ from management’s current estimates. On December 17, 2021, Transocean Offshore Deepwater Drilling Inc., our wholly owned subsidiary, received a letter from the U.S.
We can provide no assurance that our beliefs or expectations as to the outcome or effect of any lawsuit or claim or dispute will prove correct, and the eventual outcome of these matters could materially differ from management’s current estimates. On December 17, 2021, Transocean Offshore Deepwater Drilling Inc. (“TODDI”), our wholly owned subsidiary, received a letter from the U.S.
Item 3. Legal Proceedings We have certain actions, claims and other matters pending as discussed and reported in “ Part II. Item 8. Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements—Note 12—Commitments and Contingencies ” and “ Part II. Item 7.
Item 3. Legal Proceedings We have certain actions, claims and other matters pending as discussed and reported in “ Part II. Item 8. Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements—Note 13—Commitments and Contingencies ” and “ Part II. Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations—Other Matters—Regulatory Matters ” in this annual report on Form 10-K. We are also involved in various tax matters as described in “ Part II. Item 8. Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements—Note 10—Income Taxes ” and in “ Part II. Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations—Other Matters—Regulatory Matters ” in our annual report on Form 10-K. We are also involved in various tax matters as described in “ Part II. Item 8. Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements—Note 11—Income Taxes ” and in “ Part II. Item 7.
As of December 31, 2022, we were involved in a number of other lawsuits, regulatory matters, disputes and claims, asserted and unasserted, all of which have arisen in the ordinary course of our business and for which we do not expect the liability, if any, to have a material adverse effect on our consolidated financial position, results of operations or cash flows.
As of December 31, 2023, we were involved in a number of other lawsuits, regulatory matters, disputes and claims, asserted and unasserted, all of which constitute ordinary routine litigation incidental to our business and for which we do not expect the liability, if any, to have a material adverse effect on our consolidated financial position, results of operations or cash flows.
We evaluate matters on a case by case basis, investigate allegations in accordance with our policies and cooperate with applicable governmental authorities.
We evaluate - 22 - Table of Contents matters on a case-by-case basis, investigate allegations in accordance with our policies and cooperate with applicable governmental authorities.
Department of Justice (the “DOJ”) related to alleged violations by our subsidiary of its Clean Water Act (“CWA”) National Pollutant Discharge Elimination System permit (“Permit”).
Department of Justice (the “DOJ”) related to alleged violations by our subsidiary of its Clean Water Act (“CWA”) National Pollutant Discharge Elimination System permit for the western Gulf of Mexico (“Permit”). The alleged violations, involving seven of our drillships, were identified by the U.S.
We do not believe that the enforcement action would have a material adverse effect on our consolidated financial position, results of operations or cash flow. If our current expectations relating to these costs prove to be inaccurate, future expenditures may exceed our accrued amounts.
We do not believe that the enforcement of the Consent Decree would have a material adverse effect on our consolidated financial position, results of operations or cash flows.
Removed
At the DOJ’s invitation, in an effort to resolve the matter, we initiated settlement discussions with the DOJ, which remain ongoing, and the enforcement action will likely result in our agreeing to take or continue to take certain corrective actions to ensure current and future Permit and CWA compliance and to pay a monetary penalty, which we believe at this time would be immaterial.
Added
At the DOJ’s invitation, in an effort to resolve the matter, we initiated settlement discussions with the DOJ, which concluded with the execution of a civil consent decree by and between the DOJ, EPA, and TODDI, effective January 6, 2024 (the “Consent Decree”), that resolved the claims of the DOJ based upon the alleged violations of our Permit and the CWA.
Added
Pursuant to the Consent Decree, we agreed to pay an immaterial monetary civil penalty, and we further agreed (i) to take or continue to take certain corrective actions to ensure current and future Permit and CWA compliance, including implementing certain procedures and submitting reports and other information, in each case according to the timelines and as described in the Consent Decree, (ii) to appoint an independent auditor to review, audit and report on our compliance with certain of our obligations thereunder, and (iii) to certain non-exclusive stipulated monetary penalties if we fail to comply with applicable provisions of the Consent Decree.
Added
We may request termination of the Consent Decree after we have (x) completed timely the civil penalty payment and any accrued stipulated penalty requirements of the Consent Decree, and (y) maintained continuous satisfactory compliance with the Consent Decree for at least three years.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

5 edited+0 added−39 removed19 unchanged
Biggest changeThigpen (a) Chief Executive Officer 48 ​ Keelan Adamson (a) ​ President and Chief Operating Officer ​ 53 ​ Howard E. Davis ​ ​ Executive Vice President, Chief Administrative Officer and Chief Information Officer ​ 64 ​ Brady K. Long ​ Executive Vice President and General Counsel 50 ​ Mark L.
Biggest changeThigpen (a) Chief Executive Officer 49 ​ Keelan Adamson (a) ​ President and Chief Operating Officer ​ 54 ​ Howard E. Davis ​ ​ Executive Vice President, Chief Administrative Officer and Chief Information Officer ​ 65 ​ Brady K. Long ​ Executive Vice President and General Counsel 51 ​ Mark L.
The board of directors elects the officers of the Company, generally on an annual basis. There is no family relationship between any of our executive officers. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Age as of ​ Officer ​ Office February 14, 2023 Jeremy D.
The board of directors elects the officers of the Company, generally on an annual basis. There is no family relationship between any of our executive officers. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Age as of ​ Officer ​ Office February 14, 2024 Jeremy D.
Item 4. Mine Safety Disclosures Not applicable. - 22 - Table of Contents Information About Our Executive Officers We have included the following information, presented as of February 14, 2023, on our executive officers for purposes of U.S. securities laws in Part I of this report in reliance on General Instruction G(3) to Form 10-K.
Item 4. Mine Safety Disclosures Not applicable. - 23 - Table of Contents Information About Our Executive Officers We have included the following information, presented as of February 14, 2024, on our executive officers for purposes of U.S. securities laws in Part I of this report in reliance on General Instruction G(3) to Form 10-K.
Mey (a) Executive Vice President and Chief Financial Officer 59 ​ David Tonnel ​ Senior Vice President and Chief Accounting Officer 53 ​ (a) Member of our executive management team for purposes of Swiss law. Jeremy D. Thigpen is Chief Executive Officer and a member of the Company’s board of directors.
Mey (a) Executive Vice President and Chief Financial Officer 60 ​ David Tonnel ​ Senior Vice President and Chief Accounting Officer 54 ​ (a) Member of our executive management team for purposes of Swiss law. Jeremy D. Thigpen is Chief Executive Officer and a member of the Company’s board of directors.
Tonnel earned a Master of Science degree in Management from HEC in Paris, France in 1991. - 23 - Table of Contents PART II Item 5.
Tonnel earned a Master of Science degree in Management from HEC in Paris, France in 1991. - 24 - Table of Contents PART II
Removed
Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities Market for Shares of Our Common Equity Our shares are listed on the New York Stock Exchange under the ticker symbol “RIG.” On February 14, 2023, we had 726,263,759 shares outstanding and 4,893 holders of record of our shares.
Removed
Shareholder Matters Swiss tax consequences to our shareholders Overview —The tax consequences discussed below are not a complete analysis or listing of all the possible tax consequences that may be relevant to our shareholders.
Removed
Shareholders should consult their own tax advisors in respect of the tax consequences related to receipt, ownership, purchase or sale or other disposition of our shares and the procedures for claiming a refund of withholding tax.
Removed
Swiss income tax on dividends and similar distributions —A non-Swiss holder is not subject to Swiss income taxes on dividend income and similar distributions in respect of our shares, unless the shares are attributable to a permanent establishment or a fixed place of business maintained in Switzerland by such non-Swiss holder.
Removed
However, dividends and similar distributions are subject to Swiss withholding tax, subject to certain exceptions.
Removed
See “— Swiss withholding tax on dividends and similar distributions to shareholders .” Swiss wealth tax —A non-Swiss holder is not subject to Swiss wealth taxes unless the holder’s shares are attributable to a permanent establishment or a fixed place of business maintained in Switzerland by such non-Swiss holder.
Removed
Swiss capital gains tax upon disposal of shares —A non-Swiss holder is not subject to Swiss income taxes for capital gains unless the holder’s shares are attributable to a permanent establishment or a fixed place of business maintained in Switzerland by such non-Swiss holder.
Removed
In such case, the non-Swiss holder is required to recognize capital gains or losses on the sale of such shares, which are subject to cantonal, communal and federal income tax.
Removed
Swiss withholding tax on dividends and similar distributions to shareholders —A Swiss withholding tax of 35 percent is due on dividends and similar distributions to our shareholders from us, regardless of the place of residency of the shareholder, subject to the exceptions discussed under “— Exemption ” below.
Removed
We will be required to withhold at such rate and remit on a net basis any payments made to a holder of our shares and pay such withheld amounts to the Swiss federal tax authorities.
Removed
Exemption —Distributions to shareholders in the form of a par value reduction or out of qualifying additional paid-in capital for Swiss statutory purposes are exempt from Swiss withholding tax.
Removed
On December 31, 2022, the aggregate amount of par value of our outstanding shares was CHF 72.2 million, equivalent to approximately $78.1 million, and the aggregate amount of qualifying additional paid-in capital of our outstanding shares was CHF 14.0 billion, equivalent to approximately $15.1 billion.
Removed
Consequently, we expect that a substantial amount of any potential future distributions may be exempt from Swiss withholding tax.
Removed
Refund available to Swiss holders —A Swiss tax resident, corporate or individual, can recover the withholding tax in full if such resident is the beneficial owner of our shares at the time the dividend or other distribution becomes due and provided that such resident reports the gross distribution received on such resident’s income tax return, or in the case of an entity, includes the taxable income in such resident’s income statement.
Removed
Refund available to non - Swiss holders —If the shareholder that receives a distribution from us is not a Swiss tax resident, does not hold our shares in connection with a permanent establishment or a fixed place of business maintained in Switzerland, and resides in a country that has concluded a treaty for the avoidance of double taxation with Switzerland for which the conditions for the application and protection of and by the treaty are met, then the shareholder may be entitled to a full or partial refund of the withholding tax described above.
Removed
Switzerland has entered into bilateral treaties for the avoidance of double taxation with respect to income taxes with numerous countries, including the United States (“U.S.”), whereby under certain circumstances all or part of the withholding tax may be refunded. The procedures for claiming treaty refunds, and the time frame required for obtaining a refund, may differ from country to country.
Removed
Refund available to U.S. residents —The Swiss-U.S. tax treaty provides that U.S. residents eligible for benefits under the treaty can seek a refund of the Swiss withholding tax on dividends for the portion exceeding 15 percent, leading to a refund of 20 percent, or a 100 percent refund in the case of qualified pension funds.
Removed
As a general rule, the refund will be granted under the treaty if the U.S. resident can show evidence of the following: (a) beneficial ownership, (b) U.S. residency and (c) meeting the U.S.-Swiss tax treaty’s limitation on benefits requirements.
Removed
The claim for refund must be filed with the Swiss federal tax authorities (Eigerstrasse 65, 3003 Bern, Switzerland), not later than December 31 of the third year following the year in which the dividend payments became due. The relevant Swiss tax form is Form 82C for companies, 82E for other entities and 82I for individuals.
Removed
These forms can be obtained from any Swiss Consulate General in the U.S. or from the Swiss federal tax authorities at the above address or can be downloaded from the webpage of the Swiss federal tax administration. Each form must be completed in triplicate, with each copy duly completed and signed before a notary public in the U.S.
Removed
Evidence that the withholding tax was withheld at the source must also be included. - 24 - Table of Contents Stamp duties in relation to the transfer of shares —The purchase or sale of our shares may be subject to Swiss federal stamp taxes on the transfer of securities irrespective of the place of residency of the purchaser or seller if the transaction takes place through or with a Swiss bank or other Swiss securities dealer, as those terms are defined in the Swiss Federal Stamp Tax Act and no exemption applies in the specific case.
Removed
If a purchase or sale is not entered into through or with a Swiss bank or other Swiss securities dealer, then no stamp tax will be due. The applicable stamp tax rate is 0.075 percent for each of the two parties to a transaction and is calculated based on the purchase price or sale proceeds.
Removed
If the transaction does not involve cash consideration, the transfer stamp duty is computed on the basis of the market value of the consideration.
Removed
Share repurchases Shares repurchased for the purpose of capital reduction are treated as a partial liquidation subject to a 35 percent Swiss withholding tax based on the difference between the repurchase price and the related amount of par value and the related amount of qualifying additional paid-in capital, if any.
Removed
We would be required to remit on a net basis the purchase price with the Swiss withholding tax deducted to a holder of our shares and pay the withholding tax to the Swiss federal tax authorities.
Removed
However, for such repurchased shares, the portions of the repurchase price that are attributable to the par value and the qualifying additional paid-in capital for Swiss statutory reporting purposes are not subject to the Swiss withholding tax.
Removed
If we repurchase shares, we expect to use an alternative procedure pursuant to which we repurchase our shares via a "virtual second trading line" from market players, such as banks and institutional investors, who are generally entitled to receive a full refund of the Swiss withholding tax.
Removed
The use of such “virtual second trading line” with respect to share repurchase programs is subject to approval of the competent Swiss tax and other authorities.
Removed
We may not be able to repurchase as many shares as we would like to repurchase for purposes of capital reduction on the “virtual second trading line” without subjecting the selling shareholders to Swiss withholding taxes.
Removed
The repurchase of shares for purposes other than for cancellation, such as to retain as treasury shares for use in connection with stock incentive plans, convertible debt or other instruments within certain periods, are not generally subject to Swiss withholding tax. In addition, in December 2022, the U.S.
Removed
Department of the Treasury released proposed regulations under the Inflation Reduction Act, whereby an excise tax of one percent would be imposed on stock repurchases in the event one of our U.S. subsidiaries funds the stock repurchase. Under Swiss corporate law, the right of a company and its subsidiaries to repurchase and hold its own shares is limited.
Removed
A company may repurchase its shares to the extent it has freely distributable reserves as shown on its Swiss statutory balance sheet in the amount of the purchase price and if the aggregate par value of all shares held by the company as treasury shares does not exceed 10 percent of the company’s share capital recorded in the Swiss Commercial Register, whereby for purposes of determining whether the 10 percent threshold has been reached, shares repurchased under a share repurchase program for cancellation purposes authorized by the company’s shareholders are disregarded.
Removed
As of February 14, 2023, Transocean Inc., our wholly owned subsidiary, held as treasury shares 8.90 percent of our issued shares.
Removed
Our board of directors could, to the extent freely distributable reserves are available, authorize the repurchase of additional shares for purposes other than cancellation, such as to retain treasury shares for use in satisfying our obligations in connection with incentive plans or other rights to acquire our shares.
Removed
Based on the number of shares held as treasury shares as of February 14, 2023, 1.10 percent of our issued shares could be repurchased for purposes of retention as additional treasury shares.
Removed
Although our board of directors has not approved such a share repurchase program for the purpose of retaining repurchased shares as treasury shares, if it did so, any such shares repurchased would be in addition to any shares repurchased under the currently approved program.
Removed
Issuer Purchases of Equity Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total number of shares ​ Approximate dollar value ​ ​ ​ Total number ​ Average ​ purchased as part ​ of shares that may yet ​ ​ ​ of shares ​ price paid ​ of publicly announced ​ be purchased under the plans ​ Period purchased per share plans or programs (a) or programs (in millions ) (a) October 2022 ​ — ​ $ — ​ — $ 3,508 ​ November 2022 ​ — ​ ​ — ​ — ​ ​ 3,508 ​ December 2022 ​ — ​ ​ — ​ — ​ ​ 3,508 ​ Total ​ — ​ $ — ​ — $ 3,508 ​ (a) In May 2009, at our annual general meeting, our shareholders approved and authorized our board of directors, at its discretion, to repurchase for cancellation any amount of our shares for an aggregate purchase price of up to CHF 3.50 billion.
Removed
At December 31, 2022, the authorization remaining under the share repurchase program was for the repurchase of our outstanding shares for an aggregate cost of up to CHF 3.24 billion, equivalent to $3.51 billion . The share repurchase program may be suspended or discontinued by our board of directors or company management, as applicable, at any time.
Removed
See “ Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Sources and uses of liquidity .”

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

27 edited+157 added−27 removed32 unchanged
Biggest changeThe balance of the cash and cash equivalents held by the captive insurance company varies, depending on (i) premiums received and (ii) the timing and magnitude of claims and dividends paid by the captive insurance company. - 35 - Table of Contents Drilling fleet Expansion —From time to time, we review possible acquisitions of businesses and drilling rigs, as well as noncontrolling interests in other companies, and we may make significant future capital commitments for such purposes.
Biggest changeDrilling fleet —From time to time, we review possible acquisitions of businesses and drilling rigs, as well as noncontrolling ownership interests in other companies, and we may make significant future capital commitments for such purposes. We may also consider investments related to major rig upgrades, new rig construction, or the acquisition of a rig under construction.
During the years ended December 31, 2022 and 2021, in connection with our evaluation of the projected realizability of our deferred tax assets, we determined that our consolidated cumulative loss incurred over the recent three-year period has limited our ability to consider other subjective evidence, such as projected contract activity rather than contract backlog.
During the years ended December 31, 2023 and 2022, in connection with our evaluation of the projected realizability of our deferred tax assets, we determined that our consolidated cumulative loss incurred over the recent three-year period has limited our ability to consider other subjective evidence, such as projected contract activity rather than contract backlog.
The relationship between our provision for or benefit from income taxes and our income or loss before income taxes can vary significantly from period to period considering, among other factors, (a) the overall level of income before income taxes, (b) changes in the blend of income that is taxed based on gross revenues rather than income before taxes, (c) rig movements between taxing jurisdictions and (d) our rig operating structures.
The relationship between our provision for or benefit from income taxes and our income or loss before income taxes can vary significantly from period to period considering, among other factors, (a) the overall level of income before income taxes, (b) changes in the blend of income that is taxed based on gross revenues rather than income before taxes, (c) rig movements - 35 - Table of Contents between taxing jurisdictions and (d) our rig operating structures.
See Notes to Consolidated Financial Statements— Note 10—Income Taxes . Property and equipment —We apply significant judgment to account for our property and equipment, consisting primarily of offshore drilling rigs and related equipment, related to estimates and assumptions for cost capitalization, useful lives and salvage values.
See Notes to Consolidated Financial Statements— Note 11—Income Taxes . Property and equipment Overview —We apply significant judgment to account for our property and equipment, consisting primarily of offshore drilling rigs and related equipment, related to estimates and assumptions for cost capitalization, useful lives and salvage values.
Valuation allowance —We apply significant judgment to determine whether our deferred tax assets will be fully or partially realized. Our evaluation requires us to consider all available positive and negative evidence, including projected future taxable income and the existence of cumulative losses in recent years.
Valuation allowance —We apply significant judgment to determine whether our deferred tax assets will be fully or partially realized. Our evaluation requires us to consider all available positive and negative evidence, including projected future taxable income and the existence of cumulative losses in recent years. We continually evaluate opportunities for the future utilization of our deferred tax assets.
We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
We evaluate our estimates on an ongoing basis using historical experience and various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
See Notes to Consolidated Financial Statements— Note 12—Commitments and Contingencies . Tax matters We conduct operations through our various subsidiaries in countries throughout the world. Each country has its own tax regimes with varying nominal rates, deductions and tax attributes that are subject to changes resulting from new legislation, interpretation or guidance.
See Notes to Consolidated Financial Statements— Note 13—Commitments and Contingencies . Tax matters We conduct operations through our various subsidiaries in countries throughout the world. Each country has its own tax regimes with varying statutory rates, deductions and tax attributes, which are subject to changes resulting from new legislation, interpretation or guidance.
We intend to fund the cash requirements relating to our capital expenditures not financed under the Shipyard Loans by using available cash balances, cash generated from operations and asset sales, borrowings under our Secured Credit Facility and financing arrangements with banks or other capital providers. Economic conditions and other factors could impact the availability of these sources of funding.
We intend to fund the cash requirements for our projected capital expenditures by using available cash balances, cash generated from operations and asset sales, borrowings under our Secured Credit Facility and financing arrangements with banks or other capital providers. Economic conditions and other factors could impact the availability of these sources of funding.
As of December 31, 2022, we had unrecognized tax benefits of $471 million, including interest and penalties, against which we recorded net operating loss deferred tax assets of $383 million, resulting in net unrecognized tax benefits of $88 million, including interest and penalties, that upon reversal would favorably impact our effective tax rate.
At December 31, 2023 and 2022, we had unrecognized tax benefits of $458 million and $471 million, respectively, including interest and penalties, against which we recorded net operating loss deferred tax assets of $411 million and $383 million, respectively, resulting in net unrecognized tax benefits of $47 million and $88 million, respectively, including interest and penalties, that upon reversal would favorably impact our effective tax rate.
In the years ended December 31, 2022 and 2021, we made capital expenditures of $717 million and $208 million, respectively, including $669 million and $174 million, respectively, for our newbuild construction projects.
In the years ended December 31, 2023 and 2022, we made capital expenditures of $427 million and $717 million, respectively, including $331 million and $669 million, respectively, for our newbuild construction projects.
See Notes to Consolidated Financial Statements—Note 10—Income Taxes . Other commercial commitments —We have other commercial commitments, such as standby letters of credit and surety bonds that guarantee our performance as it relates to our drilling contracts, insurance, customs, tax and other obligations in various jurisdictions.
Other commercial commitments —We have other commercial commitments, such as standby letters of credit and surety bonds that guarantee our performance as it relates to our drilling contracts, insurance, customs, tax and other obligations in various jurisdictions.
For a discussion of our significant accounting policies and accounting standards updates, refer to our Notes to Consolidated Financial Statements— Note 2—Significant Accounting Policies . Income taxes —We provide for income taxes based on expected taxable income, statutory rates, tax laws and tax planning opportunities available to us in the jurisdictions in which we operate or have a taxable presence.
For information about our significant accounting policies and accounting standards updates, see Notes to Consolidated Financial Statements— Note 2—Significant Accounting Policies . Income taxes Overview —We provide for income taxes based on expected taxable income, statutory rates and tax laws in the jurisdictions in which we operate or have a taxable presence.
At December 31, 2022 and 2021, the carrying amount of our property and equipment was $17.47 billion and $17.10 billion, respectively, representing 85 percent and 83 percent, respectively, of our total assets.
At December 31, 2023 and 2022, the carrying amount of our property and equipment was $16.94 billion and $17.47 billion, respectively, representing 84 percent and 85 percent, respectively, of our total assets.
These exposures may be affected by changes in applicable tax law or other factors, which could cause us to revise our prior estimates, and are generally resolved through the settlement of audits within these tax jurisdictions or by judicial means.
Such tax exposures include potential challenges to intercompany pricing, disposition transactions, and withholding tax rates and their applicability. These exposures may be affected by changes in applicable tax law or other factors, which could cause us to revise our prior estimates, and are generally resolved through the settlement of audits within these tax jurisdictions or by judicial means.
The seventh generation, high-specification drillship is designed to be equipped with our patented dual activity, a 1,400 short-ton hookload, large deck space, high load capacities, large deck space and will be dual-stack ready.
The seventh generation, high-specification drillship is designed to be equipped with our patented dual activity, a 1,400 short-ton hookload, large deck space, high load capacities and will be dual-stack ready. The rig is expected to commence operations under its drilling contract in mid-2024.
See Notes to Consolidated Financial Statements— Note 10—Income Taxes .
See Notes to Consolidated Financial Statements— Note 11—Income Taxes . - 37 - Table of Contents
Our failure to subsequently secure drilling contracts in these instances, if not already secured, could have an adverse effect on our results of operations or cash flows.
Any such acquisition or investment could involve the payment by us of a substantial amount of cash or the issuance of a substantial number of additional shares or other securities. Our failure to subsequently secure drilling contracts in these instances, if not already secured, could have an adverse effect on our results of operations or cash flows.
See “— Sources and uses of liquidity .” Dispositions —From time to time, we may also review the possible disposition of certain drilling assets. Considering market conditions, we have previously committed to plans to sell certain lower-specification drilling units for scrap value, and we may identify additional lower-specification drilling units to be sold for scrap, recycling or alternative purposes.
Considering market conditions, we have previously committed to plans to sell certain lower specification - 34 - Table of Contents drilling units for scrap value, and we may identify additional lower-specification drilling units to be sold for scrap, recycling or alternative purposes. See Notes to Consolidated Financial Statements — Note 7 — Long-Lived Assets.
Capitalized costs increase the carrying amounts of, and depreciation expense for, the related assets, which also impact our results of operations. Useful lives and salvage values —We depreciate our assets using the straight-line method over their estimated useful lives after allowing for salvage values.
Cost capitalization affects our results of operations by reducing expenses in the period incurred and increasing depreciation expense over the useful life of the asset. Useful lives and salvage values —We depreciate our assets using the straight-line method over their estimated useful lives after allowing for salvage values.
Long - lived asset impairment —We review our property and equipment for impairment when events or changes in circumstances indicate that the carrying amounts of our assets held and used may not be recoverable.
At December 31, 2023, a hypothetical one-year increase in the useful lives of all of our rigs would cause a decrease in our annual depreciation expense of approximately $33 million and a hypothetical one-year decrease would cause an increase in our annual depreciation expense of approximately $13 million. - 36 - Table of Contents Long-lived asset impairment —We review our property and equipment for impairment when events or changes in circumstances indicate that the carrying amounts of our assets held and used may not be recoverable.
In August 2020, Perestroika AS, an entity affiliated with one of our directors that beneficially owns approximately 11 percent of our shares, exchanged $356 million aggregate principal amount of the 0.50% Exchangeable Senior Bonds for $213 million aggregate principal amount of 2.50% Senior Guaranteed Exchangeable Bonds.
Related Party Transactions In April 2023, Perestroika AS (together with its subsidiaries, “Perestroika”), an entity affiliated with one of our directors that beneficially owns approximately 11 percent of our shares, exchanged $213 million aggregate principal amount of the 2.50% Senior Guaranteed Exchangeable Bonds under the terms of the governing indenture at the applicable exchange rate of 162.1626 Transocean Ltd. shares per $1,000 note.
The historical and projected capital expenditures and non-cash capital additions for our ongoing newbuild construction projects were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Expected ​ ​ ​ ​ ​ ​ Total costs ​ costs for the ​ ​ ​ ​ ​ ​ through ​ year ending ​ ​ ​ ​ ​ December 31, ​ December 31, ​ ​ ​ ​ 2022 2023 ​ Total ​ ​ (in millions) Deepwater Atlas (a) ​ $ 954 ​ $ 66 ​ $ 1,020 ​ Deepwater Titan (b) ​ ​ 1,052 ​ ​ 128 ​ ​ 1,180 ​ Total ​ $ 2,006 $ 194 $ 2,200 ​ (a) In October 2022, we completed construction of the ultra-deepwater drillship Deepwater Atlas .
The historical and projected capital expenditures and non-cash capital additions for our ongoing newbuild construction projects were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Expected ​ ​ ​ ​ ​ ​ Total costs ​ costs for the ​ ​ ​ ​ ​ ​ through ​ year ending ​ ​ ​ ​ ​ December 31, ​ December 31, ​ ​ ​ ​ 2023 2024 ​ Total ​ ​ (in millions) Deepwater Aquila (a) ​ $ 301 ​ $ 139 ​ $ 440 ​ Deepwater Titan (b) ​ ​ 1,165 ​ ​ — ​ ​ 1,165 ​ Deepwater Atlas (c) ​ ​ 1,000 ​ ​ — ​ ​ 1,000 ​ Total ​ $ 2,466 $ 139 $ 2,605 ​ (a) In September 2023, we acquired Deepwater Aquila , an ultra-deepwater drillship under construction for Liquila, a previously unconsolidated variable interest entity, by acquiring the outstanding ownership interests in Liquila.
In October 2022, the rig commenced operations in the first of two phases using a 15,000 pounds per square inch blowout preventer. Before the start of the second phase, the rig will undergo installation of a 20,000 pounds per square inch blowout preventer and related equipment, which is expected to be commissioned in the third quarter of 2023.
In October 2023, the rig completed installation of a 20,000 pounds per square inch blowout preventer and related equipment, and is expected to return to service in the first half of 2024.
Given the nature of these evaluations and their application to specific asset groups and specific time periods, it is not possible to reasonably quantify the impact of changes in these assumptions. In the year ended December 31, 2020, we recognized a loss of $31 million, which had no tax effect, associated with the impairment of the midwater floater asset group.
Given the nature of these evaluations and their application to specific asset groups and specific time periods, it is not possible to reasonably quantify the impact of changes in these assumptions. See Notes to Consolidated Financial Statements— Note 7—Long-Lived Assets .
See Notes to Consolidated Financial Statements— Note 3—Unconsolidated Affiliates and Notes to Consolidated Financial Statements—Note 8—Debt .
See Notes to Consolidated Financial Statements— Note 4—Unconsolidated Affiliates . We engage in certain related party transactions with our unconsolidated affiliates.
Gulf of Mexico and an upgrade for two 20,000 pounds per square inch blowout preventers and other equipment required by our customer.
(b) In May 2023, we completed construction of the ultra-deepwater drillship Deepwater Titan , and it commenced operations under its drilling contract. Deepwater Titan is equipped with two 20,000 pounds per square inch blowout preventers and other equipment required by our customer.
Related Party Transactions We engage in certain related party transactions with our unconsolidated affiliates, the most significant of which are under agreements with Orion. We have a management services agreement with Orion for the operation, stacking and maintenance of the harsh environment floater Transocean Norge and a marketing services agreement for the marketing of the rig.
Our most significant transactions with our unconsolidated affiliates are under agreements with Orion Holdings (Cayman) Limited as follows: (a) we operate, stack and maintain Transocean Norge under a management services agreement, (b) we market Transocean Norge under a marketing services agreement and (c) during operations, we lease Transocean Norge under a bareboat charter agreement.
Removed
Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities—Shareholder Matters .” Contractual obligations —At December 31, 2022, our contractual obligations stated at face value, were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ending December 31, ​ ​ ​ ​ Total 2023 2024 - 2025 2026 - 2027 Thereafter ​ ​ (in millions) Debt ​ $ 7,311 $ 728 $ 2,084 $ 2,755 $ 1,744 ​ Interest on debt ​ ​ 2,136 ​ ​ 384 ​ ​ 635 ​ ​ 335 ​ ​ 782 ​ Finance lease liability ​ ​ 465 ​ ​ 65 ​ ​ 141 ​ ​ 141 ​ ​ 118 ​ Operating lease liabilities ​ ​ 160 ​ ​ 13 ​ ​ 25 ​ ​ 24 ​ ​ 98 ​ Purchase obligations ​ ​ 38 ​ ​ 36 ​ ​ 2 ​ ​ — ​ ​ — ​ Service agreement obligations ​ ​ 836 ​ ​ 124 ​ ​ 281 ​ ​ 266 ​ ​ 165 ​ Total ​ $ 10,946 $ 1,350 $ 3,168 $ 3,521 $ 2,907 ​ As of December 31, 2022, our defined benefit pension and other postemployment plans represented an aggregate liability of $174 million, representing the aggregate projected benefit obligation, net of the aggregate fair value of plan assets.
Added
Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities Market for Shares of Our Common Equity Our shares are listed on the New York Stock Exchange under the ticker symbol “RIG.” On February 14, 2024, we had 809,030,846 shares outstanding and 4,694 holders of record of our shares.
Removed
The carrying amount of this liability is influenced by, among others, significant current and future assumptions, funding contributions, returns on plan assets, participant demographics, and plan amendments. We excluded this amount from our contractual obligations presented above due to the uncertainties resulting from these factors and because the amount is not representative of future liquidity requirements.
Added
Shareholder Matters Swiss tax consequences to our shareholders Overview —The tax consequences discussed below are not a complete analysis or listing of all the possible tax consequences that may be relevant to our shareholders.
Removed
See Notes to Consolidated Financial Statements—Note 9—Postemployment Benefit Plans .
Added
Shareholders should consult their own tax advisors in respect of the tax consequences related to receipt, ownership, purchase or sale or other disposition of our shares and the procedures for claiming a refund of withholding tax.
Removed
Although a portion of these could settle or reverse in the coming year, we have excluded this amount from our contractual obligations presented above due to the high degree of uncertainty regarding the timing of future cash outflows associated with these liabilities and the period in which any cash settlement may be made with the respective taxing authorities.
Added
Swiss income tax on dividends and similar distributions —A non-Swiss holder is not subject to Swiss income taxes on dividend income and similar distributions in respect of our shares, unless the shares are attributable to a permanent establishment or a fixed place of business maintained in Switzerland by such non-Swiss holder.
Removed
At December 31, 2022, the aggregate cash collateral held by banks for letters of credit and surety bonds was $7 million.
Added
However, dividends and similar distributions are subject to Swiss withholding tax, subject to certain exceptions.
Removed
At December 31, 2022, these obligations stated in U.S. dollar equivalents and their time to expiration were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ending December 31, ​ ​ ​ ​ Total 2023 2024 - 2025 2026 - 2027 Thereafter ​ (in millions) Standby letters of credit ​ $ 8 $ 8 ​ $ — ​ $ — ​ $ — ​ Surety bonds ​ ​ 161 ​ ​ 29 ​ ​ 121 ​ ​ 11 ​ ​ — ​ Total ​ $ 169 $ 37 ​ $ 121 ​ $ 11 ​ $ — ​ We have established a wholly owned captive insurance company to insure various risks of our operating subsidiaries.
Added
See “— Swiss withholding tax on dividends and similar distributions to shareholders .” Swiss wealth tax —A non-Swiss holder is not subject to Swiss wealth taxes unless the holder’s shares are attributable to a permanent establishment or a fixed place of business maintained in Switzerland by such non-Swiss holder.
Removed
Access to the cash and cash equivalents of the captive insurance company may be limited due to local regulatory restrictions. At December 31, 2022, the captive insurance company held cash and cash equivalents of $44 million, and such balance is expected to range from $25 million to $75 million through December 31, 2023.
Added
Swiss capital gains tax upon disposal of shares —A non-Swiss holder is not subject to Swiss income taxes for capital gains unless the holder’s shares are attributable to a permanent establishment or a fixed place of business maintained in Switzerland by such non-Swiss holder.
Removed
We may also consider investments related to major rig upgrades, new rig construction, or the acquisition of a rig under construction. Any such acquisition or investment could involve the payment by us of a substantial amount of cash or the issuance of a substantial number of additional shares or other securities.
Added
In such case, the non-Swiss holder is required to recognize capital gains or losses on the sale of such shares, which are subject to cantonal, communal and federal income tax.
Removed
In the year ended December 31, 2022, we made a cash contribution of $15 million to Liquila, which represented our proportionate contribution that was used to make the initial payment to the shipyard to acquire the newbuild ultra-deepwater drillship Deepwater Aquila for a purchase price of approximately $200 million.
Added
Swiss withholding tax on dividends and similar distributions to shareholders —A Swiss withholding tax of 35 percent is due on dividends and similar distributions to our shareholders from us, regardless of the place of residency of the shareholder, subject to the exceptions discussed under “— Exemption ” below.
Removed
We maintain the exclusive right to market and manage the operations of the rig, which is expected to be delivered from the shipyard in the third quarter of 2023.
Added
We will be required to withhold at such rate and remit on a net basis any payments made to a holder of our shares and pay such withheld amounts to the Swiss federal tax authorities.
Removed
In June 2022, we borrowed $349 million under the Shipyard Loan and made a cash payment of $46 million to satisfy the final milestone payment due upon delivery of Deepwater Atlas . We recorded the Shipyard Loan, net of imputed interest, and corresponding non-cash capital additions of $300 million.
Added
Exemption —Distributions to shareholders in the form of a par value reduction or out of qualifying additional paid-in capital for Swiss statutory purposes are exempt from Swiss withholding tax.
Removed
(b) Deepwater Titan is an ultra-deepwater drillship under construction. In December 2022, we took delivery from Jurong Shipyard Pte Ltd. in Singapore and borrowed $90 million under the Shipyard Loan and made a cash payment of $325 million to satisfy the final milestone payment due upon delivery of Deepwater Titan .
Added
On December 31, 2023, the aggregate amount of par value of our outstanding shares was CHF 80.9 million, equivalent to approximately $96.2 million, and the aggregate amount of qualifying additional paid-in capital of our outstanding shares was CHF 14.4 billion, equivalent to approximately $17.1 billion.
Removed
We recorded the Shipyard Loan, net of imputed interest, and corresponding non-cash capital additions of $82 million. The rig is expected to commence operations under its drilling contract in the second quarter of 2023. The projected capital additions include estimates for the mobilization and customer acceptance in the U.S.
Added
Consequently, we expect that a substantial amount of any potential future distributions may be exempt from Swiss withholding tax.
Removed
We also periodically lease the rig under short-term bareboat charter agreements. In June 2021, Orion refinanced its shipyard loans under a financing arrangement for $100 million, in which we made a cash investment of $33 million. Borrowings under the financing arrangement are secured by Transocean Norge .
Added
Refund available to Swiss holders —A Swiss tax resident, corporate or individual, can recover the withholding tax in full if such resident is the beneficial owner of our shares at the time the dividend or other distribution becomes due and provided that such resident reports the gross distribution received on such resident’s income tax return, or in the case of an entity, includes the taxable income in such resident’s income statement.
Removed
Additionally, we have a management services agreement with Liquila for various services, including the marketing of - 36 - Table of Contents the newbuild ultra-deepwater drilliship Deepwater Aquila . See Notes to Consolidated Financial Statements—Note 3—Unconsolidated Affiliates .
Added
Refund available to non - Swiss holders —If the shareholder that receives a distribution from us is not a Swiss tax resident, does not hold our shares in connection with a permanent establishment or a fixed place of business maintained in Switzerland, and resides in a country that has concluded a treaty for the avoidance of double taxation with Switzerland for which the conditions for the application and protection of and by the treaty are met, then the shareholder may be entitled to a full or partial refund of the withholding tax described above.
Removed
Perestroika AS has certain registration rights related to its shares and shares that may be issued in connection with any exchange of its 2.50% Senior Guaranteed Exchangeable Bonds. In November 2022, Perestroika AS made a cash investment of $10 million for a 13 percent noncontrolling ownership interest in Liquila.
Added
Switzerland has entered into bilateral treaties for the avoidance of double taxation with respect to income taxes with numerous countries, including the United States (“U.S.”), whereby under certain circumstances all or part of the withholding tax may be refunded. The procedures for claiming treaty refunds, and the time frame required for obtaining a refund, may differ from country to country.
Removed
On an ongoing basis, we evaluate our estimates, including those related to our income taxes, property and equipment, equity investments, contingencies, allowance for excess materials and supplies, intangibles, postemployment benefit plans and share-based compensation.
Added
Refund available to U.S. residents —The Swiss-U.S. tax treaty provides that U.S. residents eligible for benefits under the treaty can seek a refund of the Swiss withholding tax on dividends for the portion exceeding 15 percent, leading to a refund of 20 percent, or a 100 percent refund in the case of qualified pension funds.
Removed
Such tax exposures include potential challenges to permanent establishment positions, intercompany pricing, disposition transactions, and withholding tax rates and their applicability.
Added
As a general rule, the refund will be granted under the treaty if the U.S. resident can show evidence of the following: (a) beneficial ownership, (b) U.S. residency and (c) meeting the U.S.-Swiss tax treaty’s limitation on benefits requirements.
Removed
At December 31, 2022 and 2021, we had unrecognized tax benefits of $471 million and $435 million, respectively, including interest and penalties, against which we recorded net operating loss deferred tax assets of $383 million and $320 million, respectively, resulting in net unrecognized tax benefits of $88 million and $115 million, respectively, including interest and penalties, that upon reversal would favorably impact our effective tax rate.
Added
The claim for refund must be filed with the Swiss federal tax authorities (Eigerstrasse 65, 3003 Bern, Switzerland), not later than December 31 of the third year following the year in which the dividend payments became due. The relevant Swiss tax form is Form 82C for companies, 82E for other entities and 82I for individuals.
Removed
We continually evaluate tax planning strategies that could allow for the future utilization of - 37 - Table of Contents our deferred tax assets.
Added
These forms can be obtained from any Swiss Consulate General in the U.S. or from the Swiss federal tax authorities at the above address or can be downloaded from the webpage of the Swiss federal tax administration. Each form must be completed in triplicate, with each copy duly completed and signed before a notary public in the U.S.
Removed
At December 31, 2022, a hypothetical one-year increase in the useful lives of all of our rigs would cause a decrease in our annual depreciation expense of approximately $38 million and a hypothetical one-year decrease would cause an increase in our annual depreciation expense of approximately $13 million.
Added
Evidence that the withholding tax was withheld at the source must also be included. - 25 - Table of Contents Stamp duties in relation to the transfer of shares —The purchase or sale of our shares may be subject to Swiss federal stamp taxes on the transfer of securities irrespective of the place of residency of the purchaser or seller if the transaction takes place through or with a Swiss bank or other Swiss securities dealer, as those terms are defined in the Swiss Federal Stamp Tax Act and no exemption applies in the specific case.
Removed
See Notes to Consolidated Financial Statements— Note 6—Long-Lived Assets . Equity-method investments and impairment —We review our equity-method investments for potential impairment when events or changes in circumstances indicate that the carrying amount of the investment might not be recoverable in the near term.
Added
If a purchase or sale is not entered into through or with a Swiss bank or other Swiss securities dealer, then no stamp tax will be due. The applicable stamp tax rate is 0.075 percent for each of the two parties to a transaction and is calculated based on the purchase price or sale proceeds.
Removed
Such circumstances include the following: (a) evidence we are unable to recover the carrying amount of our investment, (b) evidence that the investee is unable to sustain earnings that would justify the carrying amount or (c) the current fair value of the investment is less than the carrying amount.
Added
If the transaction does not involve cash consideration, the transfer stamp duty is computed on the basis of the market value of the consideration.
Removed
If an evaluation of such circumstances results in the determination that an impairment that is other than temporary exists, - 38 - Table of Contents we recognize an impairment loss, measured as the amount by which the carrying amount of the investment exceeds its estimated fair value.
Added
Share repurchases Overview —Shares repurchased for the purpose of capital reduction are treated as a partial liquidation subject to a 35 percent Swiss withholding tax based on the difference between the repurchase price and the related amount of par value and the related amount of qualifying additional paid-in capital, if any.
Removed
To estimate the fair value of the investment, we apply valuation methods that rely primarily on the income and market approaches.
Added
We would be required to remit on a net basis the purchase price with the Swiss withholding tax deducted to a holder of our shares and pay the withholding tax to the Swiss federal tax authorities.
Removed
Our estimate of fair value generally requires us to use significant unobservable inputs, representative of Level 3 fair value measurements, including assumptions related to the estimated discount rate and the investee’s long-term future operational performance factors, such as projected revenues and costs and market factors, including demand for the investee’s industry, services and product lines.
Added
However, for such repurchased shares, the portions of the repurchase price that are attributable to the par value and the qualifying additional paid-in capital for Swiss statutory reporting purposes are not subject to the Swiss withholding tax.
Removed
Such projections involve significant uncertainties and require significant judgment. In the years ended December 31, 2021 and 2020, we recognized a loss of $37 million and $59 million, respectively, associated with an other-than-temporary impairment of the carrying amount of our equity-method investments. See Notes to Consolidated Financial Statements— Note 3—Unconsolidated Affiliates .

… 131 more changes not shown on this page.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

0 edited+2 added−156 removed0 unchanged
Removed
Item 6. RESERVED ​ - 25 - Table of Contents Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following information should be read in conjunction with the information contained in “ Part I. Item 1. Business ,” “ Part I. Item 1A.
Added
Item 6. Reserved 27 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 27 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 38 Item 8. Financial Statements and Supplementary Data 39 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 72 Item 9A. Controls and Procedures 72 Item 9B.
Removed
Risk Factors ” and the audited consolidated financial statements and the notes thereto included under “ Item 8. Financial Statements and Supplementary Data ” elsewhere in this annual report on Form 10-K. The following discussion of our results of operations and liquidity and capital resources includes comparisons for the years ended December 31, 2022 and 2021.
Added
Other Information 72 Item 9C . Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 73 ​ ​ ​ PART III
Removed
For a discussion, including comparisons, of our results of operations and liquidity and capital resources for the years ended December 31, 2021 and 2020, see “Part II. Item 7.
Removed
Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our annual report on Form 10-K for the year ended December 31, 2021 , filed with the United States (“U.S.”) Securities and Exchange Commission on February 23, 2022. Business Transocean Ltd.
Removed
(together with its subsidiaries and predecessors, unless the context requires otherwise, “Transocean,” “we,” “us” or “our”) is a leading international provider of offshore contract drilling services for oil and gas wells.
Removed
As of February 14, 2023, we owned or had partial ownership interests in and operated 37 mobile offshore drilling units, consisting of 27 ultra-deepwater floaters and 10 harsh environment floaters. Additionally, as of February 14, 2023, we were constructing one ultra-deepwater drillship and held a noncontrolling ownership interest in a company that is constructing one ultra-deepwater drillship.
Removed
We provide, as our primary business, contract drilling services in a single operating segment, which involves contracting our mobile offshore drilling rigs, related equipment and work crews to drill oil and gas wells. We specialize in technically demanding regions of the global offshore drilling business with a particular focus on ultra-deepwater and harsh environment drilling services.
Removed
Our drilling fleet is one of the most versatile fleets in the world, consisting of drillships and semisubmersible floaters used in support of offshore drilling activities and offshore support services on a worldwide basis.
Removed
We perform contract drilling services by deploying our high-specification fleet in a single, global market that is geographically dispersed in oil and gas exploration and development areas throughout the world.
Removed
Although rigs can be moved from one region to another, the cost of moving rigs and the availability of rig-moving vessels may cause the supply and demand balance to fluctuate somewhat between regions. Still, significant variations between regions do not tend to persist long term because of rig mobility.
Removed
The location of our rigs and the allocation of resources to operate, build or upgrade our rigs are determined by the activities and needs of our customers. Significant Events Fleet expansion —In October 2022, we completed the construction of and placed into service the ultra-deepwater floater Deepwater Atlas .
Removed
In November 2022, we made a cash contribution of $15 million associated with our noncontrolling ownership interest in Liquila Ventures Ltd. (together with its subsidiaries, “Liquila”), a Bermuda company formed to construct, own and operate the newbuild ultra-deepwater drillship Deepwater Aquila .
Removed
See “— Liquidity and Capital Resources—Sources and uses of liquidity ” and “— Liquidity and Capital Resources—Drilling fleet .” Secured debt issuance —In January 2023, we issued $525 million aggregate principal amount of 8.375% senior secured notes due February 2028 (the “8.375% Senior Secured Notes”), and we received $515 million aggregate cash proceeds, net of issue costs.
Removed
In January 2023, we issued $1.175 billion aggregate principal amount of 8.75% senior secured notes due February 2030 (the “8.75% Senior Secured Notes”), and we received $1.157 billion aggregate cash proceeds, net of issue costs.
Removed
See “— Liquidity and Capital Resources—Sources and uses of liquidity .” Debt and warrant issuance —In September 2022, we issued $300 million aggregate principal amount of 4.625% senior guaranteed exchangeable bonds due September 2029 (the “4.625% Senior Guaranteed Exchangeable Bonds”) in connection with (a) the issuance for aggregate cash proceeds of $188 million and (b) the exchanges (the “2022 Private Exchange”) of certain of the 0.50% exchangeable senior bonds due January 2023 (the “0.50% Exchangeable Senior Bonds”) and the 7.25% senior notes due November 2025 (the “7.25% Senior Notes”).
Removed
In connection with the 2022 Private Exchange, we also issued 22.2 million warrants to purchase Transocean Ltd. shares.
Removed
See “— Liquidity and Capital Resources—Sources and uses of liquidity .” Shipyard Loans —In June 2022, we borrowed $349 million under one of two credit agreements (each, a “Shipyard Loan,” and together, the “Shipyard Loans”) and made a cash payment of $46 million to satisfy the final milestone payment due upon delivery of Deepwater Atlas .
Removed
In December 2022, we borrowed $90 million under the second Shipyard Loan and made a cash payment of $325 million to satisfy the final milestone payment due upon delivery of Deepwater Titan .
Removed
We recorded the Shipyard Loan for Deepwater Atlas and Deepwater Titan , net of imputed interest, and the corresponding non-cash capital additions of $300 million and $82 million, respectively.
Removed
See “— Liquidity and Capital Resources—Sources and uses of liquidity ” and “— Liquidity and Capital Resources—Drilling fleet .” Early debt retirement —In January 2023, in connection with the issuance of the 8.75% Senior Secured Notes, we made an aggregate payment of $1.156 billion, including a make-whole premium, to redeem the remaining outstanding $311 million, $240 million, $250 million, and $336 million aggregate principal amount of the 5.875% senior secured notes due January 2024 (the “5.875% Senior Secured Notes”), the 7.75% senior secured notes due October 2024 (the “7.75% Senior Secured Notes”), the 6.25% senior secured notes - 26 - Table of Contents due December 2024 (the “6.25% Senior Secured Notes”) and the 6.125% senior secured notes due August 2025 (the “6.125% Senior Secured Notes”), respectively.
Removed
In January 2023, we made a cash payment of $121 million to redeem an equivalent aggregate principal amount of the outstanding 5.375% senior secured notes due May 2023 (the “5.375% Senior Secured Notes”), and the trustee notified holders of our intent to redeem the remaining outstanding $122 million aggregate principal amount of notes for an equivalent aggregate cash payment, expected to be made on February 24, 2023.
Removed
In July 2022, we made an aggregate cash payment of $27 million to redeem an equivalent aggregate principal amount of the then outstanding 3.80% senior notes due October 2022 (the “3.80% Senior Notes”).
Removed
In January 2022, we made an aggregate cash payment of $18 million to redeem an equivalent aggregate principal amount of the 5.52% senior secured notes due May 2022 (the “5.52% Senior Secured Notes”).
Removed
See “— Operating Results ” and “— Liquidity and Capital Resources—Sources and uses of liquidity .” Share issuance —In June 2021, we commenced an at-the-market equity offering program (the “ATM Program”).
Removed
In the year ended December 31, 2022, we received aggregate cash proceeds of $263 million, net of issue costs, for the aggregate sale of 61.0 million shares under the ATM Program.
Removed
See “— Liquidity and Capital Resources—Sources and uses of liquidity .” Secured credit facility amendment —In July 2022, we amended the bank credit agreement for our Secured Credit Facility (as amended from time to time, the “Secured Credit Facility”) to, among other things, extend the maturity date from June 22, 2023 to June 22, 2025 and reduce the borrowing capacity from $1.33 billion to $774 million through June 22, 2023, and thereafter, reduce the borrowing capacity to $600 million through June 22, 2025.
Removed
See “— Liquidity and Capital Resources—Sources and uses of liquidity .” Outlook Drilling market —Our industry outlook is positive based upon several fundamental factors, including the increased global demand for hydrocarbons combined with a diminishing global supply, the latter being the result of the natural decline in production of existing oil and gas fields compounded by the significant underinvestment in reserve replacement by oil and gas producers, and additional constraints imposed on industry participants by the governments of oil and gas producing nations as well as investors.
Removed
Additionally, the Russian invasion of Ukraine and the related economic sanctions have highlighted the criticality of energy reliability and security across Europe, the U.S. and elsewhere. Due to these and other factors, oil prices have increased materially over the past two years and even reached 10-year highs.
Removed
Although the price for both prompt and longer-dated barrels continues to exhibit volatility that reflects market concerns about inflationary trends, economic recession and the potential for demand destruction, these commodity prices are currently, and are expected to remain, at levels that are robustly supportive of investment in deepwater and harsh environment exploration and development projects.
Removed
Additionally, rig attrition resulting from significantly reduced offshore contracting activity over the last several years has resulted in a much smaller global fleet of floating rigs that is available to meet customer demands, specifically with respect to the highest specification drilling units required by many of our customers for their projects.
Removed
Consequently, our outlook for the offshore drilling industry overall remains positive, particularly for high-specification drilling assets, such as those we own and operate. Our customers continue to show interest in deepwater and harsh environment offshore projects as evidenced by the restarting of delayed projects and commencement of new drilling campaigns.
Removed
Licensing activity has also increased as energy companies look to explore and develop new prospects. This has resulted in more tendering activity during the last half of 2022 and into 2023. Several multi-year tenders for work in Brazil, West Africa, Asia and Australia are expected to be awarded in the first nine months of 2023.
Removed
We have recently observed that the commencement of certain projects or parts of a project is, in some cases, being delayed due to global supply chain constraints adversely impacting the timely availability of necessary equipment and supplies. We currently believe that these temporary circumstances will gradually diminish over the short to medium term.
Removed
Offshore drilling activity is increasing in every ultra-deepwater geographic sector. South America, the U.S. Gulf of Mexico and, increasingly, West Africa remain key ultra-deepwater market sectors. We have seen significant increases in dayrates for projects in the U.S. Gulf of Mexico and, particularly, in Brazil, trends that we expect will continue.
Removed
In Norway, the largest market for harsh environment rigs, we do not expect many new projects to commence before late 2023, but we expect demand for rigs in this market will accelerate thereafter through 2026 due to previously enacted Norwegian tax incentive programs.
Removed
Given the highly regulated nature of the Norwegian market and the limited number of rigs qualified to operate in it, we anticipate an increase in dayrates commensurate with the increased demand. We are also encouraged by projects being announced in the United Kingdom, Namibia, South Africa and Australia that require high-specification, harsh environment semisubmersibles.
Removed
As expected, these opportunities are attracting rigs currently working in Norway, thereby further reducing rig supply and potentially accelerating dayrate increases for the remaining assets in the region. We expect global energy demand to continue to increase in both member and non-member countries of the Organization for Economic Co-operation and Development.
Removed
Forecasts indicate that non-member countries will experience the largest population growth and require the most significant improvement in living standards, compounding the effect on energy demand for the foreseeable future. We believe that this increase in global energy demand will result in meaningful incremental demand for oil and gas.
Removed
In the context of the pronounced decline in investment in exploration and production activities over the last decade, we anticipate that a prolonged period of elevated hydrocarbon prices and investment in drilling activity will be necessary to meet this demand. - 27 - Table of Contents With deepwater and harsh environment fields generating robust economic returns versus other hydrocarbon sources, combined with their comparably low carbon intensity of production, we expect a significant portion of the required spending in fossil fuel development will be allocated to deepwater and harsh environment projects.
Removed
As there are now fewer high-specification offshore drilling rigs capable of operating in these markets, we believe that this increase in demand will support further improvement of dayrates. As of February 9, 2023, our contract backlog was $8.54 billion compared to $7.27 billion as of October 13, 2022.
Removed
The risks of drilling project delays, contract renegotiations and contract terminations and cancellations have diminished as oil prices have improved and stabilized. Fleet status —We refer to the availability of our rigs in terms of the uncommitted fleet rate.
Removed
The uncommitted fleet rate is defined as the number of uncommitted days divided by the total number of rig calendar days in the measurement period, expressed as a percentage. An uncommitted day is defined as a calendar day during which a rig is idle or stacked, is not contracted to a customer and is not committed to a shipyard.
Removed
The uncommitted fleet rates exclude the effect of priced options.
Removed
As of February 9, 2023, our uncommitted fleet rates for each of the five years in the period ending December 31, 2027 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 2024 2025 2026 2027 Uncommitted fleet rate ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ultra-deepwater floaters ​ 39 % ​ 56 % ​ 67 % ​ 76 % ​ 84 % ​ Harsh environment floaters ​ 42 % ​ 71 % ​ 89 % ​ 90 % ​ 96 % ​ Performance and Other Key Indicators Contract backlog —We believe our industry leading contract backlog sets us apart from the competition and provides indicators of our future revenue-earning opportunities.
Removed
Contract backlog is defined as the maximum contractual operating dayrate multiplied by the number of days remaining in the firm contract period, excluding revenues for mobilization, demobilization, contract preparation, other incentive provisions or reimbursement revenues, which are not expected to be significant to our contract drilling revenues.
Removed
The contract backlog represents the maximum contract drilling revenues that can be earned considering the contractual operating dayrate in effect during the firm contract period.
Removed
The contract backlog for our fleet was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ February 9, ​ October 13, ​ February 14, ​ 2023 2022 2022 ​ ​ (in millions) Contract backlog ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ultra-deepwater floaters ​ $ 7,378 $ 6,327 $ 5,301 ​ Harsh environment floaters ​ ​ 1,159 ​ ​ 943 ​ ​ 1,165 ​ Total contract backlog $ 8,537 $ 7,270 $ 6,466 ​ Our contract backlog includes only firm commitments, including amounts associated with our contracted newbuild units under construction, which are represented by signed drilling contracts or, in some cases, by other definitive agreements awaiting contract execution.
Removed
It does not include conditional agreements and options to extend firm commitments. The average contractual dayrate relative to our contract backlog is defined as the average maximum contractual operating dayrate to be earned per operating day in the measurement period.
Removed
An operating day is defined as a day for which a rig is contracted to earn a dayrate during the firm contract period after operations commence.
Removed
At February 9, 2023, the contract backlog and average contractual dayrates for our fleet were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the years ending December 31, ​ ​ ​ ​ Total 2023 2024 2025 2026 2027 Thereafter ​ ​ (in millions, except average dayrates) Contract backlog ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ultra-deepwater floaters $ 7,378 $ 1,748 $ 1,926 ​ $ 1,518 ​ $ 1,073 ​ $ 734 ​ $ 379 ​ Harsh environment floaters ​ ​ 1,159 ​ ​ 604 ​ ​ 254 ​ ​ 125 ​ ​ 118 ​ ​ 58 ​ ​ — ​ Total contract backlog $ 8,537 $ 2,352 $ 2,180 ​ $ 1,643 ​ $ 1,191 ​ $ 792 ​ $ 379 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average contractual dayrates ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ultra-deepwater floaters $ 428,000 $ 386,000 $ 435,000 ​ $ 448,000 ​ $ 444,000 ​ $ 451,000 ​ $ 452,000 ​ Harsh environment floaters ​ $ 349,000 $ 341,000 $ 307,000 ​ $ 412,000 ​ $ 424,000 ​ $ 424,000 ​ $ — ​ Total fleet average ​ $ 415,000 $ 373,000 $ 415,000 ​ $ 445,000 ​ $ 442,000 ​ $ 449,000 ​ $ 452,000 ​ The actual amount of revenues earned and the actual periods in which revenues are earned will differ from the amounts and periods shown in the tables above due to various factors, including shipyard and maintenance projects, unplanned downtime and other factors that result in lower applicable dayrates than the full contractual operating dayrate.
Removed
Additional factors that could affect the amount and timing of actual revenues to be recognized include customer liquidity issues and contract terminations that may be available to our customers under certain circumstances.
Removed
The contractual operating dayrate may be higher than the actual dayrate we ultimately receive because an alternative contractual dayrate, such as a waiting-on-weather rate, repair rate, standby rate or force majeure rate, may apply under certain circumstances.
Removed
The - 28 - Table of Contents contractual operating dayrate may also be higher than the actual dayrate we ultimately receive because of a number of factors, including rig downtime or suspension of operations. In certain contracts, the actual dayrate may be reduced to zero if, for example, repairs extend beyond a stated period of time. See “ Part I.
Removed
Item 1A. Risk Factors—Risks related to our business—Our current backlog of contract drilling revenues may not be fully realized .” Average daily revenue —We believe average daily revenue provides a comparative measurement unit for our revenue-earning performance. Average daily revenue is defined as operating revenues, excluding revenues for contract terminations, reimbursements and contract intangible amortization, earned per operating day.
Removed
The average daily revenue for our fleet was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ended December 31, ​ ​ 2022 2021 2020 Average daily revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ultra-deepwater floaters ​ $ 329,100 $ 355,500 ​ $ 324,500 ​ Harsh environment floaters ​ $ 380,000 ​ $ 386,200 ​ $ 339,600 ​ Midwater floaters ​ $ — $ — ​ $ 111,400 ​ Total fleet average daily revenue ​ $ 345,500 $ 365,600 ​ $ 327,500 ​ Our average daily revenue fluctuates relative to market conditions and our revenue efficiency.
Removed
The average daily revenue may be affected by incentive performance bonuses or penalties or demobilization fee revenues. Our total fleet average daily revenue is affected by the mix of rig classes being operated. Midwater floaters, for example, which we no longer operate, are typically contracted at lower dayrates compared to ultra-deepwater floaters and harsh environment floaters.
Removed
Revenues for a contracted newbuild unit are included in the calculation when the rig commences operations upon acceptance by the customer.
Removed
We remove rigs from the calculation upon disposal or classification as held for sale, unless we continue to operate rigs subsequent to sale, in which case we remove the rigs at the time of completion or novation of the contract. Revenue efficiency —We believe revenue efficiency measures our ability to ultimately convert our contract backlog into revenues.
Removed
Revenue efficiency is defined as actual operating 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.
Removed
Maximum revenue is defined as the greatest amount of contract drilling revenues the drilling unit could earn for the measurement period, excluding revenues for incentive provisions, reimbursements and contract terminations.
Removed
The revenue efficiency rates for our fleet were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ended December 31, ​ ​ ​ 2022 2021 2020 Revenue efficiency ​ ​ ​ ​ ​ ​ Ultra-deepwater floaters ​ 95.7 % 96.1 % 97.2 % Harsh environment floaters ​ 97.6 % 98.8 % 95.0 % Midwater floaters ​ — % — % 86.2 % Total fleet average revenue efficiency ​ 96.4 % 97.0 % 96.3 % Our revenue efficiency rate varies due to revenues earned under alternative contractual dayrates, such as a waiting-on-weather rate, repair rate, standby rate, force majeure rate or zero rate, that may apply under certain circumstances.
Removed
Our revenue efficiency rate is also affected by incentive performance bonuses or penalties. We include newbuilds in the calculation when the rigs commence operations upon acceptance by the customer. We exclude rigs that are not operating under contract, such as those that are stacked.
Removed
Rig utilization —We present our rig utilization as an indicator of our ability to secure work for our fleet. Rig utilization is defined as the total number of operating days divided by the total number of rig calendar days in the measurement period, expressed as a percentage.
Removed
The rig utilization rates for our fleet were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ended December 31, ​ ​ ​ 2022 2021 2020 Rig utilization ​ ​ ​ ​ Ultra-deepwater floaters ​ 50.1 % 49.3 % 58.5 % Harsh environment floaters ​ 64.9 % 64.4 % 72.6 % Midwater floaters ​ — % — % 37.1 % Total fleet average rig utilization ​ 54.1 % 53.4 % 62.4 % Our rig utilization rate declines as a result of idle and stacked rigs and during shipyard and mobilization periods to the extent these rigs are not earning revenues.
Removed
We include newbuilds in the calculation when the rigs commence operations upon acceptance by the customer. We remove rigs from the calculation upon disposal or classification as held for sale.
Removed
Accordingly, our rig utilization can increase when we remove idle or stacked units from our fleet. - 29 - Table of Contents Operating Results Year ended December 31, 2022 compared to the year ended December 31, 2021 The following is an analysis of our operating results.
Removed
See “— Performance and Other Key Indicators ” for definitions of operating days, average daily revenue, revenue efficiency and rig utilization. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ended December 31, ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 ​ 2021 ​ Change % Change ​ ​ ​ (in millions, except day amounts and percentages) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating days ​ ​ 7,341 ​ ​ 7,236 ​ ​ ​ 105 ​ 1 % Average daily revenue ​ $ 345,500 ​ ​ $ 365,600 ​ ​ $ (20,100) ​ (5) % Revenue efficiency ​ ​ 96.4 % ​ ​ 97.0 % ​ ​ ​ ​ ​ ​ Rig utilization ​ ​ 54.1 % ​ ​ 53.4 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Contract drilling revenues ​ $ 2,575 ​ ​ $ 2,556 ​ ​ $ 19 ​ 1 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating and maintenance expense ​ ​ (1,679) ​ ​ ​ (1,697) ​ ​ ​ 18 ​ 1 % Depreciation and amortization expense ​ ​ (735) ​ ​ ​ (742) ​ ​ ​ 7 ​ 1 % General and administrative expense ​ ​ (182) ​ ​ ​ (167) ​ ​ ​ (15) ​ (9) % Loss on disposal of assets, net ​ ​ (10) ​ ​ ​ (62) ​ ​ ​ 52 ​ 84 % Operating loss ​ ​ (31) ​ ​ ​ (112) ​ ​ ​ 81 ​ 72 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other income (expense), net ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest income ​ ​ 27 ​ ​ ​ 15 ​ ​ ​ 12 ​ 80 % Interest expense, net of amounts capitalized ​ ​ (561) ​ ​ ​ (447) ​ ​ ​ (114) ​ (26) % Gain on retirement of debt ​ ​ 8 ​ ​ ​ 51 ​ ​ ​ (43) ​ (84) % Other, net ​ ​ (5) ​ ​ ​ 23 ​ ​ ​ (28) ​ nm ​ Loss before income tax expense ​ ​ (562) ​ ​ ​ (470) ​ ​ ​ (92) ​ (20) % Income tax expense ​ ​ (59) ​ ​ ​ (121) ​ ​ ​ 62 ​ 51 % Net loss ​ $ (621) ​ ​ $ (591) ​ ​ $ (30) ​ (5) % “nm” means not meaningful.
Removed
Contract drilling revenues —Contract drilling revenues increased for the year ended December 31, 2022, compared to the year ended December 31, 2021, primarily due to the following: (a) approximately $25 million resulting from Deepwater Atlas , which was placed into service in October 2022, (b) approximately $20 million resulting from increased rig utilization, (c) approximately $10 million resulting from higher early termination revenues and (d) approximately $10 million resulting from higher reimbursable revenues.
Removed
These increases were partially offset by (a) approximately $40 million resulting from lower dayrates and (b) approximately $5 million resulting from lower fleet revenue efficiency.
Removed
Costs and expenses —Operating and maintenance costs and expenses decreased for the year ended December 31, 2022, compared to the year ended December 31, 2021, primarily due to the following: (a) approximately $35 million resulting from the effect of favorable exchange rates, (b) approximately $28 million resulting from the allowance for excess materials and supplies due to the identification, in the year ended December 31, 2021, of parts that were in excess of our expected future usage, (c) approximately $15 million resulting from reduced rig out-of-service maintenance costs and (d) approximately $5 million incurred on rigs sold in the year ended December 31, 2021.
Removed
These decreases were partially offset by the following increases: (a) approximately $25 million resulting from personnel compensation increases, (b) approximately $20 million resulting from increased rig operating activities, (c) approximately $15 million resulting from Deepwater Atlas and (d) approximately $10 million resulting from higher customer reimbursable costs.
Removed
Depreciation and amortization expense decreased for the year ended December 31, 2022, compared to the year ended December 31, 2021, primarily due to (a) approximately $17 million resulting from assets that had reached the end of their useful lives or had been retired, partially offset by (b) approximately $10 million of increased depreciation associated with our newbuild ultra-deepwater drillship and other property and equipment placed into service in the year ended December 31, 2022.
Removed
General and administrative expense increased for the year ended December 31, 2022, compared to the year ended December 31, 2021, primarily due to the following: (a) approximately $8 million of increased costs for information systems and technology and (b) approximately $3 million of increased costs for strategy and innovation.
Removed
Disposal of assets —In the year ended December 31, 2021, we recognized an aggregate net loss of $57 million, primarily associated with the sale of a harsh environment floater and related assets.
Removed
In the years ended December 31, 2022 and 2021, we recognized an aggregate net loss of $10 million and $5 million, respectively, associated with the disposal of assets unrelated to rig sales.
Removed
Other income and expense —Interest expense, net of amounts capitalized, increased in the year ended December 31, 2022, compared to the year ended December 31, 2021, primarily due to the following: (a) an increase of $157 million resulting from the fair value adjustment of the bifurcated compound exchange feature embedded in the 4.625% Senior Guaranteed Exchangeable Bonds and (b) an increase of $15 million resulting from borrowings under the Shipyard Loans, partially offset by (c) a decrease of $41 million resulting from - 30 - Table of Contents debt repaid as scheduled or early retired and (d) a decrease of $23 million resulting from increased interest capitalized for our newbuild construction projects.
Removed
In the year ended December 31, 2022, we recognized an aggregate net gain on the retirement of debt, primarily associated with the retirement of $116 million aggregate principal amount of debt as a result of the 2022 Private Exchange.
Removed
In the year ended December 31, 2021, we recognized an aggregate net gain on the retirement of debt, primarily associated with the retirement of $323 million aggregate principal amount of debt as a result of the private exchanges completed in February 2021 (the “2021 Private Exchange”).

… 78 more changes not shown on this page.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

30 edited+9 added−5 removed94 unchanged
Biggest changeActions taken under such provisions may adversely affect prevailing market prices for our shares, and could, among other things: ◾ provide that the board of directors is authorized, subject to obtaining shareholder approval every two years, at any time during a maximum two-year period, which under our current authorized share capital will expire on May 12, 2024, to issue a specified number of shares, which under our current authorized share capital is approximately 13.5 percent of the share capital registered in the commercial register as of February 14, 2023, and to limit or withdraw the preemptive rights of existing shareholders in various circumstances; ◾ provide for a conditional share capital that authorizes the issuance of additional shares up to a maximum amount of approximately 17.9 percent of the share capital registered in the commercial register as of February 14, 2023, without obtaining additional shareholder approval through: (1) the exercise of conversion, exchange, option, warrant or similar rights for the subscription of shares granted in connection with bonds, options, warrants or other securities newly or already issued in national or international capital markets or new or already existing contractual obligations by or of any of our subsidiaries; or (2) in connection with the issuance of shares, options or other share-based awards; ◾ provide that any shareholder who wishes to propose any business or to nominate a person or persons for election as director at any annual meeting may only do so if we are given advance notice; ◾ provide that directors can be removed from office only by the affirmative vote of the holders of at least 66 2/3 percent of the shares entitled to vote; ◾ provide that a merger or demerger transaction requires the affirmative vote of the holders of at least 66 2/3 percent of the shares represented at the meeting and provide for the possibility of a so-called cash-out or squeeze-out merger if the acquirer controls 90 percent of the outstanding shares entitled to vote at the meeting; ◾ provide that any action required or permitted to be taken by the holders of shares must be taken at a duly called annual or extraordinary general meeting of shareholders; ◾ limit the ability of our shareholders to amend or repeal some provisions of our articles of association; and ◾ limit transactions between us and an “interested shareholder,” which is generally defined as a shareholder that, together with its affiliates and associates, beneficially, directly or indirectly, owns 15 percent or more of our shares entitled to vote at a general meeting.
Biggest changePursuant to the terms of the current general share capital authorization, the board’s authority to issue new shares expires on May 11, 2024, subject to shareholders approving a renewal or increase of this authorization in accordance with the current company practice; ◾ provide for a conditional share capital that authorizes the issuance of additional shares up to a maximum amount of approximately 16.9 percent of the share capital registered in the commercial register as of February 14, 2024 without obtaining additional shareholder approval through: (1) the exercise of conversion, exchange, option, warrant or similar rights for the subscription of shares granted in connection with bonds, options, warrants or other securities newly or already issued in national or international capital markets or new or already existing contractual obligations by or of any of our subsidiaries; or (2) in connection with the issuance of shares, options or other share-based awards; ◾ provide that any shareholder who wishes to propose any business or to nominate a person or persons for election as director at any annual meeting may only do so if we are given advance notice; ◾ provide that directors can be removed from office only by the affirmative vote of the holders of at least 66 2/3 percent of the shares entitled to vote; ◾ provide that a merger or demerger transaction requires the affirmative vote of the holders of at least 66 2/3 percent of the shares represented at the meeting and provide for the possibility of a so-called cash-out or squeeze-out merger if the acquirer controls 90 percent of the outstanding shares entitled to vote at the meeting; ◾ provide that any action required or permitted to be taken by the holders of shares must be taken at a duly called annual or extraordinary general meeting of shareholders; ◾ limit the ability of our shareholders to amend or repeal some provisions of our articles of association; and ◾ limit transactions between us and an “interested shareholder,” which is generally defined as a shareholder that, together with its affiliates and associates, beneficially, directly or indirectly, owns 15 percent or more of our shares entitled to vote at a general meeting.
To the extent new laws are enacted, existing laws are changed or other governmental actions are taken that prohibit or restrict offshore drilling or impose additional environmental protection and safety requirements that result in increased costs to the oil and gas industry, in general, or the offshore drilling industry, in particular, our business or prospects could be materially adversely affected.
To the extent new laws are enacted, existing laws are changed or other governmental actions are taken that prohibit or restrict offshore drilling or impose additional environmental protection and safety requirements that result in increased costs to the oil and gas industry, in general, or the offshore drilling industry, in particular, our business or prospects could be materially and adversely affected.
In addition, the oil and gas industry has adopted equipment and operating standards, such as the American Petroleum Institute Standard 53, related to the installation and testing of well control equipment. A failure to comply with applicable laws and regulations may result in administrative and civil penalties, criminal sanctions or the suspension or termination of our operations.
The oil and gas industry has adopted equipment and operating standards, such as the American Petroleum Institute Standard 53, related to the installation and testing of well control equipment. A failure to comply with applicable laws and regulations may result in administrative and civil penalties, criminal sanctions or the suspension or termination of our operations.
Such attention could also result in other adverse impacts for the oil and gas industry, including further restrictions or bans - 16 - Table of Contents imposed by lawmakers, lawsuits by governments or third-parties seeking recoveries for damages resulting from the combustion of fuels that may contribute to climate change effects, decreased demand for goods or services that produce significant greenhouse gas emissions, or reduced interest from investors if they elect in the future to shift some or all of their investments to non-fossil fuel related sectors.
Such attention could also result in other adverse impacts for the oil and gas industry, including further restrictions or bans imposed by lawmakers, lawsuits by governments or third-parties seeking recoveries for damages resulting from the combustion of fuels that may contribute to climate change effects, decreased demand for goods and services that produce significant greenhouse gas emissions, or reduced interest from investors if they elect in the future to shift some or all of their investments to non-fossil fuel related sectors.
The application of these requirements or the adoption of new requirements or measures could have an adverse effect on our financial position, results of operations or cash flows. Regulatory and various other risks, including litigation, associated with greenhouse gases, other emissions and climate change could have an adverse impact on our business and demand for our services.
The application of these requirements or the adoption of new requirements or measures could have an adverse effect on our financial position, results of operations or cash flows. Regulatory and various other risks, including litigation, associated with greenhouse gas emissions, other emissions and climate change could have an adverse impact on our business and demand for our services.
If any tax authority successfully challenges our operational structure, intercompany pricing policies or the taxable presence of our key subsidiaries in certain countries; or if the terms of certain income tax treaties are interpreted in a manner that is adverse to our structure; or if we lose a material tax dispute in any country, our effective tax rate on our worldwide earnings could increase substantially and our earnings and cash flows from operations could be materially adversely affected.
If any tax authority successfully challenges our operational structure, intercompany pricing policies or the taxable presence of our key subsidiaries in certain - 19 - Table of Contents countries; or if the terms of certain income tax treaties are interpreted in a manner that is adverse to our structure; or if we lose a material tax dispute in any country, our effective tax rate on our worldwide earnings could increase substantially and our earnings and cash flows from operations could be materially adversely affected.
Though we are not currently a party to any such lawsuit, these suits present a high degree of uncertainty regarding the extent to which energy companies, including offshore drillers, face an increased risk of liability stemming from climate change, which risk would also adversely impact the oil and gas industry and impact demand for our services.
Though we are not currently a party to any such lawsuit, these suits present a high degree of uncertainty regarding the extent to which energy companies, - 16 - Table of Contents including offshore drillers, face an increased risk of liability stemming from climate change, which risk would also adversely impact the oil and gas industry and impact demand for our services.
Any such safety, environmental and other regulatory restrictions or standards, including voluntary customer compliance with respect thereto, could decrease, disrupt or delay operations, decrease demand for offshore drilling services, increase operating costs and compliance costs or penalties, increase out-of-service time, decrease dayrates, or reduce the area of operations for drilling rigs in the U.S. and non-U.S. offshore areas.
Any such safety, environmental and other regulatory restrictions or standards, including voluntary customer compliance with respect thereto, could decrease, disrupt or delay operations, decrease demand for offshore drilling services, increase operating costs and compliance costs or penalties, increase out-of-service time, - 15 - Table of Contents decrease dayrates, or reduce the area of operations for drilling rigs in the U.S. and non-U.S. offshore areas.
If economic conditions preclude or limit financing from banking institutions participating in our credit facilities, we may not be able to obtain similar financing from other institutions. A slowdown in economic activity could further reduce worldwide demand for energy and extend or worsen the recovery from low oil and natural gas prices.
If economic conditions preclude or limit financing from banking institutions participating in our credit facilities, we may not be able to obtain similar financing from other institutions. A slowdown in economic activity could reduce worldwide demand for energy and reverse or worsen the recovery from low oil and natural gas prices.
If we repurchase shares, we expect to use an alternative procedure pursuant to which we repurchase shares via a “virtual second trading line” from market players, such as banks and - 20 - Table of Contents institutional investors, who are generally entitled to receive a full refund of the Swiss withholding tax.
If we repurchase shares, we expect to use an alternative procedure pursuant to which we repurchase shares via a “virtual second trading line” from market players, such as banks and institutional investors, who are generally entitled to receive a full refund of the Swiss withholding tax.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Sources and uses of liquidity .” Credit rating agencies have rated our debt below investment grade, which could limit our access to capital and have an adverse effect on our business and financial condition.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Sources and uses of liquidity .” - 14 - Table of Contents Credit rating agencies have rated our debt below investment grade, which could limit our access to capital and have an adverse effect on our business and financial condition.
These potential developments, or market perceptions concerning these and related issues, could adversely affect our financial position, results of operations or cash flows. In addition, turmoil and hostilities in the Middle East, Ukraine, North Africa and other geographic areas and countries present incremental risk.
These potential developments, or market perceptions concerning these and related issues, could adversely affect our financial position, results of operations or cash flows. In addition, turmoil and hostilities in the Middle East, Eastern Europe, North Africa and other geographic areas and countries present incremental risk.
We may not be able to repurchase as many shares as we would like to repurchase for purposes of capital reduction on the “virtual second trading line” without subjecting the selling shareholders to Swiss withholding taxes. We are subject to anti-takeover provisions.
We may not be able to repurchase as many shares as we would like to repurchase for purposes of capital reduction on the “virtual second trading line” without subjecting the selling shareholders to Swiss withholding taxes. - 20 - Table of Contents We are subject to anti-takeover provisions.
Governments also may impose economic sanctions against certain countries, persons and other entities that may restrict or prohibit transactions involving such countries, persons and entities, and we are also subject to the U.S. anti-boycott laws. The laws and regulations concerning import and export activity, recordkeeping and reporting, import and export control and economic sanctions are complex and constantly changing.
Governments also may impose economic sanctions against certain countries, persons and other entities that may restrict or prohibit transactions involving such countries, persons and entities, and we are also subject to the U.S. anti-boycott laws. - 17 - Table of Contents The laws and regulations concerning import and export activity, recordkeeping and reporting, import and export control and economic sanctions are complex and constantly changing.
We cannot predict the outcome of these investigations and cases or the potential costs - 18 - Table of Contents to resolve them. Insurance may not be applicable or sufficient in all cases, insurers may not remain solvent and policies may not be located.
We cannot predict the outcome of these investigations and cases or the potential costs to resolve them. Insurance may not be applicable or sufficient in all cases, insurers may not remain solvent and policies may not be located.
We operate in various regions throughout the world, which may expose us to political and other uncertainties, including risks of: ◾ terrorist acts, war, piracy and civil unrest; ◾ seizure, expropriation or nationalization of our equipment; ◾ expropriation or nationalization of our customers’ property; ◾ repudiation or nationalization of contracts; ◾ imposition of trade or immigration barriers; ◾ import-export quotas; ◾ wage and price controls; ◾ changes in law and regulatory requirements, including changes in interpretation and enforcement; ◾ involvement in judicial proceedings in unfavorable jurisdictions; ◾ damage to our equipment or violence directed at our employees, including kidnappings; ◾ complications associated with supplying, repairing and replacing equipment in remote locations; ◾ the inability to move income or capital; and ◾ currency exchange fluctuations and currency exchange restrictions, including exchange or similar controls that may limit our ability to convert local currency into U.S. dollars and transfer funds out of a local jurisdiction.
We operate in various regions throughout the world, which may expose us to political and other uncertainties, including risks of: ◾ terrorist acts, war, piracy and civil unrest; ◾ seizure, expropriation or nationalization of our equipment or of our customers’ property; ◾ customs delays or disputes; ◾ repudiation or nationalization of contracts; ◾ imposition of trade or immigration barriers; ◾ import-export quotas; ◾ wage and price controls; ◾ changes in law and regulatory requirements, including changes in interpretation and enforcement; ◾ involvement in judicial proceedings in unfavorable jurisdictions; ◾ damage to our equipment or violence directed at our employees, including kidnappings; ◾ complications associated with supplying, repairing and replacing equipment in remote locations; ◾ public health threats, including pandemics and epidemics, severe influenza, coronaviruses and other highly communicable viruses or diseases; ◾ the inability to move income or capital; and ◾ currency exchange fluctuations and currency exchange restrictions, including exchange or similar controls that may limit our ability to convert local currency into U.S. dollars and transfer funds out of a local jurisdiction.
Accordingly, shareholders at our annual general meeting in May 2023 may be requested to approve a renewal and an increase in authorized share capital. Subject to certain exceptions, Swiss law also grants preemptive rights to existing shareholders to subscribe for new issuances of shares.
Accordingly, shareholders at our annual general meeting in May 2024 may be requested to approve a renewal and increase of our general share capital authorization for an additional term. Subject to certain exceptions, Swiss law also grants preemptive rights to existing shareholders to subscribe for new issuances of shares.
Department of the Interior (“DOI”) administers the submerged lands, subsoil, and seabed, lying between the seaward extent of the states’ jurisdiction and the seaward extent of federal jurisdiction, and the U.S. government has the power to limit oil and gas activities on this area, known as the OCS. Under the Outer Continental Shelf Lands Act, as amended, the U.S.
Department of the Interior (“DOI”) administers the submerged lands, subsoil, and seabed, lying between the seaward extent of the states’ jurisdiction and the seaward extent of federal jurisdiction, and the U.S. government has the power to limit oil and gas activities on this area, known as the OCS.
Our Debt Ratings could have adverse consequences for our business and future prospects and could cause the following: ◾ limitations on our ability to access debt markets, including for the purpose of refinancing our existing debt and replacing or extending our Secured Credit Facility; ◾ less favorable terms and conditions on any refinancing arrangements, debt issuances or bank credit agreements, some of which could require collateral and restrict, among other things, our ability to pay distributions or repurchase shares; ◾ increases to certain fees under our Secured Credit Facility and the interest rate under the indenture governing the 7.35% senior notes due December 2041, which has reached the maximum rate increase of 2 percent pursuant to the indenture due to the downgrades of certain credit rating agencies; ◾ reduced willingness of current and prospective customers, suppliers and creditors to transact business with us; ◾ requirements from creditors, suppliers or customers for additional insurance, guarantees and collateral; ◾ limitations on our access to bank and third-party guarantees, surety bonds and letters of credit; and ◾ reductions to or eliminations of the level of credit suppliers and financial institutions may provide through payment terms or intraday funding when dealing with us thereby increasing the need for higher levels of cash on hand, which would decrease our ability to repay debt balances.
Our Debt Ratings could have adverse consequences for our business and future prospects and could cause the following: ◾ limitations on our ability to access debt markets, including for the purpose of refinancing our existing debt and replacing or extending our Secured Credit Facility; ◾ less favorable terms and conditions on any refinancing arrangements, debt issuances or bank credit agreements, some of which could require collateral and restrict, among other things, our ability to pay distributions or repurchase shares; ◾ increases to certain fees under our Secured Credit Facility and interest rates under the indentures governing certain of our senior notes; ◾ reduced willingness of current and prospective customers, suppliers and creditors to transact business with us; ◾ requirements from creditors, suppliers or customers for additional insurance, guarantees and collateral; ◾ limitations on our access to bank and third-party guarantees, surety bonds and letters of credit; and ◾ reductions to or eliminations of the level of credit suppliers and financial institutions may provide through payment terms or intraday funding when dealing with us thereby increasing the need for higher levels of cash on hand, which would decrease our ability to repay debt balances.
Under Swiss law, our shareholders may approve an authorized share capital that allows the board of directors to issue new shares without additional shareholder approval within a period of up to two years and for up to a maximum of 50 percent of a company’s issued share capital.
Under Swiss law, our shareholders may approve a general share capital authorization, referred to under Swiss law as a capital band, that allows the board of directors to issue new shares without additional shareholder approval within a period of up to five years and for up to a maximum of 50 percent of a company’s issued share capital.
Bureau of Ocean Energy management (“BOEM”) within the DOI must prepare and maintain forward-looking five-year plans—referred to as national programs or five-year programs—to schedule proposed oil and gas lease sales on the OCS. On July 1, 2022, BOEM announced the availability of the Proposed Program for the 2023-2028 timeframe for public comments.
Under the Outer Continental Shelf Lands Act, as amended, the BOEM within the DOI must prepare and maintain forward-looking five-year plans—referred to as national programs or five-year programs—to schedule proposed oil and gas lease sales on the OCS. On July 1, 2022, BOEM announced the availability of the Proposed Program for the 2023-2028 timeframe for public comments.
The authorized share capital approved by our shareholders at the May 2022 annual general meeting will expire on May 12, 2024. Our currently available authorized share capital is approximately 13.5 percent of our issued share capital as of February 14, 2023.
The general share capital authorization approved by our shareholders at the May 2023 annual general meeting will expire on May 11, 2024. Our currently available authority under this general share capital authorization is equivalent to approximately 17.5 percent of our issued share capital as of February 14, 2024.
To the extent that one or more pending or future investigations or litigation matters is not resolved in our favor and is not covered by insurance, which could have a material adverse effect on our financial position, results of operations or cash flows.
To the extent that one or more pending or future investigations or litigation matters is not resolved in our favor and is not covered by insurance, which could have a material adverse effect on our financial position, results of operations or cash flows. - 18 - Table of Contents We are subject to cybersecurity risks and threats as well as increasing regulation of data privacy and security.
Any material change to tax laws, treaties, regulations or policies, their interpretation or application, or the adoption of new interpretations of existing laws and rulings, in any of the jurisdictions in which we operate, are incorporated or resident, could result in a higher effective tax rate on our worldwide earnings and such change could have a significant adverse effect on our financial position, results of operations or cash flows. - 19 - Table of Contents A loss of a major tax dispute or a successful tax challenge to our operating structure, intercompany pricing policies or the taxable presence of our key subsidiaries in certain countries could result in a higher effective tax rate on our consolidated earnings and increase our cash tax payments.
As such, any material change to tax laws, treaties, regulations or policies, their interpretation or application, or the adoption of new interpretations of existing laws and rulings, in any of the jurisdictions in which we operate, are incorporated or resident, could result in a higher effective tax rate on our worldwide earnings and such change could have a significant adverse effect on our financial position, results of operations or cash flows.
Environmental and safety laws and regulations protecting the environment have become increasingly stringent and may in some cases impose strict liability on facility or vessel owners or operators, rendering a person liable for environmental damage without regard to negligence.
See “ — Our business involves numerous operating hazards, and our insurance and indemnities from our customers may not be adequate to cover potential losses from our operations .” Environmental and safety laws and regulations protecting the environment have become increasingly stringent and may in some cases impose strict liability on facility or vessel owners or operators, rendering a person liable for environmental damage without regard to negligence.
Investors could view any potential violations of OFAC regulations negatively, which could adversely affect our reputation and the market for our shares. - 17 - Table of Contents Governments in some countries have become increasingly active in regulating and controlling the ownership of concessions and companies holding concessions, the exploration for oil and gas and other aspects of the oil and gas industries in their countries, including local content requirements for participating in tenders for certain drilling contracts.
Governments in some countries have become increasingly active in regulating and controlling the ownership of concessions and companies holding concessions, the exploration for oil and gas and other aspects of the oil and gas industries in their countries, including local content requirements for participating in tenders for certain drilling contracts.
We are subject to cybersecurity risks and threats as well as increasing regulation of data privacy and security. We depend on data and digital technologies to conduct our offshore and onshore operations, to collect payments from customers and to pay vendors and employees.
We depend on data and digital technologies to conduct our offshore and onshore operations, to collect payments from customers and to pay vendors and employees.
Failure to comply with applicable laws and regulations, including those relating to sanctions and export restrictions, may subject us to criminal sanctions or civil remedies, including fines, denial of export privileges, injunctions or seizures of assets.
Failure to comply with applicable laws and regulations, including those relating to sanctions and export restrictions, may subject us to criminal sanctions or civil remedies, including fines, denial of export privileges, injunctions or seizures of assets. Investors could view any potential violations of OFAC regulations negatively, which could adversely affect our reputation and the market for our shares.
A further decline in oil and natural gas prices or an extension of the current low oil and natural gas prices could reduce demand for our drilling services and have an adverse effect on our financial position, results of operations or cash flows. - 15 - Table of Contents Risks related to laws, regulations and governmental compliance Impact of increasingly stringent environmental and safety laws and our compliance with or breach of such laws can be costly, expose us to liability and could limit our operations.
A further decline in oil and natural gas prices or an extension of the current low oil and natural gas prices could reduce demand for our drilling services and have an adverse effect on our financial position, results of operations or cash flows.
In addition, governing data privacy and the unauthorized disclosure of personal data and confidential information pose increasingly complex compliance challenges and potential to elevate our costs under various laws and regulations, including (a) the European Union General Data Protection Regulation, the Data Protection Act, as revised, of the Cayman Islands, (b) the General Data Protection Law of Brazil and (c) the California Consumer Privacy Act, as well as (d) the amended Swiss Data Protection Act, which will enter into force in September 2023,.
In addition, data privacy and the unauthorized disclosure of personal data and confidential information pose increasingly complex compliance challenges and have the potential to elevate our costs under various laws and regulations, including privacy regulations that have been adopted or may in the future be adopted by, or be applicable from time to time to, countries, states, and other jurisdictions or authorities.
Removed
The Organization for Economic Co-operation and Development, for example, issued its action plan of tax reform measures that called for member states to take action to prevent base erosion and profit shifting.
Added
Risks related to laws, regulations and governmental compliance Impact of increasingly stringent environmental and safety laws and our compliance with or breach of such laws can be costly, expose us to liability and could limit our operations.
Removed
Some of these measures impact transfer pricing, requirements to qualify for tax treaty benefits, and the definition of permanent establishments depending on each jurisdiction’s adoption and interpretation of such proposals. Respective countries, including Switzerland, have adopted various measures into their own tax laws.
Added
The Bureau of Ocean Energy Management (the “BOEM”) has also proposed changes regarding when oil, gas and sulfur lessees and certain other parties operating in the offshore Outer Continental Shelf must post additional bonds or other supplemental financial assurance, which could, if finalized, increase bonding requirements for some of our customers.
Removed
In addition, the European Union has issued Anti-Tax Avoidance Directives and proposed directives that required or require member states to adopt specific tax reform measures, some of which relate to a 15 percent minimum tax. Other tax jurisdictions in which we operate have expressed an intent to implement similar measures.
Added
Additionally, at the United Nations Climate Change Conference in the United Arab Emirates in December 2023, more than 190 governments reached a non-binding agreement to transition away from fossil fuels and encourage the growth and expansion of renewable energy.
Removed
Item 1B. Unresolved Staff Comments None. Item 2. Properties The description of our property included under “ Item 1. Business ” is incorporated by reference herein. We maintain offices, land bases and other facilities worldwide, most of which we lease, including principal executive offices in Steinhausen, Switzerland, and corporate offices in Houston, Texas, and the Cayman Islands.
Added
Our results are directly affected by the applicability of certain customs duties and importation tax relief programs under customs regimes for the exportation and importation of goods and equipment, including rigs, related to the oil and gas sector. Among other incentives, such programs grant full suspension of certain import taxes, resulting in reduced tax burdens from operations.
Removed
Our remaining offices and bases are located in various countries in North America, Europe, South America, Asia and Africa.
Added
If unprecedented interpretations are applied by the customs and tax authorities governing such programs and regimes, including those that would deny us the use of such incentives granted historically in the ordinary course, and assuming we are unable to successfully challenge such interpretation or otherwise able to recover any amounts pursuant to the contractual provisions of the applicable drilling contract, then the amount of the applicable tariff, which would depend on many factors, could reasonably be expected to increase our operating costs.
Added
Several jurisdictions have implemented or are expected to implement in the future, the Organization for Economic Co-operation and Development Pillar 2 or other tax related provision that are aimed at preventing base erosion and profit shifting, ensuring income is subject to a minimum level of taxation and preventing treaty misuse.
Added
The application of these provisions is not always certain, and jurisdictions are still developing their rules and interpretations with regard to same.
Added
A loss of a major tax dispute or a successful tax challenge to our operating structure, intercompany pricing policies or the taxable presence of our key subsidiaries in certain countries could result in a higher effective tax rate on our consolidated earnings and increase our cash tax payments.
Added
Actions taken under such provisions may adversely affect prevailing market prices for our shares, and could, among other things: ◾ provide that the board of directors is authorized to issue a specified number of shares, which under our current general share capital authorization as of February 14, 2024 is approximately 17.5 percent of the share capital registered in the commercial register, and to limit or withdraw the preemptive rights of existing shareholders in various circumstances.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

6 edited+4 added−1 removed3 unchanged
Biggest changeDuring the year ended December 31, 2022, the fair value of our debt increased by $751 million due to the following: (a) an increase of $469 million due to changes in the market prices of our outstanding debt, (b) an increase of $407 million due to borrowings under shipyard loans established to finance a portion of the final installments due upon delivery of Deepwater Atlas and Deepwater Titan and (c) a net increase of $388 million due to the issuance of the 4.625% Senior Guaranteed Exchangeable Bonds in private exchanges for a portion of the 0.50% Exchangeable Senior Bonds and the 7.25% Senior Notes and the sale of new securities, partially offset by (d) a decrease of $468 million due to scheduled repayments and (e) a decrease of $44 million due to early retirement.
Biggest changeDuring the year ended December 31, 2023, the fair value of our debt increased by $896 million due to the following: (a) an increase of $2.05 billion due to the issuance of the 8.375% senior secured notes due February 2028, 8.00% senior secured notes due September 2028 and the 8.75% senior secured notes due February 2030, (b) a net increase of $817 million resulting from changes in the market prices of our outstanding debt, partially offset by (c) a decrease of $1.36 billion due to early retirement of certain notes, (d) a decrease of $380 million due to the exchange of the 2.50% senior guaranteed exchangeable bonds due January 2027 and partial exchanges of the 4.00% senior guaranteed exchangeable bonds due December 2025 and the 4.625% senior guaranteed exchangeable bonds due September 2029 (the “4.625% Senior Guaranteed Exchangeable Bonds”) and (e) a decrease of $225 million due to scheduled installments.
The currency exchange effect resulting from our international operations generally has not had a material impact on our operating results. See Notes to Consolidated Financial Statements— Note 18—Risk Concentration . - 39 - Table of Contents
The currency exchange effect resulting from our international operations generally has not had a material impact on our operating results. See Notes to Consolidated Financial Statements— Note 19—Risk Concentration . - 38 - Table of Contents
See Notes to Consolidated Financial Statements— Note 8—Debt . The majority of our cash equivalents is subject to variable interest rates or short-term interest rates and such cash equivalents earn commensurately higher rates of return when interest rates increase.
See Notes to Consolidated Financial Statements— Note 9—Debt and Notes to Consolidated Financial Statements— Note 19—Risk Concentration . The majority of our cash equivalents is subject to variable interest rates or short-term interest rates and such cash equivalents earn commensurately higher rates of return when interest rates increase.
Currency exchange rate risk —We are exposed to currency exchange rate risk primarily related to contract drilling revenues, employee compensation costs and purchasing costs that are denominated in currencies other than our functional currency, the U.S. dollar.
See Notes to Consolidated Financial Statements— Note 9—Debt and Notes to Consolidated Financial Statements— Note 19—Risk Concentration . Currency exchange rate risk —We are exposed to currency exchange rate risk primarily related to contract drilling revenues, employee compensation costs and purchasing costs that are denominated in currencies other than our functional currency, the U.S. dollar.
The following table presents information as of December 31, 2022 for each of the five years in the period ending December 31, 2027 and thereafter (in millions, except interest rate percentages): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Twelve months ending December 31, ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 ​ 2024 ​ 2025 ​ 2026 ​ 2027 ​ Thereafter ​ Total Fair value Debt ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fixed rate (USD) $ 728 ​ $ 952 ​ $ 1,132 ​ $ 866 ​ $ 1,889 ​ $ 1,744 ​ $ 7,311 ​ $ 6,412 ​ Average interest rate ​ ​ 5.08 % ​ 5.87 % ​ 5.44 % ​ 6.37 % ​ 4.01 % ​ 6.87 % ​ ​ ​ ​ ​ ​ At December 31, 2022 and 2021, the fair value of our outstanding debt was $6.41 billion and $5.66 billion, respectively.
The following table presents information as of December 31, 2023, for each of the five years in the period ending December 31, 2028 and thereafter (in millions, except interest rate percentages): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ended December 31, ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 ​ 2025 ​ 2026 ​ 2027 ​ 2028 ​ Thereafter ​ Total Fair value Debt ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fixed rate (USD) $ 391 ​ $ 1,140 ​ $ 1,182 ​ $ 1,936 ​ $ 664 ​ $ 1,970 ​ $ 7,283 ​ $ 7,308 ​ Average interest rate ​ ​ 5.89 % ​ 6.16 % ​ 6.96 % ​ 5.17 % ​ 7.83 % ​ 7.41 % ​ ​ ​ ​ ​ ​ At December 31, 2023 and 2022, the fair value of our outstanding debt was $7.31 billion and $6.41 billion, respectively.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk Interest rate risk —We are exposed to interest rate risk, primarily associated with our long-term debt, including current maturities. The following table presents the scheduled installment amounts and related weighted-average interest rates of our long-term debt instruments by contractual maturity date.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk Overview —We are exposed to interest rate risk, primarily associated with our long-term debt, including current maturities. Additionally, we are exposed to equity price risk related to certain of our exchangeable bonds and currency exchange rate risk related to our international operations.
Removed
The scheduled installment amounts include the contractual principal and interest payments resulting from previously restructured debt.
Added
Interest rate risk —The following table presents the scheduled installment amounts and related weighted-average interest rates of our long-term debt instruments by contractual maturity date. The expected maturity amounts, presented below, include both principal and other installments.
Added
Equity price risk —We are exposed to equity price risk primarily related to the bifurcated compound exchange feature contained within the 4.625% Senior Guaranteed Exchangeable Bonds. The compound exchange feature must be bifurcated from the host debt instrument since it is not considered indexed to our stock.
Added
The market price of our shares is the primary driver of the fair value of the exchange feature. At December 31, 2023, the fair value of the bifurcated compound exchange feature was $350 million.
Added
At December 31, 2023, a 10 percent hypothetical increase or decrease to the market price of our shares would result in a $43 million increase or decrease in the carrying amount of the exchange feature, recorded as a component of our debt, and a corresponding adjustment to interest expense.

Other RIG 10-K year-over-year comparisons