3Q21 10Q

TABLE OF CONTENTS

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

• QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
  For the quarterly period ended September 30, 2021

OR

• TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
  For the transition period from _____ to _____

Commission file number 001-38373

Transocean Ltd.

(Exact name of registrant as specified in its charter)

Switzerland	98-0599916
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
Turmstrasse 30	6312
Steinhausen, Switzerland
(Address of principal executive offices)	(Zip Code)

[phone]

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbol	Name of each exchange on which
		registered
Shares, CHF 0.10 par value	RIG	New York Stock Exchange
0.50% Exchangeable Senior Bonds due 2023	RIG/23	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☑ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of October 25, 2021, 655,504,841 shares were outstanding.

TABLE OF CONTENTS

TRANSOCEAN LTD. AND SUBSIDIARIES

INDEX TO QUARTERLY REPORT ON FORM 10-Q

QUARTER ENDED SEPTEMBER 30, 2021

			Page
	PART I	FINANCIAL INFORMATION
	Item 1.	Financial Statements (Unaudited)
		Condensed Consolidated Statements of Operations	1
		Condensed Consolidated Statements of Comprehensive Income (Loss)	2
		Condensed Consolidated Balance Sheets	3
		Condensed Consolidated Statements of Equity	4
		Condensed Consolidated Statements of Cash Flows	5
		Notes to Condensed Consolidated Financial Statements	6
	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	16
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28
	Item 4.	Controls and Procedures	28
	PART I	OTHER INFORMATION
	Item 1.	Legal Proceedings	28
	Item 1A.	Risk Factors	29
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29
	Item 5	Other Information	29
	Item 6.	Exhibits	29

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

ITEM I. FINANCIAL STATEMENTS

TRANSOCEAN LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share data)

(Unaudited)

		Three months ended			Nine months ended
				September 30,			September 30,
				2021			2020			2021			2020
Contract drilling revenues	$	626	$	773	$	1,935	$	2,462
Costs and expenses
	Operating and maintenance			398			470			1,267			1,535
	Depreciation and amortization			185			190			558			592
	General and administrative			40			45			118			133
				623			705			1,943			2,260
	Loss on impairment			-			-			-			(597)
	Loss on disposal of assets, net			(3)			(64)			(61)			(64)
	Operating income (loss)			-			4			(69)			(459)
Other income (expense), net
	Interest income			4			6			11			19
	Interest expense, net of amounts capitalized			(110)			(145)			(340)			(458)
	Gain on restructuring and retirement of debt			-			449			51			396
	Other, net			3			21			26			(23)
				(103)			331			(252)			(66)
	Income (loss) before income tax expense (benefit)			(103)			335			(321)			(525)
	Income tax expense (benefit)			27			(24)			10			4
Net income (loss)			(130)			359			(331)			(529)
	Net income attributable to noncontrolling interest			-			-			1			1
	Net income (loss) attributable to controlling interest	$	(130)	$	359	$	(332)	$	(530)
Earnings (loss) per share
	Basic	$	(0.20)	$	0.58	$	(0.53)	$	(0.86)
	Diluted	$	(0.20)	$	0.51	$	(0.53)	$	(0.86)
Weighted-average shares outstanding
	Basic			653			616			630			615
	Diluted			653			702			630			615

See accompanying notes.

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TABLE OF CONTENTS

TRANSOCEAN LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In millions) (Unaudited)

				Three months			Nine months ended
				ended
				September 30,			September 30,
				2021			2020			2021			2020
Net income (loss)	$	(130)	$	359	$	(331)	$	(529)
	Net income attributable to noncontrolling interest			-			-			1			1
	Net income (loss) attributable to controlling interest			(130)			359			(332)			(530)
Components of net periodic benefit costs before reclassifications			-			-			(5)			(9)
	Components of net periodic benefit costs reclassified to net income (loss)			3			2			7			6
Other comprehensive income (loss) before income taxes			3			2			2			(3)
	Income taxes related to other comprehensive income (loss)			-			-			-			-
	Other comprehensive income (loss)			3			2			2			(3)
	Other comprehensive income attributable to noncontrolling interest			-			-			-			-
	Other comprehensive income (loss) attributable to controlling interest			3			2			2			(3)
Total comprehensive income (loss)			(127)			361			(329)			(532)
	Total comprehensive income attributable to noncontrolling interest			-			-			1			1
	Total comprehensive income (loss) attributable to controlling interest	$	(127)	$	361	$	(330)	$	(533)

See accompanying notes.

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TABLE OF CONTENTS

TRANSOCEAN LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except share data)

(Unaudited)

		September 30,	December 31,
				2021			2020
Assets
	Cash and cash equivalents	$	900	$	1,154
	Accounts receivable, net of allowance of $2 at September 30, 2021 and December 31, 2020			507			583
	Materials and supplies, net of allowance of $148 and $143 at September 30, 2021 and December 31, 2020,
	respectively			433			434
	Restricted cash and cash equivalents			576			406
	Other current assets			165			163
	Total current assets			2,581			2,740
Property and equipment			23,102			23,040
	Less accumulated depreciation			(5,886)			(5,373)
	Property and equipment, net			17,216			17,667
	Contract intangible assets			223			393
	Deferred income taxes, net			9			9
	Other assets			947			995
	Total assets	$	20,976	$	21,804
Liabilities and equity
	Accounts payable	$	215	$	194
	Accrued income taxes			10			28
	Debt due within one year			575			505
	Other current liabilities			551			659
	Total current liabilities			1,351			1,386
Long-term debt			6,773			7,302
	Deferred income taxes, net			358			315
	Other long-term liabilities			1,227			1,366
	Total long-term liabilities			8,358			8,983
Commitments and contingencies
Shares, CHF 0.10 par value, 891,379,306 authorized, 142,363,356 conditionally authorized, 685,676,456
issued
	and 651,155,650 outstanding at September 30, 2021, and 824,650,660 authorized, 142,363,647 conditionally
	authorized, 639,676,165 issued and 615,140,276 outstanding at December 31, 2020			63			60
	Additional paid-in capital			13,659			13,501
	Accumulated deficit			(2,198)			(1,866)
	Accumulated other comprehensive loss			(261)			(263)
	Total controlling interest shareholders' equity			11,263			11,432
	Noncontrolling interest			4			3
	Total equity			11,267			11,435
	Total liabilities and equity	$	20,976	$	21,804

See accompanying notes.

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