Key Highlights

  • Contract drilling revenues were USD 937 million with Revenue efficiency of 96.8%, and Net Income was USD 26 million.
  • Adjusted EBITDA was USD 313 million, a 33.4% margin, and free Cash Flow was USD 131 million.
  • The company added USD 2.0 billion of Backlog at a weighted average dayrate of about USD 423,000.
  • Debt principal fell to USD 4,975 million from USD 6,297 million, with USD 200 million of notes retired.

Quarter in Numbers

Transocean Ltd. (NYSE:RIG), an offshore drilling contractor, reported third-quarter 2026 contract drilling revenues of USD 937 million, compared with USD 966 million in the second quarter and USD 1,028 million a year earlier. Revenue efficiency was 96.8%, versus 97.0% and 97.5%. The company attributed the sequential decline mainly to an anticipated decrease in rig utilization. Operating and maintenance expense was USD 589 million versus USD 608 million in the second quarter.

Net income was USD 26 million, or USD 0.02 per diluted share, compared with USD 170 million in the second quarter and a net loss of USD 1,923 million, or USD 2.00 per share, a year earlier. Adjusted EBITDA was USD 313 million versus USD 312 million and USD 397 million, giving a Margin of 33.4% versus 32.2% and 38.7%. Adjusted net income was USD 1 million.

Cash Flow, Debt and Liquidity

Net cash provided by Operating Activities was USD 174 million, and after capital expenditures of USD 43 million free cash flow was USD 131 million, compared with USD 212 million in the second quarter. Total debt principal was USD 4,975 million, down from USD 5,107 million at June 30. Interest expense, excluding a USD 22 million effect of the exchangeable bond feature, was USD 112 million. Cash taxes paid, net of USD 9 million of refunds, were USD 7 million. Total Liquidity was USD 1.3 billion, including an undrawn USD 510 million revolving Credit facility.

Chief executive Keelan Adamson said strong cash flow allowed the company to retire the remaining USD 200 million of debt tied to the Deepwater Aquila notes ahead of schedule.

Backlog and Merger

Since its August fleet report the company added nine new fixtures with incremental backlog of about USD 2.0 billion. Contract backlog stood at about USD 8.0 billion as of November 2, and 2027 contract coverage improved to approximately 95%. The chief executive said priorities remain safe and reliable service, converting backlog into cash flow and reducing debt, and that with all regulatory approvals received the Valaris closing is scheduled for December 1, with attention on integration planning and USD 200 million of identified annual synergies.

Backlog and Merger Timeline Markers

Guidance for the fourth quarter projects contract drilling revenues of USD 915 million to USD 965 million, operating and maintenance expense of USD 550 million to USD 600 million, interest expense of USD 107 million and capital expenditures of USD 50 million. Full-year 2026 guidance is revenues of USD 3,900 million to USD 3,950 million, operating and maintenance expense of USD 2,350 million to USD 2,400 million, interest expense of USD 500 million, capital expenditures of USD 145 million and year-end liquidity of USD 1,300 million.

Preliminary 2027 guidance is revenues of USD 3,850 million to USD 4,000 million, operating and maintenance expense of USD 2,375 million to USD 2,500 million, interest expense of USD 415 million, capital expenditures of USD 130 million to USD 140 million and year-end liquidity of USD 1,500 million to USD 1,700 million. Items to track include rig utilization, dayrates on new fixtures and progress on debt reduction.