Filed 2026-02-23 · Period ending 2025-12-31 · 72,507 words · SEC EDGAR
# Transocean Ltd. (RIG) — 10-K
**Filed:** 2026-02-23
**Period ending:** 2025-12-31
**Accession:** 0001451505-26-000018
**Source:** [SEC EDGAR](https://www.sec.gov/Archives/edgar/data/1451505/000145150526000018/)
**Origin leaf:** 18717383ae8896ef867ef6f15f37fd3c69b82a2f81ba641880c16036da23b2da
**Words:** 72,507
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**Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM****10-K**
(Mark one)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December31, 2025
**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
*
**TRANSOCEANLTD****.**
(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.) | |
| | | |
| Turmstrasse30 | | |
| Steinhausen, Switzerland | 6312 | |
| (Address of principal executive offices) | (Zip Code) | |
**Registrants telephone number, including area code:****+41 (41)********749-0500**
Securities registered pursuant to Section 12(b)of the Act:
| | | | |
| Title of each class | Trading symbol | Name of each exchange on which registered | |
| Shares, $0.10 par value | RIG | New York Stock Exchange | |
Securities registered pursuant to Section 12(g)of the Act: None
Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule405 of the Securities Act. Yes No
Indicate by check mark if the registrant is not required to file reports pursuant to Section13 or Section15(d)of the Exchange Act. Yes No
Indicate by check mark whether the registrant (1)has filed all reports required to be filed by Section13 or 15(d)of the Securities Exchange Act of 1934 during the preceding 12months (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 90days. Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule405 of RegulationS-T during the preceding 12months (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, 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 Rule12b-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 Section13(a) of the Exchange Act.
Indicate by check mark whether the registrant has filed a report on and attestation to its managements assessment of the effectiveness of its internal control over financial reporting under Section404(b) of the Sarbanes-Oxley Act (15U.S.C.7262(b)) by the registered public accounting firm that prepared or issued its audit report.
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrants executive officers during the relevant recovery period pursuant to 240.10D-1(b).
Indicate by check mark whether the registrant is a shell company (as defined by Rule12b-2 of the Exchange Act). Yes No
As of June30, 2025, 902,249,348shares were outstanding and the aggregate market value of shares held by non-affiliates was approximately $2.34billion (based on the reported closing market price of the shares of TransoceanLtd. on June30, 2025 of $2.59per share and assuming that all directors and executive officers of the Company are affiliates, although the Company does not acknowledge that any such person is actually an affiliate within the meaning of the federal securities laws). As of February17, 2026, 1,102,848,748shares were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrants definitive Proxy Statement to be filed with the United States Securities and Exchange Commission within 120days of December31, 2025, for its 2026 annual general meeting of shareholders, are incorporated by reference into PartIII of this Form10-K.
Table of Contents
TRANSOCEANLTD. AND SUBSIDIARIES
INDEX TO ANNUAL REPORT ON FORM10-K
FOR THE YEAR ENDED DECEMBER31, 2025
| Item | | Page | |
| PARTI | |
| Item 1. | Business | 2 | |
| Item 1A. | Risk Factors | 8 | |
| Item 1B. | Unresolved Staff Comments | 22 | |
| Item 1C. | Cybersecurity | 22 | |
| Item 2. | Properties | 23 | |
| Item 3. | Legal Proceedings | 23 | |
| Item 4. | Mine Safety Disclosures | 24 | |
| | | | |
| PARTII | |
| Item 5. | Market for Registrants Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities | 24 | |
| Item 6. | Reserved | 26 | |
| Item 7. | Managements Discussion and Analysis of Financial Condition and Results of Operations | 26 | |
| Item 7A. | Quantitative and Qualitative Disclosures About Market Risk | 36 | |
| Item 8. | Financial Statements and Supplementary Data | 37 | |
| Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 70 | |
| Item 9A. | Controls and Procedures | 70 | |
| Item 9B. | Other Information | 70 | |
| Item 9C. | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | 70 | |
| | | | |
| PARTIII | |
| Item 10. | Directors, Executive Officers and Corporate Governance | 70 | |
| Item 11. | Executive Compensation | 70 | |
| Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters | 70 | |
| Item 13. | Certain Relationships and Related Transactions, and Director Independence | 70 | |
| Item 14. | Principal Accountant Fees and Services | 70 | |
| | | | |
| PARTIV | |
| Item 15. | Exhibits and Financial Statement Schedules | 71 | |
| | | | |
Forward-Looking Information
The statements included in this annual report regarding future financial performance and results of operations and other statements that are not historical facts are forward-looking statements within the meaning of Section27A of the United States (U.S.)Securities Act of1933 and Section21E of the U.S. Securities Exchange Act of1934. Forward-looking statements in this annual report include, but are not limited to, statements about the following subjects:
| | the effect of any disputes and actions with respect to production levels by, among or between major oil and gas producing countries and any expectations we may have with respect thereto; | |
| | our results of operations, our cash flow from operations, our revenue efficiency and other performance indicators and optimization of rig-based spending; | |
| | the offshore drilling market, including the effects of variations in commodity prices, supply and demand, utilization rates, dayrates, customer drilling programs, customer strategy, stacking and reactivation of rigs, the impact of changes to regulations in jurisdictions in which we operate and changes in the global economy or market outlook for our industry or the various geographies in which we operate; | |
| | customer drilling contracts, including contract backlog, force majeure provisions, contract awards, commencements, extensions, cancellations, terminations, renegotiations, contract option exercises, contract revenues, early termination fees, indemnity provisions and rig mobilizations; | |
| | the addition of renewable or other energy alternatives to meet local, regional or global demand for energy and efforts by us or our customers, to reduce greenhouse gas emissions or operating intensity thereof; | |
| | liquidity, including availability under our Secured Credit Facility, as defined in this annual report, and adequacy of cash flows for our obligations; | |
| | debt, including interest rates, credit ratings and our evaluation or decisions with respect to any potential liability management transactions or strategic alternatives intended to prudently manage our liquidity, debt maturities and other aspects of our capital structure and any litigation, potential or alleged defaults and discussions with creditors related thereto; | |
| | upgrade, shipyard, reactivations and other capital projects, including the level of expected capital expenditures and the timing and cost of completing capital projects, relinquishment or abandonment, expected downtime and lost revenues; | |
| | the cost and timing of acquisitions and reactivations, and the proceeds and timing of dispositions; | |
| | our expectations regarding the timing, completion and anticipated benefits of the proposed business combination (the Business Combination) with ValarisLimited, an exempted company limited by shares incorporated under the laws of Bermuda (Valaris); | |
| | tax matters, including our effective tax rate, uncertain tax positions, changes in tax laws, treaties and regulations, tax assessments, tax incentive programs and liabilities for tax issues in the tax jurisdictions in which we operate or have a taxable presence; | |
| | legal and regulatory matters, including results and effects of current or potential legal proceedings and governmental audits and assessments, outcomes and effects of internal and governmental investigations, customs and environmental matters; | |
| | insurance matters, risk tolerance and risk response, including adequacy and solvency of insurance, renewal of insurance, insurance proceeds and cash investments of our wholly owned captive insurance company; | |
| | effects of accounting changes and adoption of accounting policies; and | |
| | investment in recruitment, retention and personnel development initiatives, the timing of, and other matters concerning, severance payments, benefit payments and maintaining agreements with labor unions. | |
Forward-looking statements in this annual report are identifiable by use of the following words and other similar expressions:
| | anticipates | | budgets | | estimates | | forecasts | | may | | plans | | projects | | should | |
| | believes | | could | | expects | | intends | | might | | predicts | | scheduled | | | |
Such statements are subject to numerous risks, uncertainties and assumptions, including, but not limited to:
| | those described under Item1A. Risk Factors in this annual report on Form10-K; | |
| | the effects of actions by, or disputes among or between, members of the Organization of the Petroleum Exporting Countries and other oil and natural gas producing countries with respect to production levels or other matters related to the prices of oil and natural gas; | |
| | the adequacy of and access to our sources of liquidity; | |
| | our inability to renew drilling contracts at comparable, or improved, dayrates and to obtain drilling contracts for our rigs that do not have contracts; | |
| | our operational performance; | |
| | the cancellation of drilling contracts currently included in our reported contract backlog; | |
| | losses on impairment of long-lived assets; | |
| | shipyard and other delays; | |
| | the results of meetings of our shareholders; | |
| | changes in political, social and economic conditions, including the effects of political and military disputes; | |
| | the possibility of changes in tax, environmental, trade, immigration and other laws, regulations and policies, including the imposition of tariffs, economic or trade sanctions or other trade barriers and actions of government that impact, whether directly or indirectly, oil and gas operations; | |
| | the effect and results of litigation, regulatory matters, settlements, audits, assessments and contingencies; | |
| | the availability of borrowings under our Secured Credit Facility, as defined below, as well as the timing of any amendments thereto; and | |
| | other factors discussed in this annual report and in our other filings with the U.S. Securities and Exchange Commission (SEC), which are available free of charge on the SEC website at www.sec.gov. | |
The foregoing risks and uncertainties are beyond our ability to control, and in many cases, we cannot predict the risks and uncertainties that could cause our actual results to differ materially from those indicated by the forward-looking statements. Should oneor more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated. All subsequent written and oral forward-looking statements attributable to us or to persons acting on our behalf are expressly qualified in their entirety by reference to these risks and uncertainties. You should not place undue reliance on forward-looking statements, each of which speaks only as of the date of the particular statement. We expressly disclaim any obligations or undertaking to release publicly any updates or revisions to any forward-looking statement to reflect any change in our expectations or beliefs with regard to the statement or any change in events, conditions or circumstances on which any forward-looking statement is based, except as required by law.
Table of Contents
PARTI
**Item1.**Business
Overview
TransoceanLtd. (together with its subsidiaries and predecessors, unless the context requires otherwise, Transocean, the Company, we, us or our) is a leading international provider of offshore contract drilling services for oil and gas wells. As of February17, 2026, we owned or had partial ownership interests in and operated 27mobile offshore drilling units, consisting of 20ultra-deepwater drillships and sevenharsh environment semisubmersibles.
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. Our drilling fleet is oneof 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.
TransoceanLtd. is a Swiss corporation with its registered office in Steinhausen, Canton of Zug, and with principal executive offices located at Turmstrasse30, 6312Steinhausen, Switzerland. Our telephone number at that address is +4141749-0500. Our shares are listed on the New York Stock Exchange under the ticker symbol RIG.
On February9, 2026, we and Valaris entered into a Business Combination Agreement (the "Agreement") providing for the Business Combination. Pursuant to the Agreement, and on the terms and subject to the conditions thereof, we will acquire all of the issued and outstanding common shares, par value $0.01each, of Valaris (the Valaris Shares) in exchange for TransoceanLtd. shares, par value $0.10each, at an exchange ratio of 15.235TransoceanLtd. shares for each Valaris Share.
For information about the revenues, operating income, assets and other information related to our business, our agreement to acquire of Valaris, and the geographic areas in which we operate, see PartII. Item7. Managements Discussion and Analysis of Financial Condition and Results of Operations and PartII. Item8. Financial Statements and Supplementary DataNotes to Consolidated Financial StatementsNote1Business, Note5Revenues and Note6Long-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. Floaters are designed to operate in locations away from port for extended periods of time and have living quarters for the crews, a helicopter landing deck and storage space for drill pipe, riser and drilling supplies. Our drilling units and related equipment are suitable for both exploration and development, and we engage in both types of activities.
Our fleet of floaters consists of ultra-deepwater drillships 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 4,500feet or greater. Harsh environment floaters are capable of drilling in harsh environments in water depths between 1,500and 10,000feet and typically have greater displacement than other semisubmersibles, which offers larger variable load capacity, more useable deck space and better motion characteristics.
**Drillship features**Drillships are floating vessels that are shaped like conventional ships, generally self-propelled and considered to be the most mobile of the major rig types. Drillships typically have greater deck load and storage capacity than semisubmersible rigs, which provides logistical and resupply efficiency benefits for customers. 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. We have twodrillships that are equipped with an industry-leading, 1,700short ton hoisting capacity. We have 18drillships that are equipped with dual-activity technology that employs structures, equipment and techniques using twodrilling stations within a dual derrick to allow these drillships to perform simultaneous drilling tasks in a parallel, rather than a sequential manner, which reduces critical path activity and improves efficiency in both exploration and development drilling.
**Semisubmersible features**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. Semisubmersible floaters are capable of maintaining their position over a well either through dynamic positioning or the use of mooring systems. Although most semisubmersibles are relocated with the assistance of tugs, some units are self-propelled and move between locations under their own power when afloat on pontoons. All of our semisubmersibles have mooring capability and are equipped for year-round operations in harsh environments, such as those of the Norwegian continental shelf and sub-Arctic waters. Twoof our sevensemisubmersibles are custom-designed, high-capacity drilling rigs, equipped with dual-activity technology.
**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. A *stacked* rig typically has
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reduced operating and maintenance costs, is staffed by a reduced crew or has no crew and is (a)preparing for an extended period of inactivity, (b)expected to continue to be inactive for an extended period or (c)completing a period of extended inactivity. Stacked rigs will continue to incur operating costs at or above normal operating levels for approximately 30days following initiation of stacking. Some idle rigs and all stacked rigs require additional costs to return to service. 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 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. 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 table, presented as of February19, 2026, provides certain specifications for our rigs, excluding rigs classified as held for sale. Unless otherwise noted, the stated location of each rig indicates either the current drilling location, if the rig is operating, or the next operating location, if the rig is in shipyard with a follow-on contract. The dates provided represent the year placed into service, and, if applicable, the year of the most recent upgrade. As of February19, 2026, we owned all the drilling rigs in our fleet noted in the tables below, except for the ultra-deepwater drillship *Petrobras10000*, which is subject to a finance lease through August2029.
| | | | | | | | | | | | | | | | | |
| | | | | Year | | Hook | | Water | | Drilling | | | | Contracted | | |
| | | | | entered | | load | | depth | | depth | | | | location or | | |
| | | | | service / | | capacity | | capacity | | capacity | | | | standby | | |
| Rig category and name | | | | upgraded | | (short tons) | | (infeet) | | (infeet) | | Specifications | | status | | |
| Ultra-deepwater drillships (20) | | | | | | | | | | | | | | | | |
| Deepwater Titan | | | | 2023 | | 1,700 | | 12,000 | | 40,000 | | (a) (b) (c) | | U.S. Gulf | | |
| Deepwater Atlas | | | | 2022 | | 1,700 | | 12,000 | | 40,000 | | (a) (b) (d) | | U.S. Gulf | | |
| Deepwater Aquila | | | | 2024 | | 1,400 | | 12,000 | | 40,000 | | (a) (b) (e) (f) | | Brazil | | |
| Deepwater Poseidon | | | | 2018 | | 1,400 | | 12,000 | | 40,000 | | (a) (b) (f) (g) (h) | | U.S. Gulf | | |
| Deepwater Pontus | | | | 2017 | | 1,400 | | 12,000 | | 40,000 | | (a) (b) (g) (h) | | U.S. Gulf | | |
| DeepwaterConqueror | | | | 2016 | | 1,400 | | 12,000 | | 40,000 | | (a) (b) (f) (g) (h) | | U.S. Gulf | | |
| DeepwaterProteus | | | | 2016 | | 1,400 | | 12,000 | | 40,000 | | (a) (b) (g) (h) | | U.S. Gulf | | |
| Deepwater Thalassa | | | | 2016 | | 1,400 | | 12,000 | | 40,000 | | (a) (b) (g) (h) | | Mexico | | |
| Deepwater Asgard | | | | 2014 | | 1,400 | | 12,000 | | 40,000 | | (a) (b) (g) | | U.S. Gulf | | |
| DeepwaterInvictus | | | | 2014 | | 1,400 | | 12,000 | | 40,000 | | (a) (b) (f) (g) | | U.S. Gulf | | |
| Ocean Rig Apollo | | | | 2015 | | 1,250 | | 12,000 | | 40,000 | | (a) (b) | | Stacked | | |
| Ocean Rig Athena | | | | 2014 | | 1,250 | | 12,000 | | 40,000 | | (a) (b) | | Stacked | | |
| Deepwater Skyros | | | | 2013 | | 1,250 | | 12,000 | | 40,000 | | (a) (b) | | Ivory Coast | | |
| Ocean Rig Mylos | | | | 2013 | | 1,250 | | 12,000 | | 40,000 | | (a) (b) (g) | | Stacked | | |
| Deepwater Corcovado | | | | 2011 | | 1,000 | | 10,000 | | 35,000 | | (a) (b) | | Brazil | | |
| Deepwater Mykonos | | | | 2011 | | 1,000 | | 10,000 | | 35,000 | | (a) (b) | | Brazil | | |
| Deepwater Orion | | | | 2011 | | 1,000 | | 10,000 | | 35,000 | | (a) (b) | | Brazil | | |
| DhirubhaiDeepwater KG2 | | | | 2010 | | 1,000 | | 12,000 | | 35,000 | | (a) | | Brazil | | |
| Petrobras10000 | | | | 2009 | | 1,000 | | 12,000 | | 37,500 | | (a) (b) | | Brazil | | |
| DhirubhaiDeepwaterKG1 | | | | 2009 | | 1,000 | | 12,000 | | 35,000 | | (a) | | India | | |
| | | | | | | | | | | | | | | | | |
| Harsh environment semisubmersibles (7) | | | | | | | | | | | | | | | | |
| Transocean Norge | | | | 2019 | | 1,000 | | 10,000 | | 40,000 | | (a) (f) (i) | | Norwegian N. Sea | | |
| TransoceanSpitsbergen | | | | 2010 | | 1,000 | | 10,000 | | 30,000 | | (a) (b) (i) | | Norwegian N. Sea | | |
| TransoceanBarents | | | | 2009 | | 1,000 | | 10,000 | | 30,000 | | (a) (b) (i) | | Romania | | |
| Transocean Enabler | | | | 2016 | | 750 | | 1,640 | | 28,000 | | (a) (f) (i) | | Norwegian N. Sea | | |
| Transocean Encourage | | | | 2016 | | 750 | | 1,640 | | 28,000 | | (a) (f) (i) | | Norwegian N. Sea | | |
| Transocean Endurance | | | | 2015 | | 750 | | 1,640 | | 28,000 | | (a) (f) (i) | | Australia | | |
| Transocean Equinox | | | | 2015 | | 750 | | 1,640 | | 28,000 | | (a) (f) (i) | | Australia | | |
| (a) | Dynamically positioned. | |
| (b) | Dual activity. | |
| (c) | Two20,000psi blowout preventers. | |
| (d) | One15,000psi blowout preventer and one20,000psi blowout preventer. | |
| (e) | One15,000psi blowout preventer and designed to accommodate a future 20,000psi blowout preventer. | |
| (f) | Automated drilling control. | |
| (g) | Two15,000psi blowout preventers. | |
| (h) | Designed to accommodate a future upgrade to 20,000psi blowout preventer(s). | |
| (i) | Moored. | |
Technology
**Overview**Celebrating 100years of drilling, we have a long history of technological innovation, including the firstdynamically positioned drillship, the firstsemisubmersible rig to drill year-round in the NorthSea, the first10,000-ft. water depth rated ultra-deepwater drillship, the firstdual-activity drillship and thefirst eighth-generation drillships with 1,700-ton hoisting systems and 20,000-psi well-control systems. Additionally, we have achieved numerous water depth world records over the past several decades. We develop, invest in and deploy industry-leading technology to differentiate our service offerings in the pursuit of delivering ever-improving operational integrity with safer, more efficient and environmentally responsible drilling services for our customers.
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Although we do not currently use artificial intelligence (AI) in our offshore drilling operations, we have introduced AI tools to streamline certain high-volume office and administrative tasks and are exploring use cases to further improve productivity. We have established an AI Governance Committee, which includes internal senior leaders and technical experts, that oversees our tool selection, security protocols, training and overall usage. See [Item1A. Risk FactorsRisks related to laws, regulations and government complianceWe are subject to cybersecurity risks and threats as well as risks related to the use of artificial intelligence and the regulation of data privacy and security.](#Item1A_WeAreSubjectToCybersecurity)
We believe our efforts to continuously improve, and effectively use, innovative technologies to meet or exceed our customers requirements is critical to maintaining our competitive position within the contract drilling services industry by ensuring the safety of our crews, drilling more efficient wells, building greater resilience into our critical operating systems and reducing fuel consumption and emissions. Some examples of technology deployed in our fleet include the following:
**Drilling equipment and well control**Our entire fleet is dynamically positioned. We have eighteendrillships and twoharsh environment semisubmersibles that are equipped with 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. Twoof our drillships are equipped with 1,700short ton hoisting capacity and 20,000psi blowout preventers. Tendrillships in our fleet are outfitted with dual blowout preventers and triple liquid mud systems. Sixdrillships in our fleet are designed to accept 20,000psi blowout preventers in the future. In 2021, we deployed the industrys first kinetic blowout stopper, a step-changing technology for well control that delivers unrivaled shearing capability, and we have deployed this technology on twoof our floaters. Since 2024, we installed the rotary multi-tool pipe cleaner and wellbore protector on threefloaters with oneadditional system in progress.
**Automated drilling control and robotics**We utilize available technology and employ data-driven methods, augmented by the size of our fleet, to expand our knowledge framework for sustainable process optimization. Our automated fleet includes fourultra-deepwater drillships and fiveharsh environment semisubmersibles that are equipped with an automated drilling control system, and we have twomore installations in progress. Additionally, since 2022, we have threeultra-deepwater drillships that are equipped with an offshore robotics riser system that handles riser joint bolting without human intervention, and we have onemore installation in progress.
**Automated safety and monitoring tools**We employ the patented HaloGuard system on tenof our drilling units, which is designed to alarm, notify and, if required, halt equipment to avoid injury to personnel who move into danger zones. We use our smart equipment analytics tool to deliver real-time data feeds from equipment across our fleet to monitor equipment health, inferred emissions and energy consumption while identifying performance trends that allow us to systematically optimize equipment maintenance and achieve higher levels of reliability, operational efficiency and sustainability.
Drilling Contracts
**Overview**Our 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. Drilling contracts generally provide for payment on a dayrate basis, typically with higher rates for periods when drilling operations are optimized or as incentives to complete drilling operations on or ahead of an agreed schedule and, conversely, lower or zerorates for periods when 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, which in limited cases may include lower rates for periods when drilling operations are necessary to extend beyond an agreed schedule. A dayrate drilling contract generally extends over a period of time either covering the drilling of a single well or group of wells or covering a stated term. At December31, 2025, our contract backlog was $6.29billion, representing a decrease of 28percent and a decrease of 32percent, compared to our contract backlog of $8.74billion and $9.25billion at December31, 2024 and 2023, respectively. See [PartII. Item7. Managements Discussion and Analysis of Financial Condition and Results of OperationsPerformance and Other Key Indicators](#MDA_PerformanceAndOKI).
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. Drilling contracts also customarily provide for either automatic termination or termination at the option of the customer, typically without payment of any termination fee, under various circumstances such as non-performance, in the event of extended downtime or impaired performance due to equipment or operational issues or extended downtime due to force majeure events. Many of these events are beyond our control. The contract term in some instances may be extended by the customer exercising options for the drilling of additional wells or for additional periods of time. Our contracts also typically include a provision that allows the customer to extend the contract to finish drilling a well-in-progress. During periods of depressed market conditions, our customers may seek to renegotiate drilling contracts or options to reduce the term of their obligations or the average dayrate through term extensions or may seek to early terminate or repudiate their contracts. Suspension of drilling contracts will result in the reduction in or loss of dayrate for the period of the suspension. If customers cancel some of our contracts and we are unable to secure new contracts on a timely basis and on substantially similar or more favorable terms, if some of our contracts are suspended for an extended period of time or if a number of our contracts are renegotiated on less favorable terms, our consolidated financial position, results of operations or cash flows may be adversely affected. See [Item1A. Risk FactorsRisks related to our businessOur drilling](#Item1A_OurDrillingContracts)
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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.[](#Item1A_OurDrillingContracts)
**Contractual indemnity**Under dayrate drilling contracts, consistent with standard industry practice, our customers, as the operators, generally assume, and grant indemnity for, subsurface and well control risks, and their consequential damages. 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. 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 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. In some instances, we have contractually agreed upon certain limits to our indemnification rights and can be responsible for certain damages up to a specified maximum dollar amount. The nature of our liability and the prevailing market conditions, among other factors, can influence such contractual terms. Notwithstanding a contractual indemnity from a customer, there can be no assurance that our customers will be financially able to indemnify us or will otherwise honor their contractual indemnity obligations.
The interpretation and enforceability of a contractual indemnity depends upon the specific facts and circumstances involved, as governed by applicable laws, and may ultimately need to be decided by a court or other proceeding, which would need to consider the specific contract language, the facts and applicable laws. Applicable laws often consider contractual indemnity for criminal fines and penalties to be against public policy. Many courts also restrict indemnification for criminal fines and penalties. The inability or other failure of our customers to fulfill their indemnification obligations, or the unenforceability of all of our contractual protections could have a material adverse effect on our financial position, results of operations or cash flows. See [Item1A. Risk FactorsRisks related to our businessOur business involves numerous operating hazards, and our insurance and indemnities from our customers may not be adequate to cover potential losses from our operations.](#Item1A_OurBusinessInvolves)
Market
Our operations are geographically dispersed in oil and gas exploration and development areas throughout the world. We operate in a single, global offshore drilling market, as our drilling rigs are mobile floating vessels and can be moved according to prevailing market conditions. We may mobilize our drilling rigs between regions for a variety of reasons, including to respond to customer contracting requirements or to capture observed market demand. Consequently, we cannot predict the future percentage of our revenues that will be derived from particular geographic areas. As of February19, 2026, the drilling units in our fleet, including stacked and idle rigs, were located in the U.S.GulfofAmerica (eightunits), Brazil (sixunits), the Norwegian North Sea (fourunits), Greece (threeunits), Australia (twounits), India(oneunit), Ivory Coast (oneunit), Mexico(oneunit) and Romania (oneunit).
We categorize the market sectors in which we operate as follows: (1)ultra-deepwater and deepwater, (2)harsh environment and (3)midwater. We typically employ our ultra-deepwater floaters to service the ultra-deepwater and deepwater sector, and we employ our harsh environment floaters to service all threesectors. We generally view the ultra-deepwater and deepwater market sector as water depths beginning at 4,500feet and extending to the maximum water depths in which rigs are capable of drilling, which is currently up to 12,000feet. The midwater market sector includes water depths from approximately 300feet to approximately 4,500feet. The harsh environment market sector includes regions that are more challenged by lower temperatures, harsher weather conditions and water currents.
The market for offshore drilling rigs and related services reflects our customers demand for equipment for drilling exploration, appraisal and development wells and for performing maintenance on existing production wells. Activity levels of energy companies, including integrated energy companies, independent energy companies and, to a lesser extent, national energy companies are largely driven by the worldwide demand for energy, including crude oil and natural gas. Worldwide energy supply and demand drives oil and natural gas prices, which, in turn, impact energy companies ability to fund investments in exploration, development and production activities.
See ****[PartII. Item7. Managements Discussion and Analysis of Financial Condition and Results of OperationsOutlook](#MDA_Outlook).
Human Capital Resources
**Workforce**As of December31, 2025, we had a global workforce of approximately 5,600individuals, including approximately 380contractors, representing 67nationalities. At December31, 2025, our global workforce was geographically distributed in 20countries across sixcontinents as follows: 38percent in North America, 26percent in South America, 23percent in Europe, sixpercent in Australia, fourpercent in Africa, and threepercent in Asia.
**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 and to maintain a safe and respectful work environment for our people. We maintain a Code of Integrity and a Human Rights Policy Statement that apply to all board members, executives, employees and business partners, including contractors, suppliers, vendors, investees and joint venture partners. We demonstrate respect of human rights by aiming to maintain a healthy and safe work environment, observe fair employment practices and provide competitive employment terms. Practices such as modern slavery, child labor, forced or indentured servitude, and other human rights abuses are strictly prohibited.
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**Labor rights**We respect the labor rights of all individuals in our workforce, including the right to collective bargaining. As of December31, 2025, approximately 45percent of our total workforce, working primarily in Brazil and Norway, is represented by, and some of our contracted labor work is subject to, collective bargaining agreements, substantially all of which are subject to annual salary negotiations. Negotiations for 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.
**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 worlds premier offshore drilling contractor. We seek to maintain a competitive advantage while benefitting local communities by offering regionally competitive compensation and benefits packages tailored to our workforce demographics, a technically challenging work environment, global opportunities, and rotational development programs. We design our wellness and benefits strategy under fourpillars consisting of physical well-being, financial well-being, emotional well-being and social well-being, including a globally available employee assistance program. We continually assess and adapt offerings and policies to provide a modern work environment based on evolving social and technological practices, which is essential to attract and retain top talent. Our focus on the quality of our workforce is designed to maximize the quality of work performance and ultimately, the value we deliver to our customers and investors.
**Training**We invest in our workers by providing them with the transferrable skill sets essential to advancing their professional development. To optimize the competitive position of our business, we maintain a rigorous competency-based training program. We maintain an internal training board that regularly updates our training matrix to meet or exceed industry standards, and it oversees our competency assurance management system, which is accredited by the Offshore Petroleum Industry Training Organization. We provide various offshore training formats designed to encompass all learning styles through on-the-job, e-learning, customer-specific training, certifications, and leadership and licensing programs. Distinguishing us from many of our competitors, we also offer unique simulation-based education augmented by digital twin modeling, enabling our workforce to visualize equipment performance and target efficiencies more accurately. We articulate to our workforce the certifications, skills and competencies needed for each role, and workers are required to successfully complete the relevant training and attain necessary certifications prior to taking on new roles.
**Safety**Our safety vision is to conduct our operations in an incident-free workplace, all the time, everywhere. 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 local regulations, and our operations are governed by a comprehensive set of internal requirements. Regular competency and effectiveness assessments help to ensure that our highly trained crews are equipped to protect operational integrity with the process-driven management of hazards to prevent and mitigate major accidents. We measure safety performance in terms of widely accepted ratios with the use of industry standards, including (a)the total recordable incident rate (TRIR), which represents the number of recordable work-related injuries or illnesses for every 200,000hours worked, and (b)the lost time incident rate (LTIR), which measures the number of incidents that result in lost time due to work-related injuries or illnesses for every 200,000hours worked. In the year ended December31, 2025, our TRIR was0.19 and our LTIR was0.00, the calculations for which were based on 11.5million labor hours.
Executive Leadership
The following information, presented as of February17, 2026, introduces our executive officers, each of which is also an officer for purposes of Section16 under the Securities and Exchange Act of 1934. The executive officers are appointed by and serve at the discretion of our board of directors. None of our executive officers has any family relationship with any director or other executive officer.
| | | | | | | | |
| | | | | | Ageasof | | |
| Officer | | | Office | | February17,2026 | | |
| Keelan Adamson | | | President and Chief Executive Officer | | 56 | | |
| R. Thaddeus Vayda | | | Executive Vice President and Chief Financial Officer | | 63 | | |
| Jeremy D. Thigpen | | | Executive Chair | | 51 | | |
| Brady K. Long | | | Executive Vice President and Chief Legal Officer | | 53 | | |
| Roderick J. Mackenzie | | | Executive Vice President and Chief Commercial Officer | | 50 | | |
| Jason Pack | | | Senior Vice President and Chief Accounting Officer | | 51 | | |
| | Member of our executive management team for purposes of Swiss law. | |
KeelanAdamson is President and Chief Executive Officer of the Company. Before being named to his current position in May2025, Mr.Adamson served as President and Chief Operating Officer of the Company from February2022 to May2025. Mr.Adamson served as Executive Vice President and Chief Operations Officer from August2018 to February2022, as Senior Vice President, Operations from October2017 to July2018 and as Senior Vice President, Operations Integrity and HSE, from June2015 to October2017. Since 2010, Mr.Adamson served in multiple executive positions with responsibilities spanning Engineering and Technical Services, Major Capital Projects, Human Resources, and more recently, Operations Integrity and HSE. Mr.Adamson started his career as a drilling engineer with BPExploration in 1991 and joined Transocean in July1995. In addition to several management assignments in the United Kingdom (the U.K.), Asia, and Africa, he also held leadership roles in Sales and Marketing, Well Construction and Technology, and as Managing Director for operations in North America, Canada and Trinidad. Mr.Adamson earned a bachelor's degree in Aeronautical Engineering from The Queens University of Belfast in 1991 and completed the Advanced Management program at Harvard Business School in 2016.
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R.ThaddeusVayda is Executive Vice President and Chief Financial Officer of the Company. Before being named to his current position in May2024, Mr.Vayda served as Senior Vice President of Corporate Finance and Treasurer from February2023 to April2024; as Vice President, Investor Relations, and Treasurer from August2015 to February2023, as Vice President, Corporate Finance and Treasurer from July2014 to August2015; as Vice President, Investor Relations and Communications from March2012 to June2014 and as Vice President, Investor Relations from July2011 to February2012. Mr.Vayda initially joined Transocean in August1995, working with the Company until April2000 in positions that included Director of Corporate Planning and Operational Division Engineer. Between May2000 and June2011, Mr.Vayda worked primarily in energy-related equity capital markets roles. Earlier in his career, Mr.Vayda held various leadership positions at Northwest Airlines. Mr.Vayda started his professional career with Booz Allen Hamilton, Management Consultants. He earned a Master of Business Administration degree from the FuquaSchool of Business at DukeUniversity, Durham, NorthCarolina in May1992, and a Bachelor of Science degree in Engineering from the Catholic University of America at Washington,D.C. in May1985.
JeremyD. Thigpen is Executive Chair of the Companys board of directors. Before being named to his current position in May2025, Mr.Thigpen served as Chief Executive Officer and a member of the Companys board of directors from April2015 to May2025. Mr.Thigpen served as Senior Vice President and Chief Financial Officer at NOVInc. from December2012 to April2015. At NOVInc., Mr.Thigpen also served as President, Downhole and Pumping Solutions from August2007 to December2012, as President of the Downhole Tools Group from May2003 to August2007 and as manager of the Downhole Tools Group from April2002 to May2003. From 2000 to 2002, Mr.Thigpen served as the Director of Business Development and Special Assistant to the Chairman for NOVInc. Mr.Thigpen earned a Bachelor of Arts degree in Economics and Managerial Studies from Rice University in 1997, and he completed the Program for Management Development at Harvard Business School in 2001.
BradyK. Long is Executive Vice President and Chief Legal Officer of the Company. Before being named to his current position in March2018, Mr.Long served as Senior Vice President and General Counsel from November2015 to March2018. From 2011 to November2015, when Mr.Long joined the Company, he served as Vice PresidentGeneral Counsel and Secretary of Enscoplc, which acquired Pride International,Inc. where he had served as Vice President, General Counsel and Secretary since August2009. Mr.Long joined Pride International,Inc. in June2005 as Assistant General Counsel and served as Chief Compliance Officer from June2006 to February2009. He was director of Transocean PartnersLLC from May2016 until December2016. Mr.Long previously practiced corporate and securities law with the law firm of BracewellLLP. Mr.Long earned a Bachelor of Arts degree from Brigham Young University in 1996, a Juris Doctorate degree from the University of Texas School of Law in 1999 and an ExecutiveLLM in Taxation from New York University in 2019.
Roderick J.Mackenzie is Executive Vice President and Chief Commercial Officer of the Company. Before being named to his current position in February2022, Mr.Mackenzie served as Senior Vice President, Marketing, Innovation and Industry Relations from August2018 to February2022; Vice President, Marketing and Contracts from February2017 to August2018; Managing Director, Business Development and Strategic Accounts from February2016 to February2017; and as a Marketing Director in the U.S., France, and Dubai from March2012 to February2016. In addition, Mr.Mackenzie has previously served in various operational and project roles around the globe, starting his career at the Company as a rig-based engineer in 1997. Mr.Mackenzie currently serves as Chair for the International Association of Drilling Contractors. Mr.Mackenzie earned a bachelor's degree in Civil Engineering with Environmental Studies from the University of Strathclyde in 1997, and completed the Advanced Management Program at Harvard Business School in 2016.
JasonPack is Senior Vice President and Chief Accounting Officer of the Company. Before being named to his current position in August2024, he served as Chief Audit Executive from August2018 to July2024. Mr.Pack previously served as Vice President, Internal Audit at NOVInc., where he spent 16years. At NOVInc., Mr.Pack held several roles, including Vice President, Finance Drilling and Intervention; Vice President, Finance Africa and Global Controller, Downhole. Prior to its acquisition by NOVInc. in 2006, Mr.Pack served as Senior Controller of NQL Drilling ToolsInc. Mr.Pack has served as Director and Chairman of the Audit Committee for two publicly listed exploration and production companies: Kallisto EnergyCorp. from November2006 to June2013 and Shelton CanadaCorp from March2007 to December2009. Mr.Pack started his career at Deloitte and Touche in Edmonton, Alberta, Canada, where he worked as a staff auditor for threeyears. Mr.Pack is a certified public accountant and earned a Bachelor of Management degree in Accounting and a Bachelor of Science degree in Biology, Chemistry and Math from the University of Lethbridge.
Environmental Responsibility
We strive to deliver services in a manner that minimizes the impact of our business on the environment. We continuously monitor our operations and seek innovative ways to enhance our ability to meet our objectives. We maintain a global Environmental Management System (EMS) standard that applies to all our rigs, offices and facilities. The EMS provides a framework to consistently manage our worldwide operations in an environmentally responsible manner and monitor our performance. Within this framework, we regularly assess the environmental impact of operations, focusing on the reduction of greenhouse gas emissions, operational discharges, water use and waste. In addition, our EMS is ISO14001 certified for the management of the operation of drilling services to the global offshore oil and gas industry.
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Joint Venture, Agency and Sponsorship Relationships and Other Investments
In some areas of the world, local customs and practice or governmental requirements necessitate the formation of joint ventures with local participation since local laws or customs in those areas effectively mandate the establishment of a relationship with a local agent or sponsor. When appropriate in these areas, we may enter into agency or sponsorship agreements. We also invest in certain companies for operational and strategic purposes. Some of these companies or joint ventures in which we invest are involved in (a)businesses developed to support renewable or other energy alternatives or (b)research and development of technology to improve efficiency, reliability, sustainability and safety of our drilling and other activities. We may or may not control these partially owned companies. At December31, 2025, we held partial ownership interests in companies organized in Belgium, the Cayman Islands, the U.K., Norway and other countries. At December31, 2025, among other equity investments, we held noncontrolling equity ownership interests inGlobal Sea Mineral ResourcesNV, 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.
Governmental Regulations
Our operations are subject to a variety of international, national, regional, state and local government regulations, including environmental regulations. We monitor our compliance with such government regulations in each country of operation and, notwithstanding increases in governmental regulations, particularly general environmental regulations, we have made and will continue to make the required expenditures to comply with current and future government requirements. 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 December31, 2026, or any other period contemplated at this time. We do not believe that our compliance with such requirements will have a material adverse effect on our competitive position, consolidated results of operations or cash flows. We incorporate by reference herein the disclosures on government regulations, including environmental regulations, contained in the following sections of this annual report on Form10-K:
| | Item1A. Risk FactorsRisks related to our laws, regulations and governmental compliance; | |
| | Item3. Legal Proceedings; | |
| | PartII. Item7. Managements Discussion and Analysis of Financial Condition and Results of OperationsOther Matters; | |
| | PartII. Item8. Financial Statements and Supplementary DataNotes to Consolidated Financial StatementsNote10Income Taxes; and | |
| | PartII. Item8. Financial Statements and Supplementary DataNotes to Consolidated Financial StatementsNote12Commitments and Contingencies. | |
Available Information
Our website address is***www.deepwater.com**. *Information contained on or accessible from our website is not incorporated by reference into this annual report on Form10-K and should not be considered a part of this report or any other filing that we make with the SEC. Furthermore, references to our website URLs are intended to be inactive textual references only. We make available on this website free of charge, our annual reports on Form10-K, quarterly reports on Form10-Q, current reports on Form8-K and amendments to those reports as soon as reasonably practicable after we electronically file those materials with, or furnish those materials to, the SEC. 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. We intend to satisfy the requirement under Item5.05 of Form8-K to disclose any amendments to our Code of Integrity and any waiver from any provision of our Code of Integrity by posting such information in the Governance page on our website at *www.deepwater.com*.
**Item1A.**Risk Factors
Risks related to our business
Our business depends on the level of activity in the offshore oil and gas industry, which is significantly affected by volatile oil and gas prices and other factors.
Our business, and demand for our services, depends on oil and gas exploration, development and production in offshore areas where we are capable of operating. Our customers expenditure levels for these activities are directly affected by trends in the price of oil and, to a lesser extent, natural gas. Oil and gas prices are extremely volatile and are affected by many 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, or to be influenced to set and maintain, production levels, productive spare capacity and pricing among its members, including the ability of OPEC to successfully coordinate and enforce production quotas; | |
| | 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; | |
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| | 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. | |
Demand for our services is particularly sensitive to the level of exploration, development and production activity of, and the corresponding capital spending by, energy companies, including national energy companies. Prolonged reductions in oil and natural gas prices could depress the immediate levels of exploration, development and production activity. Perceptions of longer-term lower oil and natural gas prices by energy companies, or a perception that the demand for hydrocarbons will significantly decrease in the medium to long term, could similarly reduce or defer major expenditures given the long-term nature of many large-scale development projects and capital reinvestment policies. Lower levels of activity result in a corresponding decline in the demand for our services, which could have a material adverse effect on our revenue and profitability. Oil and gas prices and market expectations of potential changes in these prices significantly affect this level of activity. However, increases in near-term commodity prices do not necessarily translate into increased offshore drilling activity since customers expectations of longer-term future commodity prices and expectations regarding future demand for hydrocarbons typically have a greater impact on demand for our rigs. 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. The availability of quality drilling prospects, exploration success, relative production costs, the stage of reservoir development and political and regulatory environments also affect customers drilling campaigns. Worldwide military, political and economic events have often contributed to oil and gas price volatility and are likely to do so in the future.
The offshore drilling industry is highly competitive and cyclical, with intense price competition.
The offshore contract drilling industry is highly competitive with numerous industry participants, none of which has a dominant market share. Drilling contracts are traditionally awarded on a competitive bid basis. 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. Periods of high customer demand, limited rig supply and high dayrates have been followed by periods of low customer demand, excess rig supply and low dayrates. Changes in commodity prices can have a dramatic effect on rig demand, and periods of excess rig supply may intensify competition in the industry and result in the idling of older and less technologically advanced equipment. We have idled and stacked rigs and may in the future idle or stack additional rigs or enter into lower dayrate drilling contracts in response to market conditions. Idled or stacked rigs may remain out of service for extended periods of time. During periods of high dayrates and rig utilization rates, we and other industry participants have responded to actual or anticipated increases in customer demand by increasing the supply of rigs through ordering the construction of new units. 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. 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. Additionally, lower market dayrates and intense price competition may drive customers to seek to renegotiate existing contracts to reduce dayrates in exchange for longer contract terms. Lower dayrates and rig utilization rates could adversely affect our revenues and profitability.
As of February19, 2026, we have threeuncontracted rigs which have been out of service for greater than fiveyears, and these rigs may remain out of service for extended periods of time. If we are unable to obtain drilling contracts for our uncontracted rigs, whether due to a prolonged offshore drilling market downturn, a delayed or muted recovery of such market or otherwise, it may have an adverse effect on our results of operations and cash flows.
Our current backlog of contract drilling revenues may not be fully realized.
At February19, 2026, our contract backlog was $6.06billion. This amount represents the maximum contractual operating dayrate multiplied by the number of days remaining in the firm contract period, including certain performance-based provisions for which achievement is probable, excluding provisions for mobilization, demobilization, contract preparation, other incentive provisions or reimbursement revenues, which are not expected to be significant to our contract drilling revenues. The contractual operating dayrate may be higher than the actual dayrate we ultimately receive or an alternative contractual dayrate, such as waiting-on-weather rate, waiting-on-customer rate, repair rate, standby rate or force majeure rate, may apply under certain circumstances. The contractual operating dayrate may also be higher than the actual dayrate we ultimately receive due to a number of factors, including rig downtime or suspension of operations. We may receive a lower contractual operating dayrate during periods when drilling operations are necessary to extend beyond an agreed schedule, even if we are not the cause of the delay in completing drilling operations. Several factors could cause rig downtime or a
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suspension of operations, including: equipment breakdowns and other unforeseen engineering problems, labor strikes and other work stoppages, shortages of material and skilled labor, surveys by government and maritime authorities, periodic classification surveys, severe weather or harsh operating conditions, and force majeure events.
In certain drilling contracts, the dayrate may be reduced to zero if, for example, repairs extend beyond a stated period of time. Our contract backlog includes only firm commitments, which are represented by signed drilling contracts or, in some cases, other definitive agreements awaiting contract execution. We may not be able to realize the full amount of our contract backlog due to events beyond our control. In addition, some of our customers have experienced liquidity issues in the past, and these liquidity issues could be experienced again if commodity prices decline for an extended period of time. Liquidity issues and other market pressures could lead our customers to seek bankruptcy protection or to seek to repudiate, cancel or renegotiate these agreements for various reasons (see [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](#Item1A_OurDrillingContracts)). 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.
Our operating and maintenance costs will not necessarily fluctuate in proportion to changes in our operating revenues.
Our operating and maintenance costs will not necessarily fluctuate in proportion to changes in our operating revenues and are affected by many factors, including inflation. Costs for operating a rig are generally fixed or only semi-variable regardless of the dayrate being earned. To the extent a drilling contract provides for escalations attributable to inflation in our costs, those adjustments will lag the impact of inflationary pressures and may not reflect the full impact to us of any cost inflation. As drilling contracts with such provisions expire or are terminated, there can be no assurance that future drilling contracts will contain similar provisions, which may reduce our margins in inflationary environments. In addition, should our rigs incur unplanned downtime while on contract or idle time between drilling contracts, we will not always reduce the staff on those rigs because we could use the crew to prepare the rig for its next contract. During times of reduced activity, reductions in costs may not be immediate because portions of the crew may be required to prepare rigs for stacking, after which time the crew members may be reassigned to active rigs or released. As our rigs are mobilized from onegeographic location to another, the labor and other operating and maintenance costs can vary significantly. In general, labor costs increase primarily due to higher salary levels and inflation. Equipment maintenance costs fluctuate depending upon the type of activity the unit is performing and the age and condition of the equipment, and these costs could increase for short or extended periods as a result of regulatory or customer requirements that raise maintenance standards above historical levels. The amount of contract preparation and reactivation costs vary based on the scope and length of the contract preparation or reactivation project, and the recognition of such costs varies depending on the duration of the firm contractual period and other contract terms.
Certain of our drilling contracts are partially receivable in local currency, and certain costs for labor, goods and services are payable by us in local currency. The amounts, if any, of local currency received under these drilling contracts may exceed our local currency needs to pay local operating and maintenance costs, leading to an accumulation of excess local currency balances. Any local currency surplus may be subject to restrictions or other difficulties in converting to U.S. dollars, our functional currency, or to other currencies of the locations where we operate, including disruptions that may occur in the currency exchange markets, whether as a result of economic policies of governments, central banks or otherwise. Excess amounts of local currency may also be exposed to the risk of currency exchange losses.
We may not be able to renew or obtain new drilling contracts for rigs whose contracts are expiring or obtain drilling contracts for our stacked and idle rigs.
The offshore drilling market in which we compete experience fluctuations in the demand for drilling services. Our ability to renew expiring drilling contracts or obtain new drilling contracts depends on the prevailing or expected market conditions. As of February19, 2026, we have threestacked rigs. We may be unable to obtain drilling contracts for our rigs that are currently operating upon the expiration or termination of such contracts, and there may be a gap in the operation of the rigs between the current contracts and subsequent contracts. When oil and natural gas prices are low or it is expected that such prices will decrease in the future, we may be unable to obtain drilling contracts at attractive dayrates or at all. We may not be able to obtain new drilling contracts with the terms or dayrates sufficient to support a reactivation of a cold-stacked rig. Likewise, we may not be able to obtain new drilling contracts in direct continuation with existing contracts, or depending on prevailing market conditions, we may enter into drilling contracts at dayrates substantially below the existing dayrates or on terms otherwise less favorable compared to existing contract terms, which may have an adverse effect on our financial position, results of operations or cash flows.
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 maintain our active fleet or to reactivate our stacked or idle fleet. These expenditures could increase because of changes in the cost of labor and materials, requirements of customers, the cost of replacement parts for existing rigs, the size of our fleet, the geographic location of the rigs and the length of drilling contracts. Changes in offshore drilling technology, customer requirements for new or upgraded equipment and competition within our industry may require us to make significant expenditures in order to maintain our competitiveness and fund efforts to reduce our greenhouse gas emissions. Changes in governmental
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regulations, including environmental requirements, and changes in safety or other equipment standards, as well as compliance with standards imposed by maritime self-regulatory organizations, may cause our expenditures to increase or require us to make additional unforeseen expenditures. As a result of these factors, we may be required to take our rigs out of service for extended periods of time, with corresponding losses of revenues, in order to make such alterations or to add such equipment. 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.
If we are unable to fund such 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. Our ability to access the capital markets may be limited by our financial condition at the time, perceptions of us or our industry, by changes in laws and regulations or interpretation thereof and by adverse market conditions resulting from, among other things, general economic conditions and contingencies and uncertainties that are beyond our control. If we raise funds by issuing equity securities or other securities that are convertible into equity securities, existing shareholders may experience dilution. Our failure to obtain the funds for necessary future capital and operating expenditures could have a material adverse effect on our business and on our financial position, results of operations and cash flows.
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.
We engage in offshore drilling services for most of the leading integrated energy companies or their affiliates, as well as for many government-owned or government-controlled energy companies and other independent energy companies. For the year ended December31, 2025, our most significant customers were Petrleo BrasileiroS.A. (together with its affiliates, Petrobras), Shellplc (together with its affiliates, Shell) and EquinorASA (together with its affiliates, Equinor), representing 22percent, 22percent and 12percent, respectively, of our consolidated operating revenues. As of February19, 2026, the customers with the most significant aggregate amount of contract backlog associated with our drilling contracts were Petrobras, Equinor, BPp.l.c., Shell, ChevronCorporation and WoodsideEnergyGroupLtd., representing 20percent, 16percent, 16percent, 12percent, 11percent and 10percent, respectively, of our total contract backlog. The loss of any of these customers or another significant customer, or a decline in payments under any of our drilling contracts, could, at least in the short term, have an adverse effect on our business.
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.
Our operations are subject to the usual hazards inherent in the drilling of oil and gas wells, such as, blowouts, reservoir damage, loss of production, loss of well control, lost or stuck drill strings, equipment defects, craterings, fires, explosions and pollution. Contract drilling requires the use of heavy equipment and exposure to hazardous conditions, which may subject us to liability claims by employees, customers and other parties. These hazards can cause personal injury or loss of life, severe damage to or destruction of property and equipment, pollution or environmental or natural resource damage, claims by third parties or customers and suspension of operations. Our offshore fleet is also subject to hazards inherent in marine operations, either while on site or during mobilization, such as capsizing, sinking, grounding, collision, piracy, damage from severe weather and marine life infestations.
The U.S. Gulf of America, the South China Sea and the Northwest Coast of Australia are areas subject to typhoons, hurricanes or other extreme weather conditions on a relatively frequent basis, and our drilling rigs in these regions may be exposed to damage or total loss by these storms, some of which may not be covered by insurance. 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. Operations may also be suspended because of machinery breakdowns, abnormal drilling conditions, failure of subcontractors to perform or supply goods or services, or personnel shortages. We customarily provide contract indemnity to our customers for certain claims that could be asserted by us relating to damage to or loss of our equipment, including rigs, and claims that could be asserted by us or our employees relating to personal injury or loss of life.
Damage to the environment or natural resources could also result from our operations, particularly through spillage of hydrocarbons, fuel, lubricants or other chemicals and substances used in drilling operations, or extensive uncontrolled fires. We may also be subject to property damage, environmental indemnity, well contamination and other claims by energy companies or other third parties. Drilling involves certain risks associated with the loss of control of a well, such as blowout, cratering, the cost to regain control of or redrill the well and remediation of associated pollution. Our customers may be unable or unwilling to indemnify us against such risks. In addition, a court may decide that certain indemnities in our current or future drilling contracts are not enforceable. The law generally considers contractual indemnity for criminal fines and penalties to be against public policy, and the enforceability of an indemnity as to other matters may be limited.
Our insurance policies and drilling contracts contain rights to indemnity that may not adequately cover our losses, and we do not have insurance coverage or rights to indemnity for all risks. For example, pollution and environmental risks generally are not completely insurable. We have twomain types of insurance coverage: (1)hull and machinery coverage for physical damage to our property and equipment and (2)excess liability coverage, which generally covers offshore risks, such as personal injury, third-party property claims, and third-party non-crew claims, including wreck removal and pollution. We generally have no hull and machinery insurance coverage for damages caused by named storms in the U.S. Gulf of America. We maintain per occurrence deductibles that generally range up to
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$10million for various third-party liabilities, and we self-insure up to $75million of the $750million excess liability coverage through our wholly owned captive insurance company. We also retain the risk for any liability that exceeds our excess liability coverage.
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. 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, and 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. Additionally, 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, and we could decide to retain more risk in the future, resulting in higher risk of losses, which could be material.
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. Such payments may not, however, fully compensate us for the loss of the contract. Drilling contracts also customarily provide for either automatic termination or termination at the option of the customer, typically without the payment of any termination fee, under various circumstances such as non-performance, as a result of significant downtime or impaired performance caused by equipment or operational issues, or sustained periods of downtime due to force majeure events, many of which are beyond our control. Certain customers who seek to terminate our drilling contracts may attempt to defeat or circumvent our protections against certain liabilities. Our customers ability to perform their obligations under their drilling contracts, including their ability to fulfill their indemnity obligations to us, may also be negatively impacted by an economic downturn. Our customers, which include national energy companies, often have significant bargaining leverage over us. If our customers cancel some of our contracts, and we are unable to secure new contracts on a timely basis and on substantially similar terms, or if contracts are suspended for an extended period of time or if a number of our contracts are renegotiated on terms that are not as favorable as current terms, it could adversely affect our financial position, results of operations or cash flows.
During periods of depressed market conditions, we are subject to increased counterparty risk, as our customers may seek to repudiate their contracts, including through claims of non-performance to reduce their capital expenditures. Our customers may no longer need a drilling rig that is currently under contract or may be able to obtain a comparable drilling rig at a lower dayrate. We have experienced, and are at continued risk of experiencing, early contract terminations during periods of a weak commodity price environment. The ability of each of our counterparties to perform its obligations under a contract with us, including indemnity obligations, depends on a number of factors that are beyond our control and may include, among other things, conditions of the economy in general or of the offshore drilling industry in particular, prevailing prices for oil and natural gas, the overall financial condition of the counterparty, the dayrates received and the level of expenditures necessary to maintain drilling activities. 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.
We depend on the continuing efforts of key members of our management, as well as other highly skilled personnel, to operate and provide technical services and support for our business worldwide. Historically, competition for the personnel required for drilling operations has intensified as the number of rigs activated, added to worldwide fleets or under construction increased, leading to shortages of qualified personnel in the industry and creating upward pressure on wages and higher turnover. We may experience a reduction in the experience level of our personnel as a result of any increased turnover, which could lead to higher downtime and more operating incidents, which in turn could decrease revenues and increase costs. If increased competition for qualified personnel were to intensify in the future we may experience increases in costs or limits on operations.
Our labor costs and the operating restrictions under which we operate could increase as a result of collective bargaining negotiations and additional unionization efforts.
As of December31, 2025, approximately 45percent of our total workforce, working primarily in Brazil and Norway, 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. 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 the union members. A failure to reach an agreement on certain key issues could result in strikes, lockouts, or other work stoppages. Legislation has from time to time been, and may continue to be, 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.
At any given time, we have a variety of shipyard projects underway for our existing rigs. These 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; | |
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| | shortages of equipment and materials and failed 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; | |
| | skilled labor shortages, 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, epidemics, 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. | |
These factors may contribute to cost variations and delays in the delivery of rigs undergoing shipyard projects or any future newbuild units. Cost variations may result in, among other things, disputes with the shipyards that construct or service our drilling units. In addition, delayed delivery of newbuild units or other rigs undergoing shipyard projects would impact contract commencement, resulting in a loss of revenues we could earn, and may also cause customers to terminate or shorten the term of the drilling contract for the rig pursuant to applicable late delivery clauses. 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. We also rely on the supply of ancillary services, including supply boats and helicopters and subcontracted services, including casing and managed pressure drilling services. Our reliance on our suppliers, manufacturers and service providers to secure equipment, parts, components and sub-systems used in our operations exposes us to volatility in the quality, prices and availability of such items. Certain parts and equipment that we use in our operations may be available only from a small number of suppliers, manufacturers or service providers, or in some cases must be sourced through a single supplier, manufacturer or service provider. Some parts and equipment require long lead times to obtain, and an unplanned failure or other need to replace any such parts and equipment may result in a longer than usual time to obtain them or require us to pay higher costs to obtain them on an expedited basis. 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, ancillary services or subcontracted 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.
As part of our business strategies, We may pursue opportunities to strengthen, streamline or broaden our business that include acquisitions or dispositions of businesses or drilling rigs, mergers or joint ventures or other investments, and such transactions would present various risks and uncertainties.
We may pursue transactions that involve the acquisition or disposition of businesses or assets, mergers or joint ventures or other investments that we believe will enable us to further strengthen, streamline or broaden our business. Any such transaction would be evaluated on a case-by-case basis, and the consummation thereof would be dependent upon several factors, including identifying suitable companies, businesses or assets that align, or no longer align, with our business strategies, reaching agreement with the potential counterparties on acceptable terms, the receipt of any applicable regulatory and other approvals, counterparties fulfilling contractual obligations and other conditions. These transactions involve various risks, including among others, (i)difficulties related to integrating, separating or managing applicable parts of an acquired, or disposed of, business, assets or joint venture and unanticipated changes in customer and other third-party relationships subsequent to closing, (ii)diversion of management's attention from day-to-day operations, (iii)failure to realize anticipated benefits, such as cost savings, revenue enhancements or strengthening, streamlining or broadening our business, (iv)potentially substantial transaction costs associated with acquisitions, joint ventures or investments if we or a transaction counterparty seeks to exit or terminate an interest in the joint venture or investment, (v)applicable antitrust laws and other regulations that may limit our ability to acquire targets or require us to divest an acquired business or asset, (vi)potential accounting impairment or actual diminution or loss of value of our investment if future market, business or other conditions ultimately differ from our assumptions at the time of such transaction is consummated and (vii)potential accounting impairment upon the decision to reclassify assets as held for sale.
Changing sentiment towards climate change, fossil fuels and related matters could adversely affect our business, cost of capital and the price of our stock and other securities.
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. If such efforts are successful, the market price of our shares and our ability to access capital markets may be negatively impacted.
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Certain regulators and members of the investment community have heightened awareness of sustainability and corporate responsibility and disclosures, including those related to an inclusive workplace culture and, particularly in the energy industry, those related to greenhouse gas emissions and climate change. We may be subject in the future to additional reporting requirements that develop in response to such awareness. Additionally, certain investment funds seeking investment products focused on green economy, sustainability and corporate responsibility may screen companies such as ours before investing. If we or our securities are unable to meet the sustainability and corporate responsibility or other investment criteria set by any such funds invested in our securities, we may lose such investors or they may allocate a portion of their capital away from us. 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.
Public health threats could have significant adverse consequences for our business and operations.
Public health threats, including pandemics and epidemics, severe influenza, coronaviruses and other highly communicable viruses or diseases, have impacted and may in the future 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. Such impacts may include, among others, (a)causing a temporary interruption to operations in case of an outbreak on one or more of our rigs, (b)disrupting or restricting the ability of our suppliers, manufacturers and service providers to supply parts, equipment, labor or services for our operations, (c)causing us to incur increased costs, inefficiencies and labor shortages as a result of precautionary measures taken, either voluntarily or in response to actions by governmental authorities, to prevent or reduce the spread of an outbreak, such as imposing mandatory or seeking voluntary closures of business facilities and imposing restrictions on travel, business operations and public gatherings or interactions.
As a result, we may experience impediments to our ability to meet our commitments to customers, including due to increased operating costs and increased risk of rig downtime or contract termination, which may result in substantial adverse consequences for our business and results of operations. Additionally, public health threats may result in significantly reduced global or regional economic activity, which could result in a sharp reduction in the demand for oil and an associated decline in oil prices. Such conditions may result in, reductions to our customers drilling and production expenditures and delays or cancellations of projects, which may cause a decrease in demand for our services and an increase in the risk that our customers may seek to terminate or renegotiate pricing or other terms for our existing contracts or that more of our rigs may become idle, stacked or retired from our fleet.
Increased transition to renewable or other alternative energy sources could adversely affect our business, results of operations and cash flows.
Our long-term success will be impacted in part by the ability of global energy markets to effectively address the transition to renewable and other alternative energy sources, since increased transition to such alternative sources could adversely impact the long-term demand for oil and natural gas and, ultimately, the demand for our services and products from our services. An increase in the demand for alternative energy sources, including as a result of new and more efficient technologies or increased government subsidies and intervention, could further increase the market share of alternative energy sources as compared to oil and gas. Such shifts, if any, in the global energy markets could adversely affect our business, results of operations and cash flows.
Our aspirations, goals, targets and initiatives related to sustainability, including emissions reduction, and our public statements and disclosures regarding them, expose us to numerous risks.
We may periodically develop and set goals, targets, and other objectives related to sustainability matters, including with respect to emissions reduction. Statements related to these goals, targets and other objectives do not constitute a guarantee that they will be achieved. Our efforts to research, establish, accomplish, and accurately report on these goals, targets, and other objectives expose us to numerous operational, reputational, financial, legal, and other risks. Our ability to achieve any stated goal, target, or other objective, is subject to numerous factors and conditions, many of which are outside of our control. Our business may face increased scrutiny from investors, business partners and others related to our sustainability activities, including the goals, targets, and other objectives that we announce, and our methodologies and timelines for pursuing them. If our sustainability assumptions or practices do not meet investor, regulatory or other relevant expectations and standards, which continue to evolve, our reputation, our ability to attract or retain employees and our attractiveness as an investment or business partner could be negatively affected. Similarly, our failure or perceived failure to pursue or fulfill 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 and could expose us to government enforcement actions and private litigation.
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 December31, 2025, our total debt was $5.66billion, of which $1.68billion was secured. We have a Secured Credit Facility, which is currently undrawn, the borrowings under which would be secured and guaranteed by certain of our subsidiaries. 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; | |
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| | 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 certain of our 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 based upon evolving trends among certain financial intermediaries, investors and other capital markets participants that have focused on 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. | |
See [Item7. Managements Discussion and Analysis of Financial Condition and Results of OperationsLiquidity and Capital ResourcesSources and uses of liquidity](#MDA_SourcesUsesOfLiquidity).
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.
The ratings assigned to our debt securities by certain credit rating agencies (our DebtRatings) are below investment grade. 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. | |
Our Debt Ratings have caused some of the effects listed above, and any downgrades may cause or exacerbate, any of the effects listed above and could have an adverse effect on our business and financial condition.
Worldwide financial, economic and political conditions could restrict our ability to access capital markets, reduce our flexibility to react to changing economic and business conditions and reduce demand for our services.
Worldwide financial and economic conditions could restrict our ability to access capital markets at a time when we would like, or need, to access such markets, which could have an impact on our flexibility to react to changing economic and business conditions. Worldwide economic conditions have in the past impacted, and could in the future impact, the lenders participating in our credit facilities and our customers, causing them to fail to meet their obligations to us. 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. 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, South America and other geographic areas and countries present incremental risk. An extended period of negative outlook for the world economy could reduce the overall demand for oil and natural gas and for our services. A decline in 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.
Risks related to our proposed combination with Valaris
Our proposed Business combination may be delayed or not occur at all for a variety of reasons, some of which are outside our control.
On February9, 2026, Transocean and Valaris entered into the Agreement providing for the combination of Transocean and Valaris. Pursuant to the Agreement, and on the terms and subject to the conditions thereof, Transocean will acquire all of the issued and outstanding Valaris Shares in exchange for TransoceanLtd. shares at an exchange ratio of 15.235TransoceanLtd. shares for each Valaris Share. Pursuant to the Agreement, and on the terms and subject to the conditions thereof, at the time on which the order of the Supreme Court of Bermuda providing for its sanction of the Scheme of Arrangement is filed with the Registrar of Companies of Bermuda, the Business Combination will become effective and Valaris will become our wholly owned subsidiary. The board of directors of Transocean and Valaris each unanimously approved and declared advisable the Agreement and the transactions contemplated thereby, including the Business Combination.
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Completion of the Business Combination is subject to the satisfaction or waiver of certain customary conditions set forth in the Agreement, including, but not limited to: (i)the receipt of the requisite approvals of the Valaris shareholders and the Transocean shareholders, (ii)the granting of the sanction order on terms consistent with the Agreement, (iii)the TransoceanLtd. shares issued pursuant to the Agreement having been approved for listing on the New York Stock Exchange, (iv)certain regulatory approvals having been obtained or any applicable waiting period having expired or been terminated, (v)no governmental authority within applicable jurisdictions having enacted or issued any law or order preventing or prohibiting the consummation of the Business Combination and (vi)the absence of a Transocean Material Adverse Effect or a Valaris Material Adverse Effect, each as defined in the Agreement. Therefore, the Business Combination may not be completed or may not be completed as timely as expected.
Furthermore, failure to complete the Business Combination could adversely affect our business and the market price of our common shares in a number of ways, including to the extent that the current market price of TransoceanLtd. shares reflects an assumption that the Business Combination will be consummated. We may also be required to pay a termination fee in certain circumstances, as further described in the Agreement. Additionally, if the Agreement is terminated and we seek another business combination, we may not be able to negotiate a transaction with another party on terms comparable to, or better than, the terms of the Business Combination.
Efforts to complete the business combination could disrupt our relationships with third parties and employees, divert managements attention, or result in legal proceedings, any of which could negatively impact our operating results and ongoing business.
We have expended, and continue to expend, significant management time and resources in an effort to complete the Business Combination, which may have a negative impact on our ongoing business and operations. Uncertainty regarding the outcome of the Business Combination and our future could disrupt our business relationships with our existing and potential customers, suppliers and other business partners. Uncertainty regarding the outcome of the Business Combination could also adversely affect our ability to recruit and retain key personnel and other employees. The pendency of the Business Combination may lead to litigation against the parties or their directors and officers which could be distracting to management and may, in the future, require us to incur significant costs.
The Agreement contains provisions that impose restrictions on Transoceans business prior to the effective time of the business combination.
The Agreement subjects Transocean and Valaris to restrictions on their respective business activities prior to the effective time, including covenants obligating each such party to continue to conduct their respective businesses in the ordinary course, to cooperate in seeking regulatory approvals and not to engage in certain specified transactions or activities without the prior consent of the other party to the Agreement. Such restrictions could prevent Transocean from pursuing certain business opportunities that arise prior to the effective time and are outside the ordinary course of business.
The failure to integrate the business and operations of transocean and valaris successfully in the expected time frame may adversely affect the combined businesss future results and may result in the combined business failing to realize the anticipated benefits of the business combination.
Transocean and Valaris have operated and, until the completion of the Business Combination, will continue to operate independently. Following consummation, their respective businesses may not be integrated successfully. Specifically, the combined business may not be able to achieve the cost savings and operating synergies that Transocean anticipates as a result of the Business Combination, and may face difficulty integrating personnel from the two companies, minimizing the loss of key employees, identifying and eliminating redundant functions and assets, harmonizing the companies operating practices, employee development and compensation programs, internal controls, and other policies, procedures and processes. If the combined company is not able to achieve these objectives and realize the anticipated benefits and synergies expected, then the combined companys business, financial condition and operating results may be adversely affected, the combined companys earnings per share may be diluted, the accretive effect of the Business Combination may decrease or be delayed and the share price of the combined company may be negatively impacted.
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.
Our business is affected by laws and regulations relating to the energy industry and the environment and safety, including international conventions and treaties, and regional, national, state, and local laws and regulations. Our business also depends on demand for services from the oil and gas exploration and production industry, and, accordingly, we are directly affected by the adoption of laws and regulations that, for economic, environmental or other policy reasons, curtail, delay or impose additional compliance costs and obligations related to the exploration and development drilling for oil and gas. Offshore drilling in certain areas has been curtailed and, in certain cases, prohibited because of environmental or safety concerns. In addition, compliance with environmental and safety laws, regulations and standards, where applicable, may require us to make significant capital expenditures, such as the installation of costly equipment or implementation of operational changes, and may affect the resale values or useful lives of our rigs. We may incur additional costs in order to comply with other existing and future regulatory obligations or industry standards, including, but not limited to, costs relating to air emissions, including greenhouse gases, the management of ballast waters, hull cleaning, maintenance and inspection, development and
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implementation of emergency procedures and maintenance of insurance coverage or other financial assurance of our ability to address pollution incidents. In the last decade, U.S. federal agencies adopted enhanced governmental safety and environmental requirements applicable to our operations for drilling in the U.S. Gulf of America. These requirements have caused increased compliance costs and may in the future increase the risk of environmental or safety enforcement cases and litigation and cause operators to have difficulties obtaining drilling permits in the U.S. Gulf of America. The U.S. Bureau of Ocean Energy Management (the BOEM) implemented changes regarding when oil, gas and sulfur lessees and certain other parties operating in the offshore Outer Continental Shelf (OCS) must post additional bonds or other supplemental financial assurance, which could increase bonding requirements and operating expenditures for some of our customers, and as a result, increase price competition for our services.
The oil and gas industry has adopted equipment and operating standards, such as the American Petroleum Institute Standard53, 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. Additionally, our customers may elect to voluntarily comply with any non-mandatory laws, regulations or other standards. 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 effects could have an adverse effect on our financial position, results of operations or cash flows.
To the extent new laws are enacted, existing laws are changed or other governmental or judicial 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. The operation of our drilling rigs will require certain governmental approvals, some of which may involve public hearings and costly undertakings on our part. We may not obtain such approvals or such approvals may not be obtained in a timely manner. If we fail to timely secure the necessary governmental approvals or permits, our customers may have the right to terminate or seek to renegotiate their drilling contracts to our detriment. The amendment or modification of existing laws and regulations or the adoption of new laws and regulations curtailing or further regulating exploratory or development drilling or production of oil and gas and compliance with any such new or amended legislation or regulations could have an adverse effect on our business or on our financial position, results of operations or cash flows.
As a contract driller with operations in certain offshore areas, we may be liable for damages and costs incurred in connection with oil spills or disposal of wastes related to those operations, and we may also be subject to significant fines and other liabilities in connection with spills. For example, an oil spill could result in significant liability, including fines, penalties and criminal liability and remediation, restoration or compensation costs for environmental or natural resource damages, as well as third-party damages, to the extent that the contractual indemnification provisions in our drilling contracts are not enforceable or otherwise sufficient, or if our customers are unwilling or unable to contractually indemnify us against these risks. Additionally, we may not be able to obtain such indemnities in our future drilling contracts, and our customers may not have the financial capability to fulfill their contractual obligations to us. Also, these indemnities may be held to be unenforceable in certain jurisdictions, because of public policy or for other reasons. 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](#Item1A_OurBusinessInvolves).
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. These laws and regulations may expose us to liability for the conduct of, or conditions caused by, others or for acts that were in compliance with all applicable laws at the time they were performed. 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.
Scientific studies have suggested that emissions of certain gases, including greenhouse gases, such as carbon dioxide and methane, contribute to warming of the earths atmosphere and other climatic changes. In response to such studies, the issue of climate change and the effect of greenhouse gas emissions, in particular emissions from the fossil fuel industry, has attracted considerable political and social attention worldwide. The attention to climate change has led, and we expect it to continue to lead, to additional regulations designed to reduce greenhouse gas emissions and other emissions in various jurisdictions in which we operate. 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. To the extent financial markets view climate change and greenhouse emissions as a financial risk, this could negatively impact our cost of or access to capital. Because our business depends on the level of activity in the oil and gas industry, existing or future laws, regulations, treaties or international agreements related to greenhouse gases and climate change, or related political, litigation or financial risks, including incentives to conserve energy or use alternative energy sources, could have a negative impact on our business if such laws, regulations, treaties or international agreements reduce the worldwide demand for oil and gas or limit drilling opportunities. In addition, such laws, regulations, treaties or international
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agreements or related risks could result in increased compliance costs or additional operating restrictions, which may have an adverse effect on our business. Further, some experts believe global climate change could increase the frequency and severity of extreme weather conditions, the impacts of which could interfere with our operations, cause damage to our equipment as well as cause other financial and operational impacts, including those that could result from any impact of such conditions on our customers.
We could also face increased climate-related litigation with respect to our operations both in the U.S. and around the world. Governmental and other entities in various U.S. states, such as California and New York, have filed lawsuits against coal, gas, oil and petroleum companies. These suits allege damages as a result of climate change, and the plaintiffs are seeking unspecified damages and abatement under various tort theories. Similar lawsuits may be filed in other jurisdictions both in the U.S. and globally. 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.
Any restrictions on oil and natural gas operations on the U.S. Outer Continental Shelf could have an adverse impact on our business and demand for our services.
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. Under the Outer Continental Shelf Lands Act, as amended (the OCSLA), 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. The number of lease sales and areas available for lease provided in a five-year program may differ from program to program. To the extent that the number of lease sales and areas available for lease within the current five-year program, or in any future five-year program, are not sufficient to meet our customers planned or expected offshore drilling programs, demand for our drilling services on the OCS may be impacted. Executive, legislative and judicial actions in the U.S. from time to time have restricted certain oil and gas activities on the OCS. For example, litigation is ongoing in U.S. federal courts regarding the potential reversal of a previously ordered withdrawal of acreage from future oil and gas leasing under the OCSLA. Future actions taken by the U.S. to limit the availability of new oil and gas leases on the OSC would adversely impact the offshore oil and gas industry and impact demand for our services.
The global nature of our operations involves additional risks.
We operate in various regions throughout the world, which may expose us to political and other uncertainties, including risks of:
| | customs delays or disputes, import-export quotas, and imposition of trade or immigration barriers; | |
| | wage and price controls; | |
| | complications associated with supplying, repairing and replacing equipment in remote locations; | |
| | changes in law and regulatory requirements, including changes in interpretation and enforcement; | |
| | the inability to move income or capital; | |
| | 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. | |
| | involvement in judicial proceedings in unfavorable jurisdictions; | |
| | repudiation or nationalization of contracts; | |
| | damage to our equipment or violence directed at our employees, including kidnappings; | |
| | terrorist acts, war, piracy and civil unrest; | |
| | seizure, expropriation or nationalization of our assets or of our customers property; and | |
| | public health threats, including pandemics, epidemics, severe influenza, coronaviruses and other highly communicable viruses or diseases. | |
Our non-U.S. contract drilling operations are subject to various laws and regulations related to economic and trade sanctions in certain countries in which we operate, including laws and regulations relating to the import and export, equipment and operation of drilling units, currency conversions and repatriation, oil and gas exploration and development, taxation and social contributions of offshore earnings and earnings of expatriate personnel. We are also subject to the U.S. Treasury Departments Office of Foreign Assets Control (OFAC) and other U.S. and non-U.S. laws and regulations governing our international operations. In addition, various state and municipal governments, universities and other investors have proposed or adopted divestment and other initiatives regarding investments including, with respect to state governments, by state retirement systems in companies that do business with countries that have been designated as state sponsors of terrorism by the U.S. State Department. Failure to comply with applicable laws and regulations, including those relating to sanctions, tariffs and other trade, import or 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.
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. Many governments currently favor or effectively, or may in the future favor or effectively require, the awarding of drilling contracts to local contractors or require nonlocal contractors to employ citizens of, or purchase supplies from, a particular jurisdiction or require use of a local agent. We cannot predict whether any changes to laws, regulations or interpretations thereof would result in modifications to our operations nor whether any such modifications would have a material
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impact to our business. In addition, government action, including initiatives by OPEC, may continue to cause oil or gas price volatility. In some areas of the world, this governmental activity has adversely affected the amount of exploration and development work by major energy companies and may continue to do so.
The shipment of goods, services and technology across international borders subjects us to extensive trade laws and regulations. Our import and export activities are governed by unique customs and export control laws and regulations in each country in which we operate. Moreover, many countries, including the U.S., control the import and export of certain goods, services and technology and impose related import and export recordkeeping and reporting obligations. Governments may also 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. These laws and regulations may be enacted, amended, enforced or interpreted in a manner materially impacting our operations. Ongoing economic challenges and the current geopolitical environment may increase some governments efforts to enact, enforce, amend or interpret laws and regulations as a method to increase revenue. Shipments can be delayed and denied import or export for a variety of reasons, some of which are outside our control and some of which may result from failure to comply with existing legal and regulatory regimes. Shipping delays or denials could cause unscheduled operational downtime. Changes to foreign trade policies of the U.S. and other countries could lead to the imposition of additional trade barriers and tariffs in jurisdictions in which we operate or from which we or our suppliers procure materials and equipment. We cannot predict what changes to trade policies will be made, including whether existing tariff policies will be maintained or modified or whether the entry into new bilateral or multilateral trade agreements will occur, nor can we predict the effects that any such potential changes would have on our business.
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. 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.
Our ability to operate worldwide depends on our ability to obtain the necessary visas and work permits for our personnel to travel in and out of, and to work in, the jurisdictions in which we operate. Governmental actions in some of the jurisdictions in which we operate may make it difficult for us to move our personnel in and out of these jurisdictions by delaying or withholding the approval of these permits. If we are unable to obtain visas and work permits for the employees we need to conduct our operations on a timely basis, we might not be able to perform our obligations under our drilling contracts, which could allow our customers to cancel the contracts. If our customers cancel some of our drilling contracts, and we are unable to secure new drilling contracts on a timely basis and on substantially similar terms, it could have a material adverse effect on our business and on our financial position, results of operations or cash flows.
Failure to comply with anti-bribery statutes, such as the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act2010, could result in fines, criminal penalties, drilling contract terminations and an adverse effect on our business.
The U.S. Foreign Corrupt Practices Act (FCPA), the U.K. Bribery Act2010 (Bribery Act) and similar anti-bribery laws in other jurisdictions, generally prohibit companies and their intermediaries from making improper payments for the purpose of obtaining or retaining business. We operate in many parts of the world that have experienced corruption to some degree and, in certain circumstances, strict compliance with anti-bribery laws may conflict with local customs and practices. If we are found to be liable for violations under the FCPA, the Bribery Act or other similar laws, either due to our acts or omissions or due to the acts or omissions of others, including our partners in our various joint ventures and of the current or former officers, directors or employees of any companies we have acquired, we could suffer from civil and criminal penalties or other sanctions, which could have a material adverse effect on our business or our financial position, results of operations or cash flows. In addition, investors could negatively view potential violations, inquiries or allegations of misconduct under the FCPA, the Bribery Act or similar laws, which could adversely affect our reputation and the market for our shares.
We could also face fines, sanctions and other penalties from authorities in relevant jurisdictions, including prohibition of our participating in or curtailment of business operations in those jurisdictions and the seizure of rigs or other assets. Additionally, our business and results of operations could be adversely affected as a result of claims by customers, agents, shareholders, debt holders, other interest holders, current or former employees or other constituents of our company who, in connection with alleged or actual noncompliance with antibribery and related laws, may seek to impose penalties, seek remedies, terminate drilling contracts or take other actions adverse to our interests. Our business and results of operations may be adversely affected if we are required to dedicate significant time and resources to investigate and resolve allegations of misconduct, regardless of the merit of such allegations. Further, disclosure of the subject matter of any investigation could adversely affect our reputation and our ability to obtain new business with potential customers, to retain existing business with our current customers, to attract and retain employees and to access the capital markets.
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We are subject to investigations and litigation that, if not resolved in our favor and not sufficiently insured against, could have a material adverse effect on us.
We are subject to a variety of disputes, investigations and litigation. Certain of our subsidiaries are subject to and have been involved in litigation with certain of our customers and other constituents. Certain of our subsidiaries are named as defendants in numerous lawsuits alleging personal grievances or injury, including as a result of exposure to asbestos or toxic fumes or resulting from other occupational diseases, such as silicosis, and various other medical issues that can remain undiscovered for a considerable amount of time. Some of these subsidiaries that have been put on notice of potential liabilities have no assets. Certain subsidiaries are subject to litigation relating to environmental damage. We are also subject to a number of significant tax disputes. 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 and insurers may not remain solvent and policies may not be located. Suits against non-asset-owning subsidiaries have given and may in the future give rise to alter ego or successor-in-interest claims against us and our asset-owning subsidiaries to the extent a subsidiary is unable to pay a claim or insurance is not available or sufficient to cover the claims. To the extent that oneor more pending or future investigations or litigation matters is not resolved in our favor and is not covered by insurance, such matter or matters could have a material adverse effect on our financial position, results of operations or cash flows.
We are subject to cybersecurity risks and threats as well as risks related to the use of artificial intelligence and the 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. Our data protection measures and measures taken by our customers and vendors may not prevent unauthorized access of information technology systems, and when such unauthorized access occurs, we, our customers or vendors may not detect the incident in time to prevent harm or damage. Threats to our information technology systems, and the systems of our customers and vendors, associated with cybersecurity risks and cyber-incidents or attacks continue to grow and may pose new or unknown cybersecurity risks and challenges, including as a result of the use of emerging technologies, such as AI, machine learning, generative AI and large language models. Such threats may derive from human error, fraud or malice, social engineering on the part of employees or third parties, or may result from accidental technological failure. In addition, breaches to our systems and systems of our customers and vendors could go unnoticed for some period of time. Risks associated with these threats include disruptions of certain systems on our rigs; other impairments of our ability to conduct our operations; loss or ransom of intellectual property, proprietary information, personal identifiable information or customer and vendor data; disruption of our customers and vendors operations; misappropriation of assets; loss or damage to our customer and vendor data delivery systems; and increased costs to prevent, respond to or mitigate cybersecurity events. A breach could also originate from, or compromise, our customers and vendors or other third-party networks outside of our control. A breach may also result in legal claims or proceedings against us by our shareholders, employees, customers, vendors and governmental authorities, both U.S. and non-U.S. If such a cyber-incident were to occur, it could have a material adverse effect on our business or on our financial position, results of operations or cash flows.
Our business has introduced and continues to incorporate AI to improve our processes and to further improve productivity. Issues in the development and use of AI, combined with an uncertain regulatory environment, may result in new or enhanced governmental or regulatory scrutiny, litigation, confidentiality or security risks, reputational harm, liability or other adverse consequences to our business operations, all of which could adversely affect our business, financial condition and results of operations.
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. Any failure by us to comply with these laws and regulations, including as a result of a security or privacy breach, could result in significant penalties, litigation and liabilities for us. Additionally, if we acquire a company that has violated or is not in compliance with applicable data protection laws, we may incur significant liabilities and penalties as a result.
Acts of terrorism, piracy and political and social unrest could affect the market for drilling services.
Acts of terrorism and social unrest, brought about by world political events or otherwise, have caused instability in the worlds financial and insurance markets in the past and may occur in the future. Such acts could be directed against companies such as ours. In addition, acts of terrorism, piracy and social unrest could lead to increased volatility in prices for crude oil and natural gas and could affect the market for drilling services. Insurance premiums could increase and coverage may be unavailable in the future. Government regulations may effectively preclude us from engaging in business activities in certain countries. These regulations could be amended to cover countries where we currently operate or where we may wish to operate in the future. Our drilling contracts do not generally provide indemnification against loss of capital assets or loss of revenues resulting from acts of terrorism, piracy or political or social unrest. We have limited insurance for our assets providing coverage for physical damage losses resulting from certain risks, such as terrorist acts, piracy, vandalism, sabotage, civil unrest, expropriation and acts of war, and we do not carry insurance for loss of revenues resulting from such risks.
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Risks related to taxes
A change in tax laws, treaties or regulations, or their interpretation, of any country in which we have operations, are incorporated or are resident could result in a higher effective tax rate on our consolidated earnings and increase our cash tax payments.
We are subject to changes in applicable tax laws, treaties or regulations in the jurisdictions in which we operate and earn income, and such changes could include laws or policies directed toward companies organized in jurisdictions with low tax rates with the intent to increase their tax burden. Several jurisdictions have implemented and continue to implement the Organization for Economic Co-operation and Development Pillar2 or other tax related provisions that are aimed at preventing base erosion and profit shifting, ensuring income is subject to a minimum level of taxation and preventing treaty misuse. The application of these provisions is not always certain, and jurisdictions are still developing their rules and interpretations with regard to same. 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.
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.
We are subject to tax laws, treaties and regulations in the countries in which we operate and earn income. Our income taxes are based on the applicable tax laws and tax rates in effect in the countries in which we operate and earn income as well as upon our operating structures in these countries. Our income tax returns are subject to review and examination in these jurisdictions, and we do not recognize the benefit of income tax positions that are not more likely than not to be respected upon challenge by a tax authority. 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. For example, we believe that neither we nor our non-U.S. subsidiaries, other than those that report a U.S. trade or business or a U.S. permanent establishment, were or are engaged in a trade or business in the U.S. or, if applicable, maintained or maintain a permanent establishment in the U.S. The determination of the aforementioned, among other things, involves considerable judgment. If the U.S. Internal Revenue Service were to disagree, then we could be subject to additional U.S. corporate income and branch profits taxes on the portion of our earnings effectively connected to such U.S. business or, if applicable, attributable to such U.S. permanent establishment during the period in which this was considered to have occurred. If this occurs, our effective tax rate on worldwide earnings for that period could increase substantially, we could be subject to assessments in previously filed returns that remain open to audit and our earnings and cash flows from operations for that period could be adversely affected.
Risks related to our jurisdiction of organization and governing documents
As a Swiss corporation, our flexibility may be limited with respect to certain aspects of capital management AND swift implementation of certain initiatives or strategies.
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 fiveyears and for up to a maximum of 50percent of a companys issued share capital. The general share capital authorization approved by shareholders at the May2025 annual general meeting provides for a capital band that authorizes our board of directors to issue up to 188,165,780new fully paid-in shares for general corporate purposes at any time until May30, 2026. Our board of directors has made full use of the general share issuance authorization under Article5, SectionA of our Articles of Association by issuing 188,165,780shares into Transoceans treasury. Accordingly, shareholders at our annual general meeting in May2026 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. Further, Swiss law does not provide as much flexibility in the various terms that can attach to different classes of shares as the laws of some other jurisdictions. Swiss law also reserves for shareholder approval certain corporate actions, such as approval of dividends, over which a board of directors would have authority in some other jurisdictions. These Swiss law requirements relating to our capital management may limit our flexibility to swiftly implement certain initiatives or strategies, and situations may arise where greater flexibility would have provided substantial benefits to our shareholders.
We are required, from time to time, to evaluate the carrying amount of our investments in affiliates, as presented on our Swiss standalone balance sheet. If we determine that the carrying amount of any such investment exceeds its fair value, we may conclude that such investment is impaired. Any recognized loss associated with such a non-cash impairment could result in our net assets no longer covering our statutory share capital and statutory capital reserves. Under Swiss law, if our net assets cover less than 50percent of our statutory share capital and the non-distributable part of the statutory capital and profit reserves, the board of directors must take appropriate measures or, to the extent such measures fall within the competence of the general meeting of shareholders, convene a general meeting of shareholders, and propose measures to remedy such a capital loss. Appropriate measures depend on the circumstances and the magnitude of the recognized loss and may include seeking shareholder approval for offsetting the aggregate loss, or a portion thereof, with our statutory
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capital reserves, including qualifying additional paid-in capital otherwise available for distributions to shareholders, or raising new equity. Depending on the circumstances, we may also need to use qualifying additional paid-in capital available for distributions to reduce our accumulated net loss and such use might reduce our ability to make distributions without subjecting our shareholders to Swiss withholding tax.
Distributions to shareholders in the form of a par value reduction and dividend distributions out of qualifying additional paid-in capital are currently not subject to the 35percent Swiss federal withholding tax. However, the Swiss withholding tax rules could be changed in the future, and any such change may adversely affect us or our shareholders. In addition, over the long term, the amount of par value available for us to use for par value reductions or the amount of qualifying additional paid-in capital available for us to pay out as distributions is limited. If we are unable to make a distribution through a reduction in par value, or out of qualifying additional paid-in capital as shown on TransoceanLtd.s standalone Swiss statutory financial statements, we may not be able to make distributions without subjecting our shareholders to Swiss withholding taxes.
Under Swiss tax law, repurchases of shares for the purposes of capital reduction are treated as a partial liquidation subject to a 35percent 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. At our 2009annual general meeting, shareholders approved a share repurchase program. If we repurchase shares, we expect to use an alternative procedure pursuant to which we repurchase shares via a virtual secondtrading line from market players, such as banks and institutional investors, who are generally entitled to receive a full refund of the Swiss withholding tax. The use of such virtual secondtrading line with respect to share repurchase programs is subject to the approval of the competent Swiss tax and other authorities. We may not be able to repurchase as many shares as we would like to repurchase for purposes of capital reduction on the virtual secondtrading line without subjecting the selling shareholders to Swiss withholding taxes.
We are subject to anti-takeover provisions.
Our articles of association and Swiss law contain provisions that could prevent or delay an acquisition of the company by means of a tender offer, a proxy contest or otherwise. 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, within the limits set forth in the Articles of Association, to issue a specified number of shares. As of February17, 2026, the boards issuance authority under the capital band has been fully utilized and no further shares may currently be issued. However, the boards authority to reduce the share capital within the capital band, remains in effect. Upon any such reduction of share capital, the boards authority to issue new shares would again become available, up to the limits provided in the Articles of Association and subject to the expiry of the capital band on May30, 2026, unless renewed or amended by the shareholders in accordance with the companys practice; | |
| | provide for a conditional share capital that authorizes the issuance of additional shares up to a maximum amount of 11.7percent of the share capital registered in the commercial register as of February17, 2026 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 662/3percent of the shares entitled to vote; | |
| | provide that a merger or demerger transaction requires the affirmative vote of the holders of at least 662/3percent 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 90percent 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 15percent or more of our shares entitled to vote at a general meeting.
**Item1B.**Unresolved Staff Comments
None.
**Item1C.**Cybersecurity
Risk management and strategy
Our approach to managing cybersecurity risk and safeguarding information across our organization embeds data protection and cybersecurity risk management throughout our enterprise and daily operations. We maintain processes for identifying, assessing and managing material risks, including such risks from cybersecurity threats, and such processes are integrated into our overall risk management system. Our enterprise risk register inventories significant risks to our company, including significant cybersecurity risks, and we maintain a separate functional risk register, specifically focusing on potential cybersecurity risks. Within these risk registers, we record each identified
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risk, describe its likelihood of occurrence and assess its potential impact, including the materiality thereof. As part of this exercise, mitigating measures are planned and implemented into action as necessary. As an additional feature of our cybersecurity risk management process, we have engaged an external service provider to support our cybersecurity team by performing penetration tests and periodic external security evaluations.
We undertake to align our cybersecurity program, which encompasses both enterprise security and operational security, with the standards of the National Institute of Standards and Technology Cybersecurity Framework. We maintain continuous cyber threat-detection systems and have established an incident response plan, which contains playbooks for addressing and recovering from potential material cyberattacks and breaches of data security. In addition to establishing security measures for vendors, we require onboarding orientation and periodic training for all employees and board members that focuses on cybersecurity and information management, and we conduct regular cybersecurity awareness campaigns.
As of the date of our filing of this report, we are not aware of any cybersecurity incident that has had or is reasonably likely to have a material impact on our business operations. Given the rapid evolution of cyber-related attack techniques, including through the use of AI, cybersecurity risks associated with our information technology systems and the systems of our customers and vendors continue to grow. Notwithstanding our cybersecurity management processes, a future cybersecurity incident could have a material adverse effect on our business or on our financial position, results of operations or cash flows. See [Item 1A. Risk FactorsRisks related to laws, regulation, and governmental complianceWe are subject to cybersecurity risks and threats as well as risks related to the use of artificial intelligence and the regulation of data privacy and security.](#_We_are_subject)
Governance
We involve multiple levels of oversight as a part of our approach to cybersecurity risk management. Our board of directors oversees our enterprise risk register and cybersecurity program, including related policies and procedures. As part of this oversight, the audit committee of our board of directors receives regular status reports and updates from our management team and conducts periodic executive sessions with our Vice President, Information Technology. Such status reports and executive sessions cover cybersecurity matters, such as developments to our program, key risk indicators, emerging risks, and identified incidents.
In addition, our Vice President, Information Technology, who has more than 20years of industry experience and over 25years of experience with the development, training and controls of effective global enterprise cybersecurity programs, oversees the implementation and compliance of our cybersecurity program and mitigation of information security related risks. Such oversight includes (i)reviewing our enterprise risk register, (ii)maintaining adequate processes to manage the identified risks under our cybersecurity program, (iii)regularly analyzing logs of cybersecurity threats and vulnerabilities and (iv)overseeing prevention, detection, mitigation and remediation efforts in general, including the development and maintenance of the above-mentioned incident response plan. Additionally, we maintain an experienced information technology team at the employee level that supports our Vice President, Information Technology in implementing our cybersecurity program and internal reporting, security and mitigation functions.
**Item2.**Properties
The description of our property included under [Item1. Business](#Item1_Business)Drilling Fleet is incorporated by reference herein. We maintain office spaces, land bases and other facilities worldwide, most of which we rent or lease, including principal executive offices in Steinhausen, Switzerland, and corporate offices in Houston, Texas, and Bermuda. We maintain additional facilities in various countries in North America, Europe, South America, Asia, Africa and Australia.
**Item3.**Legal Proceedings
We have certain actions, claims and other matters pending as discussed and reported in [PartII. Item8. Financial Statements and Supplementary DataNotes to Consolidated Financial StatementsNote12Commitments and Contingencies](#Note13_CommAndConting) and [PartII. Item7. Managements Discussion and Analysis of Financial Condition and Results of OperationsOther MattersRegulatory Matters](#MDA_OM_RegulatoryMatters) in our annual report on Form10-K. We are also involved in various tax matters as described in [PartII. Item8. Financial Statements and Supplementary DataNotes to Consolidated Financial StatementsNote10Income Taxes](#Note11_IncTaxes) and in [PartII. Item7. Managements Discussion and Analysis of Financial Condition and Results of OperationsOther MattersTax matters](#MDA_OM_TaxMatters) in this annual report on Form10-K. All such actions, claims, tax and other matters disclosed therein are incorporated herein by reference.
As of December31, 2025, 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 financial position, results of operations or cash flows. We cannot predict with certainty the outcome or effect of any of the matters referred to above or of any such other pending, threatened or possible litigation or legal proceedings. 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 managements current estimates.
On December17, 2021, Transocean Offshore Deepwater DrillingInc. (TODDI), our wholly owned subsidiary, received a letter from the U.S.Department of Justice (the DOJ) related to alleged violations by our subsidiary of its Clean Water Act (CWA) National
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Pollutant Discharge Elimination System permit for the western U.S. Gulf of America (Permit). The alleged violations, involving seven of our drillships, were identified by the U.S. 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 administrative monitoring and reporting obligations. In connection with the initial EPA inspection, we initiated modifications to our Permit and CWA compliance processes and maintained a dialogue with the EPA regarding the design and implementation of enhancements to these processes. At the DOJs 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 January3, 2024 (the Consent Decree), that resolved the claims of the DOJ based upon the alleged violations of our Permit and the CWA. 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. 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 threeyears. We do not believe that the enforcement of the Consent Decree would have a material adverse effect on our financial position, results of operations or cash flows.
In addition to the legal proceedings described above, we may from time to time identify other matters that we monitor through our compliance program or in response to events arising generally within our industry and in the markets where we do business. We evaluate matters on a case-by-case basis, investigate allegations in accordance with our policies and cooperate with applicable governmental authorities. Through the process of monitoring and proactive investigation, we strive to ensure no violation of our policies, Code of Integrity or law has occurred, or will occur; however, we can provide no assurance as to the outcome of these matters.
**Item4.**Mine Safety Disclosures
Not applicable.
PARTII
**Item5.**Market for Registrants 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 February17, 2026, we had 1,102,848,748shares outstanding and 4,246holders of record of our shares.
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. 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.
**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. However, dividends and similar distributions are subject to Swiss withholding tax, subject to certain exceptions. See [Swiss withholding tax on dividends and similar distributions to shareholders](#SHMatters_SwissWHTaxOnDiv).
**Swiss wealth tax**A non-Swiss holder is not subject to Swiss wealth taxes unless the holders shares are attributable to a permanent establishment or a fixed place of business maintained in Switzerland by such non-Swiss holder.
**Swiss capital gains tax upon disposal of shares**A non-Swiss holder is not subject to Swiss income taxes for capital gains unless the holders shares are attributable to a permanent establishment or a fixed place of business maintained in Switzerland by such non-Swiss holder. 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.
**Swiss withholding tax on dividends and similar distributions to shareholders**A Swiss withholding tax of 35percent 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*](#SHMatters_Exemption) below. 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.
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*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. On December31, 2025, the aggregate amount of par value of our outstanding shares was $110.2million, and the aggregate amount of qualifying additional paid-in capital of our outstanding shares was $18.1billion. Consequently, we expect that a substantial amount of any potential future distributions may be exempt from Swiss withholding tax.
*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 residents income tax return, or in the case of an entity, includes the taxable income in such residents income statement.
*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. Switzerland has entered into bilateral treaties for the avoidance of double taxation with respect to income taxes with numerous countries, including the 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.
*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 15percent, leading to a refund of 20percent, or a 100percent refund in the case of qualified pension funds. 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 treatys limitation on benefits requirements. The claim for refund must be filed with the Swiss federal tax authorities (Eigerstrasse65, 3003Bern, Switzerland), not later than December31 of the thirdyear following the year in which the dividend payments became due. The relevant Swiss tax form is Form82C for companies, 82Efor other entities and 82Ifor individuals. 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. Evidence that the withholding tax was withheld at the source must also be included.
**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. 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 0.075percent for each of the twoparties to a transaction and is calculated based on the purchase price or sale proceeds. If the transaction does not involve cash consideration, the transfer stamp duty is computed on the basis of the market value of the consideration.
Share repurchases
**Overview**Shares repurchased for the purpose of capital reduction are treated as a partial liquidation subject to a 35percent 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. 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. 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.
If we repurchase shares, we expect to use an alternative procedure pursuant to which we repurchase our shares via a "virtual secondtrading line" from market players, such as banks and institutional investors, who are generally entitled to receive a full refund of the Swiss withholding tax. The use of such virtual secondtrading line with respect to share repurchase programs is subject to approval of the competent Swiss tax and other authorities. We may not be able to repurchase as many shares as we would like to repurchase for purposes of capital reduction on the virtual secondtrading line without subjecting the selling shareholders to Swiss withholding taxes. 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 November2025, the U.S. Department of the Treasury adopted final regulations under the Inflation Reduction Act of2022, whereby an excise tax of onepercent would be imposed on stock repurchases in the event one of our U.S. subsidiaries funds the stock repurchase.
**Own share limitation**Under Swiss corporate law, the right of a company and its subsidiaries to repurchase and hold its own shares is limited. 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 10percent of the companys share capital recorded in the Swiss Commercial Register, whereby for purposes of determining whether the 10percent threshold has been reached, shares repurchased under a share repurchase program for cancellation purposes authorized by the companys shareholders are disregarded. As of February17, 2026, together, TransoceanLtd. and Transocean InternationalLimited, a Bermuda exempted company and our wholly owned subsidiary, held as treasury shares 8.4percent of our issued shares. Our board of directors could, to the extent freely distributable reserves are available, authorize the repurchase of additional shares
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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. Based on the number of shares held as treasury shares as of February17, 2026, 1.6percent of our issued shares could be repurchased for purposes of retention as additional treasury shares. 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.
**Share repurchase program**In May2009, at our annual general meeting, 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 CHF3.50billion. On February12, 2010, our board of directors authorized our management to implement the share repurchase program. At December31, 2025, the authorization remaining under the share repurchase program was for the repurchase of our outstanding shares for an aggregate purchase price of up to CHF3.24billion, equivalent to $4.09billion. We intend to fund any repurchases using available cash balances and cash from operating activities. The share repurchase program could be suspended or discontinued by our board of directors or company management, as applicable, at any time. We may decide, based on our ongoing capital requirements, the price of our shares, regulatory and tax considerations, cash flow generation, the amount and duration of our contract backlog, general market conditions, debt rating considerations and other factors, that we should retain cash, reduce debt, make capital investments or acquisitions or otherwise use cash for general corporate purposes. Decisions regarding the amount, if any, and timing of any share repurchases will be made from time to time based on these factors. Any repurchased shares under the share repurchase program would be held by us for cancellation by the shareholders at a future general meeting of shareholders.
Issuer Purchases of Equity Securities
| | | | | | | | | | | | | |
| | | | | | | | Total number of shares | | Approximate dollar value | | |
| | | Total number | | Average | | purchasedaspart | | ofsharesthatmayyet | | |
| | | ofshares | | pricepaid | | ofpublicly announced | | be purchased undertheplans | | |
| Period | | purchased | | pershare | | plansorprograms | | or programs (inmillions) (a) | | |
| October 2025 | | | | $ | | | | | $ | 4,091 | | |
| November 2025 | | | | | | | | | | 4,091 | | |
| December 2025 | | | | | | | | | | 4,091 | | |
| Total | | | | $ | | | | | $ | 4,091 | | |
**Item6.**RESERVED
**Item7.**Managements Discussion and Analysis of Financial Condition and Results of Operations
Introduction
TransoceanLtd. (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. As of February17, 2026, we owned or had partial ownership interests in and operated 27mobile offshore drilling units, consisting of 20ultra-deepwater drillships and sevenharsh environment semisubmersibles.
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. Our drilling fleet is oneof 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.
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. Although rigs can be moved from oneregion 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. 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.
The information contained in this section should be read in conjunction with the information contained in [PartI. Item1. Business](#Item1_Business), [PartI. Item1A. Risk Factors](#Item1A_RiskFactors) and the audited consolidated financial statements and the notes thereto included under [Item8. Financial Statements and Supplementary Data](#Item8FinancialStatementsandSupplementary) elsewhere in this annual report on Form10-K. The following discussion of our results of operations and liquidity and capital resources includes comparisons for the years ended December31, 2025 and 2024. For a discussion, including comparisons, of our results of operations and liquidity and capital resources for the years ended December31, 2024 and 2023, see PartII. Item7. Managements Discussion and Analysis of Financial Condition and Results of Operations of our annual report on [Form10-K for the year ended December31, 2024](https://www.sec.gov/ix?doc=/Archives/edgar/data/0001451505/000145150525000018/rig-20241231x10k.htm), filed with the United States (U.S.) Securities and Exchange Commission on February18, 2025.
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Significant Events
**Agreement to acquire Valaris**On February9, 2026, we and ValarisLimited, an exempted company limited by shares incorporated under the laws of Bermuda ("Valaris"), entered into a Business Combination Agreement (the "Agreement") providing for the combination of Transocean and Valaris (the "Business Combination"). Pursuant to the Agreement, and on the terms and subject to the conditions thereof, we will acquire all of the issued and outstanding common shares, par value $0.01each, of Valaris (the Valaris Shares) in exchange for TransoceanLtd. shares, par value $0.10each, at an exchange ratio of 15.235TransoceanLtd. shares for each Valaris Share. See Notes to Consolidated Financial Statements[Note1Business](#Note1_Business).
**Held-for-sale asset impairments**In the year ended December31, 2025, we recognized an aggregate loss of $3.05billion ($3.04billion, or $3.16per diluted share, net of tax), associated with the impairment of sixultra-deepwater floaters and oneharsh environment floater, together with related assets, which we determined were impaired at the time we classified the assets as held for sale, and twoultra-deepwater floaters, together with related assets, which we previously classified as held for sale and determined the assets were further impaired. See [Operating Results](#MDA_OperatingResults).
**Disposal of assets**In the year ended December31, 2025, we completed the sale of the ultra-deepwater floaters *DevelopmentDrillerIII,* *DiscovererAmericas*, *DiscovererClearLeader*, *DiscovererInspiration*, *DiscovererLuanda* and *GSFDevelopmentDrillerI*, together with related assets, for aggregate net cash proceeds of $71million. In January2026, we completed the sale of the ultra-deepwater drillship *DiscovererIndia*, together with related assets, for aggregate net cash proceeds of $14million, including $1million received as a deposit in the year ended December31, 2025. See [Liquidity and Capital ResourcesSources and uses of liquidity](#MDA_SourcesUsesOfLiquidity).
**Share issuance**In September2025, we issued 143.8million TransoceanLtd. shares and received $421million aggregate cash proceeds, net of issue costs. See [Liquidity and Capital ResourcesSources and uses of liquidity](#MDA_SourcesUsesOfLiquidity).
**Debt issuance**In October2025, we issued $500million aggregate principal amount of 7.875%senior guaranteed notes due October2032 (the 7.875%Senior Guaranteed Notes) and received $492million aggregate cash proceeds, net of issue costs. See [Liquidity and Capital ResourcesSources and uses of liquidity](#MDA_SourcesUsesOfLiquidity).
**Debt redemption**In October2025, we made an aggregate cash payment of $903million, including related costs, to fully redeem $655million aggregate principal amount of 8.00%senior notes due February2027 and $248million aggregate principal amount of 6.875%senior secured notes due February2027. See [Liquidity and Capital ResourcesSources and uses of liquidity](#MDA_SourcesUsesOfLiquidity).
**Debt exchanges**In the year ended December31, 2025, we entered into separate, individually negotiated agreements (as amended, the Exchange Agreements) with certain holders of the 4.00% senior guaranteed exchangeable bonds due December2025 (the 4.00%Exchangeable Bonds). In the yearended December31, 2025, the holders exchanged $196million aggregate principal amount of 4.00%Exchangeable Bonds under the terms of the Exchange Agreements and received an aggregate 73.3million TransoceanLtd. shares. See [Operating Results](#MDA_OperatingResults) and [Liquidity and Capital ResourcesSources and uses of liquidity](#MDA_SourcesUsesOfLiquidity).
**Debt tender offers**In October2025, we made an aggregate cash payment of $100million, including related costs, to complete cash tender offers for $89million aggregate principal amount of the validly tendered 7.35%senior notes due December2041 (the 7.35%Senior Notes) and $16million aggregate principal amount of the validly tendered 7.00%notes due June2028. See [Liquidity and Capital ResourcesSources and uses of liquidity](#MDA_SourcesUsesOfLiquidity).
**Debt repurchases**In the year ended December31, 2025, we made an aggregate cash payment of $36million, including related costs, to complete open market repurchases of $36million aggregate principal amount of the 7.00%notes due June2028 and $1million aggregate principal amount of the 7.35%Senior Notes. See [Liquidity and Capital ResourcesSources and uses of liquidity](#MDA_SourcesUsesOfLiquidity).
Outlook
**Drilling market**Our industry outlook remains positive, informed by numerous long-term forecasts indicating that hydrocarbons will continue to be a critical source of energy for the foreseeable future. In response to persistent geopolitical instability, supply chain constraints, and the limitations of renewable energy technologies, many governments and operators are reassessing their energy strategies. Rather than accelerating a shift away from fossil fuels, many policy makers are prioritizing energy security, resulting in a diverse and resilient supply portfolio. This shift underscores the continued need for accessible, reliable, cost-effective, and transportable energy sources, with offshore oil and gas increasingly viewed as a strategic asset. We believe these dynamics will support sustained, long-term demand for oil and natural gas.
In the context of the natural depletion of existing fields, maintaining current oil and natural gas production levels will require both the development of existing resources and continued investment in exploration to identify new reserve opportunities. We believe that oil and natural gas producers will invest a greater portion of their budgets in offshore drilling, and particularly in deepwater, where resource potential, production longevity, and project economics are favorable, to achieve their production and reserve replacement targets.
Although hydrocarbon prices remain sensitive to geopolitical events, macroeconomic policy decisions, and short-term supply fluctuations, we expect the overall economics of deepwater projects to remain attractive. Deepwater and harsh-environment fields continue
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to generate competitive economic returns and are of generally lower carbon intensity compared to many other hydrocarbon sources, making them consistently compelling for capital deployment.
While the long-term outlook for offshore drilling activity remains positive across all major deepwater sectors, we expect our customers to continue to be disciplined in capital spending. Consistent with our prior expectations, tendering activity and contract awards increased during the latter part of 2025. Additional contracting opportunities are anticipated through the first half of 2026 for projects commencing in 2027 and 2028. In the near term, continued pressure on utilization may result in the retirement of uncompetitive rigs.
We expect demand for harsh-environment rigs to remain strong through the end of the decade, driven primarily by activity in Norwaythe largest market for such unitsand by emerging opportunities in new geographies suited for harsh-environment capable rigs. Several high-specification semisubmersible rigs that previously mobilized to other harsh-environment markets such as Namibia, the Black Sea, and Australia may ultimately return to the region depending on project requirements and market conditions.
**Fleet status**We refer to the availability of our rigs in terms of the uncommitted fleet rate. 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. The uncommitted fleet rates exclude the effect of priced options. As of February19, 2026, our uncommitted fleet rates for each of the fiveyears in the period ending December31, 2030 were as follows:
| | | | | | | | | | | | | | | | | | |
| | | 2026 | | 2027 | | 2028 | | 2029 | | 2030 | | |
| Uncommitted fleet rate | | | | | | | | | | | | | | | | | |
| Ultra-deepwater floaters | | 36 | % | | 52 | % | | 82 | % | | 91 | % | | 98 | % | | |
| Harsh environment floaters | | 5 | % | | 45 | % | | 97 | % | | 100 | % | | 100 | % | | |
Performance and Other Key Indicators
**Contract backlog**We believe our contract backlog provides an indicator of our future revenue-earning opportunities. Contract backlog is defined as the maximum contractual operating dayrate multiplied by the number of days remaining in the firm contract period, including certain performance-based provisions for which achievement is probable, excluding provisions for mobilization, demobilization, contract preparation, other incentive provisions or reimbursement revenues, which are not expected to be material to our contract drilling revenues. The contract backlog represents the maximum contract drilling revenues that can be earned considering the reported operating dayrate in effect during the firm contract period. The contract backlog for our fleet was as follows:
| | | | | | | | | | | | |
| | | February 19, | | October 15, | | February 12, | | |
| | | 2026 | | 2025 | | 2025 | | |
| |
| | | (inmillions) | | |
| Contract backlog | | | | | | | | | | | |
| Ultra-deepwater floaters | | $ | 4,477 | | $ | 5,105 | | $ | 6,363 | | |
| Harsh environment floaters | | | 1,587 | | | 1,623 | | | 1,965 | | |
| Total contract backlog | | $ | 6,064 | | $ | 6,728 | | $ | 8,328 | | |
Our contract backlog includes only firm commitments which are represented by signed drilling contracts or, in some cases, by other definitive agreements awaiting contract execution. 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 and certain performance-based provisions expected to be achieved in the measurement period. 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. At February19, 2026, the contract backlog and average contractual dayrates for our fleet were as follows:
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | FortheyearsendingDecember31, | | |
| | | Total | | 2026 | | 2027 | | 2028 | | 2029 | | 2030 | | |
| |
| | | (inmillions,exceptaveragedayrates) | | |
| Contract backlog | | | | | | | | | | | | | | | | | | | | |
| Ultra-deepwater floaters | | $ | 4,477 | | $ | 1,819 | | $ | 1,576 | | $ | 627 | | $ | 359 | | $ | 96 | | |
| Harsh environment floaters | | | 1,587 | | | 922 | | | 632 | | | 33 | | | | | | | | |
| Total contract backlog | | $ | 6,064 | | $ | 2,741 | | $ | 2,208 | | $ | 660 | | $ | 359 | | $ | 96 | | |
| | | | | | | | | | | | | | | | | | | | | |
| Average contractual dayrates | | | | | | | | | | | | | | | | | | | | |
| Ultra-deepwater floaters | | $ | 470,000 | | $ | 461,000 | | $ | 450,000 | | $ | 488,000 | | $ | 557,000 | | $ | 635,000 | | |
| Harsh environment floaters | | $ | 449,000 | | $ | 447,000 | | $ | 454,000 | | $ | 424,000 | | $ | | | $ | | | |
| Total fleet average | | $ | 464,000 | | $ | 456,000 | | $ | 451,000 | | $ | 484,000 | | $ | 557,000 | | $ | 635,000 | | |
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. Additional factors that could affect the amount and
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timing of actual revenues to be recognized include customer liquidity issues and contract suspension or termination that may be available to our customers under certain circumstances.
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, waiting-on-customer rate, repair rate, standby rate or force majeure rate, may apply under certain circumstances. The 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. Item1A.Risk FactorsRisks related to our businessOur current backlog of contract drilling revenues may not be fully realized](#Item1A_OurCurrentBacklog).
**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. The average daily revenue for our fleet was as follows:
| | | | | | | | | | | | |
| | | Years ended December31, | | |
| | | 2025 | | 2024 | | 2023 | | |
| Average daily revenue | | | | | | | | | | | |
| Ultra-deepwater floaters | | $ | 456,900 | | $ | 428,000 | | $ | 393,700 | | |
| Harsh environment floaters | | $ | 456,200 | | $ | 435,900 | | $ | 354,300 | | |
| Total fleet average daily revenue | | $ | 456,700 | | $ | 430,100 | | $ | 382,300 | | |
Our average daily revenue fluctuates relative to market conditions and our revenue efficiency. The average daily revenue may be affected by incentive performance bonuses or penalties or demobilization fee revenues. Revenues for a newbuild unit are included in the calculation when the rig commences operations upon acceptance by the customer. We remove a rig from the calculation upon disposal or classification as held for sale, unless we continue to operate the rig, in which case we remove the rig upon completion or novation of the contract.
**Revenue efficiency**We believe revenue efficiency measures our ability to ultimately convert our contract backlog into revenues. 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. 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. The revenue efficiency rates for our fleet were as follows:
| | | | | | | | | | | |
| | | Years ended December31, | | |
| | | 2025 | | | 2024 | | | 2023 | | |
| Revenue efficiency | | | | | | | | | | |
| Ultra-deepwater floaters | | 95.7 | % | | 93.4 | % | | 96.5 | % | |
| Harsh environment floaters | | 98.4 | % | | 97.5 | % | | 97.8 | % | |
| Total fleet average revenue efficiency | | 96.5 | % | | 94.5 | % | | 96.8 | % | |
Our revenue efficiency rate varies due to revenues earned under alternative contractual dayrates, such as a waiting-on-weather rate, waiting-on-customer rate, repair rate, standby rate, force majeure rate or zero rate, that may apply under certain circumstances. 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.
**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. The rig utilization rates for our fleet were as follows:
| | | | | | | | | | | |
| | | Years ended December31, | | |
| | | 2025 | | | 2024 | | | 2023 | | |
| Rig utilization | | | | | | | | | | |
| Ultra-deepwater floaters | | 69.1 | % | | 57.3 | % | | 49.4 | % | |
| Harsh environment floaters | | 82.6 | % | | 71.1 | % | | 59.1 | % | |
| Total fleet average rig utilization | | 72.4 | % | | 60.5 | % | | 51.9 | % | |
Our rig utilization rate declines as a result of idle and stacked rigs and during shipyard, contract preparation and mobilization periods. We include newbuilds in the calculation when the rigs commence operations upon acceptance by the customer. We remove a rig from the calculation upon disposal or classification as held for sale, unless we continue to operate the rig, in which case we remove the rig upon completion or novation of the contract. Accordingly, our rig utilization can increase when we remove idle or stacked units from our fleet.
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Operating Results
Year ended December31, 2025 compared to the year ended December31, 2024
The following is an analysis of our operating results. See [Performance and Other Key Indicators](#MDA_PerformanceAndOKI) for definitions of operating days, average daily revenue, revenue efficiency and rig utilization.
| | | | | | | | | | | | | | | | |
| | | Years ended December31, | | | | | | | | |
| | | 2025 | | | 2024 | | | Change | | %Change | | |
| |
| | | (inmillions,exceptdayamountsandpercentages) | | |
| Operating days | | | 8,220 | | | | 7,848 | | | | 372 | | 5 | % | |
| Average daily revenue | | $ | 456,700 | | | $ | 430,100 | | | $ | 26,600 | | 6 | % | |
| Revenue efficiency | | | 96.5 | % | | | 94.5 | % | | | | | | | |
| Rig utilization | | | 72.4 | % | | | 60.5 | % | | | | | | | |
| | | | | | | | | | | | | | | | |
| Contract drilling revenues | | $ | 3,965 | | | $ | 3,524 | | | $ | 441 | | 13 | % | |
| | | | | | | | | | | | | | | | |
| Operating and maintenance expense | | | (2,406) | | | | (2,199) | | | | (207) | | (9) | % | |
| Depreciation and amortization expense | | | (659) | | | | (739) | | | | 80 | | 11 | % | |
| General and administrative expense | | | (195) | | | | (214) | | | | 19 | | 9 | % | |
| Loss on impairment of assets | | | (3,049) | | | | (772) | | | | (2,277) | | nm | | |
| Gain (loss) on disposal of assets, net | | | 7 | | | | (17) | | | | 24 | | nm | | |
| Operating loss | | | (2,337) | | | | (417) | | | | (1,920) | | nm | | |
| | | | | | | | | | | | | | | | |
| Other income (expense), net | | | | | | | | | | | | | | | |
| Interest income | | | 40 | | | | 50 | | | | (10) | | (20) | % | |
| Interest expense | | | (555) | | | | (362) | | | | (193) | | (53) | % | |
| Gain on retirement of debt | | | 3 | | | | 161 | | | | (158) | | (98) | % | |
| Other, net | | | (99) | | | | 45 | | | | (144) | | nm | | |
| Loss before income taxes | | | (2,948) | | | | (523) | | | | (2,425) | | nm | | |
| Income tax benefit | | | 33 | | | | 11 | | | | 22 | | nm | | |
| Net loss | | $ | (2,915) | | | $ | (512) | | | $ | (2,403) | | nm | | |
nm means not meaningful.
**Contract drilling revenues**Contract drilling revenues increased for the year ended December31, 2025, compared to the year ended December31, 2024, primarily due to the following: (a)approximately $140million resulting from higher average daily revenues, (b)approximately $110million resulting from increased utilization, (c)approximately $80million resulting from increased revenue efficiency for the fleet, (d)approximately $70million resulting from increased activity for the operations of our newbuild ultra-deepwater drillship *DeepwaterAquila* and (e)approximately $50million resulting from increased reimbursement revenues. These increases were partially offset by approximately $10million resulting from oneless calendar day in the yearended December31, 2025.
**Costs and expenses**Operating and maintenance costs and expenses increased for the year ended December31, 2025, compared to the year ended December31, 2024, primarily due to the following: (a)approximately $85million resulting from increased activity for the operations of our active fleet, (b)approximately $50million resulting from increased reimbursable costs, (c)a net increased loss of approximately $45million associated with certain legal outcomes that resulted in a net non-cash loss of $20million in the current year compared to a net gain of $25million from favorable settlements in the earlier year, (d)approximately $35million resulting from the operations of our newbuild *DeepwaterAquila* and (e)approximately $35million resulting from the estimated effect of inflation on personnel and other operating costs. These increases were partially offset by the following: (a)approximately $25million resulting from rigs classified as held for sale or sold, (b)approximately $15million resulting from lower supply chain costs and (c)approximately $5million resulting from costs associated with the early retirement of certain personnel in the earlier year.
Depreciation and amortization expense decreased for the year ended December31, 2025, compared to the year ended December31, 2024, primarily due to the following: (a)$97million resulting from rigs sold or classified as held for sale and (b)$9million resulting from assets that were retired or had reached the end of their useful lives, partially offset by (c)$27million resulting from oneacquired harsh environment semisubmersible, onenewbuild ultra-deepwater drillship and other property and equipment placed into service in the earlier year.
General and administrative costs and expenses decreased for the year ended December31, 2025, compared to the year ended December31, 2024, primarily due to the following: (a)$8million resulting from decreased legal and professional fees, (b)$5million resulting from decreased personnel costs, primarily associated with the early retirement of certain personnel in the earlier year, and (c)approximately $4million resulting from decreased technology costs.
**Impairment of assets**In the year ended December31, 2025, we recognized a loss associated with the impairment of the ultra-deepwater floaters *DeepwaterChampion*, *DiscovererAmericas, DiscovererClearLeader*,***DiscovererIndia**, DiscovererLuanda*, *GSFDevelopmentDrillerI***and the harsh environment semisubmersible*HenryGoodrich***together with related assets, which we determined were impaired at the time we classified them as held for sale, and *DevelopmentDrillerIII* and *DiscovererInspiration* together with related
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assets, which were previously classified as held for sale and we determined were further impaired. In the year ended December31, 2024, we recognized a loss associated with the impairment of the ultra-deepwater floaters *DeepwaterNautilus*,*DevelopmentDrillerIII* and *DiscovererInspiration*, together with related assets, which we determined were impaired at the time we classified them as held for sale.
**Disposal of assets**In the year ended December31, 2025, we recognized a net gain of $4million associated with the disposal of rigs and related assets. In the years ended December31, 2025 and 2024, we recognized a net gain of $3million and a net loss of $16million, respectively, associated with the disposal of assets unrelated to rig sales.
**Other income and expense**Interest expense increased in the year ended December31, 2025, compared to the year ended December31, 2024, primarily due to the following: (a)$204million increased interest resulting from a decreased gain on the fair value adjustment of the bifurcated compound exchange feature embedded in the indenture governing the 4.625%senior guaranteed exchangeable bonds due September2029 (the 4.625%Exchangeable Bonds), (b)$55million increased interest resulting from debt issued in the earlier year and (c)$15million increased interest resulting from interest costs capitalized for our newbuild construction program completed in the earlier year, partially offset by (d)$79million decreased interest resulting from debt repaid as scheduled or early retired.
In the year ended December31, 2025, we recognized a net gain on retirement of debt due to the following: (a)a net gain of $4million associated with the retirement of $105million aggregate principal amount of notes validly tendered in the tender offers completed in the year, partially offset by (b)a net loss of $1million associated with the redemption of $940million aggregate principal amount of our debt securities. In the year ended December31, 2024, we recognized a net gain on retirement of debt due to the following: (a)a net gain of $144million associated with the retirement of $845million aggregate principal amount of notes validly tendered in the tender offers completed in the year and (b)a net gain of $17million associated with the redemption of $852million aggregate principal amount of our debt securities.
Other expense net, increased in the year ended December31, 2025, compared to the year ended December31, 2024, primarily due to the following: (a)a loss of $99million associated with, pursuant to the Exchange Agreements, the issuance of additional TransoceanLtd. shares to certain holders of 4.00%Exchangeable Bonds in the current year, (b)a net increased loss of $29million associated with currency exchange rate changes and (c)decreased income of $22million associated with non-service components of net periodic benefit income.
**Income tax expense**In the years ended December31, 2025 and 2024, our effective tax rate was 1.1percent and 2.2percent, respectively, based on loss before income tax benefit. In the years ended December31, 2025 and 2024, the effect of various discrete period tax items was a net tax benefit of $193million and $158million, respectively. In the year ended December31, 2025, such discrete items included changes to various uncertain tax positions, valuation allowances, rig ownership changes and rig basis changes related to impairments. In the year ended December31, 2024, such discrete items included changes to deferred taxes resulting from operational and structural changes related to rig movements and asset impairments, changes to valuation allowances and settlements and expirations of various uncertain tax positions. In the years ended December31, 2025 and 2024, our effective tax rate, excluding discrete items, was 81.2percent and 159.1percent, respectively, based on income or loss before income tax expense. In the year ended December31, 2025 compared to the year ended December31, 2024, our effective tax rate excluding discrete items increased primarily due to changes in the relative blend of income from operations in certain jurisdictions.
Due to our operating activities and organizational structure, our income tax expense or benefit does not change proportionally with our income or loss before income taxes. We may have subsidiaries with tax expense on taxable earnings that exceeds the tax benefits in other jurisdictions, or vice versa, which sometimes results in a negative effective tax rate or unusually large effective tax rates relative to consolidated income or loss before income tax expense or benefit. Our rig operating structures further complicate our tax calculations, especially in instances where we have more than oneoperating structure for the taxing jurisdiction and, thus, more than onemethod of calculating taxes depending on the operating structure utilized by the rig under the contract.
Liquidity and Capital Resources
Sources and uses of cash
In the year ended December31, 2025, our primary sources of cash were net cash provided by our operating activities, net cash proceeds from the issuance of shares and net cash proceeds from the issuance of debt. Our primary uses of cash were debt repayments and capital expenditures.
| | | | | | | | | | | | |
| | | Years ended December31, | | | | | |
| | | 2025 | | 2024 | | Change | | |
| |
| | | (inmillions) | | |
| Cash flows from operating activities | | | | | | | | | | | |
| Net loss | | $ | (2,915) | | $ | (512) | | $ | (2,403) | | |
| Non-cash items, net | | | 3,773 | | | 1,201 | | | 2,572 | | |
| Changes in operating assets and liabilities, net | | | (109) | | | (242) | | | 133 | | |
| | | $ | 749 | | $ | 447 | | $ | 302 | | |
Net cash provided by operating activities increased primarily due to (a)increased cash received from customers and (b)decreased cash paid to suppliers, partially offset by (c)increased cash paid for personnel-related costs.
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| | | | | | | | | | | | |
| | | Years ended December31, | | | | | |
| | | 2025 | | 2024 | | Change | | |
| |
| | | (inmillions) | | |
| Cash flows from investing activities | | | | | | | | | | | |
| Capital expenditures | | $ | (123) | | $ | (254) | | $ | 131 | | |
| Investment in loan to unconsolidated affiliates | | | | | | (3) | | | 3 | | |
| Proceeds from disposal of assets, net of costs to sell | | | 84 | | | 101 | | | (17) | | |
| Proceeds from disposal of equity investment in unconsolidated affiliate | | | 6 | | | | | | 6 | | |
| Cash acquired in acquisition of unconsolidated affiliates | | | | | | 5 | | | (5) | | |
| | | $ | (33) | | $ | (151) | | $ | 118 | | |
Net cash used in investing activities decreased primarily due to (a)decreased capital expenditures, resulting principally from the completion of our newbuild construction program in the earlier year, partially offset by (b)decreased proceeds from disposal of assets.
| | | | | | | | | | | | |
| | | Years ended December31, | | | | | |
| | | 2025 | | 2024 | | Change | | |
| |
| | | (inmillions) | | |
| Cash flows from financing activities | | | | | | | | | | | |
| Repayments of debt | | $ | (1,556) | | $ | (2,103) | | $ | 547 | | |
| Proceeds from issuance of debt, net of issue costs | | | 492 | | | 1,770 | | | (1,278) | | |
| Proceeds from issuance of shares, net of issue costs | | | 421 | | | | | | 421 | | |
| Other, net | | | (17) | | | (17) | | | | | |
| | | $ | (660) | | $ | (350) | | $ | (310) | | |
Net cash used in financing activities increased primarily due to (a)decreased net cash proceeds from the issuance of $500million aggregate principal amount of 7.875%Senior Guaranteed Notes in the current year compared to the issuance of $900million aggregate principal amount of 8.25%senior notes due May2029 and $900million aggregate principal amount of 8.50%senior secured notes due May2031 in the earlier year, partially offset by (b)decreased cash used to repay debt, resulting principally from the early retirement of $1.05billion aggregate principal amount of certain debt securities in redemptions, tender offers and repurchases in the current year compared to the early retirement of $1.70billion aggregate principal amount of certain of our debt securities in redemptions and tender offers completed in the earlier year, and (c)net cash proceeds from the issuance of shares with no comparable activity in the earlier year.
Sources and uses of liquidity
**Overview**We expect to use existing unrestricted cash balances, cash flows from operating activities, borrowings under our Secured Credit Facility, proceeds from the disposal of assets or proceeds from the issuance of debt or shares to fulfill anticipated near-term obligations, which may include capital expenditures, working capital and other operational requirements, scheduled debt maturities and installments or other debt-related deposits or reservations of unrestricted cash. At December31, 2025, we had $620million in unrestricted cash and cash equivalents and $377million in restricted cash and cash equivalents. We have generated positive cash flows from operating activities over recent years and, although we cannot provide assurances, we expect that such cash flows will continue to be positive over the next year. For example, among other factors, if we incur costs for reactivation or contract preparation of multiple rigs or to otherwise assure the marketability of our fleet or general economic, financial, industry or business conditions deteriorate, our cash flows from operations may be reduced or negative.
We have a Secured Credit Facility that provides us with a borrowing capacity of $510million through its maturity on June22, 2028. Our Secured Credit Facility, which is secured by, among other things, a lien on eightof our ultra-deepwater drillships and twoof our harsh environment semisubmersibles, contains certain restrictive covenants, including a minimum guarantee coverage ratio of 3.0to1.0, a minimum collateral coverage ratio of 2.1to1.0 and a minimum liquidity requirement of $200million, among others. The Secured Credit Facility also restricts the ability of TransoceanLtd. and certain of our subsidiaries to, among other things, merge, consolidate or otherwise make changes to the corporate structure, incur liens, incur additional indebtedness, enter into transactions with affiliates and permits, subject to certain conditions, us to pay dividends and repurchase our shares. For more information about our Secured Credit Facility and our outstanding debt instruments, see Notes to Consolidated Financial Statements[Note8Debt](#Note9_Debt).
Although we currently anticipate relying on these sources of liquidity, including cash flows from operating activities and borrowings under our Secured Credit Facility, among others, we may in the future consider establishing additional financing arrangements with banks or other capital providers and subject to market conditions and other factors, we may be required to provide collateral for any such future financing arrangements. Our secured indentures include collateral rig leverage ratios. During periods where collateral rigs have experienced reduced levels of operating efficiency or utilization, we have in the past deposited cash into the applicable debt service reserve account and taken other actions, including obtaining consents of holders of certain of our secured debt, as applicable, in order to satisfy the applicable collateral rig leverage ratio, and we may in the future take such actions from time to time, as necessary. For more information about our indentures and our debt and equity securities, see Notes to Consolidated Financial Statements[Note8Debt](#Note9_Debt) and Notes to Consolidated Financial Statements[Note13Equity](#Note14_Equity).
**Debt and equity markets**From time to time, we seek to access the capital markets in connection with our ongoing efforts to prudently manage our capital structure and improve our liquidity position. For example, we have completed multiple debt and equity
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transactions, including tender offers, redemptions, exchanges and retirement of existing debt. Subject to then-existing market conditions and our expected liquidity needs, among other factors, we may also use existing unrestricted cash balances, cash flows from operating activities, or proceeds from asset sales to manage our capital structure, including by purchasing or exchanging any of our debt or equity securities in the open market, in privately negotiated transactions, or through tender or exchange offers, or by redeeming any of our outstanding debt securities pursuant to the terms of the applicable governing document, if applicable. Any future purchases, exchanges or other transactions may be on the same terms or on terms that are more or less favorable to holders than the terms of any prior transaction. We can provide no assurance as to which, if any, of these alternatives, or combinations thereof, we may choose to pursue in the future, if at all, or as to the timing with respect to any future transactions. For more information about our debt and equity transactions during the three-year period ended December31, 2025, see Notes to Consolidated Financial Statements[Note8Debt](#Note9_Debt) and Notes to Consolidated Financial Statements[Note13Equity](#Note14_Equity).
Our ability and willingness to access the debt and equity markets is a function of a variety of factors, including, among others, general economic, industry or market conditions, market perceptions of us and our industry and credit rating agencies views of our debt. General economic or market conditions could have an adverse effect on our business and financial position and on the business and financial position of our customers, suppliers and lenders and could affect our ability to access the capital markets on acceptable terms or at all and our future need or ability to borrow under our Secured Credit Facility. In addition to our potential sources of funding, the effects of such global events could impact our liquidity or cause us to need to alter our allocation or sources of capital, implement further cost reduction measures and change our financial strategy. Additionally, the rating of our long-term debt is below investment grade, which is causing us to experience increased fees and interest rates under our Secured Credit Facility and indentures governing certain of our senior notes. Future downgrades may further restrict our ability to access the debt market for sources of capital and may negatively impact the cost of such capital at a time when we would like, or need, to access such markets, which could have an impact on our flexibility to react to changing economic and business conditions.
**Drilling 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. Any such acquisition or investment has involved, and in the future 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.
The ultimate amount of our capital expenditures is partly dependent upon financial market conditions, the actual level of operational and contracting activity, the costs associated with the current regulatory environment and customer requested capital improvements and equipment for which the customer agrees to reimburse us. As with any major shipyard project that takes place over an extended period, the actual costs, the timing of expenditures and the project completion date may vary from estimates based on numerous factors, including actual contract terms, weather, exchange rates, shipyard labor conditions, availability of suppliers to recertify equipment and market demand for required components and resources. 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.
From time to time, we may also review the possible disposition of certain drilling assets. During the yearended December31, 2025, we completed the disposal of sixultra-deepwater floaters, together with related assets, in sales for recycling. As of December31, 2025, we had classified as held for sale twoultra-deepwater drillships and oneharsh environment semisubmersible, together with related assets, and we have committed to sell these drilling units for recycling. In January2026, we completed the sale of oneultra-deepwater drillship, together with related assets, previously classified as held for sale. Considering market conditions, we may identify additional drilling units to be sold for scrap, recycling or alternative purposes. See Notes to Consolidated Financial Statements[Note6Long-Lived Assets.](#Note7_LongLivedAssets)
**Contractual obligations**We provide additional information about our cash requirements for known contractual and other obligations on both a short-term and long-term basis in the notes to our consolidated financial statements as follows:
For additional information regarding our operating and finance lease obligations, see Notes to Consolidated Financial Statements[Note7Leases](#Note8_Leases).
For additional information regarding our debt obligations and scheduled maturities, see Notes to Consolidated Financial Statements[Note8Debt](#Note9_Debt).
For additional information regarding the obligations to our employees under our various postemployment benefit plans, see Notes to Consolidated Financial Statements[Note9Benefit Plans](#Note10_PostemploymentBenef).
For additional information regarding our tax obligations, see Notes to Consolidated Financial Statements[Note10Income Taxes](#Note11_IncTaxes).
For additional information regarding our obligations under long-term service agreements and our material contingencies, see Notes to Consolidated Financial Statements[Note12Commitments and Contingencies](#Note13_CommAndConting).
**Other commercial commitments**We have other commercial commitments, such as standby letters of credit and surety bonds that guarantee certain performance activities, tax commitments and customs or other obligations in various jurisdictions. The cash obligations of these commitments, which are primarily geographically concentrated in Brazil, are not normally called because we typically comply with the underlying performance requirements. For additional information regarding our standby letters of credit and surety bond guarantees, see Notes to Consolidated Financial Statements[Note12Commitments and Contingencies](#Note13_CommAndConting).
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Critical Accounting Policies and Estimates
Overview
We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the U.S., which require us to make estimates that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures of contingent assets and liabilities. These estimates require significant judgments and assumptions. 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.
We consider the following to be our critical accounting policies and estimates since they are very important to the portrayal of our financial condition and results and require our most subjective and complex judgments. We have discussed the development, selection and disclosure of such policies and estimates with the audit committee of our board of directors. For information about our significant accounting policies and accounting standards updates, see Notes to Consolidated Financial Statements[Note2Significant Accounting Policies](#Note2_SAP) and Notes to Consolidated Financial Statements[Note3Accounting Standards Updates](#Note3_ASU).
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. 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. Consequently, our income tax expense does not change proportionally with our income or loss before income taxes.
**Uncertain tax positions**We apply significant judgment to evaluate our tax positions based on the interpretation of tax laws in various jurisdictions and with the use of estimates and assumptions regarding significant future events, such as the amount, timing and character of income, deductions and tax credits. Our tax liability in any given year could be affected by changes in tax laws, regulations, agreements, and treaties, currency exchange restrictions or our level or profitability of operations in each jurisdiction. The tax laws relating to the offshore drilling industry in certain jurisdictions in which we operate are not well developed, requiring us to apply incremental judgment. Although we employ the best information available at the time we prepare our annual tax provision, a number of years may elapse before the tax liabilities in the various jurisdictions are ultimately determined.
Our tax returns are undergoing examinations in several taxing jurisdictions covering various years. We review our assets and liabilities on an ongoing basis and, to the extent audits or other events cause us to adjust our previously recognized assets or liabilities, we record those adjustments in the period of the event. Our potential tax liabilities are dependent on numerous factors that cannot be reasonably projected, including among others, the amount and nature of additional taxes potentially asserted by local tax authorities; the willingness of local tax authorities to negotiate a fair settlement through an administrative process; the impartiality of the local courts; and the potential for changes in the taxes paid to onecountry that either produce, or fail to produce, offsetting tax changes in other countries.
**Unrecognized tax benefits**We establish liabilities for estimated tax exposures, and we recognize the provisions and benefits resulting from changes to those liabilities, together with related interest and penalties, in income tax expense or benefit. Income tax exposure items primarily include potential challenges to permanent establishment or active trading positions, intercompany pricing, disposition transactions, and withholding tax rates and their applicability. Such tax 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 the tax jurisdictions or by judicial means. At December31, 2025 and 2024, we had unrecognized tax benefits of $302million and $414million, respectively, including interest and penalties, against which we recorded net operating loss deferred tax assets of $235million and $372million, respectively, resulting in net unrecognized tax benefits of $67million and $42million, respectively, including interest and penalties, that upon reversal would favorably impact our effective tax rate.
**Valuation allowance**We apply significant judgment to determine whether our deferred tax assets will be fully or partially realized. To evaluate our ability to realize deferred tax assets, we 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 to utilize our deferred tax assets. We record a valuation allowance for deferred tax assets when it is more likely than not that some or all of the benefit from the deferred tax asset will not be realized. For example, we may record a valuation allowance for deferred tax assets resulting from net operating losses incurred during the year in certain jurisdictions for which the benefit of the losses will not be realized or for foreign tax credit carryforwards that may expire prior to their utilization. During the years ended December31, 2025 and 2024, 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. See Notes to Consolidated Financial Statements[Note10Income Taxes](#Note11_IncTaxes).
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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 useful lives and salvage values. At December31, 2025 and 2024, the carrying amount of our property and equipment was $12.58billion and $15.83billion, respectively, representing 80percent and 82percent, respectively, of our total assets.
**Useful lives and salvage values**We depreciate our assets using the straight-line method over their estimated useful lives after allowing for salvage values. We estimate useful lives and salvage values by applying judgments and assumptions that reflect both historical experience and expectations regarding future operations, rig utilization and asset performance. Useful lives and salvage values of rigs are difficult to estimate due to a variety of factors, including (a)technological advances that impact the methods or cost of oil and gas exploration and development, (b)changes in market or economic conditions and (c)changes in laws or regulations affecting the drilling industry. Applying different judgments and assumptions in establishing the useful lives and salvage values would likely result in materially different net carrying amounts and depreciation expense for our assets. We reevaluate the remaining useful lives and salvage values of our rigs when certain events occur that directly impact the useful lives and salvage values of the rigs, including changes in operating condition, functional capability and market and economic factors. We may also consider major capital upgrades required to perform certain contracts and the long-term impact of those upgrades on future marketability. At December31, 2025, 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 $22million and a hypothetical one-year decrease would cause an increase in our annual depreciation expense of approximately $12million.
**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. Potential impairment indicators include rapid declines in commodity prices and related market conditions, declines in dayrates or utilization, cancellations of contracts or credit concerns of multiple customers. During periods of oversupply, we may idle or stack rigs for extended periods of time until market conditions change, or we may elect to sell certain rigs for scrap, which in combination with other indicators above, could be an indication that an asset group may be impaired since supply and demand are the key drivers of rig utilization and our ability to contract our rigs at economical rates. Our rigs are mobile units, equipped to operate in geographic regions throughout the world and, consequently, we may mobilize rigs from an oversupplied region to a more profitable and temporarily undersupplied region when it is economical to do so. Many of our contracts generally allow our customers to relocate our rigs from onegeographic region to another, subject to certain conditions, and our customers utilize this capability to meet their worldwide drilling requirements. Accordingly, our rigs are considered to be interchangeable within each asset group, and we evaluate impairment by asset group. We consider our asset groups to be ultra-deepwater floaters and harsh environment floaters.
We assess recoverability of assets held and used by projecting undiscounted cash flows for the asset group being evaluated. When the carrying amount of the asset group is determined to be unrecoverable, we recognize an impairment loss, measured as the amount by which the carrying amount of the asset group exceeds its estimated fair value. To estimate the fair value of each asset group, we apply a variety of valuation methods, incorporating income, market and cost approaches. We may weigh the approaches, under certain circumstances, when relevant data is limited, when results are inconclusive or when results deviate significantly. Our estimate of fair value generally requires us to use significant unobservable inputs, representative of Level3 fair value measurements, including assumptions related to the long-term future performance of our asset groups, such as projected revenues and costs, dayrates, rig utilization and revenue efficiency. These projections involve uncertainties that rely on assumptions about demand for our services, future market conditions and technological developments. Because our business is cyclical, the results of our impairment testing are expected to vary significantly depending on the timing of the assessment relative to the business cycle. Altering either the timing of or the assumptions used to estimate fair value and development of significant unanticipated changes to the assumptions could materially alter an outcome that could otherwise result in an impairment loss. 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.
We also consider a held-for-sale asset to be impaired to the extent its carrying amount exceeds its estimated fair value less cost to sell. In the years ended December31, 2025, 2024, and 2023, we recognized a loss of $3.05billion, $772million, and $57million, respectively, associated with the impairment of assets that we determined were impaired at the time we classified such assets as held for sale or we identified changes in circumstances that indicated assets previously classified as held for sale were further impaired. See Notes to Consolidated Financial Statements[Note6Long-Lived Assets](#Note7_LongLivedAssets).
Other Matters
Related party transactions
During the year ended December31, 2025, we entered into certain related party transactions with our unconsolidated affiliates. For additional information regarding our related party transactions, see Notes to Consolidated Financial Statements[Note4Unconsolidated Affiliates](#Note_UnconsolidatedAffiliates) and Notes to Consolidated Financial Statements[Note8Debt](#Note9_Debt).
Regulatory matters
We occasionally receive inquiries from governmental regulatory agencies regarding our operations around the world, including inquiries with respect to various tax, environmental, regulatory and compliance matters. To the extent appropriate under the circumstances,
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we investigate such matters, respond to such inquiries and cooperate with the regulatory agencies. See Notes to Consolidated Financial Statements[Note12Commitments and Contingencies](#Note13_CommAndConting).
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. From time to time, as a result of these changes, we may revise previously evaluated tax positions, which could cause us to adjust our recorded tax assets and liabilities. Tax authorities in certain jurisdictions are examining our tax returns and, in some cases, have issued assessments. We intend to defend our tax positions vigorously. Although we can provide no assurance as to the outcome of the aforementioned changes, examinations or assessments, we do not expect the ultimate liability to have a material adverse effect on our financial position or results of operations; however, it could have a material adverse effect on our cash flows. See Notes to Consolidated Financial Statements[Note10Income Taxes](#Note11_IncTaxes).
**Item7A.**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 our exchangeable bonds and currency exchange rate risk related to our international operations.
**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 following table presents information as of December31, 2025, for each of the fiveyears in the period ending December31, 2030 and thereafter (inmillions, except interest ratepercentages):
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Years ending December 31, | | | | | | | | | | | |
| | | 2026 | | 2027 | | 2028 | | 2029 | | 2030 | | Thereafter | | Total | | Fair value | | |
| Debt | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Fixed rate (USD) | | $ | 458 | | $ | 435 | | $ | 612 | | $ | 1,277 | | $ | 411 | | $ | 2,493 | | $ | 5,686 | | $ | 5,755 | | |
| Average interest rate | | | 7.26 | % | | 7.66 | % | | 7.90 | % | | 7.56 | % | | 8.75 | % | | 7.83 | % | | | | | | | |
At December31, 2025 and 2024, the fair value of our outstanding debt was $5.76billion and $6.89billion, respectively. During the year ended December31, 2025, the fair value of our debt decreased by $1.13billion due to the following: (a)a decrease of $1.07billion resulting from debt retired in tender offers, redemptions and repurchases, (b)a decrease of $484million resulting from scheduled repayments and (c)a decrease of $207million due to principal reduction of the 4.00% Exchangeable Bonds pursuant to the Exchange Agreements. These decreases were partially offset by the following: (a)an increase of $522million resulting from the issuance of 7.875%Senior Guaranteed Notes and (b)a net increase of $108million resulting from changes in the market prices of our outstanding debt. See Notes to Consolidated Financial Statements[Note8Debt](#Note9_Debt) and Notes to Consolidated Financial Statements[Note19Risk Concentration](#Note19_RiskConcentr).
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.
**Equity price risk**We are exposed to equity price risk primarily related to the bifurcated compound exchange feature contained within the indenture governing the 4.625%Exchangeable Bonds. The market price of our shares is the primary driver of the fair value of the exchange feature. At December31, 2025, the fair value of the bifurcated compound exchange feature was $126million. At December31, 2025, a 10percent hypothetical increase or decrease to the market price of our shares would result in a $30million increase or $21million decrease, respectively, to the carrying amount of the exchange feature, recorded as a component of our debt, and a corresponding adjustment to interest expense. See Notes to Consolidated Financial Statements[Note8Debt](#Note9_Debt) and Notes to Consolidated Financial Statements[Note19Risk Concentration](#Note19_RiskConcentr).
**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. We use a variety of techniques to minimize the exposure to currency exchange rate risk, including structuring customer payment terms and occasionally entering into forward exchange contracts. We structure customer contracts, as our primary tool to manage currency exchange rate risk, to provide for payment in both U.S. dollars and local currency where the local currency portion is based on our anticipated local currency requirements over the contract term. Due to various factors, including customer acceptance, local banking laws, national content requirements, other statutory requirements, currency liquidity, local inflation and revenue efficiency, actual local currency needs may vary from those realized in the customer contracts, resulting in partial exposure to currency exchange rate risk. 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[Note19Risk Concentration](#Note19_RiskConcentr).
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**Item8.**Financial Statements and Supplementary Data
Managements Report on Internal Control Over Financial Reporting
Management of TransoceanLtd. (the Company, we or our) is responsible for the integrity and objectivity of the financial information included in this annual report. We have prepared our financial statements in accordance with accounting principles generally accepted in the United States (U.S.), which require us to apply our best judgement to make estimates and assumptions for certain amounts. We are responsible for establishing and maintaining a system of internal controls and procedures to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the consolidated financial statements. Our internal control system is supported by a program of internal audits and appropriate reviews by management, written policies and guidelines, careful selection of qualified personnel, and a written Code of Integrity. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements and, even when determined to be effective, can only provide reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness in future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules13a-15(e) and 15d-15(e) under the U.S. Securities Exchange Act of1934. Management assessed the effectiveness of the Companys internal control over financial reporting as of December31, 2025. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission, as described in *Internal Control-Integrated Framework*, as published in 2013. Based on this assessment, management believes that the Company maintained effective internal control over financial reporting as of December31, 2025.
The Companys independent auditors, Ernst&YoungLLP, a registered public accounting firm, are appointed by the audit committee of the Companys board of directors, subject to ratification by our shareholders. Ernst&YoungLLP has audited and reported on the consolidated financial statements of TransoceanLtd. and subsidiaries, and the Companys internal control over financial reporting. The reports of the independent auditors are contained in this annual report.
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Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of TransoceanLtd.
**Opinion on Internal Control Over Financial Reporting**
We have audited TransoceanLtd. and subsidiaries internal control over financial reporting as of December31, 2025, based on criteria established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, TransoceanLtd. and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December31, 2025, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December31, 2025 and 2024, the related consolidated statements of operations, comprehensive loss, equity and cash flows for each of the threeyears in the period ended December31, 2025, and the related notes and financial statement schedule listed in the Index at Item15(a) and our report dated February23, 2026 expressed an unqualified opinion thereon.
**Basis for Opinion**
The Companys management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Managements Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Companys internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
**Definition and Limitations of Internal Control Over Financial Reporting**
A companys internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companys internal control over financial reporting includes those policies and procedures that (1)pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2)provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3)provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Houston, Texas
February23, 2026
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Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of TransoceanLtd.
**Opinion on the Financial Statements**
We have audited the accompanying consolidated balance sheets of TransoceanLtd. and subsidiaries (the Company) as of December31, 2025 and 2024, the related consolidated statements of operations, comprehensive loss, equity and cash flows for each of the threeyears in the period ended December31, 2025, and the related notes and financial statement schedule listed in the Index at Item15(a) (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December31, 2025 and 2024, and the results of its operations and its cash flows for each of the threeyears in the period ended December31, 2025, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December31, 2025, based on criteria established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013framework), and our report dated February23, 2026 expressed an unqualified opinion thereon.
**Basis for Opinion**
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Companys financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
**Critical Audit Matter**
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1)relates to accounts or disclosures that are material to the financial statements and (2)involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates.
| | | | |
| | | Income Taxes | |
| Description of the Matter | | As discussed in Notes2 and 10 to the consolidated financial statements, the Company operates in multiple jurisdictions through a complex operating structure and is subject to applicable tax laws or regulations in each jurisdiction where it operates. The Companys provision for income taxes is based on the tax laws and rates applicable in each jurisdiction. Auditing managements provision for income taxes and related deferred taxes was complex because of the Companys multi-national operating structure. In particular, a higher degree of auditor judgment was required to evaluate the completeness of the Companys deferred tax provision as a result of the Companys interpretation of tax law in certain jurisdictions across its multiple subsidiaries. | |
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| How We Addressed the Matter in Our Audit | | We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Companys income tax provision process, including controls over managements review of the identification of deferred income taxes and changes in the tax structure and tax laws and regulations that may impact the completeness of the Companys deferred income tax provision.Our audit procedures also included, among others, (i)obtaining an understanding of the Companys overall tax structure, evaluating changes in the Companys tax structure that occurred during the year as well as changes in tax law, and assessing the interpretation of those changes under the relevant jurisdictions tax law; (ii)utilizing tax resources with appropriate knowledge of local jurisdictional laws and regulations; and (iii)evaluating the completeness of deferred income taxes. | |
/s/ Ernst & Young LLP
We have served as the Companys auditor since 1999.
Houston, Texas
February23, 2026
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TRANSOCEANLTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(inmillions, except per share data)
| | | | | | | | | | | | |
| | | Years ended December31, | | |
| | | 2025 | | 2024 | | 2023 | | |
| | | | | | | | | | | | |
| Contract drilling revenues | | $ | 3,965 | | $ | 3,524 | | $ | 2,832 | | |
| | | | | | | | | | | | |
| Costs and expenses | | | | | | | | | | | |
| Operating and maintenance | | | 2,406 | | | 2,199 | | | 1,986 | | |
| Depreciation and amortization | | | 659 | | | 739 | | | 744 | | |
| General and administrative | | | 195 | | | 214 | | | 187 | | |
| | | | 3,260 | | | 3,152 | | | 2,917 | | |
| | | | | | | | | | | | |
| Loss on impairment of assets | | | (3,049) | | | (772) | | | (57) | | |
| Gain (loss) on disposal of assets, net | | | 7 | | | (17) | | | (183) | | |
| Operating loss | | | (2,337) | | | (417) | | | (325) | | |
| | | | | | | | | | | | |
| Other income (expense), net | | | | | | | | | | | |
| Interest income | | | 40 | | | 50 | | | 52 | | |
| Interest expense, net of amounts capitalized | | | (555) | | | (362) | | | (646) | | |
| Gain (loss) on retirement of debt | | | 3 | | | 161 | | | (31) | | |
| Other, net | | | (99) | | | 45 | | | 9 | | |
| | | | (611) | | | (106) | | | (616) | | |
| | | | | | | | | | | | |
| Loss before income taxes | | | (2,948) | | | (523) | | | (941) | | |
| Income tax expense (benefit) | | | (33) | | | (11) | | | 13 | | |
| | | | | | | | | | | | |
| Net loss | | | (2,915) | | | (512) | | | (954) | | |
| Net income attributable to noncontrolling interest | | | | | | | | | | | |
| Net loss attributable to controlling interest | | $ | (2,915) | | $ | (512) | | $ | (954) | | |
| | | | | | | | | | | | |
| Loss per share | | | | | | | | | | | |
| Basic | | $ | (3.04) | | $ | (0.60) | | $ | (1.24) | | |
| Diluted | | $ | (3.04) | | $ | (0.76) | | $ | (1.24) | | |
| | | | | | | | | | | | |
| Weighted-average shares outstanding | | | | | | | | | | | |
| Basic | | | 960 | | | 850 | | | 768 | | |
| Diluted | | | 960 | | | 925 | | | 768 | | |
See accompanying notes.
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TRANSOCEANLTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(inmillions)
| | | | | | | | | | | | |
| | | Years ended December31, | | |
| | | 2025 | | 2024 | | 2023 | | |
| | | | | | | | | | | | |
| Net loss | | $ | (2,915) | | $ | (512) | | $ | (954) | | |
| Net income attributable to noncontrolling interest | | | | | | | | | | | |
| Net loss attributable to controlling interest | | | (2,915) | | | (512) | | | (954) | | |
| | | | | | | | | | | | |
| Components of net periodic benefit costs before reclassifications | | | (9) | | | 37 | | | 6 | | |
| Components of net periodic benefit costs reclassified to net loss | | | 1 | | | 2 | | | | | |
| Other comprehensive income (loss) before income taxes | | | (8) | | | 39 | | | 6 | | |
| Income taxes related to other comprehensive income (loss) | | | | | | | | | 2 | | |
| | | | | | | | | | | | |
| Other comprehensive income (loss) | | | (8) | | | 39 | | | 8 | | |
| Other comprehensive income attributable to noncontrolling interest | | | | | | | | | | | |
| Other comprehensive income (loss) attributable to controlling interest | | | (8) | | | 39 | | | 8 | | |
| | | | | | | | | | | | |
| Total comprehensive loss | | | (2,923) | | | (473) | | | (946) | | |
| Total comprehensive income attributable to noncontrolling interest | | | | | | | | | | | |
| Total comprehensive loss attributable to controlling interest | | $ | (2,923) | | $ | (473) | | $ | (946) | | |
See accompanying notes.
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TRANSOCEANLTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(inmillions, except share data)
| | | | | | | | | |
| | | December31, | | |
| | | 2025 | | 2024 | | |
| Assets | | | | | | | | |
| Cash and cash equivalents | | $ | 620 | | $ | 560 | | |
| Accounts receivable, net | | | 540 | | | 564 | | |
| Materials and supplies, net | | | 378 | | | 439 | | |
| Assets held for sale | | | 24 | | | 343 | | |
| Restricted cash and cash equivalents | | | 377 | | | 381 | | |
| Other current assets | | | 142 | | | 165 | | |
| Total current assets | | | 2,081 | | | 2,452 | | |
| | | | | | | | | |
| Property and equipment | | | 17,451 | | | 22,417 | | |
| Less accumulated depreciation | | | (4,874) | | | (6,586) | | |
| Property and equipment, net | | | 12,577 | | | 15,831 | | |
| | | | | | | | | |
| Deferred tax assets, net | | | 61 | | | 45 | | |
| Other assets | | | 923 | | | 1,043 | | |
| Total assets | | $ | 15,642 | | $ | 19,371 | | |
| | | | | | | | | |
| Liabilities and equity | | | | | | | | |
| Accounts payable | | $ | 242 | | $ | 255 | | |
| Accrued income taxes | | | 22 | | | 31 | | |
| Debt due within oneyear | | | 445 | | | 686 | | |
| Other current liabilities | | | 627 | | | 691 | | |
| Total current liabilities | | | 1,336 | | | 1,663 | | |
| | | | | | | | | |
| Long-term debt | | | 5,212 | | | 6,195 | | |
| Deferred tax liabilities, net | | | 404 | | | 499 | | |
| Other long-term liabilities | | | 582 | | | 729 | | |
| Total long-term liabilities | | | 6,198 | | | 7,423 | | |
| | | | | | | | | |
| Commitments and contingencies | | | | | | | | |
| | | | | | | | | |
| Shares, $0.10 par value, 1,204,009,681 authorized, 141,262,093 conditionally authorized, 1,204,009,681 issued | | | | | | | | |
| and 1,101,528,481 outstanding at December 31, 2025, and 1,057,879,029 authorized, 141,262,093 conditionally | | | | | | | | |
| authorized, 940,828,901 issued and 875,830,772 outstanding at December 31, 2024 | | | 110 | | | 87 | | |
| Additional paid-in capital | | | 15,604 | | | 14,880 | | |
| Accumulated deficit | | | (7,460) | | | (4,545) | | |
| Accumulated other comprehensive loss | | | (146) | | | (138) | | |
| Total controlling interest shareholders equity | | | 8,108 | | | 10,284 | | |
| Noncontrolling interest | | | | | | 1 | | |
| Total equity | | | 8,108 | | | 10,285 | | |
| Total liabilities and equity | | $ | 15,642 | | $ | 19,371 | | |
See accompanying notes.
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TRANSOCEANLTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY
(inmillions)
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | Years ended December31, | | Years ended December31, | |
| | | 2025 | | 2024 | | 2023 | | 2025 | | 2024 | | 2023 | | |
| |
| | | Quantity | | Amount | | |
| Shares | | | | | | | | | | | | | | | | | |
| Balance, beginning of period | | 876 | | 809 | | 722 | | $ | 87 | | $ | 81 | | $ | 71 | | |
| Issuance of shares | | 226 | | 67 | | 87 | | | 23 | | | 6 | | | 10 | | |
| Balance, end of period | | 1,102 | | 876 | | 809 | | $ | 110 | | $ | 87 | | $ | 81 | | |
| | | | | | | | | | | | | | | | | | |
| Additional paid-in capital | | | | | | | | | | | | | | | | | |
| Balance, beginning of period | | | | | | | | $ | 14,880 | | $ | 14,544 | | $ | 13,984 | | |
| Share-based compensation | | | | | | | | | 35 | | | 47 | | | 40 | | |
| Issuance of shares | | | | | | | | | 689 | | | 289 | | | 520 | | |
| Balance, end of period | | | | | | | | $ | 15,604 | | $ | 14,880 | | $ | 14,544 | | |
| | | | | | | | | | | | | | | | | | |
| Accumulated deficit | | | | | | | | | | | | | | | | | |
| Balance, beginning of period | | | | | | | | $ | (4,545) | | $ | (4,033) | | $ | (3,079) | | |
| Net loss attributable to controlling interest | | | | | | | | | (2,915) | | | (512) | | | (954) | | |
| Balance, end of period | | | | | | | | $ | (7,460) | | $ | (4,545) | | $ | (4,033) | | |
| | | | | | | | | | | | | | | | | | |
| Accumulated other comprehensive loss | | | | | | | | | | | | | | | | | |
| Balance, beginning of period | | | | | | | | $ | (138) | | $ | (177) | | $ | (185) | | |
| Other comprehensive income (loss) attributable to controlling interest | | | | | | | | | (8) | | | 39 | | | 8 | | |
| Balance, end of period | | | | | | | | $ | (146) | | $ | (138) | | $ | (177) | | |
| | | | | | | | | | | | | | | | | | |
| Total controlling interest shareholders equity | | | | | | | | | | | | | | | | | |
| Balance, beginning of period | | | | | | | | $ | 10,284 | | $ | 10,415 | | $ | 10,791 | | |
| Total comprehensive loss attributable to controlling interest | | | | | | | | | (2,923) | | | (473) | | | (946) | | |
| Share-based compensation | | | | | | | | | 35 | | | 47 | | | 40 | | |
| Issuance of shares | | | | | | | | | 712 | | | 295 | | | 530 | | |
| Balance, end of period | | | | | | | | $ | 8,108 | | $ | 10,284 | | $ | 10,415 | | |
| | | | | | | | | | | | | | | | | | |
| Noncontrolling interest | | | | | | | | | | | | | | | | | |
| Balance, beginning of period | | | | | | | | $ | 1 | | $ | 1 | | $ | 1 | | |
| Distribution to holder of noncontrolling interest | | | | | | | | | (1) | | | | | | | | |
| Balance, end of period | | | | | | | | $ | | | $ | 1 | | $ | 1 | | |
| | | | | | | | | | | | | | | | | | |
| Total equity | | | | | | | | | | | | | | | | | |
| Balance, beginning of period | | | | | | | | $ | 10,285 | | $ | 10,416 | | $ | 10,792 | | |
| Total comprehensive loss | | | | | | | | | (2,923) | | | (473) | | | (946) | | |
| Share-based compensation | | | | | | | | | 35 | | | 47 | | | 40 | | |
| Issuance of shares | | | | | | | | | 712 | | | 295 | | | 530 | | |
| Distribution to holder of noncontrolling interest | | | | | | | | | (1) | | | | | | | | |
| Balance, end of period | | | | | | | | $ | 8,108 | | $ | 10,285 | | $ | 10,416 | | |
See accompanying notes.
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TRANSOCEANLTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(inmillions)
| | | | | | | | | | | | |
| | | Years ended December31, | | |
| | | 2025 | | 2024 | | 2023 | | |
| Cash flows from operating activities | | | | | | | | | | | |
| Net loss | | $ | (2,915) | | $ | (512) | | $ | (954) | | |
| Adjustments to reconcile to net cash provided by operating activities: | | | | | | | | | | | |
| Amortization of contract intangible asset | | | | | | 4 | | | 52 | | |
| Depreciation and amortization | | | 659 | | | 739 | | | 744 | | |
| Share-based compensation expense | | | 35 | | | 47 | | | 40 | | |
| Loss on impairment of assets | | | 3,049 | | | 772 | | | 57 | | |
| (Gain) loss on disposal of assets, net | | | (7) | | | 17 | | | 183 | | |
| Amortization of debt-related balances, net | | | 48 | | | 53 | | | 51 | | |
| (Gain) loss on adjustment to bifurcated compound exchange feature | | | (10) | | | (214) | | | 127 | | |
| (Gain) loss on retirement of debt | | | (3) | | | (161) | | | 31 | | |
| Loss on conversion of debt to equity | | | 99 | | | | | | 27 | | |
| Loss on impairment of investment in unconsolidated affiliate | | | | | | 5 | | | 5 | | |
| Deferred income tax expense (benefit) | | | (111) | | | (42) | | | 18 | | |
| Other, net | | | 14 | | | (19) | | | (1) | | |
| Changes in contract liabilities, net | | | (170) | | | 45 | | | 70 | | |
| Changes in deferred costs, net | | | 86 | | | (2) | | | (190) | | |
| Changes in other operating assets and liabilities, net | | | (25) | | | (285) | | | (96) | | |
| Net cash provided by operating activities | | | 749 | | | 447 | | | 164 | | |
| | | | | | | | | | | | |
| Cash flows from investing activities | | | | | | | | | | | |
| Capital expenditures | | | (123) | | | (254) | | | (427) | | |
| Investment in loans to unconsolidated affiliates | | | | | | (3) | | | (3) | | |
| Investment in equity of unconsolidated affiliates | | | | | | | | | (10) | | |
| Proceeds from disposal of assets, net of costs to sell | | | 84 | | | 101 | | | 10 | | |
| Proceeds from disposal of equity investment in unconsolidated affiliate | | | 6 | | | | | | | | |
| Cash acquired in acquisition of unconsolidated affiliates | | | | | | 5 | | | 7 | | |
| Net cash used in investing activities | | | (33) | | | (151) | | | (423) | | |
| | | | | | | | | | | | |
| Cash flows from financing activities | | | | | | | | | | | |
| Repayments of debt | | | (1,556) | | | (2,103) | | | (1,717) | | |
| Proceeds from issuance of debt, net of issue costs | | | 492 | | | 1,770 | | | 1,983 | | |
| Proceeds from issuance of shares, net of issue costs | | | 421 | | | | | | | | |
| Other, net | | | (17) | | | (17) | | | (3) | | |
| Net cash provided by (used in) financing activities | | | (660) | | | (350) | | | 263 | | |
| | | | | | | | | | | | |
| Net increase (decrease) in unrestricted and restricted cash and cash equivalents | | | 56 | | | (54) | | | 4 | | |
| Unrestricted and restricted cash and cash equivalents, beginning of period | | | 941 | | | 995 | | | 991 | | |
| Unrestricted and restricted cash and cash equivalents, end of period | | $ | 997 | | $ | 941 | | $ | 995 | | |
See accompanying notes.
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TRANSOCEANLTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note1Business
Overview
TransoceanLtd. (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. As of December31, 2025, we owned or had partial ownership interests in and operated a fleet of 27mobile offshore drilling units, consisting of 20ultra-deepwater drillships and sevenharsh environment semisubmersibles.
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. Our drilling fleet is oneof 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.
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. The location of our rigs and the allocation of our resources to build or upgrade rigs are determined by the activities and needs of our customers. See [Note15Supplemental Segment Information](#Note15_SupplementalSegmentInfo).
Agreement to acquire ValarisLimited
On February9, 2026, we and ValarisLimited, an exempted company limited by shares incorporated under the laws of Bermuda ("Valaris"), entered into a Business Combination Agreement (the "Agreement") providing for the combination of Transocean and Valaris (the "Business Combination"). Pursuant to the Agreement, and on the terms and subject to the conditions thereof, we will acquire all of the issued and outstanding common shares, par value $0.01each, of Valaris (the Valaris Shares) in exchange for TransoceanLtd. shares, par value $0.10each, at an exchange ratio of 15.235TransoceanLtd. shares for each Valaris Share. Pursuant to the Agreement, and on the terms and subject to the conditions thereof, at the time on which the order of the Supreme Court of Bermuda providing for its sanction of the Scheme of Arrangement is filed with the Registrar of Companies of Bermuda, the Business Combination will become effective and Valaris will become our wholly owned subsidiary. The board of directors of Transocean and Valaris each unanimously approved and declared advisable the Agreement and the transactions contemplated thereby, including the Business Combination.
Note2Significant Accounting Policies
**Accounting estimates**To prepare financial statements in accordance with accounting principles generally accepted in the United States (U.S.), we must make judgments by applying estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosures of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates and assumptions, including those related to our income taxes, property and equipment, equity investments, contingencies, allowance for excess materials and supplies, assets held for sale, postemployment benefit plans and share-based compensation. We base our estimates and assumptions on historical experience and other factors that we believe are reasonable. Actual results could differ from such estimates.
**Fair value measurements**We estimate fair value at an exchange price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. Our valuation techniques require inputs that we categorize using a three-level hierarchy, from highest to lowest level of observable inputs, as follows: (1)significant observable inputs, including unadjusted quoted prices for identical assets or liabilities in active markets (Level1), (2)significant other observable inputs, including direct or indirect market data for similar assets or liabilities in active markets or identical assets or liabilities in less active markets (Level2) and (3)significant unobservable inputs, including those that require considerable judgment for which there is little or no market data (Level3). When a valuation requires multiple input levels, we categorize the entire fair value measurement according to the lowest level of input that is significant to the measurement even though we may have also utilized significant inputs that are more readily observable.
**Consolidation**We consolidate entities in which we have a majority voting interest and entities that meet the criteria for variable interest entities for which we are deemed to be the primary beneficiary for accounting purposes. We eliminate intercompany transactions and accounts in consolidation. We apply the equity method of accounting for an equity investment in an unconsolidated entity if we have the ability to exercise significant influence over the entity that (a)does not meet the variable interest entity criteria or (b)meets the variable interest entity criteria, but for which we are not deemed to be the primary beneficiary. We measure other equity investments at fair value if the investment has a fair value that is readily determinable; otherwise, we measure the investment at cost, less any impairment. We separately present within equity on our consolidated balance sheets the ownership interests attributable to parties with noncontrolling interests in our consolidated subsidiaries, and we separately present net income attributable to such parties on our consolidated statements of operations. See [Note4Unconsolidated Affiliates](#Note_UnconsolidatedAffiliates)and [Note13Equity](#Note14_Equity).
**Functional currency**We consider the U.S. dollar to be the functional currency for all of our operations since the majority of our revenues and expenditures are denominated in U.S. dollars. Consequently, our exposure to currency exchange rate fluctuations is limited.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTScontinued
We recognize currency exchange rate gains and losses in other, net. In the years ended December31, 2025, 2024 and 2023, we recognized a net loss of $13million, a net gain of $16million and a net gain of $10million, respectively, related to currency exchange rates.
**Revenues and related pre-operating costs**We recognize revenues earned under our drilling contracts based on variable dayrates, which range from a full operating dayrate to lower rates or zero rates for periods when drilling operations are interrupted or restricted, based on the specific activities we perform during the contract on an hourly, or more frequent, basis. Such dayrate consideration is attributed to the distinct time period to which it relates within the contract term, and therefore, is recognized as we perform the services. When the operating dayrate declines over the contract term, we recognize revenues on a straight-line basis over the estimated contract period. We recognize reimbursement revenues and the corresponding costs as we provide the customer-requested goods and services, when such reimbursable costs are incurred while performing drilling operations. Prior to performing drilling operations, we may receive pre-operating revenues, on either a fixed lump-sum or variable dayrate basis, for mobilization, contract preparation, customer-requested goods and services or capital upgrades, for which we record a contract liability and recognize as revenues on a straight-line basis over the estimated contract period. We recognize losses for loss contracts as such losses are incurred. We recognize revenues for demobilization over the contract period unless otherwise constrained. We recognize revenues from contract terminations as we fulfill our obligations and all contingencies have been resolved. We apply the optional exemption that permits us to exclude disclosure of the estimated transaction price related to the variable portion of unsatisfied performance obligations at the end of the reporting period, as our transaction price is typically based on a single performance obligation consisting of a series of distinct hourly, or more frequent, periods, the variability of which will be resolved at the time of the future services.
To obtain contracts with our customers, we incur pre-operating costs to prepare a rig for contract and mobilize a rig to the drilling location. We defer such pre-operating contract preparation and mobilization costs for recognition in operating and maintenance costs over the estimated contract period on a straight-line basis, consistent with the general pace of activity. See [Note5Revenues](#Note5_Revenues).
**Income taxes**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. We recognize the effect of changes in tax laws as of the date of enactment. We recognize potential global intangible low-taxed income inclusions as a period cost.
We establish liabilities for estimated tax exposures, and we recognize the provisions and benefits resulting from changes to those liabilities, together with related interest and penalties, in income tax expense or benefit. Income tax exposure items include potential challenges to permanent establishment positions, intercompany pricing, disposition transactions, and withholding tax rates and their applicability. Such tax 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 the tax jurisdictions or by judicial means.
We measure deferred tax assets and liabilities using enacted tax rates that will apply in the years in which the deferred tax assets and liabilities are expected to be recovered or paid. To evaluate our ability to realize deferred tax assets, we consider all available positive and negative evidence, including projected future taxable income and the existence of cumulative losses in recent years. We record a valuation allowance for deferred tax assets when it is more likely than not that some or all of the benefit from the deferred tax asset will not be realized. For example, we may record a valuation allowance for deferred tax assets resulting from net operating losses incurred during the year in certain jurisdictions for which the benefit of the losses will not be realized or for foreign tax credit carryforwards that may expire prior to their utilization. See [Note10Income Taxes](#Note11_IncTaxes).
**Cash and cash equivalents**We consider cash equivalents to include highly liquid debt instruments with original maturities of threemonths or less, such as time deposits with commercial banks that have high credit ratings, U.S. Treasury and government securities, Eurodollar time deposits, certificates of deposit and commercial paper. We may also invest excess funds in no-load, open-ended, management investment trusts. Such management trusts invest exclusively in high-quality money market instruments.
**Restricted cash and cash equivalents**We maintain restricted cash and cash equivalents that are either pledged for debt service under certain bond indentures, as required under certain bank credit arrangements, or held in accounts that are subject to restrictions due to legislation, regulation or court order. We classify such restricted cash and cash equivalents in current assets if the restriction is expected to expire or otherwise be resolved within oneyear or if such funds are considered to correspond to liabilities that are properly classified as current liabilities. See [Note8Debt](#Note9_Debt).
**Materials and supplies**We record materials and supplies at their average cost less an allowance for excess items. We estimate the allowance for excess items based on historical experience and expectations for future use of the materials and supplies. At December31, 2025 and 2024, our allowance for excess items was $140million and $178million, respectively. The decrease was primarily due to the disposal of materials and supplies associated with rigs and related assets sold or classified as held for sale.
**Assets held for sale**We classify an asset as held for sale when the facts and circumstances meet the criteria for such classification, including the following: (a)we have committed to a plan to sell the asset, (b)the asset is available for immediate sale, (c)we have initiated actions to complete the sale, including locating a buyer, (d)the sale is expected to be completed within oneyear, (e)the asset is being actively marketed at a price that is reasonable relative to its fair value, and (f)the plan to sell is unlikely to be subject to significant changes or termination. The carrying amount of our assets held for sale is measured at the lower of its carrying amount or fair value less
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTScontinued
cost to sell. We consider a held-for-sale asset to be impaired to the extent its carrying amount exceeds its estimated fair value less cost to sell. See [Note6Long-Lived Assets](#Note7_LongLivedAssets).
**Property and equipment**We apply 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. We base our estimates and assumptions on historical experience and expectations regarding future industry conditions and operations. At December31, 2025, the aggregate carrying amount of our property and equipment represented 80percent of our total assets.
We capitalize expenditures for newbuilds, renewals, replacements and improvements, including capitalized interest, if applicable, and we recognize the expense for maintenance and repair costs as incurred. For newbuild construction projects, we also capitalize the initial preparation, mobilization and commissioning costs incurred until the drilling unit is placed into service. Upon sale or other disposition of an asset, we recognize a net gain or loss on disposal of the asset, which is measured as the difference between the net carrying amount of the asset and the net proceeds received. We compute depreciation using the straight-line method after allowing for salvage values.
The estimated original useful life of our drilling units is 35years, our buildings and improvements range from threeto 30years and our machinery and equipment range from fourto 20years. We reevaluate the remaining useful lives and salvage values of our rigs when certain events occur that directly impact the useful lives and salvage values of the rigs, including changes in operating condition, functional capability and market and economic factors. When evaluating the remaining useful lives of rigs, we also consider major capital upgrades required to perform certain contracts and the long-term impact of those upgrades on future marketability.
**Long**-**lived asset impairment**We review the carrying amounts of long-lived assets, including property and equipment and right-of-use assets, for potential impairment when events occur or circumstances change that indicate that the carrying amount of such assets may not be recoverable. For assets classified as held and used, we determine recoverability by evaluating the estimated undiscounted future net cash flows based on projected dayrates and utilization of the asset group under review. We consider our asset groups to be ultra-deepwater floaters and harsh environment floaters. When an impairment of an asset group is indicated, we measure an impairment as the amount by which the carrying amount of the asset group exceeds its estimated fair value. We estimate the fair value of an asset group by applying a variety of valuation methods, incorporating a combination of income, market and cost approaches, using projected discounted cash flows and estimates of the exchange price that would be received for the assets in the principal or most advantageous market for the assets in an orderly transaction between market participants as of the measurement date. See[Note6LongLived Assets](#Note7_LongLivedAssets).
**Equity investments and impairment**We review our equity-method investments, and other equity investments for which a readily determinable fair value is not available, 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. If we determine that an impairment that is other than temporary exists, we recognize an impairment loss, measured as the amount by which the carrying amount of the investment exceeds its estimated fair value. To estimate the fair value of the investment, we apply valuation methods that rely primarily on the income and market approaches. We amortize the basis difference caused by such impairments using the straight-line method over the estimated life of the asset. See [Note4Unconsolidated Affiliates](#Note_UnconsolidatedAffiliates).
**Pension and other postemployment benefit plans**We use a measurement date of January1 to determine net periodic benefit costs and December31 to determine plan benefit obligations and the fair values of plan assets. We determine our net periodic benefit costs based on a market-related value of assets that reduces year-to-year volatility by including investment gains or losses subject to amortization over a five-year period from the year in which they occur. We calculate investment gains or losses for this purpose as the difference between the expected return calculated using the market-related value of assets and the actual return based on the market-related value of assets. If gains or losses exceed 10percent of the greater of plan assets or plan liabilities, we amortize such gains or losses over the average expected future lifetime of the participants.
We measure the actuarially determined obligations and related costs for our defined benefit pension and other postemployment benefit plans, retiree life insurance and medical benefits, by applying assumptions, the most significant of which include long-term rate of return on plan assets, discount rates and mortality rates. For the long-term rate of return, we develop our assumptions regarding the expected rate of return on plan assets based on projected long-term investment returns, and we weight the assumptions based on each plans asset allocation. For the discount rate, we base our assumptions on a yield curve approach using Aa-rated corporate bonds and the expected timing of future benefit payments. At December31, 2025 and 2024, the funded status of our pension and other postemployment benefit plans represented an aggregate liability of $105million and $104million, respectively, and an aggregate asset of $78million and $73million, respectively. See [Note9Benefit Plans](#Note10_PostemploymentBenef).
**Share**-**based compensation**To measure the fair values of granted or modified service-based restricted share units, we use the market price of our shares on the grant date or modification date. To measure the fair values of granted or modified performance-based restricted share units subject to market factors, we use an average price at the performance start date and project performance based on a Monte Carlo simulation model under a risk-neutral approach and apply assumptions for the expected life, risk-free interest rate, expected volatility and dividend yield. To measure the fair values of granted or modified performance-based restricted share units that are subject to performance targets, we use the market price of our shares on the grant date or modification date and adjust the value for the projected performance rate expected to be achieved at the end of the measurement period. We recognize share-based compensation expense in the
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTScontinued
same financial statement line item as cash compensation paid to the respective employees or non-employee directors. We recognize such compensation expense on a straight-line basis over the service period through the date the employee or non-employee director is no longer required to provide service to earn the award. See [Note14ShareBased Compensation](#Note15_ShareBasedComp).
**Contingencies**We assess our contingencies on an ongoing basis to evaluate the appropriateness of our liabilities and disclosures for such contingencies. We establish liabilities for estimated loss contingencies when we believe a loss is probable and the amount of the probable loss can be reasonably estimated. Once established, we adjust the carrying amount of a contingent liability upon the occurrence of a recognizable event when facts and circumstances change, altering our previous assumptions with respect to the likelihood or amount of loss. We recognize corresponding assets for those loss contingencies that we believe are probable of being recovered through insurance. We recognize expense for legal costs as they are incurred, and we recognize a corresponding asset for such legal costs only if we expect such legal costs to be recovered through insurance.
Note3Accounting Standards Updates
Recently adopted accounting standards
**Income taxes**Effective for the year ended December31, 2025, we adopted the accounting standards update that requires significant incremental disclosures intended to enhance the transparency and decision-usefulness of income tax disclosures, particularly with regard to the effective tax rate reconciliation table and income taxes paid. We have provided new disclosures, as required, presented on a prospective basis in our notes to consolidated financial statements. [See Note10Income Taxes](#Note11_IncTaxes).
Recently issued accounting standards updates not yet adopted
**Disaggregated income statement expenses**Effective for the year ending December31, 2027, we will adopt the accounting standards update that requires, in the notes to consolidated financial statements, disaggregated disclosures of certain categories of expenses that are included in expense line items on the face of the consolidated statements of operations. The disclosures will be required on an annual and interim basis. We will provide the new disclosures, as required, for annual periods beginning with our annual report on Form10-K for the year ending December31, 2027, and subsequently, for interim periods beginning with our quarterly report on Form10-Q for the quarterly period ending March31, 2028. We continue to evaluate the requirements. Although our adoption will require us to augment certain disclosures in the notes to consolidated financial statements, we do not expect such adoption to have a material effect on our consolidated statements of financial position, operations or cash flows.
Note4Unconsolidated Affiliates
Equity investments
**Overview**At December31, 2025, we hold equity investments in certain unconsolidated companies, including (a)our 16percent ownership interest in Global Sea Mineral ResourcesNV (together with its subsidiaries, GSR), a 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, (b)our 19percent ownership interest in Ocean MineralsLLC, the parent company of Moana MineralsLtd., a Cook Islands subsea resource development company that intends to explore and collect polymetallic nodules, and (c)our ownership interests in other companies involved in researching and developing technology to improve efficiency, reliability, sustainability and safety for drilling and other activities. In the years ended December31, 2025, 2024 and 2023, we recognized income of $1million, income of $4million and a loss of $14million, respectively, recorded in other, net, associated with equity in earnings or losses of our equity investments. At December31, 2025 and 2024, the aggregate carrying amount of our equity investments was $121million and $123million, respectively, recorded in other assets.
**Contributions**In February2023, we acquired a noncontrolling interest in GSR in exchange for a cash contribution of $10million and a non-cash contribution of the ultra-deepwater floater *OceanRigOlympia*, which had been cold stacked, and related assets, with an estimated fair value of $85million (see [Note6Long-Lived Assets](#Note7_LongLivedAssets)). We estimated the fair value of the rig using projected discounted cash flows, and our estimate required us to use significant unobservable inputs, representative of Level3 fair value measurements, including assumptions related to future performance of the rig, projected demand for its services, rig availability and dayrates.
**Acquisition**In June2024, we acquired the outstanding 67.0percent ownership interest in Orion Holdings (Cayman)Limited (together with its subsidiary, Orion), the Cayman Islands company that owned the harsh environment floater *TransoceanNorge*, in a noncash transaction. Prior to this transaction, we held a 33.0percent noncontrolling interest in Orion and the aggregate carrying amount of our investment was $86million. To acquire Orion, we issued 55.5million TransoceanLtd. shares and $130million aggregate principal amount of 8.00%senior notes due February2027 (the 8.00%Senior Notes) with an aggregate fair value of $431million. As a result, Orion became our wholly owned subsidiary. We recorded the transaction using the asset acquisition method of accounting. See [Note6Long Lived Assets](#Note7_LongLivedAssets), [Note8Debt](#Note9_Debt) and [Note13Equity](#Note14_Equity).
**Impairments**In the year ended December31, 2024, we recognized a loss of $5million, which had no tax effect, recorded in other, net, associated with the other-than-temporary impairment of the carrying amount of certain equity investments.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTScontinued
Related party transactions
**Acquisition**In September2023, we acquired the outstanding ownership interest in Liquila Ventures Ltd. (together with its subsidiaries, Liquila), a previously unconsolidated Bermuda company, that was constructing the ultra-deepwater floater *DeepwaterAquila*. Prior to this transaction, we and Perestroika (Cyprus)Ltd (together with its subsidiaries, Perestroika), an entity affiliated with one of our directors that beneficially owns approximately ninepercent of our shares, held a noncontrolling interest of 20percent and 13percent, respectively, in Liquila. To acquire the outstanding 80percent ownership interest in Liquila, we issued 11.9million TransoceanLtd. shares with an aggregate value of $99million, including 2.0million TransoceanLtd. shares with an aggregate value of $16million issued to Perestroika. As a result, Liquila became our wholly owned subsidiary. We recorded the transaction using the asset acquisition method of accounting. See [Note6Long Lived Assets](#Note7_LongLivedAssets) and [Note13Equity](#Note14_Equity).
**Operating and lending activities**We procure and provide services and equipment from and to our unconsolidated affiliates for technological innovation and subsea minerals exploration, and we occasionally provide loans to our unconsolidated affiliates. In the years ended December31, 2025, 2024 and 2023, we made an aggregate cash payment of $12million, $14million and $12million, respectively, to our unconsolidated affiliates primarily for equipment and for research and development. At December31, 2025 and 2024, the aggregate carrying amount of balances due to us under certain financing arrangements with our unconsolidated affiliates was $8million and $10million, respectively, recorded in other assets.
In the years ended December31, 2024 and 2023, we received an aggregate cash payment of $11million and $49million, respectively, for services and equipment provided to, and prior to our acquisition of, Orion. In the years ended December31, 2024, and 2023, we recognized rent expense of $25million and $26million, respectively, recorded in operating and maintenance costs, and made an aggregate cash payment of $25million and $27million, respectively, to charter the rig and rent other equipment from, and prior to our acquisition of, Orion. Additionally, in the year ended December31, 2023, we and Orion agreed to the non-cash net settlement of a balance of $25million of accounts receivable and payable.
Note5Revenues
**Overview**We earn revenues primarily by performing the following activities: (i)providing our drilling rig, together with the work crews, related equipment and services necessary to operate the rig, (ii)providing certain pre-operating activities, including rig preparation and equipment modifications required for the contract, and (iii)delivering the drilling rig by mobilizing to and demobilizing from the drill location. For most of our contracts with customers, our drilling services represent a single performance obligation that is satisfied over time, the duration of which varies by contract. As of December31, 2025, the drilling contract with the longest expected remaining duration, excluding unexercised options, extends through May2030.
**Disaggregation**Our contract drilling revenues, disaggregated by asset group and by country in which they were earned, were as follows (inmillions):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Year ended December31,2025 | | Year ended December31,2024 | | Year ended December31,2023 | | |
| | | Ultra- | | Harsh | | | | Ultra- | | Harsh | | | | Ultra- | | Harsh | | | | |
| | | deepwater | | environment | | | | deepwater | | environment | | | | deepwater | | environment | | | | |
| | | floaters | | floaters | | Total | | floaters | | floaters | | Total | | floaters | | floaters | | Total | | |
| U.S. | | $ | 1,635 | | $ | | | $ | 1,635 | | $ | 1,566 | | $ | | | $ | 1,566 | | $ | 1,433 | | $ | | | $ | 1,433 | | |
| Brazil | | | 872 | | | | | | 872 | | | 727 | | | | | | 727 | | | 298 | | | | | | 298 | | |
| Norway | | | | | | 639 | | | 639 | | | | | | 654 | | | 654 | | | | | | 603 | | | 603 | | |
| Other countries (a) | | | 270 | | | 549 | | | 819 | | | 225 | | | 352 | | | 577 | | | 341 | | | 157 | | | 498 | | |
| Total contract drilling revenues | | $ | 2,777 | | $ | 1,188 | | $ | 3,965 | | $ | 2,518 | | $ | 1,006 | | $ | 3,524 | | $ | 2,072 | | $ | 760 | | $ | 2,832 | | |
| (a) | The aggregate contract drilling revenues earned in other countries that individually represented less than 10percent of total contract drilling revenues. | |
**Major customers**For the year ended December31, 2025, Petrleo BrasileiroS.A. (together with its affiliates, Petrobras), Shellplc (together with its affiliates, Shell), and EquinorASA (together with its affiliates, Equinor) represented 22percent, 22percent and 12percent, respectively, of our consolidated operating revenues. For the year ended December31, 2024, Shell, Petrobras and Equinor represented 27percent, 21percent and 13percent, respectively, of our consolidated operating revenues. For the year ended December31, 2023, Shell, Equinor, TotalEnergiesSE and Petrobras represented 27percent, 16percent, 12percent and 11percent, respectively, of our consolidated operating revenues.
**Contract liabilities**Contract liabilities for our contracts with customers were as follows (in millions):
| | | | | | | | | |
| | | December31, | | |
| | | 2025 | | 2024 | | |
| Deferred contract revenues, recorded in other current liabilities | | $ | 181 | | $ | 231 | | |
| Deferred contract revenues, recorded in other long-term liabilities | | | 92 | | | 212 | | |
| Total contract liabilities | | $ | 273 | | $ | 443 | | |
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Significant changes in contract liabilities were as follows (in millions):
| | | | | | | | | |
| | | Years ended December31, | | |
| | | 2025 | | 2024 | | |
| Total contract liabilities, beginning of period | | $ | 443 | | $ | 398 | | |
| Decrease due to recognition of revenues for goods and services | | | (260) | | | (243) | | |
| Increase due to goods and services transferred over time | | | 90 | | | 288 | | |
| Total contract liabilities, end of period | | $ | 273 | | $ | 443 | | |
**Pre-operating costs**In the years ended December31, 2025, 2024 and 2023, we recognized pre-operating costs of $158million, $138million and $69million, respectively, recorded in operating and maintenance costs. Recognition increased in each of the twoyears in the period ended December31, 2025, primarily as a result of the commencement of operations for onerig that mobilized to Brazil, tworigs that mobilized to Australia, onerig that mobilized to Romania and onerig that we reactivated for a contract in Brazil in the years ended December31, 2024 and 2023. At December31, 2025 and 2024, the carrying amount of our unrecognized pre-operating costs to obtain contracts was $136million and $224million, respectively, recorded in other assets.
Note6Long-Lived Assets
**Disaggregation**The aggregate carrying amount of our long-lived assets, including our property and equipment and our right-of-use assets, measured net of accumulated depreciation or amortization, disaggregated by country in which they were located, was as follows (inmillions):
| | | | | | | | | |
| | | December31, | | |
| | | 2025 | | 2024 | | |
| Long-lived assets | | | | | | | | |
| U.S. | | $ | 6,487 | | $ | 6,727 | | |
| Norway | | | 1,941 | | | 2,017 | | |
| Brazil | | | 1,914 | | | 1,993 | | |
| Greece | | | 611 | | | 2,531 | | |
| Other countries (a) | | | 2,050 | | | 3,008 | | |
| Total long-lived assets | | $ | 13,003 | | $ | 16,276 | | |
| (a) | The aggregate net carrying amount of long-lived assets located in other countries that individually represented less than 10percent of total long-lived assets on both dates. | |
Because the majority of our assets are mobile, the geographic locations of such assets at the end of the periods are not necessarily indicative of the geographic distribution of the operating revenues generated by such assets during the periods presented. Our international operations are subject to certain political and other uncertainties, including risks of war and civil disturbances or other market disrupting events, expropriation of equipment, repatriation of income or capital, taxation policies, and the general hazards associated with certain areas in which we operate. Although we are organized under the laws of Switzerland, we have minimal assets located in Switzerland, and we do not conduct any operations or earn operating revenues in Switzerland.Property and equipmentAt December31, 2025 and 2024, our rigs and related equipment, measured at cost, had a carrying amount of $17.1billion and $22.0billion, respectively, representing 98percent of our total property and equipment, measured at cost. In the years ended December31, 2024 and 2023, we capitalized interest costs of $15million and $39million, respectively, for our construction work in progress.AcquisitionsIn June2024 we acquired $517million of property and equipment associated with TransoceanNorge, together with $5million of cash and cash equivalents and $4million of accounts receivable from us. In September2023, we acquired $126million of property and equipment associated with DeepwaterAquila, together with $7million of cash and cash equivalents, and we assumed $19million of accounts payable. See Note4Unconsolidated Affiliates, Note8Debt and Note13Equity.ImpairmentsIn the year ended December31, 2025, we recognized an aggregate loss of $3.05billion ($3.04billion, or $3.16per diluted share, net of tax), respectively, associated with the impairment of the ultra-deepwater floaters DeepwaterChampion, DiscovererAmericas, DiscovererClearLeader, DiscovererIndia, DiscovererLuanda, GSFDevelopmentDrillerI and the harsh environment semisubmersible HenryGoodrich, together with related assets, which we determined were impaired at the time that we classified the assets as held for sale, and the ultra-deepwater floaters DevelopmentDrillerIII and DiscovererInspiration, together with related assets, which were previously classified as held for sale and we determined were further impaired. In the year ended December31, 2024, we recognized a loss of $772million ($755million or $0.82per diluted share, net of tax) associated with the impairment of the ultra-deepwater floaters DeepwaterNautilus, DevelopmentDrillerIII and DiscovererInspiration, together with related assets, which we determined were impaired at the time that we classified the assets as held for sale. In the year ended December31, 2023, we recognized a loss of $57million ($0.07per diluted share), which had no tax effect, associated with the impairment of the harsh environment floaters PaulB.Loyd,Jr. and TransoceanLeader, together with related assets, which we determined were impaired at the time that we classified the assets as held for sale.- 51 -
Table of ContentsTRANSOCEANLTD. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTScontinuedWe measured the impairment of the rigs and related assets as the amount by which the carrying amount exceeded the estimated fair value less costs to sell. We estimated the fair value of the assets using significant other observable inputs, representative of Level2 fair value measurements, including binding contracts for the sale of the rigs and related assets or indicative market values for the assets to be sold for recycling or scrap.Assets held for saleAt December31, 2025, the aggregate carrying amount of our assets held for sale, including DeepwaterChampion, DiscovererIndia and HenryGoodrich, together with related assets, was $24million, and in the year ended December31, 2025, we received an aggregate cash deposit of $3million for the sale of the twodrillships. At December31, 2024, the aggregate carrying amount of our assets held for sale, including DevelopmentDrillerIII and DiscovererInspiration, together with related assets, was $343million.DisposalsIn the year ended December31, 2025, we completed the sale of DevelopmentDrillerIII, DiscovererAmericas, DiscovererClearLeader, DiscovererInspiration, DiscovererLuanda and GSFDevelopmentDrillerI, together with related assets, for aggregate net cash proceeds of $71million, and we recognized an aggregate net gain of $4million, which had no tax effect, associated with the disposal of the rigs and related assets. In the year ended December31, 2024, we completed the sale of DeepwaterNautilus, PaulB.Loyd,Jr. and TransoceanLeader, together with related assets, for aggregate net cash proceeds of $102million, including $6million received as a deposit in the year ended December31, 2023. In the year ended December31, 2023, we made a non-cash contribution of OceanRigOlympia and related assets in connection with our investment in a partial ownership interest in GSR, and we recognized a loss of $169million ($0.22per diluted share), which had no tax effect, associated with the disposal of the rig and related assets (see Note4Unconsolidated Affiliates). In the years ended December31, 2025, 2024 and 2023, we received aggregate net cash proceeds of $10million, $5million and $4million, respectively and recognized an aggregate net gain of $3million, an aggregate net loss of $17million and an aggregate net loss of $14million, respectively, associated with the disposal of assets unrelated to rig sales.Subsequent eventIn January2026, we completed the sale of DiscovererIndia, together with related assets, for aggregate net cash proceeds of $14million, including $1million received as a deposit in the year ended December31, 2025.Note7LeasesOverviewOur operating leases are principally for office space, storage facilities, land and operating equipment. At December31, 2025, our operating leases had a weighted-average discount rate of 7.3percent and a weighted-average remaining lease term of 9.9years.Our finance lease for the ultra-deepwater drillship Petrobras10000 has an implicit interest rate of 7.8percent and requires scheduled monthly installments through the lease expiration in August2029, after which we are obligated to acquire the drillship from the lessor for onedollar. We recognize expense for the amortization of the right-of-use asset in depreciation and amortization. See Note16Supplemental Balance Sheet Information.Lease costsThe components of our lease costs were as follows (inmillions):
| | | | | | | | | | | | |
| | | Years ended December31, | | |
| Lease costs | | 2025 | | 2024 | | 2023 | | |
| Short-term lease costs | | $ | 15 | | $ | 10 | | $ | 4 | | |
| Operating lease costs | | | 10 | | | 16 | | | 14 | | |
| Finance lease costs, amortization of right-of-use asset | | | 20 | | | 20 | | | 20 | | |
| Finance lease costs, interest on lease liability | | | 20 | | | 24 | | | 27 | | |
| Total lease costs | | $ | 65 | | $ | 70 | | $ | 65 | | |
**Lease payments**Supplemental cash flow information for our leases was as follows (inmillions):
| | | | | | | | | | | | |
| | | Years ended December31, | | |
| | | 2025 | | 2024 | | 2023 | | |
| Cash paid for amounts included in the measurement of lease liabilities: | | | | | | | | | | | |
| Operating cash flows from operating leases | | $ | 14 | | $ | 20 | | $ | 17 | | |
| Operating cash flows from finance lease | | | 6 | | | 4 | | | | | |
| Financing cash flows from finance lease | | | 12 | | | 7 | | | | | |
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At December31, 2025, the aggregate future minimum lease payments were as follows (inmillions):
| | | | | | | | | | | | |
| | | | | | Operating | | Finance | | |
| | | | | | leases | | lease | | |
| Years ending December 31, | | | | | | | | | | | |
| 2026 | | | | | $ | 15 | | $ | 65 | | |
| 2027 | | | | | | 14 | | | 70 | | |
| 2028 | | | | | | 14 | | | 71 | | |
| 2029 | | | | | | 14 | | | 47 | | |
| 2030 | | | | | | 13 | | | | | |
| Thereafter | | | | | | 64 | | | | | |
| Total future minimum rental payment | | | | | | 134 | | | 253 | | |
| Less amount representing imputed interest | | | | | | (40) | | | (33) | | |
| Present value of future minimum rental payments | | | | | | 94 | | | 220 | | |
| Current portion, recorded in other current liabilities | | | | | | 8 | | | 51 | | |
| Long-term lease liabilities, recorded in other long-term liabilities | | | | | $ | 86 | | $ | 169 | | |
Note8Debt
Overview
**Outstanding debt**The aggregate principal amounts and aggregate carrying amounts, including a bifurcated compound exchange feature and unamortized debt-related balances, such as discounts, premiums and issue costs, were as follows (inmillions):
| | | | | | | | | | | | | | | | | | |
| | | | | Principal amount | | | Carrying amount | | |
| | | | | December31, | | December 31, | | | December31, | | December31, | | |
| | | | | 2025 | | 2024 | | | 2025 | | 2024 | | |
| 4.00% Senior Guaranteed Exchangeable Bonds due December 2025 | | (a) | | $ | | | $ | 234 | | | $ | | | $ | 227 | | |
| 6.875% Senior Secured Notes due February 2027 | | (b) | | | | | | 330 | | | | | | | 328 | | |
| 8.00% Senior Notes due February 2027 | | (c) | | | | | | 655 | | | | | | | 653 | | |
| 7.45% Notes due April2027 | | (d) | | | 52 | | | 52 | | | | 52 | | | 52 | | |
| 8.00% Debentures due April2027 | | (d) | | | 22 | | | 22 | | | | 22 | | | 22 | | |
| 4.50% Shipyard Loans due September 2027 | | (e) | | | 209 | | | 329 | | | | 202 | | | 310 | | |
| 8.375% Senior Secured Notes due February 2028 | | (b) | | | 425 | | | 525 | | | | 421 | | | 518 | | |
| 7.00% Notes due June2028 | | (e) | | | 209 | | | 261 | | | | 210 | | | 263 | | |
| 8.00% Senior Secured Notes due September 2028 | | (b) | | | 235 | | | 295 | | | | 233 | | | 292 | | |
| 8.25%Senior Notes due May 2029 | | (c) | | | 900 | | | 900 | | | | 889 | | | 887 | | |
| 4.625% Senior Guaranteed Exchangeable Bonds due September 2029 | | (c) | | | 259 | | | 259 | | | | 292 | | | 286 | | |
| 8.75% Senior Secured Notes due February 2030 | | (f) | | | 881 | | | 999 | | | | 868 | | | 981 | | |
| 7.50% Notes due April2031 | | (d) | | | 396 | | | 396 | | | | 395 | | | 395 | | |
| 8.50%Senior Notes due May 2031 | | (c) | | | 900 | | | 900 | | | | 888 | | | 886 | | |
| 7.875% Senior Guaranteed Notes due October 2032 | | (a) | | | 500 | | | | | | | 493 | | | | | |
| 6.80% Senior Notes due March2038 | | (d) | | | 610 | | | 610 | | | | 605 | | | 605 | | |
| 7.35% Senior Notes due December2041 | | (d) | | | 88 | | | 177 | | | | 87 | | | 176 | | |
| Total debt | | | | | 5,686 | | | 6,944 | | | | 5,657 | | | 6,881 | | |
| | | | | | | | | | | | | | | | | | |
| Less debt due within oneyear | | | | | | | | | | | | | | | | | |
| 4.00% Senior Guaranteed Exchangeable Bonds due December 2025 | | (a) | | | | | | 234 | | | | | | | 227 | | |
| 6.875% Senior Secured Notes due February 2027 | | (b) | | | | | | 83 | | | | | | | 82 | | |
| 4.50% Shipyard Loans due September 2027 | | (e) | | | 136 | | | 120 | | | | 129 | | | 108 | | |
| 8.375% Senior Secured Notes due February 2028 | | (b) | | | 135 | | | 100 | | | | 133 | | | 97 | | |
| 8.00% Senior Secured Notes due September 2028 | | (b) | | | 70 | | | 60 | | | | 69 | | | 59 | | |
| 8.75% Senior Secured Notes due February 2030 | | (f) | | | 117 | | | 117 | | | | 114 | | | 113 | | |
| Total debt due within oneyear | | | | | 458 | | | 714 | | | | 445 | | | 686 | | |
| Total long-term debt | | | | $ | 5,228 | | $ | 6,230 | | | $ | 5,212 | | $ | 6,195 | | |
| (a) | Transocean InternationalLimited, a wholly owned direct subsidiary of TransoceanLtd., is the issuer of the unregistered notes (together, the Senior Priority Guaranteed Notes). The priority guaranteed senior unsecured notes are fully and unconditionally, jointly and severally, guaranteed by TransoceanLtd. and certain wholly owned indirect subsidiaries of Transocean InternationalLimited and rank equal in right of payment of all of our existing and future unsecured unsubordinated obligations. Such notes are structurally senior to the Priority Guaranteed Notes, as defined below, to the extent of the value of the assets of the subsidiaries guaranteeing the notes. | |
| (b) | Each subsidiary issuer of the respective unregistered notes is a wholly owned indirect subsidiary of Transocean InternationalLimited. The senior secured notes are fully and unconditionally, jointly and severally, guaranteed by TransoceanLtd., Transocean InternationalLimited and, in each case, the owner of the respective collateral rig or rigs. | |
| (c) | Transocean InternationalLimited is the issuer of the unregistered notes (collectively, the Priority Guaranteed Notes). The guaranteed senior unsecured notes are fully and unconditionally, jointly and severally, guaranteed by TransoceanLtd. and certain wholly owned indirect subsidiaries of Transocean InternationalLimited and rank equal in right of payment of all our existing and future unsecured unsubordinated obligations. Such notes are structurally senior | |
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| to the Legacy Guaranteed Notes, as defined below, the 4.50%shipyard loans due September2027 (each, a Shipyard Loan, and together, the Shipyard Loans) and the 7.00%notes due June2028 and structurally subordinate to the Senior Priority Guaranteed Notes to the extent of the value of the assets of the subsidiaries guaranteeing the notes. | |
| (d) | Transocean InternationalLimited is the issuer of the notes and debentures (the Legacy Guaranteed Notes). The Legacy Guaranteed Notes are fully and unconditionally, jointly and severally, guaranteed by TransoceanLtd. | |
| (e) | The subsidiary borrowers under the Shipyard Loans and the subsidiary issuer of the registered notes are wholly owned indirect subsidiaries of Transocean InternationalLimited. The loans and notes are fully and unconditionally guaranteed by Transocean InternationalLimited. | |
| (f) | Transocean InternationalLimited is the issuer of the unregistered notes. The senior secured notes are fully and unconditionally guaranteed on an unsecured basis by TransoceanLtd. and on a limited senior secured basis by each of the wholly owned subsidiary owners of the collateral rigs. | |
**Indentures**The indentures that govern our debt generally contain covenants that, among other things, limit our ability to incur certain liens on our drilling units without equally and ratably securing the notes, to engage in certain sale and lease back transactions covering any of our drilling units, to allow our subsidiaries to incur certain additional debt, or to engage in certain merger, consolidation or reorganization transactions or to enter into a scheme of arrangement qualifying as an amalgamation. TransoceanLtd. and Transocean InternationalLimited are not subject to any significant restrictions on their ability to obtain funds from their consolidated subsidiaries by dividends, loans or capital distributions.
The indenture that governs the 4.625%senior guaranteed exchangeable bonds due September2029 (the 4.625%Exchangeable Bonds) requires such bonds to be repurchased upon the occurrence of certain fundamental changes and events, at specified prices depending on the particular fundamental change or event, which include changes and events related to certain (i)change of control events applicable to TransoceanLtd. or Transocean InternationalLimited, (ii)the failure of our shares to be listed or quoted on a national securities exchange and (iii)specified tax matters.
The indentures that govern the 8.375%senior secured notes due February2028 (the 8.375%Senior Secured Notes), the 8.00%senior secured notes due September2028 (the 8.00%Senior Secured Notes) and the 8.75%senior secured notes due February2030 (the 8.75%Senior Secured Notes) contain certain covenants, among others, related to the debt and earnings attributable to the collateral rigs and the ability of our subsidiaries that own or operate the collateral rigs to declare or pay dividends to their affiliates. We will be required to redeem the senior secured notes at a price equal to 100percent of the aggregate principal amount without a make-whole premium, upon the occurrence of certain events related to the respective collateral rigs and related drilling contracts. The indentures that govern our senior secured notes contain certain lien requirements, including the maintenance of certain balances in a restricted cash account to satisfy debt service requirements.
**Assets encumbered for outstanding debt**At December31, 2025, the rigs encumbered for the senior secured notes and our Shipyard Loans include the ultra-deepwater drillships *DeepwaterAquila*, *DeepwaterAtlas*, *DeepwaterPontus*, *DeepwaterProteus*, *DeepwaterThalassa*, *DeepwaterTitan*, and the harsh environment semisubmersibles *TransoceanEnabler* and *TransoceanEncourage*, the aggregate carrying amount of which was $5.19billion. At December31, 2025, we had restricted cash and cash equivalents of $358million deposited in restricted accounts to satisfy debt service and reserve requirements for the senior secured notes.
**Interest rate adjustments**At December31, 2025, the interest rate in effect for the 7.35%senior notes due December2041 was 9.35percent, which is subject to adjustment from time to time upon a change to the credit rating of our non-credit enhanced senior unsecured long-term debt.
**Scheduled maturities and installments**At December31, 2025, the scheduled repayments were as follows (inmillions):
| | | | | | |
| | | Total | | |
| Years ending December 31, | | | | | |
| 2026 | | $ | 458 | | |
| 2027 | | | 435 | | |
| 2028 | | | 612 | | |
| 2029 | | | 1,277 | | |
| 2030 | | | 411 | | |
| Thereafter | | | 2,493 | | |
| Total principal amount of debt | | | 5,686 | | |
| Total unamortized debt-related balances, net | | | (155) | | |
| Bifurcated compound exchange feature, at estimated fair value | | | 126 | | |
| Total carrying amount of debt | | $ | 5,657 | | |
Credit agreements
**Secured Credit Facility**As of December31, 2025, we have a secured revolving credit facility established under a bank credit agreement (as amended from time to time, the Secured Credit Facility), which has a borrowing capacity of $510million through its maturity on June22, 2028. Throughout the term of the Secured Credit Facility, we pay a facility fee on the amount of the underlying commitment, which ranges from 0.375percent to 1.00percent based on the credit rating of the Secured Credit Facility. We may borrow under the Secured Credit Facility at a forward-looking term rate based on the secured overnight financing rate (Term SOFR) plus a margin and a Term SOFR
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spread adjustment of 0.10percent. The Secured Credit Facility is subject to permitted extensions and certain early maturity triggers, including if on any date the aggregate amount of scheduled principal repayments of indebtedness, with certain exceptions, due within 91days thereof is equal to or in excess of $325million and available cash is less than $250million. The Secured Credit Facility permits us to increase the aggregate amount of commitments by up to $250million. The Secured Credit Facility is guaranteed by TransoceanLtd. and certain wholly owned subsidiaries. The Secured Credit Facility is secured by, among other things, a lien on the ultra-deepwater drillships *DeepwaterAsgard*, *DeepwaterConqueror, DeepwaterCorcovado*, *DeepwaterInvictus*, *DeepwaterMykonos*, *DeepwaterOrion*, *DeepwaterSkyros* and *DhirubhaiDeepwaterKG2*and the harsh environment semisubmersibles *TransoceanBarents*and *TransoceanSpitsbergen*, and at December31, 2025, the aggregate carrying amount of which was $4.18billion.
The Secured Credit Facility contains covenants that, among other things, include maintenance of a minimum guarantee coverage ratio of 3.0to1.0, a minimum collateral coverage ratio of 2.1to1.0, a maximum debt to capitalization ratio of 0.60to1.00 and minimum liquidity of $200million. The Secured Credit Facility also restricts the ability of TransoceanLtd. and certain of our subsidiaries to, among other things, merge, consolidate or otherwise make changes to the corporate structure, incur liens, incur additional indebtedness, enter into transactions with affiliates and permits, subject to certain conditions, the ability to pay dividends and repurchase our shares. In order to utilize the Secured Credit Facility, we must, at the time of the borrowing request, be in full compliance with the terms and conditions of the Secured Credit Facility and make certain representations and warranties, including with respect to compliance with laws and solvency, to the lenders. Repayment of borrowings under the Secured Credit Facility are subject to acceleration upon the occurrence of an event of default. Under the agreements governing certain of our debt and finance lease, we are also subject to various covenants, including restrictions on creating liens, engaging in sale/leaseback transactions and engaging in certain merger, consolidation or reorganization transactions. A default under our public debt indentures, the agreements governing our senior secured notes, our finance lease contract or any other debt owed to unaffiliated entities that exceeds $125million could trigger a default under the Secured Credit Facility and, if not waived by the lenders or otherwise cured, could cause us to lose access to the Secured Credit Facility. At December31, 2025, based on the credit rating of the Secured Credit Facility as of that date, the Secured Credit Facility Margin was 2.875percent and the facility fee was 0.625percent. At December31, 2025, we had noborrowings outstanding, $48million of letters of credit issued, and we had $462million of available borrowing capacity under the Secured Credit Facility.
**Shipyard financing arrangement**We have credit agreements that established the Shipyard Loans to finance all or a portion of the final payments owed to the shipyard when we took delivery of *DeepwaterAtlas* and *DeepwaterTitan* in the year ended December31, 2022 The Shipyard Loans contain covenants that, among other things, limit the ability of the subsidiary owners of the drilling rigs to incur certain types of additional indebtedness or make certain additional commitments or investments. We have the right to prepay outstanding borrowings, in full or in part, without penalty. At December31, 2025, the Shipyard Loan for *DeepwaterAtlas* had outstanding borrowings of $159million, which are secured by, among other security, a lien on the rig, and the Shipyard Loan for *DeepwaterTitan* had outstanding borrowings of $50million, which are unsecured.
Exchangeable bonds
**Interest expense**We recognized interest expense for our exchangeable bonds as follows (in millions):
| | | | | | | | | | | | |
| | | | Years ended December 31, | | |
| | | 2025 | | 2024 | | 2023 | | |
| Contractual interest | | $ | 18 | | $ | 21 | | $ | 24 | | |
| Amortization | | | 20 | | | 20 | | | 19 | | |
| (Gain) loss on adjustment to bifurcated compound exchange feature | | | (10) | | | (214) | | | 127 | | |
| Total | | $ | 28 | | $ | (173) | | $ | 170 | | |
On or after March30, 2026, we may redeem for cash all or a portion of the 4.625%Exchangeable Bonds at a price equivalent to the aggregate principal amount to be redeemed if the closing price of our shares has been greater than 115percent of the exchange price for a period of at least 20trading days. If we give notice of our election to exercise the right to redeem, the indenture governing the 4.625%Exchangeable Bonds contains a compound exchange feature that, in addition to the exchange terms presented below, requires us to pay a make-whole premium of future interest through March30, 2028 to any holders that exercise their right to exchange during the redemption notice period. Such compound exchange feature must be bifurcated from the host debt instrument since it is not considered indexed to our stock. Accordingly, we recognize changes to the liability for the estimated fair value of the bifurcated compound exchange feature with a corresponding adjustment to interest expense. At December31, 2025 and 2024, the carrying amount of the bifurcated compound exchange feature, recorded as a component of the carrying amount of debt, was $126million and $136million, respectively.
**Effective interest rate and fair value**At December31, 2025, the 4.625%Exchangeable Bonds had an effective interest rate of 18.3% and an estimated fair value of $355million. We estimated the fair value of the exchangeable debt instrument, including the exchange feature, by employing a binomial lattice model using significant other observable inputs, representative of Level2 fair value measurements, including the terms and credit spreads of our debt and the expected volatility of the market price for our shares.
**Exchange terms**At December31, 2025, the 4.625%Exchangeable Bonds had the following exchange terms: (a)an exchange rate of 290.6618 TransoceanLtd. shares per $1,000note, (b)an implied exchange price of $3.44per TransoceanLtd. share and (c)an aggregate of 75.3million shares issuable upon exchange of our exchangeable bonds. The exchange rate is subject to adjustment upon the
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occurrence of certain events. The 4.625%Exchangeable Bonds may be exchanged by holders at any time prior to the close of business on the secondbusiness day immediately preceding the maturity date or redemption date and, at our election, such exchange may be settled by delivering cash, TransoceanLtd. shares or a combination of cash and shares.
**Exchanges**In the year ended December31, 2025, we entered into separate, individually negotiated agreements (as amended, the Exchange Agreements) with certain holders of the 4.00% senior guaranteed exchangeable bonds due December 2025 (the 4.00% Exchangeable Bonds). In the year ended December31, 2025, the holders exchanged $196million aggregate principal amount of 4.00%Exchangeable Bonds under the terms of the Exchange Agreements and received an aggregate 73.3million TransoceanLtd. shares, which included an aggregate 35.9million shares incremental to the number of shares issuable pursuant to the governing indenture based upon the principal amount exchanged. In the year ended December31, 2025, we recognized a loss of $99million, recorded in other, net, associated with these exchanges.
In the year ended December31, 2023, holders of the outstanding $238million aggregate principal amount of 2.50%senior guaranteed exchangeable bonds due January2027 (the 2.50%Exchangeable Bonds) exchanged such bonds under the terms of the governing indenture at the applicable exchange rate of 162.1626TransoceanLtd. shares per $1,000note. In April2023, as part of the transactions, we delivered 34.6million TransoceanLtd. shares, together with $3million cash consideration, for $213million aggregate principal amount of exchanged bonds in a related party transaction with Perestroika. In the year ended December31, 2023, we recognized a loss of $3million, recorded in other, net, associated with these exchanges. The directors beneficial ownership of our shares resulting from the related party transaction did not change. In July2023, we delivered 4.0million TransoceanLtd. shares to holders of the remaining $25million aggregate principal amount of 2.50%Exchangeable Bonds.
Additionally, in October2023, holders of $60million and $41million aggregate principal amount of 4.00%Exchangeable Bonds and 4.625%Exchangeable Bonds, respectively, exchanged such bonds under the terms of the governing indenture at the applicable exchange rate of 190.4762and 290.6618TransoceanLtd. shares, respectively, per $1,000note. As part of the transactions, we delivered an aggregate 26.5million TransoceanLtd. shares, including an aggregate 3.1million shares incremental to the number of shares issuable pursuant to the governing indenture. In the year ended December31, 2023, we recognized a loss of $24million, recorded in other, net, associated with these transactions.
Debt issuance
**Senior notes**In October2025, we issued $500million aggregate principal amount of 7.875%senior guaranteed notes due October2032 (the 7.875%Senior Guaranteed Notes) and received $492million aggregate cash proceeds, net of issue costs. The 7.875%Senior Guaranteed Notes are fully and unconditionally guaranteed on a senior unsecured basis by TransoceanLtd. and certain of our wholly owned subsidiaries. Prior to October15, 2028, we may redeem up to 40percent of the aggregate principal amount of the 7.875%Senior Guaranteed Notes at a price equal to 107.875percent, or we may redeem all or a portion at a price equal to 100percent of the aggregate principal amount plus a make-whole premium. On or after October15, 2028, we may redeem the notes at specified redemption prices.
In April2024, we issued $900million aggregate principal amount of 8.25%senior notes due May2029 (the 8.25%Senior Notes) and $900million aggregate principal amount of 8.50%senior notes due May2031 (the 8.50%Senior Notes), and we received $1.77billion aggregate cash proceeds, net of issue costs. The 8.25%Senior Notes and the 8.50%Senior Notes are fully and unconditionally guaranteed on a senior unsecured basis by TransoceanLtd. and certain of our wholly owned subsidiaries. On or prior to May15, 2026 and 2027, respectively, we may redeem all or a portion of the 8.25%Senior Notes and the 8.50%Senior Notes, respectively, at a price equal to 100percent of the aggregate principal amount plus a make-whole premium, and subsequently, at specified redemption prices.
In June2024, as partial consideration to acquire the outstanding 67.0percent ownership interest in Orion, we issued $130million aggregate principal amount of 8.00%Senior Notes, with an equivalent aggregate fair value, as additional debt securities under the indenture governing such notes. See [Note4Unconsolidated Affiliates](#Note_UnconsolidatedAffiliates), [Note6Long-Lived Assets](#Note7_LongLivedAssets) and [Note13Equity](#Note14_Equity).
**Senior secured notes**In January2023, we issued $525million aggregate principal amount of 8.375%Senior Secured Notes, and we received $516million aggregate cash proceeds, net of issue costs. The 8.375%Senior Secured Notes are secured by the assets and earnings associated with *DeepwaterTitan* and the equity of the wholly owned subsidiary that owns or operates the collateral rig. We may redeem all or a portion of the 8.375%Senior Secured Notes at specified redemption prices.
In January2023, we issued $1.175billion aggregate principal amount of 8.75%Senior Secured Notes, and we received $1.148billion aggregate cash proceeds, net of issue costs. The 8.75%Senior Secured Notes are secured by a lien on *DeepwaterPontus*, *DeepwaterProteus*, *DeepwaterThalassa*, *TransoceanEnabler* and *TransoceanEncourage*, together with certain related assets. We may redeem all or a portion of the 8.75%Senior Secured Notes at specified redemption prices.
In October2023, we issued $325million aggregate principal amount of 8.00%Senior Secured Notes, and we received $319million aggregate cash proceeds, net of issue costs. The 8.00%Senior Secured Notes are secured by the assets and certain earnings associated with *DeepwaterAquila* as well as the equity of certain of the wholly owned subsidiaries that own or operate the collateral rig. We may redeem all or a portion of the 8.00%Senior Secured Notes at specified redemption prices.
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TRANSOCEANLTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTScontinued
Debt repayment, redemption, repurchases, tenders, and retirement
**Scheduled maturities and installments**On the scheduled maturity date of December15, 2025, we made a cash payment of $37million to repay an equivalent aggregate principal amount of the outstanding 4.00%Exchangeable Bonds. On the scheduled maturity date of January30, 2023, we made a cash payment of $49million to repay an equivalent aggregate principal amount of the outstanding 0.50% exchangeable senior bonds due January 2023.
In the years ended December31, 2025, 2024 and 2023, we made an aggregate cash payment of $480million, $355million and $262million, respectively, to repay other indebtedness in scheduled installments.
**Early retirement**During the threeyears ended December31, 2025, we retired certain notes for which the aggregate principal amounts, cash payments and recognized gain or loss were as follows (inmillions):
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | 2025 | | 2024 | | 2023 | | |
| | | Redeem or repurchase | | Tender | | Total | | Redeem | | Tender | | Total | | Redeem | | |
| 5.375% Senior Secured Notes due May 2023 | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | 243 | | |
| 5.875% Senior Secured Notes due January 2024 | | | | | | | | | | | | | | | | | | | | | 311 | | |
| 7.75% Senior Secured Notes due October 2024 | | | | | | | | | | | | | | | | | | | | | 240 | | |
| 6.25% Senior Secured Notes due December 2024 | | | | | | | | | | | | | | | | | | | | | 250 | | |
| 6.125% Senior Secured Notes due August 2025 | | | | | | | | | | | | | | | | | | | | | 336 | | |
| 7.25% Senior Notes due November2025 | | | | | | | | | | | | 105 | | | 249 | | | 354 | | | | | |
| 7.50% Senior Notes due January 2026 | | | | | | | | | | | | 569 | | | | | | 569 | | | | | |
| 11.50% Senior Guaranteed Notes due January 2027 | | | | | | | | | | | | 91 | | | 596 | | | 687 | | | | | |
| 8.00% Senior Notes due February 2027 | | | 655 | | | | | | 655 | | | 87 | | | | | | 87 | | | | | |
| 6.875% Senior Secured Notes due February 2027 | | | 248 | | | | | | 248 | | | | | | | | | | | | | | |
| 7.00% Notes due June 2028 | | | 36 | | | 16 | | | 52 | | | | | | | | | | | | | | |
| 7.35% Senior Notes due December 2041 | | | 1 | | | 89 | | | 90 | | | | | | | | | | | | | | |
| Aggregate principal amount of debt retired | | $ | 940 | | $ | 105 | | $ | 1,045 | | $ | 852 | | $ | 845 | | $ | 1,697 | | $ | 1,380 | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| Aggregate cash payment | | $ | 939 | | $ | 100 | | $ | 1,039 | | $ | 862 | | $ | 886 | | $ | 1,748 | | $ | 1,402 | | |
| Aggregate net gain (loss) | | $ | (1) | | $ | 4 | | $ | 3 | | $ | 17 | | $ | 144 | | $ | 161 | | $ | (32) | | |
Additionally, in the year ended December31, 2023, we recognized a net gain of $1million associated with the retirement of $41million aggregate principal amount of 4.625%Exchangeable Bonds exchanged by holders in October2023.
Note9Benefit Plans
Defined contribution plans
We sponsor defined contribution plans for our employees in most markets in which we operate worldwide, the most significant of which were as follows: (1)a qualified savings plan covering certain eligible employees working in the U.S., (2)various savings plans covering eligible employees working in Norway and (3)a non-qualified savings plan covering certain eligible expatriate employees. In the years ended December31, 2025, 2024 and 2023, we recognized expense of $62million, $63million and $58million, respectively, related to our defined contribution plans and recorded in the same financial statement line item as cash compensation paid to the respective employees.
Defined benefit pension and other postemployment benefit plans
**Overview**As of December31, 2025, we had threefunded and threeunfunded defined benefit plans in the U.S. (the U.S.Plans) and onefunded defined benefit plan in the United Kingdom (the U.K.Plan). We also maintain certain unfunded other postemployment benefit plans (collectively, the OPEBPlans), under which benefits to eligible participants diminish during a phase-out period ending December31, 2026. We maintain the benefit obligations under our defined benefit plans until they are fully satisfied.
We estimated our net periodic benefit costs using the following weighted average assumptions:
| | | | | | | | | | | | | | | | | | | | | |
| | | Year ended December31,2025 | | Year ended December31,2024 | | Year ended December31,2023 | | |
| | | U.S. | | U.K. | | OPEB | | U.S. | | U.K. | | OPEB | | U.S. | | U.K. | | OPEB | | |
| | | Plans | | Plan | | Plans | | Plans | | Plan | | Plans | | Plans | | Plan | | Plans | | |
| Discount rate | | 5.58 | % | 5.60 | % | 5.02 | % | 4.88 | % | 4.50 | % | 4.80 | % | 5.06 | % | 4.80 | % | 4.92 | % | |
| Expected rate of return | | 5.66 | % | 4.80 | % | na | | 6.51 | % | 5.10 | % | na | | 6.41 | % | 5.00 | % | na | | |
na means not applicable.
We estimated our benefit obligations using the following weighted-average assumptions:
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | December31,2025 | | December31,2024 | | |
| | | | | | | | | U.S. | | U.K. | | OPEB | | U.S. | | U.K. | | OPEB | | |
| | | | | | | | | Plans | | Plan | | Plans | | Plans | | Plan | | Plans | | |
| Discount rate | | | | | | | | 5.65 | % | 5.60 | % | 4.34 | % | 5.58 | % | 5.60 | % | 5.02 | % | |
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TRANSOCEANLTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTScontinued
**Net periodic benefit costs**The components of net periodic benefit costs, recognized in other income and expense, were as follows (inmillions):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Year ended December31,2025 | | Year ended December31,2024 | | Year ended December31,2023 | | |
| | | U.S. | | U.K. | | OPEB | | | | U.S. | | U.K. | | OPEB | | | | U.S. | | U.K. | | OPEB | | | | |
| | | Plans | | Plan | | Plans | | Total | | Plans | | Plan | | Plans | | Total | | Plans | | Plan | | Plans | | Total | | |
| Net periodic benefit costs | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest cost | | $ | 67 | | $ | 10 | | $ | | | $ | 77 | | $ | 63 | | $ | 9 | | $ | | | $ | 72 | | $ | 65 | | $ | 9 | | $ | | | $ | 74 | | |
| Expected return on plan assets | | | (71) | | | (9) | | | | | | (80) | | | (86) | | | (11) | | | | | | (97) | | | (84) | | | (11) | | | | | | (95) | | |
| Special termination benefits | | | | | | | | | | | | | | | | | | | | | 2 | | | 2 | | | | | | | | | | | | | | |
| Settlements and curtailments | | | | | | | | | | | | | | | | | | | | | (2) | | | (2) | | | | | | | | | | | | | | |
| Actuarial loss, net | | | | | | 3 | | | | | | 3 | | | 1 | | | 2 | | | | | | 3 | | | | | | 2 | | | | | | 2 | | |
| Prior service gain, net | | | | | | | | | (1) | | | (1) | | | | | | | | | (1) | | | (1) | | | | | | | | | (2) | | | (2) | | |
| Net periodic benefit costs (income) | | $ | (4) | | $ | 4 | | $ | (1) | | $ | (1) | | $ | (22) | | $ | | | $ | (1) | | $ | (23) | | $ | (19) | | $ | | | $ | (2) | | $ | (21) | | |
**Funded status**The changes in funded status were as follows (inmillions):
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Year ended December31,2025 | | Year ended December31,2024 | | |
| | | U.S. | | U.K. | | OPEB | | | | | U.S. | | U.K. | | OPEB | | | | | |
| | | Plans | | Plan | | Plans | | Total | | Plans | | Plan | | Plans | | Total | | |
| Change in projected benefit obligation | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Projected benefit obligation, beginning of period | | $ | 1,217 | | $ | 178 | | $ | 10 | | $ | 1,405 | | $ | 1,328 | | $ | 208 | | $ | 8 | | $ | 1,544 | | |
| Actuarial (gain) loss, net | | | 5 | | | (2) | | | | | | 3 | | | (97) | | | (27) | | | 2 | | | (122) | | |
| Interest cost | | | 67 | | | 10 | | | | | | 77 | | | 63 | | | 9 | | | | | | 72 | | |
| Currency exchange rate (gain) loss | | | | | | 14 | | | | | | 14 | | | | | | (2) | | | | | | (2) | | |
| Benefits paid | | | (78) | | | (11) | | | (1) | | | (90) | | | (77) | | | (10) | | | (2) | | | (89) | | |
| Settlements | | | (1) | | | | | | | | | (1) | | | | | | | | | | | | | | |
| Special termination benefits | | | | | | | | | | | | | | | | | | | | | 2 | | | 2 | | |
| Projected benefit obligation, end of period | | | 1,210 | | | 189 | | | 9 | | | 1,408 | | | 1,217 | | | 178 | | | 10 | | | 1,405 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Change in plan assets | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Fair value of plan assets, beginning of period | | | 1,164 | | | 210 | | | | | | 1,374 | | | 1,211 | | | 239 | | | | | | 1,450 | | |
| Actual return (loss) on plan assets | | | 66 | | | 8 | | | | | | 74 | | | 30 | | | (16) | | | | | | 14 | | |
| Currency exchange rate gain (loss) | | | | | | 16 | | | | | | 16 | | | | | | (3) | | | | | | (3) | | |
| Employer contributions | | | 7 | | | | | | 1 | | | 8 | | | | | | | | | 2 | | | 2 | | |
| Benefits paid | | | (78) | | | (11) | | | (1) | | | (90) | | | (77) | | | (10) | | | (2) | | | (89) | | |
| Settlements | | | (1) | | | | | | | | | (1) | | | | | | | | | | | | | | |
| Fair value of plan assets, end of period | | | 1,158 | | | 223 | | | | | | 1,381 | | | 1,164 | | | 210 | | | | | | 1,374 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Funded status asset (liability), end of period | | $ | (52) | | $ | 34 | | $ | (9) | | $ | (27) | | $ | (53) | | $ | 32 | | $ | (10) | | $ | (31) | | |
The balance sheet classifications and accumulated benefit obligations were as follows (inmillions):
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | December31,2025 | | December31,2024 | | |
| | | | U.S. | | U.K. | | OPEB | | | | | U.S. | | U.K. | | OPEB | | | | |
| | | | Plans | | Plan | | Plans | | Total | | Plans | | Plan | | Plans | | Total | |
| Balance sheet classification, end of period: | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Pension asset, non-current | | $ | 44 | | $ | 34 | | $ | | | $ | 78 | | $ | 41 | | $ | 32 | | $ | | | $ | 73 | | |
| Pension liability, current | | | | | | | | | (2) | | | (2) | | | (1) | | | | | | (3) | | | (4) | | |
| Pension liability, non-current | | | (96) | | | | | | (7) | | | (103) | | | (93) | | | | | | (7) | | | (100) | | |
| Accumulated other comprehensive loss (income), before taxes | | | 112 | | | 84 | | | | | | 196 | | | 102 | | | 88 | | | (1) | | | 189 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Accumulated benefit obligation, end of period | | $ | 1,210 | | $ | 189 | | $ | 9 | | $ | 1,408 | | $ | 1,217 | | $ | 178 | | $ | 10 | | $ | 1,405 | | |
Because our defined benefit plans no longer accrue benefits for participants, the projected benefit obligation is equivalent to the accumulated benefit obligation. Certain amounts related to plans with a projected benefit obligation and accumulated benefit obligation in excess of plan assets were as follows (inmillions):
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | December31,2025 | | December31,2024 | | |
| | | U.S. | | U.K. | | OPEB | | | | | U.S. | | U.K. | | OPEB | | | | | |
| | | Plans | | Plan | | Plans | | Total | | Plans | | Plan | | Plans | | Total | | |
| Projected benefit obligation / accumulated benefit obligation | | $ | 101 | | $ | | | $ | 9 | | $ | 110 | | $ | 100 | | $ | | | $ | 10 | | $ | 110 | | |
| Fair value of plan assets | | | 5 | | | | | | | | | 5 | | | 6 | | | | | | | | | 6 | | |
The amounts in accumulated other comprehensive loss (income) that have not been recognized were as follows (inmillions):
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | December31,2025 | | December31,2024 | | |
| | | U.S. | | U.K. | | OPEB | | | | | U.S. | | U.K. | | OPEB | | | | | |
| | | Plans | | Plan | | Plans | | Total | | Plans | | Plan | | Plans | | Total | | |
| Actuarial (gain) loss, net | | $ | 112 | | $ | 83 | | $ | | | $ | 195 | | $ | 102 | | $ | 87 | | $ | 2 | | $ | 191 | | |
| Prior service cost (credit), net | | | | | | 1 | | | | | | 1 | | | | | | 1 | | | (3) | | | (2) | | |
| Accumulated other comprehensive loss (income), before taxes | | $ | 112 | | $ | 84 | | $ | | | $ | 196 | | $ | 102 | | $ | 88 | | $ | (1) | | $ | 189 | | |
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[Table of Contents](#Toc)
TRANSOCEANLTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTScontinued
**Plan assets**The weighted-average target and actual allocations of assets for the funded defined benefit plans were as follows:
| | | | | | | | | | | | | | | | | | | |
| | | December31,2025 | | December31,2024 | | |
| | | Targetallocation | | Actualallocation | | Targetallocation | | Actual allocation | | |
| | | U.S. | | U.K. | | U.S. | | U.K. | | U.S. | | U.K. | | U.S. | | U.K. | | |
| | | Plans | | Plan | | Plans | | Plan | | Plans | | Plan | | Plans | | Plan | | |
| Equity securities | | | % | | % | | % | | % | | % | 20 | % | | % | 26 | % | |
| Fixed income securities | | | % | 95 | % | | % | 90 | % | 99 | % | 73 | % | 99 | % | 65 | % | |
| Other investments | | 100 | % | 5 | % | 100 | % | 10 | % | 1 | % | 7 | % | 1 | % | 9 | % | |
| Total | | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | |
We periodically review our investment policies, plan assets and asset allocation strategies in conjunction with asset performance relative to specified objectives. In August2025, using trust assets for the largest of our U.S. Plans, we purchased an insurance buy-in contract as a plan asset with an initial value of $1.107billion. Under the buy-in contract, the insurer reimburses the plan as it continues to satisfy benefit obligations for which it remains responsible, resulting in no net cash flows in the plan. For the U.K.Plan, the plan trustees establish asset allocation strategies consistent with requirements of the United Kingdom pension regulators with guidance from financial advisors and company representatives.
Investment managers for the U.K.Plan are given established ranges within which the investments may deviate from the target allocations. The plan investment managers have discretion to select securities within each asset category. Given this discretion, the plan may occasionally hold positions in our debt or equity securities. Any such positions are expected to be immaterial relative to asset categories and total plan assets.
The investments for our funded defined benefit plans were categorized as follows (inmillions):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | December31,2025 | | |
| | | U.S. Plans | | U.K. Plan | | Total | | |
| | | Level 1 | | Level 2 | | Level 3 | | Level 1 | | Level 2 | | Level 3 | | Level 1 | | Level 2 | | Level 3 | | |
| Mutual funds | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Non-U.S. equity funds | | $ | | | $ | | | $ | | | $ | | | $ | 5 | | $ | | | $ | | | $ | 5 | | $ | | | |
| Bond funds | | | | | | | | | | | | | | | 201 | | | | | | | | | 201 | | | | | |
| Total mutual funds | | | | | | | | | | | | | | | 206 | | | | | | | | | 206 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Other investments | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Cash and money market funds | | | 55 | | | | | | | | | 6 | | | | | | | | | 61 | | | | | | | | |
| Buy-in contract | | | | | | | | | 1,103 | | | | | | | | | | | | | | | | | | 1,103 | | |
| Synthetic leveraged credit fund | | | | | | | | | | | | | | | 11 | | | | | | | | | 11 | | | | | |
| Total other investments | | | 55 | | | | | | 1,103 | | | 6 | | | 11 | | | | | | 61 | | | 11 | | | 1,103 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total investments | | $ | 55 | | $ | | | $ | 1,103 | | $ | 6 | | $ | 217 | | $ | | | $ | 61 | | $ | 217 | | $ | 1,103 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | December31,2024 | | |
| | | U.S. Plans | | U.K. Plan | | Total | | |
| | | Level 1 | | Level 2 | | Level 3 | | Level 1 | | Level 2 | | Level 3 | | Level 1 | | Level 2 | | Level 3 | | |
| Mutual funds | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Non-U.S. equity funds | | $ | 4 | | $ | | | $ | | | $ | | | $ | 55 | | $ | | | $ | 4 | | $ | 55 | | $ | | | |
| Bond funds | | | 1,149 | | | 2 | | | | | | | | | 136 | | | | | | 1,151 | | | 136 | | | | | |
| Total mutual funds | | | 1,153 | | | 2 | | | | | | | | | 191 | | | | | | 1,155 | | | 191 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Other investments | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Cash and money market funds | | | 9 | | | | | | | | | 2 | | | | | | | | | 9 | | | 2 | | | | | |
| Synthetic leveraged credit fund | | | | | | | | | | | | | | | 17 | | | | | | | | | 17 | | | | | |
| Total other investments | | | 9 | | | | | | | | | 2 | | | 17 | | | | | | 9 | | | 19 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total investments | | $ | 1,162 | | $ | 2 | | $ | | | $ | 2 | | $ | 208 | | $ | | | $ | 1,164 | | $ | 210 | | $ | | | |
We estimated the fair values of the plan assets by applying the market approach, as categorized above, using either (i)significant observable inputs, representative of Level1 fair value measurements, including market prices of actively traded funds, (ii)significant other observable inputs, representative of Level2 fair value measurements, including the market prices of underlying securities in trust funds, or (iii)significant unobservable inputs, representative of Level3 fair value measurements, including the demographic inputs used to develop expected future cash flows, which were discounted at prevailing market discount rates, for the actuarial valuation of the buy-in contract.
**Funding contributions and benefit payments**In the years ended December31, 2025, 2024 and 2023, we made an aggregate contribution of $8million, $2million and $8million, respectively, to the defined benefit pension plans and the OPEBPlans using our cash flows from operations. In the year ending December31, 2026, we expect to make an aggregate contribution of $5million, including $3million and $2million to the defined benefit pension plans and the OPEBPlans, respectively.
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The projected benefits payments were as follows (inmillions):
| | | | | | | | | | | | | | | |
| | | U.S. | | U.K. | | OPEB | | | | | |
| | | Plans | | Plan | | Plans | | Total | | |
| Years ending December31, | | | | | | | | | | | | | | |
| 2026 | | $ | 85 | | $ | 8 | | $ | 2 | | $ | 95 | | |
| 2027 | | | 85 | | | 8 | | | 2 | | | 95 | | |
| 2028 | | | 85 | | | 9 | | | 1 | | | 95 | | |
| 2029 | | | 86 | | | 10 | | | 1 | | | 97 | | |
| 2030 | | | 86 | | | 11 | | | 1 | | | 98 | | |
| 2031 - 2035 | | | 431 | | | 67 | | | 1 | | | 499 | | |
Note10Income Taxes
**Overview**TransoceanLtd., a holding company and Swiss resident, is subject to Swiss federal, cantonal and communal income tax. For Swiss income taxes, however, qualifying net dividend income and net capital gains on the sale of qualifying investments in subsidiaries are exempt from taxation. Consequently, there is not a direct relationship between our Swiss earnings before income taxes and our Swiss income tax expense. In the year ended December31, 2025, the amount of our loss before income tax benefit derived in Switzerland and non-Swiss jurisdictions was $2.01billion and $937million, respectively.
**Tax provision and rate**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. In the year ended December31, 2025, the amount of our income tax provision (benefit) derived in Switzerland, Switzerland cantons, and non-Switzerland jurisdictions was $(21)million, $(13)million and $1million, respectively. In the years ended December31, 2025, 2024 and 2023, our effective tax rate was 1.1percent, 2.2percent and (1.4)percent, respectively, based on loss before income tax expense (benefit).
The components of our income tax provision (benefit) were as follows (inmillions):
| | | | | | | | | | | | |
| | | Years ended December31, | | |
| | | 2025 | | 2024 | | 2023 | | |
| Current tax expense (benefit) | | $ | 78 | | $ | 31 | | $ | (5) | | |
| Deferred tax expense (benefit) | | | (111) | | | (42) | | | 18 | | |
| Income tax expense (benefit) | | $ | (33) | | $ | (11) | | $ | 13 | | |
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The following is a reconciliation of the income tax benefit computed at the Swiss holding company federal effective rate and our reported income tax benefit for the year ended December31, 2025 (in millions, except percentages):
| | | | | | | | |
| | | Year ended | | |
| | | December 31, 2025 | | |
| Switzerland, federal statutory tax rate | | $ | (220) | | 7.48% | | |
| Switzerland, cantonal taxes | | | (13) | | 0.44% | | |
| Switzerland, changes in valuation allowance | | | 131 | | (4.46)% | | |
| | | | | | | | |
| Non-Switzerland tax effects | | | | | | | |
| Bermuda, changes in valuation allowance | | | 212 | | (7.21)% | | |
| Bermuda, tax rate differential | | | (107) | | 3.64% | | |
| Bermuda, other, net | | | 13 | | (0.42)% | | |
| United States, tax rate differential | | | 65 | | (2.21)% | | |
| United States, changes in valuation allowance | | | 20 | | (0.68)% | | |
| United States, other, net | | | (15) | | 0.51% | | |
| Luxembourg, changes due to operational restructuring | | | 43 | | (1.46)% | | |
| Luxembourg, changes in valuation allowance | | | (20) | | 0.68% | | |
| Luxembourg, other, net | | | 8 | | (0.27)% | | |
| Norway, changes in currency exchange | | | (17) | | 0.56% | | |
| Norway, other, net | | | 24 | | (0.82)% | | |
| Hungary, changes in valuation allowance | | | 26 | | (0.88)% | | |
| Hungary, changes in currency exchange | | | (25) | | 0.85% | | |
| Hungary, other, net | | | 1 | | (0.02)% | | |
| Brazil, tax rate differential | | | 16 | | (0.54)% | | |
| Brazil, other, net | | | (19) | | 0.65% | | |
| United Kingdom, changes in valuation allowance | | | (36) | | 1.22% | | |
| United Kingdom, other, net | | | (5) | | 0.15% | | |
| Other, net | | | 9 | | (0.30)% | | |
| | | | | | | | |
| Changes in unrecognized tax benefits | | | (123) | | 4.18% | | |
| | | | | | | | |
| Other adjustments | | | | | | | |
| Switzerland, changes due to operational restructuring | | | (13) | | 0.44% | | |
| Switzerland, other, net | | | 12 | | (0.40)% | | |
| Effective tax rate | | $ | (33) | | 1.13% | | |
In the year ended December31, 2025, we recognized a net tax benefit of $33million, primarily resulting from a release of an uncertain tax position. For state and local income taxes, cantonal taxes in Zug, Switzerland made up the majority, greater than 50percent, of the tax effect in this category.
The following is a reconciliation of the income tax benefit computed at the Swiss holding company federal effective rate of 7.83%and our reported consolidated income tax expense (benefit) for the years ended December31, 2024 and 2023 (inmillions):
| | | | | | | | | | | | |
| | | | | | Years ended December 31, | | |
| | | | | | 2024 | | 2023 | | |
| Income tax benefit at Swiss federal statutory rate | | | | | $ | (40) | | $ | (74) | | |
| Earnings subject to rates different than the Swiss federal statutory rate | | | | | | 74 | | | 129 | | |
| Changes in valuation allowance | | | | | | 208 | | | (23) | | |
| Tax attribute expirations | | | | | | 185 | | | | | |
| Deemed profits taxes | | | | | | 12 | | | 11 | | |
| Withholding taxes | | | | | | 4 | | | 5 | | |
| Changes in unrecognized tax benefits, net | | | | | | (4) | | | (37) | | |
| Changes due to organizational restructuring | | | | | | (452) | | | | | |
| Other, net | | | | | | 2 | | | 2 | | |
| Income tax expense (benefit) | | | | | $ | (11) | | $ | 13 | | |
In the year ended December31, 2024, as a result of operational and structural changes related to rig movements, we remeasured our deferred tax assets and liabilities related to Luxembourg, resulting in an increase of our net deferred tax asset from $8million to $280million, and such increase was substantially offset by an increase to our valuation allowance.
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**Unrecognized tax benefits**The changes to unrecognized tax benefits, excluding interest and penalties that we recognize as a component of income tax expense, were as follows (inmillions):
| | | | | | | | | | | | |
| | | Years ended December31, | | |
| | | | 2025 | | | 2024 | | | 2023 | | |
| Balance, beginning of period | | $ | 407 | | $ | 449 | | $ | 444 | | |
| Additions for current year tax positions | | | 49 | | | 13 | | | 45 | | |
| Additions for prior year tax positions | | | 39 | | | 11 | | | 5 | | |
| Reductions due to settlements | | | (203) | | | (30) | | | (5) | | |
| Reductions related to statute of limitation expirations and changes in law | | | (8) | | | (19) | | | (14) | | |
| Reductions for prior year tax positions | | | | | | (17) | | | (26) | | |
| Balance, end of period | | $ | 284 | | $ | 407 | | $ | 449 | | |
Our unrecognized tax benefits were as follows (inmillions):
| | | | | | | | | |
| | | December31, | | |
| | | | 2025 | | | 2024 | | |
| Unrecognized tax benefits, excluding interest and penalties | | $ | 284 | | $ | 407 | | |
| Interest and penalties | | | 18 | | | 7 | | |
| Unrecognized tax benefits, including interest and penalties | | $ | 302 | | $ | 414 | | |
In the years ended December31, 2025, 2024 and 2023, we recognized, as a component of our income tax provision, expense of $11million, benefit of $2million and expense of $18million, respectively, related to interest and penalties associated with our unrecognized tax benefits. As of December31, 2025, we have unrecognized benefits of $302million, including interest and penalties, against which we have recorded net operating loss deferred tax assets of $235million, resulting in net unrecognized tax benefits of $67million, including interest and penalties, that upon reversal would favorably impact our effective tax rate.
**Tax positions and returns**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. From time to time, as a result of these changes, we may revise previously evaluated tax positions, which could cause us to adjust our recorded tax assets and liabilities. Tax authorities in certain jurisdictions are examining our tax returns and, in some cases, have issued assessments. We intend to defend our tax positions vigorously. Although we can provide no assurance as to the outcome of the aforementioned changes, examinations or assessments, we do not expect the ultimate liability to have a material adverse effect on our consolidated statement of financial position or results of operations; however, it could have a material adverse effect on our consolidated statement of cash flows.
*Brazil tax investigations*In December2005, the Brazilian tax authorities began issuing tax assessments with respect to our tax returns for the years 2000 through 2004. In May2014, the Brazilian tax authorities issued an additional tax assessment for the years2009 and 2010. We filed protests with the Brazilian tax authorities for the assessments and are engaged in the appeals process, and a portion of twocases were favorably closed. As of December31, 2025, the remaining aggregate tax assessment, including interest and penalties, was for corporate income tax of BRL523million, equivalent to $95million, and indirect tax of BRL96million, equivalent to $17million. We believe our returns are materially correct as filed, and we are vigorously contesting these assessments. An unfavorable outcome on these proposed assessments could have a material adverse effect on our consolidated statement of financial position, results of operations or cash flows.
**Tax payments**The components of our income taxes paid, net of refunds received, disaggregated by country, were as follows (in millions):
| | | | | | |
| | | Year ended | | |
| | | December 31, | | |
| | | 2025 | | |
| Switzerland, federal | | $ | 2 | | |
| Switzerland, cantonal | | | 2 | | |
| Total Switzerland | | | 4 | | |
| | | | | | |
| Brazil | | | 17 | | |
| United States | | | 14 | | |
| Angola | | | 9 | | |
| Australia | | | 5 | | |
| India | | | 5 | | |
| Hungary | | | 4 | | |
| Other countries (a) | | | 3 | | |
| Total tax payments, net of refunds received | | $ | 61 | | |
| (a) | The aggregate income taxes paid, net of refunds received, in other countries that individually represented less than 5percent of total income taxes paid, net. | |
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Table of ContentsTRANSOCEANLTD. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTScontinuedIn the years ended December31, 2024 and 2023, aggregate income taxes paid were $60million and $41million, respectively, before deducting refunds received.Deferred taxesThe significant components of our deferred tax assets and liabilities were as follows (inmillions):
| | | | | | | | | |
| | | December31, | | |
| | | 2025 | | 2024 | | |
| Deferred tax assets | | | | | | | | |
| Net operating loss carryforwards | | $ | 1,985 | | $ | 1,541 | | |
| Swiss historic depreciation and financing asset costs | | | 1,034 | | | 1,053 | | |
| Interest expense limitation | | | 54 | | | 87 | | |
| United Kingdom charter limitation | | | 53 | | | 53 | | |
| Accrued costs and expenses | | | 33 | | | 20 | | |
| Contract liabilities | | | 6 | | | 22 | | |
| Accrued payroll costs not currently deductible | | | 11 | | | 12 | | |
| Other | | | 69 | | | 69 | | |
| Valuation allowance | | | (2,479) | | | (2,089) | | |
| Total deferred tax assets, net of allowance | | | 766 | | | 768 | | |
| | | | | | | | | |
| Deferred tax liabilities | | | | | | | | |
| Depreciation | | | (1,068) | | | (1,214) | | |
| Other | | | (41) | | | (8) | | |
| Total deferred tax liabilities | | | (1,109) | | | (1,222) | | |
| | | | | | | | | |
| Deferred tax liabilities, net | | $ | (343) | | $ | (454) | | |
We include taxes related to the earnings of all of our subsidiaries since we do not consider the earnings of any of our subsidiaries to be indefinitely reinvested.
At December31, 2025 and 2024, our deferred tax assets included U.S. tax credits of $5million, which will expire between 2042 and 2044. Deferred tax assets related to our net operating losses were generated in various worldwide tax jurisdictions. At December31, 2025, our net deferred tax assets related to our net operating loss carryforwards included $1.57billion, which do not expire, and $563million, which will expire between 2026 and 2041.
As of December31, 2025, our consolidated cumulative loss incurred over the recent three-year period represented significant objective negative evidence for the evaluation of the realizability of our deferred tax assets. Because such evidence has limited our ability to consider other subjective evidence, we evaluate each jurisdiction separately. We consider objective evidence, such as contract backlog activity, in jurisdictions in which we have profitable contracts, and the ability to carryback losses or utilize losses against potential exposures. If estimated future taxable income changes during the carryforward periods or if the cumulative loss is no longer present, we may adjust the amount of deferred tax assets that we expect to realize. At December31, 2025 and 2024, due to uncertainty of realization, we had a valuation allowance of $2.48billion and $2.09billion, respectively, on net operating losses and other deferred tax assets due to the uncertainty of realization.
Note11Loss Per Share
The computation of basic and diluted loss per share was as follows (inmillions, except per share data):
| | | | | | | | | | | | | | | | | | | | | |
| | | Years ended December31, | | |
| | | 2025 | | 2024 | | 2023 | | |
| | | Basic | | Diluted | | Basic | | Diluted | | Basic | | Diluted | | |
| Numerator for loss per share | | | | | | | | | | | | | | | | | | | | |
| Net loss attributable to controlling interest | | $ | (2,915) | | $ | (2,915) | | $ | (512) | | $ | (512) | | $ | (954) | | $ | (954) | | |
| Effect of convertible debt instruments, net of tax | | | | | | | | | | | | (189) | | | | | | | | |
| Loss for per share calculation | | $ | (2,915) | | $ | (2,915) | | $ | (512) | | $ | (701) | | $ | (954) | | $ | (954) | | |
| | | | | | | | | | | | | | | | | | | | | |
| Denominator for loss per share | | | | | | | | | | | | | | | | | | | | |
| Weighted-average shares outstanding | | | 960 | | | 960 | | | 850 | | | 850 | | | 768 | | | 768 | | |
| Effect of convertible debt instruments | | | | | | | | | | | | 75 | | | | | | | | |
| Weighted-average shares for per share calculation | | | 960 | | | 960 | | | 850 | | | 925 | | | 768 | | | 768 | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Loss per share | | $ | (3.04) | | $ | (3.04) | | $ | (0.60) | | $ | (0.76) | | $ | (1.24) | | $ | (1.24) | | |
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We excluded from the computations certain shares issuable as follows because the effect would have been antidilutive (inmillions):
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | Years ended December31, | |
| | | | | | | | | | | | | 2025 | | 2024 | | 2023 | |
| Exchangeable bonds | | | | | | | | | | | | 102 | | | 45 | | | 151 | | |
| Share-based awards | | | | | | | | | | | | 8 | | | 11 | | | 19 | | |
| Warrants (a) | | | | | | | | | | | | | | | 6 | | | 10 | | |
| (a) | For the year ended December31, 2025, the warrants were antidilutive since the exercise price was greater than the average price for our shares. | |
Note12Commitments and ContingenciesService agreement obligationsWe have long-term service agreements with original equipment manufacturers to provide services and parts, primarily related to our pressure control systems and drilling systems. We estimated the commitments for our service agreements based on projected operating activity, and actual operating activity could differ from such estimates. At December31, 2025, the aggregate future payments required under our service agreement obligations were as follows (in millions):
| | | | | | |
| | | Service | | |
| | | agreement | | |
| | | obligations | | |
| Years ending December 31, | | | | | |
| 2026 | | $ | 140 | | |
| 2027 | | | 117 | | |
| 2028 | | | 73 | | |
| 2029 | | | 51 | | |
| 2030 | | | 31 | | |
| Thereafter | | | 66 | | |
| Total | | $ | 478 | | |
Letters of credit and surety bonds
At December31, 2025 and 2024, we had outstanding letters of credit totaling $51million and $9million, respectively, issued under various committed and uncommitted credit lines provided by banks to guarantee certain performance activities, tax commitments and customs or other obligations. At December31, 2025 and 2024, we also had outstanding surety bonds totaling $128million and $147million, respectively, to secure certain tax commitments and other obligations. At December31, 2025 and 2024, the aggregate cash collateral held by institutions to secure our letters of credit and surety bonds was $3million and $8million, respectively.
Legal proceedings
**Asbestos litigation**In 2014, several of our subsidiaries were named, along with numerous other unaffiliated defendants, in complaints filed in Louisiana. The plaintiffs, former employees of some of the defendants, generally allege that the defendants used or manufactured asbestos-containing drilling mud additives for use in connection with drilling operations, claiming negligence, products liability, strict liability and claims allowed under the Jones Act and general maritime law. One of our subsidiaries has been named in similar complaints filed in Illinois, Missouri and California. At December31, 2025, twoplaintiffs have claims pending in Louisiana and 30plaintiffs in the aggregate have claims pending in Illinois, Missouri, and California, in which we have or may have an interest. We intend to defend these lawsuits vigorously, although we can provide no assurance as to the outcome. We historically have maintained broad liability insurance, although we can provide no assurance as to whether insurance will cover the liabilities, if any, arising out of these claims. Based on our evaluation of the exposure to date, we do not expect the liability, if any, resulting from these claims to have a material adverse effect on our consolidated statement of financial position, results of operations or cash flows.
Oneof our subsidiaries was named as a defendant, along with numerous other companies, in lawsuits arising out of the subsidiarys manufacture and sale of heat exchangers, and involvement in the construction and refurbishment of major industrial complexes alleging bodily injury or personal injury as a result of exposure to asbestos. As of December31, 2025, the subsidiary was a defendant in approximately 405lawsuits with a corresponding number of plaintiffs. For many of these lawsuits, we have not been provided sufficient information from the plaintiffs to determine whether all or some of the plaintiffs have claims against the subsidiary, the basis of any such claims, or the nature of their alleged injuries. The operating assets of the subsidiary were sold in 1989. We have a coverage-in-place agreement with certain insurers and additional funding from settlement agreements with other insurers. Overall, we believe the subsidiary has sufficient resources to respond to both the current lawsuits as well as future lawsuits of a similar nature. While we cannot predict or provide assurance as to the outcome of these matters, we do not expect the ultimate liability, if any, resulting from these claims to have a material adverse effect on our consolidated statement of financial position, results of operations or cash flows.
**Other matters**We are involved in various regulatory matters and a number of claims and lawsuits, asserted and unasserted, all of which have arisen in the ordinary course of our business. We do not expect the liability, if any, resulting from these other matters to have
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a material adverse effect on our consolidated statement of financial position, results of operations or cash flows. We cannot predict with certainty the outcome or effect of any of the litigation matters specifically described above or of any such other pending, threatened, or possible litigation or liability. We can provide no assurance that our beliefs or expectations as to the outcome or effect of any tax, regulatory, lawsuit or other litigation matter will prove correct and the eventual outcome of these matters could materially differ from managements current estimates.
Environmental matters
We have certain potential liabilities under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) and similar state acts regulating cleanup of hazardous substances at various waste disposal sites, including those described below. CERCLA is intended to expedite the remediation of hazardous substances without regard to fault. Potentially responsible parties (PRPs) for each site include present and former owners and operators of, transporters to and generators of the substances at the site. It is difficult to quantify the potential cost of environmental matters and remediation obligations. Liability is strict and can be joint and several.
One of our subsidiaries was named as a PRP in connection with a site located in SantaFe Springs, California, known as the Waste Disposal,Inc. site. We and other PRPs agreed, under a participation agreement with the U.S. Environmental Protection Agency (the EPA) and the U.S. Department of Justice, to settle our potential liabilities by remediating the site. The remedial action for the site was completed in 2006. Our share of the ongoing operating and maintenance costs has been insignificant, and we do not expect any additional potential liabilities to be material. Resolutions of other claims by the EPA, the involved state agency or PRPs are at various stages of investigation. Nevertheless, based on available information with respect to all environmental matters, including all related pending legal proceedings, asserted legal claims and known potential legal claims that are likely to be asserted, we do not expect the ultimate liability, if any, resulting from such matters, to have a material adverse effect on our consolidated statement of financial position, results of operations or cash flows.
Note13Equity
**Share issuance in public offering**In September2025, we issued 143.8million TransoceanLtd. shares in a public offering, including 4.0million TransoceanLtd. shares issued to Perestroika. In connection with the issuance, we received $421million aggregate cash proceeds, net of issue costs, including $12million from Perestroika.
We maintain an at-the-market equity offering program (the ATMProgram). We may use the net proceeds from our ongoing ATMProgram for general corporate purposes, which may include, among other things, the repayment or refinancing of indebtedness and the funding of working capital, capital expenditures, investments and additional balance sheet liquidity. In June2021, we entered into an equity distribution agreement with a sales agent for the offer and sale of our shares, with a maximum aggregate net offering price of up to $400million, under the ATMProgram. In August2022, we entered into an equity distribution agreement with a sales agent for the offer and sale of our shares, with a maximum aggregate net offering price of up to $435million, under the ATMProgram. In the threeyears in the period ended December31, 2025, we did not issue any shares under the ATMProgram.
**Share issuance in debt exchanges**In the year ended December31, 2025, we issued 73.3million TransoceanLtd. shares with an aggregate fair value of $201million to certain holders that elected to exchange the 4.00%Exchangeable Bonds pursuant to the Exchange Agreements. In the yearended December31, 2023, we issued 65.1million shares with an aggregate fair value of $434million to certain holders that elected to exchange the 2.50%Exchangeable Bonds, the 4.00%Exchangeable Bonds and the 4.625%Exchangeable Bonds under terms of the governing indentures. See [Note8Debt](#Note9_Debt).
**Share issuance in acquisitions**In June2024, we issued 55.5million TransoceanLtd. shares with an aggregate fair value of $297million as partial consideration to acquire the outstanding 67.0percent ownership interest in Orion. In September2023, we issued 11.9million TransoceanLtd. shares with an aggregate fair value of $99million to acquire the outstanding 80.0percent ownership interests in Liquila. See [Note4Unconsolidated Affiliates](#Note_UnconsolidatedAffiliates) and [Note6Long-Lived Assets](#Note7_LongLivedAssets).
**Shares held by us**We and oneof our subsidiaries hold TransoceanLtd. shares for future use to deliver shares in connection with sales under the ATMProgram and in connection with awards granted under our incentive plans or other rights to acquire our shares. At December31, 2025, we and our subsidiary held 82.9million and 19.6million shares, respectively, and at December31, 2024, we and our subsidiary held 22.5million and 42.5million shares, respectively.
**Share capital currency change**In May2024, at our annual general meeting, shareholders approved (a)redenominating the currency of our share capital from Swiss francs to U.S. dollars and (b)reducing the par value of our shares for purposes of such redenomination. As a result of the redenomination and reduction, made effective as of January1, 2024, the par value of each of our shares was changed to $0.10 from CHF0.10.
**Warrants**At December31, 2025 and 2024, we had 22.2million outstanding warrants to purchase TransoceanLtd. shares. The warrants may be exercised by holders at any time prior to the close of business on March13, 2026 at an exercise price equal to $3.71per share, subject to certain anti-dilutive adjustments, and at our election, such exercise may be settled by delivering cash, TransoceanLtd. shares or a combination of cash and shares. At December31, 2025 and 2024, the carrying amount of the warrants, recorded as a component of additional paid-in capital, was $16million, net of issue costs, which represented the initial estimated fair value on the date of issuance.
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Note14Share-Based Compensation
Overview
We have a long-term incentive plan (the Long-Term Incentive Plan) for executives, key employees and non-employee directors under which awards can be granted in the form of restricted share units, restricted shares, stock options, stock appreciation rights and cash performance awards. Awards may be granted as service awards that are earned over a defined service period or as performance awards that are earned based on the achievement of certain market factors or performance targets or a combination of market factors and performance targets. The compensation committee of our board of directors determines the terms and conditions of the awards granted under the Long-Term Incentive Plan. At December31, 2025, we had 154.2million shares authorized and 37.3million shares available to be granted under the Long-Term Incentive Plan. At December31, 2025, the total unrecognized compensation cost related to our unvested share-based awards was $33million, which we expect to recognize over a weighted-average period of 1.7years.
Service awards typically vest either in threeequal annual installments beginning on the firstanniversary date of the grant or in an aggregate installment at the end of the stated vesting period. Service-based stock options, once fully vested, are typically exercisable during a seven-year period. Performance awards are typically subject to a three-year measurement period and typically vest in oneaggregate installment following the ultimate determination date.
Service awards
**Restricted share units**A restricted share unit subject to service requirements is a notional unit that is equivalent to oneshare but has no voting rights until the underlying share is issued. The following table summarizes unvested activity during the year ended December31, 2025 for service-based units granted under our incentive plan:
| | | | | | | | | | | | | |
| | | | | | | | Number | | Weighted-average | | |
| | | | | | | | of | | grant-date fair value | | |
| | | | | | | | units | | per unit | | |
| Unvested at January1, 2025 | | | | | | | 7,659,028 | | $ | 5.44 | | |
| Granted | | | | | | | 6,852,828 | | | 3.47 | | |
| Vested | | | | | | | (5,280,936) | | | 4.72 | | |
| Forfeited | | | | | | | (113,268) | | | 4.46 | | |
| Unvested at December31,2025 | | | | | | | 9,117,652 | | $ | 4.23 | | |
In the year ended December31, 2025, the service-based units that vested had an aggregate grant-date fair value of $25million. In the years ended December31, 2024 and 2023, we granted 5,116,762 and 3,744,049service-based units, respectively, with a per unit weighted-average grant-date fair value of $5.29 and $7.23, respectively. In the years ended December31, 2024 and 2023, we had 6,727,943 and 6,200,155service-based units, respectively, that vested with an aggregate grant-date fair value of $32million and $18million, respectively.
**Stock options**The following table summarizes activity during the year ended December31, 2025 for vested service-based stock options outstanding under our incentive plan:
| | | | | | | | | | | | | |
| | | | | | | | Weighted-average | | | | |
| | | Number | | Weighted-average | | remaining | | Aggregate | | |
| | | of shares | | exercise price | | contractual term | | intrinsic value | | |
| | | under option | | per share | | (years) | | (inmillions) | | |
| Outstanding at January1, 2025 | | 4,069,334 | | $ | 9.53 | | 2.93 | | $ | | | |
| Forfeited | | (17,006) | | | 8.35 | | | | | | | |
| Outstanding at December31,2025 | | 4,052,328 | | $ | 9.54 | | 1.92 | | $ | | | |
| | | | | | | | | | | | | |
| Vested and exercisable at December31,2025 | | 4,052,328 | | $ | 9.54 | | 1.92 | | $ | | | |
At December31, 2025, 2024 and 2023, there were no outstanding unvested stock options to purchase our shares.
Performance awards
**Restricted share units**A restricted share unit subject to performance requirements is a notional unit for which the awarded number of shares to be issued per unit remains uncertain until quantified as of the ultimate determination date following completion of the performance period. The following table summarizes unvested activity during the year ended December31, 2025 for performance-based units under our incentive plan:
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTScontinued
| | | | | | | | | | | | | |
| | | | | | | | Number | | Weighted-average | | |
| | | | | | | | of | | grant-date fair value | | |
| | | | | | | | units | | per unit | | |
| Unvested at January1, 2025 | | | | | | | 3,495,925 | | $ | 5.78 | | |
| Granted | | | | | | | 3,138,657 | | | 3.35 | | |
| Vested | | | | | | | (1,439,846) | | | 6.74 | | |
| Unvested at December31,2025 | | | | | | | 5,194,736 | | $ | 4.04 | | |
In the year ended December31, 2025, the performance-based units that vested had an aggregate grant-date fair value of $10million. In the years ended December31, 2024 and 2023, we granted 2,687,268 and 1,912,292performance-based units, respectively, with a per unit weighted-average grant-date fair value of $5.10 and $6.74, respectively. In the years ended December31, 2024 and 2023 we had 4,429,028 and 3,025,512performance-based units, respectively, that vested with an aggregate grant-date fair value of $21million and $11million, respectively.
Note15Supplemental Segment information
Our Chief Executive Officer serves as our chief operating decision maker (CODM) and assesses performance for and allocates resources for our single contract drilling services segment based on our consolidated net income or loss, as presented on our consolidated statements of operations. The significant segment expense categories regularly provided to our CODM include our operating and maintenance costs and our general and administrative costs, as presented on our consolidated statements of operations. Other segment items included in our consolidated net income or loss include depreciation and amortization, loss on impairment of assets, gain or loss on disposal of assets, interest expense and income tax expense or benefit. Additionally, our CODM reviews our segment assets, as presented on our consolidated balance sheets.
Our CODM uses our consolidated results of operations to evaluate income or loss generated from segment assets, or return on assets, to make decisions to deploy cash flows from operations for reinvestment in our contract drilling services segment or for other uses, such as for acquisitions, debt and equity investments, liability management or to pay dividends to our shareholders. Consolidated results of operations are used to monitor actual results relative to historical, budgeted and forecasted results and to assess segment performance against our peers.
Note16Supplemental Balance Sheet Information
Other current liabilities were comprised of the following (inmillions):
| | | | | | | | | |
| | | December31, | | |
| | | 2025 | | 2024 | | |
| Other current liabilities | | | | | | | | |
| Accrued employee benefits and payroll-related liabilities | | $ | 166 | | $ | 136 | | |
| Accrued interest | | | 101 | | | 134 | | |
| Accrued taxes, other than income | | | 28 | | | 39 | | |
| Finance lease liability | | | 51 | | | 47 | | |
| Operating lease liabilities | | | 8 | | | 7 | | |
| Contract liabilities | | | 181 | | | 231 | | |
| Contingent liabilities | | | 87 | | | 94 | | |
| Other | | | 5 | | | 3 | | |
| Total other current liabilities | | $ | 627 | | $ | 691 | | |
Other long-term liabilities were comprised of the following (inmillions):
| | | | | | | | | |
| | | December31, | | |
| | | 2025 | | 2024 | | |
| Other long-term liabilities | | | | | | | | |
| Postemployment benefit plan obligations | | $ | 103 | | $ | 100 | | |
| Finance lease liability | | | 169 | | | 224 | | |
| Operating lease liabilities | | | 86 | | | 88 | | |
| Income taxes payable | | | 90 | | | 65 | | |
| Contract liabilities | | | 92 | | | 212 | | |
| Other | | | 42 | | | 40 | | |
| Total other long-term liabilities | | $ | 582 | | $ | 729 | | |
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TRANSOCEANLTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTScontinued
Note17Supplemental Cash Flow Information
The reconciling adjustments of our net cash provided by operating activities that were attributable to the net change in other operating assets and liabilities were as follows (inmillions):
| | | | | | | | | | | | | | |
| | | | | Years ended December31, | | |
| | | | | 2025 | | 2024 | | 2023 | | |
| Changes in other operating assets and liabilities | | | | | | | | | | | | | |
| Increase in accounts receivable | | | | $ | (30) | | $ | (94) | | $ | (99) | | |
| (Increase) decrease in other assets | | | | | 7 | | | (92) | | | (91) | | |
| Increase (decrease) in accounts payable and other current liabilities | | | | | (12) | | | (86) | | | 144 | | |
| Decrease in other long-term liabilities | | | | | (7) | | | (3) | | | (6) | | |
| Change in income taxes receivable / payable, net | | | | | 17 | | | (19) | | | (36) | | |
| Change in receivables from / payables to affiliates, net | | | | | | | | 9 | | | (8) | | |
| | | | | $ | (25) | | $ | (285) | | $ | (96) | | |
Additional cash flow information was as follows (inmillions):
| | | | | | | | | | | | | | |
| | | | | Years ended December31, | | |
| | | | | 2025 | | 2024 | | 2023 | | |
| Certain cash operating activities | | | | | | | | | | | | | |
| Cash payments for interest | | | | $ | 538 | | $ | 521 | | $ | 408 | | |
| | | | | | | | | | | | | | |
| Noncash investing and financing activities | | | | | | | | | | | | | |
| Capital additions accrued at end of period | | (a) | | $ | 20 | | $ | 23 | | $ | 36 | | |
| Acquisition of outstanding ownership interests in exchange for shares and debt | | (b) | | | | | | 431 | | | 99 | | |
| Debt investment exchanged for equity ownership interests | | (c) | | | 2 | | | | | | 37 | | |
| Finance lease installments settled with credits issued to customer | | (d) | | | 39 | | | 40 | | | 44 | | |
| Shares issued in exchanges of exchangeable bonds | | (e) | | | 201 | | | | | | 434 | | |
| (a) | Additions to property and equipment for which we had accrued a corresponding liability in accounts payable at the end of the period. See Note6Long-Lived Assets. | |
| (b) | In June2024, we issued 55.5million TransoceanLtd. shares and $130million aggregate principal amount of 8.00%Senior Notes to acquire the outstanding ownership interest in Orion. In September2023, we issued 11.9million TransoceanLtd. shares to acquire the outstanding ownership interest in Liquila. See Note4Unconsolidated Affiliates, Note6Long-Lived Assets and Note13Equity. | |
| (c) | In October2025, we agreed to exchange borrowings due to us under a loan agreement with an unconsolidated affiliate for equity ownership interests. In September2023, we agreed to exchange borrowings due to us under a financing arrangement with Orion for additional equity ownership interests in Orion. See Note4Unconsolidated Affiliates. | |
| (d) | In the years ended December31, 2025, 2024 and 2023, we agreed to settle installments due to the lessor under our finance lease by issuing corresponding credits to our customer for amounts due to us under the drilling contract. See Note7Leases. | |
| (e) | In the year ended December31, 2025, we issued 73.3million TransoceanLtd. shares to certain holders that elected to exchange the 4.00%Exchangeable Bonds pursuant to the Exchange Agreements. In the yearended December31, 2023, we issued 65.1million TransoceanLtd. shares to certain holders that elected to exchange the 2.50%Exchangeable Bonds, the 4.00%Exchangeable Bonds and the 4.625%Exchangeable Bonds. See Note8Debt and Note13Equity. | |
Note18Financial Instruments
**Overview**The carrying amounts and fair values of our financial instruments were as follows (in millions):
| | | | | | | | | | | | | | | |
| | | December31,2025 | | December31,2024 | | |
| | | Carrying | | Fair | | Carrying | | Fair | | |
| | | amount | | value | | amount | | value | | |
| Cash and cash equivalents | | $ | 620 | | $ | 620 | | $ | 560 | | $ | 560 | | |
| Restricted cash and cash equivalents | | | 377 | | | 377 | | | 381 | | | 381 | | |
| Total debt | | | 5,657 | | | 5,755 | | | 6,881 | | | 6,888 | | |
**Cash and cash equivalents**Our cash and cash equivalents are primarily invested in demand deposits, short-term time deposits and money market funds. The carrying amount of our cash and cash equivalents represents the historical cost, plus accrued interest, which approximates fair value because of the short maturities of the instruments.
**Restricted cash and cash equivalents**Our restricted cash and cash equivalents, which are subject to restrictions due to collateral requirements, legislation, regulation or court order, are primarily invested in demand deposits and money market funds. The carrying amount of our restricted cash and cash equivalents represents the historical cost, plus accrued interest, which approximates fair value because of the short maturities of the instruments.
**Total debt**The carrying amount of our total debt represents the principal amount, together with unamortized discounts, premiums and issue costs. The carrying amount and fair value of our total debt includes amounts related to our exchangeable bonds (see [Note8](#Note9_Debt)
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TRANSOCEANLTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTScontinued
Debt[](#Note9_Debt)). We estimated the fair value of our total debt using significant other observable inputs, representative of Level2 fair value measurements, including the terms and credit spreads for the instruments and, with respect to our exchangeable bonds, the expected volatility of the market price for our shares.
Note19Risk Concentration
**Interest rate risk**We are exposed to interest rate risk related to our fixed-rate debt when we refinance maturing debt with new debt or when we early retire debt in open market repurchases or other market transactions. We are also exposed to interest rate risk related to our restricted and unrestricted cash equivalents, as the interest income earned on these investments is based on variable or short-term interest rates, which change with market interest rates.
**Equity price risk**We are exposed to equity price risk primarily related to the bifurcated compound exchange feature contained within the indenture governing the 4.625%Exchangeable Bonds. The market price of our shares is the primary driver of the fair value of the exchange feature. An increase or decrease to the market price of our shares yields an increase or decrease to the carrying amount of the exchange feature, recorded as a component of our debt, and a corresponding change to interest expense.
**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. To minimize the exposure to currency exchange rate risk, we use a variety of techniques, including structuring customer payment terms and occasionally entering into forward exchange contracts. We structure customer contracts, as our primary tool to manage currency exchange rate risk, to provide for payment in both U.S. dollars and local currency where the local currency portion is based on our anticipated local currency requirements over the contract term. Due to various factors, including customer acceptance, local banking laws, national content requirements, other statutory requirements, currency liquidity, local inflation and revenue efficiency, actual local currency needs may vary from those realized in the customer contracts, resulting in partial exposure to currency exchange rate risk. The currency exchange effect resulting from our international operations generally has not had a material impact on our operating results.
**Credit risk**We are exposed to concentrations of credit risk primarily related to our restricted and unrestricted cash and cash equivalents and customer receivables. We generally maintain our restricted and unrestricted cash and cash equivalents in time deposits at commercial banks with high credit ratings or mutual funds, which invest exclusively in high-quality money market instruments, and because we limit the amount of exposure to any oneinstitution, we do not believe we are exposed to any significant credit risk. Our customer receivables, dispersed across various countries, are due from integrated energy companies, government-owned or government-controlled energy companies and other independent energy companies. We occasionally require collateral or other security to support customer receivables when we have encountered isolated concerns related to the credit of independent energy companies. Additionally, in certain infrequent instances, when we determine that collection is uncertain, we may offer extended payment terms and recognize revenues associated with the contract on a cash basis. We establish an allowance for credit losses, recorded in accounts receivable, net, by applying an expected loss rate based on current, forecasted and historical experience. At December31, 2025 and 2024, our allowance for credit losses was $2million.
**Labor agreements**At December31, 2025, we had a global workforce of approximately 5,600individuals, including approximately 380contractors. Approximately 45percent of our total workforce, working primarily in Brazil and Norway, is represented by, and some of our contracted labor work is subject to, collective bargaining agreements, substantially all of which are subject to annual salary negotiations. Negotiations for 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.
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**Item9.**Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
We have not had a change in or disagreement with our accountants within 24months prior to the date of our most recent financial statements or in any period subsequent to such date.
**Item9A.**Controls and Procedures
**Disclosure controls and procedures**Our disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the U.S. Securities Exchange Act of 1934 is (1)accumulated and communicated to our management, including our Chief Executive Officer, who is our principal executive officer, and our Chief Financial Officer, who is our principal financial officer, to allow timely decisions regarding required disclosure and (2)recorded, processed, summarized and reported within the time periods specified in the U.S. Securities and Exchange Commissions rules and forms. Under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, we performed an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of December31, 2025.
**Internal control over financial reporting**There were no changes to our internal control over financial reporting during the quarter ended December31, 2025 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting. See [Managements Report on Internal Control Over Financial Reporting](#Item8_MgmtReportOnIntControl) and [Report of Independent Registered Public Accounting Firm](#Item8_ReportOfIndepenRegist), included in Item8 of this annual report.
**Item9B.**Other Information
During the threemonths ended December31, 2025, no director or officer of Transocean adopted or terminated a Rule10b5-1 trading arrangement or non-Rule10b5-1 trading arrangement, as each term is defined in Item408(a) of RegulationS-K.
**Item9C.**Disclosure Regarding Foreign Jurisdictions That Prevent Inspections
Not applicable.
PARTIII
**Item10.**Directors, Executive Officers and Corporate Governance
**Item11.**Executive Compensation
**Item12.**Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters
**Item13.**Certain Relationships, Related Transactions, and Director Independence
**Item14.**Principal Accountant Fees and Services
The information required by Items10, 11, 12, 13 and 14 is incorporated herein by reference to our definitive proxy statement for our 2026annual general meeting of shareholders, which will be filed with the U.S. Securities and Exchange Commission pursuant to Regulation14A under the U.S. Securities Exchange Act of 1934 within 120days of December31, 2025. Certain information with respect to our executive officers is set forth in PartI of this annual report under the caption [Executive Leadership.](#Item1_ExecutiveLeadership)
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PARTIV
**Item15.**Exhibits and Financial Statement Schedules
**(a)**Index to Financial Statements, Financial Statement Schedules and Exhibits
(1)Index to Financial Statements
| 9 | | | | |
| Included in PartII of this report: | | Page | | |
| Managements Report on Internal Control Over Financial Reporting | | 37 | | |
| Reports of Independent Registered Public Accounting Firm (PCAOB ID 00042) | | 38 | | |
| Consolidated Statements of Operations | | 41 | | |
| Consolidated Statements of Comprehensive Loss | | 42 | | |
| Consolidated Balance Sheets | | 43 | | |
| Consolidated Statements of Equity | | 44 | | |
| Consolidated Statements of Cash Flows | | 45 | | |
| Notes to Consolidated Financial Statements | | 46 | | |
Financial statements of unconsolidated subsidiaries are not presented herein because such subsidiaries do not meet the significance test.
(2)Financial Statement Schedules
**TransoceanLtd. and Subsidiaries**
**Schedule IIValuation and Qualifying Accounts**
(inmillions)
| | | | | | | | | | | | | | | | |
| | | | | Years ended December31, | |
| | | | | 2025 | | | 2024 | | | 2023 | | |
| Allowance for credit losses | | | | | | | | | | | | | | | |
| Balance, beginning of period | | | | $ | 2 | | | $ | 2 | | | $ | 2 | | |
| Additions: charged to cost and expenses | | | | | | | | | | | | | | | |
| Additions: charged to other accounts | | | | | | | | | | | | | | | |
| Deductions | | | | | | | | | | | | | | | |
| Balance, end of period | | | | $ | 2 | | | $ | 2 | | | $ | 2 | | |
| | | | | | | | | | | | | | | | |
| Allowance for excess materials and supplies | | | | | | | | | | | | | | | |
| Balance, beginning of period | | | | $ | 178 | | | $ | 198 | | | $ | 199 | | |
| Additions: charged to cost and expenses | | | | | 17 | | | | 7 | | | | 6 | | |
| Additions: charged to other accounts | | | | | | | | | | | | | | | |
| Deductions | | (a) | | | (55) | | | | (27) | | | | (7) | | |
| Balance, end of period | | | | $ | 140 | | | $ | 178 | | | $ | 198 | | |
| | | | | | | | | | | | | | | | |
| Valuation allowance on deferred tax assets | | | | | | | | | | | | | | | |
| Balance, beginning of period | | | | $ | 2,089 | | | $ | 1,884 | | | $ | 1,910 | | |
| Additions: charged to cost and expenses | | | | | 390 | | | | 208 | | | | | | |
| Additions: charged to other accounts | | | | | | | | | | | | | | | |
| Deductions | | (b) | | | | | | | (3) | | | | (26) | | |
| Balance, end of period | | | | $ | 2,479 | | | $ | 2,089 | | | $ | 1,884 | | |
| (a) | Amount related to disposal of materials and supplies, primarily associated with rigs and related assets sold or classified as held for sale. | |
| (b) | Amount related to adjustments to other deferred tax assets with valuation allowances. | |
(3)Exhibits
The following exhibits are filed or furnished herewith, as indicated, or incorporated by reference to the location indicated:
| | | | | | | |
| Number | | Description | | Location | |
| | 2.1 | | Business Combination Agreement, dated as of February9, 2026, between TransoceanLtd. and ValarisLimited | | Exhibit2.1 to TransoceanLtd.s Current Report on Form8-K (Commission File No.001-38373) filed on February10, 2026 | |
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| | | | | | | |
| Number | | Description | | Location | |
| | 3.1 | | Articles of Association of TransoceanLtd. | | Exhibit3.2 to TransoceanLtd.s Current Report on Form8-K (Commission File No.001-38373) filed on June3, 2025 | |
| | 3.2 | | Organizational Regulations of TransoceanLtd., amended effective as of May30, 2025 | | Exhibit3.3 to TransoceanLtd.s Current Report on Form8-K (Commission File No.001-38373) filed on June3, 2025 | |
| | 4.1 | | Description of Securities Registered Pursuant to Section12 of the Securities Exchange Act of 1934 | | Filed herewith | |
| | 4.2 | | Credit Agreement, dated as of June22, 2018, among Transocean InternationalLimited, the lenders parties thereto and Citibank,N.A., as administrative agent and collateral agent | | Exhibit4.1 to TransoceanLtd.s Current Report on Form8-K (Commission File No.000-53533) filed on June27, 2018 | |
| | 4.2.1 | | Increase of Commitments and First Amendment to Credit Agreement, dated as of May13, 2019, among Transocean InternationalLimited, the lenders and issuing banks parties thereto, Citibank,N.A., as administrative agent, and for the limited purposes set forth therein, TransoceanLtd. and certain of its subsidiaries | | Exhibit10.1 to TransoceanLtd.s Current Report on Form8-K (Commission File No.001-38373) filed on May13, 2019 | |
| | 4.2.2 | | Increase of Commitments, Second Amendment to Credit Agreement and First Amendment to Guaranties, dated as of July15, 2019, among Transocean InternationalLimited, the lenders and issuing banks parties thereto, Citibank,N.A., as administrative agent, and for the limited purposes set forth therein, TransoceanLtd. and certain of its subsidiaries | | Exhibit10.1 to TransoceanLtd.s Current Report on Form8-K (Commission File No.001-38373) filed on July15, 2019 | |
| | 4.2.3 | | Curative Agreement, dated September24, 2019, between Transocean InternationalLimited and Citibank,N.A., as administrative agent for the lenders under the Credit Agreement dated June22, 2018, as amended | | Exhibit10.2 to TransoceanLtd.s Quarterly Report on Form10-Q (Commission File No.001-38373) for the quarter ended September30, 2019 | |
| | 4.2.4 | | Increase of Commitments and Third Amendment to Credit Agreement, dated as of December23, 2019, among Transocean InternationalLimited, the lenders and issuing banks parties thereto, Citibank,N.A., as administrative agent, and for the limited purposes set forth therein, TransoceanLtd. and certain of its subsidiaries | | Exhibit4.6 to TransoceanLtd.s Annual Report on Form10-K (Commission File No.001-38373) for the year ended December31, 2019 | |
| | 4.2.5 | | Fourth Amendment to Credit Agreement, dated as of November30, 2020, among Transocean InternationalLimited, the lenders and issuing banks parties thereto, Citibank,N.A., as administrative agent, and for the limited purposes set forth therein, certain of Transocean InternationalLimiteds subsidiaries | | Exhibit10.1 to TransoceanLtd.s Current Report on Form8-K (Commission File No.001-38373) filed on December1, 2020 | |
| | 4.2.6 | | FifthAmendment to Credit Agreement, dated as of July27, 2022, among Transocean InternationalLimited, the lenders and issuing banks parties thereto, Citibank,N.A., as administrative agent, and for the limited purposes set forth therein, TransoceanLtd. and certain of Transocean InternationalLimiteds subsidiaries | | Exhibit10.1 to TransoceanLtd.s Current Report on Form8-K (Commission File No.001-38373) filed on August1, 2022 | |
| | 4.2.7 | | SixthAmendment to Credit Agreement, dated as of April18, 2024, among Transocean InternationalLimited, the lenders parties thereto, Citibank,N.A. as administrative agent and collateral agent, and for the limited purposes set forth therein, TransoceanLtd. and certain of Transocean InternationalLimiteds subsidiaries | | Exhibit10.1 to TransoceanLtd.s Current Report on Form8-K (Commission File No.001-38373) filed on April18, 2024 | |
| | 4.3 | | Indenture, dated as of April15, 1997, between Transocean OffshoreInc. and Texas Commerce Bank NationalAssociation, as trustee | | Exhibit4.1 to TransoceanOffshoreInc.s Current Report on Form8-K (Commission File No.001-07746) filed on April30, 1997 | |
| | 4.3.1 | | FirstSupplemental Indenture, dated as of April15, 1997, between Transocean OffshoreInc. and Texas Commerce Bank NationalAssociation, as trustee, supplementing the Indenture dated as of April15, 1997 | | Exhibit4.2 to Transocean OffshoreInc.s Current Report on Form8-K (Commission File No.001-07746) filed on April30, 1997 | |
| | 4.3.2 | | SecondSupplemental Indenture, dated as of May14, 1999, between Transocean Offshore (Texas)Inc., Transocean OffshoreInc. and Chase Bank of Texas, NationalAssociation, as trustee | | Exhibit4.5 to Transocean OffshoreInc.s Post-Effective Amendment No.1 to Registration Statement on FormS-3 (Registration No.333-59001-99) filed on June29, 1999 | |
| | 4.3.3 | | Fifth Supplemental Indenture, dated as of December18, 2008, among TransoceanLtd., Transocean InternationalLimited and The Bank of New York Mellon Trust Company,N.A., as trustee | | Exhibit4.4 to TransoceanLtd.s Current Report on Form8-K (Commission File No.333-75899) filed on December19, 2008 | |
| | 4.3.4 | | Form of 7.45%Notes due April15, 2027 | | Exhibit4.3 to Transocean OffshoreInc.s Current Report on Form8-K (Commission File No.001-07746) filed on April30, 1997 | |
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| | | | | | | |
| Number | | Description | | Location | |
| | 4.3.5 | | Form of 8.00%Debentures due April15, 2027 | | Exhibit4.4 to Transocean OffshoreInc.s Current Report on Form8-K (Commission File No.001-07746) filed on April30, 1997 | |
| | 4.3.6 | | Officers Certificate establishing the terms of the 7.50%Notes due April15, 2031 | | Exhibit4.3 to Transocean Sedco ForexInc.s Current Report on Form8-K (Commission File No.333-75899) filed on April9, 2001 | |
| | 4.3.7 | | Officers Certificate establishing the terms of the 7.375%Notes due April15, 2018 | | Exhibit4.14 to Transocean Sedco ForexInc.s Annual Report on Form10-K (Commission File No.333-75899) for the year ended December31, 2001 | |
| | 4.4 | | Indenture, dated as of September1, 1997, between Global MarineInc. and Wilmington TrustCompany, as Trustee, relating to Debt Securities of Global MarineInc. | | Exhibit4.1 of Global MarineInc.s Registration Statement on FormS-4 (No.333-39033) filed on October30, 1997 | |
| | 4.4.1 | | FirstSupplemental Indenture, dated as of June23, 2000, between Global MarineInc. and Wilmington TrustCompany, as Trustee, relating to Debt Securities of Global MarineInc. | | Exhibit4.2 of Global MarineInc.s Quarterly Report on Form10-Q (Commission File No.001-05471) for the quarter ended June30, 2000 | |
| | 4.4.2 | | SecondSupplemental Indenture, dated as of November20, 2001, between Global MarineInc. and Wilmington TrustCompany, as Trustee, relating to Debt Securities of Global MarineInc. | | Exhibit4.2 to GlobalSantaFeCorporations Annual Report on Form10-K (Commission File No.001-14634) for the year ended December31, 2004 | |
| | 4.4.3 | | Third Supplemental Indenture, dated as of July29, 2019, among Global MarineInc, Transocean InternationalLimited and Wilmington TrustCompany, as trustee, relating to Debt Securities of Global MarineInc. | | Exhibit4.1 to TransoceanLtd.s Current Report on Form8-K (Commission File No.001-38373) filed on July29, 2019 | |
| | 4.4.4 | | Form of 7%Note due 2028 | | Exhibit4.2 of Global MarineInc.s Current Report on Form8-K (Commission File No.001-05471) filed on May22, 1998 | |
| | 4.4.5 | | Terms of 7%Notes due 2028 | | Exhibit4.1 of Global MarineInc.s Current Report on Form8-K (Commission File No.001-05471) filed on May22, 1998 | |
| | 4.5 | | Indenture, dated as of December11, 2007, between Transocean InternationalLimited and Wells Fargo Bank, NationalAssociation | | Exhibit4.36 to Transocean InternationalLimiteds Annual Report on Form10-K (Commission File No.333-75899) for the year ended December31, 2007 | |
| | 4.5.1 | | FirstSupplemental Indenture, dated as of December11, 2007, between Transocean InternationalLimited and Wells Fargo Bank, NationalAssociation | | Exhibit4.37 to Transocean InternationalLimiteds Annual Report on Form10-K (Commission File No.333-75899) for the year ended December31, 2007 | |
| | 4.5.2 | | ThirdSupplemental Indenture, dated as of December18, 2008, among TransoceanLtd., Transocean InternationalLimited and Wells Fargo Bank, National Association, as trustee | | Exhibit4.3 to TransoceanLtd.s Current Report on Form8-K (Commission File No.333-75899) filed on December19, 2008 | |
| | 4.5.3 | | FourthSupplemental Indenture, dated as of September21, 2010, among TransoceanLtd., Transocean InternationalLimited and Wells Fargo Bank, NationalAssociation, as trustee | | Exhibit4.1 to TransoceanLtd.s Quarterly Report on Form10-Q (Commission File No.000-53533) for the quarter ended September30, 2010 | |
| | 4.5.4 | | FifthSupplemental Indenture, dated as of December5, 2011, among TransoceanLtd., Transocean InternationalLimited and Wells Fargo Bank, National Association, as trustee | | Exhibit4.3 to TransoceanLtd.s Current Report on Form8-K (Commission File No.000-53533) filed on December5, 2011 | |
| | 4.5.5 | | SixthSupplemental Indenture, dated as of September13, 2012, among Transocean InternationalLimited, TransoceanLtd. and Wells Fargo Bank, NationalAssociation, as trustee | | Exhibit4.3 to TransoceanLtd.s Current Report on Form8-K (Commission File No.000-53533) filed on September13, 2012 | |
| | 4.6 | | Registration Rights Agreement, dated as of January30, 2018, among TransoceanLtd., Transocean InternationalLimited, and the security holders named therein | | Exhibit4.3 to TransoceanLtd.s Current Report on Form8-K (Commission File No.000-53533) filed on January30, 2018 | |
| | 4.6.1 | | Amendment to Registration Rights Agreement, dated as of August14, 2020, by and among TransoceanLtd., Transocean InternationalLimited and Perestroika (Cyprus)Ltd. | | Exhibit 4.2 to TransoceanLtd.s Current Report on Form8-K (Commission File No.001-38373) filed on August14, 2020 | |
| | 4.7 | | Indenture, dated as of September30, 2022, by and among Transocean InternationalLimited, the Guarantors and Truist Bank, as trustee | | Exhibit4.1 to TransoceanLtd.s Current Report on Form8-K (Commission File No.001-38373) filed on September30, 2022 | |
| | 4.8 | | Warrant Agreement, dated as of September30, 2022, by and among Transocean InternationalLimited, TransoceanLtd. and ComputershareInc. and Computershare Trust Company,N.A., as warrant agent | | Exhibit4.2 to TransoceanLtd.s Current Report on Form8-K (Commission File No.001-3873) filed on September30, 2022 | |
| | 4.9 | | Indenture, dated as of January17, 2023, among Transocean Titan FinancingLimited, the Guarantors and Truist Bank, as trustee and collateral agent | | Exhibit4.1 to TransoceanLtd.s Current Report on Form8-K (Commission File No.001-38373) filed on January17, 2023 | |
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| | | | | | | |
| Number | | Description | | Location | |
| | 4.9.1 | | First Supplemental Indenture, dated as of May8, 2024, among Transocean Titan FinancingLimited, the Guarantors and Truist Bank, as trustee and collateral agent | | Exhibit4.1 to TransoceanLtd.s Current Report on Form8-K (Commission File No.001-138373) filed on May8, 2024 | |
| | 4.10 | | Indenture, dated as of January31, 2023, among Transocean InternationalLimited, the Guarantors named therein and Truist Bank, as trustee and collateral agent | | Exhibit4.1 to TransoceanLtd.s Current Report on Form8-K (Commission File No.001-38373) filed on January31, 2023 | |
| | 4.10.1 | | First Supplemental Indenture, dated as of January26, 2024, by and among Transocean InternationalLimited, the Additional Guarantors, the Note Parties and Truist Bank, as trustee and collateral agent, supplementing the Indenture dated as of January31, 2023 | | Exhibit4.16.1 to TransoceanLtd.s Annual Report on Form10-K (Commission File No.001-38373) for the year ended December31, 2023 | |
| | 4.10.2 | | Second Supplemental Indenture, dated as of May30, 2024, by and among Transocean InternationalLimited, the Additional Guarantors, the Note Parties and Truist Bank, as trustee and collateral agent, supplementing the Indenture dated as of January31, 2023 | | Exhibit4.3 to TransoceanLtd.s Quarterly Report on Form10-Q (Commission File No.001-38373) for the quarter ended June30, 2024 | |
| | 4.11 | | Indenture, dated as of October11, 2023, among Transocean AquilaLimited, the Guarantors and Truist Bank, as trustee and collateral agent | | Exhibit4.1 to TransoceanLtd.s Current Report on Form8-K (Commission File No.001-38373) filed on October11, 2023 | |
| | 4.11.1 | | First Supplemental Indenture, dated as of March18, 2024, by and among Transocean AquilaLimited, the Additional Guarantors, the Note Parties and Truist Bank, as trustee and collateral agent, supplementing the Indenture dated as of October11, 2023 | | Exhibit4.2 to TransoceanLtd.s Quarterly Report on Form10-Q (Commission File No.001-38373) for the quarter ended March31, 2024 | |
| | 4.12 | | Indenture, dated as of April18, 2024, by and among Transocean InternationalLimited, the Guarantors and Truist Bank, as trustee. | | Exhibit4.1 to TransoceanLtd.s Current Report on Form8-K (Commission File No.001-38373) filed on April18, 2024 | |
| | 4.13 | | Registration Rights Agreement, dated as of June28, 2024, by and among the Company and Hayfin | | Exhibit10.1 to TransoceanLtd.s Current Report on Form8-K (Commission File No.001-38373) filed on June28, 2024 | |
| | 4.14 | | Indenture, dated as of October15, 2025, by and among Transocean InternationalLimited, the Guarantors and Truist Bank, as trustee | | Exhibit4.1 to TransoceanLtd.s Current Report on Form8-K (Commission File No.001-38373) filed on October15, 2025 | |
| | 10.1 | | Shipyard Credit Agreement for DeepwaterAtlas, dated as of June5, 2021, by and between Jurong Shipyard Pte.Ltd. and Transocean Offshore Deepwater HoldingsLimited | | Exhibit10.2 to TransoceanLtd.s Quarterly Report on Form10-Q (Commission File No.001-38373) for the quarter ended June30, 2021 | |
| | 10.2 | | Shipyard Credit Agreement for DeepwaterTitan, dated as of June5, 2021, by and between Jurong Shipyard Pte.Ltd. and Transocean Offshore Deepwater HoldingsLimited | | Exhibit10.3 to TransoceanLtd.s Quarterly Report on Form10-Q (Commission File No.001-38373) for the quarter ended June30, 2021 | |
| | 10.3 | | Amended and Restated 2015 TransoceanLtd. Long-Term Incentive Plan, effective as of May30, 2025 | | Exhibit10.1 to TransoceanLtd.s Current Report on Form8-K (Commission No.001-38373) filed on June3, 2025 | |
| | 10.4 | | Terms and Conditions of 2013 Director Deferred Unit Award | | Exhibit10.14 to TransoceanLtd.s Annual Report on Form10-K (Commission File No.000-53533) for the year ended December31, 2015 | |
| | 10.5 | | Terms and Conditions of 2014Director Deferred Unit Award | | Exhibit10.15 to TransoceanLtd.s Annual Report on Form10-K (Commission File No.000-53533) for the year ended December31, 2015 | |
| | 10.6 | | Terms and Conditions of 2015Director Restricted Share Unit Award | | Exhibit10.16 to TransoceanLtd.s Annual Report on Form10-K (Commission File No.000-53533) for the year ended December31, 2015 | |
| | 10.7 | | TransoceanLtd. Pension Equalization Plan, as amended and restated, effective January1, 2009 | | Exhibit10.41 to TransoceanLtd.s Annual Report on Form10-K (Commission File No.000-53533) for the year ended December31, 2008 | |
| | 10.8 | | TransoceanU.S. Supplemental Savings Plan, as amended and restated, effective as of January1, 2009 | | Exhibit10.44 to TransoceanLtd.s Annual Report on Form10-K (Commission File No.000-53533) for the year ended December31, 2008 | |
| 10.9 | | Form of Indemnification Agreement entered into between TransoceanLtd. and each of its Directors and Executive Officers | | Exhibit10.1 to Transocean InternationalLimiteds Current Report on Form8-K (Commission File No.333-75899) filed on October10, 2008 | |
| | 10.10 | | Amended and Restated Executive Severance Benefit Policy | | Exhibit10.1 to TransoceanLtd.s Current Report on Form8-K (Commission File No.000-53533) filed on November22, 2023 | |
| | 10.11 | | Employment Agreement with Jeremy D.Thigpen effective September1, 2016 | | Exhibit10.1 to TransoceanLtd.s Quarterly Report on Form10-Q (Commission File No.000-53533) for the quarter ended September30, 2016 | |
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| | | | | | | |
| Number | | Description | | Location | |
| | 10.12 | | Employment Agreement with Jeremy D.Thigpen effective May1, 2025 | | Exhibit10.4 to TransoceanLtd.s Quarterly Report on Form10-Q (Commission File No.001-38373) for the quarter ended March31, 2025 | |
| | 10.13 | | Employment Agreement with Mark L.Mey effective September1, 2016 | | Exhibit10.2 to TransoceanLtd.s Quarterly Report on Form10-Q (Commission File No.000-53533) for the quarter ended September30, 2016 | |
| | 10.14 | | Amended and Restated Performance Award and Cash Bonus Plan of TransoceanLtd. | | Exhibit10.48 to TransoceanLtd.s Annual Report on Form10-K (Commission File No.001-38373) for the year ended December31, 2020 | |
| | 10.15 | | Terms and Conditions of 2020 Director Restricted Share Unit Award | | Exhibit10.3 to TransoceanLtd.s Quarterly Report on Form10-Q (Commission File No.001-38373) for the quarter ended June30, 2020 | |
| | 10.16 | | Terms and Conditions of 2022 Executive Equity Awards | | Exhibit 10.52 to Transocean Ltd.s Annual Report on Form 10-K (Commission File No.001-38373) for the year ended December31, 2021 | |
| | 10.17 | | Terms and Conditions of 2023 Executive Equity Awards | | Exhibit 10.50 to TransoceanLtd.s Annual Report on Form10-K (Commission File No.001-38373) for the year ended December31, 2022 | |
| | 10.18 | | Terms and Conditions of 2024 Executive Equity Awards | | Exhibit10.1 to TransoceanLtd.s Quarterly Report on Form10-Q (Commission File No.001-38373) for the quarter ended March31, 2024 | |
| | 10.19 | | Terms and Conditions of 2024 Executive Management Team Equity Awards | | Exhibit10.2 to TransoceanLtd.s Quarterly Report on Form10-Q (Commission File No.001-38373) for the quarter ended March31, 2024 | |
| | 10.20 | | Employment Agreement with Mr.Thad Vayda dated May20, 2024 | | Exhibit10.2 to TransoceanLtd.s Current Report on Form8-K (Commission No.001-38373) filed on May22, 2024 | |
| | 10.21 | | Employment Agreement with Keelan Adamson effective May1, 2025 | | Exhibit10.3 to TransoceanLtd.s Quarterly Report on Form10-Q (Commission File No.001-38373) for the quarter ended March31, 2025 | |
| | 10.22 | | Terms and Conditions of 2025 Executive Equity Awards | | Exhibit10.1 to TransoceanLtd.s Quarterly Report on Form10-Q (Commission File No.001-38373) for the quarter ended March31, 2025 | |
| | 10.23 | | Terms and Conditions of 2025 Executive Management Team Equity Awards | | Exhibit10.2 to TransoceanLtd.s Quarterly Report on Form10-Q (Commission File No.001-38373) for the quarter ended March31, 2025 | |
| | 19 | | TransoceanLtd. Insider Trading Policy | | Exhibit19 to TransoceanLtd.s Annual Report on Form10-K (Commission File No.001-38373) for the year ended December31, 2024 | |
| | 21 | | Subsidiaries of TransoceanLtd. | | Filed herewith | |
| | 23 | | Consent of Ernst & YoungLLP | | Filed herewith | |
| | 24 | | Powers of Attorney | | Filed herewith | |
| | 31.1 | | Certification of Chief Executive Officer pursuant to Section302 of the Sarbanes-Oxley Act of 2002 | | Filed herewith | |
| | 31.2 | | Certification of Chief Financial Officer pursuant to Section302 of the Sarbanes-Oxley Act of 2002 | | Filed herewith | |
| | 32.1 | | Certification of Chief Executive Officer pursuant to Section906 of the Sarbanes-Oxley Act of 2002 | | Furnished herewith | |
| | 32.2 | | Certification of Chief Financial Officer pursuant to Section906 of the Sarbanes-Oxley Act of 2002 | | Furnished herewith | |
| | 97 | | TransoceanLtd. Executive Officer Incentive-Based Compensation Recoupment Policy | | Exhibit97 to TransoceanLtd.s Annual Report on Form10-K (Commission File No.001-38373) for the year ended December31, 2023 | |
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| | | | | | | |
| Number | | Description | | Location | |
| | 101 | | Interactive data files pursuant to Rule405 of RegulationS-T formatted in Inline Extensible Business Reporting Language: (i)our consolidated statements of operations for the years ended December31, 2025, 2024 and 2023; (ii)our consolidated statements of comprehensive loss for the years ended December31, 2025, 2024 and 2023; (iii)our consolidated balance sheets as of December31, 2025 and 2024; (iv)our consolidated statements of equity for the years ended December31, 2025, 2024 and 2023; (v)our consolidated statements of cash flows for the years ended December31, 2025, 2024 and 2023; and (vi)the notes to consolidated financial statements | | Filed herewith | |
| | 104 | | The cover page from our annual report on Form10-K for the year ended December31, 2025, formatted in Inline Extensible Business Reporting Language | | Filed herewith | |
| | | | Compensatory plan or arrangement | | | |
Exhibits listed above as previously having been filed with the U.S. Securities and Exchange Commission are incorporated herein by reference pursuant to Rule12b-32 under the Securities Exchange Act of 1934 and made a part hereof with the same effect as if filed herewith.
Certain instruments relating to our long-term debt and our subsidiaries have not been filed as exhibits since the total amount of securities authorized under any such instrument does not exceed 10percent of our total assets and our subsidiaries on a consolidated basis. We agree to furnish a copy of each such instrument to the U.S. Securities and Exchange Commission upon request.
Certain agreements filed as exhibits to this Report may contain representations and warranties by the parties to such agreements. These representations and warranties have been made solely for the benefit of the parties to such agreements and (1)may be intended not as statements of fact, but rather as a way of allocating the risk to oneof the parties if those statements prove to be inaccurate, (2)may have been qualified by certain disclosures that were made to other parties in connection with the negotiation of such agreements, which disclosures are not reflected in such agreements, and (3)may apply standards of materiality in a way that is different from what may be viewed as material to investors.
SIGNATURES
Pursuant to the requirements of Section13 or 15(d)of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned; thereunto duly authorized, on February23, 2026.
| | | | |
| | TRANSOCEANLTD. | |
| | | | |
| | | | |
| | | | |
| | By: | /s/ Robert Thaddeus Vayda | |
| | | Robert Thaddeus Vayda | |
| | | Executive Vice President and Chief Financial Officer | |
| | | (Principal Financial Officer) | |
| | | | |
| | | | |
| | | | |
| | By: | /s/ Jason Pack | |
| | | Jason Pack | |
| | | Senior Vice President and Chief Accounting Officer | |
| | | (Principal Accounting Officer) | |
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**Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities indicated on February23, 2026.**
| | | | | |
| Signature | | Title | | |
| | | | | |
| /s/ Keelan Adamson | | President and Chief Executive Officer and Director | | |
| Keelan Adamson | | (Principal Executive Officer) | | |
| | | | | |
| /s/ Robert Thaddeus Vayda | | Executive Vice President andChief Financial Officer | | |
| Robert Thaddeus Vayda | | (Principal Financial Officer) | | |
| | | | | |
| /s/ Jason Pack | | Senior Vice President andChief Accounting Officer | | |
| Jason Pack | | (Principal Accounting Officer) | | |
| | | | | |
| * | | Executive Chairof the Board of Directors | | |
| Jeremy D. Thigpen | | | | |
| | | | | |
| * | | Lead Independent Director | | |
| Chadwick C. Deaton | | | | |
| | | | | |
| * | | Director | | |
| Glyn A. Barker | | | | |
| | | | | |
| * | | Director | | |
| Vanessa C.L. Chang | | | | |
| | | | | |
| * | | Director | | |
| Frederico F. Curado | | | | |
| | | | | |
| * | | Director | | |
| Domenic J. DellOsso, Jr. | | | | |
| | | | | |
| * | | Director | | |
| Vincent J. Intrieri | | | | |
| | | | | |
| * | | Director | | |
| William F. Lacey | | | | |
| | | | | |
| * | | Director | | |
| Samuel J. Merksamer | | | | |
| | | | | |
| * | | Director | | |
| Frederik W. Mohn | | | | |
| | | | | |
| | | | | |
| By: /s/ Jason Pack | | | | |
| (Attorney-in-Fact) | | | | |
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