Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark one)
☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FORM 10-K
For the fiscal year ended December 31, 2022
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____
Commission file number 001-38373
TRANSOCEAN LTD.
(Exact name of registrant as specified in its charter)
Switzerland
(State or other jurisdiction of incorporation or organization)
98-0599916
(I.R.S. Employer Identification No.)
Turmstrasse 30
Steinhausen, Switzerland
(Address of principal executive offices)
6312
(Zip Code)
Registrant’s telephone number, including area code: +41 (41) 749-0500
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Shares, CHF 0.10 per share
0.50% Exchangeable Senior Bonds due 2023
Trading symbol
RIG
RIG/23
Name of each exchange on which registered
New York Stock Exchange
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 Rule 405 of the Securities Act. Yes ☑ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No ☑
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of
Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an
emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in
Rule 12b-2 of the Exchange Act.
Large accelerated filer ☑ Accelerated filer ☐ Non-accelerated filer ☐
Smaller reporting company ☐ Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new
or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal
control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.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 registrant’s 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 Rule 12b-2 of the Exchange Act). Yes ☐ No ☑
As of June 30, 2022, 705,711,203 shares were outstanding and the aggregate market value of shares held by non-affiliates was approximately $2.35 billion
(based on the reported closing market price of the shares of Transocean Ltd. on June 30, 2022 of $3.33 per 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 February 14, 2023, 726,263,759 shares were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s definitive Proxy Statement to be filed with the United States Securities and Exchange Commission within 120 days of
December 31, 2022, for its 2023 annual general meeting of shareholders, are incorporated by reference into Part III of this Form 10-K.
Table of Contents
TRANSOCEAN LTD. AND SUBSIDIARIES
INDEX TO ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 2022
Item
Page
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 9C.
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
PART I
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
PART II
Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of
Equity Securities
Reserved
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
PART III
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Shareholder
Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accountant Fees and Services
Item 15.
Exhibits and Financial Statement Schedules
PART IV
2
8
21
21
21
22
24
25
26
39
40
74
74
74
74
75
75
75
75
75
76
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 Section 27A of the United States
(“U.S.”) Securities Act of 1933 and Section 21E of the U.S. Securities Exchange Act of 1934. Forward-looking statements in
this annual report include, but are not limited to, statements about the following subjects:
◾ the effect, impact, potential duration, the scale of any economic disruptions or other implications of COVID-19, including virus variants;
◾ 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, stacking and reactivation of rigs, effects of new rigs on the market, the impact of changes to regulations in
jurisdictions in which we operate and changes in the global economy or market outlook for our industry, our rig classes or the various
geographies in which we operate;
◾ customer drilling contracts, including contract backlog, force majeure provisions, contract awards, commencements, extensions,
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, the commitment, by us or our
customers, to reduce greenhouse gas emissions or intensity thereof;
◾ liquidity, including availability under our bank credit agreement, and adequacy of cash flows for our obligations;
◾ debt levels, 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, alleged defaults and discussions with creditors related thereto;
◾ newbuild, upgrade, shipyard and other capital projects, including the level of expected capital expenditures and the timing and cost of
completing capital projects, delivery and operating commencement dates, relinquishment or abandonment, expected downtime and lost
revenues;
◾ the cost and timing of acquisitions and the proceeds and timing of dispositions;
◾ tax matters, including our effective tax rate, 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, including adequacy 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 and benefit payments.
Forward-looking statements in this annual report are identifiable by use of the following words and other similar
expressions:
◾ anticipates ◾ budgets
◾ believes
◾ could
◾ estimates
◾ expects
◾ forecasts
◾ intends
◾ may
◾ might
◾ plans
◾ predicts
◾ projects
◾ scheduled
◾ should
Such statements are subject to numerous risks, uncertainties and assumptions, including, but not limited to:
◾ those described under “Item 1A. Risk Factors” in this annual report on Form 10-K;
◾ the effects of public health threats, pandemics and epidemics, such as the outbreak of COVID-19, and the adverse impact thereof on our
business, financial condition and results of operations, including, but not limited to, our growth, operating costs, supply chain, labor
availability, logistical capabilities, customer demand for our services and industry demand generally, our liquidity, the price of our
securities and trading markets with respect thereto, our ability to access capital markets, and the global economy and financial markets
generally;
◾ the effects of actions by, or disputes among or between, members of the Organization of 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;
◾ operational performance;
◾ the cancellation of drilling contracts currently included in our reported contract backlog;
◾ losses on impairment of long-lived assets;
◾ shipyard, construction and other delays;
◾ the results of meetings of our shareholders;
◾ changes in political, social and economic conditions;
◾ the effect and results of litigation, regulatory matters, settlements, audits, assessments and contingencies; 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
one or 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 forward-looking statement 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.
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ITEM 1. BUSINESS
OVERVIEW
PART I
Transocean Ltd. (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 February 14, 2023, we owned or had partial ownership interests in and operated 37 mobile offshore drilling units,
consisting of 27 ultra-deepwater floaters and 10 harsh environment floaters. Additionally, as of February 14, 2023, we were
constructing one ultra-deepwater drillship and held a noncontrolling ownership interest in a company that is constructing
one ultra-deepwater drillship.
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 one of the most versatile fleets in the world, consisting of drillships and
semisubmersible floaters used in support of offshore drilling activities and offshore support services on a worldwide basis.
Transocean Ltd. is a Swiss corporation with its registered office in Steinhausen, Canton of Zug and with principal
executive offices located at Turmstrasse 30, 6312 Steinhausen, Switzerland. Our telephone number at that address is
+41 41 749-0500. Our shares are listed on the New York Stock Exchange under the ticker symbol “RIG.” For information
about the revenues, operating income, assets and other information related to our business, our segments and the geographic
areas in which we operate, see “Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations” and “Part II. Item 8. Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements—
Note 1—Business, Note 4—Revenues and Note 6—Long-Lived Assets.”
DRILLING FLEET
Overview—We provide contract drilling services using our fleet of mobile offshore drilling units, including both
drillships and semisubmersibles, broadly referred to as floaters. 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.
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. 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 22 ultra-deepwater drillships that are, and
two ultra-deepwater drillships under construction that will be, equipped with our patented dual-activity technology. Dual-
activity technology employs structures, equipment and techniques using two drilling 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. In addition, our newbuild drillships under
construction will be equipped with dynamic positioning thruster systems and industry-leading hoisting capacity.
Semisubmersibles are floating vessels that can be partially submerged by means of a water ballast system such that the
lower column sections and pontoons are below the water surface during drilling operations. Semisubmersibles are 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 semisubmersible
rigs are relocated with the assistance of tugs, some units are self-propelled and move between locations under their own power
when afloat on pontoons. Four of our 13 semisubmersibles are equipped with dual-activity technology and also have mooring
capability. Two of these four dual-activity units are custom-designed, high-capacity semisubmersible drilling rigs, equipped for
year-round operations in harsh environments, such as those of the Norwegian continental shelf and sub-Arctic waters.
Our floater fleet consists of ultra-deepwater floaters and harsh environment floaters that are designed with high-
specification capabilities to operate in the technically demanding regions of the global offshore drilling business. Ultra-
deepwater floaters are equipped with high-pressure mud pumps and are capable of drilling in water depths of 4,500 feet or
greater. Harsh environment floaters are capable of drilling in harsh environments in water depths between 1,500 and
10,000 feet and have greater displacement, which offers larger variable load capacity, more useable deck space and better
motion characteristics.
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 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 30 days 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
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significant and could fluctuate over time, depends upon various factors, including the availability and cost of shipyard facilities,
the cost of equipment and materials, the extent of repairs and maintenance that may ultimately be required, the length of time a
rig has spent in stacking mode and time and cost of assembling and training crew. We consider these factors, together with
market conditions, length of contract, dayrate and other contract terms, when deciding whether to return a stacked rig to service.
We may not return some stacked rigs to work for drilling services.
Drilling units—The following tables, presented as of February 9, 2023, provide certain specifications for our rigs.
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 expected time of
completion, the year placed into service, and, if applicable, the year of the most recent upgrade. As of February 9, 2023, we
owned all of the drilling rigs in our fleet noted in the tables below, except for the following: (1) the ultra-deepwater floater
Petrobras 10000, which is subject to a finance lease through August 2029, (2) the harsh environment floater Transocean Norge,
which is owned through our 33 percent noncontrolling ownership interest in Orion Holdings (Cayman) Limited (together with
its subsidiary, “Orion”), and (3) the newbuild ultra-deepwater drillship under construction, to be named Deepwater Aquila,
which is owned through our noncontrolling ownership interest in Liquila Ventures Ltd. (together with its subsidiaries,
“Liquila”).
Rig category and name
Ultra-deepwater floaters (27)
Deepwater Atlas
Deepwater Poseidon
Deepwater Pontus
Deepwater Conqueror
Deepwater Proteus
Deepwater Thalassa
Ocean Rig Apollo
Deepwater Athena
Deepwater Asgard
Deepwater Invictus
Deepwater Skyros
Deepwater Mylos
Deepwater Champion
Deepwater Corcovado
Deepwater Mykonos
Deepwater Orion
Discoverer India
Discoverer Luanda
Dhirubhai Deepwater KG2
Discoverer Inspiration
Discoverer Americas
Development Driller III
Petrobras 10000
Discoverer Clear Leader
Dhirubhai Deepwater KG1
GSF Development Driller I
Deepwater Nautilus
Harsh environment floaters (10)
Transocean Norge
Transocean Enabler
Transocean Encourage
Transocean Endurance
Transocean Equinox
Transocean Spitsbergen
Transocean Barents
Henry Goodrich
Transocean Leader
Paul B. Loyd, Jr.
Specifications
Type
upgraded (in feet) (in feet)
Year
entered
service /
Water
depth
capacity
Drilling
depth
capacity
Contracted
location or
standby
status
(a) (b) (c) (d) (f)
Drillship
(a) (b) (c) (e) (g)
Drillship
(a) (b) (c) (e) (g)
Drillship
(a) (b) (c) (e) (g)
Drillship
(a) (b) (c) (e) (g)
Drillship
(a) (b) (c) (e) (g)
Drillship
(a) (b)
(a) (b)
(a) (b) (c) (g)
(a) (b) (c) (g)
(a) (b)
(a) (b) (c)
(a) (b)
(a) (b)
(a) (b)
(a) (b)
(a) (b)
(a) (b)
(a)
(a) (b) (c)
(a) (b)
(a) (b) (h)
(a) (b)
(a) (b) (c)
(a)
(a) (b) (h)
(h)
(a) (h) (i)
(a) (h) (i)
(a) (h) (i)
(a) (h) (i)
(a) (h) (i)
Drillship
Drillship
Drillship
Drillship
Drillship
Drillship
Drillship
Drillship
Drillship
Drillship
Drillship
Drillship
Drillship
Drillship
Drillship
Semisubmersible
Drillship
Drillship
Drillship
Semisubmersible
Semisubmersible
Semisubmersible
Semisubmersible
Semisubmersible
Semisubmersible
Semisubmersible
2022
2018
2017
2016
2016
2016
2015
2014
2014
2014
2013
2013
2011
2011
2011
2011
2010
2010
2010
2010
2009
2009
2009
2009
2009
2005
2000
2019
2016
2016
2015
2015
12,000
40,000
U.S. Gulf
12,000
40,000
U.S. Gulf
12,000
40,000
U.S. Gulf
12,000
40,000
U.S. Gulf
12,000
40,000
U.S. Gulf
12,000
40,000
U.S. Gulf
12,000
40,000
Stacked
12,000
40,000
Stacked
12,000
40,000
U.S. Gulf
12,000
40,000
U.S. Gulf
12,000
40,000
Angola
12,000
40,000
Stacked
12,000
40,000
Stacked
10,000
35,000
10,000
35,000
10,000
35,000
Brazil
Brazil
Brazil
12,000
7,500
40,000
40,000
Stacked
Stacked
12,000
35,000
Brazil
12,000
40,000
U.S. Gulf
12,000
7,500
40,000
37,500
Stacked
Suriname
12,000
37,500
Brazil
12,000
40,000
Stacked
12,000
7,500
8,000
35,000
37,500
30,000
India
Stacked
Stacked
10,000
1,640
1,640
1,640
1,640
40,000 Norwegian N. Sea
28,000 Norwegian N. Sea
28,000 Norwegian N. Sea
28,000 Norwegian N. Sea
28,000
Idle
(a) (h) (i) (j)
Semisubmersible
2010
10,000
30,000 Norwegian N. Sea
(a) (h) (j)
(h)
(h)
(h)
2009
Semisubmersible
Semisubmersible 1985/2007
Semisubmersible 1987/1997
Semisubmersible
1990
10,000
5,000
4,500
2,000
30,000
30,000
25,000
25,000
U.K. N. Sea
Stacked
Stacked
U.K. N. Sea
(a) Dynamically positioned.
(b) Patented dual activity.
(c) Two blowout preventers.
(d) Equipped with two 15,000 psi blowout preventers, one of which is scheduled to be upgraded to a 20,000 psi blowout preventer.
(e) Designed to accommodate a future upgrade to 20,000 psi blowout preventer(s).
(f) Main hoisting capacity of 1,700 short tons.
(g) Main hoisting capacity of 1,400 short tons.
(h) Moored.
(i) Automated drilling control.
(j) Dual activity.
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Rig category and name
Rigs under construction (2)
Ultra-deepwater floaters
Deepwater Titan
Deepwater Aquila
Specifications
Type
Water
depth
capacity
completion (in feet) (in feet)
Drilling
depth
capacity
Expected
Contracted
location
(a) (b) (c) (d)
(a) (b) (e)
Drillship
Drillship
2Q2023
3Q2023
12,000
10,000
40,000
40,000
U.S. Gulf
TBD
(a) To be dynamically positioned.
(b) To be equipped with our patented dual activity.
(c) To be equipped with two 20,000 psi blowout preventers.
(d) To be equipped with main hoisting capacity of 1,700 short tons.
(e) To be equipped with main hoisting capacity of 1,400 short tons.
DRILLING CONTRACTS
Our offshore drilling services contracts are individually negotiated and vary in their terms and conditions. We obtain
most of our drilling contracts through bidding processes in competition against other drilling services contractors and through
direct negotiations with operators. Drilling contracts generally provide for payment on a dayrate basis, typically with higher
rates for periods when drilling operations are optimized and lower or zero rates for periods during which the drilling unit is
mobilized or when drilling operations are interrupted, restricted by equipment breakdowns, adverse environmental conditions or
otherwise. 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 December 31, 2022, our contract backlog was approximately $8.34 billion,
representing an increase of 26 percent and 4 percent, respectively, compared to the contract backlog at December 31, 2021 and
2020, which was $6.60 billion and $8.06 billion, respectively. See “Part II. Item 7. Management’s Discussion and Analysis of
Financial Condition and Results of Operations—Performance and Other Key Indicators.”
Certain of our drilling contracts may be cancelable for the convenience of the customer, typically with the payment of
an early termination payment. Such payments, however, may not fully compensate us for the loss of the contract. 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 “Item 1A. Risk Factors—
Risks related to our business—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.”
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 from substances in our control, such as diesel used onboard the rig 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 the cost of bringing the well under control. However, because our drilling contracts are individually negotiated, the degree
of indemnification we receive from our customers for the risks discussed above may vary from contract to contract based on
market conditions, customer requirements existing when the contract was negotiated or other factors. 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 consolidated financial position,
results of operations or cash flows. See “Item 1A. Risk Factors—Risks related to 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.”
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MARKETS
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 assets 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 February 9, 2023, the drilling units in
our fleet, including stacked and idle rigs, but excluding rigs under construction, were located in the U.S. Gulf of Mexico
(nine units), Greece (seven units), the Norwegian North Sea (six units), Brazil (five units), Malaysia (three units), the United
Kingdom (the “U.K.”) North Sea (three units), Angola (one unit), Canada (one unit), India (one unit) and Suriname (one unit).
We categorize the sectors of the floater market 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 three sectors. We generally view the ultra-
deepwater and deepwater market sector as water depths beginning at 4,500 feet and extending to the maximum water depths in
which rigs are capable of drilling, which is currently up to 12,000 feet. The midwater market sector includes water depths from
approximately 300 feet to approximately 4,500 feet. 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 “Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—
Outlook.”
CUSTOMERS
We provide our offshore drilling services to 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 December 31, 2022, our most significant customers were Shell plc (together with its affiliates, “Shell”),
Equinor ASA (together with its affiliates, “Equinor”) and Petróleo Brasileiro S.A. (together with its affiliates, “Petrobras”),
representing approximately 33 percent, 25 percent and 11 percent, respectively, of our consolidated operating revenues. No
other customers accounted for 10 percent or more of our consolidated operating revenues in the year ended December 31, 2022.
Additionally, as of February 9, 2023, the customers with the most significant aggregate amount of contract backlog associated
with our drilling contracts were Shell, Petrobras and Chevron Corporation (together with its affiliates, “Chevron”), representing
approximately 33 percent, 31 percent and 14 percent, respectively, of our total contract backlog. See “Item 1A. Risk Factors—
Risks related to our business—We rely heavily on a relatively small number of customers and the loss of a significant customer
or a dispute that leads to the loss of a customer could have an adverse effect on our business.”
HUMAN CAPITAL RESOURCES
Worldwide workforce—As of December 31, 2022, we had a global workforce of approximately 5,340 individuals,
including approximately 300 contractors, representing 57 nationalities. At December 31, 2022, our global workforce was
geographically distributed in 21 countries across five continents as follows: 38 percent in North America, 30 percent in Europe,
19 percent in South America, 8 percent in Asia and 5 percent in Africa.
FIRST Shared Values and corporate culture—Our FIRST Shared Values serve as the foundation for our corporate
culture and guide us to act ethically and responsibly as we strive to deliver value for our stakeholders and to maintain a safe and
respectful work environment for our people. Our Shared Values are as follows:
◾ Focused. We will consistently exceed the expectations of customers, shareholders and employees.
◾ Innovative. We will continuously advance our position as technical leaders, and relentlessly pursue improvement in all
that we do.
◾ Reliable. We will execute flawlessly by ensuring that our equipment, processes and systems always perform as and when
intended, and that our people are properly trained and motivated.
◾ Safe. Above all else, we will protect each other, the environment and our assets. We will conduct our operations in an
incident-free environment, all the time, everywhere.
◾ Trusted. We will always act with integrity and professionalism, honor our commitments, comply with laws and
regulations, respect local cultures, and be fiscally responsible.
Code of Integrity and Human Rights—We maintain a Code of Integrity and Human Rights Policy that applies to all
our board members, executives, employees and business partners, including contractors, suppliers, vendors, investees and joint
venture partners. We demonstrate our respect of human rights by maintaining a healthy and safe work environment, observing
fair employment practices and providing competitive employment terms. Practices such as modern slavery, child labor, forced
or indentured servitude, and other human rights abuses are strictly prohibited.
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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 December 31, 2022, approximately 43 percent of our total workforce, working primarily in Norway, Brazil
and the U.K., are represented by, and some of our contracted labor work is subject to, collective bargaining agreements,
substantially all of which are subject to annual salary negotiation. Negotiations over annual salary or other labor matters could
result in higher personnel or other costs or increased operational restrictions or disruptions. The outcome of any such
negotiation generally affects the market for all offshore employees, not only union members. A failure to reach an agreement
on certain key issues could result in strikes, lockouts or other work stoppages.
Attraction, development and retention—We aim to strategically cultivate a best-in-class workforce to offer the
innovation, local knowledge and experience required of the world’s premier offshore drilling contractor. We seek to maintain
our competitive advantage while benefitting our local communities by offering regionally competitive compensation and
benefits packages, a technically challenging work environment, global opportunities, and rotational development programs. We
continually assess and adapt our offerings and our policies, based on evolving social and technological practices, to provide a
modern work environment, which is essential to attract and retain top talent, and a respectful and inclusive work environment in
which our global workforce can thrive. Our focus on the quality of our workforce is designed to maximize the quality of our
work performance and ultimately, the value we deliver to our stakeholders.
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. Our internal training board maintains and 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. Setting us apart from
our competitors, we also offer unique simulation-based education, augmented by digital twin modeling, enabling our workforce
to more accurately visualize equipment performance and target efficiencies. We clearly 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.
Wellness and benefits—We offer our workforce regionally competitive medical and financial benefits, tailored to our
workforce demographics. We design our wellness and benefits strategy under four pillars consisting of physical well-being,
financial well-being, emotional well-being and social well-being, including our globally available employee assistance program.
Safety—Our safety vision is to conduct our operations in an incident-free workplace, all the time, everywhere. As a
socially responsible company, we prioritize the protection of everyone aboard our rigs and in our facilities, the environment and
our property at all work locations and during all operations. We require compliance with all local regulations and a
comprehensive set of internal policies and procedures that govern our operations. With regular competency and effectiveness
assessments, our highly trained crews are equipped to protect our operational integrity with the process-driven management of
hazards to prevent and mitigate major accidents. We measure our 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 200,000 hours 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 200,000 hours
worked. In the years ended December 31, 2022 and 2021, our TRIR was 0.21 and 0.26, respectively, and our LTIR was 0.00
and 0.02, respectively.
ENVIRONMENTAL RESPONSIBILITY
We strive to deliver services in a manner that both minimizes the impact our business has on the environment and
supports the interests of our stakeholders. We continuously seek new ways to advance our commitment to safely performing
operations while simultaneously safeguarding the environment. We maintain a global Environmental Management System
(“EMS”) standard that is applied to our rigs, offices and facilities. The EMS is aligned to ISO 14001 and provides a framework
to ensure that our worldwide operations are managed consistently and continuously in an environmentally responsible manner.
We regularly assess the environmental impact of operations, focusing on the reduction of greenhouse gas emissions, operational
discharges, water use and waste. Accordingly, we intend to reduce Scope 1 and Scope 2 greenhouse gas emissions intensity by
40 percent from 2019 levels by 2030. Achieving these targets will require investments over time that result in the development
and implementation of new technologies, reduced fuel consumption and other initiatives that enable us to optimize power
management capabilities.
TECHNOLOGICAL INNOVATION
We have a long history of technological innovation, including the first dynamically positioned drillship, the first rig to
drill year-round in the North Sea, the first semisubmersible rig for year-round sub-Arctic operations, the first 10,000-ft. water
depth rated ultra-deepwater drillship and numerous water depth world records over the past several decades. Twenty-
two drillships and two semisubmersibles in our existing fleet are, and our two drillships under construction will be, equipped
with our patented dual-activity technology, which allows our rigs to perform simultaneous drilling tasks in a parallel rather than
sequential manner, reducing well construction critical path activities and, thereby, improving efficiency in both exploration and
development drilling.
We develop and deploy industry-leading technology in the pursuit of delivering safer, more efficient and
environmentally responsible drilling services. In addition to our patented dual-activity drilling technology, one of our drillships
has, and one drillship under
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construction will have, industry-leading 3.4 million-pound hoisting load capability. Six of our drillships and one of our
drillships under construction include hybrid energy storage systems for enhanced drill floor equipment reliability, fuel and
emissions savings as well as advanced generator protection for power plant reliability. Eleven drillships in our existing fleet
are, and one of our drillships under construction will be, outfitted with dual blowout preventers and triple liquid mud systems.
Six drillships in our existing fleet are designed to accept 20,000 psi blowout preventers in the future, and one of our drillships
under construction will be equipped with dual 20,000 psi blowout preventers and related equipment. We also continue to
develop and invest in technologies designed to optimize our performance, deliver ever improving operational integrity and
reduce our carbon emissions.
Seven of our harsh environment semisubmersibles are designed and constructed specifically to provide highly efficient
performance in harsh environments. We have installed automated drilling control systems on six harsh environment floaters,
which materially improves our ability to safely and efficiently deliver wells to our customers.
We employ a data-driven approach by deploying technology, augmented by the size of our fleet, to expand our
knowledge framework for sustainable process optimization. In 2020, we deployed our smart equipment analytics tool, which
delivers real-time data feeds from equipment 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.
Driven by our continued focus on safety, we developed and, on five of our drilling units, deployed our patented
HaloGuard℠ system, which alarms, notifies and, if required, halts equipment to avoid injury to personnel who move into
danger zones. We recently deployed the first unit of Enhanced Drilling’s EC-Monitor system to an offshore installation,
enabling highly accurate understanding of well fluid dynamics and improving the efficiency and accuracy of flow-checking and
detecting flow anomalies. Additionally, in 2021, we deployed on one of our ultra-deepwater drillships the first kinetic blowout
stopper, a step-changing technology that promotes operations integrity and enterprise risk reduction through unrivaled shearing
capability. In 2022, we deployed an offshore robotic riser bolting tool on two of our ultra-deepwater drillships, improving our
ability to deliver safe and efficient operations to our customers.
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.
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 joint ventures or
companies in which we are an investor are involved in researching and developing technology to improve efficiency, reliability,
sustainability and safety for our drilling and other activities or are involved in businesses developed to support renewable or
other energy alternatives. We may or may not control these partially owned companies. At December 31, 2022, we held partial
ownership interests in companies organized in the Cayman Islands, the U.S., Norway, Canada and other countries. At
December 31, 2022, among other equity investments, we held a 33 percent ownership interest in Orion, an unconsolidated
Cayman Islands exempted company that owns the harsh environment semisubmersible Transocean Norge and we held a
20 percent ownership interest in Liquila, an unconsolidated Bermuda company formed to construct, own and operate the
newbuild ultra-deepwater drillship Deepwater Aquila, which is currently under construction.
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 December 31, 2023, 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
Form 10-K:
◾ “Item 1A. Risk Factors—Risks related to our laws, regulations and governmental compliance;”
◾ “Item 3. Legal Proceedings;”
◾ “Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Other Matters;”
◾ “Part II. Item 8. Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements—Note 10—Income
Taxes;” and
◾ “Part II. Item 8. Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements—Note 12—
Commitments and Contingencies.”
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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 Form 10-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 Form 10-K, quarterly reports on Form 10-Q,
current reports on Form 8-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 Item 5.05 of Form 8-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.
ITEM 1A.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 depends on oil and gas exploration, development and production in offshore areas where we are capable
of operating. Demand for our services depends on these activities and related expenditure levels that are directly affected by
trends in oil and, to a lesser extent, natural gas prices. Oil and gas prices are extremely volatile and are affected by numerous
factors, including the following:
◾ worldwide demand for oil and gas, including economic activity in the U.S., other large energy-consuming markets and in
developing and emerging markets, which was significantly impacted by COVID-19 and the governmental, company and
individual reactions thereto;
◾ the ability of the Organization of the Petroleum Exporting Countries (“OPEC”) to set and maintain production levels,
productive spare capacity and pricing among its members;
◾ the level of production in non-OPEC countries;
◾ inventory levels, and the cost and availability of storage and transportation of oil, gas and their related products;
◾ the policies, laws and regulations of various governments regarding exploration and development of their oil and gas reserves
and environmental matters, including those addressing alternative energy sources and the risks of global climate change;
◾ international sanctions on oil-producing countries, or the lifting of such sanctions;
◾ advances in exploration, development and production technology;
◾ the development, exploitation and market acceptance of alternative energy sources;
◾ the further development of shale technology to exploit oil and gas reserves;
◾ the discovery rate of new oil and gas reserves and the rate of decline of existing oil and gas reserves;
◾ accidents, adverse weather conditions, natural disasters and other similar incidents relating to the oil and gas industry; and
◾ the worldwide security and political environment, including uncertainty or instability resulting from an escalation or outbreak
of armed hostilities, civil unrest, acts of terrorism, public health threats or other crises.
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 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.
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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 prior periods of high dayrates and rig utilization rates, we and other industry participants responded to
increased 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, would 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 February 9, 2023, we have 13 uncontracted rigs, of which five have been out of service for greater than
five years, and these rigs may remain out of service for extended periods of time. We also have a noncontrolling ownership
interest in a company that has an uncontracted newbuild drillship under construction. 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.
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 markets 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 February 9, 2023, we have 13 stacked or idle rigs. We also have seven existing drilling contracts for our rigs
that are currently operating, which are scheduled to expire before December 31, 2023. 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.
OUR CURRENT BACKLOG OF CONTRACT DRILLING REVENUES MAY NOT BE FULLY REALIZED.
At February 9, 2023, our contract backlog was approximately $8.54 billion. This amount represents the maximum
contractual operating dayrate multiplied by the number of days remaining in the firm contract period, excluding revenues for
mobilization, demobilization, contract preparation, other incentive provisions or reimbursement revenues, which are not
expected to be significant to our contract drilling revenues. Our contract backlog includes amounts associated with our
one contracted newbuild unit that is currently under construction. 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, 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.
Several factors could cause rig downtime or a 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,
including some recently, 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”). 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.
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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 as a result of changes in the cost of labor and materials, requirements of
customers, the size of our fleet, the cost of replacement parts for existing rigs, 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 capital expenditures in order to maintain our
competitiveness and to achieve our intention to reduce our greenhouse gas emission intensity. Changes in governmental
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 capital expenditures to increase or require us
to make additional unforeseen capital 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 capital expenditures with our cash flows from operations or proceeds from sales of non-
strategic assets, we may be required to either incur additional borrowings or raise capital through the sale of debt or equity
securities, or additional financing arrangements with banks or other capital providers. 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 expenditures could have a material adverse effect on our business and on our financial position, results
of operations and 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 one geographic 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 payable 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, which, in certain instances, may be subject to either restrictions or other
difficulties in converting to U.S. dollars, our functional currency, or to other currencies of the locations where we operate.
Excess amounts of local currency may also be exposed to the risk of currency exchange losses.
PUBLIC AND INVESTOR SENTIMENT TOWARDS CLIMATE CHANGE, FOSSIL FUELS AND OTHER ESG
MATTERS COULD ADVERSELY AFFECT OUR BUSINESS, COST OF CAPITAL AND THE PRICE OF OUR
STOCK AND OTHER SECURITIES.
Changing public sentiment concerning fossil fuels, aimed at the investment community, including investment advisors,
sovereign wealth funds, public pension funds, universities and other groups, has prompted efforts to promote the divestment of
shares of energy companies, as well as to pressure lenders and other financial services companies to limit or curtail activities
with energy companies. These efforts have recently intensified, as demonstrated by the State of New York’s December 2020
announcement that it will be divesting the state’s Common Retirement Fund from fossil fuels by 2040. If this or similar
divestment efforts are successful, our stock price and our ability to access capital markets may be negatively impacted.
Members of the investment community are also increasing their focus on environmental, social and governance
(“ESG”) practices and disclosures, including practices and disclosures related to greenhouse gases and climate change, in the
energy industry in particular, and diversity and inclusion initiatives and governance standards among public companies more
generally. As a result, we may face
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increasing pressure regarding our ESG disclosures and practices. Additionally, members of the investment community may
screen companies such as ours for ESG sustainability performance before investing in our stock. Over the past few years there
has also been an acceleration in investor demand for ESG investing opportunities, and many large institutional investors have
committed to increasing the percentage of their portfolios that are allocated towards ESG investments. As a result, there has
been a proliferation of ESG focused investment funds seeking ESG oriented investment products. If we or our securities are
unable to meet the sustainability ESG standards or investment criteria set by these investors and funds, we may lose investors or
investors may allocate a portion of their capital away from us, our cost of capital may increase, our stock price may be
negatively impacted, the cost of capital associated with our securities offerings may increase and our reputation may be
negatively affected.
PUBLIC HEALTH THREATS HAVE HAD, AND MAY CONTINUE TO HAVE, SIGNIFICANT ADVERSE
CONSEQUENCES FOR GENERAL ECONOMIC, FINANCIAL AND BUSINESS CONDITIONS, AS WELL AS FOR
OUR BUSINESS AND OPERATIONS.
Public health threats, including pandemics and epidemics, such as the outbreak of COVID-19, new variants thereof,
severe influenza, other coronaviruses and other highly communicable viruses or diseases, have impacted and may continue to
impact our operations directly or indirectly, including by disrupting the operations of our business partners, suppliers and
customers in ways that adversely impact our operations. Such impacts may include, among others:
◾ causing a temporary shut-down of operations in case of an outbreak on one or more of our rigs;
◾ disrupting or restricting the ability of our suppliers, manufacturers and service providers to supply parts, equipment labor or
services in the jurisdictions in which we operate or conduct shipyard activities including newbuild construction;
◾ causing us to incur increased costs, inefficiencies, and labor shortages as a result of precautionary measures taken to counteract
a potential or actual outbreak, including testing and quarantining of offshore personnel; and
◾ being negatively affected by various actions by governmental authorities around the world designed to prevent or reduce the
spread of an outbreak, such as imposing mandatory closures of all business facilities deemed to be non-essential, seeking
voluntary closures of such facilities and imposing restrictions on, or issuing advisories with respect to, travel, business
operations and public gatherings or interactions.
As a result, we may experience significant adverse consequences in 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. In addition, 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 as occurred during 2020. 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.
The magnitude and duration of potential social, economic and labor instability resulting from such public health
threats, including the speed at which national economies can recover, or whether any recovery will ultimately experience a
reversal or other setbacks, are uncertain and cannot be estimated as such effects depend on future events that would be largely
out of our control.
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 December 31, 2022, our most significant customers were Shell, Equinor and Petrobras, representing approximately
33 percent, 25 percent and 11 percent, respectively, of our consolidated operating revenues. As of February 9, 2023, the
customers with the most significant aggregate amount of contract backlog associated with our drilling contracts were Shell,
Petrobras and Chevron, representing approximately 33 percent, 31 percent, and 14 percent, respectively, of our total contract
backlog. 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 Mexico, 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
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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 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. We have two main 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 Mexico. We maintain per occurrence deductibles that generally range up to $10 million for various third-party
liabilities, and we self-insure $50 million of the $750 million excess liability coverage through our wholly owned captive
insurance company. We also retain the risk for any liability that exceeds our excess liability coverage. However, pollution and
environmental risks generally are not completely insurable.
If a significant accident or other event occurs that is not fully covered by our insurance or by an enforceable or
recoverable indemnity, the occurrence could adversely affect our financial position, results of operations or cash flows. 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. As a result, we generally retain the risk for any losses in excess of these
limits. We generally do not carry insurance for loss of revenue, and certain other claims may also not be reimbursed by
insurance carriers. Any such lack of reimbursement may cause us to incur substantial costs. In addition, we could decide to
retain more risk in the future, resulting in higher risk of losses, which could be material. Moreover, we may not be able to
maintain adequate insurance in the future at rates that we consider reasonable or be able to obtain insurance against certain
risks.
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. For example,
early in the fourth quarter of 2022, Transocean Equinox concluded the activities contemplated in its drilling contract prior to the
end of the contract’s firm term that was previously expected late in the fourth quarter of 2022. The termination payment
associated with the drilling contract would not fully compensate us for the early termination of the contract. 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, such as we have recently experienced, we are subject to an increased
counterparty risk, as our customers may seek to repudiate their contracts, including through claims of non-performance in order
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 when there is a weak commodity price environment. The ability of each of our counterparties to
perform its obligations under a contract with us, including indemnity obligations, will depend on a number of factors that are
beyond our control and may include, among other things, general economic conditions, the condition of the offshore drilling
industry, 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.
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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 December 31, 2022, approximately 43 percent of our total workforce, working primarily in Norway, Brazil and
the U.K., are represented by, and some of our contracted labor work is subject to, collective bargaining agreements,
substantially all of which are subject to annual salary negotiation. 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 been introduced in
the U.S. Congress that could encourage additional unionization efforts in the U.S., as well as increase the chances that such
efforts succeed. Additional unionization efforts, if successful, new collective bargaining agreements or work stoppages could
materially increase our labor costs and operating restrictions.
OUR SHIPYARD PROJECTS AND OPERATIONS ARE SUBJECT TO DELAYS AND COST OVERRUNS.
We have a variety of shipyard projects underway for our existing rigs at any given time. Additionally, as of
February 14, 2023, we were constructing one ultra-deepwater drillship and held a noncontrolling ownership interest in a
company that is constructing one ultra-deepwater drillship. These shipyard projects are subject to the risks of delay or cost
overruns inherent in any such construction project resulting from numerous factors, including the following:
◾ complications arising from pandemics and epidemics, such severe influenza, coronaviruses and other highly communicable
viruses or diseases, and associated government orders in the country where the rigs are being constructed or serviced and
elsewhere;
◾ shipyard availability, failures and difficulties;
◾ shortages of equipment, materials or skilled labor;
◾ failure or delayed deliveries of significant materials or equipment for various reasons, including due to supplier shortages,
constraints, disruption or quality issues;
◾ design and engineering problems, including those relating to the commissioning of newly designed equipment;
◾ latent damages or deterioration to hull, equipment and machinery in excess of engineering estimates and assumptions;
◾ unanticipated actual or purported change orders;
◾ disputes with shipyards and suppliers;
◾ availability of suppliers to recertify equipment for enhanced regulations;
◾ strikes, labor disputes and work stoppages;
◾ customer acceptance delays or delays in providing customer-supplied engineering, approvals or equipment;
◾ adverse weather conditions, including damage caused by such conditions;
◾ terrorist acts, war, piracy and civil unrest;
◾ unanticipated cost increases; and
◾ difficulty in obtaining necessary permits or approvals.
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 our 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 also 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. 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 or ancillary services could adversely affect our ability to
meet our commitments to customers, adversely impact our operations, increase our operating costs and result in increases in rig
downtime and delays in the repair and maintenance of our fleet.
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AS PART OF OUR BUSINESS STRATEGIES, WE MAY PURSUE OPPORTUNITIES TO STRENGTHEN AND
BROADEN OUR BUSINESS THAT INCLUDE ACQUISITIONS OF BUSINESSES OR DRILLING RIGS, MERGERS
OR JOINT VENTURES OR OTHER INVESTMENTS, AND SUCH TRANSACTIONS WOULD PRESENT VARIOUS
RISKS AND UNCERTAINTIES.
We may pursue transactions that involve the acquisition of businesses or assets, mergers or joint ventures or other
investments that we believe will enable us to further strengthen 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 with our business strategies, reaching agreement with the
potential counterparties on acceptable terms, the receipt of any applicable regulatory and other approvals, and other conditions.
These transactions involve various risks, including among others, (i) difficulties related to integrating or managing applicable
parts of an acquired business 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 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, and (v) 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.
FAILURE TO EFFECTIVELY AND TIMELY ADDRESS THE TRANSITION TO RENEWABLE OR OTHER
ALTERNATIVE ENERGY SOURCES, OR TO RESPOND TO OTHER CLIMATE RELATED BUSINESS TRENDS,
COULD ADVERSELY AFFECT OUR BUSINESS, RESULTS OF OPERATIONS AND CASH FLOWS.
Our long-term success will be impacted by our ability to effectively address the transition to renewable and other
alternative energy sources, and our ability to respond to other climate-related business trends that could adversely impact the
long-term demand for oil and natural gas and, ultimately, the demand for our services and products from our services.
Addressing increased focus on the development of additional alternative energy sources and other climate-related business
trends has required and will further require adapting certain parts of our operations to changing government requirements and
customer preferences.
We continue to engage with existing and potential customers and suppliers to develop or implement solutions designed
to reduce or decarbonize oil and gas operations, or to advance renewable and other alternative energy sources. Nonetheless, as
it is not possible at this time to predict the timing, scope and effect of the development of and transition to renewable or other
alternative energy sources, any such developments, such as the declining cost of renewable energy generation technologies,
could adversely impact the long-term global demand for oil and natural gas and, ultimately, the demand for our services and
products from our services. If the transition to alternative energy sources or other climate-related trends change faster than
anticipated or develop in a manner that we do not anticipate, our business, results of operations and cash flows could be
adversely affected. If we do not or are perceived to not effectively implement a strategy that incorporates alternative energy
sources, or if investors or financial institutions shift funding away from companies in fossil fuel-related industries, our access to
capital or the market for our securities could be negatively impacted.
OUR ASPIRATIONS, GOALS, COMMITMENT TARGETS AND INITIATIVES RELATED TO SUSTAINABILITY,
INCLUDING EMISSIONS REDUCTION, AND OUR PUBLIC STATEMENTS AND DISCLOSURES REGARDING
THEM, EXPOSE US TO NUMEROUS RISKS.
We have developed, and will continue to develop and set, goals, targets, and other objectives related to sustainability
matters, including our commitment target to reduce greenhouse gas emissions intensity. Statements related to these goals,
commitment targets and objectives reflect our current intentions and do not constitute a guarantee that they will be achieved.
Our efforts to research, establish, accomplish, and accurately report on these goals, commitment targets, and other objectives
expose us to numerous operational, reputational, financial, legal, and other risks. Our ability to achieve any stated goal,
commitment target, or objective, including with respect to emissions intensity reduction, is subject to numerous factors and
conditions, some of which are outside of our control.
Our business may face increased scrutiny from investors and other stakeholders related to our sustainability activities,
including the goals, commitment 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 or other stakeholder 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 our
sustainability-focused goals, targets, and objectives, to comply with ethical, environmental, or other standards, regulations, or
expectations, or to satisfy various reporting standards with respect to these matters, within the timelines we announce, or at all,
could adversely affect our business or reputation, as well as expose us to government enforcement actions and private litigation.
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RISKS RELATED TO OUR INDEBTEDNESS
WE HAVE A SUBSTANTIAL AMOUNT OF DEBT, INCLUDING SECURED DEBT, AND WE MAY LOSE THE
ABILITY TO OBTAIN FUTURE FINANCING AND SUFFER COMPETITIVE DISADVANTAGES.
At December 31, 2022 and 2021, our total debt was $7.35 billion and $7.17 billion, respectively, of which $2.19 billion
and $2.30 billion, respectively, was secured. We have a bank credit agreement (as amended, the “Secured Credit Facility”),
which is currently undrawn, the borrowings under which would be secured. This substantial level of debt and other obligations
could have significant adverse consequences on our business and future prospects, including the following:
◾ we may be unable to obtain financing in the future to refinance our existing debt or for working capital, capital expenditures,
acquisitions, debt service requirements, distributions, share repurchases, or other purposes;
◾ we may be unable to use operating cash flow in other areas of our business because we must dedicate a substantial portion of
these funds to service the debt;
◾ we could become more vulnerable to general adverse economic and industry conditions, including increases in interest rates,
particularly given our substantial indebtedness, some of which bears interest at variable rates;
◾ we may be unable to meet financial ratios in the agreements governing certain of our debt facilities and finance lease or satisfy
certain other covenants and conditions included in our debt agreements, which could result in our inability to meet
requirements for borrowings under our credit agreement or a default under these agreements, impose restrictions with respect
to our access to certain of our capital, and trigger cross default provisions in our other debt instruments;
◾ if we default under the terms of our secured financing arrangements, the secured debtholders may, among other things,
foreclose on the collateral securing the debt, including the applicable drilling units;
◾ we may be unable to obtain new investment or financing given recent ESG-influenced trends among many financial
intermediaries, investors and other capital markets participants in reducing, or ceasing, lending to, or investing in, companies
that operate in industries with higher perceived environmental exposure; and
◾ we may be less able to take advantage of significant business opportunities and to react to changes in market or industry
conditions than our less levered competitors.
See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and
Capital Resources—Sources and uses of liquidity.”
CREDIT RATING AGENCIES HAVE RATED OUR DEBT BELOW INVESTMENT GRADE, WHICH COULD
LIMIT OUR ACCESS TO CAPITAL AND HAVE AN ADVERSE EFFECT ON OUR BUSINESS AND FINANCIAL
CONDITION.
The ratings assigned to our debt securities by certain credit rating agencies (our “Debt Ratings”) 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 the interest rate under the indenture governing the 7.35% senior
notes due December 2041, which has reached the maximum rate increase of 2 percent pursuant to the indenture due to the
downgrades of certain credit rating agencies;
◾ reduced willingness of current and prospective customers, suppliers and creditors to transact business with us;
◾ requirements from creditors, suppliers or customers for additional insurance, guarantees and collateral;
◾ limitations on our access to bank and third-party guarantees, surety bonds and letters of credit; and
◾ reductions to or eliminations of the level of credit suppliers and financial institutions may provide through payment terms or
intraday funding when dealing with us thereby increasing the need for higher levels of cash on hand, which would decrease
our ability to repay debt balances.
Our Debt Ratings have caused some of the effects listed above, and any further 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 THE 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 the 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 further reduce worldwide demand for
energy and extend or worsen the recovery from low oil and natural gas prices. These potential developments, or market
perceptions concerning these and related issues, could adversely affect our financial position, results of operations or cash
flows. In addition, turmoil and hostilities in the Middle East, Ukraine, North Africa and other geographic areas and countries
present incremental risk. An extended period of negative outlook for the world economy could further reduce the overall
demand for oil and natural gas and for our services. A further decline in oil and natural gas prices or an extension of the current
low oil and natural gas prices could reduce demand for our drilling services and have an adverse effect on our financial position,
results of operations or cash flows.
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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 also 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, maintenance and inspection, development and
implementation of emergency procedures and maintenance of insurance coverage or other financial assurance of our ability to
address pollution incidents. In the last decade, enhanced governmental safety and environmental requirements applicable to our
operations were adopted by U.S. federal agencies for drilling in the U.S. Gulf of Mexico. 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 Mexico. In addition, the oil and gas
industry has adopted equipment and operating standards, such as the American Petroleum Institute Standard 53, related to the
installation and testing of well control equipment. A failure to comply with applicable laws and regulations may result in
administrative and civil penalties, criminal sanctions or the suspension or termination of our operations. 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 actions are taken that prohibit or
restrict offshore drilling or impose additional environmental protection and safety requirements that result in increased costs to
the oil and gas industry, in general, or the offshore drilling industry, in particular, our business or prospects could be materially
adversely affected. 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, as a result of public policy or for other reasons. 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
GASES, 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 earth’s 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
and continues to attract 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 domestically and
internationally. In August 2022, for example, the U.S. enacted the Inflation Reduction Act of 2022, which contains hundreds of
billions of dollars in incentives for the development of renewable energy, clean hydrogen, clean fuels, electric vehicles and
supporting infrastructure and carbon capture and sequestration, amongst other provisions. Such attention could also result in
other adverse impacts for the oil and gas industry, including further restrictions or bans
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imposed by lawmakers, lawsuits by governments or third-parties seeking recoveries for damages resulting from the combustion
of fuels that may contribute to climate change effects, decreased demand for goods or services that produce significant
greenhouse gas emissions, or reduced interest from investors if they elect in the future to shift some or all of their investments to
non-fossil fuel related sectors. 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
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 (“OCS”) 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
U.S. Bureau of Ocean Energy management (“BOEM”) within the DOI must prepare and maintain forward-looking five-year
plans—referred to as national programs or five-year programs—to schedule proposed oil and gas lease sales on the OCS. On
July 1, 2022, BOEM announced the availability of the Proposed Program for the 2023-2028 timeframe for public comments.
The Proposed Program includes no more than ten potential lease sales in the U.S. Gulf of Mexico. Inclusion of an area in the
Proposed Program is not a final indication that it will be included in the approved 2023-2028 National OCS Program or offered
in a lease sale. In addition, the U.S. previously placed a moratorium on new oil and natural gas leases on federal lands and
waters, including the federal OCS. 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:
◾ terrorist acts, war, piracy and civil unrest;
◾ seizure, expropriation or nationalization of our equipment;
◾ expropriation or nationalization of our customers’ property;
◾ repudiation or nationalization of contracts;
◾ imposition of trade or immigration barriers;
◾ import-export quotas;
◾ wage and price controls;
◾ changes in law and regulatory requirements, including changes in interpretation and enforcement;
◾ involvement in judicial proceedings in unfavorable jurisdictions;
◾ damage to our equipment or violence directed at our employees, including kidnappings;
◾ complications associated with supplying, repairing and replacing equipment in remote locations;
◾ the inability to move income or capital; and
◾ currency exchange fluctuations and currency exchange restrictions, including exchange or similar controls that may limit our
ability to convert local currency into U.S. dollars and transfer funds out of a local jurisdiction.
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
Department’s 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 and export
restrictions, may subject us to criminal sanctions or civil remedies, including fines, denial of export privileges, injunctions or
seizures of assets. Investors could view any potential violations of OFAC regulations negatively, which could adversely affect
our reputation and the market for our shares.
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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 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. 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
of the countries where 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
also may impose economic sanctions against certain countries, persons and other entities that may restrict or prohibit
transactions involving such countries, persons and entities, and we are also subject to the U.S. anti-boycott laws.
The laws and regulations concerning import and export activity, recordkeeping and reporting, import and export
control and economic sanctions are complex and constantly changing. These laws and regulations may be enacted, amended,
enforced or interpreted in a manner materially impacting our operations. Ongoing economic challenges 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.
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 not able 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 ACT 2010, 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 Act 2010 (“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.
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. Our patent for dual-activity
technology has been successfully challenged in certain jurisdictions. 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
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to resolve them. Insurance may not be applicable or sufficient in all cases, insurers may not remain solvent and policies may
not be located. Suits against non-asset-owning subsidiaries have 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 one or more pending or future investigations or litigation matters is
not resolved in our favor and is not covered by insurance, which could have a material adverse effect on our financial position,
results of operations or cash flows.
WE ARE SUBJECT TO CYBERSECURITY RISKS AND THREATS AS WELL AS INCREASING REGULATION
OF DATA PRIVACY AND SECURITY.
We depend on data and digital technologies to conduct our offshore and onshore operations, to collect payments from
customers and to pay vendors and employees. 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. 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.
In addition, governing data privacy and the unauthorized disclosure of personal data and confidential information pose
increasingly complex compliance challenges and potential to elevate our costs under various laws and regulations, including
(a) the European Union General Data Protection Regulation, the Data Protection Act, as revised, of the Cayman Islands, (b) the
General Data Protection Law of Brazil and (c) the California Consumer Privacy Act, as well as (d) the amended Swiss Data
Protection Act, which will enter into force in September 2023,. 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 MARKETS
FOR DRILLING SERVICES.
Acts of terrorism and social unrest, brought about by world political events or otherwise, have caused instability in the
world’s 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 markets 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.
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 the tax burden. The Organization for Economic Co-operation and Development, for example,
issued its action plan of tax reform measures that called for member states to take action to prevent base erosion and profit
shifting. Some of these measures impact transfer pricing, requirements to qualify for tax treaty benefits, and the definition of
permanent establishments depending on each jurisdiction’s adoption and interpretation of such proposals. Respective countries,
including Switzerland, have adopted various measures into their own tax laws. In addition, the European Union has issued
Anti-Tax Avoidance Directives and proposed directives that required or require member states to adopt specific tax reform
measures, some of which relate to a 15 percent minimum tax. Other tax jurisdictions in which we operate have expressed an
intent to implement similar measures. 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.
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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 we believe are more likely than not to be disallowed
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 uncertainty. 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 an authorized share capital that allows the board of directors to issue
new shares without additional shareholder approval within a period of up to two years and for up to a maximum of 50 percent of
a company’s issued share capital. The authorized share capital approved by our shareholders at the May 2022 annual general
meeting will expire on May 12, 2024. Our currently available authorized share capital is approximately 13.5 percent of our
issued share capital as of February 14, 2023. Accordingly, shareholders at our annual general meeting in May 2023 may be
requested to approve a renewal and an increase in authorized share capital. Subject to certain exceptions, Swiss law also grants
preemptive rights to existing shareholders to subscribe for new issuances of shares. 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 50 percent 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 relevant 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 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 in order 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 35 percent 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 Transocean Ltd.’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 35 percent Swiss withholding tax based on the difference between the repurchase price and the related amount of
par value and the related amount of qualifying additional paid-in capital, if any. At our 2009 annual general meeting, our
shareholders approved the repurchase of up to CHF 3.50 billion of our shares for cancellation under the share repurchase
program. If we repurchase shares, we expect to use an alternative procedure pursuant to which we repurchase shares via a
“virtual second trading line” from market players, such as banks and
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institutional investors, who are generally entitled to receive a full refund of the Swiss withholding tax. The use of such “virtual
second trading 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 second trading 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, subject to obtaining shareholder approval every two years, at any time during
a maximum two-year period, which under our current authorized share capital will expire on May 12, 2024, to issue a
specified number of shares, which under our current authorized share capital is approximately 13.5 percent of the share capital
registered in the commercial register as of February 14, 2023, and to limit or withdraw the preemptive rights of existing
shareholders in various circumstances;
◾ provide for a conditional share capital that authorizes the issuance of additional shares up to a maximum amount of
approximately 17.9 percent of the share capital registered in the commercial register as of February 14, 2023, without
obtaining additional shareholder approval through: (1) the exercise of conversion, exchange, option, warrant or similar rights
for the subscription of shares granted in connection with bonds, options, warrants or other securities newly or already issued in
national or international capital markets or new or already existing contractual obligations by or of any of our subsidiaries; or
(2) in connection with the issuance of shares, options or other share-based awards;
◾ provide that any shareholder who wishes to propose any business or to nominate a person or persons for election as director at
any annual meeting may only do so if we are given advance notice;
◾ provide that directors can be removed from office only by the affirmative vote of the holders of at least 66 2/3 percent of the
shares entitled to vote;
◾ provide that a merger or demerger transaction requires the affirmative vote of the holders of at least 66 2/3 percent of the
shares represented at the meeting and provide for the possibility of a so-called cash-out or squeeze-out merger if the acquirer
controls 90 percent of the outstanding shares entitled to vote at the meeting;
◾ provide that any action required or permitted to be taken by the holders of shares must be taken at a duly called annual or
extraordinary general meeting of shareholders;
◾ limit the ability of our shareholders to amend or repeal some provisions of our articles of association; and
◾ limit transactions between us and an “interested shareholder,” which is generally defined as a shareholder that, together with its
affiliates and associates, beneficially, directly or indirectly, owns 15 percent or more of our shares entitled to vote at a general
meeting.
ITEM 1B.UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
The description of our property included under “Item 1. Business” is incorporated by reference herein. We maintain
offices, land bases and other facilities worldwide, most of which we lease, including principal executive offices in Steinhausen,
Switzerland, and corporate offices in Houston, Texas, and the Cayman Islands. Our remaining offices and bases are located in
various countries in North America, Europe, South America, Asia and Africa.
ITEM 3. LEGAL PROCEEDINGS
We have certain actions, claims and other matters pending as discussed and reported in “Part II. Item 8. Financial
Statements and Supplementary Data—Notes
to Consolidated Financial Statements—Note 12—Commitments and
Contingencies” and “Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
—Other Matters—Regulatory Matters” in this annual report on Form 10-K. We are also involved in various tax matters as
described in “Part II. Item 8. Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements—
Note 10—Income Taxes” and in “Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations—Other Matters—Tax matters” in this annual report on Form 10-K. All such actions, claims, tax and other matters
disclosed therein are incorporated herein by reference.
As of December 31, 2022, we were involved in a number of other lawsuits, regulatory matters, disputes and claims,
asserted and unasserted, all of which have arisen in the ordinary course of our business and for which we do not expect the
liability, if any, to have a material adverse effect on our consolidated financial position, results of operations or cash flows. 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 management’s current estimates.
On December 17, 2021, Transocean Offshore Deepwater Drilling Inc., 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 Pollutant Discharge Elimination System permit (“Permit”). The alleged violations, involving seven of our drillships,
were identified by the U.S.
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Environmental Protection Agency (“EPA”) following an initial inspection in 2018 of our compliance with the Permit and the
CWA and relate to deficiencies with respect to records retention, reporting requirements, discharges, permit limits, inspections
and maintenance, and the submission of monitoring reports. 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 DOJ’s invitation, in an effort to resolve the matter, we initiated
settlement discussions with the DOJ, which remain ongoing, and the enforcement action will likely result in our agreeing to take
or continue to take certain corrective actions to ensure current and future Permit and CWA compliance and to pay a monetary
penalty, which we believe at this time would be immaterial. We do not believe that the enforcement action would have a
material adverse effect on our consolidated financial position, results of operations or cash flow. If our current expectations
relating to these costs prove to be inaccurate, future expenditures may exceed our accrued amounts.
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.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
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INFORMATION ABOUT OUR EXECUTIVE OFFICERS
We have included the following information, presented as of February 14, 2023, on our executive officers for purposes of
U.S. securities laws in Part I of this report in reliance on General Instruction G(3) to Form 10-K. The board of directors elects the
officers of the Company, generally on an annual basis. There is no family relationship between any of our executive officers.
Officer
Jeremy D. Thigpen
Keelan Adamson
Howard E. Davis
Brady K. Long
Mark L. Mey
David Tonnel
(a)
(a)
(a)
Chief Executive Officer
Office
President and Chief Operating Officer
Executive Vice President, Chief Administrative Officer and Chief Information Officer
Executive Vice President and General Counsel
Executive Vice President and Chief Financial Officer
Senior Vice President and Chief Accounting Officer
Age as of
February 14, 2023
48
53
64
50
59
53
(a) Member of our executive management team for purposes of Swiss law.
Jeremy D. Thigpen is Chief Executive Officer and a member of the Company’s board of directors. Before joining the
Company in this position in April 2015, Mr. Thigpen served as Senior Vice President and Chief Financial Officer at
National Oilwell Varco, Inc. from December 2012 to April 2015. At National Oilwell Varco, Inc., Mr. Thigpen also served as
President, Downhole and Pumping Solutions from August 2007 to December 2012, as President of the Downhole Tools Group from
May 2003 to August 2007 and as manager of the Downhole Tools Group from April 2002 to May 2003. From 2000 to 2002,
Mr. Thigpen served as the Director of Business Development and Special Assistant to the Chairman for National Oilwell Varco, Inc.
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.
Keelan Adamson is President and Chief Operating Officer of the Company. Before being named to his current position in
February 2022, Mr. Adamson served as Executive Vice President and Chief Operations Officer from August 2018 to February 2022, as
Senior Vice President, Operations from October 2017 to July 2018 and as Senior Vice President, Operations Integrity and HSE, from
June 2015 to October 2017. 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 BP Exploration in 1991 and joined Transocean in July 1995. In addition to
several management assignments in 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 and completed the Advanced Management
program at Harvard Business School in 2016.
Howard E. Davis is Executive Vice President, Chief Administrative Officer and Chief Information Officer of the Company.
Before joining the Company in this position in August 2015, Mr. Davis served as Senior Vice President, Chief Administrative Officer
and Chief Information Officer of National Oilwell Varco, Inc. from March 2005 to April 2015 and as Vice President, Chief
Administrative Officer and Chief Information Officer from August 2002 to March 2005. Mr. Davis earned a bachelor’s degree from
University of Kentucky in 1980, and he completed the Advanced Management Program at Harvard Business School in 2005.
Brady K. Long is Executive Vice President and General Counsel of the Company. Before being named to his current
position in March 2018, Mr. Long served as Senior Vice President and General Counsel from November 2015 to March 2018. From
2011 to November 2015, when Mr. Long joined the Company, he served as Vice President—General Counsel and Secretary of
Ensco plc, which acquired Pride International, Inc. where he had served as Vice President, General Counsel and Secretary since
August 2009. Mr. Long joined Pride International, Inc. in June 2005 as Assistant General Counsel and served as Chief Compliance
Officer from June 2006 to February 2009. He was director of Transocean Partners LLC from May 2016 until December 2016.
Mr. Long previously practiced corporate and securities law with the law firm of Bracewell LLP. 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
Executive LLM in Taxation from New York University in 2019.
Mark L. Mey is Executive Vice President and Chief Financial Officer of the Company. Before joining the Company in this
position in May 2015, Mr. Mey served as Executive Vice President and Chief Financial Officer of Atwood Oceanics, Inc. from
January 2015 to May 2015, prior to which he served as Senior Vice President and Chief Financial Officer from August 2010. Mr. Mey
was director of Transocean Partners LLC from June 2015 until December 2016. He served as Director, Senior Vice President and
Chief Financial Officer of Scorpion Offshore Ltd. from August 2005 to July 2010. Prior to 2005, Mr. Mey held various senior
financial and other roles in the drilling and financial services industries, including 12 years with Noble Corporation. He earned an
Advanced Diploma in Accounting and a Bachelor of Commerce degree from the University of Port Elizabeth in South Africa in 1985,
and he is a chartered accountant. Additionally, Mr. Mey completed the Harvard Business School Executive Advanced Management
Program in 1998.
David Tonnel is Senior Vice President and Chief Accounting Officer. Before being named to his current position in
April 2017, he served as Senior Vice President, Supply Chain and Corporate Controller from October 2015 to April 2017, as Senior
Vice President, Finance and Controller from March 2012 to October 2015 and as Senior Vice President of the Europe and Africa Unit
from June 2009 to March 2012. Mr. Tonnel served as Vice President of Global Supply Chain from November 2008 to June 2009, as
Vice President of Integration and Process Improvement from November 2007 to November 2008, and as Vice President and Controller
from February 2005 to November 2007. Prior to February 2005, he served in various financial roles, including Assistant Controller;
Finance Manager, Asia Australia Region; and Controller, Nigeria. Mr. Tonnel joined the Company in 1996 after working for Ernst &
Young in France as Senior Auditor. Mr. Tonnel earned a Master of Science degree in Management from HEC in Paris, France in 1991.
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Table of Contents
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES
MARKET FOR SHARES OF OUR COMMON EQUITY
Our shares are listed on the New York Stock Exchange under the ticker symbol “RIG.” On February 14, 2023, we had
726,263,759 shares outstanding and 4,893 holders 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.”
Swiss wealth tax—A non-Swiss holder is not subject to Swiss wealth taxes unless the holder’s shares are attributable
to a permanent establishment or a fixed place of business maintained in Switzerland by such non-Swiss holder.
Swiss capital gains tax upon disposal of shares—A non-Swiss holder is not subject to Swiss income taxes for capital
gains unless the holder’s shares are attributable to a permanent establishment or a fixed place of business maintained in
Switzerland by such non-Swiss holder. 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
35 percent is due on dividends and similar distributions to our shareholders from us, regardless of the place of residency of the
shareholder, subject to the exceptions discussed under “—Exemption” below. 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.
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 December 31, 2022, the aggregate amount of
par value of our outstanding shares was CHF 72.2 million, equivalent to approximately $78.1 million, and the aggregate amount
of qualifying additional paid-in capital of our outstanding shares was CHF 14.0 billion, equivalent to approximately
$15.1 billion. 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 resident’s income tax return, or in the case of an entity,
includes the taxable income in such resident’s 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 United States (“U.S.”), whereby under
certain circumstances all or part of the withholding tax may be refunded. The procedures for claiming treaty refunds, and the
time frame required for obtaining a refund, may differ from country to country.
Refund available to U.S. residents—The Swiss-U.S. tax treaty provides that U.S. residents eligible for benefits under
the treaty can seek a refund of the Swiss withholding tax on dividends for the portion exceeding 15 percent, leading to a refund
of 20 percent, or a 100 percent refund in the case of qualified pension funds. As a general rule, the refund will be granted under
the treaty if the U.S. resident can show evidence of the following: (a) beneficial ownership, (b) U.S. residency and (c) meeting
the U.S.-Swiss tax treaty’s limitation on benefits requirements. The claim for refund must be filed with the Swiss federal tax
authorities (Eigerstrasse 65, 3003 Bern, Switzerland), not later than December 31 of the third year following the year in which
the dividend payments became due. The relevant Swiss tax form is Form 82C for companies, 82E for other entities and 82I for
individuals. 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.
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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 0.075 percent for each of the
two parties 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
Shares repurchased for the purpose of capital reduction are treated as a partial liquidation subject to a 35 percent Swiss
withholding tax based on the difference between the repurchase price and the related amount of par value and the related
amount of qualifying additional paid-in capital, if any. 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 second trading line" from market players, such as banks and institutional investors, who are generally entitled to receive
a full refund of the Swiss withholding tax. The use of such “virtual second trading line” with respect to share repurchase
programs is subject to approval of the competent Swiss tax and other authorities. We may not be able to repurchase as many
shares as we would like to repurchase for purposes of capital reduction on the “virtual second trading line” without subjecting
the selling shareholders to Swiss withholding taxes. The repurchase of shares for purposes other than for cancellation, such as
to retain as treasury shares for use in connection with stock incentive plans, convertible debt or other instruments within certain
periods, are not generally subject to Swiss withholding tax. In addition, in December 2022, the U.S. Department of the
Treasury released proposed regulations under the Inflation Reduction Act, whereby an excise tax of one percent would be
imposed on stock repurchases in the event one of our U.S. subsidiaries funds the stock repurchase.
Under Swiss corporate law, the right of a company and its subsidiaries to repurchase and hold its own shares is limited.
A company may repurchase its shares to the extent it has freely distributable reserves as shown on its Swiss statutory balance
sheet in the amount of the purchase price and if the aggregate par value of all shares held by the company as treasury shares
does not exceed 10 percent of the company’s share capital recorded in the Swiss Commercial Register, whereby for purposes of
determining whether the 10 percent threshold has been reached, shares repurchased under a share repurchase program for
cancellation purposes authorized by the company’s shareholders are disregarded. As of February 14, 2023, Transocean Inc., our
wholly owned subsidiary, held as treasury shares 8.90 percent of our issued shares. Our board of directors could, to the extent
freely distributable reserves are available, authorize the repurchase of additional shares for purposes other than cancellation,
such as to retain treasury shares for use in satisfying our obligations in connection with incentive plans or other rights to acquire
our shares. Based on the number of shares held as treasury shares as of February 14, 2023, 1.10 percent of our issued shares
could be repurchased for purposes of retention as additional treasury shares. 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.
ISSUER PURCHASES OF EQUITY SECURITIES
Period
October 2022
November 2022
December 2022
Total
Total number
of shares
purchased
Average
price paid
per share
Total number of shares
purchased as part
of publicly announced
plans or programs (a)
Approximate dollar value
of shares that may yet
be purchased under the plans
or programs (in millions) (a)
— $
—
—
— $
—
—
—
—
— $
—
—
— $
3,508
3,508
3,508
3,508
(a)
In May 2009, at our annual general meeting, our shareholders approved and authorized our board of directors, at its discretion, to
repurchase for cancellation any amount of our shares for an aggregate purchase price of up to CHF 3.50 billion. At December 31, 2022,
the authorization remaining under the share repurchase program was for the repurchase of our outstanding shares for an aggregate cost of
up to CHF 3.24 billion, equivalent to $3.51 billion. The share repurchase program may be suspended or discontinued by our board of
directors or company management, as applicable, at any time. See “Item 7. Management’s Discussion and Analysis of Financial
Condition and Results of Operations—Liquidity and Capital Resources—Sources and uses of liquidity.”
ITEM 6. RESERVED
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following information should be read in conjunction with the information contained in “Part I. Item 1. Business,”
“Part I. Item 1A. Risk Factors” and the audited consolidated financial statements and the notes thereto included under “Item 8.
Financial Statements and Supplementary Data” elsewhere in this annual report on Form 10-K. The following discussion of our
results of operations and liquidity and capital resources includes comparisons for the years ended December 31, 2022 and 2021.
For a discussion, including comparisons, of our results of operations and liquidity and capital resources for the years ended
December 31, 2021 and 2020, see “Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations” of our annual report on Form 10-K for the year ended December 31, 2021, filed with the United States (“U.S.”)
Securities and Exchange Commission on February 23, 2022.
BUSINESS
Transocean Ltd. (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
February 14, 2023, we owned or had partial ownership interests in and operated 37 mobile offshore drilling units, consisting of
27 ultra-deepwater floaters and 10 harsh environment floaters. Additionally, as of February 14, 2023, we were constructing
one ultra-deepwater drillship and held a noncontrolling ownership interest in a company that is constructing one ultra-deepwater
drillship.
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 one of the most versatile fleets in the world, consisting of drillships and
semisubmersible floaters used in support of offshore drilling activities and offshore support services on a worldwide basis.
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 one region to another, the cost of moving rigs and the availability of rig-moving vessels may cause the supply and demand
balance to fluctuate somewhat between regions. Still, significant variations between regions do not tend to persist long term
because of rig mobility. The location of our rigs and the allocation of resources to operate, build or upgrade our rigs are
determined by the activities and needs of our customers.
SIGNIFICANT EVENTS
Fleet expansion—In October 2022, we completed the construction of and placed into service the ultra-deepwater
floater Deepwater Atlas. In November 2022, we made a cash contribution of $15 million associated with our noncontrolling
ownership interest in Liquila Ventures Ltd. (together with its subsidiaries, “Liquila”), a Bermuda company formed to construct,
own and operate the newbuild ultra-deepwater drillship Deepwater Aquila. See “—Liquidity and Capital Resources—Sources
and uses of liquidity” and “—Liquidity and Capital Resources—Drilling fleet.”
Secured debt issuance—In January 2023, we issued $525 million aggregate principal amount of 8.375% senior
secured notes due February 2028 (the “8.375% Senior Secured Notes”), and we received $515 million aggregate cash proceeds,
net of issue costs. In January 2023, we issued $1.175 billion aggregate principal amount of 8.75% senior secured notes due
February 2030 (the “8.75% Senior Secured Notes”), and we received $1.157 billion aggregate cash proceeds, net of issue costs.
See “—Liquidity and Capital Resources—Sources and uses of liquidity.”
Debt and warrant issuance—In September 2022, we issued $300 million aggregate principal amount of
4.625% senior guaranteed exchangeable bonds due September 2029 (the “4.625% Senior Guaranteed Exchangeable Bonds”) in
connection with (a) the issuance for aggregate cash proceeds of $188 million and (b) the exchanges (the “2022 Private
Exchange”) of certain of the 0.50% exchangeable senior bonds due January 2023 (the “0.50% Exchangeable Senior Bonds”)
and the 7.25% senior notes due November 2025 (the “7.25% Senior Notes”). In connection with the 2022 Private Exchange,
we also issued 22.2 million warrants to purchase Transocean Ltd. shares. See “—Liquidity and Capital Resources—Sources
and uses of liquidity.”
Shipyard Loans—In June 2022, we borrowed $349 million under one of two credit agreements (each, a “Shipyard
Loan,” and together, the “Shipyard Loans”) and made a cash payment of $46 million to satisfy the final milestone payment due
upon delivery of Deepwater Atlas. In December 2022, we borrowed $90 million under the second Shipyard Loan and made a
cash payment of $325 million to satisfy the final milestone payment due upon delivery of Deepwater Titan. We recorded the
Shipyard Loan for Deepwater Atlas and Deepwater Titan, net of imputed interest, and the corresponding non-cash capital
additions of $300 million and $82 million, respectively. See “—Liquidity and Capital Resources—Sources and uses of
liquidity” and “—Liquidity and Capital Resources—Drilling fleet.”
Early debt retirement—In January 2023, in connection with the issuance of the 8.75% Senior Secured Notes, we
made an aggregate payment of $1.156 billion, including a make-whole premium, to redeem the remaining outstanding
$311 million, $240 million, $250 million, and $336 million aggregate principal amount of the 5.875% senior secured notes due
January 2024 (the “5.875% Senior Secured Notes”), the 7.75% senior secured notes due October 2024 (the “7.75% Senior
Secured Notes”), the 6.25% senior secured notes
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Table of Contents
due December 2024 (the “6.25% Senior Secured Notes”) and the 6.125% senior secured notes due August 2025 (the
“6.125% Senior Secured Notes”), respectively.
In January 2023, we made a cash payment of $121 million to redeem an equivalent aggregate principal amount of the
outstanding 5.375% senior secured notes due May 2023 (the “5.375% Senior Secured Notes”), and the trustee notified holders
of our intent to redeem the remaining outstanding $122 million aggregate principal amount of notes for an equivalent aggregate
cash payment, expected to be made on February 24, 2023.
In July 2022, we made an aggregate cash payment of $27 million to redeem an equivalent aggregate principal amount
of the then outstanding 3.80% senior notes due October 2022 (the “3.80% Senior Notes”). In January 2022, we made an
aggregate cash payment of $18 million to redeem an equivalent aggregate principal amount of the 5.52% senior secured notes
due May 2022 (the “5.52% Senior Secured Notes”). See “—Operating Results” and “—Liquidity and Capital Resources—
Sources and uses of liquidity.”
Share issuance—In June 2021, we commenced an at-the-market equity offering program (the “ATM Program”). In
the year ended December 31, 2022, we received aggregate cash proceeds of $263 million, net of issue costs, for the aggregate
sale of 61.0 million shares under the ATM Program. See “—Liquidity and Capital Resources—Sources and uses of liquidity.”
Secured credit facility amendment—In July 2022, we amended the bank credit agreement for our Secured Credit
Facility (as amended from time to time, the “Secured Credit Facility”) to, among other things, extend the maturity date from
June 22, 2023 to June 22, 2025 and reduce the borrowing capacity from $1.33 billion to $774 million through June 22, 2023,
and thereafter, reduce the borrowing capacity to $600 million through June 22, 2025. See “—Liquidity and Capital Resources
—Sources and uses of liquidity.”
OUTLOOK
Drilling market—Our industry outlook is positive based upon several fundamental factors, including the increased
global demand for hydrocarbons combined with a diminishing global supply, the latter being the result of the natural decline in
production of existing oil and gas fields compounded by the significant underinvestment in reserve replacement by oil and gas
producers, and additional constraints imposed on industry participants by the governments of oil and gas producing nations as
well as investors. Additionally, the Russian invasion of Ukraine and the related economic sanctions have highlighted the
criticality of energy reliability and security across Europe, the U.S. and elsewhere. Due to these and other factors, oil prices
have increased materially over the past two years and even reached 10-year highs.
Although the price for both prompt and longer-dated barrels continues to exhibit volatility that reflects market concerns
about inflationary trends, economic recession and the potential for demand destruction, these commodity prices are currently,
and are expected to remain, at levels that are robustly supportive of investment in deepwater and harsh environment exploration
and development projects. Additionally, rig attrition resulting from significantly reduced offshore contracting activity over the
last several years has resulted in a much smaller global fleet of floating rigs that is available to meet customer demands,
specifically with respect to the highest specification drilling units required by many of our customers for their projects.
Consequently, our outlook for the offshore drilling industry overall remains positive, particularly for high-specification drilling
assets, such as those we own and operate.
Our customers continue to show interest in deepwater and harsh environment offshore projects as evidenced by the
restarting of delayed projects and commencement of new drilling campaigns. Licensing activity has also increased as energy
companies look to explore and develop new prospects. This has resulted in more tendering activity during the last half of 2022
and into 2023. Several multi-year tenders for work in Brazil, West Africa, Asia and Australia are expected to be awarded in the
first nine months of 2023. We have recently observed that the commencement of certain projects or parts of a project is, in
some cases, being delayed due to global supply chain constraints adversely impacting the timely availability of necessary
equipment and supplies. We currently believe that these temporary circumstances will gradually diminish over the short to
medium term.
Offshore drilling activity is increasing in every ultra-deepwater geographic sector. South America, the U.S.
Gulf of Mexico and, increasingly, West Africa remain key ultra-deepwater market sectors. We have seen significant increases
in dayrates for projects in the U.S. Gulf of Mexico and, particularly, in Brazil, trends that we expect will continue. In Norway,
the largest market for harsh environment rigs, we do not expect many new projects to commence before late 2023, but we
expect demand for rigs in this market will accelerate thereafter through 2026 due to previously enacted Norwegian tax incentive
programs. Given the highly regulated nature of the Norwegian market and the limited number of rigs qualified to operate in it,
we anticipate an increase in dayrates commensurate with the increased demand. We are also encouraged by projects being
announced in the United Kingdom, Namibia, South Africa and Australia that require high-specification, harsh environment
semisubmersibles. As expected, these opportunities are attracting rigs currently working in Norway, thereby further reducing
rig supply and potentially accelerating dayrate increases for the remaining assets in the region.
We expect global energy demand to continue to increase in both member and non-member countries of the
Organization for Economic Co-operation and Development. Forecasts indicate that non-member countries will experience the
largest population growth and require the most significant improvement in living standards, compounding the effect on energy
demand for the foreseeable future. We believe that this increase in global energy demand will result in meaningful incremental
demand for oil and gas. In the context of the pronounced decline in investment in exploration and production activities over the
last decade, we anticipate that a prolonged period of elevated hydrocarbon prices and investment in drilling activity will be
necessary to meet this demand.
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With deepwater and harsh environment fields generating robust economic returns versus other hydrocarbon sources,
combined with their comparably low carbon intensity of production, we expect a significant portion of the required spending in
fossil fuel development will be allocated to deepwater and harsh environment projects. As there are now fewer high-
specification offshore drilling rigs capable of operating in these markets, we believe that this increase in demand will support
further improvement of dayrates.
As of February 9, 2023, our contract backlog was $8.54 billion compared to $7.27 billion as of October 13, 2022. The
risks of drilling project delays, contract renegotiations and contract terminations and cancellations have diminished as oil prices
have improved and stabilized.
Fleet status—We refer to the availability of our rigs in terms of the uncommitted fleet rate. 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 February 9, 2023, our uncommitted fleet rates for each of the five years in the period ending December 31, 2027 were as
follows:
Uncommitted fleet rate
Ultra-deepwater floaters
Harsh environment floaters
2023 2024 2025 2026 2027
39 %
42 %
56 %
71 %
67 %
89 %
76 %
90 %
84 %
96 %
PERFORMANCE AND OTHER KEY INDICATORS
Contract backlog—We believe our industry leading contract backlog sets us apart from the competition and provides
indicators of our future revenue-earning opportunities. Contract backlog is defined as the maximum contractual operating
dayrate multiplied by the number of days remaining in the firm contract period, excluding revenues for mobilization,
demobilization, contract preparation, other incentive provisions or reimbursement revenues, which are not expected to be
significant to our contract drilling revenues. The contract backlog represents the maximum contract drilling revenues that can
be earned considering the contractual operating dayrate in effect during the firm contract period. The contract backlog for our
fleet was as follows:
Contract backlog
Ultra-deepwater floaters
Harsh environment floaters
Total contract backlog
February 9,
2023
October 13,
2022
(in millions)
February 14,
2022
$ 7,378 $ 6,327 $
1,159
943
$ 8,537 $ 7,270 $
5,301
1,165
6,466
Our contract backlog includes only firm commitments, including amounts associated with our contracted newbuild
units under construction, which are represented by signed drilling contracts or, in some cases, by other definitive agreements
awaiting contract execution. It does not include conditional agreements and options to extend firm commitments.
The average contractual dayrate relative to our contract backlog is defined as the average maximum contractual
operating dayrate to be earned per operating day in the measurement period. 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 February 9, 2023, the contract
backlog and average contractual dayrates for our fleet were as follows:
Contract backlog
Ultra-deepwater floaters
Harsh environment floaters
Total contract backlog
Average contractual dayrates
Total
2023
For the years ending December 31,
2024
2026
2025
(in millions, except average dayrates)
2027
Thereafter
$
$
7,378 $
1,159
8,537 $
1,748 $
604
2,352 $
1,926
254
2,180
$
$
1,518
125
1,643
$
$
1,073
118
1,191
$
$
734
58
792
$
$
379
—
379
Ultra-deepwater floaters
$
428,000 $
386,000 $
435,000
$
448,000
$ 444,000
$ 451,000
$ 452,000
Harsh environment floaters
$
349,000 $
341,000 $
307,000
$
412,000
$ 424,000
$ 424,000
$
—
Total fleet average
$
415,000 $
373,000 $
415,000
$
445,000
$ 442,000
$ 449,000
$ 452,000
The actual amount of revenues earned and the actual periods in which revenues are earned will differ from the amounts
and periods shown in the tables above due to various factors, including shipyard and maintenance projects, unplanned downtime
and other factors that result in lower applicable dayrates than the full contractual operating dayrate. Additional factors that
could affect the amount and timing of actual revenues to be recognized include customer liquidity issues and contract
terminations that may be available to our customers under certain circumstances.
The contractual operating dayrate may be higher than the actual dayrate we ultimately receive because an alternative
contractual dayrate, such as a waiting-on-weather rate, repair rate, standby rate or force majeure rate, may apply under certain
circumstances. The
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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. Item 1A. Risk Factors—Risks related to our business—Our
current backlog of contract drilling revenues may not be fully realized.”
Average daily revenue—We believe average daily revenue provides a comparative measurement unit for our revenue-
earning performance. Average daily revenue is defined as operating revenues, excluding revenues for contract terminations,
reimbursements and contract intangible amortization, earned per operating day. The average daily revenue for our fleet was as
follows:
Years ended December 31,
2021
2020
2022
Average daily revenue
Ultra-deepwater floaters
$
329,100 $
355,500
$
324,500
Harsh environment floaters
$
380,000
$
386,200
$
339,600
Midwater floaters
$
— $
— $
111,400
Total fleet average daily revenue
$
345,500 $
365,600
$
327,500
Our average daily revenue fluctuates relative to market conditions and our revenue efficiency. The average daily
revenue may be affected by incentive performance bonuses or penalties or demobilization fee revenues. Our total fleet average
daily revenue is affected by the mix of rig classes being operated. Midwater floaters, for example, which we no longer operate,
are typically contracted at lower dayrates compared to ultra-deepwater floaters and harsh environment floaters. Revenues for a
contracted newbuild unit are included in the calculation when the rig commences operations upon acceptance by the customer.
We remove rigs from the calculation upon disposal or classification as held for sale, unless we continue to operate rigs
subsequent to sale, in which case we remove the rigs at the time of completion or novation of the contract.
Revenue efficiency—We believe revenue efficiency measures our ability to ultimately convert our contract backlog
into revenues. 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:
Revenue efficiency
Ultra-deepwater floaters
Harsh environment floaters
Midwater floaters
Total fleet average revenue efficiency
Years ended December 31,
2020
2022 2021
95.7 % 96.1 % 97.2 %
97.6 % 98.8 % 95.0 %
— % 86.2 %
96.4 % 97.0 % 96.3 %
— %
Our revenue efficiency rate varies due to revenues earned under alternative contractual dayrates, such as a waiting-on-
weather rate, repair rate, standby rate, force majeure rate or zero rate, that may apply under certain circumstances. 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:
Rig utilization
Ultra-deepwater floaters
Harsh environment floaters
Midwater floaters
Total fleet average rig utilization
Years ended December 31,
2020
2022 2021
50.1 % 49.3 % 58.5 %
64.9 % 64.4 % 72.6 %
— % 37.1 %
54.1 % 53.4 % 62.4 %
— %
Our rig utilization rate declines as a result of idle and stacked rigs and during shipyard and mobilization periods to the
extent these rigs are not earning revenues. We include newbuilds in the calculation when the rigs commence operations upon
acceptance by the customer. We remove rigs from the calculation upon disposal or classification as held for sale. Accordingly,
our rig utilization can increase when we remove idle or stacked units from our fleet.
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OPERATING RESULTS
Year ended December 31, 2022 compared to the year ended December 31, 2021
The following is an analysis of our operating results. See “—Performance and Other Key Indicators” for definitions of
operating days, average daily revenue, revenue efficiency and rig utilization.
Operating days
Average daily revenue
Revenue efficiency
Rig utilization
Contract drilling revenues
Operating and maintenance expense
Depreciation and amortization expense
General and administrative expense
Loss on disposal of assets, net
Operating loss
Other income (expense), net
Interest income
Interest expense, net of amounts capitalized
Gain on retirement of debt
Other, net
Loss before income tax expense
Income tax expense
Net loss
“nm” means not meaningful.
Years ended December 31,
2022
2021
Change
% Change
(in millions, except day amounts and percentages)
7,341
$ 345,500
7,236
$ 365,600
105
$ (20,100)
1 %
(5)%
96.4 %
54.1 %
97.0 %
53.4 %
$
2,575
$
2,556
$
19
(1,679)
(735)
(182)
(10)
(31)
27
(561)
8
(5)
(562)
(59)
(621)
$
(1,697)
(742)
(167)
(62)
(112)
15
(447)
51
23
(470)
(121)
(591)
$
18
7
(15)
52
81
12
(114)
(43)
(28)
(92)
62
(30)
$
1 %
1 %
1 %
(9)%
84 %
72 %
80 %
(26)%
(84)%
nm
(20)%
51 %
(5)%
Contract drilling revenues—Contract drilling revenues increased for the year ended December 31, 2022, compared to
the year ended December 31, 2021, primarily due to the following: (a) approximately $25 million resulting from
Deepwater Atlas, which was placed into service in October 2022, (b) approximately $20 million resulting from increased rig
utilization, (c) approximately $10 million resulting from higher early termination revenues and (d) approximately $10 million
resulting from higher reimbursable revenues. These increases were partially offset by (a) approximately $40 million resulting
from lower dayrates and (b) approximately $5 million resulting from lower fleet revenue efficiency.
Costs and expenses—Operating and maintenance costs and expenses decreased for the year ended December 31,
2022, compared to the year ended December 31, 2021, primarily due to the following: (a) approximately $35 million resulting
from the effect of favorable exchange rates, (b) approximately $28 million resulting from the allowance for excess materials and
supplies due to the identification, in the year ended December 31, 2021, of parts that were in excess of our expected future
usage, (c) approximately $15 million resulting from reduced rig out-of-service maintenance costs and (d) approximately
$5 million incurred on rigs sold in the year ended December 31, 2021. These decreases were partially offset by the following
increases: (a) approximately $25 million resulting from personnel compensation increases, (b) approximately $20 million
resulting from increased rig operating activities, (c) approximately $15 million resulting from Deepwater Atlas and
(d) approximately $10 million resulting from higher customer reimbursable costs.
Depreciation and amortization expense decreased for the year ended December 31, 2022, compared to the year ended
December 31, 2021, primarily due to (a) approximately $17 million resulting from assets that had reached the end of their
useful lives or had been retired, partially offset by (b) approximately $10 million of increased depreciation associated with our
newbuild ultra-deepwater drillship and other property and equipment placed into service in the year ended December 31, 2022.
General and administrative expense increased for the year ended December 31, 2022, compared to the year ended
December 31, 2021, primarily due to the following: (a) approximately $8 million of increased costs for information systems and
technology and (b) approximately $3 million of increased costs for strategy and innovation.
Disposal of assets—In the year ended December 31, 2021, we recognized an aggregate net loss of $57 million,
primarily associated with the sale of a harsh environment floater and related assets. In the years ended December 31, 2022 and
2021, we recognized an aggregate net loss of $10 million and $5 million, respectively, associated with the disposal of assets
unrelated to rig sales.
Other income and expense—Interest expense, net of amounts capitalized, increased in the year ended December 31,
2022, compared to the year ended December 31, 2021, primarily due to the following: (a) an increase of $157 million resulting
from the fair value adjustment of the bifurcated compound exchange feature embedded in the 4.625% Senior Guaranteed
Exchangeable Bonds and (b) an increase of $15 million resulting from borrowings under the Shipyard Loans, partially offset by
(c) a decrease of $41 million resulting from
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debt repaid as scheduled or early retired and (d) a decrease of $23 million resulting from increased interest capitalized for our
newbuild construction projects.
In the year ended December 31, 2022, we recognized an aggregate net gain on the retirement of debt, primarily
associated with the retirement of $116 million aggregate principal amount of debt as a result of the 2022 Private Exchange. In
the year ended December 31, 2021, we recognized an aggregate net gain on the retirement of debt, primarily associated with the
retirement of $323 million aggregate principal amount of debt as a result of the private exchanges completed in February 2021
(the “2021 Private Exchange”).
Other expense, net, increased in the year ended December 31, 2022, compared to the year ended December 31, 2021,
primarily due to the following: (a) income of $32 million resulting from settlement of litigation recognized in the year ended
December 31, 2021, (b) increased loss of $11 million related to our investment in Nauticus Robotics, Inc. (“Nauticus”),
(c) reduced income of $7 million related to our dual-activity patent, (d) increased losses of $7 million resulting from net
changes to currency exchange rates, and (e) reduced income of $5 million related to the non-service components of net periodic
benefit income, partially offset by (f) reduced losses of $33 million related to our investment in Orion Holdings (Cayman)
Limited (“Orion”).
Income tax expense—In the years ended December 31, 2022 and 2021, our effective tax rate was (10.4) percent and
(25.7) percent, respectively, based on loss before income tax expense. In the years ended December 31, 2022 and 2021, the
aggregate effect of discrete period tax items was a net tax benefit of $19 million and net tax expense of $47 million,
respectively. In the year ended December 31, 2022, such discrete items included settlement and expiration of various uncertain
tax positions, changes to valuation allowances, operational restructuring and gains due to exchange rate changes. In the year
ended December 31, 2021, such discrete items included the effect of tax law changes in Switzerland and jurisdictional
ownership changes of certain assets, loss on disposal of assets, expiration and settlements of various uncertain tax positions,
gain on retirement of debt, changes to our allowance for excess materials and loss on impairment of an equity investment. In
the years ended December 31, 2022 and 2021, our effective tax rate, excluding discrete items, was (13.6) percent and
(18.5) percent, respectively, based on loss before income tax expense. In the year ended December 31, 2022 compared to the
year ended December 31, 2021, our effective tax rate 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 does not change proportionally
with our income before income taxes. Significant decreases in our income before income taxes typically lead to higher effective
tax rates, while significant increases in income before income taxes can lead to lower effective tax rates, subject to the other
factors impacting income tax expense noted above. With respect to the effective tax rate calculation for the year ended
December 31, 2022, a significant portion of our income tax expense was generated in countries in which income taxes are
imposed or treated to be imposed on gross revenues, with the most significant of these countries being Angola and India.
Conversely, during this period, the most significant countries in which we incurred income taxes that were based on income
before income tax included the U.S., Hungary and Switzerland. Our rig operating structures further complicate our tax
calculations, especially in instances where we have more than one operating structure for the taxing jurisdiction and, thus, more
than one method of calculating taxes depending on the operating structure utilized by the rig under the contract.
LIQUIDITY AND CAPITAL RESOURCES
Sources and uses of cash
At December 31, 2022, we had $683 million in unrestricted cash and cash equivalents and $308 million in restricted
cash and cash equivalents. In the year ended December 31, 2022, our primary sources of cash were net cash provided by our
operating activities, net cash proceeds from the issuance of shares under the ATM Program and net cash proceeds from the
issuance of debt. Our primary uses of cash were debt repayments and capital expenditures.
Cash flows from operating activities
Net loss
Non-cash items, net
Changes in operating assets and liabilities, net
Years ended December 31,
2022
2021
(in millions)
Change
$
$
(621) $
1,163
(94)
448 $
(591)
1,243
(77)
575
$
$
(30)
(80)
(17)
(127)
Net cash provided by operating activities decreased primarily due to (a) reduced cash collected from customers,
(b) increased cash paid to employees and (c) reduced cash refunds for income taxes, partially offset by (d) reduced cash paid for
interest.
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Cash flows from investing activities
Capital expenditures
Investments in equity of unconsolidated affiliates
Investment in loans to unconsolidated affiliates
Proceeds from disposal of assets, net
Years ended December 31,
2022
2021
(in millions)
Change
$
$
(717) $
(42)
(5)
7
(757) $
(208)
(1)
(33)
9
(233)
$
$
(509)
(41)
28
(2)
(524)
Net cash used in investing activities increased primarily due to (a) increased capital expenditures related to our
newbuild construction program and (b) increased investments in equity of unconsolidated affiliates, including Liquila,
Ocean Minerals LLC and Orion, partially offset by (c) reduced investment in loans to unconsolidated affiliates.
Cash flows from financing activities
Repayments of debt
Proceeds from issuance of shares, net of issue costs
Proceeds from issuance of debt, net of issue costs
Proceeds from issuance of warrants, net of issue costs
Other, net
Years ended December 31,
2022
2021
(in millions)
Change
$
$
$
(554)
263
175
12
(8)
(112) $
(606)
158
—
—
(42)
(490)
$
$
52
105
175
12
34
378
Net cash used in financing activities decreased primarily due to (a) net cash proceeds from the issuance of the
4.625% Senior Guaranteed Exchangeable Bonds in the year ended December 31, 2022, (b) increased net cash proceeds from the
issuance of shares under the ATM Program and (c) decreased cash used to repay debt.
Sources and uses of liquidity
Overview—We expect to use existing unrestricted cash balances, internally generated cash flows, borrowings under
our Secured Credit Facility or proceeds from the disposal of assets or 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 or other payments. We may 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.
We have generated positive cash flows from operating activities over recent years and, although we cannot provide
assurances, we currently expect that such cash flows will continue to be positive over the next year. Among other factors, if
general economic, financial, industry or business conditions deteriorate, if we experience poor operating results, or if we incur
costs to, for example, reactivate, stack or otherwise assure the marketability of our fleet, our cash flows from operations may be
reduced or negative.
We continue to evaluate additional potential liability management transactions in connection with our ongoing efforts
to prudently manage our capital structure and improve our liquidity. In each case subject to then-existing market conditions and
our expected liquidity needs, among other factors, we may continue to use existing unrestricted cash balances, internally
generated cash flows and proceeds from asset sales to pursue liability management transactions, including among others,
purchasing or exchanging one or more existing series of our debt securities in the open market, in privately negotiated
transactions, through tender offers or through exchange offers. 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, including our
previous exchange transactions. 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.
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 need to alter our
allocation or sources of capital, implement further cost reduction measures and change our financial strategy. Additionally, the
rating of the majority of our long-term debt, which is below investment grade, is causing us to experience increased fees and
interest rates under our Secured Credit Facility and agreements 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.
Debt issuances—In January 2023, we issued $525 million aggregate principal amount of 8.375% Senior Secured
Notes, and we received $515 million aggregate cash proceeds, net of issue costs. The 8.375% Senior Secured Notes are secured
by the assets and earnings associated with the ultra-deepwater floater Deepwater Titan and the equity of the wholly owned
subsidiary that owns or operates
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the collateral rig. Additionally, we are required to maintain certain balances in a restricted cash account to satisfy debt service
requirements. We may redeem all or a portion of the 8.375% Senior Secured Notes on or prior to February 1, 2025 at a price
equal to 100 percent of the aggregate principal amount plus a make-whole premium, and subsequently, at specified redemption
prices.
In January 2023, we issued $1.175 billion aggregate principal amount of 8.75% Senior Secured Notes, and we received
$1.157 billion aggregate cash proceeds, net of issue costs. The 8.75% Senior Secured Notes are fully and unconditionally
guaranteed on an unsecured basis by Transocean Ltd. and on a limited senior secured basis by certain of our wholly owned
subsidiaries. The 8.75% Senior Secured Notes are secured by a lien on the ultra-deepwater floaters Deepwater Pontus,
Deepwater Proteus and Deepwater Thalassa and
floaters Transocean Enabler and
Transocean Encourage, together with certain related assets. Additionally, we are required to maintain certain balances in a
restricted cash account to satisfy debt service requirements.
the harsh environment
Early debt retirement—In January 2023, in connection with the issuance of the 8.75% Senior Secured Notes, we
made an aggregate payment of $1.156 billion, including a make-whole premium, to redeem the remaining outstanding
$311 million, $240 million, $250 million, and $336 million aggregate principal amount of the 5.875% Senior Secured Notes,
the 7.75% Senior Secured Notes, the 6.25% Senior Secured Notes and the 6.125% Senior Secured Notes, respectively.
In January 2022, we made an aggregate cash payment of $18 million to repay the then outstanding equivalent
aggregate principal amount of the 5.52% Senior Secured Notes, and as a result, the noteholders subsequently released all liens,
the mortgage on the secured rig and $106 million from restricted cash accounts. In July 2022, we made an aggregate cash
payment of $27 million to redeem the then outstanding equivalent aggregate principal amount of the 3.80% Senior Notes.
In October 2022, the harsh environment floater Transocean Equinox, which is held as collateral for the 5.375% Senior
Secured Notes, concluded its drilling contract following a notice received from the customer in September 2022. As required
under the indenture governing such notes, in January 2023, we made a cash payment of $121 million to redeem an equivalent
aggregate principal amount of the outstanding securities. Additionally, in January 2023, the trustee notified holders of our intent
to redeem the remaining outstanding $122 million aggregate principal amount of notes for an equivalent aggregate cash
payment, expected to be made on February 24, 2023.
In the year ended December 31, 2021, we made an aggregate cash payment of $79 million to repurchase in the open
market an equivalent aggregate principal amount of our debt securities.
Shipyard financing arrangement—We established the Shipyard Loans to finance all or a portion of the final
payments expected to be owed to the shipyard upon delivery of the ultra-deepwater floaters Deepwater Atlas and
Deepwater Titan. In June 2022, we borrowed $349 million under one of the Shipyard Loans and made a cash payment of
$46 million to satisfy the final milestone payment due upon delivery of Deepwater Atlas. In December 2022, we borrowed
$90 million under the other Shipyard Loan and made a cash payment of $325 million to satisfy the final milestone payment due
upon delivery of Deepwater Titan. The Shipyard Loans are guaranteed by Transocean Inc. Borrowings under the Shipyard
Loan for Deepwater Atlas are secured by, among other security, a lien on the rig. Borrowings under the Shipyard Loan for
Deepwater Titan are unsecured. We have the right to prepay the outstanding borrowings, in full or in part, without penalty. The
Shipyard Loans contain covenants that, among other things, limits the ability of the subsidiary owners of the drilling rigs to
incur certain types of additional indebtedness or make certain additional commitments or investments.
Debt exchanges—In September 2022, we issued $300 million aggregate principal amount of 4.625% Senior
Guaranteed Exchangeable Bonds in connection with exchange and purchase agreements. Pursuant to the exchange and
purchase agreements, we exchanged (a) $73 million aggregate principal amount of the 0.50% Exchangeable Senior Bonds for
(i) $73 million aggregate principal amount of the 4.625% Senior Guaranteed Exchangeable Bonds and (ii) 6.7 million warrants
to purchase Transocean Ltd. shares, and (b) $43 million aggregate principal amount of the 7.25% Senior Notes for $39 million
aggregate principal amount of the 4.625% Senior Guaranteed Exchangeable Bonds. Additionally, we sold $188 million
aggregate principal amount of the 4.625% Senior Guaranteed Exchangeable Bonds and issued 15.5 million warrants to purchase
Transocean Ltd. shares for aggregate net cash proceeds of $188 million. On or after March 30, 2026, we may redeem for cash
all or a portion of the 4.625% Senior Guaranteed 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 115 percent of the exchange price for a period of at least
20 trading days.
In February 2021, we issued $294 million aggregate principal amount of the 4.00% senior guaranteed exchangeable
bonds due December 2025 (the “4.00% Senior Guaranteed Exchangeable Bonds”) and made an aggregate cash payment of
$11 million in the 2021 Private Exchange for $323 million aggregate principal amount of the 0.50% Exchangeable Senior
Bonds. The 4.00% Senior Guaranteed Exchangeable Bonds are guaranteed by Transocean Ltd. and the same subsidiaries of
Transocean Inc. that guarantee the 2.50% senior guaranteed exchangeable bonds due January 2027 (the “2.50% Senior
Guaranteed Exchangeable Bonds”) and the 11.50% senior guaranteed notes due January 2027. The indenture that governs the
4.00% Senior Guaranteed Exchangeable Bonds also 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 Transocean Ltd. or Transocean Inc., (ii) the
failure of our shares to be listed or quoted on a national securities exchange and (iii) specified tax matters. The 4.00% Senior
Guaranteed Exchangeable Bonds may be exchanged at any time prior to the close of business on the second business day
immediately preceding the maturity date at a current exchange rate of 190.4762 Transocean Ltd. shares per $1,000 note, which
implies an exchange price of $5.25 per share, subject to adjustment upon the occurrence of certain events, and any such
exchange may be settled in cash, Transocean Ltd. shares or a combination of cash and Transocean Ltd. shares, at our election.
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Share issuance—We intend to use the net proceeds from the sale of our shares under the ATM Program 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 the years ended December 31, 2022
and 2021, we received aggregate cash proceeds of $263 million and $158 million, respectively, net of issue costs, for the
aggregate sale of 61.0 million shares and 36.1 million shares, respectively, under the ATM Program.
Secured Credit Facility—In July 2022, we amended the bank credit agreement for our Secured Credit Facility to,
among other things, (i) extend the maturity date from June 22, 2023 to June 22, 2025, (ii) reduce the borrowing capacity from
$1.33 billion to $774 million through June 22, 2023, and thereafter reduce the borrowing capacity to $600 million through
June 22, 2025 and (iii) replace our ability to borrow under the Secured Credit Facility at the reserve adjusted London Interbank
Offered Rate plus a margin (the “Secured Credit Facility Margin”) with the ability to borrow under the Secured Credit Facility
at a forward looking term rate based on the secured overnight financing rate (“Term SOFR”) plus the Secured Credit Facility
Margin and a Term SOFR spread adjustment of 0.10 percent. 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 91 days thereof is equal to or in excess of $200 million and available cash is
less than $250 million. The amended secured credit facility also permits us to increase the aggregate amount of commitments
by up to $250 million. The Secured Credit Facility is guaranteed by Transocean Ltd. and certain wholly owned subsidiaries.
The Secured Credit Facility is secured by, among other things, a lien on nine of our ultra-deepwater floaters and two of our
harsh environment floaters.
The Secured Credit Facility contains covenants that, among other things, include maintenance of a minimum guarantee
coverage ratio of 3.0 to 1.0, a minimum collateral coverage ratio of 2.1 to 1.0, a maximum debt to capitalization ratio of
0.60 to 1.00 and minimum liquidity of $500 million. The Secured Credit Facility also restricts the ability of Transocean Ltd.
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 pay dividends and other distributions. 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 $125 million could trigger a default under the Secured Credit Facility and, if not waived by the lenders, could cause us
to lose access to the Secured Credit Facility. At February 14, 2023, we had no borrowings outstanding, $6 million of letters of
credit issued, and we had $767 million of available borrowing capacity under the Secured Credit Facility.
Equity and debt investments—In the years ended December 31, 2022 and 2021, we made cash investments of
$25 million and $34 million, respectively, in the equity and debt of certain unconsolidated affiliates, such as Orion and Liquila,
that own drilling units. In the year ended December 31, 2022, we made a cash contribution of $15 million to Liquila, which
was used by Liquila to make the initial payment to the shipyard to acquire the ultra-deepwater drillship Deepwater Aquila.
Additionally, in the year ended December 31, 2022, we made an aggregate cash contribution of $10 million to our equity
investment in Orion, the company that, through its wholly owned subsidiary, owns the harsh environment floater
Transocean Norge. In June 2021, we agreed to participate in a financing arrangement for Orion, at a rate of 33 percent,
equivalent to our ownership interest in Orion, and made a cash investment of $33 million in the loan facility.
In February 2023, we agreed to make an investment for a noncontrolling ownership interest in Global Sea Mineral
Resources, 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. In addition to
a cash investment of $10 million, we agreed to contribute the ultra-deepwater drillship Ocean Rig Olympia, and we expect to
contribute engineering services in the future.
In the year ended December 31, 2022, we made an aggregate cash investment of $22 million in the equity and debt of
certain other unconsolidated affiliates that are involved in researching and developing technology to improve efficiency,
reliability, sustainability and safety in drilling and other activities. We hold an equity investment in Nauticus, a company that
develops highly sophisticated, ultra-sustainable marine robots and intelligent software to power them, which, following the
completion of a business combination with a publicly traded special purpose acquisition company in September 2022, became a
publicly listed company, the common shares of which trade on the NASDAQ exchange under the ticker symbol “KITT.”
Additionally, we hold equity and debt investments in Ocean Minerals LLC, the parent company of Moana Minerals Ltd.
(“Moana”), a Cook Islands subsea resource development company that intends to extract polymetallic nodules. We retain a
priority right to provide deepwater nodule extraction services to Moana, and together with Moana and others, we intend to
extract the nodules in an environmentally responsible way by employing existing and developing new technologies.
Exchangeable bonds—The indentures that govern the 4.00% Senior Guaranteed Exchangeable Bonds, 2.50% senior
guaranteed exchangeable bonds due January 2027 and the 4.625% Senior Guaranteed Exchangeable Bonds each 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 Transocean Ltd. or Transocean Inc., (ii) the failure of our shares to be listed or quoted on a national securities
exchange and (iii) specified tax matters. Additionally, the 4.00% Senior Guaranteed Exchangeable Bonds and the
4.625% Senior Guaranteed Exchangeable Bonds may be exchanged at any time prior to the close of business on the second
business day immediately preceding the maturity date at the effective
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exchange rate, and any such exchange may be settled in cash, Transocean Ltd. shares or a combination of cash and
Transocean Ltd. shares, at our election.
Share repurchase program—In May 2009, at our annual general meeting, our shareholders approved and authorized
our board of directors, at its discretion, to repurchase for cancellation any amount of our shares for an aggregate purchase price
of up to CHF 3.50 billion. On February 12, 2010, our board of directors authorized our management to implement the share
repurchase program. At December 31, 2022, the authorization remaining under the share repurchase program was for the
repurchase of our outstanding shares for an aggregate purchase price of up to CHF 3.24 billion, equivalent to $3.51 billion. 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. See “Item 5. Market for Registrant’s Common Equity, Related
Shareholder Matters and Issuer Purchases of Equity Securities—Shareholder Matters.”
Contractual obligations—At December 31, 2022, our contractual obligations stated at face value, were as follows:
Debt
Interest on debt
Finance lease liability
Operating lease liabilities
Purchase obligations
Service agreement obligations
Total
Years ending December 31,
Total
2023
2024 - 2025 2026 - 2027 Thereafter
(in millions)
$ 7,311 $
2,136
465
160
38
836
728 $
384
65
13
36
124
2,084 $
635
141
25
2
281
$ 10,946 $ 1,350 $
3,168 $
2,755 $ 1,744
782
118
98
—
165
3,521 $ 2,907
335
141
24
—
266
As of December 31, 2022, our defined benefit pension and other postemployment plans represented an aggregate
liability of $174 million, representing the aggregate projected benefit obligation, net of the aggregate fair value of plan assets.
The carrying amount of this liability is influenced by, among others, significant current and future assumptions, funding
contributions, returns on plan assets, participant demographics, and plan amendments. We excluded this amount from our
contractual obligations presented above due to the uncertainties resulting from these factors and because the amount is not
representative of future liquidity requirements. See Notes to Consolidated Financial Statements—Note 9—Postemployment
Benefit Plans.
As of December 31, 2022, we had unrecognized tax benefits of $471 million, including interest and penalties, against
which we recorded net operating loss deferred tax assets of $383 million, resulting in net unrecognized tax benefits of
$88 million, including interest and penalties, that upon reversal would favorably impact our effective tax rate. Although a
portion of these could settle or reverse in the coming year, we have excluded this amount from our contractual obligations
presented above due to the high degree of uncertainty regarding the timing of future cash outflows associated with these
liabilities and the period in which any cash settlement may be made with the respective taxing authorities. See Notes to
Consolidated Financial Statements—Note 10—Income Taxes.
Other commercial commitments—We have other commercial commitments, such as standby letters of credit and
surety bonds that guarantee our performance as it relates to our drilling contracts, insurance, customs, tax and other obligations
in various jurisdictions. 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. Standby letters of credit
are issued under various committed and uncommitted credit lines, some of which require cash collateral. At December 31,
2022, the aggregate cash collateral held by banks for letters of credit and surety bonds was $7 million.
At December 31, 2022, these obligations stated in U.S. dollar equivalents and their time to expiration were as follows:
Total
2023
2024 - 2025 2026 - 2027 Thereafter
Years ending December 31,
Standby letters of credit
Surety bonds
Total
$
$
8 $
161
169 $
8
29
37
(in millions)
$
— $
121
121
$
$
— $
11
11
$
—
—
—
We have established a wholly owned captive insurance company to insure various risks of our operating subsidiaries.
Access to the cash and cash equivalents of the captive insurance company may be limited due to local regulatory restrictions.
At December 31, 2022, the captive insurance company held cash and cash equivalents of $44 million, and such balance is
expected to range from $25 million to $75 million through December 31, 2023. The balance of the cash and cash equivalents
held by the captive insurance company varies, depending on (i) premiums received and (ii) the timing and magnitude of claims
and dividends paid by the captive insurance company.
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Drilling fleet
Expansion—From time to time, we review possible acquisitions of businesses and drilling rigs, as well as
noncontrolling interests in other companies, and we may make significant future capital commitments for such purposes. We
may also consider investments related to major rig upgrades, new rig construction, or the acquisition of a rig under construction.
Any such acquisition or investment could involve the payment by us of a substantial amount of cash or the issuance of a
substantial number of additional shares or other securities. 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.
In the year ended December 31, 2022, we made a cash contribution of $15 million to Liquila, which represented our
proportionate contribution that was used to make the initial payment to the shipyard to acquire the newbuild ultra-deepwater
drillship Deepwater Aquila for a purchase price of approximately $200 million. The seventh generation, high-specification
drillship is designed to be equipped with our patented dual activity, a 1,400 short-ton hookload, large deck space, high load
capacities, large deck space and will be dual-stack ready. We maintain the exclusive right to market and manage the operations
of the rig, which is expected to be delivered from the shipyard in the third quarter of 2023.
In the years ended December 31, 2022 and 2021, we made capital expenditures of $717 million and $208 million,
respectively, including $669 million and $174 million, respectively, for our newbuild construction projects. The historical and
projected capital expenditures and non-cash capital additions for our ongoing newbuild construction projects were as follows:
Deepwater Atlas (a)
Deepwater Titan (b)
Total
Total costs
through
December 31,
2022
Expected
costs for the
year ending
December 31,
2023
(in millions)
$
$
$
954
1,052
2,006 $
$
66
128
194 $
Total
1,020
1,180
2,200
(a)
In October 2022, we completed construction of the ultra-deepwater drillship Deepwater Atlas. In June 2022, we borrowed $349 million
under the Shipyard Loan and made a cash payment of $46 million to satisfy the final milestone payment due upon delivery of
Deepwater Atlas. We recorded the Shipyard Loan, net of imputed interest, and corresponding non-cash capital additions of $300 million.
In October 2022, the rig commenced operations in the first of two phases using a 15,000 pounds per square inch blowout preventer.
Before the start of the second phase, the rig will undergo installation of a 20,000 pounds per square inch blowout preventer and related
equipment, which is expected to be commissioned in the third quarter of 2023.
(b) Deepwater Titan is an ultra-deepwater drillship under construction. In December 2022, we took delivery from Jurong Shipyard Pte Ltd.
in Singapore and borrowed $90 million under the Shipyard Loan and made a cash payment of $325 million to satisfy the final milestone
payment due upon delivery of Deepwater Titan. We recorded the Shipyard Loan, net of imputed interest, and corresponding non-cash
capital additions of $82 million. The rig is expected to commence operations under its drilling contract in the second quarter of 2023.
The projected capital additions include estimates for the mobilization and customer acceptance in the U.S. Gulf of Mexico and an
upgrade for two 20,000 pounds per square inch blowout preventers and other equipment required by our customer.
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 of time, 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 the market demand for components and resources required for
drilling unit construction. We intend to fund the cash requirements relating to our capital expenditures not financed under the
Shipyard Loans by using available cash balances, cash generated from operations and asset sales, borrowings under our Secured
Credit Facility and financing arrangements with banks or other capital providers. Economic conditions and other factors could
impact the availability of these sources of funding. See “—Sources and uses of liquidity.”
Dispositions—From time to time, we may also review the possible disposition of certain drilling assets. Considering
market conditions, we have previously committed to plans to sell certain lower-specification drilling units for scrap value, and
we may identify additional lower-specification drilling units to be sold for scrap, recycling or alternative purposes.
RELATED PARTY TRANSACTIONS
We engage in certain related party transactions with our unconsolidated affiliates, the most significant of which are
under agreements with Orion. We have a management services agreement with Orion for the operation, stacking and
maintenance of the harsh environment floater Transocean Norge and a marketing services agreement for the marketing of the
rig. We also periodically lease the rig under short-term bareboat charter agreements. In June 2021, Orion refinanced its
shipyard loans under a financing arrangement for $100 million, in which we made a cash investment of $33 million.
Borrowings under the financing arrangement are secured by Transocean Norge. Additionally, we have a management services
agreement with Liquila for various services, including the marketing of
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the newbuild ultra-deepwater drilliship Deepwater Aquila. See Notes to Consolidated Financial Statements—Note 3—
Unconsolidated Affiliates.
In August 2020, Perestroika AS, an entity affiliated with one of our directors that beneficially owns approximately
11 percent of our shares, exchanged $356 million aggregate principal amount of the 0.50% Exchangeable Senior Bonds for
$213 million aggregate principal amount of 2.50% Senior Guaranteed Exchangeable Bonds. Perestroika AS has certain
registration rights related to its shares and shares that may be issued in connection with any exchange of its 2.50% Senior
Guaranteed Exchangeable Bonds. In November 2022, Perestroika AS made a cash investment of $10 million for a 13 percent
noncontrolling ownership interest in Liquila. See Notes to Consolidated Financial Statements—Note 3—Unconsolidated
Affiliates and Notes to Consolidated Financial Statements—Note 8—Debt.
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. On an ongoing basis, we evaluate our estimates, including those related to our income taxes, property and
equipment, equity investments, contingencies, allowance for excess materials and supplies, intangibles, postemployment benefit
plans and share-based compensation. We base our estimates on historical experience and on various other assumptions that we
believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying
amounts of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
We 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 a
discussion of our significant accounting policies and accounting standards updates, refer to our Notes to Consolidated Financial
Statements—Note 2—Significant Accounting Policies.
Income taxes—We provide for income taxes based on expected taxable income, statutory rates, tax laws and tax
planning opportunities available to us in the jurisdictions in which we operate or have a taxable presence. 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.
We are undergoing examinations of our tax returns in a number of taxing jurisdictions for various years. We review
our liabilities on an ongoing basis and, to the extent audits or other events cause us to adjust the liabilities accrued in prior
periods, we recognize those adjustments in the period of the event. Our 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 one country that either produce, or fail to
produce, offsetting tax changes in other countries. Consequently, we cannot reasonably estimate the future impact of changes to
the assumptions and estimates related to our annual tax provision.
Unrecognized tax benefits—We establish liabilities for estimated tax exposures, and the provisions and benefits
resulting from changes to those liabilities are included in our annual tax provision along with related interest and penalties.
Such tax exposures include potential challenges to permanent establishment positions, intercompany pricing, disposition
transactions, and withholding tax rates and their applicability. These exposures may be affected by changes in applicable tax
law or other factors, which could cause us to revise our prior estimates, and are generally resolved through the settlement of
audits within these tax jurisdictions or by judicial means. At December 31, 2022 and 2021, we had unrecognized tax benefits of
$471 million and $435 million, respectively, including interest and penalties, against which we recorded net operating loss
deferred tax assets of $383 million and $320 million, respectively, resulting in net unrecognized tax benefits of $88 million and
$115 million, respectively, including interest and penalties, that upon reversal would favorably impact our effective tax rate.
Valuation allowance—We apply significant judgment to determine whether our deferred tax assets will be fully or
partially realized. Our evaluation requires us to consider all available positive and negative evidence, including projected future
taxable income and the existence of cumulative losses in recent years. We continually evaluate tax planning strategies that
could allow for the future utilization of
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our deferred tax assets. When it is estimated to be more likely than not that all or some portion of certain deferred tax assets,
such as foreign tax credit carryovers or net operating loss carryforwards, will not be realized, we establish a valuation allowance
for the amount of the deferred tax assets that is considered to be unrealizable. During the years ended December 31, 2022 and
2021, in connection with our evaluation of the projected realizability of our deferred tax assets, we determined that our
consolidated cumulative loss incurred over the recent three-year period has limited our ability to consider other subjective
evidence, such as projected contract activity rather than contract backlog. See Notes to Consolidated Financial Statements—
Note 10—Income Taxes.
Property and equipment—We apply significant judgment to account for our property and equipment, consisting
primarily of offshore drilling rigs and related equipment, related to estimates and assumptions for cost capitalization, useful
lives and salvage values. At December 31, 2022 and 2021, the carrying amount of our property and equipment was
$17.47 billion and $17.10 billion, respectively, representing 85 percent and 83 percent, respectively, of our total assets.
Capitalized costs—We capitalize costs incurred to enhance, improve and extend the useful lives of our property and
equipment and expense costs incurred to repair and maintain the existing condition of our rigs. For newbuild construction
projects, we also capitalize the initial preparation, mobilization and commissioning costs incurred until the drilling unit is placed
into service. Capitalized costs increase the carrying amounts of, and depreciation expense for, the related assets, which also
impact our results of operations.
Useful lives and salvage values—We depreciate our assets using the straight-line method over their estimated useful
lives after allowing for salvage values. 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 December 31, 2022, a hypothetical one-year increase in the useful lives of
all of our rigs would cause a decrease in our annual depreciation expense of approximately $38 million and a hypothetical one-
year decrease would cause an increase in our annual depreciation expense of approximately $13 million.
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 or we may elect to sell certain rigs for scrap, which 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 lucrative and undersupplied region when it is economical to do so. Many of our
contracts generally allow our customers to relocate our rigs from one geographic 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 classes or asset groups, 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
Level 3 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 in nature, 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
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. In the year ended December 31, 2020, we
recognized a loss of $31 million, which had no tax effect, associated with the impairment of the midwater floater asset group.
See Notes to Consolidated Financial Statements—Note 6—Long-Lived Assets.
Equity-method investments and impairment—We review our equity-method investments for potential impairment
when events or changes in circumstances indicate that the carrying amount of the investment might not be recoverable in the
near term. Such circumstances include the following: (a) evidence we are unable to recover the carrying amount of our
investment, (b) evidence that the investee is unable to sustain earnings that would justify the carrying amount or (c) the current
fair value of the investment is less than the carrying amount. If an evaluation of such circumstances results in the determination
that an impairment that is other than temporary exists,
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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. Our estimate of fair value generally requires us to use significant unobservable inputs, representative of
Level 3 fair value measurements, including assumptions related to the estimated discount rate and the investee’s long-term
future operational performance factors, such as projected revenues and costs and market factors, including demand for the
investee’s industry, services and product lines. Such projections involve significant uncertainties and require significant
judgment. In the years ended December 31, 2021 and 2020, we recognized a loss of $37 million and $59 million, respectively,
associated with an other-than-temporary impairment of the carrying amount of our equity-method investments. See Notes to
Consolidated Financial Statements—Note 3—Unconsolidated Affiliates.
OTHER MATTERS
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, we investigate such matters, respond to such inquiries and cooperate with the regulatory agencies. See
Notes to Consolidated Financial Statements—Note 12—Commitments and Contingencies.
Tax matters
We conduct operations through our various subsidiaries in countries throughout the world. Each country has its own
tax regimes with varying nominal rates, deductions and tax attributes that are subject to changes resulting from new legislation,
interpretation or guidance. 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. See Notes to Consolidated
Financial Statements—Note 10—Income Taxes.
ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest rate risk—We are exposed to interest rate risk, primarily associated with our long-term debt, including
current maturities. The following table presents the scheduled installment amounts and related weighted-average interest rates
of our long-term debt instruments by contractual maturity date. The scheduled installment amounts include the contractual
principal and interest payments resulting from previously restructured debt. The following table presents information as of
December 31, 2022 for each of the five years in the period ending December 31, 2027 and thereafter (in millions, except
interest rate percentages):
2023
Twelve months ending December 31,
2025
2026
2024
2027
Thereafter
Total
Fair value
Debt
Fixed rate (USD)
Average interest rate
$
$
728
5.08 %
952
5.87 %
$ 1,132
$
5.44 %
866
6.37 %
$ 1,889
$ 1,744
$ 7,311
$ 6,412
4.01 %
6.87 %
At December 31, 2022 and 2021, the fair value of our outstanding debt was $6.41 billion and $5.66 billion,
respectively. During the year ended December 31, 2022, the fair value of our debt increased by $751 million due to the
following: (a) an increase of $469 million due to changes in the market prices of our outstanding debt, (b) an increase of
$407 million due to borrowings under shipyard loans established to finance a portion of the final installments due upon delivery
of Deepwater Atlas and Deepwater Titan and (c) a net increase of $388 million due to the issuance of the 4.625% Senior
Guaranteed Exchangeable Bonds in private exchanges for a portion of the 0.50% Exchangeable Senior Bonds and the
7.25% Senior Notes and the sale of new securities, partially offset by (d) a decrease of $468 million due to scheduled
repayments and (e) a decrease of $44 million due to early retirement. See Notes to Consolidated Financial Statements—Note 8
—Debt.
The majority of our cash equivalents is subject to variable interest rates or short-term interest rates and such cash
equivalents earn commensurately higher rates of return when interest rates increase.
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 the
structuring of customer contract payment terms and occasional use of forward exchange contracts. Our primary tool to manage
currency exchange rate risk involves structuring customer contracts to provide for payment in both U.S. dollars and local
currency. The payment portion denominated in local currency is based on anticipated local currency requirements over the
contract term. Due to various factors, including customer acceptance, local banking laws, national content requirements, other
statutory requirements, local currency convertibility, 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—Note 18—Risk Concentration.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Management’s Report on Internal Control Over Financial Reporting
Management of Transocean Ltd. (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, 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 Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934. Management assessed the
effectiveness of the Company’s internal control over financial reporting as of December 31, 2022. 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 December 31, 2022.
The Company’s independent auditors, Ernst & Young LLP, a registered public accounting firm, are appointed by the
audit committee of the Company’s board of directors, subject to ratification by our shareholders. Ernst & Young LLP has
audited and reported on the consolidated financial statements of Transocean Ltd. and subsidiaries, and the Company’s 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 Transocean Ltd.
Opinion on Internal Control Over Financial Reporting
We have audited Transocean Ltd. and subsidiaries’ internal control over financial reporting as of December 31, 2022, based on
criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Transocean Ltd. and subsidiaries (the Company)
maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, 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 December 31, 2022 and 2021, and the related consolidated
statements of operations, comprehensive loss, equity and cash flows for each of the three years in the period ended
December 31, 2022, and the related notes and financial statement schedule listed in the Index at Item 15(a) and our report dated
February 22, 2023 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s 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 Management’s Report
on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s 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 company’s 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 company’s 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 company’s 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
February 22, 2023
- 41 -
Table of Contents
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Transocean Ltd.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Transocean Ltd. and subsidiaries (the Company) as of
December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive loss, equity and cash flows for
each of the three years in the period ended December 31, 2022, and the related notes and financial statement schedule listed in
the Index at Item 15(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 December 31, 2022 and
2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, 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 December 31, 2022, based on criteria established in
Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(2013 framework) and our report dated February 22, 2023, expressed an unqualified opinion thereon.
Opinion on the Financial Statements
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on
the Company’s 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.
Description of the
Matter
Income Taxes
As discussed in Notes 2 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,
treaties or regulations in each jurisdiction where it operates. The Company’s provision for income
taxes is based on the tax laws and rates applicable in each jurisdiction. The Company recognizes tax
benefits they believe are more likely than not to be sustained upon examination by the taxing
authorities based on the technical merits of the position.
Auditing management’s provision for income taxes and related deferred taxes was complex because
of the Company’s multi-national operating structure. In addition, a higher degree of auditor judgment
was required to evaluate the Company’s deferred tax provision as a result of the Company’s
interpretation of tax law in certain jurisdictions across its multiple subsidiaries.
- 42 -
Table of Contents
How We Addressed
the Matter in Our
Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls
over the Company’s income tax provision process, including controls over management’s review of
the identification and valuation of deferred income taxes and changes in tax laws and regulations that
may impact the Company’s deferred income tax provision.
Our audit procedures also included, among others, (i) obtaining an understanding of the Company’s
overall tax structure, evaluating changes in the Company’s tax structure that occurred during the year
as well as changes in tax law, and assessing the interpretation of those changes under the relevant
jurisdiction’s tax law; (ii) utilizing tax resources with appropriate knowledge of local jurisdictional
laws and regulations; (iii) evaluating the completeness and accuracy of deferred income taxes, and
(iv) assessing the reasonableness of the Company’s valuation allowance on deferred tax assets,
including projections of taxable income from the future reversal of existing taxable temporary
differences.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 1999.
Houston, Texas
February 22, 2023
- 43 -
Table of Contents
TRANSOCEAN LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share data)
Years ended December 31,
2021
2020
2022
Contract drilling revenues
Costs and expenses
Operating and maintenance
Depreciation and amortization
General and administrative
Loss on impairment
Loss on disposal of assets, net
Operating loss
Other income (expense), net
Interest income
Interest expense, net of amounts capitalized
Gain on restructuring and retirement of debt
Other, net
Loss before income tax expense
Income tax expense
Net loss
Net income (loss) attributable to noncontrolling interest
Net loss attributable to controlling interest
Loss per share, basic and diluted
Weighted-average shares, basic and diluted
See accompanying notes.
- 44 -
$
2,575
$
2,556 $
3,152
1,679
735
182
2,596
—
(10)
(31)
27
(561)
8
(5)
(531)
(562)
59
1,697
742
167
2,606
—
(62)
(112)
15
(447)
51
23
(358)
(470)
121
(621)
—
(621) $
(591)
1
(592) $
2,000
781
183
2,964
(597)
(84)
(493)
21
(575)
533
(27)
(48)
(541)
27
(568)
(1)
(567)
(0.89) $
(0.93) $
699
637
(0.92)
615
$
$
Table of Contents
TRANSOCEAN LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in millions)
Years ended December 31,
2021
2020
2022
Net loss
Net income (loss) attributable to noncontrolling interest
Net loss attributable to controlling interest
Components of net periodic benefit (income) costs before reclassifications
Components of net periodic benefit costs reclassified to net loss
Other comprehensive income (loss) before income taxes
Income taxes related to other comprehensive income (loss)
Other comprehensive income (loss)
Other comprehensive income attributable to noncontrolling interest
Other comprehensive income (loss) attributable to controlling interest
Total comprehensive loss
Total comprehensive income (loss) attributable to noncontrolling interest
Total comprehensive loss attributable to controlling interest
$
(621) $
—
(621)
(591) $
1
(592)
(568)
(1)
(567)
(109)
3
(106)
5
(101)
—
(101)
175
10
185
(6)
179
—
179
38
25
63
(2)
61
—
61
(722)
—
(722) $
(412)
1
(413) $
(507)
(1)
(506)
$
See accompanying notes.
- 45 -
Table of Contents
TRANSOCEAN LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in millions, except share data)
Assets
Cash and cash equivalents
Accounts receivable, net
Materials and supplies, net
Restricted cash and cash equivalents
Other current assets
Total current assets
Property and equipment
Less accumulated depreciation
Property and equipment, net
Contract intangible assets
Deferred tax assets, net
Other assets
Total assets
Liabilities and equity
Accounts payable
Accrued income taxes
Debt due within one year
Other current liabilities
Total current liabilities
Long-term debt
Deferred tax liabilities, net
Other long-term liabilities
Total long-term liabilities
Commitments and contingencies
Shares, CHF 0.10 par value, 905,093,509 authorized, 142,362,675 conditionally authorized, 797,244,753 issued
and 721,888,427 outstanding at December 31, 2022, and 891,379,306 authorized, 142,363,356 conditionally
authorized, 728,176,456 issued and 655,505,335 outstanding at December 31, 2021
Additional paid-in capital
Accumulated deficit
Accumulated other comprehensive loss
Total controlling interest shareholders’ equity
Noncontrolling interest
Total equity
Total liabilities and equity
See accompanying notes.
- 46 -
December 31,
2022
2021
$
$
$
$
683
485
388
308
144
2,008
24,217
(6,748)
17,469
56
13
890
20,436
281
19
719
539
1,558
6,628
493
965
8,086
71
13,984
(3,079)
(185)
10,791
1
10,792
20,436
$
$
$
$
976
492
392
436
148
2,444
23,152
(6,054)
17,098
173
7
959
20,681
228
17
513
545
1,303
6,657
447
1,068
8,172
64
13,683
(2,458)
(84)
11,205
1
11,206
20,681
Table of Contents
TRANSOCEAN LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY
(in millions)
Shares
Balance, beginning of period
Issuance of shares
Balance, end of period
Additional paid-in capital
Balance, beginning of period
Share-based compensation
Issuance of shares
Issuance of warrants
Equity component of convertible debt instruments
Other, net
Balance, end of period
Accumulated deficit
Balance, beginning of period
Net loss attributable to controlling interest
Effect of adopting accounting standards update
Balance, end of period
Accumulated other comprehensive loss
Balance, beginning of period
Other comprehensive income (loss) attributable to controlling interest
Balance, end of period
Total controlling interest shareholders’ equity
Balance, beginning of period
Total comprehensive loss attributable to controlling interest
Share-based compensation
Issuance of shares
Issuance of warrants
Equity component of convertible debt instruments
Other, net
Balance, end of period
Noncontrolling interest
Balance, beginning of period
Total comprehensive income (loss) attributable to noncontrolling interest
Acquisition of noncontrolling interest
Other, net
Balance, end of period
Total equity
Balance, beginning of period
Total comprehensive loss
Share-based compensation
Issuance of shares
Issuance of warrants
Acquisition of noncontrolling interest
Equity component of convertible debt instruments
Other, net
Balance, end of period
Years ended December 31,
2022 2021 2020
Years ended December 31,
2022 2021
2020
655
67
722
615
40
655
612
3
615
$
$
64 $
7
71 $
60 $
4
64 $
59
1
60
$13,683 $13,501 $13,424
31
(1)
—
46
1
$13,984 $13,683 $13,501
29
256
16
—
—
28
154
—
—
—
$(2,458) $(1,866) $ (1,297)
(567)
(2)
$(3,079) $(2,458) $ (1,866)
(592)
—
(621)
—
$
(84) $ (263) $ (324)
61
179
(101)
(84) $ (263)
$ (185) $
$11,205 $11,432 $ 11,862
(506)
31
—
—
46
(1)
$10,791 $11,205 $ 11,432
(722)
29
263
16
—
—
(413)
28
158
—
—
—
$
$
1 $
—
—
—
1 $
3 $
1
(3)
—
1 $
5
(1)
—
(1)
3
$11,206 $11,435 $ 11,867
(507)
31
—
—
—
46
(2)
$10,792 $11,206 $ 11,435
(412)
28
158
—
(3)
—
—
(722)
29
263
16
—
—
—
See accompanying notes.
- 47 -
Table of Contents
TRANSOCEAN LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
Years ended December 31,
2021
2022
2020
Cash flows from operating activities
Net loss
Adjustments to reconcile to net cash provided by operating activities:
Contract intangible asset amortization
Depreciation and amortization
Share-based compensation expense
Loss on impairment
Loss on impairment of investment in unconsolidated affiliates
Loss on disposal of assets, net
Fair value adjustment to bifurcated compound exchange feature
Gain on restructuring and retirement of debt
Deferred income tax expense
Other, net
Changes in deferred revenues, net
Changes in deferred costs, net
Changes in other operating assets and liabilities, net
Net cash provided by operating activities
Cash flows from investing activities
Capital expenditures
Investments in equity of unconsolidated affiliates
Investments in loans to unconsolidated affiliates
Proceeds from disposal of assets, net
Proceeds from maturities of unrestricted and restricted investments
Net cash used in investing activities
Cash flows from financing activities
Repayments of debt
Proceeds from issuance of shares, net of issue costs
Proceeds from issuance of debt, net of issue costs
Proceeds from issuance of warrants, net of issue costs
Other, net
Net cash used in financing activities
$
(621) $
(591) $
(568)
117
735
29
—
—
10
157
(8)
46
77
(20)
1
(75)
448
(717)
(42)
(5)
7
—
(757)
(554)
263
175
12
(8)
(112)
220
742
28
—
37
62
—
(51)
128
77
(108)
(6)
37
575
(208)
(1)
(33)
9
—
(233)
(606)
158
—
—
(42)
(490)
215
781
31
597
62
84
—
(533)
60
83
(73)
12
(353)
398
(265)
(19)
(2)
24
5
(257)
(1,637)
—
743
—
(36)
(930)
Net decrease in unrestricted and restricted cash and cash equivalents
Unrestricted and restricted cash and cash equivalents, beginning of period
Unrestricted and restricted cash and cash equivalents, end of period
(421)
1,412
991
$
(148)
1,560
1,412
$
(789)
2,349
1,560
$
See accompanying notes.
- 48 -
Table of Contents
NOTE 1—BUSINESS
TRANSOCEAN LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Transocean Ltd. (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
December 31, 2022, we owned or had partial ownership interests in and operated a fleet of 38 mobile offshore drilling units,
consisting of 28 ultra-deepwater floaters and 10 harsh environment floaters. As of December 31, 2022, we were constructing
one ultra-deepwater drillship and held a noncontrolling ownership interest in a company that is constructing one ultra-deepwater
drillship.
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 one of the most versatile fleets in the world, consisting of drillships and
semisubmersible floaters used in support of offshore drilling activities and offshore support services on a worldwide basis.
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.
NOTE 2—SIGNIFICANT 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, intangibles, 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 (“Level 1”), (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 (“Level 2”) and
(3) significant unobservable inputs, including those that require considerable judgment for which there is little or no market data
(“Level 3”). 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 Note 3—
Unconsolidated Affiliates and Note 13—Equity.
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
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Table of Contents
TRANSOCEAN LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued
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
Note 4—Revenues.
Contract intangible assets—We recognize contract intangible assets related to acquired executory contracts, such as
drilling contracts. The drilling contract intangible assets represent the amount by which the fixed dayrates of the acquired
contracts were above the market dayrates that were available or expected to be available during the term of the contract for
similar contracts, measured as of the acquisition date. We amortize the carrying amount of the drilling contract intangible assets
using the straight-line method as a reduction of contract drilling revenues over the expected remaining contract period. See
Note 5—Contract Intangible Assets.
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
stock options, we use the Black-Scholes-Merton option-pricing model 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 subject to market factors, we use a Monte Carlo simulation model and, in addition to the assumptions
applied for the Black-Scholes-Merton option-pricing model, we use a risk neutral approach and an average price at the
performance start date. 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 adjusted for the
projected performance rate expected to be achieved at the end of the measurement period. We recognize share-based
compensation expense in the 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 Note 14—Share-Based
Compensation.
Capitalized interest—We capitalize interest costs for qualifying construction and upgrade projects and only capitalize
interest costs during periods in which progress for the construction projects continues to be underway. In the years ended
December 31, 2022, 2021 and 2020, we capitalized interest costs of $73 million, $50 million and $47 million, respectively, for
our construction work in progress.
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, which limits our exposure to currency exchange rate
fluctuations. We recognize currency exchange rate gains and losses in other, net. In the years ended December 31, 2022, 2021
and 2020, we recognized a net loss of $8 million, $1 million and $8 million, respectively, related to currency exchange rates.
Income taxes—We provide for income taxes based on expected taxable income, statutory rates, tax laws and tax
planning opportunities available to us in the jurisdictions in which we operate or have a taxable presence. 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 maintain liabilities for estimated tax exposures in our jurisdictions of operation, and we recognize the provisions
and benefits resulting from changes to those liabilities in our income tax expense or benefit along with related interest and
penalties. Income tax exposure items include potential challenges to permanent establishment positions, intercompany pricing,
disposition transactions, and withholding tax rates and their applicability. These tax exposures are resolved primarily through
the settlement of audits within these tax jurisdictions or by judicial means, but can also be affected by changes in applicable tax
law or other factors, which could cause us to revise past estimates.
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. In evaluating 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 Note 10—Income Taxes.
Cash and cash equivalents—We consider cash equivalents to include highly liquid debt instruments with original
maturities of three months 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 one year or if such funds are considered to
offset liabilities that are properly classified as current liabilities. See Note 8—Debt and Note 12—Commitments and
Contingencies.
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Table of Contents
TRANSOCEAN LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued
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. During the year ended December 31, 2021, we identified certain materials and supplies that were in excess of our
expected future usage based on our current market outlook, and as a result of these items, we increased our allowance by
$28 million ($0.04 per diluted share, net of tax). At December 31, 2022 and 2021, our allowance for excess items was
$199 million and $183 million, respectively.
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 one year, (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. At December 31, 2022 and 2021, we had no assets classified
as held for sale.
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 December 31, 2022, the aggregate carrying amount of our property and equipment represented
approximately 85 percent 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 35 years, our buildings and improvements range from three to
30 years and our machinery and equipment range from four to 20 years. 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
one or more of our asset groups is indicated, we measure the impairment as the amount by which the asset group’s carrying
amount exceeds its estimated fair value. We measure the fair values of our asset groups 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. For an asset classified as held for sale, we
consider the asset to be impaired to the extent its carrying amount exceeds its estimated fair value less cost to sell. See Note 6
—Long-Lived Assets.
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. In the years ended December 31, 2021 and 2020, we
recognized a loss of $37 million and $62 million, respectively, associated with the other-than-temporary impairment of the
carrying amount of our equity investments. We amortize the basis difference caused by such impairments using the straight-line
method over the estimated life of the asset. See Note 3—Unconsolidated Affiliates.
Pension and other postemployment benefit plans—We use a measurement date of January 1 for determining net
periodic benefit costs and December 31 for determining 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 10 percent of
the greater of plan assets or plan liabilities, we amortize such gains or losses over the average expected future service period of
the employee 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 historical experience and projected long-
term investment returns, and we weight the assumptions
- 51 -
Table of Contents
TRANSOCEAN LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued
based on each plan’s 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 December 31, 2022 and 2021, the funded status of our
pension and other postemployment benefit plans represented an aggregate liability of $174 million and $132 million,
respectively, and an aggregate asset of $44 million and $102 million, respectively. See Note 9—Postemployment Benefit Plans.
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.
NOTE 3—UNCONSOLIDATED AFFILIATES
Equity investments
Overview—We hold noncontrolling equity investments in various unconsolidated companies, including (a) our
33 percent ownership interest in Orion Holdings (Cayman) Limited (together with its subsidiary, “Orion”), a Cayman Islands
company that owns the harsh environment floater Transocean Norge, (b) our 20 percent ownership interest in Liquila
Ventures Ltd. (together with its subsidiaries, “Liquila”), a Bermuda company formed to construct, own and operate the
newbuild ultra-deepwater drillship Deepwater Aquila, (c) our 20 percent ownership interest in Nauticus Robotics, Inc., a
publicly traded company that develops highly sophisticated, ultra-sustainable marine robots and intelligent software to power
them, (d) our interests in Ocean Minerals LLC, the parent company of Moana Minerals Ltd., a Cook Islands subsea resource
development company that intends to explore and extract polymetallic nodules, and (e) our interests in certain other companies
that are involved in researching and developing technology to improve efficiency, reliability, sustainability and safety for
drilling and other activities. In the years ended December 31, 2022, 2021 and 2020, we recognized a net loss of $24 million,
$10 million and $10 million, respectively, recorded in other income and expense, associated with equity in losses of our equity
investments. At December 31, 2022 and 2021, the aggregate carrying amount of our equity investments was $113 million and
$91 million, respectively, recorded in other assets.
In November 2022, we and Perestroika AS (“Perestroika”), an entity affiliated with one of our directors that
beneficially owns approximately 11 percent of our shares, each made a cash contribution of $15 million and $10 million,
respectively, to Liquila. The investments represented proportionate contributions, together with a contribution from the holder
of the remaining 67 percent ownership interest, that were used to make the initial payment to the shipyard to acquire a newbuild
drillship for a purchase price of approximately $200 million. We concluded that Liquila is a variable interest entity because its
equity at risk was insufficient to permit it to carry on its activities without additional subordinated financial support, and we
further concluded that we are not the primary beneficiary since the power to direct the activities that most significantly impact
its economic performance are jointly controlled. The holder of the remaining 67 percent ownership interest in Liquila may, at
any time through November 10, 2023, elect to require us to repurchase up to 80 percent of such holder’s initial investment at the
value that the holder initially paid therefor. We may, at our election, settle any such repurchase by delivering cash,
Transocean Ltd. shares or a combination of cash and shares, where any shares delivered would be valued using the then-current
market price of shares. At December 31, 2022, the carrying amount of our investment in Liquila was $15 million, recorded in
other assets.
Impairments—Our equity-method investment in Orion is the most significant of our equity investments. In the years
ended December 31, 2021 and 2020, we recognized a loss of $37 million and $59 million, respectively, which had no tax effect,
recorded in other, net, associated with the impairment of our equity investment in Orion upon determination that the carrying
amount exceeded the estimated fair value and that the impairment was other than temporary. We estimated the fair value of our
investment by applying the income method using significant unobservable inputs, representative of Level 3 fair value
measurements, including an assumed discount rate of 12 percent and assumptions about the future performance of the
investment, such as future demand and supply for harsh environment floaters, rig utilization, revenue efficiency and dayrates.
At December 31, 2022 and 2021, the aggregate carrying amount of our equity investment in Orion was $54 million and
$57 million, respectively.
Related party transactions—We engage in certain related party transactions with our unconsolidated affiliates, the
most significant of which are under agreements with Orion. We operate, stack and maintain Transocean Norge under a
management services agreement, and we market Transocean Norge under a marketing services agreement. During operations,
we lease Transocean Norge under a short-term bareboat charter agreement, the next of which is expected to begin in May 2023
and expire in January 2024. In addition to our ownership interest in Liquila, we maintain the exclusive right to market, and
once it is placed into service, manage the operations of the rig under a master services agreement. Additionally, we procure and
provide services and equipment from and to other unconsolidated affiliates for technological innovation and subsea minerals
exploration.
In the years ended December 31, 2022, 2021 and 2020, we received an aggregate cash payment of $40 million,
$16 million and $46 million, respectively, primarily for services performed under the management services agreement with
Orion. In the years ended
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Table of Contents
TRANSOCEAN LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued
December 31, 2022, 2021 and 2020, we recognized rent expense of $11 million, $12 million and $22 million, respectively,
recorded in operating and maintenance costs, and made an aggregate cash payment of $10 million, $15 million and $22 million,
respectively, to charter the rig and rent other equipment from Orion. In the years ended December 31, 2022, 2021 and 2020, we
made an aggregate cash payment of $7 million, $6 million and $15 million, respectively, to other unconsolidated affiliates for
research and development and for equipment to reduce emissions and improve reliability.
In June 2021, Orion refinanced its shipyard loans under a financing arrangement for $100 million, , and we made a
cash investment of $33 million in the loan facility. The financing arrangement, which expires in June 2024, requires interest to
be paid on outstanding borrowings at the London Interbank Offered Rate plus a margin of 6.50 percent per annum. Borrowings
under the financing arrangement are secured by Transocean Norge. At December 31, 2022 and 2021, the aggregate principal
amount due to us under the various financing arrangements with our unconsolidated affiliates was $41 million and $36 million,
respectively, recorded in other assets.
Subsequent event
In February 2023, we agreed to make an investment for a noncontrolling ownership interest in Global Sea Mineral
Resources, 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. In addition to
a cash investment of $10 million, we agreed to contribute the ultra-deepwater drillship Ocean Rig Olympia, and we expect to
contribute engineering services in the future. In the three months ending March 31, 2023, we expect to recognize a material
loss associated with the contribution of the rig and related assets.
NOTE 4—REVENUES
Overview—We earn revenues primarily by performing the following activities: (i) providing our drilling rig, work
crews, related equipment and services necessary to operate the rig (ii) delivering the drilling rig by mobilizing to and
demobilizing from the drill location, and (iii) performing certain pre-operating activities, including rig preparation activities or
equipment modifications required for the contract. These services represent a single performance obligation under most all of
our drilling contracts with customers that is satisfied over time, the duration of which varies by contract. At December 31,
2022, the drilling contract with the longest expected remaining duration, excluding unexercised options, extends through
July 2029.
Disaggregation—Our contract drilling revenues, disaggregated by asset group and by country in which they were
earned, were as follows (in millions):
Year ended December 31, 2022
Ultra-
Harsh
deepwater environment
floaters
floaters
Total
Year ended December 31, 2021
Harsh
Ultra-
environment
deepwater
floaters
floaters
Total
Year ended December 31, 2020
Ultra-
deepwater
floaters
Harsh
environment Midwater
floaters
floaters
Total
U.S.
Norway
Other countries (a)
Total contract drilling revenues
$ 1,135 $ — $ 1,135 $ 1,096 $
—
573
$ 1,708 $
835
32
867 $ 2,575 $ 1,720 $
835
605
—
624
2 $ 1,098 $ 1,302 $ — $ — $ 1,302
876
—
12
974
12 $ 3,152
790
44
836 $ 2,556 $ 2,094 $ 1,046 $
790
668
—
792
876
170
(a) The aggregate contract drilling revenues earned in other countries that individually represented less than 10 percent of total contract drilling revenues.
Major customers—For the year ended December 31, 2022, Shell plc (together with its affiliates, “Shell”),
Equinor ASA (together with its affiliates, “Equinor”) and Petróleo Brasileiro S.A. represented approximately 33 percent,
25 percent and 11 percent, respectively, of our consolidated operating revenues. For the year ended December 31, 2021, Shell
and Equinor represented approximately 31 percent and 30 percent, respectively, of our consolidated operating revenues. For the
year ended December 31, 2020, Shell, Equinor and Chevron Corporation represented approximately 28 percent, 27 percent and
14 percent, respectively, of our consolidated operating revenues.
Contract liabilities—Contract liabilities for our contracts with customers were as follows (in millions):
Deferred contract revenues, recorded in other current liabilities
Deferred contract revenues, recorded in other long-term liabilities
Total contract liabilities
Significant changes in contract liabilities were as follows (in millions):
Total contract liabilities, beginning of period
Decrease due to recognition of revenues for goods and services
Increase due to goods and services transferred over time
Total contract liabilities, end of period
- 53 -
December 31,
2022
2021
$
$
124
204
328
$
$
83
265
348
Years ended
December 31,
2022
2021
$
$
348
(119)
99
328
$
$
456
(149)
41
348
Table of Contents
TRANSOCEAN LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued
Performance obligations satisfied in prior periods—In June 2020, we entered into a settlement and mutual release
agreement with a customer, which provided for the final settlement of disputes related to performance obligations satisfied in
prior periods. In connection with the settlement, among other things, our customer agreed to pay us $185 million in four equal
installments through January 15, 2023. In the year ended December 31, 2020, we recognized revenues of $177 million,
representing the discounted value of the future payments, and recorded corresponding accounts receivable, net of imputed
interest. In each of the three years ended December 31, 2022, we received an aggregate cash payment of $46 million in
scheduled installments under the arrangement. At December 31, 2022, the aggregate carrying amount of the related receivable
was $46 million, net of imputed interest, recorded in accounts receivable. At December 31, 2021, the aggregate carrying
amount of the related receivable was $90 million, net of imputed interest, including $46 million and $44 million, recorded in
accounts receivable and other assets, respectively.
Pre-operating costs—In the years ended December 31, 2022, 2021 and 2020, we recognized pre-operating costs of
$47 million, $48 million and $60 million, respectively, recorded in operating and maintenance costs. At December 31, 2022
and 2021, the unrecognized pre-operating costs to obtain contracts was $26 million and $21 million, respectively, recorded in
other assets.
NOTE 5—CONTRACT INTANGIBLE ASSETS
The gross carrying amount and accumulated amortization of our drilling contract intangible assets were as follows
(in millions):
Year ended December 31, 2022
Gross
carrying
amount
Accumulated
amortization
Net
carrying
amount
Year ended December 31, 2021
Gross
carrying
amount
amortization amount
Net
carrying
Accumulated
Drilling contract intangible assets
Balance, beginning of period
Amortization
Balance, end of period
$
$
907 $
—
907 $
(734) $
(117)
(851) $
173
(117)
56
$
$
907
—
907
$
$
(514) $
(220)
(734) $
393
(220)
173
As of December 31, 2022, the estimated future amortization to be recognized over the expected remaining contract
periods in the years ending December 31, 2023 and 2024 was $52 million and $4 million, respectively.
NOTE 6—LONG-LIVED ASSETS
Disaggregation—The aggregate carrying amount of our long-lived assets, including our property and equipment and
our right-of-use assets, disaggregated by country in which they were located, was as follows (in millions):
Long-lived assets
U.S.
Norway
Greece
Other countries (a)
Total long-lived assets
December 31,
2022
2021
$
6,514
3,255
3,022
5,171
$ 17,962
$
5,779
3,379
3,162
5,293
$ 17,613
(a) The aggregate carrying amount of long-lived assets located in other countries that individually represented less than 10 percent
of total long-lived assets.
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.
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Table of Contents
TRANSOCEAN LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued
Construction work in progress—The changes in our construction work in progress were as follows (in millions):
Years ended December 31,
Construction work in progress, beginning of period
Capital expenditures
Newbuild construction program
Other equipment and construction projects
Total capital expenditures
Non-cash capital additions financed under Shipyard Loans
Changes in accrued capital additions
Property and equipment placed into service
Newbuild construction program
Other equipment and construction projects
Construction work in progress, end of period
2022 2021 2020
$ 1,017
828
753
$
$
669
48
717
382
3
174
34
208
—
13
143
122
265
—
(33)
(882)
(42)
$ 1,195
—
(32)
$ 1,017
—
(157)
828
$
Impairments of assets held and used—During the year ended December 31, 2020, we identified indicators that the
carrying amounts of our asset groups may not be recoverable. Such indicators included significant declines in commodity
prices and the market value of our stock, a reduction of expected demand for our drilling services as our customers announced
reductions of capital investments in response to commodity prices and a reduction of projected dayrates. As a result of our
testing, we determined that the carrying amount of our midwater floater asset group was impaired. In the year ended
December 31, 2020, we recognized a loss of $31 million ($0.05 per diluted share), which had no tax effect, associated with the
impairment of our midwater floater asset group. We estimated the fair value of the rig and related assets in this asset group by
applying the market approach using significant other observable inputs, representative of Level 2 fair value measurements,
including the marketability of the rig and prices of comparable rigs that may be sold for scrap value.
Impairments of assets held for sale—In the year ended December 31, 2020, we recognized an aggregate loss of
$556 million ($0.90 per diluted share), which had no tax effect, associated with the impairment of the ultra-deepwater floater
GSF Development Driller II, the harsh environment floaters Polar Pioneer and Songa Dee and the midwater floaters Sedco 711,
Sedco 714 and Transocean 712, along with related assets, which we determined were impaired at the time that we classified the
assets as held for sale. We measured the impairment of the drilling units 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 Level 2 fair value measurements, including indicative market values for the drilling units
and related assets to be sold for scrap value or binding contracts to sell such assets for alternative purposes. If we commit to
plans to sell additional rigs for values below the respective carrying amounts, we will be required to recognize additional losses
in future periods associated with the impairment of such assets.
Dispositions—During the year ended December 31, 2021, in connection with our efforts to dispose of non-strategic
assets, we completed the sale of the harsh environment floater Leiv Eiriksson and related assets. During the year ended
December 31, 2020, we completed the sale of the ultra-deepwater floater GSF Development Driller II, the harsh environment
floaters Polar Pioneer, Songa Dee and Transocean Arctic and the midwater floaters Sedco 711, Sedco 714 and Transocean 712,
along with related assets. In the years ended December 31, 2021 and 2020, we received aggregate net cash proceeds of
$4 million and $20 million, respectively, and recognized an aggregate net loss of $57 million ($0.09 per diluted share) and
$61 million ($0.10 per diluted share), which had no tax effect, primarily associated with the disposal of these rigs and related
assets. In the years ended December 31, 2022, 2021 and 2020, we received aggregate net cash proceeds of $7 million,
$5 million and $4 million, respectively and recognized an aggregate net loss of $10 million, $5 million and $23 million,
respectively, associated with the disposal of assets unrelated to rig sales.
NOTE 7—LEASES
Overview—Our operating leases are principally for office space, storage facilities, operating equipment and land. At
December 31, 2022, our operating leases had a weighted-average discount rate of 6.4 percent and a weighted-average remaining
lease term of 12.7 years.
Our finance lease for the ultra-deepwater drillship Petrobras 10000 has an implicit interest rate of 7.8 percent and
requires scheduled monthly installments through the lease expiration in August 2029, after which we are obligated to acquire
the drillship from the lessor for one dollar. We recognize expense for the amortization of the right-of-use asset in depreciation
and amortization.
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Table of Contents
TRANSOCEAN LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued
Lease costs—The components of our lease costs were as follows (in millions):
Lease costs
Short-term lease costs
Operating lease costs
Finance lease costs, amortization of right-of-use asset
Finance lease costs, interest on lease liability
Total lease costs
Years ended December 31,
2020
2021
2022
$
$
14 $
12
20
30
76 $
17 $
12
20
33
82 $
27
13
21
36
97
Lease payments—Supplemental cash flow information for our leases was as follows (in millions):
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases
Operating cash flows from finance lease
Financing cash flows from finance lease
$
14 $
8
3
13 $
37
33
17
36
35
Years ended December 31,
2022 2021
2020
At December 31, 2022, the aggregate future minimum lease payments were as follows (in millions):
Years ending December 31,
2023
2024
2025
2026
2027
Thereafter
Total future minimum rental payment
Less amount representing imputed interest
Present value of future minimum rental payments
Current portion, recorded in other current liabilities
Long-term lease liabilities, recorded in other long-term liabilities
- 56 -
Operating Finance
leases
lease
$
$
13 $
13
12
12
12
98
160
(53)
107
7
100 $
65
70
71
70
71
118
465
(102)
363
40
323
Table of Contents
NOTE 8—DEBT
Overview
TRANSOCEAN LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued
Outstanding debt—The aggregate principal amounts and aggregate carrying amounts, including the contractual
interest payments of previously restructured debt, a bifurcated compound exchange feature, and unamortized debt-related
balances, such as discounts, premiums and issue costs, were as follows (in millions):
5.52% Senior Secured Notes due May 2022
3.80% Senior Notes due October 2022
0.50% Exchangeable Senior Bonds due January 2023
5.375% Senior Secured Notes due May 2023
5.875% Senior Secured Notes due January 2024
7.75% Senior Secured Notes due October 2024
6.25% Senior Secured Notes due December 2024
6.125% Senior Secured Notes due August 2025
7.25% Senior Notes due November 2025
4.00% Senior Guaranteed Exchangeable Bonds due December 2025
7.50% Senior Notes due January 2026
2.50% Senior Guaranteed Exchangeable Bonds due January 2027
11.50% Senior Guaranteed Notes due January 2027
6.875% Senior Secured Notes due February 2027
8.00% Senior Notes due February 2027
7.45% Notes due April 2027
8.00% Debentures due April 2027
4.50% Shipyard Loans due September 2027
7.00% Notes due June 2028
4.625% Senior Guaranteed Exchangeable Bonds due September 2029
7.50% Notes due April 2031
6.80% Senior Notes due March 2038
7.35% Senior Notes due December 2041
Total debt
Less debt due within one year
5.52% Senior Secured Notes due May 2022
3.80% Senior Notes due October 2022
0.50% Exchangeable Senior Bonds due January 2023
5.375% Senior Secured Notes due May 2023
5.875% Senior Secured Notes due January 2024
7.75% Senior Secured Notes due October 2024
6.25% Senior Secured Notes due December 2024
6.125% Senior Secured Notes due August 2025
2.50% Senior Guaranteed Exchangeable Bonds due January 2027
11.50% Senior Guaranteed Notes due January 2027
6.875% Senior Secured Notes due February 2027
4.50% Shipyard Loans due September 2027
Total debt due within one year
Total long-term debt
Principal amount
Carrying amount
December 31, December 31, December 31, December 31,
2022
2021
2022
2021
(a)
(b)
(b)
(c)
(c)
(c)
(c)
(c)
(d)
(e)
(d)
(e)
(e)
(c)
(d)
(b)
(b)
(f)
(f)
(d)
(b)
(b)
(b)
(a)
(b)
(b)
(c)
(c)
(c)
(c)
(c)
(e)
(e)
(c)
(f)
$
$
— $
—
49
243
352
240
250
336
354
294
569
238
687
482
612
52
22
439
261
300
396
610
177
6,963
—
—
49
243
83
60
62
66
—
—
69
20
652
6,311
$
$
18
27
140
306
435
300
313
402
411
294
569
238
687
550
612
52
22
—
261
—
396
610
177
6,820
18
27
—
63
83
60
62
66
—
—
69
—
448
6,372 $
— $
—
49
242
350
238
248
332
351
271
566
265
1,008
477
608
52
22
389
264
440
394
605
176
7,347
—
—
49
242
81
59
61
64
6
70
67
20
719
6,628
$
18
27
140
304
430
296
309
397
406
264
565
271
1,078
544
607
52
22
—
265
—
394
605
176
7,170
18
27
—
62
80
58
61
64
6
70
67
—
513
6,657
(a) The subsidiary issuer of the unregistered senior secured notes is a wholly owned indirect subsidiary of Transocean Inc. The senior secured notes
were fully and unconditionally guaranteed by the owner of the collateral rig.
(b) Transocean Inc., a wholly owned direct subsidiary of Transocean Ltd., 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 Transocean Ltd.
(c) Each subsidiary issuer of the respective unregistered senior secured notes is a wholly owned indirect subsidiary of Transocean Inc. The senior
secured notes are fully and unconditionally, jointly and severally, guaranteed by Transocean Ltd., Transocean Inc. and, in each case, the owner of
the respective collateral rig or rigs.
(d) Transocean Inc. 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 Transocean Ltd. and certain wholly owned indirect subsidiaries of Transocean Inc.
and rank equal in right of payment of all of our existing and future unsecured unsubordinated obligations. Such notes are structurally senior to
the Legacy Guaranteed Notes, the 4.50% shipyard loans due September 2027 (each, a “Shipyard Loan”, and together, the “Shipyard Loans”) and
the 7.00% notes due June 2028 and are structurally subordinate to the Senior Priority Guaranteed Notes, as defined below, to the extent of the
value of the assets of the subsidiaries guaranteeing the notes.
(e) Transocean Inc. 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 Transocean Ltd. and certain wholly owned indirect
subsidiaries of Transocean Inc. and rank equal
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Table of Contents
TRANSOCEAN LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued
in right of payment of all of our existing and future unsecured unsubordinated obligations. Such notes are structurally senior to the Priority
Guaranteed Notes to the extent of the value of the assets of the subsidiaries guaranteeing the notes.
(f) The subsidiary borrowers under the Shipyard Loans and the subsidiary issuer of the registered notes are wholly owned indirect subsidiaries of
Transocean Inc. The loans and notes are fully and unconditionally guaranteed by Transocean Inc.
Transocean Ltd. has no independent assets or operations, and its other subsidiaries not owned indirectly through
Transocean Inc. are minor. Transocean Inc. has no independent assets and operations, other than those related to its investments
in non-guarantor operating companies and balances primarily pertaining to its cash and cash equivalents and debt.
Transocean Ltd. and Transocean Inc. are not subject to any significant restrictions on their ability to obtain funds from their
consolidated subsidiaries by dividends, loans or capital distributions.
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.
The indentures that govern the 0.50% exchangeable senior bonds due January 2023 (the “0.50% Exchangeable Senior
Bonds”), the 4.00% senior guaranteed exchangeable bonds due December 2025 (the “4.00% Senior Guaranteed Exchangeable
Bonds”), the 2.50% senior guaranteed exchangeable bonds due January 2027 (the “2.50% Senior Guaranteed Exchangeable
Bonds”) and the 4.625% senior guaranteed exchangeable bonds due September 2029 (the “4.625% Senior Guaranteed
Exchangeable Bonds”) require 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 Transocean Ltd. or Transocean Inc., (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 5.375% Senior Secured Notes due May 2023 (the “5.375% Senior Secured Notes”), the
5.875% senior secured notes due January 2024 (the “5.875% Senior Secured Notes”), the 7.75% senior secured notes due
October 2024 (the “7.75% Senior Secured Notes”), the 6.25% senior secured notes due December 2024 (the “6.25% Senior
Secured Notes”), the 6.125% senior secured notes due August 2025 (the “6.125% Senior Secured Notes”) and the
6.875% senior secured notes due February 2027 contain covenants that limit the ability of our subsidiaries that own or operate
the collateral rigs to declare or pay dividends to their affiliates.
The indentures that govern our senior secured notes contain certain lien requirements. At December 31, 2022, we had
restricted cash and cash equivalents of $276 million deposited in restricted accounts to satisfy debt service and reserve
requirements for the senior secured notes. At December 31, 2022, the rigs encumbered for the senior secured notes and our
including Deepwater Atlas, Deepwater Pontus, Deepwater Poseidon, Deepwater Proteus,
Shipyard Loans,
Deepwater Thalassa, Transocean Enabler, Transocean Encourage and Transocean Endurance, had an aggregate carrying
amount of $5.45 billion. We will be required to redeem the senior secured notes at a price equal to 100 percent 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.
Interest rate adjustments—The interest rates for the 7.35% senior notes due December 2041 (the “7.35% Senior
Notes”) are subject to adjustment from time to time upon a change to the credit rating of our non-credit enhanced senior
unsecured long-term debt. At December 31, 2022, the interest rate in effect for the 7.35% Senior Notes was 9.35 percent.
Scheduled maturities—At December 31, 2022, the scheduled maturities of our debt, including the principal
installments and other installments, representing the contractual interest payments of previously restructured debt, were as
follows (in millions):
Years ending December 31,
2023
2024
2025
2026
2027
Thereafter
Total installments of debt
Total unamortized debt-related balances, net
Bifurcated compound exchange feature, at estimated fair value
Total carrying amount of debt
Principal
Other
installments installments Total
$
$
652
875
1,054
788
1,850
1,744
6,963
$
$
76
77
78
78
39
—
348
$
728
952
1,132
866
1,889
1,744
7,311
(259)
295
$ 7,347
Credit agreements
Secured Credit Facility—As of December 31, 2022, we have a secured revolving credit facility established under a
bank credit agreement (as amended from time to time, the “Secured Credit Facility”), which is scheduled to mature on June 22,
2025. In July 2022, we amended the bank credit agreement for our Secured Credit Facility to, among other things, (i) extend
the maturity date from June 22, 2023
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TRANSOCEAN LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued
to June 22, 2025, (ii) reduce the borrowing capacity from $1.33 billion to $774 million through June 22, 2023, and thereafter
reduce the borrowing capacity to $600 million through June 22, 2025 and (iii) replace our ability to borrow under the Secured
Credit Facility at the reserve adjusted London Interbank Offered Rate plus a margin (the “Secured Credit Facility Margin”) with
the ability to borrow under the Secured Credit Facility at a forward looking term rate based on the secured overnight financing
rate (“Term SOFR”) plus the Secured Credit Facility Margin and a Term SOFR spread adjustment of 0.10 percent. 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 91 days thereof is equal to or in
excess of $200 million and available cash is less than $250 million. The amended secured credit facility also permits us to
increase the aggregate amount of commitments by up to $250 million. The Secured Credit Facility is guaranteed by
Transocean Ltd. and certain wholly owned subsidiaries. The Secured Credit Facility is secured by, among other things, a lien
on the ultra-deepwater floaters Deepwater Asgard, Deepwater Corcovado, Deepwater Invictus, Deepwater Mykonos,
Deepwater Orion, Deepwater Skyros, Development Driller III, Dhirubhai Deepwater KG2 and Discoverer Inspiration and the
harsh environment floaters Transocean Barents and Transocean Spitsbergen, and at December 31, 2022, the aggregate carrying
amount of which was $4.87 billion.
The Secured Credit Facility contains covenants that, among other things, include maintenance of a minimum guarantee
coverage ratio of 3.0 to 1.0, a minimum collateral coverage ratio of 2.1 to 1.0, a maximum debt to capitalization ratio of
0.60 to 1.00 and minimum liquidity of $500 million. The Secured Credit Facility also restricts the ability of Transocean Ltd.
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 pay dividends and other distributions. 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 $125 million could trigger a default under the Secured Credit Facility and, if not waived by the lenders, could cause us
to lose access to the Secured Credit Facility. At December 31, 2022, based on the credit rating of the Secured Credit Facility on
that date, the Secured Credit Facility Margin was 3.25 percent and the facility fee was 0.75 percent. At December 31, 2022, we
had no borrowings outstanding, $6 million of letters of credit issued, and we had $767 million of available borrowing capacity
under the Secured Credit Facility.
Shipyard financing arrangement—At December 31, 2022, we have credit agreements that established the Shipyard
Loans to finance all or a portion of the final payments owed to the shipyard upon delivery of the ultra-deepwater floaters
Deepwater Atlas and Deepwater Titan. Borrowings under the Shipyard Loan for Deepwater Atlas are secured by, among other
security, a lien on the rig, and borrowings under the Shipyard Loan for Deepwater Titan are unsecured. We have the right to
prepay outstanding borrowings, in full or in part, without penalty. 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. In June 2022, we borrowed $349 million under the Shipyard Loan for
Deepwater Atlas and made a cash payment of $46 million to satisfy the final milestone payment due upon delivery of the rig. In
December 2022, we borrowed $90 million under the Shipyard Loan for Deepwater Titan and made a cash payment of
$325 million to satisfy the final milestone payment due upon delivery of the rig. We recorded each Shipyard Loan, net of
imputed interest, with an initial carrying amount of $300 million and $82 million, respectively, and corresponding non-cash
capital additions, recorded in property and equipment. The carrying amount of each Shipyard Loan at inception represented its
estimated fair value using significant other observable inputs, representative of Level 2 fair value measurements, including the
terms and credit spreads of our debt, by applying an estimated discount rate of 9.4 percent and 7.6 percent, respectively.
Exchangeable bonds
Exchange terms—At December 31, 2022, the (a) current exchange rates, expressed as the number of Transocean Ltd.
shares per $1,000 note, (b) implied exchange prices per Transocean Ltd. share and (c) aggregate shares, expressed in millions,
issuable upon exchange of our exchangeable bonds were as follows:
0.50% Exchangeable Senior Bonds due January 2023
4.00% Senior Guaranteed Exchangeable Bonds due December 2025
2.50% Senior Guaranteed Exchangeable Bonds due January 2027
4.625% Senior Guaranteed Exchangeable Bonds due September 2029
Exchange
rate
97.29756
190.47620
162.16260
290.66180
Implied
exchange Shares
issuable
price
4.7
$10.28
56.0
5.25
38.6
6.17
87.2
3.44
The exchange rates, identified above, are subject to adjustment upon the occurrence of certain events. The
0.50% Exchangeable Senior Bonds may be exchanged by holders into Transocean Ltd. shares at any time prior to the close of
business on the business day immediately preceding the maturity date. The 4.00% Senior Guaranteed Exchangeable Bonds may
be exchanged by holders at any time prior to the close of business on the second business day immediately preceding the
maturity date and, at our election, such exchange may be settled by delivering cash, Transocean Ltd. shares or a combination of
cash and shares. The 2.50% Senior Guaranteed Exchangeable
- 59 -
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TRANSOCEAN LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued
Bonds may be exchanged by holders into Transocean Ltd. shares at any time prior to the close of business on the
second business day immediately preceding the maturity date or redemption date. The 4.625% Senior Guaranteed
Exchangeable Bonds may be exchanged by holders at any time prior to the close of business on the second business day
immediately preceding the maturity date or redemption date and, at our election, such exchange may be settled by delivering
cash, Transocean Ltd. shares or a combination of cash and shares.
Effective interest rates and fair values—At December 31, 2022, the effective interest rates and estimated fair values
of our exchangeable bonds were as follows (in millions, except effective interest rates):
0.50% Exchangeable Senior Bonds due January 2023
4.00% Senior Guaranteed Exchangeable Bonds due December 2025
2.50% Senior Guaranteed Exchangeable Bonds due January 2027
4.625% Senior Guaranteed Exchangeable Bonds due September 2029
Effective Fair
interest rate value
0.5% $
48
355
6.9%
244
0.0%
483
18.1%
The 4.625% Senior Guaranteed Exchangeable Bonds contain a compound exchange feature that, in addition to the
exchange terms outlined above, requires us to pay holders a make whole premium of future interest through March 30, 2028, for
exchanges exercised during a 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 estimated fair value of
the bifurcated compound exchange feature, recorded as a component of the carrying amount of debt, with a corresponding
adjustment to interest expense. In the year ended December 31, 2022, we recognized an unrealized loss of $157 million as an
adjustment to the fair value of the bifurcated compound exchange feature.
We estimated the fair values of the exchangeable debt instruments, including the exchange features, by employing a
binomial lattice model using significant other observable inputs, representative of Level 2 fair value measurements, including
the terms and credit spreads of our debt and the expected volatility of the market price for our shares.
Related balances—At December 31, 2022 and 2021, the premium associated with the original issuance of the
0.50% Exchangeable Senior Bonds had a carrying amount of $172 million, recorded in equity as a component of additional
paid-in capital.
Debt issuance
Senior guaranteed exchangeable bonds—On September 30, 2022, we issued $300 million aggregate principal
amount of 4.625% Senior Guaranteed Exchangeable Bonds in connection with exchange and purchase agreements. Pursuant to
the exchange and purchase agreements, we exchanged (the “2022 Private Exchange”) (a) $73 million aggregate principal
amount of the 0.50% Exchangeable Senior Bonds for (i) $73 million aggregate principal amount of 4.625% Senior Guaranteed
Exchangeable Bonds and (ii) 6.7 million warrants to purchase Transocean Ltd. shares, and (b) $43 million aggregate principal
amount of the 7.25% senior notes due November 2025 for $39 million aggregate principal amount of the 4.625% Senior
Guaranteed Exchangeable Bonds. In the year ended December 31, 2022, as a result of the 2022 Private Exchange, we
recognized a gain of $6 million ($0.01 per diluted share), with no tax effect, associated with the retirement of debt.
Additionally, we sold $188 million aggregate principal amount of the 4.625% Senior Guaranteed Exchangeable Bonds and
issued 15.5 million warrants to purchase Transocean Ltd. shares for aggregate net cash proceeds of $188 million. On or after
March 30, 2026, we may redeem for cash all or a portion of the 4.625% Senior Guaranteed 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 115 percent
of the exchange price for a period of at least 20 trading days. The initial carrying amount of the 4.625% Senior Guaranteed
Exchangeable Bonds, measured at the estimated fair value on the date of issuance, was $281 million. We estimated the fair
value of the exchangeable debt instrument, including the exchange feature, by employing a binomial lattice model and by using
significant other observable inputs, representative of Level 2 fair value measurements, including the terms and credit spreads of
our debt and expected volatility of the market price for our shares. See Note 13—Equity.
On February 26, 2021, we issued $294 million aggregate principal amount of the 4.00% Senior Guaranteed
Exchangeable Bonds and made an aggregate cash payment of $11 million in private exchanges (the “2021 Private Exchange”)
for $323 million aggregate principal amount of the 0.50% Exchangeable Senior Bonds. In the year ended December 31, 2021,
as a result of the 2021 Private Exchange, we recognized a gain of $51 million ($0.08 per diluted share), with no tax effect,
associated with the retirement of debt. The initial carrying amount of the 4.00% Senior Guaranteed Exchangeable Bonds,
measured at the estimated fair value on the date of issuance, was $260 million. 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 Level 2 fair value measurements, including the terms and credit spreads of our debt and expected
volatility of the market price for our shares.
On August 14, 2020, we issued $238 million aggregate principal amount of 2.50% Senior Guaranteed Exchangeable
Bonds in non-cash private exchanges (the “2020 Private Exchange”) for $397 million aggregate principal amount of the
0.50% Exchangeable Senior Bonds. In the year ended December 31, 2020, as a result of the 2020 Private Exchange, we
recognized a gain of $72 million ($0.12 per diluted share), with no tax effect, associated with the restructuring of debt. We may
redeem all or a portion of the 2.50% Senior Guaranteed Exchangeable Bonds (i) before August 14, 2023, if certain conditions
related to the price of our shares have been satisfied, at a price equal to 100 percent of the aggregate principal amount and
(ii) on or after August 14, 2023, at specified redemption prices. We recorded the
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TRANSOCEAN LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued
conversion feature of the 2.50% Senior Guaranteed Exchangeable Bonds, measured at its estimated fair value of $46 million, to
additional paid-in capital. We estimated the fair value by employing a binomial lattice model using significant other observable
inputs, representative of Level 2 fair value measurements, including the expected volatility of the market price for our shares.
Related party transactions—In August 2020, Perestroika exchanged $356 million aggregate principal amount of the
0.50% Exchangeable Senior Bonds for $213 million aggregate principal amount of 2.50% Senior Guaranteed Exchangeable
Bonds. Perestroika has certain registration rights related to its shares and shares that may be issued in connection with any
exchange of its 2.50% Senior Guaranteed Exchangeable Bonds. At December 31, 2022 and 2021, Perestroika held $213 million
aggregate principal amount of the 2.50% Senior Guaranteed Exchangeable Bonds.
Priority guaranteed senior unsecured notes—On September 11, 2020, we issued $687 million aggregate principal
amount of 11.50% senior guaranteed notes due January 2027 (the “11.50% Senior Guaranteed Notes”) in non-cash exchange
offers, pursuant to an exchange offer memorandum, dated August 10, 2020, as supplemented, for an aggregate principal amount
of $1.5 billion of several series of our existing debt securities that were validly tendered and accepted for purchase (the
“2020 Exchange Offers” and, together with the 2020 Private Exchange, the “2020 Exchange Transactions”). In the year ended
December 31, 2020, as a result of the 2020 Exchange Offers, we recognized a gain of $355 million ($0.58 per diluted share),
with no tax effect, associated with the restructuring of debt (see “—Debt repayment, redemption, restructuring, and
retirement”). We may redeem all or a portion of the 11.50% Senior Guaranteed Notes prior to July 30, 2023 at a price equal to
100 percent of the aggregate principal amount plus a make-whole premium, and subsequently, at specified redemption prices.
We may also use the net cash proceeds of certain equity offerings by Transocean Ltd. to redeem, on one or more occasions
prior to July 30, 2023, up to a maximum of 40 percent of the original aggregate principal amount of the 11.50% Senior
Guaranteed Notes, subject to certain adjustments, at a redemption price equal to 111.50 percent of the aggregate principal
amount.
Guaranteed senior unsecured notes—On January 17, 2020, we issued $750 million aggregate principal amount of
8.00% senior notes due February 2027 (the “8.00% Senior Notes”), and we received aggregate cash proceeds of $743 million,
net of issue costs. We may redeem all or a portion of the 8.00% Senior Notes on or prior to February 1, 2023 at a price equal to
100 percent of the aggregate principal amount plus a make-whole premium, and subsequently, at specified redemption prices.
Debt repayment, redemption, restructuring, and retirement
Restructuring and early retirement—During the years ended December 31, 2022, 2021 and 2020, we restructured or
retired certain notes as a result of exchange offers, private exchanges, redemption, tender offers and open market repurchases.
We recorded the 2020 Exchange Transactions completed in August 2020 and September 2020 under ASC 470-60, Troubled
Debt Restructuring by Debtors. The aggregate principal amounts, cash payments and recognized gain or loss for such
transactions were as follows (in millions):
Year ended December 31, 2022Year ended December 31, 2021
Year ended December 31, 2020
6.50% Senior Notes due November 2020
6.375% Senior Notes due December 2021
5.52% Senior Secured Notes due May 2022
3.80% Senior Notes due October 2022
0.50% Exchangeable Senior Bonds due January 2023
5.375% Senior Secured Notes due May 2023
9.00% Senior Notes due July 2023
5.875% Senior Secured Notes due January 2024
7.25% Senior Notes due November 2025
7.50% Senior Notes due January 2026
8.00% Senior Notes due February 2027
7.45% Notes due April 2027
8.00% Debentures due April 2027
7.00% Notes due June 2028
7.50% Notes due April 2031
6.80% Senior Notes due March 2038
7.35% Senior Notes due December 2041
Aggregate principal amount of debt retired
$
Exchange Redeem
Exchange Repurchase
$ — $ — $ — $ — $ — $ — $ — $ — $
Total
Total
Exchange Redeem Tender Repurchase
Total
—
—
—
73
—
—
—
43
—
—
—
—
—
—
—
—
116 $
—
18
27
18
—
—
—
14
—
—
—
—
—
—
—
—
77 $
—
18
27
91
—
—
—
57
—
—
—
—
—
—
—
—
193 $
—
—
—
323
—
—
—
—
—
—
—
—
—
—
—
—
323 $
—
—
—
—
11
—
68
—
—
—
—
—
—
—
—
—
79 $
38 $
77
—
37
—
—
—
10
—
136
—
—
397
— 103
—
—
— 714
—
—
—
— 132
207
—
—
181
—
—
138
—
—
35
—
—
35
—
—
39
—
—
192
—
—
390
—
—
123
—
—
—
323
11
—
68
—
—
—
—
—
—
—
—
—
402 $ 1,910 $ 714 $ 360 $
53
15 $
183
69
—
—
162
16
401
4
146
43
714
—
—
—
339
—
181
—
138
—
35
—
35
—
39
—
192
—
390
—
—
123
147 $ 3,131
Aggregate cash payment
Aggregate principal amount of debt issued in exchanges
Aggregate fair value of warrants issued in exchanges
Aggregate net gain (loss)
$ — $
$
$
$
75 $
112 $ — $
5 $ — $
2 $
6 $
75 $
112 $
11 $
79 $
294 $ — $
110 $ 1,109
925
5 $ — $ — $ — $ — $ — $ — $ — $ —
533
8 $
10 $ 767 $ 222 $
925 $ — $ — $ — $
427 $ (65) $ 135 $
51 $ — $
90 $
294 $
51 $
36 $
Scheduled maturities and installments—On the scheduled maturity date of December 15, 2021, we made a cash
payment of $38 million to repay an equivalent aggregate principal amount of the outstanding 6.375% senior notes due
December 2021. On the scheduled maturity date of November 16, 2020, we made a cash payment of $153 million to repay an
equivalent aggregate principal amount
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TRANSOCEAN LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued
of the outstanding 6.50% senior notes due November 2020. In the years ended December 31, 2022, 2021 and 2020, we made an
aggregate cash payment of $479 million, $478 million and $375 million, respectively, to repay other indebtedness in scheduled
installments.
Subsequent events
Debt issuance—In January 2023, we issued $525 million aggregate principal amount of 8.375% senior secured notes
due February 2028 (the “8.375% Senior Secured Notes”), and we received $515 million aggregate cash proceeds, net of issue
costs. The 8.375% Senior Secured Notes are secured by the assets and earnings associated with the ultra-deepwater floater
Deepwater Titan and the equity of the wholly owned subsidiary that owns or operates the collateral rig. Additionally, we are
required to maintain certain balances in a restricted cash account to satisfy debt service requirements. We may redeem all or a
portion of the 8.375% Senior Secured Notes on or prior to February 1, 2025 at a price equal to 100 percent of the aggregate
principal amount plus a make-whole premium, and subsequently, at specified redemption prices.
In January 2023, we issued $1.175 billion aggregate principal amount of 8.75% senior secured notes due
February 2030 (the “8.75% Senior Secured Notes”), and we received $1.157 billion aggregate cash proceeds, net of issue costs.
The 8.75% Senior Secured Notes are fully and unconditionally guaranteed on an unsecured basis by Transocean Ltd. and on a
limited senior secured basis by certain of our wholly owned subsidiaries. The 8.75% Senior Secured Notes are secured by a lien
on the ultra-deepwater floaters Deepwater Pontus, Deepwater Proteus and Deepwater Thalassa and the harsh environment
floaters Transocean Enabler and Transocean Encourage, together with certain related assets. Additionally, we are required to
maintain certain balances in a restricted cash account to satisfy debt service requirements.
Debt retirement—On the scheduled maturity date of January 30, 2023, we made a cash payment of $49 million to
repay an equivalent aggregate principal amount of the outstanding 0.50% Exchangeable Senior Bonds.
In January 2023, we made a cash payment of $121 million to redeem an equivalent aggregate principal amount of the
outstanding 5.375% Senior Secured Notes, and the trustee notified holders of our intent to redeem the remaining outstanding
$122 million aggregate principal amount of notes for an equivalent aggregate cash payment, expected to be made on
February 24, 2023.
In January 2023, in connection with the issuance of the 8.75% Senior Secured Notes, we made an aggregate payment
of $1.156 billion, including a make-whole premium, to redeem the remaining outstanding $311 million, $240 million,
$250 million, and $336 million aggregate principal amount of the 5.875% Senior Secured Notes, the 7.75% Senior Secured
Notes, the 6.25% Senior Secured Notes and the 6.125% Senior Secured Notes, respectively.
NOTE 9—POSTEMPLOYMENT BENEFIT 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, (3) a non-qualified savings plan covering certain
eligible employees working outside the U.S., the United Kingdom (“U.K.”) and Norway and (4) a qualified savings plan
covering certain eligible employees working in the U.K. In the years ended December 31, 2022, 2021 and 2020, we recognized
expense of $61 million, $52 million and $56 million, respectively, related to our defined contribution plans, 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 December 31, 2022, we had defined benefit plans in the U.S., including three funded and
three unfunded defined benefit plans (the “U.S. Plans”), and in the U.K., we had one funded defined benefit plan (the
“U.K. Plan”). During the year ended December 31, 2021, as required by local authorities, we terminated our remaining plans in
Norway (together with the U.K. Plan, the “Non-U.S. Plans”). We also maintain certain unfunded other postemployment benefit
plans (collectively, the “OPEB Plans”), under which benefits to eligible participants diminish during a phase-out period ending
December 31, 2025. We maintain the benefit obligations under our plans until they are fully satisfied.
Net periodic benefit costs—We estimated our net periodic benefit costs using the following weighted-average
assumptions:
Discount rate
Expected rate of return
“na” means not applicable.
U.S.
Plans
Year ended December 31, 2022
OPEB
U.K.
Plans
Plan
1.83 %
1.90 %
na
2.00 %
2.92 %
4.81 %
Year ended December 31, 2021
OPEB
Non-U.S.
Plans
Plans
1.21 %
1.50 %
na
3.20 %
U.S.
Plans
2.60 %
5.51 %
Year ended December 31, 2020
OPEB
Non-U.S.
Plans
Plans
2.39 %
2.10 %
na
3.10 %
U.S.
Plans
3.27 %
5.90 %
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TRANSOCEAN LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued
The components of net periodic benefit costs, recognized in other income and expense, were as follows (in millions):
Year ended December 31, 2022
Year ended December 31, 2021
Year ended December 31, 2020
U.S.
Plans
U.K.
Plan
OPEB
Plans
Total
U.S.
Plans
Non-U.S.
Plans
OPEB
Plans
Total
U.S.
Plans
Non-U.S.
Plans
OPEB
Plans
Total
Net periodic benefit costs
Service cost
Interest cost
Expected return on plan assets
Settlements and curtailments
Actuarial loss, net
Prior service gain, net
Net periodic benefit costs
(income)
$ — $ — $ — $ — $ — $ — $ — $ — $ — $
47
(66)
—
11
—
56
(72)
—
5
(2)
6
(13)
(2)
1
—
53
(79)
(2)
12
(2)
55
(67)
1
9
—
50
(65)
—
5
—
6
(7)
—
—
—
—
—
—
—
(2)
—
—
—
—
(2)
1
8
(14)
12
1
—
$ — $
—
—
—
1
(2)
1
63
(81)
13
11
(2)
$
(10) $
(1) $
(2) $
(13)
$
(8) $
(8) $
(2) $
(18)
$
(2) $
8
$
(1) $
5
Funded status—We estimated our benefit obligations using the following weighted-average assumptions:
Discount rate
Expected long-term rate of return
“na” means not applicable.
December 31, 2022
U.K.
U.S.
Plan
Plans
5.06 %
4.80 %
6.41 % 5.00 %
OPEB
Plans
4.92 %
na
December 31, 2021
U.K.
U.S.
Plan
Plans
2.91 %
1.90 %
4.82 % 2.00 %
OPEB
Plans
1.83 %
na
The changes in funded status, balance sheet classifications and accumulated benefit obligations were as follows
(in millions):
Change in projected benefit obligation
Projected benefit obligation, beginning of period
Actuarial gains, net
Interest cost
Currency exchange rate changes
Benefits paid
Settlements
Projected benefit obligation, end of period
Change in plan assets
Fair value of plan assets, beginning of period
Actual return on plan assets
Currency exchange rate changes
Employer contributions
Benefits paid
Settlements
Fair value of plan assets, end of period
Year ended December 31, 2022
Year ended December 31, 2021
U.S.
Plans
U.K.
Plan
OPEB
Plans
Total
U.S.
Plans
Non-U.S.
Plans
OPEB
Plans
Total
$
$ 1,724
(391)
50
—
(76)
—
1,307
1,621
(403)
—
1
(76)
—
1,143
$
348
(119)
6
(37)
(10)
—
188
434
(147)
(45)
—
(10)
—
232
13
(1)
—
—
(2)
—
10
—
—
—
2
(2)
—
—
$
$ 2,085
(511)
56
(37)
(88)
—
1,505
$ 1,825
(72)
47
—
(76)
—
1,724
2,055
(550)
(45)
3
(88)
—
1,375
1,565
131
—
1
(76)
—
1,621
$
384
(21)
6
(2)
(17)
(2)
348
420
29
(3)
7
(17)
(2)
434
16
(1)
—
—
(2)
—
13
—
—
—
2
(2)
—
—
$ 2,225
(94)
53
(2)
(95)
(2)
2,085
1,985
160
(3)
10
(95)
(2)
2,055
Funded status, end of period
$
(164) $
44
$
(10) $
(130) $
(103) $
86
$
(13) $
(30)
Balance sheet classification, end of period:
Pension asset, non-current
Pension liability, current
Pension liability, non-current
Accumulated other comprehensive loss (income), before taxes
$ — $
(1)
(163)
166
44
—
—
76
$ — $
(3)
(7)
(8)
$
44
(4)
(170)
234
$
16
(1)
(118)
95
$
86
—
—
42
— $
(3)
(10)
(10)
102
(4)
(128)
127
Accumulated benefit obligation, end of period
$ 1,307
$
188
$
10
$ 1,505
$ 1,724
$
348
$
13
$ 2,085
Certain amounts related to plans with a projected benefit obligation in excess of plan assets were as follows
(in millions):
Projected benefit obligation
Fair value of plan assets
U.S.
Plans
$ 1,307 $
1,143
December 31, 2022
OPEB
Plans
U.K.
Plan
— $
—
Total
10 $ 1,317 $
—
1,143
U.S.
Plans
December 31, 2021
OPEB
U.K.
Plans
Plan
140 $
20
— $
—
13 $
—
Total
153
20
Certain amounts related to plans with an accumulated benefit obligation in excess of plan assets were as follows
(in millions):
Accumulated benefit obligation
Fair value of plan assets
U.S.
Plans
$ 1,307 $
1,143
December 31, 2022
OPEB
Plans
U.K.
Plan
— $
—
Total
10 $ 1,317 $
—
1,143
U.S.
Plans
December 31, 2021
U.K.
Plan
OPEB
Plans
140 $
20
— $
—
13 $
—
Total
153
20
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Table of Contents
TRANSOCEAN LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued
The amounts in accumulated other comprehensive loss (income) that have not been recognized were as follows
(in millions):
Actuarial loss, net
Prior service cost, net
Accumulated other comprehensive loss (income), before taxes
U.S.
Plans
$
$
166 $
—
166 $
December 31, 2022
OPEB
Plans
U.K.
Plan
Total
U.S.
Plans
December 31, 2021
U.K.
Plan
OPEB
Plans
74 $
2
76 $
(1) $
(7)
(8) $
239 $
(5)
234 $
95 $
—
95 $
40 $
2
42 $
— $
(10)
(10) $
Total
135
(8)
127
Plan assets—The weighted-average target and actual allocations of assets for the funded defined benefit plans were as
follows:
December 31, 2022
December 31, 2021
Target allocation
U.K.
U.S.
Plans
Plan
Actual allocation
U.K.
U.S.
Plans
Plan
Target allocation
U.K.
U.S.
Plans
Plan
Actual allocation
U.S.
Plans
U.K.
Plan
Equity securities
Fixed income securities
Other investments
Total
19 %
24 %
20 %
38 %
80 %
74 %
62 %
80 %
1 %
2 % —
— % — %
100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 %
19 %
81 %
— % —
38 %
61 %
1 %
38 %
62 %
38 %
62 %
We periodically review our investment policies, plan assets and asset allocation strategies to evaluate performance
relative to specified objectives. In determining our asset allocation strategies for the U.S. Plans, we review the results of
regression models to assess the most appropriate target allocation for each plan, given the plan’s status, demographics and
duration. For the U.K. Plan, the plan trustees establish the asset allocation strategies consistent with the regulations of the U.K.
pension regulators and in consultation with financial advisors and company representatives. Investment managers for the
U.S. Plans and the U.K. Plan are given established ranges within which the investments may deviate from the target allocations.
The investments for the funded defined benefit plans were categorized as follows (in millions):
Significant observable inputs
U.K.
Plan
U.S.
Plans
Total
December 31, 2022
Significant other observable inputs
U.K.
Plan
U.S.
Plans
Total
U.S.
Plans
Total
U.K.
Plan
Total
Mutual funds
U.S. equity funds
Non-U.S. equity funds
Bond funds
Total mutual funds
Other investments
Cash and money market funds
$
301 $ — $
132
698
1,131
301
132
—
—
698
— 1,131
$
— $
4
2
6
— $
57
171
228
— $
61
173
234
301 $ — $
136
700
1,137
57
171
228
301
193
871
1,365
6
4
10
—
—
—
6
4
10
Total investments
$ 1,137 $
4 $ 1,141
$
6
$
228
$
234
$ 1,143 $
232 $ 1,375
Significant observable inputs
U.K.
Plan
U.S.
Plans
Total
December 31, 2021
Significant other observable inputs
U.K.
Plan
U.S.
Plans
Total
U.S.
Plans
Total
U.K.
Plan
Total
Mutual funds
U.S. equity funds
Non-U.S. equity funds
Bond funds
Total mutual funds
Other investments
Cash and money market funds
$
421 $ — $
184
999
1,604
421
184
—
999
—
— 1,604
$
— $
7
4
11
— $
85
346
431
— $
92
350
442
421 $ — $
191
1,003
1,615
85
346
431
421
276
1,349
2,046
6
3
9
—
—
—
6
3
9
Total investments
$ 1,610 $
3 $ 1,613
$
11 $
431
$
442
$ 1,621 $
434 $ 2,055
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 Level 1 fair value measurements, including market prices of actively traded
funds, or (ii) significant other observable inputs, representative of Level 2 fair value measurements, including market prices of
the underlying securities in the collective trust funds. The U.S. Plans and the U.K. Plan invest in passively and actively
managed funds that are referenced to or benchmarked against market indices. The plan investment managers have discretion to
select the securities held within each asset category. Given this discretion, the managers may occasionally invest in our debt or
equity securities and may hold either long or short positions in such securities. Since plan investment managers are required to
maintain well diversified portfolios, the actual investment in our securities would be immaterial relative to asset categories and
the overall plan assets.
Funding contributions and benefit payments—In the years ended December 31, 2022, 2021 and 2020, we made an
aggregate contribution of $3 million, $10 million and $14 million, respectively, to the defined benefit pension plans and the
OPEB Plans using our cash
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TRANSOCEAN LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued
flows from operations. In the year ending December 31, 2023, we expect to make an aggregate contribution of $4 million,
including $1 million and $3 million to the defined benefit pension plans and the OPEB Plans, respectively.
The projected benefits payments were as follows (in millions):
Years ending December 31,
2023
2024
2025
2026
2027
2028 - 2032
NOTE 10—INCOME TAXES
U.S.
Plans
U.K.
Plan
OPEB
Plans
Total
$
$
83
84
84
85
85
428
$
6
6
6
7
8
50
$
3
3
3
—
—
1
92
93
93
92
93
479
Overview—Transocean Ltd., 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.
Tax provision and rate—In the years ended December 31, 2022, 2021 and 2020, our effective tax rate was
(10.4) percent, (25.7) percent and (5.1) percent, respectively, based on loss before income tax expense. The relationship
between our provision for or benefit from income taxes and our income or loss before income taxes can vary significantly from
period to period considering, among other factors, (a) the overall level of income before income taxes, (b) changes in the blend
of income that is taxed based on gross revenues rather than income before taxes, (c) rig movements between taxing jurisdictions
and (d) our rig operating structures.
The components of our income tax provision (benefit) were as follows (in millions):
Current tax expense (benefit)
Deferred tax expense
Income tax expense
Years ended December 31,
2022 2021 2020
(33)
$
60
27
128
$ 121
13
46
59
(7) $
$
$
$
A reconciliation of the income tax benefit computed at the Swiss holding company federal statutory rate of 7.83% and
our reported consolidated income tax expense was as follows (in millions):
Income tax benefit at Swiss federal statutory rate
Earnings subject to rates different than the Swiss federal statutory rate
Swiss Federal Act on Tax Reform and AHV Financing
Changes in valuation allowance
Audit settlement
Withholding taxes
Deemed profits taxes
Changes in unrecognized tax benefits, net
Changes due to organizational restructuring
Losses on impairment
Base erosion and anti-abuse tax
U.S. Coronavirus Aid, Relief, and Economic Security Act
Other, net
Income tax expense
Years ended December 31,
2022 2021 2020
(42)
$
82
—
(31)
—
6
19
(15)
—
52
5
(28)
(21)
27
(36) $
78
(1,095)
1,167
—
10
17
(43)
16
5
—
—
2
121
(44) $
52
96
79
12
12
10
2
(162)
—
—
—
2
59
$
$
$
In January 2020, Switzerland made effective the Federal Act on Tax Reform and AHV Financing (“TRAF”). In
March 2020, we entered into discussions with the Swiss tax authorities regarding the manner by which the TRAF applies to
certain Swiss subsidiaries, which allows us to access historic depreciation and costs related to financing assets not previously
deducted on Swiss tax returns, which can be apportioned to offset taxable income based on the remaining useful lives of the rigs
and financing assets. In the three months ended December 31, 2021, we reached an agreement with the Swiss Tax authorities
regarding the TRAF treatment. At December 31, 2022 and 2021, we had a deferred tax liability of $226 million and
$238 million, respectively, and a deferred tax asset of $1.23 billion and $1.33 billion, respectively, offset with a valuation
allowance of $1.10 billion and $1.17 billion, respectively.
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Table of Contents
TRANSOCEAN LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued
The Coronavirus Aid, Relief, and Economic Security Act, enacted in March 2020, made certain changes to U.S. tax
law, including, among others, extending up to five years the carryback period for net operating losses generated between
December 31, 2017 and January 1, 2021. In the year ended December 31, 2020, we recognized an income tax benefit of
$28 million related to the carryback of our net operating losses under this provision.
Deferred taxes—The significant components of our deferred tax assets and liabilities were as follows (in millions):
Deferred tax assets
Swiss historic depreciation and financing asset costs
Net operating loss carryforwards
Interest expense limitation
United Kingdom charter limitation
Accrued expenses
Tax credits
Deferred income
Accrued payroll costs not currently deductible
Loss contingencies
Other
Valuation allowance
Total deferred tax assets
Deferred tax liabilities
Depreciation
Contract intangible amortization
Other
Total deferred tax liabilities
Deferred tax assets (liabilities), net
December 31,
2022
2021
$ 1,226 $ 1,333
915
67
53
23
19
7
2
2
31
(1,820)
632
1,115
77
53
36
11
7
18
4
43
(1,910)
680
(1,150)
—
(10)
(1,160)
(1,052)
(11)
(9)
(1,072)
$
(480) $
(440)
As of December 31, 2022, we include taxes related to the earnings of all of our subsidiaries since we no longer
consider the earnings of any of our subsidiaries to be indefinitely reinvested.
At December 31, 2022 and 2021, our deferred tax assets included U.S. foreign tax credits of $11 million and
$19 million, respectively, which will expire between 2024 and 2026. Deferred tax assets related to our net operating losses
were generated in various worldwide tax jurisdictions. At December 31, 2022, our net deferred tax assets related to our net
operating loss carryforwards included $682 million, which do not expire, and $433 million, which will expire between 2023 and
2038.
As of December 31, 2022, 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
December 31, 2022 and 2021, due to uncertainty of realization, we had a valuation allowance of $1.91 billion and $1.82 billion,
respectively, on net operating losses and other deferred tax assets due to the uncertainty of realization.
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 (in millions):
Balance, beginning of period
Additions for current year tax positions
Additions for prior year tax positions
Reductions related to statute of limitation expirations and changes in law
Reductions due to settlements
Reductions for prior year tax positions
Balance, end of period
- 66 -
Years ended December 31,
2022
2021
402 $
28
62
(13)
(5)
(30)
444 $
378 $
28
46
(19)
(31)
—
402 $
2020
335
90
11
(7)
—
(51)
378
$
$
Table of Contents
TRANSOCEAN LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued
Our unrecognized tax benefits, including related interest and penalties that we recognize as a component of income tax
expense, were as follows (in millions):
Unrecognized tax benefits, excluding interest and penalties
Interest and penalties
Unrecognized tax benefits, including interest and penalties
December 31,
2022
2021
$
$
444 $
27
471 $
402
33
435
In the years ended December 31, 2022, 2021 and 2020, we recognized, as a component of our income tax provision,
expense of $6 million, expense of $8 million and benefit of $7 million, respectively, related to interest and penalties associated
with our unrecognized tax benefits. As of December 31, 2022, we have unrecognized benefits of $471 million, including
interest and penalties, against which we have recorded net operating loss deferred tax assets of $383 million, resulting in net
unrecognized tax benefits of $88 million, including interest and penalties, that upon reversal would favorably impact our
effective tax rate. During the year ending December 31, 2023, it is reasonably possible that our existing liabilities for
unrecognized tax benefits may increase or decrease, primarily due to the progression of open audits and the expiration of
statutes of limitation. However, we cannot reasonably estimate a range of potential changes in our existing liabilities for
unrecognized tax benefits due to various uncertainties, such as the unresolved nature of various audits.
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 December 2005, the Brazilian tax authorities began issuing tax assessments with respect
to our tax returns for the years 2000 through 2004. In May 2014, the Brazilian tax authorities issued an additional tax
assessment for the years 2009 and 2010. We filed protests with the Brazilian tax authorities for the assessments and are
engaged in the appeals process, and a portion of two cases were favorably closed. As of December 31, 2022, the remaining
aggregate tax assessment, including interest and penalties, was for corporate income tax of BRL 668 million, equivalent to
approximately $126 million, and indirect tax of BRL 72 million, equivalent to $14 million. 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.
NOTE 11—LOSS PER SHARE
The computation of basic and diluted loss per share was as follows (in millions, except per share data):
Years ended December 31,
2021
2020
2022
Numerator for loss per share, basic and diluted
Net loss attributable to controlling interest
Denominator for loss per share, basic and diluted
Weighted-average shares for per share calculation
Loss per share, basic and diluted
$ (621) $ (592) $ (567)
699
637
615
$ (0.89) $ (0.93) $ (0.92)
We excluded from the computations certain shares issuable as follows because the effect would have been antidilutive
(in millions):
Exchangeable bonds
Share-based awards
Years ended December 31,
2021
104.4
12.6
2022
128.1
15.5
2020
84.0
10.8
NOTE 12—COMMITMENTS AND CONTINGENCIES
Purchase and service agreement obligations
We have purchase obligations with shipyards and other contractors primarily related to our newbuild construction
programs. We also have long-term service agreements with original equipment manufacturers to provide services and parts,
primarily related to our pressure
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Table of Contents
TRANSOCEAN LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued
control systems and drilling systems. The future payments required under our service agreements were estimated based on our
projected operating activity and may vary subject to actual operating activity. At December 31, 2022, the aggregate future
payments required under our purchase obligations and our service agreement obligations were as follows (in millions):
Years ending December 31,
2023
2024
2025
2026
2027
Thereafter
Total
Purchase
obligations
Service
agreement
obligations
$
$
36
2
—
—
—
—
38
$
$
124
138
143
147
119
165
836
Letters of credit and surety bonds
At December 31, 2022 and 2021, we had outstanding letters of credit totaling $8 million and $18 million, respectively,
issued under various committed and uncommitted credit lines provided by banks to guarantee various contract bidding,
performance activities and customs obligations. At December 31, 2022 and 2021, we also had outstanding surety bonds totaling
$161 million and $146 million, respectively, to secure customs obligations related to the importation of our rigs and certain
performance and other obligations. At December 31, 2022 and 2021, the aggregate cash collateral held by institutions to secure
our letters of credit and surety bonds was $7 million and $8 million, respectively.
Legal proceedings
Asbestos litigation—In 2004, several of our subsidiaries were named, along with numerous other unaffiliated
defendants, in complaints filed in the Circuit Courts of the State of Mississippi, and in 2014, a group of similar complaints were
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. The plaintiffs generally seek
awards of unspecified compensatory and punitive damages, but the court appointed special master has ruled that a Jones Act
employer defendant, such as us, cannot be sued for punitive damages. One of our subsidiaries was named in additional
complaints filed in Illinois and Missouri, where the plaintiffs similarly allege that the defendants manufactured asbestos
containing products or used asbestos-containing drilling mud additives in connection with land-based drilling operations. At
December 31, 2022, seven plaintiffs have claims pending in Louisiana and 12 plaintiffs in the aggregate have claims pending in
either Illinois or Missouri, 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.
One of our subsidiaries was named as a defendant, along with numerous other companies, in lawsuits arising out of the
subsidiary’s 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 December 31, 2022, the
subsidiary was a defendant in approximately 238 lawsuits 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. In December 2021, the subsidiary and certain insurers agreed to a settlement of outstanding
disputes that provide the subsidiary with cash. An earlier settlement, achieved in September 2018, provided the subsidiary with
cash and an annuity that begins making payments in 2024. Together with a coverage-in-place agreement with certain insurers
and additional coverage issued by other insurers, 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 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 management’s current estimates.
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Table of Contents
TRANSOCEAN LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued
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 Santa Fe 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.
NOTE 13—EQUITY
Share issuance—We maintain an at-the-market equity offering program (the “ATM Program”). We intend to use the
net proceeds from our ongoing ATM Program 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 June 2021, 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 $400 million, under the ATM Program. In August 2022,
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 $435 million, under the ATM Program. In the years ended December 31, 2022 and 2021,
we received aggregate cash proceeds of $263 million and $158 million, respectively, net of issue costs, for the aggregate sale of
61.0 million shares and 36.1 million shares, respectively, under the ATM Program.
Warrants—On September 30, 2022, in connection with the issuance and sale of the 4.625% Senior Guaranteed
Exchangeable Bonds in the 2022 Private Exchange, we issued 22.2 million warrants to purchase Transocean Ltd. shares. The
warrants may be exercised by holders at any time prior to the close of business on March 13, 2026 at an exercise price equal to
$3.71 per share, subject to certain anti-dilutive adjustments, and at our election, such exercise may be settled by delivering cash,
Transocean Ltd. shares or a combination of cash and shares. If at any time prior to expiration, the closing price of
Transocean Ltd. shares equals or exceeds $10.00 per share, subject to adjustment upon the occurrence of certain events, for a
period of five consecutive trading days, we will have the right to effect an exercise of all, but not less than all, of the warrants
upon notice to holders. The initial carrying amount of the warrants, recorded in additional paid-in capital and measured at the
estimated fair value on the date of issuance, was $16 million, net of issue costs. We estimated the fair value of the warrants by
employing a binomial lattice model and by using significant other observable inputs, representative of Level 2 fair value
measurements, including the expected volatility of the market price for our shares.
Shares held by subsidiaries—One of our subsidiaries holds our shares for future use to deliver shares in connection
with sales under the ATM Program and in connection with awards granted under our incentive plans or other rights to acquire
our shares. At December 31, 2022 and 2021, our subsidiary held 75.4 million and 72.7 million shares, respectively.
NOTE 14—SHARE-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 December 31, 2022, we had
85.7 million shares authorized and 13.6 million shares available to be granted under the Long-Term Incentive Plan. At
December 31, 2022, the total unrecognized compensation cost related to our unvested share-based awards was $38 million,
which we expect to recognize over a weighted-average period of 1.7 years.
Service awards typically vest either in three equal annual installments beginning on the first anniversary 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 typically vest in one aggregate installment following the
ultimate determination date. Performance awards are typically subject to a three-year measurement period during which the
number of shares to be issued remains uncertain until the end of the performance period, at which time the awarded number of
shares to be issued is determined.
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Table of Contents
Service awards
TRANSOCEAN LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued
Restricted share units—A restricted share unit is a notional unit that is equal to one share but has no voting rights
until the underlying share is issued. The following table summarizes unvested activity during the year ended December 31,
2022 for service-based units granted under our incentive plan:
Unvested at January 1, 2022
Granted
Vested
Forfeited
Unvested at December 31, 2022
Number
of
units
Weighted-average
grant-date fair value
per unit
10,662,865 $
6,768,943
(5,075,374)
(308,934)
12,047,500 $
3.13
3.60
3.47
3.29
3.25
In the year ended December 31, 2022, the service-based units that vested had an aggregate grant-date fair value of
$18 million. During the years ended December 31, 2021 and 2020, we granted 6,148,361 and 7,093,421 service-based units,
respectively, with a per unit weighted-average grant-date fair value of $3.56 and $1.41, respectively. During the years ended
December 31, 2021 and 2020, we had 4,368,749 and 2,817,155 service-based units, respectively, that vested with an aggregate
grant-date fair value of $16 million and $24 million, respectively.
Stock options—The following table summarizes activity during the year ended December 31, 2022 for vested and
unvested service-based stock options outstanding under our incentive plan:
Outstanding at January 1, 2022
Forfeited
Expired
Outstanding at December 31, 2022
Number
of shares
under option
4,263,274 $
(25,155)
(62,599)
4,175,520 $
Weighted-average
exercise price
per share
11.45
50.79
50.79
10.63
Vested and exercisable at December 31, 2022
4,175,520 $
10.63
Weighted-average
remaining
Aggregate
contractual term intrinsic value
(years)
5.70 $
(in millions)
—
4.82 $
4.82 $
—
—
In the years ended December 31, 2022, 2021 and 2020, the stock options that vested had an aggregate grant-date fair
value of $4 million, $9 million and $12 million, respectively. At December 31, 2021, there were outstanding unvested stock
options to purchase 482,688 shares.
Performance awards
Restricted share units—We grant performance awards in the form of restricted share units that can be earned
depending on the achievement of market factors and performance targets. The number of shares ultimately earned per unit is
quantified upon completion of the specified period at the ultimate determination date. The following table summarizes unvested
activity during the year ended December 31, 2022 for performance-based units under our incentive plan:
Unvested at January 1, 2022
Granted
Vested
Unvested at December 31, 2022
Number
of
units
Weighted-average
grant-date fair value
per unit
5,389,390 $
3,519,857
(2,363,878)
6,545,369 $
2.59
3.91
1.80
3.81
In the years ended December 31, 2022, the performance-based units that vested had an aggregate grant-date fair value
of $5 million, $11 million and $11 million, respectively. During the years ended December 31, 2021 and 2020, we granted
3,025,512 and 2,530,460 performance-based units, respectively, with a per unit weighted-average grant-date fair value of $3.70
and $1.80, respectively.
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Table of Contents
TRANSOCEAN LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued
NOTE 15—SUPPLEMENTAL BALANCE SHEET INFORMATION
Other current liabilities were comprised of the following (in millions):
Other current liabilities
Accrued employee benefits and payroll-related liabilities
Accrued interest
Accrued taxes, other than income
Finance lease liability
Operating lease liabilities
Deferred revenues
Contingent liabilities
Other
Total other current liabilities
Other long-term liabilities were comprised of the following (in millions):
Other long-term liabilities
Postemployment benefit plan obligations
Finance lease liability
Operating lease liabilities
Income taxes payable
Deferred revenues
Other
Total other long-term liabilities
December 31,
2022
2021
156
113
41
40
7
124
58
—
539
$
$
178
121
52
40
8
83
60
3
545
December 31,
2022
2021
170
323
100
129
204
39
965
$
$
128
366
109
157
265
43
1,068
$
$
$
$
NOTE 16—SUPPLEMENTAL CASH FLOW INFORMATION
Additional cash flow information was as follows (in millions):
Years ended December 31,
2021
2022
2020
Certain cash operating activities
Cash payments for interest
Cash payments for income taxes
Non-cash investing and financing activities
Capital additions, accrued at end of period
Capital additions financed under Shipyard Loans
Issuance of debt in exchange transactions
Issuance of warrants in exchange transactions
Settlement of finance lease payments
Equity component of exchangeable debt
$
(a) $
(b)
(c)
(d)
(e)
(f)
$
$
355
66
31
382
112
5
41
—
$
$
429
57
28
—
294
—
—
—
593
70
15
—
925
—
—
46
(a) Additions to property and equipment for which we had accrued a corresponding liability in accounts payable at
(b)
(c)
(d)
(e)
(f)
the end of the period. See Note 6—Long-Lived Assets.
In the year ended December 31, 2022, we borrowed an aggregate principal amount of $439 million under the
Shipyard Loans to satisfy a portion of the final milestone payments due upon delivery of Deepwater Atlas and
Deepwater Titan and recorded the initial carrying amount, net of imputed interest, with a corresponding entry to
construction in progress. See Note 6—Long-Lived Assets and Note 8—Debt.
In the year ended December 31, 2022, in connection with the 2022 Private Exchange, we issued $112 million
aggregate principal amount of the 4.625% Senior Guaranteed Exchangeable Bonds. In the year ended
December 31, 2021, in connection with the 2021 Private Exchange, we issued $294 million aggregate principal
amount of the 4.00% Senior Guaranteed Exchangeable Bonds. In the year ended December 31, 2020, in
connection with the 2020 Private Exchange, we issued $687 million and $238 million aggregate principal
amount of the 11.50% Senior Guaranteed Notes and the 2.50% Senior Guaranteed Exchangeable Bonds,
respectively. See Note 8—Debt.
In the year ended December 31, 2022, in connection with the 2022 Private Exchange, we issued 6.7 million
warrants to purchase Transocean Ltd. shares with an estimated fair value of $5 million. See Note 8—Debt and
Note 13—Equity.
In the year ended December 31, 2022, 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 Note 7—
Leases.
In connection with the issuance of the 2.50% Senior Guaranteed Exchangeable Bonds in the 2020 Private
Exchange, we recorded the conversion feature, measured at its estimated fair value, to additional paid-in capital.
See Note 8—Debt.
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TRANSOCEAN LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued
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 (in millions):
Years ended December 31,
2021
2022
2020
Changes in other operating assets and liabilities
(Increase) decrease in accounts receivable
Increase in other assets
Increase (decrease) in accounts payable and other current
liabilities
Increase (decrease) in other long-term liabilities
Change in income taxes receivable / payable, net
Change in receivables from / payables to affiliates, net
$
(15) $
(12)
$
137
(13)
67
(113)
8
(2)
(42)
(12)
(75) $
(52)
(3)
(17)
(15)
37
$
(254)
2
(69)
14
(353)
$
NOTE 17—FINANCIAL INSTRUMENTS
Overview—The carrying amounts and fair values of our financial instruments were as follows (in millions):
Cash and cash equivalents
Restricted cash and cash equivalents
Long-term loans receivable from unconsolidated affiliates
Total debt
Fair
value
December 31, 2022
Carrying
amount
683
$
308
41
7,347
683
308
43
6,412
$
$
Fair
value
December 31, 2021
Carrying
amount
976
436
36
7,170
976
436
33
5,661
$
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.
Long-term loans receivable from unconsolidated affiliates—The carrying amount of our long-term loans receivable
from unconsolidated affiliates, recorded in other assets, represents the principal amount of the cash investment. We estimated
the fair value of our long-term loans receivable from unconsolidated affiliates using significant unobservable inputs,
representative of Level 3 fair value measurements, including the terms and credit spreads for the instruments.
Total debt—The carrying amount of our total debt represents the principal amount, contractual interest payments of
previously restructured debt and unamortized discounts, premiums and issue costs. The carrying amount and fair value of our
total debt includes amounts related to certain exchangeable debt instruments (see Note 8—Debt). We estimated the fair value of
our total debt using significant other observable inputs, representative of Level 2 fair value measurements, including the terms
and credit spreads for the instruments and, with respect to the exchangeable debt instruments, the expected volatility of the
market price for our shares.
NOTE 18—RISK CONCENTRATION
Interest rate risk—We are exposed to the 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, exchanges 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.
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 the
structuring of customer contract payment terms and occasional use of forward exchange contracts. Our primary tool to manage
currency exchange rate risk involves structuring customer contracts to provide for payment in both U.S. dollars and local
currency. The payment portion denominated in local currency is based on anticipated local currency requirements over the
contract term. Due to various factors, including customer acceptance, local banking laws, national content requirements, other
statutory requirements, local currency convertibility, 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.
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Table of Contents
TRANSOCEAN LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued
Credit risk—We are exposed to concentrations of credit risk primarily related to our restricted and unrestricted cash
and cash equivalents and customer receivables, both current and long-term. 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
one institution, we do not believe we are exposed to any significant credit risk. Our customer receivables, which are dispersed
in various countries, are due from integrated energy companies, government-owned or government-controlled energy
companies and other independent energy companies. For such receivables, we establish an allowance for credit losses by
applying an expected loss rate based on current and forecasted future and historical experience. Although we have encountered
only isolated credit concerns related to independent energy companies, we occasionally require collateral or other security to
support customer receivables. In certain infrequent instances, when we determine that collection is not reasonably assured, we
may offer extended payment terms and recognize revenues associated with the contract on a cash basis.
Labor agreements—At December 31, 2022, we had a global workforce of approximately 5,340 individuals, including
approximately 300 contractors. Approximately 43 percent of our total workforce, working primarily in Norway, Brazil and the
U.K., are represented by, and some of our contracted labor work is subject to, collective bargaining agreements, substantially all
of which are subject to annual salary negotiation. Negotiations over annual salary or other labor matters could result in higher
personnel or other costs or increased operational restrictions or disruptions. The outcome of any such negotiation generally
affects the market for all offshore employees, not only union members. A failure to reach an agreement on certain key issues
could result in strikes, lockouts or other work stoppages.
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Table of Contents
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
We have not had a change in or disagreement with our accountants within 24 months prior to the date of our most
recent financial statements or in any period subsequent to such date.
ITEM 9A.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 Exchange Act 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
Commission’s 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 December 31, 2022.
Internal control over financial reporting—There has been no change to our internal control over financial reporting
during the quarter ended December 31, 2022 that has materially affected or is reasonably likely to materially affect our internal
control over financial reporting. See “Management’s Report on Internal Control Over Financial Reporting” and “Report of
Independent Registered Public Accounting Firm,” included in Item 8 of this annual report.
Other matters—In July 2022, we deployed a new global Enterprise Resource Planning (“ERP”) and Enterprise
Performance Management (“EPM”) system, designed to optimize and standardize processes in treasury, accounting, financial
planning, supply chain management, asset management and information technology. Although we are updating our internal
controls that have been affected by the ERP and EPM deployment, we do not believe it has had an adverse effect on our internal
control over financial reporting.
ITEM 9B.OTHER INFORMATION
None.
ITEM 9C.DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
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Table of Contents
PART III
ITEM 10.DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
ITEM 11.EXECUTIVE COMPENSATION
ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED SHAREHOLDER MATTERS
ITEM 13.CERTAIN
RELATIONSHIPS,
RELATED
TRANSACTIONS,
AND
DIRECTOR
INDEPENDENCE
ITEM 14.PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by Items 10, 11, 12, 13 and 14 is incorporated herein by reference to our definitive proxy
statement for our 2023 annual general meeting of shareholders, which will be filed with the U.S. Securities and Exchange
Commission pursuant to Regulation 14A under the Securities Exchange Act of 1934 within 120 days of December 31, 2022.
Certain information with respect to our executive officers is set forth at the end of Part I of this annual report under the caption
“Information About our Executive Officers.”
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Table of Contents
PART IV
ITEM 15.EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
INDEX TO FINANCIAL STATEMENTS, FINANCIAL STATEMENT SCHEDULES AND
(A)
EXHIBITS
(1) Index to Financial Statements
Included in Part II of this report:
Management’s Report on Internal Control Over Financial Reporting
Reports of Independent Registered Public Accounting Firm (PCAOB ID 00042)
Consolidated Statements of Operations
Consolidated Statements of Comprehensive Loss
Consolidated Balance Sheets
Consolidated Statements of Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Page
40
41
44
45
46
47
48
49
Financial statements of unconsolidated subsidiaries are not presented herein because such subsidiaries do not meet the
significance test.
(2) Financial Statement Schedules
Transocean Ltd. and Subsidiaries
Schedule II - Valuation and Qualifying Accounts
(In millions)
Year ended December 31, 2020
Reserves and allowances deducted from asset accounts:
Allowance for credit losses
Allowance for excess materials and supplies
Valuation allowance on deferred tax assets
Year ended December 31, 2021
Reserves and allowances deducted from asset accounts:
Allowance for credit losses
Allowance for excess materials and supplies
Valuation allowance on deferred tax assets
Year ended December 31, 2022
Reserves and allowances deducted from asset accounts:
Allowance for credit losses
Allowance for excess materials and supplies
Valuation allowance on deferred tax assets
Additions
Balance at
beginning of
period
Charge to cost
and
expenses
Charge to
other
accounts
-describe
Deductions
-describe
Balance at
end of
period
$
— $
127
716
— $
25
(31)
2 (a) $
—
—
— $
9 (b)
—
2
143
685
$
2
143
685
—
43
1,167
—
—
—
— $
3 (b)
32 (c)
2
183
1,820
$
2
183
1,820
—
16
79
—
—
11 (c)
— $
—
—
2
199
1,910
(a) Amount related to an adjustment to the allowance for credit losses with a corresponding entry to accumulated deficit associated with our
adoption of the accounting standards update that requires an entity to estimate an expected lifetime credit loss on financial assets ranging
from short-term trade accounts receivable to long-term financings without retrospective application.
(b) Amount related to materials and supplies on rigs and related assets sold or classified as held for sale.
(c) Amount related to adjustments to other deferred tax assets with valuation allowances.
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Table of Contents
(3) Exhibits
The following exhibits are filed or furnished herewith, as indicated, or incorporated by reference to the location indicated:
NUMBER DESCRIPTION
3.1
Articles of Association of Transocean Ltd.
3.2
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9
4.10
4.11
4.12
4.13
4.14
Organizational Regulations of Transocean Ltd., amended, effective
as of April 7, 2021
Description of Securities Registered Pursuant to Section 12 of the
Securities Exchange Act of 1934
Indenture dated as of February 26, 2021 by and among
Transocean Inc., the guarantors and Wells Fargo Bank, National
Association
Credit Agreement dated June 22, 2018, among Transocean Inc., the
lenders parties thereto and Citibank, N.A., as administrative agent
and collateral agent.
Increase of Commitments and First Amendment
to Credit
Agreement, dated May 13, 2019, among Transocean Inc., the
lenders and issuing banks parties thereto, Citibank, N.A., as
administrative agent, and for the limited purposes set forth therein,
Transocean Ltd. and certain of its subsidiaries
Increase of Commitments, Second Amendment to Credit Agreement
and First Amendment to Guaranties, dated July 15, 2019, among
Transocean Inc., the lenders and issuing banks parties thereto,
Citibank, N.A., as administrative agent, and for the limited purposes
set forth therein, Transocean Ltd. and certain of its subsidiaries
Curative Agreement, dated September 24, 2019, between
Transocean Inc. and Citibank, N.A., as administrative agent for the
lenders under the Credit Agreement dated June 22, 2018, as
amended
Increase of Commitments and Third Amendment
to Credit
Agreement, dated December 23, 2019, among Transocean Inc., the
lenders and issuing banks parties thereto, Citibank, N.A., as
administrative agent, and for the limited purposes set forth therein,
Transocean Ltd. and certain of its subsidiaries
Indenture, dated July 13, 2018, by and among Transocean Guardian
Limited,
the Guarantors and Wells Fargo Bank, National
Association
Indenture, dated July 20, 2018, by and among Transocean
Pontus Limited,
the Guarantors and Wells Fargo Bank,
National Association.
First Supplemental Indenture, dated April 15, 2019, by and among
Transocean Pontus Limited, Wells Fargo Bank, National
Association, as trustee and collateral agent, and the Note Parties,
supplementing the Indenture dated as of July 20, 2018
Indenture dated as of April 15, 1997 between Transocean
Offshore Inc. and Texas Commerce Bank National Association, as
trustee
First Supplemental Indenture dated as of April 15, 1997 between
Transocean Offshore
and Texas Commerce Bank
National Association, as trustee, supplementing the Indenture dated
as of April 15, 1997
Second Supplemental Indenture dated as of May 14, 1999 between
Transocean Offshore (Texas) Inc., Transocean Offshore Inc. and
Chase Bank of Texas, National Association, as trustee
Fifth Supplemental Indenture, dated as of December 18, 2008,
among Transocean Ltd., Transocean Inc. and The Bank of New
York Mellon Trust Company, N.A., as trustee
Inc.
- 77 -
LOCATION
Exhibit 3.1 to Transocean Ltd.’s Current Report on
Form 8-K (Commission File No. 001-38373) filed on
September 13, 2022
Exhibit 3.1 to Transocean Ltd.’s Current Report on
Form 8-K (Commission File No. 001-38373) filed on
April 7, 2021
Filed herewith
Exhibit 4.1 to Transocean Ltd.’s Current Report on
Form 8-K (Commission File No. 001-38373) filed on
February 26, 2021
Exhibit 4.1 to Transocean Ltd.’s Current Report on
Form 8-K (Commission File No. 000-53533) filed on
June 27, 2018
Exhibit 10.1 to Transocean Ltd.’ s Current Report on
Form 8-K (Commission File No. 001-38373) filed on
May 13, 2019
Exhibit 10.1 to Transocean Ltd.’ s Current Report on
Form 8-K (Commission File No. 001-38373) filed on
July 15, 2019
Exhibit 10.2 to Transocean Ltd.’ s Quarterly Report on
Form 10-Q (Commission File No. 001-38373) for the
quarter ended September 30, 2019
Exhibit 4.6 to Transocean Ltd.’s Annual Report on
Form 10-K (Commission File No. 001-38373) filed on
February 18, 2020
Exhibit 4.1 to Transocean Ltd.’s Current Report on
Form 8-K (Commission File No. 000-53533) filed on
July 17, 2018
Exhibit 4.1 to Transocean Ltd.’s Current Report on
Form 8-K (Commission File No. 000-53533) filed on
July 24, 2018
Exhibit 4.4 to Transocean Ltd.’s Quarterly Report on
Form 10-Q (Commission File No. 001-38373) for the
quarter ended March 31, 2019
Exhibit 4.1 to Transocean Offshore Inc.’s Current Report
on Form 8-K (Commission File No. 001-07746) filed on
April 30, 1997
Exhibit 4.2 to Transocean Offshore Inc.’s Current Report
on Form 8-K (Commission File No. 001-07746) filed on
April 30, 1997
Exhibit 4.5 to Transocean Offshore Inc.’s Post-Effective
Amendment No. 1 to Registration Statement on Form S-3
(Registration No. 333-59001-99) filed on June 29, 1999
Exhibit 4.4 to Transocean Ltd.’s Current Report on
Form 8-K (Commission File No. 333-75899) filed on
December 19, 2008
Table of Contents
NUMBER DESCRIPTION
4.15
Form of 7.45% Notes due April 15, 2027
4.16
Form of 8.00% Debentures due April 15, 2027
4.17
4.18
4.19
4.20
4.21
4.22
4.23
Officers’ Certificate establishing the terms of the 7.50% Notes due
April 15, 2031
Officers’ Certificate establishing the terms of the 7.375% Notes due
April 15, 2018
Indenture dated as of September 1, 1997, between Global
Marine Inc. and Wilmington Trust Company, as Trustee, relating to
Debt Securities of Global Marine Inc.
First Supplemental Indenture dated as of June 23, 2000, between
Global Marine Inc. and Wilmington Trust Company, as Trustee,
relating to Debt Securities of Global Marine Inc.
Second Supplemental Indenture dated as of November 20, 2001,
between Global Marine Inc. and Wilmington Trust Company, as
Trustee, relating to Debt Securities of Global Marine Inc.
Third Supplemental Indenture, dated as of July 29, 2019, among
Global Marine
and Wilmington
Trust Company, as trustee, relating to Debt Securities of Global
Marine Inc.
Form of 7% Note Due 2028
Inc, Transocean
Inc.
4.24
Terms of 7% Notes Due 2028
4.25
4.26
4.27
4.28
4.29
4.30
4.31
4.32
4.33
Indenture, dated as of December 11, 2007, between Transocean Inc.
and Wells Fargo Bank, National Association
Inc.
Fargo
Transocean
and Wells
First Supplemental Indenture, dated as of December 11, 2007,
between
Bank,
National Association
Third Supplemental Indenture, dated as of December 18, 2008,
among Transocean Ltd., Transocean Inc. and Wells Fargo Bank,
National Association, as trustee
Fourth Supplemental Indenture, dated as of September 21, 2010,
among Transocean Ltd., Transocean Inc. and Wells Fargo Bank,
National Association, as trustee
Fifth Supplemental Indenture, dated as of December 5, 2011, among
Transocean Ltd., Transocean Inc. and Wells Fargo Bank, National
Association, as trustee
Sixth Supplemental Indenture, dated as of September 13, 2012,
among Transocean Inc., Transocean Ltd. and Wells Fargo Bank,
National Association, as trustee
Indenture, dated as of July 21, 2016, by and among Transocean Inc.,
the Guarantors and Wells Fargo Bank, National Association
Indenture, dated as of October 19, 2016, by and among Transocean
Phoenix 2 Limited, Transocean Ltd., Transocean Inc., Triton
Capital II GmbH and Wells Fargo Bank, National Association
First Supplemental Indenture, dated April 15, 2019, by and among
Transocean Phoenix 2 Limited, Wells Fargo Bank, National
Association, as trustee and collateral agent, and the Note Parties
supplementing the Indenture dated as of October 19, 2016
- 78 -
LOCATION
Exhibit 4.3 to Transocean Offshore Inc.’s Current Report
on Form 8-K (Commission File No. 001-07746) filed on
April 30, 1997
Exhibit 4.4 to Transocean Offshore Inc.’s Current Report
on Form 8-K (Commission File No. 001-07746) filed on
April 30, 1997
Exhibit 4.3 to Transocean Sedco Forex Inc.’s Current
Report on Form 8-K (Commission File No. 333-75899)
filed on April 9, 2001
Exhibit 4.14 to Transocean Sedco Forex Inc.’s Annual
Report on Form 10-K (Commission File No. 333-75899)
for the fiscal year ended December 31, 2001
Exhibit 4.1 of Global Marine Inc.’s Registration Statement
on Form S-4 (No. 333-39033) filed on October 30, 1997
Exhibit 4.2 of Global Marine Inc.’s Quarterly Report on
Form 10-Q (Commission File No. 001-05471) for the
quarter ended June 30, 2000
Exhibit 4.2
to GlobalSantaFe Corporation’s Annual
Report on Form 10-K (Commission File No. 001-14634)
for the year ended December 31, 2004
Exhibit 4.1 to Transocean Ltd.’s Current Report on
Form 8-K (Commission File No. 001-38373) filed on
July 29, 2019
Exhibit 4.2 of Global Marine Inc.’s Current Report on
Form 8-K (Commission File No. 001-05471) filed on
May 22, 1998
Exhibit 4.1 of Global Marine Inc.’s Current Report on
Form 8-K (Commission File No. 001-05471) filed on
May 22, 1998
Exhibit 4.36 to Transocean Inc.’s Annual Report on
Form 10-K (Commission File No. 333-75899) for the year
ended December 31, 2007
Exhibit 4.37 to Transocean Inc.’s Annual Report on
Form 10-K (Commission File No. 333-75899) for the year
ended December 31, 2007
Exhibit 4.3 to Transocean Ltd.’s Current Report on
Form 8-K (Commission File No. 333-75899) filed on
December 19, 2008
Exhibit 4.1 to Transocean Ltd.’s Quarterly Report on
Form 10-Q (Commission File No. 000-53533) for the
quarter ended September 30, 2010
Exhibit 4.3 to Transocean Ltd.’s Current Report on
Form 8-K (Commission File No. 000-53533) filed on
December 5, 2011
Exhibit 4.3 to Transocean Ltd.’s Current Report on
Form 8-K (Commission File No. 000-53533) filed on
September 13, 2012
Exhibit 4.1 to Transocean Ltd.’s Current Report on
Form 8-K (Commission File No. 000-53533) filed on
July 22, 2016
Exhibit 4.1 to Transocean Ltd.’s Current Report on
Form 8-K (Commission File No. 000-53533) filed on
October 20, 2016
Exhibit 4.2 to Transocean Ltd.’s Quarterly Report on
Form 10-Q (Commission File No. 001-38373) for the
quarter ended March 31, 2019
Table of Contents
NUMBER DESCRIPTION
4.34
4.35
4.36
4.37
4.38
4.39
4.40
4.41
4.42
4.43
4.44
4.45
4.46
4.47
4.48
4.49
4.50
4.51
Fargo
Proteus
Limited, Wells
Indenture, dated December 8, 2016, by and among Transocean
Proteus Limited, the Guarantors and Wells Fargo Bank, National
Association
First Supplemental Indenture, dated April 15, 2019, by and among
Transocean
Bank,
National Association, as trustee and collateral agent, and the Note
Parties, supplementing the Indenture dated as of December 8, 2016
Indenture dated as of October 17, 2017, by and among
Transocean Inc., the guarantors party thereto and Wells Fargo Bank,
National Association
Indenture, dated January 30, 2018, among Transocean Inc.,
Transocean Ltd., as guarantor, and Computershare Trust
Company N.A. and Computershare Trust Company of Canada, as
co-trustees
Form of 0.50% Exchangeable Senior Bonds due 2023
1,
by
and
2019,
dated February
Registration Rights Agreement, dated as of January 30, 2018,
among Transocean Ltd., Transocean Inc., and the security holders
named therein
Indenture, dated October 25, 2018, among Transocean Inc., the
guarantors party
thereto and Wells Fargo Bank, National
Association, as trustee
Indenture,
among
Transocean Poseidon Limited, the Guarantors and Wells Fargo
Bank, National Association, as trustee and collateral agent
Indenture, dated May 24, 2019, by and among Transocean
Sentry Limited, the Guarantors and Wells Fargo Bank, National
Association, as trustee and collateral agent
Indenture, dated January 17, 2020, by and among Transocean Inc.,
the guarantors party thereto and Wells Fargo Bank, National
Association
Indenture, dated as of August 14, 2020, by and among
Transocean Inc., the guarantors party thereto and Wells Fargo Bank,
National Association
Amendment
to Registration Rights Agreement, dated as of
August 14, 2020, by and among Transocean Ltd., Transocean Inc.
and Perestroika (Cyprus) Ltd.
Indenture, dated as of September 11, 2020, by and among
Transocean Inc., the guarantors party thereto and Wells Fargo Bank,
National Association
Supplemental Indenture, dated November 30, 2020, by and among
Transocean Inc., Transocean Ltd., certain of Transocean Inc.’s
subsidiaries, and Wells Fargo Bank, National Association, as trustee,
supplementing the Indenture dated as of September 11, 2020.
Supplemental Indenture, dated November 30, 2020, by and among
Transocean Inc., Transocean Ltd., certain of Transocean Inc.’s
subsidiaries, and Wells Fargo Bank, National Association, as trustee,
supplementing the Indenture dated as of August 14, 2020.
Fourth Amendment to Credit Agreement, dated November 30, 2020,
among Transocean Inc., the lenders and issuing banks parties
thereto, Citibank, N.A., as administrative agent, and for the limited
purposes set forth therein, certain of Transocean Inc.’s subsidiaries.
Indenture, dated as of September 30, 2022, by and among
Transocean Inc., the Guarantors and Truist Bank, as trustee
Warrant Agreement, dated as of September 30, 2022, by and among
Transocean Inc., Transocean Ltd. and Computershare Inc. and
Computershare Trust Company, N.A., as warrant agent
- 79 -
LOCATION
Exhibit 4.1 to Transocean Ltd.’s Current Report on
Form 8-K (Commission File No. 000-53533) filed on
December 8, 2016
Exhibit 4.3 to Transocean Ltd.’s Quarterly Report on
Form 10-Q (Commission File No. 001-38373) for the
quarter ended March 31, 2019
Exhibit 4.1 to Transocean Ltd.’s Current Report on
Form 8-K (Commission File No. 000-53533) filed on
October 17, 2017
Exhibit 4.1 to Transocean Ltd.’s Current Report on
Form 8-K (Commission File No. 000-53533) filed on
January 30, 2018
Exhibit A of Exhibit 4.2 to Transocean Ltd.’s Current
Report on Form 8-K (Commission File No. 000-53533)
filed on January 30, 2018
Exhibit 4.3 to Transocean Ltd.’s Current Report on
Form 8-K (Commission File No. 000-53533) filed on
January 30, 2018
Exhibit 4.32 to Transocean Ltd.’s Annual Report on
Form 10-K (Commission File No. 001-38373) filed on
February 19, 2019
Exhibit 4.1 to Transocean Ltd.’s Current Report on
Form 8-K (Commission File No. 001-38373) filed on
February 1, 2019
Exhibit 4.1 to Transocean Ltd.’s Current Report on
Form 8-K (Commission File No. 001-38373) filed on
May 29, 2019
Exhibit 4.1 to Transocean Ltd.’s Current Report on
Form 8-K (Commission File No. 001-38373) filed on
January 17, 2020
Exhibit 4.1 to Transocean Ltd.’s Current Report on
Form 8-K (Commission File No. 001-38373) filed on
August 14, 2020
Exhibit 4.2 to Transocean Ltd.’s Current Report on
Form 8-K (Commission File No. 001-38373) filed on
August 14, 2020
Exhibit 4.1 to Transocean Ltd.’s Current Report on
Form 8-K (Commission File No. 001-38373) filed on
September 11, 2020
Exhibit 4.1 to Transocean Ltd.’s Current Report on
Form 8-K (Commission File No. 001-38373) filed on
December 1, 2020
Exhibit 4.2 to Transocean Ltd.’s Current Report on
Form 8-K (Commission File No. 001-38373) filed on
December 1, 2020
Exhibit 10.1 to Transocean Ltd.’s Current Report on
Form 8-K (Commission File No. 001-38373) filed on
December 1, 2020.
Exhibit 4.1 to Transocean Ltd.’s Current Report on
Form 8-K (Commission File No. 001-38373) filed on
September 30, 2022
Exhibit 4.2 to Transocean Ltd.’s Current Report on
Form 8-K (Commission File No. 001-3873) filed on
September 30, 2022
Table of Contents
NUMBER DESCRIPTION
4.52
* 10.1
10.2
10.3
* 10.4
Fifth Amendment to Credit Agreement, dated July 27, 2022, among
Transocean Inc., the lenders and issuing banks parties thereto,
Citibank, N.A., as administrative agent, and for the limited purposes
set forth therein, Transocean Ltd. and certain of Transocean Inc.’s
subsidiaries
Amended and Restated 2015 Transocean Ltd. Long-Term Incentive
Plan
Shipyard Credit Agreement for Deepwater Atlas, dated as of June 5,
2021, by and between Jurong Shipyard Pte. Ltd. and Transocean
Offshore Deepwater Holdings Limited
Shipyard Credit Agreement for Deepwater Titan, dated as of June 5,
2021, by and between Jurong Shipyard Pte. Ltd. and Transocean
Offshore Deepwater Holdings Limited
Long-Term Incentive Plan of Transocean Ltd. (as amended and
restated as of February 12, 2009)
* 10.5
First Amendment to Long-Term Incentive Plan of Transocean Ltd.
(as amended and restated as of February 12, 2009)
* 10.6
Deferred Compensation Plan of Transocean Offshore Inc., as
amended and restated effective January 1, 2000
* 10.7
* 10.8
January
effective
GlobalSantaFe Corporation Key Employee Deferred Compensation
to
Plan
GlobalSantaFe Corporation Key Employee Deferred Compensation
Plan effective November 20, 2001
Amendment to Transocean Inc. Deferred Compensation Plan
and Amendment
2001
1,
* 10.9
Form of 2004 Performance-Based Nonqualified Share Option
Award Letter
* 10.10
Form of 2004 Director Deferred Unit Award
* 10.11
Form of 2008 Director Deferred Unit Award
* 10.12
Form of 2009 Director Deferred Unit Award
* 10.13
Terms and Conditions of 2013 Director Deferred Unit Award
* 10.14
Terms and Conditions of 2014 Director Deferred Unit Award
* 10.15
Terms and Conditions of 2015 Director Restricted Share Unit
Award
* 10.16
Terms and Conditions of 2014 Executive Equity Award
* 10.17
Terms and Conditions of 2015 Executive Equity Award
- 80 -
LOCATION
Exhibit 10.1 to Transocean Ltd.’s Current Report on
Form 8-K (Commission File No. 001-38373) filed on
August 1, 2022
Exhibit 10.1 to Transocean Ltd.’s Current Report on
Form 8-K (Commission File No. 001-38373) filed on
June 1, 2021
Exhibit 10.2 to Transocean Ltd.’s Quarterly Report on
Form 10-Q (Commission File No. 001-38373) for the
quarter ended June 30, 2021 filed on August 3, 2021
Exhibit 10.3 to Transocean Ltd.’s Quarterly Report on
Form 10-Q (Commission File No. 001-38373) for the
quarter ended June 30, 2021 filed on August 3, 2021
Exhibit 10.5 to Transocean Ltd.’s Annual Report on
Form 10-K (Commission File No. 000-53533) for the year
ended December 31, 2008
Exhibit 10.1 to Transocean Ltd.’s Current Report on
Form 8-K (Commission File No. 000-53533) filed on
May 22, 2013
Exhibit 10.10 to Transocean Sedco Forex Inc.’s Annual
Report on Form 10-K (Commission File No. 333-75899)
for the year ended December 31, 1999
Exhibit 10.33 to the GlobalSantaFe Corporation Annual
Report on Form 10-K (Commission File No. 001-14634)
for the year ended December 31, 2004
Exhibit 10.1 to Transocean Inc.’s Current Report on
Form 8-K (Commission File No. 333-75899) filed on
December 29, 2005
Exhibit 10.2 to Transocean Inc.’s Current Report on
Form 8-K (Commission File No. 333-75899) filed on
February 15, 2005
Exhibit 10.4 to Transocean Inc.’s Current Report on
Form 8-K (Commission File No. 333-75899) filed on
February 15, 2005
Exhibit 10.20 to Transocean Ltd.’s Annual Report on
Form 10-K (Commission File No. 000-53533) for the year
ended December 31, 2008
Exhibit 10.19 to Transocean Ltd.’s Annual Report on
Form 10-K (Commission File No. 000-53533) for the year
ended December 31, 2009
Exhibit 10.14 to Transocean Ltd.’s Annual Report on
Form 10-K (Commission File No. 000-53533) for the year
ended December 31, 2015
Exhibit 10.15 to Transocean Ltd.’s Annual Report on
Form 10-K (Commission File No. 000-53533) for the year
ended December 31, 2015
Exhibit 10.16 to Transocean Ltd.’s Annual Report on
Form 10-K (Commission File No. 000-53533) for the year
ended December 31, 2015
Exhibit 10.19 to Transocean Ltd.’s Annual Report on
Form 10-K (Commission File No. 000-53533) for the year
ended December 31, 2015
Exhibit 10.20 to Transocean Ltd.’s Annual Report on
Form 10-K (Commission File No. 000-53533) for the year
ended December 31, 2015
Table of Contents
NUMBER DESCRIPTION
10.18
Terms and Conditions of the July 2008 Nonqualified Share Option
Award
* 10.19
Terms and Conditions of the February 2009 Nonqualified Share
Option Award
* 10.20
Terms and Conditions of the February 2012 Long Term Incentive
Plan Award
* 10.21
Transocean Ltd. Incentive Recoupment Policy
10.22
Form of Novation Agreement dated as of November 27, 2007 by
and among GlobalSantaFe Corporation, Transocean Offshore
Deepwater Drilling Inc. and certain executives
LOCATION
Exhibit 10.2 to Transocean Inc.’s Quarterly Report on
Form 10-Q (Commission File No. 333-75899) for the
quarter ended June 30, 2008
Exhibit 10.30 to Transocean Ltd.’s Annual Report on
Form 10-K (Commission File No. 000-53533) for the year
ended December 31, 2008
Exhibit 10.28 to Transocean Ltd.’s Annual Report on
Form 10-K (Commission File No. 000-53533) for the year
ended December 31, 2011
Exhibit 10.30 to Transocean Ltd.’s Annual Report on
Form 10-K (Commission File No. 000-53533) for the year
ended December 31, 2012
Exhibit 10.1 to Transocean Inc.’s Current Report on
Form 8-K (Commission File No. 333-75899) filed on
December 3, 2007
1999
* 10.25
* 10.24
* 10.26
1997 Long-Term Incentive Plan
* 10.27 Amendment to 1997 Long Term Incentive Compensation Plan
* 10.29 GlobalSantaFe Corporation 1998 Stock Option and Incentive Plan
* 10.28 Amendment to 1997 Long Term Incentive Plan, dated December 1,
First Amendment to Global Marine Inc. 1990 Non-Employee
Director Stock Option Plan
Second Amendment to Global Marine Inc. 1990 Non-Employee
Director Stock Option Plan
* 10.23 Global Marine Inc. 1990 Non-Employee Director Stock Option Plan Exhibit 10.18 of Global Marine Inc.’s Annual Report on
Form 10-K (Commission File No. 001-05471) for the year
ended December 31, 1991
Exhibit 10.1 of Global Marine Inc.’s Quarterly Report on
Form 10-Q (Commission File No. 001-05471) for the
quarter ended June 30, 1995
Exhibit 10.37 of Global Marine Inc.’s Annual Report on
Form 10-K (Commission File No. 001-05471) for the year
ended December 31, 1996
GlobalSantaFe Corporation’s Registration Statement on
Form S-8 (No. 333-7070) filed June 13, 1997
Exhibit 10.25 of GlobalSantaFe Corporation’s Annual
Report on Form 20-F (Commission File No. 001-14634)
for the year ended December 31, 1998
Exhibit 10.33 of GlobalSantaFe Corporation’s Annual
Report on Form 20-F (Commission File No. 001-14634)
for the year ended December 31, 1999
Exhibit 10.1 of Global Marine Inc.’s Quarterly Report on
Form 10-Q (Commission File No. 001-05471) for the
quarter ended March 31, 1998
Exhibit 10.2 of Global Marine Inc.’s Quarterly Report on
Form 10-Q (Commission File No. 001-05471) for the
quarter ended June 30, 2000
Exhibit 4.8 of GlobalSantaFe Corporation’s Registration
Statement on Form S-8 (No. 333-73878) filed on
November 21, 2001
Exhibit A to GlobalSantaFe Corporation’s definitive proxy
statement (Commission File No. 001-14634) filed on
March 21, 2001
Exhibit 10.4 to GlobalSantaFe Corporation’s Quarterly
Report on Form 10-Q (Commission File No. 001-14634)
for the quarter ended June 30, 2005
Exhibit 10.41 to Transocean Ltd.’s Annual Report on
Form 10-K (Commission File No. 000-53533) for the year
ended December 31, 2008
Exhibit 10.11 to Transocean Inc.’s Current Report on
Form 8-K (Commission File No. 333-75899) filed on
December 3, 2007
Exhibit 10.1 to the GlobalSantaFe Corporation Quarterly
Report on Form 10-Q (Commission File No. 001-14634)
for the quarter ended September 30, 2002
Transocean U.S. Supplemental Retirement Benefit Plan, as
amended and restated, effective as of November 27, 2007
Transocean Ltd. Pension Equalization Plan, as amended and
restated, effective January 1, 2009
First Amendment to GlobalSantaFe Corporation 1998 Stock Option
and Incentive Plan
* 10.31 GlobalSantaFe Corporation 2001 Non-Employee Director Stock
* 10.33 GlobalSantaFe 2003 Long-Term Incentive Plan (as Amended and
* 10.36 GlobalSantaFe Corporation Supplemental Executive Retirement
* 10.32 GlobalSantaFe Corporation 2001 Long-Term Incentive Plan
Restated Effective June 7, 2005)
Option and Incentive Plan
* 10.34
* 10.30
* 10.35
Plan
- 81 -
Table of Contents
NUMBER DESCRIPTION
* 10.37
Transocean U.S. Supplemental Savings Plan, as amended and
restated, effective as of January 1, 2009
10.38
Form of
Indemnification Agreement entered
Transocean Ltd. and each of its Directors and Executive Officers
into between
* 10.39
Form of Assignment Memorandum for Executive Officers
10.40 Drilling Contract between Vastar Resources, Inc. and R&B Falcon
to
respect
Drilling Co. dated December 9, 1998 with
Deepwater Horizon, as amended
Executive Severance Benefit Policy
* 10.41
10.42
10.43
10.44
* 10.45
Term Sheet Agreement for a Transocean and PSC/DHEPDS
Settlement, dated May 20, 2015,
among Triton Asset
Leasing GmbH, Transocean Deepwater Inc., Transocean Offshore
Deepwater Drilling Inc., Transocean Holdings LLC, the Plaintiffs
Steering Committee in MDL 2179, and the Deepwater Horizon
Economic and Property Damages Settlement Class
Confidential Settlement Agreement, Mutual Releases and
Agreement to Indemnify, dated May 20, 2015, among Transocean
Offshore Deepwater Drilling Inc., Transocean Deepwater Inc.,
Transocean Holdings LLC, Triton Asset Leasing GmbH, BP
Exploration and Production Inc. and BP America Production Co.
Transocean Punitive Damages and Assigned Claims Settlement
Agreement, dated May 29, 2015, among Transocean Offshore
Deepwater Drilling Inc., Transocean Deepwater Inc., Transocean
Holdings LLC, Triton Asset Leasing GmbH, the Plaintiffs Steering
Committee in MDL 2179, and the Deepwater Horizon Economic
and Property Damages Settlement Class
Employment Agreement with Jeremy D. Thigpen effective
September 1, 2016
* 10.46
Employment Agreement with Mark L. Mey effective September 1,
2016
* 10.47 Amended and Restated Performance Award and Cash Bonus Plan of
Transocean Ltd.
* 10.48
Terms and Conditions of 2020 Executive Equity Awards
* 10.49
Terms and Conditions of 2020 Director Restricted Share Unit
Award
* 10.50
* 10.51
Terms and Conditions of 2023 Executive Equity Awards
Employment Agreement with Keelan Adamson
February 16, 2022
effective
21
23.1
24
31.1
Subsidiaries of Transocean Ltd.
Consent of Ernst & Young LLP
Powers of Attorney
Certification of Chief Executive Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002
- 82 -
LOCATION
Exhibit 10.44 to Transocean Ltd.’s Annual Report on
Form 10-K (Commission File No. 000-53533) for the year
ended December 31, 2008
Exhibit 10.1 to Transocean Inc.’s Current Report on
Form 8-K (Commission File No. 333-75899) filed on
October 10, 2008
Exhibit 10.6 to Transocean Ltd.’s Current Report on
Form 8-K (Commission File No. 000-53533) filed on
December 19, 2008
Exhibit 10.1 to Transocean Ltd.’s Quarterly Report on
Form 10-Q (Commission File No. 000-53533) for the
quarter ended June 30, 2010
Exhibit 10.1 to Transocean Ltd.’s Current Report on
Form 8-K (Commission File No. 000-53533) filed on
February 23, 2012
Exhibit 10.3 to Transocean Ltd.’s Quarterly Report on
Form 10-Q (Commission File No. 000-53533) for the
quarter ended June 30, 2015
Exhibit 10.6 to Transocean Ltd.’s Quarterly Report on
Form 10-Q (Commission File No. 000-53533) for the
quarter ended June 30, 2015
Exhibit 10.7 to Transocean Ltd.’s Quarterly Report on
Form 10-Q (Commission File No. 000-53533) for the
quarter ended June 30, 2015
Exhibit 10.1 to Transocean Ltd.’s Quarterly Report on
Form 10-Q (Commission File No. 000-53533) for the
quarter ended September 30, 2016
Exhibit 10.2 to Transocean Ltd.’s Quarterly Report on
Form 10-Q (Commission File No. 000-53533) for the
quarter ended September 30, 2016
Exhibit 10.48 to Transocean Ltd.’s Annual Report on
Form 10-K (Commission File No. 001-38373) for the year
ended December 31, 2020
Exhibit 10.2 to Transocean Ltd.’s Quarterly Report on
Form 10-Q (Commission File No. 001-38373) for the
quarter ended June 30, 2020
Exhibit 10.3 to Transocean Ltd.’s Quarterly Report on
Form 10-Q (Commission File No. 001-38373) for the
quarter ended June 30, 2020
Filed herewith
Exhibit 10.1 to Transocean Ltd.’s Current Report on
Form 8-K (Commission File No. 001-38373) filed on
February 17, 2022
Filed herewith
Filed herewith
Filed herewith
Filed herewith
Table of Contents
NUMBER DESCRIPTION
31.2
32.1
32.2
101
104
Certification of Chief Financial Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002
Certification of Chief Executive Officer pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
Certification of Chief Financial Officer pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
Interactive data files pursuant to Rule 405 of Regulation S-T
formatted in Inline Extensible Business Reporting Language: (i) our
consolidated balance sheets as of December 31, 2021 and
December 31, 2020; (ii) our consolidated statements of operations
for the years ended December 31, 2021, 2020 and 2019; (iii) our
consolidated statements of comprehensive loss for the years ended
December 31, 2021, 2020 and 2019; (iv) our consolidated
statements of equity for the years ended December 31, 2021, 2020
and 2019; (v) our consolidated statements of cash flows for the
years ended December 31, 2021, 2020 and 2019; and (vi) the notes
to consolidated financial statements
The cover page from our annual report on Form 10-K for the year
ended December 31, 2021, formatted in Inline Extensible Business
Reporting Language
*
Compensatory plan or arrangement
LOCATION
Filed herewith
Furnished herewith
Furnished herewith
Filed herewith
Filed herewith
Exhibits listed above as previously having been filed with the U.S. Securities and Exchange Commission are
incorporated herein by reference pursuant to Rule 12b-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 10 percent of our total assets and our subsidiaries on
a consolidated basis. We agree to furnish a copy of each such instrument to the SEC 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 one of 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.
- 83 -
Table of Contents
SIGNATURES
Pursuant to the requirements of Section 13 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 February 22, 2023.
TRANSOCEAN LTD.
By:
/s/ Mark L. Mey
Mark L. Mey
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
By:
/s/ David Tonnel
David Tonnel
Senior Vice President and Chief Accounting Officer
(Principal Accounting Officer)
- 84 -
Table of Contents
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 February 22, 2023.
Signature
*
Chadwick C. Deaton
/s/ Jeremy D. Thigpen
Jeremy D. Thigpen
/s/ Mark L. Mey
Mark L. Mey
/s/ David Tonnel
David Tonnel
*
Glyn A. Barker
*
Vanessa C.L. Chang
*
Frederico F. Curado
*
Vincent J. Intrieri
*
Samuel J. Merksamer
*
Frederik W. Mohn
*
Edward R. Muller
*
Margareth Øvrum
*
Diane de Saint Victor
By: /s/ David Tonnel
(Attorney-in-Fact)
Title
Chairman
of the Board of Directors
Chief Executive Officer
(Principal Executive Officer)
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
Senior Vice President and
Chief Accounting Officer
(Principal Accounting
Officer)
Director
Director
Director
Director
Director
Director
Director
Director
Director
- 85 -
Table of Contents
- 86 -
DESCRIPTION OF TRANSOCEAN LTD.’S SECURITIES
REGISTERED PURSUANT TO SECTION 12 OF THE
SECURITIES EXCHANGE ACT OF 1934
Exhibit 4.1
As of December 31, 2022, Transocean Ltd. had two classes of securities registered under Section 12 of the Securities
Exchange Act of 1934, as amended: registered shares, par value CHF 0.10 per share (“shares”) and exchangeable
bonds due 2023 (“Exchangeable Bonds”).
Description of the Shares
The following description of Transocean Ltd.’s shares is a summary and is subject to the complete text of our Articles
of Association, filed as Exhibit 3.1 to our Current Report on Form 8-K (Commission File No. 001-38373) filed on
September 13, 2022. We encourage you to read the Articles of Association carefully. In this description, references to
“Transocean,” “we,” ”our,” and “us” mean Transocean Ltd.
Description of Share Capital
Issued Share Capital. As of February 14, 2023, the share capital of Transocean registered shares in the commercial
register, which reflects Transocean’s total issued share capital, excluding shares issued out of Transocean’s conditional
share capital not yet registered with the commercial register, was CHF 79,724,407.20, divided into 797,244,072
registered Transocean shares, par value 0.10 Swiss francs per share. The total issued share capital of Transocean,
including Transocean shares issued out of Transocean’s conditional share capital not yet registered with the
commercial register, was 79,724,533.50 Swiss francs, divided into 797,245,335 registered Transocean shares, par
value 0.10 Swiss francs per share. The issued Transocean shares are fully paid, non-assessable, and rank pari passu
with each other and all other Transocean shares.
General Authorized Share Capital. Our board of directors is authorized to issue new shares at any time until May 12,
2024, and thereby increase the stated share capital by a maximum amount of 10,784,875.60 Swiss francs by issuing a
maximum of 107,848,756 shares. Our general authorized share capital expires on May 12, 2024.
Our board of directors determines the time of the issuance, the issuance price, the manner in which the new
Transocean shares have to be paid in, the date from which the new Transocean shares carry the right to dividends and,
subject to the provisions of our Articles of Association, the conditions for the exercise of the preemptive rights with
respect to the issuance and the allotment of preemptive rights that are not exercised. The board of directors may allow
preemptive rights that are not exercised to expire, or it may place such rights or Transocean shares, the preemptive
rights in respect of which have not been exercised, at market conditions or use them otherwise in our interest. For
further information on preemptive rights with respect to our authorized share capital, see “—Preemptive Rights and
Advance Subscription Rights” below.
An increase of the share capital (i) by means of an offering underwritten by a financial institution, a syndicate of
financial institutions or another third party or third parties, followed by an offer to the then-existing shareholders of
Transocean, and (ii) in partial amounts is permissible.
The shares will be subject to the limitations for registration in the share register pursuant to Articles 7 and 9 of
Transocean’s Articles of Association.
Conditional Share Capital. Article 6 of Transocean’s Articles of Association has not yet been updated to reflect the
issuance of 1,263 shares following the exercise of certain of our Exchangeable Bonds. Accordingly, the remaining
authority to issue shares out of conditional share capital is limited to a maximum of 142,362,093 shares; these shares
may be issued through:
● the exercise of conversion, exchange, option, warrant or similar rights for the subscription of shares granted
to third parties or shareholders in connection with bonds, options, warrants or other securities newly or
1
already issued in national or international capital markets or new or already existing contractual obligations
by or of us or any of our group companies or any of our respective predecessors; or
● in connection with the issuance of shares, options or other share-based awards to members of the board of
directors, members of our executive management, employees, contractors, consultants or other persons
providing services to us or our subsidiaries.
For information on preemptive rights with respect to our conditional share capital, see “—Preemptive Rights and
Advance Subscription Rights” below.
Other Classes or Series of Transocean Shares / Non-voting stock (Genussscheine / Partizipationsscheine). The board
of directors may not create Transocean shares with increased voting powers without the affirmative resolution adopted
by shareholders holding at least two-thirds of the voting rights and an absolute majority of the par value of the
Transocean shares, each as represented (in person or by proxy) at a general meeting of the shareholders. Our board of
directors may create preferred stock with the vote of a majority of the votes cast at a general meeting of our
shareholders (not counting broker non-votes, abstentions and blank or invalid ballots).
Transocean has not issued any non-voting stock to date (Partizipationsscheine, Genussscheine).
Preemptive Rights and Advance Subscription Rights
Under the Swiss Code of Obligations (the “Swiss Code”), the prior approval of a general meeting of shareholders is
generally required to authorize, for later issuance, the issuance of Transocean shares, or rights to subscribe for, or
convert into, Transocean shares (which rights may be connected to debt instruments or other obligations). In addition,
the existing shareholders will have preemptive rights in relation to such Transocean shares or rights in proportion to
the respective par values of their holdings. The shareholders may, with the affirmative vote of shareholders holding
two-thirds of the voting rights and a majority of the par value of the Transocean shares represented at the general
meeting, withdraw or limit the preemptive rights for valid reasons (such as a merger, an acquisition or any of the
reasons authorizing the board of directors to withdraw or limit the preemptive rights of shareholders in the context of
an authorized capital increase as described below).
If the general meeting of shareholders has approved the creation of authorized or conditional capital, it may delegate
the decision whether to withdraw or limit the preemptive and advance subscription rights for valid reasons to the board
of directors. However, the valid reasons justifying the exclusion of the preemptive right must be stated in the articles of
association. Our Articles of Association provide for this delegation and state the valid reasons with respect to our
authorized and conditional share capital in the circumstances described below under “—General Authorized Share
Capital” and “—Conditional Share Capital.”
General Authorized Share Capital. At any time until May 12, 2024, and pursuant to Article 5 of Transocean’s Articles
of Association, the board of directors is authorized to withdraw or limit the preemptive rights of the shareholders with
respect to a maximum of 107,848,756 shares and to allot them to individual shareholders or third parties with respect
to the issuance of shares from authorized capital if:
●
●
●
● the issue price of the new shares is determined by reference to the market
price;
● the shares are issued in connection with the acquisition of an enterprise or
participations or any part of an enterprise or participations, the financing or
refinancing of any such transactions or the financing of our new investment
plans;
● the shares are issued in connection with the intended broadening of the
shareholder constituency of Transocean in certain financial or investor
markets, for the purposes of the participation of strategic partners, or in
connection with the listing of the shares on domestic or foreign stock
exchanges;
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●
●
● in connection with a placement or sale of shares, the grant of an over-
allotment option of up to 20% of the total number of shares in a placement or
sale of shares to the initial purchasers or underwriters; or
● for the participation of directors, members of our executive management
team, employees, contractors, consultants and other persons performing
services for our benefit or the benefit of any of our subsidiaries.
Conditional Share Capital. In connection with the issuance of bonds, notes, warrants or other financial instruments or
contractual obligations convertible into or exercisable or exchangeable for our shares, the preemptive rights of
shareholders are excluded and the board of directors is authorized to withdraw or limit the advance subscription rights
of shareholders in connection with the issuance of bonds, notes, warrants or other securities or contractual obligations
convertible into or exercisable or exchangeable for our shares if the issuance is for purposes of financing or
refinancing the acquisition of an enterprise or business, parts of an enterprise, participations or investments, or if the
issuance occurs in national or international capital markets or through a private placement.
If the advance subscription rights are withdrawn or limited:
●
●
●
● the respective financial instruments or contractual obligations will be issued
or entered into at market conditions;
● the conversion, exchange or exercise price, if any, for instruments or
obligations will be set with reference to the market conditions prevailing at
the date on which the instruments or obligations are issued or entered into;
and
● the instruments or obligations may be converted, exercised or exchanged
during a maximum period of 30 years.
The preemptive rights and the advance subscription rights of shareholders are excluded with respect to shares, bonds,
notes, warrants or other securities or contractual obligations issued from our conditional share capital to directors,
members of executive management, employees, contractors, consultants or other persons providing services to us or
any of our subsidiaries.
Dividends and Other Distributions
Under the Swiss Code, dividends may be paid out only if we have sufficient distributable profits from the previous
fiscal year, or if we have freely distributable reserves (including statutory capital contribution reserves, which are also
referred to as additional paid-in capital), each as will be presented on our audited annual standalone statutory balance
sheet or an audited interim standalone statutory balance sheet. The affirmative vote of shareholders holding a majority
of the votes cast at a general meeting of shareholders (not counting abstentions and blank or invalid ballots) must
approve the distribution of dividends. The board of directors may propose to shareholders that a dividend or other
distribution be paid but cannot itself authorize the distribution.
Payments out of our share capital (in other words, the aggregate par value of our registered share capital) in the form
of dividends are not allowed; however, payments out of registered share capital may be made by way of a par value
reduction. Such a par value reduction requires the approval of shareholders holding a majority of the votes cast at the
general meeting of shareholders (not counting abstentions and blank or invalid ballots). A special audit report must
confirm that claims of our creditors remain fully covered despite the reduction in the share capital recorded in the
commercial register. A licensed audit expert must prepare the audit report and be present at the general meeting of
shareholders that adopts the resolution. The board of directors must further give public notice of the par value
reduction resolution in the Swiss Official Gazette of Commerce and notify creditors that they may request, within one
month of the public notice, satisfaction of or security for their claims. The notification may be given before or after the
general meeting of shareholders resolving on the par value reduction.
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Under the Swiss Code, if our general reserves amount to less than 20% of our share capital recorded in the commercial
register (i.e., 20% of the aggregate par value of our registered capital), then at least 5% of our annual profit must be
allocated to the statutory profit reserve. The Swiss Code and our Articles of Association permit us to accrue additional
general reserves. In addition, if we acquire our own shares, we are required to account for these shares, if acquired by
our parent company Transocean Ltd., as a negative item in our shareholders’ equity or, if these shares are acquired by
one of our subsidiaries, to create a special reserve, in each case on our audited annual or interim standalone statutory
balance sheet in the amount of the purchase price of the shares repurchased by our parent or our subsidiary. The
negative item in our shareholders’ equity or the reserve amount would effectively reduce our capacity to declare
dividends or effect subsequent repurchases of our shares.
Swiss companies generally must maintain a separate company, stand-alone “statutory” balance sheet for the purpose
of, among other things, determining the amounts available for the return of capital to shareholders, including by way of
a distribution of dividends. Our auditor must confirm that a proposal made by the board of directors to shareholders
regarding the appropriation of our available earnings or the distribution of freely distributable reserves conforms to the
requirements of the Swiss Code and our Articles of Association. Dividends are usually due and payable shortly after
the shareholders have passed a resolution approving the payment, but shareholders may also resolve at the annual or
extraordinary general meeting of shareholders to pay dividends in quarterly or other installments. Our Articles of
Association provide that dividends that have not been claimed within five years after the payment date become our
property and are allocated to the general reserves. Dividends paid out of distributable profits or distributable general
reserves are subject to Swiss withholding tax, all or part of which can potentially be reclaimed under the relevant tax
rules in Switzerland or double taxation treaties concluded between Switzerland and foreign countries. Distributions to
shareholders in the form of a par value reduction and distributions out of capital contribution reserves are not subject to
the Swiss federal withholding tax.
Dividends, if declared by us, are expected to be declared, subject to applicable limitations under Swiss law, in U.S.
dollars, or in Swiss francs, and shareholders may be given the right to elect to be paid any such dividends in U.S.
dollars or Swiss francs. Distribution through a reduction in the par value of the shares must be declared in Swiss
francs; however, shareholders may be provided with the option to elect to be paid in U.S. dollars or Swiss francs.
Repurchases of Shares
The Swiss Code limits our ability to hold or repurchase our own shares. We and our subsidiaries may only repurchase
shares if and to the extent that sufficient freely distributable equity capital is available, as described above under “—
Dividends and Other Distributions.” The aggregate par value of all of our shares held by us and our subsidiaries may
not exceed 10% of the registered share capital. However, we may repurchase our own shares beyond the statutory limit
of 10% if the shareholders have authorized the board of directors at a general meeting of shareholders to repurchase
shares in an amount greater than 10% and the repurchased shares are dedicated for cancellation. Any shares
repurchased pursuant to such an authorization will then be cancelled based on a resolution of shareholders adopted at a
general meeting of shareholders following the approval of shareholders holding a majority of the votes cast at the
general meeting. Repurchased shares held by us or our subsidiaries do not carry any rights to vote at a general meeting
of shareholders but are, unless otherwise resolved by our shareholders at a general meeting, entitled to the economic
benefits generally associated with the shares.
General Meetings of Shareholders
The general meeting of shareholders is our supreme corporate body. Ordinary and extraordinary shareholders meetings
may be held. Among other things, the following powers will be vested exclusively in the shareholders meeting:
●
●
● adoption and amendment of our Articles of Association;
● the annual election of the chairman of the board of directors, the members of
the board of directors, the members of the compensation committee of the
board of directors, the auditor and the independent proxy;
4
●
●
●
●
●
●
●
●
●
●
● approval of the annual management report, the stand-alone statutory
financial statements and the consolidated financial statements;
● appropriation of the annual profit shown on our annual stand-alone statutory
balance sheet, in particular the distribution of any dividends;
● the determination of interim dividends and the approval of interim statutory
financial statements required for such purposes;
● the resolution regarding the repayment of the statutory capital reserves;
● the combination of shares (“reverse stock split”);
● discharge of the members of the board of directors and the executive
management team from liability for business conduct during the previous
fiscal year(s) to the extent such conduct is known to the shareholders;
● ratification of the maximum aggregate amounts of compensation of the board
of directors and the executive management team;
a
● subject to certain exceptions, the
approval
business
of
combination with an interested
shareholder (as such terms are
defined
in our Articles of
Association);
● delisting of shares from a stock
exchange;
● the approval of the report on non-
financial matters pursuant
to
article 964c of the Swiss Code;
and
● any other resolutions that are submitted to a general meeting of shareholders pursuant to
law, our Articles of Association or by voluntary submission by the board of directors
(unless a matter is within the exclusive competence of the board of directors pursuant to
the Swiss Code).
Notice and Proxy Statements
Under the Swiss Code and our Articles of Association, we must hold an annual, ordinary general meeting of
shareholders within six months after the end of our fiscal year for the purpose, among other things, of approving the
annual financial statements and the annual management report, the annual election of our chair of the board of
directors, the members of the board of directors, the members of the compensation committee of our board of
directors, our auditor and our independent proxy, and the ratification of the maximum aggregate amount of
compensation of the board of directors and the executive management team. The invitation to general meetings must
be published in the Swiss Official Gazette of Commerce at least 20 calendar days prior to the date of the relevant
general meeting of shareholders. The notice of a meeting must state the items on the agenda and the proposals of the
board of directors and of the shareholders who requested that a shareholders meeting be held or that an item be
included on the agenda and, in case of elections, the names of the nominated candidates. The notice must also include
a short explanation of the items and proposals on the agenda of the general meeting. No resolutions may be passed at a
shareholders meeting concerning agenda items for which proper notice was not given. This does not apply, however, to
proposals made during a shareholders meeting to convene an extraordinary shareholders meeting, to initiate a special
investigation or to elect the statutory auditor. No previous notification will be required for proposals concerning items
included on the agenda or for debates as to which no vote is taken.
Annual general meetings of shareholders are convened by the board of directors or, under certain circumstances
required by law, the auditor. Except as otherwise authorized in our Articles of Association, a general meeting of
shareholders can be held anywhere in Switzerland. General meetings that are held virtually only require a special
5
authorization in a company's articles of association. Our current Articles of Association do not include such an
authorization.
We expect to set the record date for each general meeting of shareholders on a date not more than 20 calendar days
prior to the date of each general meeting and announce the date of the general meeting of shareholders prior to the
record date.
Extraordinary General Meetings of Shareholders
An extraordinary general meeting may be called upon the resolution of the board of directors or, under certain
circumstances required by law, the auditor. In addition, the board of directors is required to convene an extraordinary
general meeting of shareholders if so resolved by the general meeting of shareholders, or, according to our current
Articles of Association, if so requested by one or more shareholders holding an aggregate of at least 10% of the share
capital recorded in the commercial register or according to the views expressed in legal writing, which is persuasive
authority in Switzerland, holding shares with an aggregate par value of CHF 1 million, specifying the items for the
agenda and their proposals. Under the new corporate law as reflected in the Swiss Code, effective as of January 1,
2023, the threshold applicable to the shareholders' right to request that a general meeting be convened will be reduced
from 10% (as in our current Articles of Association) to 5% of the share capital or votes by December 31, 2024, unless
our Articles of Association are amended to reflect such reduction before then. Upon such a shareholder request, the
board of directors must make the publication necessary to convene a general meeting within 60 calendar days.
In addition, if it appears from the annual stand-alone statutory balance sheet that half of the sum of our share capital,
the non-distributable statutory capital reserves and the statutory profit reserves are not covered by our assets, the board
of directors is required to take measures to remedy the capital loss situation and , where necessary, request the general
meeting to approve such measures as are within its authority.
Agenda Requests
Under our Articles of Association, any shareholder may request that an item be included on the agenda of a general
meeting of shareholders. Such shareholder may also nominate one or more directors for election. A request for
inclusion of an item on the agenda or a nominee must be made in writing at least 30 calendar days prior to the
anniversary date of the proxy statement in connection with our last general meeting of shareholders; provided,
however, that if the date of the general meeting of shareholders is more than 30 calendar days before or after the
anniversary date of the last annual general meeting of shareholders, such request must instead be made by the tenth
calendar day following the date on which we have made public disclosure of the date of the general meeting of
shareholders. The request must specify in writing the relevant agenda items and motions, together with evidence of the
required shares recorded in the share register, as well as any other information as would be required to be included in a
proxy statement pursuant to the rules of the Securities and Exchange Commission.
Under the Swiss Code, a general meeting of shareholders for which a notice of meeting has been duly published may
not be adjourned without publishing a new notice of meeting.
Our annual report, our standalone and consolidated financial statements, the auditors' reports thereon, our
compensation report pursuant to Swiss law and the auditor’s reports thereon must be made available no later than 20
calendar days prior to the annual general meeting of shareholders. If these documents are not accessible electronically,
each shareholder may request that these documents be sent to it in due course.
Voting
Each of our shares carries one vote at a general meeting of shareholders. Voting rights may be exercised by
shareholders registered in our share register or by a duly appointed proxy of a registered shareholder (including the
independent proxy), which proxy need not be a shareholder. Our Articles of Association do not limit the number of
shares that may be voted by a single shareholder. Shareholders wishing to exercise their voting rights who hold their
shares through a bank, broker or other nominee should follow the instructions provided by such bank, broker or other
nominee or, absent instructions, contact such bank, broker or other nominee for instructions. Shareholders holding
6
their shares through a bank, broker or other nominee will not automatically be registered in our share register. If any
such shareholder wishes to be registered in our share register, such shareholder should contact the bank, broker or
other nominee through which it holds our shares.
Treasury shares, whether owned by us or one of our majority-owned subsidiaries, will not be entitled to vote at general
meetings of shareholders.
Our Articles of Association do not provide for cumulative voting for the election of directors.
Pursuant to our Articles of Association, the shareholders generally pass resolutions by the affirmative vote of a relative
majority of the votes cast at the general meeting of shareholders (broker nonvotes, abstentions and blank and invalid
ballots will be disregarded), unless otherwise provided by law or our Articles of Association. However, our Articles of
Association provide that directors may be elected at a general meeting of shareholders by a plurality of the votes cast
by the shareholders present in person or by proxy at the meeting. Our Corporate Governance Guidelines have a
majority vote policy that provides that the board may nominate only those candidates for director who have submitted
an irrevocable letter of resignation which would be effective upon and only in the event that (1) such nominee fails to
receive a sufficient number of votes from shareholders in an uncontested election and (2) the board accepts the
resignation following such failure. If a nominee who has submitted such a letter of resignation does not receive more
votes cast “for” than “against” the nominee’s election, the corporate governance committee must promptly review the
letter of resignation and recommend to the board whether to accept the tendered resignation or reject it. The board
must then act on the corporate governance committee’s recommendation within 90 days following the shareholder
vote. The board must promptly disclose its decision regarding whether or not to accept the nominee’s resignation letter.
The acting chair may direct that resolutions and elections be held by use of an electronic voting system. Electronic
resolutions and elections are considered equal to resolutions and elections taken by way of a written ballot. Virtual
only meetings may only be held if the articles of association expressly authorize such a form of the general meeting.
Our Articles of Association do not currently include such an authorization.
The Swiss Code and/or our Articles of Association require the affirmative vote of at least two-thirds of the voting
rights and a majority of the par value of the shares, each as represented at a general meeting to approve, among other
things, the following matters:
●
●
●
●
●
● the amendment to or the modification of the purpose clause in our Articles of
Association;
● the combination of shares ("reverse stock split");
● the creation or cancellation of shares with privileged voting rights;
● the restriction on the transferability of shares or cancellation thereof;
● the restriction on the exercise of the right to vote or the cancellation
thereof;
● changes to our authorized or conditional share capital;
● the change of currency of our share capital;
● the delisting of our shares from a stock exchange;
● an increase in the share capital through (1) the conversion of capital surplus,
●
(2) a contribution in kind, or (3) a grant of special privileges;
7
●
●
●
●
●
● the limitation on or withdrawal of preemptive rights;
● a change in our registered office;
● the conversion of registered shares into bearer shares and vice versa; and
● the introduction of an arbitration agreement in our Articles of Association;
● our dissolution.
The same qualified voting requirements apply to resolutions in relation to transactions among corporations based on
Switzerland’s Federal Act on Mergers, Demergers, Transformations and the Transfer of Assets and Liabilities (the
“Merger Act”), including a merger, demerger or conversion of a corporation (other than a cash-out or certain squeeze-
out mergers, in which minority shareholders of the company being acquired may be compensated in a form other than
through shares of the acquiring company, for instance, through cash or securities of a parent company of the acquiring
company or of another company—in such a merger, an affirmative vote of 90% of the outstanding shares is required).
Swiss law may also impose this supermajority voting requirement in connection with the sale of “all or substantially
all of our assets” by us. See “—Compulsory Acquisitions; Appraisal Rights” below.
Our Articles of Association require the affirmative vote of at least two-thirds of the shares entitled to vote at a general
meeting to approve the following matters:
● the removal of a serving member of the board of directors;
● any changes to Article 14, paragraph 1 specifying advance notice of proposal requirements;
● any changes to Article 18 specifying vote requirements for resolutions and elections;
● any changes to Article 20, paragraph 2 specifying supermajority vote requirements;
● any changes to Article 21 specifying quorum requirements;
● any changes to Article 22 specifying the number of members of the board of directors;
● any changes to Article 23 specifying the term of the board of directors; and
● any changes to Article 24 specifying the organization of the board of directors and the indemnification
provisions for directors and officers.
Our Articles of Association require the affirmative vote of holders of the number of our shares at least equal to the sum
of (A) two-thirds of the number of all shares outstanding and entitled to vote at a general meeting, plus (B) a number
of shares outstanding and entitled to vote at the general meeting that is equal to one-third of the number of shares held
by an interested shareholder, for us to engage in any business combination with an interested shareholder (as those
terms are defined in our Articles of Association) and for the amendment of the provisions in our Articles of
Association relating to this shareholder approval requirement.
Quorum for General Meetings
The presence of shareholders, in person or by proxy, holding at least a majority of the shares entitled to vote at the time
when the general meeting proceeds to business is generally the required presence for a quorum for the transaction of
business at a general meeting of shareholders. However, the presence of shareholders, in person or by proxy, holding at
least two-thirds of the share capital recorded in the commercial register at the time when the general meeting proceeds
to business is the required presence for a quorum to adopt a resolution to amend, vary, suspend the operation of or
cause any of the following provisions of our Articles of Association to cease to apply:
8
● Article 18—which relates to proceedings and procedures at general meetings;
● Article 19(g)—which relates to business combinations with interested shareholders;
● Article 20—which sets forth the level of shareholder approval required for certain matters;
● Article 21—which sets forth the quorum at a general meeting required for certain matters, including the
removal of a serving member of the board of directors; and
● Articles 22, 23 and 24—which relate to the size and the organization of the board of directors, the term of
directors and the indemnification provisions for directors and officers.
Additionally, shareholders present, in person or by proxy, holding at least two-thirds of the share capital recorded in
the commercial register at the time when the general meeting proceeds to business constitute the required presence for
a quorum at a general meeting to adopt a resolution to remove a serving director.
Under the Swiss Code, the board of directors has no authority to waive quorum requirements stipulated in the Articles
of Association.
Inspection of Books and Records
Under the Swiss Code, a shareholder has a right to inspect the share register with regard to his, her or its own shares
and otherwise to the extent necessary to exercise his, her or its shareholder rights. No other person has a right to
inspect the share register. The books and correspondence of a Swiss company may be inspected with the express
authorization of the general meeting of shareholders or by resolution of the board of directors and subject to the
safeguarding of the company’s business secrets. At a general meeting of shareholders, any shareholder is entitled to
request information from the board of directors concerning the affairs of the company. Shareholders may also ask the
auditor questions regarding its audit of the company. The board of directors and the auditor must answer shareholders’
questions to the extent necessary for the exercise of shareholders’ rights and subject to prevailing business secrets or
other of our material interests.
Special Investigation
If the shareholders’ inspection and information rights as outlined above prove to be insufficient, any shareholder may
propose to the general meeting of shareholders that a special independent commissioner investigate specific facts in a
special investigation. If the general meeting of shareholders approves the proposal, we or any shareholder may, within
30 calendar days after the general meeting of shareholders, request the court at our registered office to appoint a
special commissioner. If the general meeting of shareholders rejects the request, one or more shareholders representing
at least 5% of the share capital or the votes may request, within three months after the general meeting, the court to
appoint a special independent commissioner. The court will issue such an order if the petitioners can demonstrate
prima facie that the board of directors, any member of our board of directors or one of our officers infringed the law or
our Articles of Association and thereby damaged the company or the shareholders. The costs of the investigation
would generally be allocated to us and only in exceptional cases to the petitioners.
Compulsory Acquisitions; Appraisal Rights
Swiss companies that undertake business combinations and other transactions that are binding on all shareholders are
governed by the Merger Act. A statutory merger or demerger requires that at least two-thirds of the shares and a
majority of the par value of the shares, each as represented at the general meeting of shareholders, vote in favor of the
transaction. Under the Merger Act, a “demerger” may take two forms:
● a legal entity may divide all of its assets and transfer such assets to other legal entities, with the
shareholders of the transferring entity receiving equity securities in the acquiring entities and the
transferring entity dissolving upon deregistration in the commercial register; or
9
● a legal entity may transfer all or a portion of its assets to other legal entities, with the shareholders of the
transferring entity receiving equity securities in the acquiring entities.
If a transaction under the Merger Act receives all of the necessary consents, all shareholders would be compelled to
participate in the transaction. See “—Voting” above.
Swiss companies may be acquired by an acquirer through the direct acquisition of the share capital of the Swiss
company. With respect to corporations limited by shares, such as Transocean, the Merger Act provides for the
possibility of a so-called “cash-out” or “squeeze-out” merger if the acquirer controls 90% of the outstanding shares. In
these limited circumstances, minority shareholders of the company being acquired may be compensated in a form
other than through shares of the acquiring company (for instance, through cash or securities of a parent company of the
acquiring company or of another company). For business combinations effected in the form of a statutory merger or
demerger and subject to Swiss law, the Merger Act provides that if the equity rights have not been adequately
preserved or compensation payments in the transaction are unreasonable, a shareholder may request the competent
court to determine a reasonable amount of compensation.
In addition, under Swiss law, the sale of “all or substantially all of our assets” by us may require a resolution of the
general meeting of shareholders passed by holders of at least two-thirds of the voting rights and a majority of the par
value of the shares, each as represented at the general meeting of shareholders. Whether or not a shareholder resolution
is required depends on the particular transaction, including whether the following test is satisfied:
● the company sells a core part of its business, without which it is economically impracticable or
unreasonable to continue to operate the remaining business;
● the company’s assets, after the divestment, are not invested in accordance with the company’s statutory
business purpose; and
● the proceeds of the divestment are not earmarked for reinvestment in accordance with the company’s
business purpose but, instead, are intended for distribution to shareholders or for financial investments
unrelated to the company’s business.
If all of the foregoing apply, a shareholder resolution would likely be required.
Legal Name; Formation; Fiscal Year; Registered Office
Transocean was initially formed on August 18, 2008. It is incorporated and domiciled in Steinhausen, Canton of Zug,
Switzerland, and operates under the Swiss Code as a stock corporation (Aktiengesellschaft). Transocean is recorded in
the Commercial Register of the Canton of Zug with the registration number CHE-114.461.224. Transocean’s fiscal
year is the calendar year.
The address of Transocean’s registered office is Transocean, Turmstrasse 30, 6312 Steinhausen, Switzerland, and the
telephone number at that address is +41 (0)41 749 0500.
Corporate Purpose
Transocean is the parent holding company of the Transocean group. Pursuant to its Articles of Association, its business
purpose is to acquire, hold, manage, exploit and sell, whether directly or indirectly, participations in businesses in
Switzerland and outside of Switzerland, in particular in businesses that are involved in offshore contract drilling
services for oil and gas wells, oil and gas drilling management services, drilling engineering services and drilling
project management services and oil and gas exploration and production activities, and to provide financing for this
purpose. Transocean may acquire, hold, manage, mortgage and sell real estate and intellectual property rights in
Switzerland and outside of Switzerland.
Duration and Liquidation
10
Our Articles of Association do not limit our duration. Under Swiss law, we may be dissolved at any time by a
resolution adopted at a general meeting of shareholders, which must be passed by the affirmative vote of holders of at
least two thirds of voting rights and an absolute majority of the par value of the shares, each as represented (in person
or by proxy) at the general meeting. Dissolution and liquidation by court order is possible if (1) we become bankrupt
or (2) shareholders holding at least 10% of our share capital so request for valid reasons. Under Swiss law, any surplus
arising out of liquidation (after the settlement of all claims of all creditors) is distributed in proportion to the paid-up
par value of shares held. The amount exceeding the par value of the share is subject to Swiss withholding tax of 35%.
Our shares carry no privilege with respect to such liquidation surplus.
Uncertificated Shares
Our shares have been issued in uncertificated form in accordance with article 973c of the Swiss Code as uncertificated
securities, which have been registered with Computershare, and constitute intermediated securities within the meaning
of the Swiss Federal Act on Intermediated Securities. In accordance with article 973c of the Code, Transocean
maintains a register of uncertificated securities (Wertrechtebuch).
Stock Exchange Listing
Our shares are listed and trade on the NYSE under the symbol “RIG.”
No Sinking Fund
The shares have no sinking fund provisions.
No Liability for Further Calls or Assessments
The shares that have been issued to date are duly and validly issued, fully paid and nonassessable.
No Redemption and Conversion
The shares are not convertible into shares of any other class or series or subject to redemption either by us or the
holder of the shares.
Transfer and Registration of Shares
We have not imposed any restrictions applicable to the transfer of our shares, other than the requirement that an
acquirer of shares expressly declares to have acquired the shares in its own name and for its own account. Our share
register is maintained by Computershare, which acts as transfer agent and registrar. The share register reflects only
record owners of our shares. Swiss law does not recognize fractional share interests.
Description of the 2023 Exchangeable Bonds
Introductory note: The following is a description of the Exchangeable Bonds as of December 31, 2022. The
Exchangeable Bonds were subsequently repaid as of their maturity date of January 30, 2023.
The following is a summary and does not purport to be complete. It is subject to, and qualified by reference to, all of
the provisions of the Exchangeable Bonds and the indenture among Transocean Inc. (“TINC”), as issuer, Transocean
Ltd. (“Transocean”), as guarantor, and Computershare Trust Company, N.A. and Computershare Trust Company of
Canada, as co-trustees, dated January 30, 2018 (the “indenture”). We encourage you to read the indenture for
additional information. In this summary, “we,” “our” and “us” means TINC, as issuer of the Exchangeable Bonds,
and “guarantor” means Transocean, as guarantor of the Exchangeable Bonds, unless, in each case, we indicate
otherwise or the context indicates otherwise. General
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The Exchangeable Bonds are our general unsecured and senior obligations, and are exchangeable into Transocean’s
Shares as described under “—Exchange Rights” below. The Exchangeable Bonds are fully and unconditionally
guaranteed on a senior unsecured basis by the guarantor. The Exchangeable Bonds will mature on January 30, 2023.
The Exchangeable Bonds pay cash interest at an annual rate of 0.5% on the principal amount of the Exchangeable
Bonds to, but excluding, the next scheduled interest payment date until January 30, 2023. Interest is payable semi-
annually in arrears on January 30 and July 30 of each year, to holders of record at the close of business on the
preceding January 15 and July 15, respectively. Accrued interest is computed on the basis of a 360-day year composed
of twelve 30-day months. In the event of the repurchase by us at the option of the holder of an Exchangeable Bond,
interest ceases to accrue on the Exchangeable Bonds under the terms of and subject to the conditions of the indenture.
Any amounts on the Exchangeable Bonds that are payable but not punctually paid or provided for (“defaulted
amounts”) will cease to be payable to the holder of the Exchangeable Bonds on the relevant payment date but will
accrue interest per annum at the rate borne by the Exchangeable Bonds, subject to applicable law, from, and including,
the relevant payment date. We may elect to pay the defaulted amounts and any interest accrued (i) to the holders of the
Exchangeable Bonds as of the close of business on a special record date, which will be not more than 15 days and not
less than 10 days prior to the date of our proposed payment of such defaulted amounts or (ii) in any other lawful
manner not inconsistent with the requirements of the New York Stock Exchange, or any other securities exchange or
automated quotation system on which the Exchangeable Bonds may be listed or designated for trading.
The indenture does not contain any financial covenants or any restrictions on the payment of dividends, the making of
investments, the incurrence of indebtedness, the granting of liens or mortgages, or the issuance or repurchase of
securities by us. The indenture does not contain any covenants or other provisions to protect holders of the
Exchangeable Bonds in the event of a highly leveraged transaction or a fundamental change, except to the extent
described under “—Exchange Rights—Increased Exchange Rate in Connection with Fundamental Changes” and “—
Repurchase Rights Following Fundamental Change or Tax Event” below.
As of December 31, 2022, approximately $49 million aggregate principal amount of Exchangeable Bonds was
outstanding.
The Exchangeable Bonds are not subject to a sinking fund provision and are not be subject to defeasance or covenant
defeasance under the indenture.
Guarantee
Our obligations under the indenture, including the repurchase obligations resulting from a fundamental change or tax
event, are fully and unconditionally guaranteed, on a senior unsecured basis by the guarantor.
The guarantor’s obligations under the guarantee are limited to the maximum amount as, after giving effect to all other
contingent and fixed liabilities of the guarantor, will result in the guarantor’s obligation under the guarantee not
constituting a fraudulent transfer or conveyance for purposes of any Bankruptcy Law, the Uniform Fraudulent
Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal or state law.
The Exchangeable Bonds are not obligations of, or guaranteed by, any of our or the guarantor’s existing or future
subsidiaries.
Ranking/Additional Debt
The Exchangeable Bonds are our general unsecured obligations and rank:
(1) senior in right of payment to all of our existing and future subordinated indebtedness;
(2) equal in right of payment with all of our existing and future unsecured senior indebtedness;
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(3) effectively junior in right of payment to all of our existing and future secured indebtedness to the extent of the
value of the assets securing such indebtedness; and
(4) structurally subordinated to all secured and unsecured liabilities of our subsidiaries.
The guarantee is a senior unsecured obligation of the guarantor and will rank equally in right of payment with the
guarantor’s other senior unsecured indebtedness from time to time outstanding.
The indenture does not limit the amount of debt that we or any of our subsidiaries may incur or issue, and it does not
restrict transactions between us and our affiliates or dividends and other distributions by us or our subsidiaries. As
described under “—General,” we may issue additional Exchangeable Bonds under the indenture from time to time.
Exchange Rights
General
Unless the Exchangeable Bonds are previously repurchased, holders may exchange their Exchangeable Bonds for
Shares at any time prior to the close of business on the business day immediately preceding the maturity date. The
initial exchange rate of the Exchangeable Bonds is 97.29756 Shares per $1,000 principal amount of Exchangeable
Bonds. The exchange rate is subject to change as described below under “—Increased Exchange Rate in Connection
with a Fundamental Change,” “—Increased Exchange Rate in Connection with a Tax Event” and “—Exchange Rate
Adjustments.” A holder may exchange fewer than all of such holder’s Exchangeable Bonds so long as the portion of
Exchangeable Bonds exchanged is an integral multiple of $1,000 principal amount.
We will satisfy our exchange obligation through delivery by the guarantor of the Shares. See “—Settlement Upon
Exchange.” Upon exchange of an Exchangeable Bond, a holder will not receive any cash payment of interest (unless
such exchange occurs between a regular record date and the interest payment date to which it relates and the
exchanging holder held the Exchangeable Bonds on that record date), and we will not adjust the exchange rate to
account for accrued and unpaid interest. Accordingly, any accrued but unpaid interest will be deemed to be paid in full
upon exchange, rather than cancelled, extinguished or forfeited.
Holders of Exchangeable Bonds at the close of business on a regular record date will receive payment of interest
payable on the corresponding interest payment date notwithstanding the exchange of such Exchangeable Bonds at any
time after the close of business on the applicable regular record date. Exchangeable Bonds surrendered for exchange
by a holder after the close of business on any regular record date but prior to the next interest payment date must be
accompanied by payment of an amount equal to the interest that the holder on the record date is to receive on the
Exchangeable Bonds; provided, however, that no such payment need be made (1) for exchanges following the regular
record date immediately preceding the maturity date, (2) if we have specified a repurchase date following a tax event
or fundamental change that is after a record date and on or prior to the next interest payment date or (3) only to the
extent of overdue interest, if any overdue interest exists at the time of exchange with respect to such Exchangeable
Bonds. No other payments or adjustments for interest will be made upon exchange.
Holders of the Shares issuable upon exchange, if any, will not be entitled to receive any dividends payable to holders
of the Shares as of any record time or date before such Shares are delivered to the holder upon exchange of such
holder’s Exchangeable Bonds.
If a holder has already delivered a repurchase notice as described under “—Repurchase Rights Following Fundamental
Change or Tax Event” with respect to an Exchangeable Bond, the holder may not surrender that Exchangeable Bond
for exchange until the holder has withdrawn the repurchase notice in accordance with the indenture.
Settlement Upon Exchange
To exchange the Exchangeable Bonds, a holder of Exchangeable Bonds in certificated form must deliver an
irrevocable, duly completed exchange notice, together with the certificated security, to the exchange agent along with
appropriate endorsements and transfer documents, if required, and pay any interest and transfer or similar tax, in each
13
case, if required, and a holder of Exchangeable Bonds in global form must comply with the applicable procedures of
the depositary in effect at the time and pay any interest and transfer or similar tax, in each case, if required. The date a
holder satisfies these requirements is called the “exchange date.” The form of exchange notice is attached to the
indenture.
Delivery of the Shares upon exchange will be accomplished by book-entry transfer of the required number of Shares
through The Depository Trust Company, New York, New York (“DTC”). The trustee will initially act as the exchange
agent.
Upon exchange of the Exchangeable Bonds, a holder will receive, for each $1,000 principal amount of Exchangeable
Bonds exchanged, the Shares at the exchange rate in effect on the exchange date. Cash will be delivered in lieu of any
fractional shares. Settlement will occur through the exchange agent on the third business day following the exchange
date (or, if the exchange is in connection with a fundamental change, on the fifth business day following the exchange
date).
The guarantor’s delivery to the holder of the Shares and any cash, if applicable, in settlement as described above will
satisfy our exchange obligation.
Increased Exchange Rate in Connection with a Fundamental Change
If the effective date of any fundamental change occurs prior to the maturity date, and a holder elects to exchange its
Exchangeable Bonds during the period commencing on such effective date and ending on the business day
immediately before the fundamental change repurchase date (the “fundamental change period”), then the guarantor
will increase the exchange rate for the Exchangeable Bonds surrendered for exchange as described below.
We will notify holders of any such fundamental change and the anticipated effective date in accordance with the
procedures outlined in the indenture and described in “—Repurchase Rights Following Fundamental Change or Tax
Event” below.
The increased exchange rate applicable to any exchange in connection with a fundamental change due to a change of
control will be determined as follows:
COCER
COCER
OER
EP
c
t
LFER
LFER
OER
EP
c
t
= OER x (1 +(EP x (c/t))), where
= change of control exchange rate
= exchange rate otherwise applicable, before giving effect to increase
= 22.50%
= the number of days from and including the date of the change of control to but excluding the
maturity date
= the number of days from and including the issue date to but excluding the maturity date
Notwithstanding the foregoing, the increased exchange rate applicable to any exchange in connection with a
fundamental change due to a listing failure event will be determined as follows:
= OER x (1 +(EP x (c/t))), where
= listing failure event exchange rate
= exchange rate otherwise applicable, before giving effect to increase
= 22.50%
= the number of days from and including the date of the listing failure event to but excluding the
maturity date
= the number of days from and including the issue date to but excluding the maturity date
For the avoidance of doubt, if a holder exchanges its Exchangeable Bonds prior to the fundamental change period,
then, whether or not such fundamental change occurs, the holder will not be entitled to an increased exchange rate in
connection with such fundamental change.
14
A “fundamental change” will be deemed to have occurred at such time after the original issuance of the
Exchangeable Bonds when any of the following has occurred:
● a change of control event; or
● a listing failure event.
“Change of control” means the occurrence of any of the following:
A. the sale, lease, transfer, conveyance or other disposition (other than by way of merger, amalgamation or statutory
plan of arrangement or consolidation), in one or a series of related transactions, of all or substantially all of our and our
subsidiaries’ or the guarantor’s and its subsidiaries’ assets, in each case taken as a whole, to any “person” or “group”
(as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) other than to us, the guarantor or one of the
guarantor’s other subsidiaries;
B. the consummation of any transaction (including, without limitation, any merger, amalgamation or statutory plan of
arrangement or consolidation) the result of which is that any “person” or “group” (as such terms are used in Sections
13(d) and 14(d) of the Exchange Act) becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act), directly or indirectly, of more than 50% of the combined voting power of the guarantor’s or our voting
stock or other voting stock into which the guarantor’s or our voting stock is reclassified, consolidated, exchanged or
changed, measured by voting power rather than number of shares;
C. we or the guarantor consolidate, amalgamate, or enter into a statutory plan of arrangement with, or merge with or
into, any “person” (as that term is used in Section 13(d)(3) of the Exchange Act), or any person consolidates,
amalgamates, or enters into a statutory plan of arrangement with, or merges with or into, us or the guarantor, in any
such event pursuant to a transaction in which any of the guarantor’s, our or of such other person’s outstanding voting
stock is converted into or exchanged for cash, securities or other property, other than any such transaction where the
shares of our or the guarantor’s voting stock outstanding immediately prior to such transaction constitute, or are
converted into or exchanged for, voting stock representing more than 50% of the combined voting power of the
surviving person immediately after giving effect to such transaction; or
D. the adoption of a plan relating to the guarantor’s or our liquidation or dissolution.
Notwithstanding the foregoing, any holding company whose only significant asset is our capital stock or any of our
direct or indirect parent companies will not itself be considered a “person” or “group” for purposes of clause B above.
Further, notwithstanding the foregoing, no change of control of the guarantor will be deemed to have occurred if at
least 90% of the consideration for the Shares (excluding cash payments for fractional shares) in the transaction or
transactions otherwise constituting a change of control in respect of the guarantor consist of common stock, ordinary
shares, American Depositary Receipts or equivalent capital stock traded on the New York Stock Exchange, The
NASDAQ Global Select Market or The NASDAQ Global Market, or any successor to any such market, or which will
be so traded when issued or exchanged in connection with the transaction or transactions otherwise constituting a
change of control in respect of the guarantor, and as a result of such transaction or transactions, the Exchangeable
Bonds become exchangeable, upon the conditions for exchange and actual exchange in accordance with the terms
hereof, into such common stock, ordinary shares, American Depositary Receipts or equivalent capital stock.
“Change of control event” means (a) in the case of a change of control in respect of us, on any date during the 60-day
period (which period will be extended so long as the rating of the Exchangeable Bonds is under publicly announced
consideration for a possible downgrade by any of the rating agencies (as defined in the indenture)) (the “trigger
period”) after the earlier of (1) the occurrence of a change of control; or (2) public notice of the occurrence of a
change of control or the intention by us to effect a change of control, (i) in the event the Exchangeable Bonds are rated
investment grade by at least two of the rating agencies prior to such public notice, the rating of the Exchangeable
Bonds by any rating agency shall be below investment grade, (ii) in the event the Exchangeable Bonds are rated below
Investment Grade by at least two of the rating agencies prior to such public notice, the rating of the Exchangeable
Bonds by any rating agency will be decreased by one or more categories or (iii) the Exchangeable Bonds will not be,
or cease to be, rated by at least one of the rating agencies; provided that, in each case, such event is in whole or in part
15
in connection with the change of control and (b) in the case of a change of control in respect of the guarantor, the
effective date of such change of control. Notwithstanding the foregoing, no Change of Control Event will be deemed to
have occurred in connection with any particular Change of Control unless and until such Change of Control has
actually been consummated.
A “listing failure event” will be deemed to have occurred at the time after the Exchangeable Bonds are originally
issued if the Shares (or any other ordinary shares, common shares or American depositary shares underlying the
Exchangeable Bonds) cease to be listed or quoted on any of The New York Stock Exchange, The NASDAQ Global
Select Market or The NASDAQ Global Market (or any of their respective successors) and are not listed or quoted on
one of The New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or any
of their respective successors) concurrently with such cessation.
Increased Exchange Rate in Connection with a Tax Event
If a tax event occurs prior to the maturity date, and a holder elects to exchange its Exchangeable Bonds during the
period commencing on such effective date and ending on the day before the tax event repurchase date (the “tax event
repurchase period”), then the guarantor will increase the exchange rate for the Exchangeable Bonds surrendered for
exchange, as described below.
We will notify holders of any such tax event in accordance with the procedures outlined in the indenture and described
in “—Fundamental Change or Tax Event Requires Us to Repurchase Exchangeable Bonds at the Option of the
Holder” below.
The increase exchange rate applicable to any exchange in connection with a tax event will be determined as follows:
TEER
TEER
OER
EP
c
t
= OER x (1 +(EP x (c/t))), where
= tax event exchange rate
= exchange rate otherwise applicable, before giving effect to increase
= 22.50%
= the number of days from and including the date of the tax event to but excluding the maturity date
= the number of days from and including the issue date to but excluding the maturity date
For the avoidance of doubt, if a holder exchanges its Exchangeable Bonds prior to the tax event repurchase period,
then, whether or not such tax event occurs, the holder will not be entitled to an increased exchange rate in connection
with such tax event.
A “tax event” will be deemed to have occurred if, at any time after the Exchangeable Bonds are originally issued, (x)
we reasonably determine that (A) as a result of (I) any change in or amendment to the laws or treaties (or any
regulations or rulings promulgated thereunder) of any taxing jurisdiction (as defined below), or (II) any change in the
official position regarding the application or interpretation of such laws, treaties, regulations or rulings by any
legislative body, court, governmental agency or regulatory authority, which change or amendment becomes effective
on or after (1) the issue date, in the case of the Cayman Islands or Switzerland, or (2) the date such jurisdiction
becomes a taxing jurisdiction, in the case of any other taxing jurisdiction, we, the guarantor or any such successor, as
applicable, have or will become obligated to pay, on the next succeeding date on which interest is due, additional
amounts pursuant to the indenture with respect to any of the Exchangeable Bonds; or (B) on or after (1) the issue date,
in the case of the Cayman Islands or Switzerland, or (2) the date such jurisdiction becomes a taxing jurisdiction, in the
case of any other taxing jurisdiction, any action has been taken by any taxing authority of, or any decision has been
rendered by a court of competent jurisdiction in a taxing jurisdiction, including any of those actions specified in (A)
above, whether or not such action was taken or such decision was rendered with respect to us, the guarantor or any
such successor, as applicable, or any change, amendment, application or interpretation will be officially proposed,
which in any case, in an opinion of counsel, will result in us, the guarantor or any such successor becoming obligated
to pay, on the next succeeding date on which interest is due, additional amounts with respect to any of the
Exchangeable Bonds, and, in any such case, we or the guarantor, as applicable, in our business judgment, determine
that such obligation cannot be avoided by the use of reasonable measures available to us or the guarantor; and (y) we
provide notice to all holders of the Exchangeable Bonds and the trustee and the paying agent no less than 20, and no
more than 60, days prior to the
16
earliest date on which we or the guarantor would be obligated to withhold tax resulting from the amendment or change
described in (A) or (B) above were a payment in respect of the Exchangeable Bonds then due that we are designating
such amendment or change as a tax event.
We are not obligated to designate any event as a tax event. As a result, any development described in clause (x) of the
preceding paragraph will not constitute a tax event unless we elect, at our option, to designate it as such. If we declare
a tax event, however, and a tax event offer to repurchase pursuant to the indenture, neither we nor the guarantor will
thereafter be required to pay related additional amounts in respect of the Exchangeable Bonds. See “—Tax Additional
Amounts.”
Exchange Rate Adjustments
The exchange rate will be adjusted for certain events, as described below, except that we will not make any
adjustments to the exchange rate if holders of Exchangeable Bonds have the right to participate (other than in the case
of a share split or share combination or a tender or exchange offer), as a result of holding the Exchangeable Bonds, in
any of the transactions described below without having to exchange their Exchangeable Bonds:
(1) If the guarantor exclusively issues the Shares as a dividend or distribution on the Shares, or effects a subdivision or
combination of the outstanding Shares, the exchange rate will be adjusted based on the following formula:
ER’ = ER0
x
OS’
OS0
ER0
ER’
OS0
OS
= the exchange rate in effect immediately prior to the close of business on the record
date of such dividend or distribution, or immediately prior to the open of business on
the date of the subdivision or combination
= the exchange rate in effect immediately after the close of business on such record date
or date of subdivision or combination
= the number of Shares outstanding immediately prior to such subdivision or
combination
= the number of Shares that would be outstanding immediately after giving effect to
such dividend, distribution, subdivision or combination
Any adjustment made under this paragraph (1) will become effective immediately after the close of business on the
record date for such dividend or distribution, or immediately after the open of business on the date for such subdivision
or combination, as applicable. If any dividend or distribution of the type described in this paragraph (1) is declared but
not so paid or made, the exchange rate will be immediately readjusted, effective as of the date the guarantor’s board of
directors determines not to pay such dividend or distribution, to the exchange rate that would then be in effect if such
dividend or distribution had not been declared.
(2) If the guarantor issues to all or substantially all holders of the Shares, rights, options or warrants (other than in
connection with a shareholder rights plan) that allow such holders, for a period ending not more than 45 days after the
announcement date of such issuance, to subscribe for or purchase the Shares at a price per Share that is less than the
average of the last reported sale prices of the Shares for the ten consecutive trading days ending on the business day
immediately preceding the announcement date of such issuance, the exchange rate will be adjusted based on the
following formula:
ER’ = ER0 x
where,
OS0 + X
OS0 + Y
ER0
ER’
OS0
= the exchange rate in effect immediately prior to the close of business on the record
date for such issuance
= the exchange rate in effect immediately after the close of business on such record date
= the number of Shares outstanding immediately prior to the close of business on such
record date
17
X
Y
= the total number of Shares issuable pursuant to such rights, options or warrants
the number of Shares equal to the aggregate price payable to exercise such rights,
options or warrants divided by the average of the last reported sale prices of the
Shares for the ten consecutive trading days ending on the trading day immediately
preceding the announcement of the issuance of such rights, options or warrants
Any increase made under this paragraph (2) will become effective immediately after the close of business on the
record date for such issuance. To the extent that the Shares are not delivered after the expiration of such rights, options
or warrants, the exchange rate will be decreased to be the exchange rate that would then be in effect had the increase
with respect to the issuance of such rights, options or warrants been made on the basis of delivery of only the number
of Shares actually delivered. If such rights, options or warrants are not so issued, the exchange rate will be decreased to
the exchange rate that would then be in effect if such record date for such issuance had not occurred.
(3) If the guarantor distributes the Shares, evidences of its indebtedness, other assets or property of the guarantor or
rights, options or warrants to acquire the Shares or other securities, to all or substantially all holders of the Shares,
excluding (i) dividends, distributions or issuances as to which an adjustment was effected as described in paragraphs
(1) or (2) above, (ii) dividends or distributions paid exclusively in cash as to which an adjustment was effected as
described in paragraph (4) below, and (iii) spin-offs (as defined below) as to which the provisions set forth below in
this paragraph (3) apply (any of such Shares, evidences of indebtedness, other assets or property or rights, options or
warrants to acquire the Shares or other securities, the “distributed property”), then the exchange rate will be
increased based on the following formula:
ER’ = ER0 x
where,
SP0
SP0 - FMV
ER0
ER’
SP0
FMV
= the exchange rate in effect immediately prior to the close of business on the record
date for such distribution;
= the exchange rate in effect immediately after the close of business on such record date;
= the average of the last reported sale prices of the Shares over the 10 consecutive
trading day period ending on, and including, the trading day immediately preceding
the ex-dividend date for the distribution; and
= the fair market value (as determined by the guarantor’s Board of Directors) of the
distributed property with respect to each outstanding Share on the ex-dividend date for
the distribution.
Any increase made as described in this paragraph (3) will become effective immediately after the close of business on
the record date for such distribution. If the distribution is not so paid or made, the exchange rate will be decreased to
the exchange rate that would then be in effect if the distribution had not been declared. Notwithstanding the foregoing,
if the fair market value of the Shares is equal to or greater than SP0, in lieu of the foregoing increase, each holder of
Exchangeable Bonds will receive, in respect of each $1,000 principal amount thereof, at the same time and upon the
same terms as holders of the Shares receive the distributed property, the amount and kind of distributed property such
Holder would have received if the holder owned a number of Shares equal to the exchange rate in effect on the ex-
dividend date for the distribution.
With respect to an adjustment as described in this paragraph (3) where there has been a payment of a dividend or other
distribution on the Shares or shares of capital stock of any class or series, or similar equity interest, of or relating to
one of the guarantor’s subsidiaries or other business units, that are, or, when issued, will be, listed or admitted for
trading on a U.S. national securities exchange (a “spin-off”), the exchange rate will be increased based on the
following formula:
ER’ = ER0 x
where,
FMV0 + MP0
MP0
18
ER0
ER’
FMV0
= the exchange rate in effect immediately prior to the close of business on the record
date for the spin-off;
= the exchange rate in effect immediately after the close of business on the record date
for the spin-off;
= the average of the last reported sale prices of the capital stock or similar equity interest
distributed to holders of the Shares applicable to one Share over the first 10
consecutive trading day period after, and including, the ex-dividend date of the spin-
off (the “valuation period”); and
MP0
= the average of the last reported sale prices of the Shares over the valuation period.
The increase to the exchange rate under the preceding paragraph will occur at the close of business on the record date
for the spin-off; provided that if the relevant exchange date occurs during the valuation period, references to “10” in
the preceding paragraph will be deemed to be replaced with lesser number of trading days as have elapsed from, and
including, the ex-dividend date of the spin-off to, and including, the exchange date in determining the exchange rate.
For purposes of this paragraph (3), rights, options or warrants distributed by the Guarantor to all holders of the Shares
entitling them to subscribe for or purchase shares of the Guarantor’s Capital Stock, including the Shares (either
initially or under certain circumstances), which rights, options or warrants, until the occurrence of a specified event or
events (a “trigger event”): (i) are deemed to be transferred with such Shares; (ii) are not exercisable; and (iii) are also
issued in respect of future issuances of the Shares, will be deemed not to have been distributed for purposes of this
paragraph (3) (and no adjustment to the exchange rate under this paragraph (3) will be required) until the occurrence of
the earliest trigger event, whereupon such rights, options or warrants will be deemed to have been distributed and an
appropriate adjustment (if required) to the exchange rate will be made under this paragraph (3). If any such right,
option or warrant, including any such existing rights, options or warrants distributed prior to the date of the indenture,
are subject to events, upon the occurrence of which such rights, options or warrants become exercisable to purchase
different securities, evidences of indebtedness or other assets, then the date of the occurrence of any and each such
event will be deemed to be the date of distribution and record date with respect to new rights, options or warrants with
such rights (in which case the existing rights, options or warrants will be deemed to terminate and expire on such date
without exercise by any of the holders thereof). In addition, in the event of any distribution (or deemed distribution) of
rights, options or warrants, or any trigger event or other event (of the type described in the immediately preceding
sentence) with respect thereto that was counted for purposes of calculating a distribution amount for which an
adjustment to the exchange rate under this paragraph (3) was made, (1) in the case of any such rights, options or
warrants that have all been redeemed or purchased without exercise by any holders thereof, upon such final
redemption or purchase (x) the exchange rate will be readjusted as if such rights, options or warrants had not been
issued and (y) the exchange rate will then again be readjusted to give effect to such distribution, deemed distribution or
trigger event, as the case may be, as though it were a cash distribution, equal to the per share redemption or purchase
price received by a holder or holders of the Shares with respect to such rights, options or warrants (assuming such
holder had retained such rights, options or warrants), made to all holders of the Shares as of the date of such
redemption or purchase, and (2) in the case of such rights, options or warrants that will have expired or been
terminated without exercise by any holders thereof, the exchange rate will be readjusted as if such rights, options and
warrants had not been issued.
For purposes of paragraphs (1) and (2) above and this paragraph (3), if any dividend or distribution to which this
paragraph (3) is applicable also includes one or both of:
●
●
● a dividend or distribution of the Shares to which paragraph (1) above is
applicable (the “clause A distribution”); or
● a dividend or distribution of rights, options or warrants to which paragraph
(2) above is applicable (the “clause B distribution”),
then, in either case, (1) such dividend or distribution, other than the clause A Distribution and the clause B
Distribution, will be deemed to be a dividend or distribution to which this paragraph (3) is applicable (the “clause C
distribution”) and any exchange rate adjustment required by this paragraph (3) with respect to such clause C
distribution will then be made, and (2) the clause A distribution and clause B distribution will be deemed to
immediately follow the clause C distribution and any exchange rate adjustment required by paragraphs (1) and (2)
above and with respect thereto
19
will then be made, except that, if determined by the guarantor (I) the record date of the clause A distribution and the
clause B distribution will be deemed to be the record date of the clause C distribution and (II) any Shares included in
the clause A distribution or clause B distribution will be deemed not to be “outstanding immediately prior to the close
of business on such record date” within the meaning of paragraph (1) above or “outstanding immediately prior to the
close of business on such record date” within the meaning of paragraph (2) above.
(4) If any cash dividend or distribution is made to all or substantially all holders of Shares, the exchange rate will be
increased based on the following formula:
ER’ = ER0 x
SP0
SP0 - C
where,
ER0
ER’
SP0
C
= the exchange rate in effect immediately prior to the close of business on the record
date for such dividend or distribution;
= the exchange rate in effect immediately after the close of business on the record date
for such dividend or distribution;
= the last reported sale price of the Shares on the trading day immediately preceding the
record date for the ex-dividend or distribution;
= the amount in cash per share the guarantor distributes to all or substantially all holders
of the Shares.
Any increase pursuant to this paragraph (4) will become effective immediately after the close of business on the record
date for such dividend or distribution. If such dividend or distribution is not so paid, the exchange rate will be
decreased, effective as of the date the guarantor’s board of directors determines not to make or pay such dividend or
distribution, to be the exchange rate that would then be in effect if the dividend or distribution had not been declared.
Notwithstanding the foregoing, if C (as defined above) is equal to or greater than SP0 (as defined above), in lieu of the
foregoing increase, each holder of Exchangeable Bonds will receive, for each $1,000 principal amount of
Exchangeable Bonds, at the same time and upon the same terms as holders of the Shares, the amount of cash that the
Holder would have received if the Holder owned a number of the Shares equal to the exchange rate on the ex-dividend
date for the cash dividend or distribution.
(5) If the guarantor or any of its subsidiaries makes a payment in respect of a tender offer (which for the avoidance of
doubt will not include any open market buybacks or purchases that are not tender offers) or exchange offer for the
Shares, to the extent that the cash and value of any other consideration included in the payment per share of
Shares exceeds the average of the last reported sale prices of the Shares over the 10 consecutive trading day period
commencing on, and including, the trading day next succeeding the last date on which tenders or exchanges may be
made pursuant to such tender or exchange offer, the exchange rate will be increased based on the following formula:
ER’ = ER0 x
where,
AC + (SP’ x OS’)
OS0 X SP
ER0
ER’
AC
= the exchange rate in effect immediately prior to the open of business on the trading
day immediately following the trading day next succeeding the date such tender or
exchange offer expires;
= the exchange rate in effect immediately after the open of business on the trading day
immediately following the trading day next succeeding the date such tender or
exchange offer expires;
= the aggregate value of all cash and any other consideration (as determined by the
guarantor’s Board of Directors) paid or payable for the Shares purchased or
exchanged in the tender or exchange offer;
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OS0
OS’
SP
SP’
= the number of Shares outstanding immediately prior to the date such tender or
exchange offer expires (prior to giving effect to the purchase of all the Shares
accepted for purchase or exchange in the tender or exchange offer);
the number of Shares outstanding immediately after the date such tender or exchange
offer expires (after giving effect to the purchase of all the Shares accepted for
purchase or exchange in the tender or exchange offer);
the average of the last reported sale prices of the Shares over the 10 consecutive
trading day period ending on, and including, the trading day immediately preceding
the date the tender or exchange offer expires; and
the average of the last reported sale prices of the Shares over the 10 consecutive
trading day period commencing on, and including, the trading day next succeeding the
date the tender or exchange offer expires.
The increase to the exchange rate under this paragraph (5) will occur at the open of business on the trading day
immediately following the trading day next succeeding the date such tender or exchange offer expires; provided that if
the relevant exchange date occurs during the 10 trading days immediately following, and including, the trading day
next succeeding the expiration date of any tender or exchange offer, references to “10” or “10th” in the preceding
paragraph will be deemed replaced with such lesser number of trading days as have elapsed between the date that such
tender or exchange offer expires and the exchange date in determining the exchange rate as of such trading day.
Except as stated above, the exchange rate will not be adjusted for the issuance of the Shares or any securities
convertible into or exchangeable for the Shares or the right to purchase any of the foregoing.
The guarantor may from time to time, to the extent permitted by law and subject to applicable rules of the New York
Stock Exchange or any exchange on which any of the guarantor’s securities are then listed, increase the exchange rate
of the Exchangeable Bonds by any amount for any period of at least 20 business days. In such case, we will give at
least 15 calendar days’ notice of such increase. We may make such increases in the exchange rate, in addition to those
set forth above, as the guarantor’s board of directors deems advisable or to avoid or diminish any income tax to holders
of our ordinary shares resulting from any dividend or distribution of shares (or rights to acquire shares) or from any
event treated as such for income tax purposes.
Notwithstanding anything in this section to the contrary, we will not be required to adjust the exchange rate unless the
adjustment would result in a change of at least 1% of the exchange rate. However, we will carry forward any
adjustments that are less than 1% of the exchange rate and take them into account when determining subsequent
adjustments.
In addition, without limiting the generality of any other provision of the Exchangeable Bonds, the exchange rate will
not be adjusted:
(1) upon the issuance of any Shares pursuant to any present or future plan providing for the reinvestment of dividends
or interest payable on the guarantor’s securities and the investment of additional optional amounts in the Shares under
any plan;
(2) upon the issuance of any Shares or options or rights to purchase the Shares pursuant to any present or future
employee, director, officer or consultant benefit, compensation or stock purchase plan or program of or assumed by the
guarantor or any of its subsidiaries;
(3) upon the issuance of any Shares pursuant to any option, warrant, right or exercisable, exchangeable or convertible
security not described above and outstanding as of the issue date of the Exchangeable Bonds;
(4) upon the repurchase of any Shares pursuant to an open-market share repurchase program or other buyback
transaction that is not a tender or exchange offer of the type described in paragraph (5) above;
(5) solely for a change in the nominal value of the Shares; or
21
(6) for accrued and unpaid interest, if any.
As a result of any adjustment of the exchange rate, the holders of Exchangeable Bonds may, in certain circumstances,
be deemed to have received a distribution that is treated as a dividend for U.S. federal income tax purposes. In certain
other circumstances, the absence of an adjustment may result in a taxable dividend to the holders of ordinary shares.
Recapitalizations, Reclassifications and Changes of the Shares
If the guarantor is a party to (1) a recapitalization, reclassification or change of the Shares, (2) a consolidation, merger
or combination, (3) a sale, lease or transfer to a third party of the consolidated assets of the guarantor and its
subsidiaries or (4) any statutory share exchange, in each case, as a result of which the Shares would be converted into,
or exchanged for, stock, other securities, other property or assets, then the exchange rights will be changed into a right
to exchange the Exchangeable Bonds into the kind and amount of stock, other securities, other property or assets that a
holder would have been entitled to receive if such holder had held a number of ordinary shares equal to the applicable
exchange rate in effect immediately prior to the transaction (the “reference property”). The amount of cash and any
reference property holders receive will be based on the daily exchange values of reference property and the applicable
exchange rate, as described above.
If an event described in the immediately preceding paragraph causes the Shares to be converted into, or exchanged for,
the right to receive more than a single type of consideration (determined based in part upon any form of shareholder
election), then (i) the reference property into which the Exchangeable Bonds will be exchangeable will be deemed to
be (x) the weighted average of the types and amounts of consideration received by the holders of the Shares that
affirmatively make such an election or (y) if no holders of the Shares affirmatively make such an election, the types
and amounts of consideration actually received by the holders of Shares, and (ii) the unit of reference property for
purposes of the immediately preceding paragraph will refer to the consideration referred to in clause (i) in this
paragraph attributable to one Share.
To the extent that the Exchangeable Bonds become exchangeable into the right to receive cash following an event
described above, interest will not accrue on such cash.
If the transaction also constitutes a fundamental change, a holder can alternatively require us to purchase all or a
portion of such holder’s Exchangeable Bonds as described under “—Repurchase Rights Following Fundamental
Change or Tax Event” below.
Calculations in Respect of the Exchangeable Bonds
We will be responsible for making all calculations called for under the Exchangeable Bonds. These calculations
include, but are not limited to, determinations of the last reported sale prices of the Shares, the accrued interest payable
on the Exchangeable Bonds, the tax event repurchase price, the change of control repurchase price, the listing failure
event repurchase price and the exchange rate of the Exchangeable Bonds. We will make all these calculations in good
faith and, absent manifest error, our calculations shall be final and binding on holders of the Exchangeable Bonds. We
will provide a schedule of our calculations to each of the trustee and the exchange agent, and each of the trustee and
exchange agent is entitled to rely conclusively on the accuracy of our calculations without independent verification.
The trustee will forward our calculations to any holder of the Exchangeable Bonds upon the request of such holder at
our cost and expense.
Repurchase Rights Following Fundamental Change or Tax Event
If we undergo a fundamental change or tax event after the first issuance of the Exchangeable Bonds, each holder will
have the option to require us to purchase its Exchangeable Bonds on a date of our choosing (the “repurchase date”)
that is not less than 60 business days after the fundamental change (or a longer period if required by applicable law). In
the event of a change of control repurchase event, we will pay a purchase price equal to 101% of the principal amount
of the holder’s Exchangeable Bonds plus accrued and unpaid interest up to but excluding the date of purchase (the
“change of control repurchase price”). In the event of a listing failure event or tax event, we will pay a purchase
price equal to 100% of the principal amount of the holder’s Exchangeable Bonds plus accrued and unpaid interest up
22
to but excluding the date of purchase (the “listing failure event repurchase price” or “tax event repurchase price,”
as applicable). However, if the repurchase date is after a record date and on or prior to the corresponding interest
payment date, the interest will be paid on the interest payment date to the holder of record on the record date. A holder
may require us to purchase all or any part of the Exchangeable Bonds so long as the principal amount at maturity of
the Exchangeable Bonds being purchased is an integral multiple of $1,000.
Our ability to repurchase Exchangeable Bonds with cash at any time may be limited by the terms of our then existing
borrowing agreements. The indenture prohibits us from repurchasing Exchangeable Bonds in connection with the
holders’ repurchase rights if any event of default under the indenture has occurred and is continuing, except for a
default in the payment of the repurchase price with respect to the Exchangeable Bonds. If a fundamental change occurs
at a time when we are prohibited from repurchasing the Exchangeable Bonds, we could seek the consent of our lenders
to purchase the Exchangeable Bonds or attempt to refinance the debt. If we do not obtain such consent or we are not
able to refinance the debt, we would not be permitted to repurchase the Exchangeable Bonds. Our existing borrowing
agreements currently do not restrict us from repurchasing the Exchangeable Bonds so long as we remain in compliance
with certain financial covenants.
On or before the 20th calendar day after a fundamental change, we will provide notice to the trustee and to each holder
of the Exchangeable Bonds of the fundamental change which specifies the terms and conditions and the procedures
required for exercise of a holder’s right to require us to repurchase its Exchangeable Bonds. Such notice will specify:
(1) the events causing the fundamental change;
(2) the date of such fundamental change;
(3) the last date by which a holder of Exchangeable Bonds may exercise the repurchase right;
(4) the fundamental change repurchase date;
(5) the change of control repurchase price or the listing failure event repurchase price, as applicable;
(6) the name and address of the paying agent and the exchange agent, if applicable;
(7) the exchange rate and any adjustments to the exchange rate;
(8) that Exchangeable Bonds with respect to which a fundamental change purchase notice is given by the holder may
be exchanged only if the fundamental change purchase notice has been withdrawn in accordance with the terms of the
indenture; and
(9) the procedures that holders must follow to exercise these rights.
No less than 20 and no more than 60 days prior to the earliest date on which we would have to withhold tax in
connection with a tax event, we will provide notice to the trustee and to each holder of the Exchangeable Bonds of the
tax event which specifies the terms and conditions and the procedures required for exercise of a holder’s right to
require us to repurchase its Exchangeable Bonds. Such notice will specify:
(1) the events causing the tax event;
(2) the date of such tax event;
(3) the last date by which a holder of Exchangeable Bonds may exercise the repurchase right;
(4) the tax event repurchase date;
(5) the tax event repurchase price;
23
(6) the name and address of the paying agent and the exchange agent, if applicable;
(7) the exchange rate and any adjustments to the exchange rate;
(8) that Exchangeable Bonds with respect to which a tax event purchase notice is given by the holder may be
exchanged only if the tax event purchase notice has been withdrawn in accordance with the terms of the indenture;
(9) the impact of such tax event on our obligation to pay additional amounts; and
(10) the procedures that holders must follow to exercise these rights.
To exercise the repurchase right, a holder of Exchangeable Bonds must deliver, at any time prior to the close of
business on the business day immediately preceding the repurchase date specified in our notice, written notice to the
paying agent of the holder’s exercise of its repurchase right.
The holder may withdraw any written repurchase notice by delivering a written notice of withdrawal to the paying
agent prior to the close of business on the business day immediately preceding the repurchase date that states the
principal amount of the withdrawn Exchangeable Bonds, the certificate number of the Exchangeable Bonds in the case
of a physical bond and the principal amount, if any, of Exchangeable Bonds that remain subject to the original
repurchase notice, which must be in principal amounts of $1,000 or an integral multiple of $1,000.
For purposes of defining a fundamental change:
●
●
●
● the terms “person” and “group” have the meanings given to them in
Sections 13(d) and 14(d) of the Exchange Act or any successor provisions;
● the term “group” includes any group acting for the purpose of acquiring,
holding or disposing of securities within the meaning of Rule 13d-5(b)(1)
under the Exchange Act or any successor provision; and
● the term “beneficial owner” is determined in accordance with Rule 13d-3
under the Exchange Act.
Rule 13e-4 under the Exchange Act, as amended, requires the dissemination of certain information to security holders
if an issuer tender offer occurs and may apply if the repurchase option becomes available to holders of the
Exchangeable Bonds. We will comply with this rule to the extent applicable at that time.
We could, in the future, enter into certain transactions, including certain recapitalizations, that would not constitute a
fundamental change with respect to the fundamental change repurchase feature of the Exchangeable Bonds, but that
would increase the amount of our outstanding indebtedness or the outstanding indebtedness of our subsidiaries.
No Exchangeable Bonds may be repurchased at the option of holders upon a fundamental change if the principal
amount of the Exchangeable Bonds has been accelerated, and such acceleration has not been rescinded, on or prior to
such date (except in the case of an acceleration resulting from our default in the payment of the tax event repurchase
price, the change of control repurchase price or the listing failure event repurchase price).
The fundamental change repurchase feature of the Exchangeable Bonds may in certain circumstances make it more
difficult or discourage a takeover of us or the guarantor. The fundamental change repurchase feature, however, is not
the result of our knowledge of any specific effort to accumulate the Shares, to obtain control of us by means of a
merger, scheme of arrangement, tender offer solicitation or otherwise, or by management to adopt a series of anti-
takeover provisions. Instead, the fundamental change repurchase feature is a standard term contained in securities
similar to the Exchangeable Bonds, is limited to specified transactions and may not include other events that might
adversely affect our or the guarantor’s financial condition or results of operations.
Consolidation, Merger and Sale of Assets
24
● We have agreed, for so long as any Exchangeable Bonds remain
outstanding, that we will not consolidate with or merge into any entity, or
transfer or dispose of all or substantially all of our assets to any entity,
unless, among certain other requirements:
● either (a) we or the guarantor is the continuing entity or (b) the continuing
entity is organized under the laws of the United States, the District of
Columbia, the Cayman Islands, Bermuda, the British Virgin Islands,
Cyprus, the Kingdom of the Netherlands, the Grand Duchy of Luxembourg,
England, Scotland, Wales, Ireland, or any other jurisdiction that does not
adversely affect the rights of any Holder under the indenture in any material
respect;
● immediately after giving effect to such transaction or series of transactions,
no default or event of default will have occurred and be continuing or would
result therefrom; and
● the successor (if not us or the guarantor) expressly assumes our or the
guarantor’s, as applicable, covenants and obligations under the indenture.
●
●
●
●
Additional Covenants
The covenants summarized below will apply to the Exchangeable Bonds.
Ownership of the Company
The guarantor will continue to own (directly or indirectly) 100% of our common equity.
Covenants with Respect to the Shares
The guarantor will keep available at all times (a) conditional share capital to issue and/or (b) the Shares held in
treasury by the guarantor or any of its subsidiaries to deliver to holders of the Exchangeable Bonds the full number of
Shares issuable or deliverable, as applicable, upon exchange of the Exchangeable Bonds, which Shares will not be
subject by law to preemptive rights and in respect of which no contractual preemptive rights will be granted. The
guarantor will cause the person in whose name any Shares will be issuable upon exchange to be effectively treated as a
stockholder of record of such Shares for purposes of any dividends or distribution payable on the Shares as of the close
of business on the relevant exchange date.
The guarantor will not alter its share capital or amend its articles of association if and to the extent such alteration or
amendment would have the effect of preventing, hindering or impairing the right of holders of the Exchangeable
Bonds to exchange their Exchangeable Bonds for the Shares.
The guarantor undertakes to and covenants with the trustee that in the event of our failing to comply with our
obligations pursuant to the provisions described under “—Exchange Rights—Settlement Upon Exchange” above, the
guarantor will cause us to comply with such obligations.
Required Information
At any time we and the guarantor are not subject to Sections 13 or 15(d) of the Exchange Act, we will, so long as any
of the Exchangeable Bonds or the Shares constitute “restricted securities” within the meaning of Rule 144(a)(3) under
the Securities Act, promptly provide to any holder, beneficial owner or prospective purchaser of such Exchangeable
Bonds or any such Shares, upon written request, the information required to be delivered pursuant to Rule 144A(d)(4)
under the Securities Act (or any other provision of Rule 144A, as such rule may be amended from time to time), to
facilitate the resale of such Exchangeable Bonds or the Shares pursuant to Rule 144A under the Securities Act, as such
rule may be amended from time to time.
We and the guarantor will file with the trustee within fifteen days after the same are required to be filed with the SEC,
copies of any documents or reports that we are required to file with the SEC pursuant to Section 13 or 15(d) of the
25
Exchange Act (giving effect to any grace period provided by Rule 12b-25 under the Exchange Act). Any such
document or report that we or the guarantor files with the SEC via the SEC’s EDGAR system will be deemed to be
filed with the trustee for purposes of this paragraph at the time such documents are filed via the EDGAR system.
Delivery of such reports, documents and information to the trustee is for informational purposes only, and the trustee’s
receipt of such shall not constitute constructive notice of any information contained therein or determinable from
information contained therein, including our compliance with any of our covenants (as to which the trustee is entitled
to rely exclusively on officers’ certificates). The trustee shall not be obligated to monitor or confirm, on a continuing
basis or otherwise, our compliance with this required information covenant or the posting of any reports, documents
and information on the EDGAR system or any website.
Events of Default
Each of the following will constitute an event of default under the indenture:
● we or the guarantor defaults in the payment of interest on any Exchangeable Bond when
due and payable, and the default continues for a period of 30 days;
● we or the guarantor defaults in the payment of the principal (including the tax event
repurchase price, change of control repurchase price or listing failure event repurchase
price, if applicable) of, or premium on, any Exchangeable Bond when due and payable at
maturity, upon required repurchase or otherwise;
●
●
●
●
●
●
● we or the guarantor fails to comply with our respective obligations to
exchange the Exchangeable Bonds in accordance with the indenture upon
exercise of a holder’s exchange right;
● we or the guarantor fails to make an offer in connection with a fundamental
change or tax event in accordance with the indenture;
● we or the guarantor fails to comply with any covenant or agreement in the
indenture and such default or breach continues for 90 days after we have
been given written notice specifying such default or breach and requiring it
to be remedied in accordance with the indenture;
● the occurrence of a listing failure event;
● certain events involving bankruptcy, insolvency or liquidation of us or the
guarantor; and
● the guarantee ceases to be in full force and effect or is declared null and
void in a judicial proceeding, or the guarantor denies or disaffirms its
obligations under the indenture.
If an event of default described above will occur and be continuing, the trustee or the holders of at least 25% in
aggregate principal amount of the Exchangeable Bonds then outstanding may declare the Exchangeable Bonds due and
payable at their principal amount together with accrued interest, and thereupon the trustee may, at its discretion,
proceed to protect and enforce the rights of the holders of Exchangeable Bonds by appropriate judicial proceedings.
Such declaration may be rescinded and annulled with the written consent of the holders of a majority in aggregate
principal amount of the Exchangeable Bonds then outstanding on behalf of all holders of Exchangeable Bonds, subject
to the provisions of the indenture. Notwithstanding the foregoing, no such waiver or rescission and annulment will
extend to affect any default or event of default resulting from (i) the nonpayment of the principal (including the change
of control repurchase price, the listing failure event repurchase price or the tax event repurchase price, if applicable) of,
or accrued and unpaid interest on, any Exchangeable Bonds, (ii) failure to repurchase any Exchangeable Bonds when
required or (iii) a failure to pay or deliver, as the case may be, the consideration due upon exchange of the
Exchangeable Bonds. Further, notwithstanding the foregoing, the guarantor’s failure to own (directly or indirectly)
100% of the common equity of us shall constitute an event of default immediately upon such event.
26
Tax Additional Amounts
We and the guarantor, or any such successor, as applicable, will pay any amounts due with respect to the Exchangeable
Bonds without deduction or withholding for any and all present and future withholding taxes, levies, imposts and
charges (a “withholding tax”) imposed by or for the account of the Cayman Islands, Switzerland or any other
jurisdiction in which we or the guarantor, or any such successor, as applicable, are resident for tax purposes or any
political subdivision or taxing authority of such jurisdiction (the “taxing jurisdiction”), unless such withholding or
deduction is required by law. If such deduction or withholding is at any time required, we or the guarantor, or any such
successor, as applicable, will (subject to compliance by you with any relevant administrative requirements) pay you
additional amounts as will result in your receipt of such amounts as you would have received had no such withholding
or deduction been required.
If the taxing jurisdiction requires us to deduct or withhold any of these taxes, levies, imposts or charges, we or the
guarantor, or any such successor, as applicable, will (subject to compliance by the holder of Exchangeable Bonds with
any relevant administrative requirements) pay these additional amounts in respect of principal amount, redemption
price, repurchase price and interest (if any), in accordance with the terms of the Exchangeable Bonds and the
indenture, as may be necessary so that the net amounts paid to the holder or the trustee after such deduction or
withholding will equal the principal amount, redemption price, repurchase price and interest (if any), on the
Exchangeable Bonds. However, none of us or the guarantor, or any such successor, as applicable, will pay additional
amounts in the following instances:
(1) if any withholding would not be payable or due but for the fact that (1) the holder (or a fiduciary, settlor,
beneficiary of, member or shareholder of, the holder, if the holder is an estate, trust, partnership or corporation), is a
domiciliary, national or resident of, or engaging in business or maintaining a permanent establishment or being
physically present in, the taxing jurisdiction or otherwise having some present or former connection with the taxing
jurisdiction other than the holding or ownership of the Exchangeable Bonds or the collection of principal amount,
redemption price, repurchase price and interest (if any), in accordance with the terms of the Exchangeable Bonds and
the indenture, or the enforcement of the Exchangeable Bonds or (2) where presentation is required, the Exchangeable
Bonds were presented more than 30 days after the date such payment became due or was provided for, whichever is
later,
(2) if any withholding tax would not have been imposed but for the failure to comply with certification, information,
documentation or other reporting requirements concerning the nationality, residence, identity or connections with the
relevant tax authority of the holder or beneficial owner of the Exchangeable Bonds, if this compliance is required by
statute or by regulation as a precondition to relief or exemption from such withholding tax,
(3) if any withholding tax would not be payable but for a tax event and we have made a tax event offer to repurchase
pursuant to the indenture, or
(4) if any withholding tax is required to be made in respect of payments made to holders of the Exchangeable Bonds
resident in Switzerland (including any holders of Exchangeable Bonds who fail to provide required certification,
documentation or other information establishing residence outside of Switzerland) pursuant to laws enacted by
Switzerland providing for the taxation of payments according to principles similar to those laid down in the draft
legislation of the Swiss Federal Council of December 17, 2014, or otherwise changing the Swiss federal withholding
tax system from an issuer-based system to a paying agent-based system to which a person other than the issuer is
required to withhold tax on any interest payment, or any combination of the instances described in the preceding bullet
points.
Notwithstanding anything herein to the contrary, if a holder does not elect to exchange, or cause repurchase of, its
Exchangeable Bonds following a tax event, none of us or the guarantor, or any such successor, as applicable, will be
required to pay additional amounts with respect to payments made in respect of such Exchangeable Bonds following
the tax event repurchase date, and all subsequent payments in respect of such Exchangeable Bonds will be subject to
any tax required to be withheld or deducted under the laws of a relevant taxing jurisdiction. The obligation to pay
additional amounts to any such holder for payments made on or in periods prior to the tax event repurchase date will
remain subject to the exceptions described above.
Satisfaction and Discharge
27
When (a)(i) all outstanding Exchangeable Bonds have been delivered to the trustee for cancellation; or (ii) we or the
guarantor has deposited with the trustee or delivered to holders, as applicable, after the Exchangeable Bonds have
become due and payable, whether on the maturity date, any tax event repurchase date, any fundamental change
repurchase date, upon exchange or otherwise, cash, the Shares, and any cash in lieu of fractional Shares, solely to
satisfy the guarantor’s exchange obligation, sufficient, without consideration of any reinvestment of interest, to pay all
of the outstanding Exchangeable Bonds and all other sums due and payable under the indenture by us and the
guarantor; and (b) we have delivered to the trustee an officers’ certificate and an opinion of counsel, each stating that
all conditions precedent for the satisfaction and discharge of the indenture have been complied with, then the indenture
will cease to be of further effect with respect to the Exchangeable Bonds.
Amendments to the Indenture
With the consent of the holders of at least a majority of the aggregate principal amount of the Exchangeable Bonds
then outstanding, we, the guarantor and the trustee may enter into supplemental indentures for the purpose of
modifying or amending any of the provisions of the indenture or any supplemental indentures thereto, or of modifying
in any manner the rights of the holders hereunder or thereunder; provided, however, that, without the consent of each
holder of an outstanding Exchangeable Bond affected, no such supplemental indenture shall:
●
●
●
● reduce the principal amount of the then outstanding Exchangeable Bonds whose
holders must consent to an amendment, supplement or waiver;
● reduce the principal of or change the fixed maturity of any Exchangeable Bonds;
● reduce the rate of or change the time for payment of interest on any Exchangeable
Bond;
● make any change that adversely affects the exchange rights or tax event or fundamental
change repurchase rights of the Exchangeable Bonds;
● waive a default or event of default in the payment or delivery, as the case may be, of (i) the
principal (including the tax event repurchase price, the change of control repurchase price or
the listing event repurchase price, if any) of, (ii) interest on or (iii) any consideration due upon
exchange of, the Exchangeable Bonds (except a rescission of acceleration of the
Exchangeable Bonds by the holders of at least a majority in aggregate principal amount of the
then outstanding Exchangeable Bonds and a waiver of the payment default that resulted from
such acceleration);
●
●
●
●
●
●
● make any Exchangeable Bond payable in money other than that stated in the
Exchangeable Bond;
● make any change in the provisions of the indenture relating to waivers of past
defaults or the rights of holders of Exchangeable Bonds to receive payments of
principal of, or interest or premium, if any, on the Exchangeable Bonds;
● adversely alter any of the provisions with respect to a repurchase of the
Exchangeable Bonds upon a tax event or fundamental change or waive any
payment of the tax event repurchase price, the change of control repurchase price
or the listing failure event repurchase price;
● cause the Exchangeable Bonds or the guarantee to become subordinated in right of
payment to any other indebtedness of us or the guarantor, as applicable;
● make any change in the amendment and waiver provisions; or
● release the guarantor from its obligations under the guarantee or the indenture,
except as permitted by the indenture.
28
Further, without requiring the consent of any holders, we, the guarantor and the trustee may enter into supplemental
indentures for one or more of the following purposes:
● to cure any ambiguity or to correct or supplement any provision in the indenture
which may be inconsistent with any other provision in the indenture, provided
such action will not adversely affect the interests of the holders of Exchangeable
Bonds in any material respect;
● to provide for uncertificated Exchangeable Bonds in addition to or in place of
physical bonds or to alter the provisions of the indenture regarding the form of
the Exchangeable Bonds (including the related definitions) in a manner that
does not adversely affect any holder of Exchangeable Bonds in any material
respect;
● to provide for the assumption of our or the guarantor’s obligations to the holders
under the indenture by a successor company as provided for in the indenture;
● to make any change that would provide any additional rights or benefits to the
holders that does not adversely affect the legal rights hereunder of any holder in
any material respect, as determined in good faith by us, as evidenced in an
officers’ certificate, or to surrender any right or power conferred upon us or the
guarantor;
● to evidence and provide the acceptance of the appointment of a successor trustee
pursuant to the terms of the indenture;
● to add an additional guarantor to the Exchangeable Bonds;
● to increase the exchange rate;
● to provide for the issuance of additional Exchangeable Bonds as permitted under
the indenture;
● in connection with any event described under “—Recapitalizations,
Reclassifications and Changes of the Shares,” to provide that the Exchangeable
Bonds are exchangeable into reference property, subject to the provisions of the
indenture, and make such related changes to the terms of the Exchangeable
Bonds to the extent expressly required; or
● to conform the provisions of the indenture of the Exchangeable Bonds to this
“Description of Transocean Exchangeable Bonds.”
●
●
●
●
●
●
●
●
●
●
Global Exchangeable Bonds: Book-Entry Form
The Exchangeable Bonds are represented by one or more global securities. A global security is a special type of
indirectly held security. Each global security is deposited with, or on behalf of, DTC and be registered in the name of a
nominee of DTC.
Investors may hold interests in the Exchangeable Bonds outside the United States through Euroclear or Clearstream if
they are participants in those systems, or indirectly through organizations which are participants in those systems.
Euroclear and Clearstream will hold interests on behalf of their participants through customers’ securities accounts in
Euroclear’s and Clearstream’s names on the books of their respective depositaries which in turn will hold such
positions in customers’ securities accounts in the names of the nominees of the depositaries on the books of DTC. All
securities in Euroclear or Clearstream are held on a fungible basis without attribution of specific certificates to specific
securities clearance accounts.
Ownership of beneficial interests in a global security will be limited to DTC participants (i.e., persons that have
accounts with DTC or its nominee) or persons that may hold interests through DTC participants including Euroclear
and Clearstream. Ownership of beneficial interests in a global security will be shown on, and the transfer of that
29
ownership will be effected only through, records maintained by DTC or its nominee (except with respect to persons
that are themselves DTC participants).
So long as DTC or its nominee is the registered owner of a global security, DTC or the nominee will be considered the
sole owner or holder of the Exchangeable Bonds represented by that global security under the indenture. Except as
described below, owners of beneficial interests in a global security will not be entitled to have Exchangeable Bonds
represented by that global security registered in their names, will not receive or be entitled to receive physical delivery
of Exchangeable Bonds in definitive form and will not be considered the owners or holders of the Exchangeable Bonds
under the indenture. Principal and interest payments on Exchangeable Bonds registered in the name of DTC or its
nominee will be made to DTC or the nominee, as the registered owner. None of us, the guarantor, the trustee, any
paying agent or the registrar for the Exchangeable Bonds will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial interests in a global security or for maintaining,
supervising or reviewing any records relating to such beneficial interests or with respect to delivery to any participant,
member, beneficial owner or other person (other than DTC) of any notice. The laws of some states require that certain
purchasers of securities take physical delivery of such securities in definitive form. Those limits and laws may impair
the ability to transfer beneficial interests in a global security.
We expect that DTC or its nominee, upon receipt of any payment of principal or interest, will credit immediately the
participants’ accounts with payments in amounts proportionate to their beneficial interests in the principal amount of
the relevant global security as shown on the records of DTC or its nominee. We also expect that payments by
participants to owners of beneficial interests in a global security held through those participants will be governed by
standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer
form or registered in “street name,” and will be the responsibility of those participants.
If DTC is at any time unwilling or unable to continue as a depositary and a successor depositary is not appointed by us
within 90 days, we will issue Exchangeable Bonds in definitive form in exchange for the entire global security for the
Exchangeable Bonds. In addition, we may at any time choose not to have Exchangeable Bonds represented by a global
security and will then issue Exchangeable Bonds in definitive form in exchange for the entire global security relating
to the Exchangeable Bonds. In any such instance, an owner of a beneficial interest in a global security will be entitled
to physical delivery in definitive form of Exchangeable Bonds represented by the global security equal in principal
amount to that beneficial interest and to have the Exchangeable Bonds registered in its name. Exchangeable Bonds so
issued in definitive form will be issued as registered Exchangeable Bonds in minimum denominations of $1,000 and
integral multiples thereof, unless otherwise specified by us.
Meetings of Holders
Meetings of holders of Exchangeable Bonds may be called at any time for any of the following purposes:
● to give any notice to us or to the trustee or to give any directions to the trustee
permitted under the indenture, or to consent to the waiving of any default or
event of default under the indenture and its consequences, or to take any other
action authorized to be taken by holders of Exchangeable Bonds in respect of
an event of default or remedy in respect of an event of default;
● to remove the trustee and nominate a successor trustee pursuant to the
indenture;
● to consent to the execution of an indenture or supplemental indenture
amending or modifying the indenture; or
● to take any other action authorized to be taken by or on behalf of the holders of
any specified aggregate principal amount of Exchangeable Bonds under any
other provision of the indenture.
●
●
●
●
Calls of Meetings
30
The trustee may at any time call a meeting of holders of Exchangeable Bonds to take any action specified above, to be
held at such time and place as the trustee will determine. Notice of every meeting of holders of Exchangeable Bonds,
setting forth the time and place of such meeting and in general terms the action proposed to be taken at such meeting
and the establishment of any record date, will be delivered to holders of Exchangeable Bonds. Such notice will also be
delivered to us, not less than 20 or more than 90 days prior to the date fixed for the meeting.
Any meeting of holders of Exchangeable Bonds will be valid without notice if the holders of all Exchangeable Bonds
then outstanding are present in person or by proxy or if notice is waived before or after the meeting by the holders of
all Exchangeable Bonds then outstanding, and if we and the trustee are either present by duly authorized
representatives or have, before or after the meeting, waived notice.
In case at any time we or the holders of at least 25% of the aggregate principal amount of the Exchangeable Bonds
then outstanding will have requested the trustee to call a meeting of holders of Exchangeable Bonds, by written request
setting forth in reasonable detail the action proposed to be taken at the meeting, and the trustee will not have delivered
the notice of such meeting within 20 days after receipt of such request, then we or such holders may determine the
time and the place for such meeting and may call such meeting to take any action described above, by delivering notice
thereof as provided in this section.
Qualifications for Voting
To be entitled to vote at any meeting of holders, a person must (a) be a holder of one or more Exchangeable Bonds on
the record date pertaining to such meeting and (b) be a person appointed by an instrument in writing as proxy by a
holder of one or more Exchangeable Bonds on the record date pertaining to such meeting. The only persons entitled to
be present or to speak at any meeting of holders will be the persons entitled to vote at such meeting and their counsel,
any representatives of the trustee and its counsel and any of our representatives and our counsel.
Notices
Any notice or communication delivered or to be delivered to a holder of Exchangeable Bonds, so long as the
Exchangeable Bonds remain in global form, will be delivered in accordance with the applicable procedures of the
depositary and shall be sufficiently given to it if so delivered within the time prescribed. Notices to holders of
Exchangeable Bonds in certificated form will be given by mail to the holder’s address as it appears in the
Exchangeable Bonds register.
Information Regarding the Co-Trustees
Computershare Trust Company, N.A. and Computershare Trust Company of Canada are co-trustees under the
indenture governing the Exchangeable Bonds. Computershare Trust Company, N.A. has also been appointed by us as
paying agent, exchange agent, registrar and custodian with regard to the Exchangeable Bonds. The trustee and its
affiliates provide and may from time to time in the future provide banking and other services to us in the ordinary
course of their business.
Governing Law
The indenture and the Exchangeable Bonds are governed by, and construed in accordance with, the law of the State of
New York.
31
Exhibit 10.50
Transocean Ltd. 2015 Long-Term Incentive Plan
(As Amended and Restated Effective May 27, 2021)
Appendix A to Award Letter
Terms and Conditions of Awards
February 9, 2023
To the extent you are granted an award of (1) Performance Units and (2) Restricted
Share Units (the award of the Performance Units and Restricted Share Units together,
the “Awards”) under the Transocean Ltd. 2015 Long-Term Incentive Plan, as amended
and restated effective May 27, 2021 (the “Plan”) effective as of the date indicated
above (the “Grant Date”), the target number of Performance Units and the number of
shares of Restricted Share Units subject to such grant is set forth in an award letter to
you (the “Award Letter”). Any such Award is subject to the terms and conditions set
forth in the Plan, the Prospectus for the Plan, any rules and regulations adopted by the
Committee, and the additional terms and conditions set forth in this Appendix A which
forms а part of your Award Letter. Any terms used in the Award Letter or this Appendix
A and not defined herein have the meanings set forth in the Plan. The terms and
provisions of your Award are governed by the terms of the Plan as effective May 27,
2021, and amended from time to time thereafter. In the event there is an inconsistency
between the terms of the Plan and the Award Letter, the terms of the Plan will control.
Section I.
PERFORMANCE UNITS
1.
Determination of Earned Performance Units
(a)
Total Target Performance Unit Grant
For purposes of the Award Letter (including this Appendix A), the term
“Total Target Performance Units” shall mean the total number of target
Shares (or other consideration) that may be issued to you in respect of
the achievement of certain performance standards as described herein,
subject to the terms and conditions hereof.
(b)
Earned Performance Units
The exact number of Performance Units that will actually be earned by
and issued to you and subject to the vesting described in Section I.2 (the
“Earned Performance Units”) will be based upon the achievement by the
Company of the performance standard, as described in this Section
I.1(b). The performance standard shall be measured for (1) the three
calendar year periods ending December 31, 2023, December 31, 2024
and December 31, 2025 (each a “Calendar Performance Period”), and
(2) the cumulative period beginning January 1, 2023 and ending
December 31, 2025 (the “Cumulative Performance Period”).
After the conclusion of each of the Calendar Performance Periods, and
at the conclusion of the Cumulative Performance Period, the Committee
will make a determination as to the number of Earned Performance
Units based on the Company’s relative performance on total shareholder
return (“TSR”) as
Appendix A
to any adjustment
compared against a peer group (as identified in Exhibit A) over the
respective Calendar Performance Period and
the Cumulative
Performance Period, and at the conclusion of each Calendar and
the Committee will make a
Cumulative Performance Period
determination as
the number of Earned
Performance Units based on the Company’s absolute performance on
TSR. The determination by the Committee with respect to the
achievement of absolute and relative TSR will be made in the first sixty
days following the end of the respective Calendar and Cumulative
Performance Period after all necessary Company and peer information
is available. The specific date on which such determination is formally
made and approved by
the
“Determination Date”. After the Determination Date, the Company will
notify you of the number of Earned Performance Units, if any.
the Committee
is referred
to as
to
More detailed definitions for TSR and the methodology for determining
the Earned Performance Units are incorporated herein as Exhibit A.
(c)
Committee Determinations
The Committee shall have absolute discretion to determine the number
of Earned Performance Units to which you are entitled, if any, including
without limitation such adjustments as may be necessary in the opinion
of the Committee to account for changes since the date of the Award
Letter. The Committee’s determination shall be final, conclusive and
binding upon you. You shall not have any right or claim with respect to
any units other than Earned Performance Units to which you become
entitled in accordance with this Appendix A.
2.
Vesting
(a)
(b)
Unless vested on an earlier date as provided in this Appendix A, the
Earned Performance Units will be vested on December 31, 2025,
subject to your continued employment through that date.
In certain circumstances more particularly described in Sections I.5 and
I.6 below, your Earned Performance Units may vest before the date set
forth in Section I.2(a). In addition, the Committee may accelerate the
vesting of all or a portion of your Earned Performance Units at any time
in its discretion.
(c)
You do not need to pay any purchase price for the Earned Performance
Units unless otherwise required in accordance with applicable law.
3.
Restrictions
Until and unless you vest in your Earned Performance Units and receive a
distribution of Shares, you do not own any of the Shares potentially subject to
this performance award and may not attempt to sell, transfer, assign or pledge
any such Shares. After the Cumulative Performance Period has ended and all
Earned Performance Units are determined, the net Shares (total Shares
distributable in respect of vested Earned Performance Units minus any Shares
retained by the Company in accordance with the policies and requirements
described in Section IV.4) will be delivered on March 15,
Appendix A
-2-
2026 in street name to your brokerage account (or, in the event of your death, to
a brokerage account in the name of your beneficiary under the Plan) with the
broker retained by the Company for such purpose (the “Broker”). Any Shares
distributed to you in respect of vested Earned Performance Units will be
registered
to any restrictions.
Notwithstanding the foregoing, the number of Shares distributed to you will be
subject to the number of Shares that remain available for issuance under
Paragraph 5 of the Plan, as amended, and the Committee may make such
adjustment as it deems appropriate to the number of Shares distributed to
reflect any limitation on Shares available.
in your name and will not be subject
4.
Dividend Equivalents, Dividends and Voting
(a)
(b)
(c)
Vested Earned Performance Units. In the event that dividends are
paid with respect to Shares such that the applicable record date for such
dividends occurs during the period beginning on the Grant Date and
ending on the date you receive a distribution of Shares in satisfaction of
your vested Earned Performance Units, you will be entitled to receive a
cash payment equal to the amount of the dividend paid per Share as of
each such dividend payment date multiplied by the number of vested
Earned Performance Units (the “Earned Dividend Equivalent”). You will
have no right to receive any payment of dividend equivalents with
respect to Performance Units that do not become vested Earned
Performance Units. All Earned Dividend Equivalents (if any) will be paid
in cash on the date of the regularly scheduled payroll next following the
date of distribution of Shares with respect to your vested Earned
Performance Units, or as soon as administratively practicable following
such date and shall be subject to all applicable withholding taxes. For
any non-cash dividends, the Committee may determine in its sole
discretion the cash value to be so paid to you in respect of such vested
Earned Performance Units or, if applicable, the adjustment to be applied
pursuant to Section 15 of the Plan.
Voting Shares. You will have the right to vote your Shares that have
been distributed in respect of any vested Earned Performance Units.
There are no voting rights associated with Performance Units (including
Earned Performance Units).
No Other Rights. You shall have no other dividend equivalent, dividend
or voting rights with respect to any Performance Unit.
5.
Termination of Employment
(a)
Termination prior to the end of the Cumulative Performance Period
The terms set out in subsections (i)–(iii) below of this Section I.5(a) shall
apply to the vesting and settlement of Earned Performance Units in the
event of your termination of employment prior to the last day of the
Cumulative Performance Period.
(i)
Death or Disability. If your employment is terminated by reason
of death or Disability, you will be entitled to earn a Pro-Rata
Earned
Appendix A
-3-
(ii)
(iii)
Award. Distribution under Section I.3 in satisfaction of all such
Earned Performance Units shall be made on March 15, 2026.
Involuntary Termination or Retirement. If your employment is
terminated in an Involuntary Termination or by reason of you
becoming a Retiree, you will be entitled to earn a Pro-Rata
Earned Award. Distribution under Section I.3 in satisfaction of all
such Earned Performance Units shall be made on March 15,
2026.
Other Termination of Employment. If your employment is
terminated prior to the end of the Cumulative Performance
Period for any reason other than those set forth in Section I.5(a)
(i), I.5(a)(ii) and I.6(b), you will not be entitled to any Earned
Performance Units.
(b)
Adjustments by the Committee
The Committee may, in its sole discretion, accelerate the vesting of your
right to receive all or any portion of any Earned Performance Units,
distributed on the distribution date under Section I.3.
(c)
Forfeiture of Performance Units
In addition to forfeitures of Performance Units pursuant to Section I.5(a)
above, if you violate or fail to comply with any of the covenants or
obligations applicable to you under the Executive Severance Benefit
Policy, you shall immediately forfeit any Performance Units, whether or
not earned.
6.
Change of Control
(a)
Change of Control
Upon the occurrence of a Change of Control, if you are employed by the
Company on the date of such Change of Control and the Determination
Date with respect to the Cumulative Performance Period or any
Calendar Performance Period has not occurred, the number of Earned
Performance Units to which you are entitled shall be equal to the Total
Target Performance Units allocable to those periods, subject to the
vesting provisions described in the Award Letter and Section I.2, I.5, and
I.6(b).
The Shares (or other consideration) shall be issued in satisfaction of the
Earned Performance Units on the distribution date under Section I.3.
(b)
Change of Control Termination
Notwithstanding the provisions of the Award Letter or Sections I.2, I.5 or
I.6(a), all of your Earned Performance Units (as described in Section
I.6(a)) will vest immediately upon a Change of Control Termination and
the Shares (or other consideration) shall be issued in satisfaction of the
Earned Performance Units thirty days after the date of such Change of
Control Termination.
Appendix A
-4-
Section II.RESTRICTED SHARE UNITS
1.
Vesting and Restricted Share Units
(a)
Unless vested on an earlier date as provided in this Appendix A, the
Restricted Share Units granted pursuant to your Award Letter will fully
vest in installments in accordance with the following vesting schedule
(each date below, an “RSU Vesting Date”) provided that you remain
continuously employed through the applicable RSU Vesting Date:
RSU Vesting
Date
March 1, 2024
March 1, 2025
March 1, 2026
Portion of
Restricted
Share Units
Vesting
1/3
1/3
1/3
To the extent that the vesting schedule above would result in vesting of a
fractional Restricted Share Unit, such fractional Restricted Share Unit
shall be rounded to a whole number as determined by the Committee.
(b)
In certain circumstances described in Section II.4 below, your Restricted
Share Units may fully vest before the final scheduled RSU Vesting Date.
In addition, the Committee may accelerate the vesting of all or a portion
of your Restricted Share Units at any time in its discretion, subject to the
provisions of Section II.4(d). The date of any accelerated vesting under
Section II.4 below will be a RSU Vesting Date for purposes of this
Appendix A.
(c)
You do not need to pay any purchase price for the Restricted Share
Units unless otherwise required in accordance with applicable law.
2.
Restrictions on the Restricted Share Units
Until and unless you vest in your Restricted Share Units and receive a
distribution of Shares, you may not attempt to sell, transfer, assign or pledge
them. Until the date on which you receive a distribution of the Shares in respect
of any vested Restricted Share Units awarded hereunder, your award of
Restricted Share Units will be evidenced by credit to a book entry account.
When Restricted Share Units vest and become payable, the net Shares (total
Shares distributable in respect of vested Restricted Share Units minus any
Shares retained by the Company in accordance with the policies and
requirements described in Section IV.4), will be delivered to you within sixty
days after the RSU Vesting Date in street name to your brokerage account (or,
in the event of your death, to a brokerage account in the name of your
beneficiary under the Plan) with the Broker. Any Shares distributed to you in
respect of vested Restricted Share Units will be registered in your name and will
not be subject to any restrictions. There will be some delay between the RSU
Vesting Date and the date your Shares become available to you due to
administrative reasons.
Appendix A
-5-
3.
Dividend Equivalents and Voting
(a)
Dividend Equivalents
In the event that dividends are paid with respect to Shares such that the
applicable record date occurs during the period beginning on the Grant
Date and ending on the date you receive a distribution of Shares in
satisfaction of your vested Restricted Share Units, you will be entitled to
receive a cash payment equal to the amount of the dividend paid per
Share as of such dividend payment date multiplied by the number of
vested Restricted Share Units (the “Dividend Equivalent”). Dividend
Equivalents (if any) payable with respect to your vested Restricted Share
Units will be paid in cash on the date of the regularly scheduled payroll
next following the applicable Vesting Date, or as soon as administratively
practicable following such date, and shall be subject to all applicable
withholding taxes. For any non-cash dividends, the Committee may
determine in its sole discretion the cash value to be so paid to you in
respect of such Restricted Share Units or, if applicable, the adjustment
to be applied pursuant to Section 15 of the Plan.
(b)
Voting Shares
You will have the right to vote your Shares that have been distributed in
respect of any vested Restricted Share Units. There are no voting rights
associated with Restricted Share Units.
(c)
No Other Rights
You shall have no other dividend equivalent, dividend or voting rights
with respect to any Restricted Share Unit.
4.
Termination of Employment
The following rules apply to the vesting of your Restricted Share Units in the
event of your termination of employment.
(a)
(b)
Death or Disability. If your employment is terminated by reason of
death or Disability, all of your Restricted Share Units will vest on your
date of termination. If you are Retirement Eligible and you experience a
Disability that satisfies the requirements of U.S. Treasury Regulation
Section 1.409A-3(i)(4) prior to the termination of your employment, all of
your Restricted Share Units will vest on the date of such Disability.
Involuntary Termination or Retirement. If your employment is
terminated in an Involuntary Termination or by reason of you becoming a
Retiree, a pro rata portion of your Restricted Share Units will vest on
your date of termination; such pro rata portion shall be determined by
multiplying the number of Restricted Share Units granted to you and
remaining outstanding and unvested at the time your employment is
terminated by a fraction, the numerator of which is the number of
calendar days you were employed between the Grant Date and your
date of termination and the denominator
Appendix A
-6-
(c)
(d)
of which is the number of calendar days between the Grant Date and the
final scheduled RSU Vesting Date.
Other Termination of Employment. If your employment terminates for
any reason other than those set forth in Sections II.4(a), II.4(b) and II.5,
any of your Restricted Share Units which have not vested prior to your
termination of employment will be forfeited.
Adjustments by the Committee. The Committee may, in its sole
discretion, accelerate the vesting of all or any portion of your Restricted
Share Units; provided, however, that no acceleration of delivery of
Shares shall be made in a manner that is not in compliance with, or
exempt from, any applicable requirements of Code Section 409A.
5.
Change of Control.
Notwithstanding the provisions of the Award Letter or Sections II.1 or II.4, all of
your Restricted Share Units will vest immediately upon a Change of Control
Termination.
Section III.Miscellaneous
The terms and provisions of this Section III apply to all Awards.
1.
Definitions
(a)
(b)
(c)
“Cause” means (1) your willful and continued failure to substantially
perform your duties with the Company (other than any such failure
resulting from your incapacity due to physical or mental illness), (2) your
willful engagement in conduct which is demonstrably and materially
injurious to the Company or its Subsidiaries, monetarily or otherwise, (3)
your willful, material breach of any written policy of the Company or any
written agreement between you and the Company or any of its
Subsidiaries, including, but not limited to, the Company’s Code of
Integrity, human resource or legal compliance and ethics policies or any
felony or a
employment agreement, (4) your
misdemeanor involving fraud, dishonesty or moral turpitude, or (5) such
other events, acts or omissions as shall be determined in good faith. For
purposes of clauses (1), (2) and (3) of this definition, no act, or failure to
act, on your part shall be deemed “willful” unless done, or omitted to be
done, by you not in good faith and without reasonable belief that your
act, or failure to act, was in the best interest of the Company.
indictment of a
“Change of Control Termination” means and occurs on the date of
your termination of employment by the Company or any Subsidiary for
any reason other than Cause within two years after the date of a Change
of Control.
“Disability” means (1) you qualify for disability benefits under a long
term disability plan sponsored by the Company or (2) if you are not
covered by any such long term disability plan, the Chief Executive
Officer of the Company, or in the case of the termination of employment
of the Chief Executive Officer of the Company, the Committee, has
determined that you are disabled.
Appendix A
-7-
(d)
(e)
(f)
(g)
(h)
“Good Reason” means (1)
the diminution of your duties or
responsibilities, or a demotion of your position, to such an extent or in
such a manner as to relegate you to a position not substantially similar
to that which you held prior to such change or (2) a material reduction in
your base salary or annual incentive plan opportunities other than in
connection with such reductions that are applicable to the Company’s
executives as a group. You shall not be considered to have terminated
for Good Reason unless you notify the Company in writing within 30
days of the date the event giving rise to Good Reason occurs, the
Company does not cure such condition within 30 days of such notice
and you terminate your employment no later than 90 days after the date
the event giving rise to Good Reason occurred.
“Involuntary Termination” means the termination of your employment
(i) by the Company without Cause or (ii) by you for Good Reason.
With respect to an award of Performance Units, “Pro-Rata Earned
Award” is determined by multiplying the number of Earned Performance
Units which would have otherwise been earned for each of the three
Calendar Performance Periods and the Cumulative Performance Period
had your employment not been terminated by a fraction, the numerator
of which is the number of calendar days you were employed during the
period beginning January 1, 2023 and ending December 31, 2025 and
the denominator of which is the total number of calendar days in the
period beginning January 1, 2023 and ending December 31, 2025.
You are a “Retiree” if your separation from service occurs for any
reason other than Cause, Involuntary Termination, Change in Control
Termination, death or Disability after (a) attainment of age 62 and (b)
completion of at least five years of service with the Company or its
Subsidiaries.
With respect to an award of Restricted Share Units, “Retirement
Eligible” means, and will apply if, your final RSU Vesting Date is
scheduled to occur after the calendar year in which you will complete at
least five years of service with the Company or its Subsidiaries and will
attain at least age 62.
2.
Award Determinations
The Chief Executive Officer of the Company, or in the case of the termination of
employment of the Chief Executive Officer of the Company, the Committee,
shall have absolute discretion to determine the date and circumstances of
termination of your employment or separation from service, including without
limitation whether as a result of Disability, Involuntary Termination, Cause, Good
Reason or any other reason and whether you are a Retiree, and such
determination shall be final, conclusive and binding upon you.
3.
Section 280G Limitation
Notwithstanding anything in the Award Letter (including this Appendix A) to the
contrary, if all or any portion of the benefits provided hereunder, either alone or
together with other payments and benefits received or to be received from the
Appendix A
-8-
Company or any affiliate or successor, would constitute a “parachute payment”,
as such term is defined in Code Section 280G(b)(2), the aggregate of the
amounts constituting the parachute payment shall be reduced to the extent
necessary so that no portion thereof shall be subject to the excise tax imposed
by Code Section 4999, but only if, by reason of such reduction, the net after-tax
benefit shall exceed the net after-tax benefit if such reduction were not made.
“Net after-tax benefit” for these purposes shall mean the sum of (w) the total
amount payable under this Award, plus (x) all other payments and benefits
which you receive or are then entitled to receive from the Company or an
Affiliate that, alone or in combination with the amounts payable under the
Award, would constitute a “parachute payment” within the meaning of Code
Section 280G, less (y) the amount of federal income taxes payable with respect
to the foregoing calculated at the maximum marginal income tax rate for each
year in which the foregoing shall be paid (based upon the rate in effect for such
year as set forth in the Code at the time of the payment under the Plan), less
(z) the amount of excise taxes imposed with respect to the payments and
benefits described in (w) and (x) above by Code Section 4999. Such reduction
shall be made to those amounts that provide you with the best economic benefit
(and to the extent any payments are economically equivalent, each shall be
reduced pro rata), which may include, without limitation and to the extent
necessary, a reduction to the Awards or vesting of the Awards in order that this
limitation not be exceeded; provided, however, that this Section IV.3 shall be
superseded in its entirety by (i) any contrary treatment of parachute payments to
which you have agreed in writing prior to the Change of Control pursuant to any
other plan, program or agreement, or (ii) any more favorable treatment of the
excise tax on parachute payments extended to you by the Company or its
affiliates pursuant to any other plan, program or agreement.
4.
Tax Consequences and Withholding
(a)
(b)
You should consult the Plan Prospectus for a general summary of the
Swiss federal income tax consequences to you and, if applicable, the
U.S. tax consequences to you, upon the grant, vesting or distribution to
you of the Awards based on currently applicable provisions of the Code,
related regulations and Swiss tax rules. The summary does not discuss
state and local tax laws or the laws of any other jurisdictions, which may
differ from the U.S. federal tax law and Swiss tax rules. For these
reasons, you are urged to consult your own tax advisor regarding the
application of the tax laws to your particular situation.
With respect to Awards of Performance Units under Section I and
Restricted Share Units under Section II, the Company shall reduce the
number of Shares otherwise deliverable to you with respect to your
Earned Performance Units or Restricted Share Units by a number of
Shares having a value approximately equal to the amount required to be
withheld under the Company’s policies and procedures or applicable
law. Further, any dividend equivalents paid to you in respect of Earned
Performance Units or Restricted Share Units pursuant to Section I.4 or
II.3, respectively, will be subject to tax withholding, as appropriate, as
additional compensation.
Appendix A
-9-
(c)
(d)
You may not elect to have the Broker withhold Shares having a value
less than the minimum statutory withholding tax liability or, if you are
serving as an expatriate employee, the “standard deduction” withheld in
accordance with the Company’s policies and procedures. If you fail to
satisfy such withholding obligation in a time and manner satisfactory to
the Company, the Company shall have the right to withhold the required
amount from your salary or other amounts payable to you.
In addition to the previous withholding requirements, any award under
the Plan is also subject to all applicable withholding policies of the
Company as may be in effect from time to time, at the sole discretion of
the Company. Without limiting the generality of the foregoing, the
Company expressly has the right to collect or cause to be collected,
pursuant to any tax equalization or other plan or policy, as any such
policies or plans may be in effect from time to time (irrespective of
whether such withholding correlates to the applicable tax withholding
requirement with respect to your award) proceeds of the sale of Shares
acquired upon vesting of the applicable award through a sale arranged
by the Company or Broker on your behalf pursuant to this authorization
without further consent. Awards are further subject to any tax and other
reporting requirement that may be applicable in any pertinent jurisdiction
including any obligation to report awards (whether related to the granting
or vesting thereof or exercise of rights thereunder) to any taxing
authority or other pertinent third party.
5.
Restrictions on Resale
Other than the restrictions referenced in Sections I.3 and II.2, there are no
restrictions imposed by the Plan on the resale of Shares acquired under the
Plan. However, under the provisions of the Securities Act and the rules and
regulations of the SEC, resales of Shares acquired under the Plan by certain
officers and directors of the Company who may be deemed to be “affiliates” of
the Company must be made pursuant to an appropriate effective registration
statement filed with the SEC, pursuant to the provisions of Rule 144 issued
under the Securities Act, or pursuant to another exemption from registration
provided in the Securities Act. At the present time, the Company does not have
a currently effective registration statement pursuant to which such resales may
be made by affiliates. There are no restrictions imposed by the SEC on the
resale of Shares acquired under the Plan by persons who are not affiliates of
the Company; provided, however, that all employees are subject to the
Company’s policies against insider trading, and restrictions against resale may
be imposed by the Company from time-to-time as may be necessary under
applicable law.
6.
Beneficiary
You may designate a beneficiary to receive any portion of your Performance
Units and Restricted Share Units that become due to you after your death, and
you may change your beneficiary from time to time. Beneficiary designations
should be filed with the Broker with respect to Performance Units and Restricted
Share Units. The beneficiary if you fail to file a designation with the Broker for
the Performance Units and the Restricted Share Units, will be (1) the beneficiary
you designated under any group life
Appendix A
-10-
insurance plan maintained by the Company or its Subsidiaries that provides the
largest death benefit, which will constitute the designated beneficiary for
purposes of this Section IV.6, or, if none, (2) the executor or administrator of
your estate.
7.
Effect on Other Benefits
Income recognized by you as a result of the grant, vesting, exercise or
distribution of Shares with respect to Awards will not be included in the formula
for calculating benefits under any of the Company’s retirement and disability
plans or any other benefit plans.
8.
Code Section 409A Compliance
(a)
(b)
The award of Performance Units under Section I is intended to be
exempt from or to comply with the provisions of Section 409A and,
wherever possible, shall be consistent therewith. No action taken to
comply with Section 409A shall be deemed to impair a benefit under the
Award Letter or this Appendix A.
interpreted consistent
The award of Restricted Share Units under Section II is intended to be
exempt from or to comply with the provisions of Section 409A and,
wherever possible, shall be
therewith.
Specifically, (1) if you are not Retirement Eligible, the time of payment
specified in Sections II.2 and II.4 is exempt from Code Section 409A as
a short term deferral in compliance with U.S. Treasury Regulation
Section 1.409A-1(b)(4), and (2) if you are Retirement Eligible the time of
payment specified with respect to Section II.4(b) is compliant with U.S.
Treasury Regulation Section 1.409A-3(a)(1) and is compliant with Code
Section 409A as being paid pursuant to a permissible payment date of
separation from service under U.S. Treasury Regulation Section 1.409A-
1(h) and the time of payment specified in Section II.4(a) with respect to
Disability is compliant with U.S. Treasury Regulation Section 1.409A-
3(a)(2) and is compliant with Code Section 409A as being paid pursuant
to the permissible payment event of disability under U.S. Treasury
Regulation Section 1.409A-3(i)(4). If you are Retirement Eligible, you
will not be considered to have a termination from employment unless
such termination meets the requirements for a “separation from service”
within the meaning of U.S. Treasury Regulation Section 1.409A-1(h), if
applicable. If you are a “specified employee” on the date of your
“separation from service” within the meaning of Code Section 409A, the
time of payment otherwise specified in the Award Letter or this Appendix
A will be deferred to the extent required by Code Section 409A. No
action taken to comply with Code Section 409A shall be deemed to
impair a benefit under the Award Letter or this Appendix A.
Appendix A
-11-
Exhibit “A” to Performance Unit Award
A. Weighting of Total Target Performance Units
Total Earned Performance Units will be based on achievement of relative TSR performance,
subject to an adjustment based on the Company’s absolute TSR. Your total Earned
Performance Units, if any, will be the number of Target Performance Units that become
Earned Performance Units, with 20% of the Total Target Performance Units weighted to each
of the Calendar Performance Periods, and 40% of the Total Target Performance Units
weighted to the Cumulative Performance Period. The maximum number of Earned
Performance Units that you may receive is 200% of the Total Target Performance Units
described in your Award Letter. If any calculation with respect to the Earned Performance
Units would result in a fractional share, the numbers of Earned Performance Units shall be
rounded down to the nearest whole share.
B. Committee Methodology for TSR
The Committee will make a determination on the Determination Date with respect to the
achievement of TSR (as defined under Section C below) by the Company and the members of
its peer group (as described under Section C below) and the number of Target Performance
Units, if any, that become Earned Performance Units based on achievement of Relative
Performance and Threshold Performance (as those terms are defined below).
“Relative Performance” shall be determined by ranking the Company, along with the other
companies in its peer group, from best to worst based on TSR, and then determining the
percentile ranking to assess the number of Earned Performance Units as described below.
If, during the applicable Calendar or Cumulative Performance Period, (i) any peer group
company files for or is the subject of any bankruptcy, insolvency or liquidation proceeding, (ii)
any peer group company continues to exist but is no longer publicly traded on an established
securities market as a result of a de-listing event (other than due to an acquisition), or (iii) any
other corporate financial restructuring event, condition or circumstance exists that, in the
determination of the Committee, causes a peer performance to no longer be appropriate for a
TSR comparison, such peer group company will remain in the peer group positioned below
the lowest performing member of the peer group in chronological order by the date of such
bankruptcy, insolvency, liquidation, de-listing or other event, condition or circumstance for the
applicable period. In the event that a peer group company is subject to a transaction in which
more than 50% of the value of the company’s outstanding shares immediately prior to the
transaction are acquired by another person or entity, such company shall be removed from the
peer group company listing for the applicable period in which the transaction occurred.
The Company’s percentile ranking in its peer group shall determine the number of TSR
Performance Units that become Earned Performance Units due to Relative Performance
based on the following schedule:
Transocean Percentile
90th Percentile or Greater
50th Percentile
25th Percentile
Less than 25th Percentile
Percentage of TSR Performance Units Becoming
Earned Performance Units (“Relative
Performance”)
200%
100%
50%
0%
Appendix A
-12-
For any achievement of a percentile ranking between the percentiles set forth in the schedule
above, the number of Total Performance Units that become Earned Performance Units due to
Relative Performance will be determined by linear interpolation between the percentages
assigned in the schedule above.
If the Company’s absolute TSR is less than -15% in any of the Calendar or Cumulative
Performance Periods, then no more than 100% of your Performance Units will become
Earned Performance Units in the relevant period.
If the Company’s absolute TSR is greater than 15% in any of the Calendar or Cumulative
Performance Periods (“Threshold Performance”), a minimum of 50% of your Performance
Units will become Earned Performance Units in the relevant period. If the Threshold
Performance is achieved, the total number of Earned Performance Units can be increased,
but not decreased, based on achievement of Relative Performance for the Calendar
Performance Periods and the Cumulative Performance Period.
Notwithstanding the foregoing, a “Price Cap” will apply such that if the Fair Market Value of a
Share exceeds $20, subject to adjustment pursuant to Section 15 of the Plan, on the
applicable Determination Date at the end of the Cumulative Performance Period, the number
of Performance Units that would have become Earned Performance Units due to either the
Relative Performance or Threshold Performance will be reduced by multiplying such number
of Earned Performance Units by a fraction, the numerator of which is $20, subject to
adjustment pursuant to Section 15 of the Plan, and the denominator of which is the Fair
Market Value of a Share on the Determination Date. If the Price Cap applies, delivery of a
number of Shares equal to such reduced number of Earned Performance Units will be in full
satisfaction of the Performance Units. As an example of the application of the Price Cap, if
100 Performance Units would become Earned Performance Units based on the schedule due
to Relative Performance and the Fair Market Value of a Share is $25 on the Determination
Date, 80 Shares will be delivered in settlement of the Performance Units (100 x 20/25).
C. Definition of Total Shareholder Return
Total Shareholder Return (“TSR”) through the Calendar or Cumulative Performance Period is
based on the comparison of the average closing share price for the thirty (30) business days
prior to start of the applicable Calendar or Cumulative Performance Period and the average
closing share price for the last thirty (30) business days in the applicable Performance Period,
adjusted for dividends. The same calculation is conducted for the Company and each of the
companies in the peer group.
D. Peer Group
The peer group shall consist of:
Aker Solutions ASA
Baker Hughes Company
Diamond Offshore Drilling,
Inc.
Noble Corporation Plc
NOV Inc.
Oceaneering International,
Inc.
Odfjell Drilling Ltd.
Oil States International,
Inc.
Saipem SpA
Seadrill Limited
Subsea 7 S.A.
TechnipFMC plc
Tidewater Inc.
Valaris Limited
Appendix A
-13-
NOTE: The Committee has the sole authority to interpret the terms of this Exhibit
A, including the formula for TSR. The Committee’s determination of all matters
in connection with the award will be final and binding.
Appendix A
-14-
Exhibit 21
SUBSIDIARIES OF TRANSOCEAN LTD.
(as of December 31, 2022)
Entity
Jurisdiction
15375 Memorial Corporation
Agon Shipping Inc.
Aguas Profundas, Limitada
Angola Deepwater Drilling Company (Offshore
Services) Ltd
AngoSantaFe - Prestacao de Servicos Petroliferos,
Limitada
Arcade Drilling AS
Asie Sonat Offshore Sdn. Bhd.
Blegra Asset Management Limited
Blegra Financing Limited
Challenger Minerals Inc.
Covent Garden - Serviços e Marketing, Sociedade
Unipessoal Lda
Deepwater Drilling (Transocean Ghana) Limited
Deepwater Drilling North Africa LLC - Free Zone
Deepwater Pacific 1 Inc.
Deepwater Supply Inc.
Drillship Alonissos Owners Inc.
Drillship Hydra Owners Inc.
Drillship Kithira Owners Inc.
Drillship Paros Owners Inc.
Drillship Skopelos Owners Inc.
Drillship Skyros Owners Inc.
Eastern Med Consultants Inc.
Entities Holdings, Inc.
Global Marine Inc.
Global Offshore Drilling Limited
GlobalSantaFe (Labuan) Inc.
GlobalSantaFe B.V.
GlobalSantaFe Denmark Holdings ApS
GlobalSantaFe Drilling (N.A.) N.V.
GlobalSantaFe Drilling Company
GlobalSantaFe Drilling Company (North Sea) Limited
GlobalSantaFe Drilling Mexico, S. de R.L. de C.V.
GlobalSantaFe Drilling Operations Inc.
GlobalSantaFe Drilling Trinidad LLC
GlobalSantaFe Drilling Venezuela, C.A.
GlobalSantaFe Financial Services (Luxembourg) S.a.r.l.
GlobalSantaFe Group Financing Limited Liability
Company
GlobalSantaFe Holding Company (North Sea) Limited
Delaware
Marshall Islands
Angola
Cayman Islands
Angola
Norway
Malaysia
Cyprus
Cyprus
California
Portugal
Ghana
Egypt
Cayman Islands
Delaware
Marshall Islands
Marshall Islands
Marshall Islands
Marshall Islands
Marshall Islands
Marshall Islands
Marshall Islands
Delaware
Delaware
Nigeria
Malaysia
Netherlands
Denmark
Netherlands Antilles
Delaware
England & Wales
Mexico
Cayman Islands
Delaware
Venezuela
Luxembourg
Hungary
England & Wales
Exhibit 21
GlobalSantaFe Hungary Services Limited Liability
Company
GlobalSantaFe International Drilling Corporation
GlobalSantaFe International Drilling Inc.
GlobalSantaFe International Services Inc.
GlobalSantaFe Nederland B.V.
GlobalSantaFe Offshore Services Inc.
GlobalSantaFe Operations (Mexico) LLC
GlobalSantaFe Saudi Arabia Ltd.
GlobalSantaFe Services (BVI) Inc.
GlobalSantaFe Services Netherlands B.V.
GlobalSantaFe Servicios de Venezuela, C.A.
GlobalSantaFe South America LLC
GlobalSantaFe Tampico, S. de R.L. de C.V.
GlobalSantaFe U.S. Holdings Inc.
GSF Leasing Services GmbH
Indigo Drilling Limited
Inteliwell JV GP Limited
Inteliwell JV, LP
Kalambo Operations Inc.
Ocean Rig 2 Inc.
Ocean Rig Canada Inc.
Ocean Rig Cubango Operations Inc.
Ocean Rig Investments Inc.
Ocean Rig Management Inc.
Ocean Rig Operations Inc.
Ocean Rig UDW Inc.
Ocean Rig UDW LLC
OCR Falklands Drilling Inc.
Offshore Ghana Transocean Limited
Olympia Rig Angola Holding, S.A.
Olympia Rig Angola, Limitada
OR Norge Operations Inc.
Orion Holdings (Cayman) Limited
Orion RigCo (Cayman) Limited
P.T. Santa Fe Supraco Indonesia
Platform Capital N.V.
Platform Financial N.V.
Primelead Limited
PT. Transocean Indonesia
R&B Falcon (A) Pty Ltd
R&B Falcon (Caledonia) Limited
R&B Falcon (M) Sdn. Bhd.
R&B Falcon (U.K.) Limited
Hungary
Bahamas
Cayman Islands
Cayman Islands
Netherlands
Cayman Islands
Delaware
Cayman Islands
Cayman Islands
Netherlands
Venezuela
Delaware
Mexico
Delaware
Switzerland
Nigeria
Cayman Islands
Cayman Islands
Marshall Islands
Marshall Islands
Nova Scotia
Marshall Islands
Marshall Islands
Marshall Islands
Marshall Islands
Cayman Islands
Delaware
Marshall Islands
Ghana
Angola
Angola
Marshall Islands
Cayman Islands
Cayman Islands
Indonesia
Netherlands Antilles
Netherlands Antilles
Cyprus
Indonesia
Western Australia
England & Wales
Malaysia
England & Wales
Exhibit 21
R&B Falcon B.V.
R&B Falcon Deepwater (UK) Limited
R&B Falcon Drilling Co. LLC
R&B Falcon Exploration Co., LLC
R&B Falcon International Energy Services B.V.
Ranger Insurance Limited
RBF Rig Corporation, LLC
Reading & Bates Coal Co., LLC
Safemal Drilling Sdn. Bhd.
Santa Fe Braun Inc.
Santa Fe Construction Company
Santa Fe Drilling Company of Venezuela, C.A.
Saudi Drilling Company Limited
SDS Offshore Limited
Sedco Forex International, Inc.
Services Petroliers Transocean
Servicios Petroleros Santa Fe, S.A.
Ship Investment Ocean Holdings Inc.
Songa Offshore Delta Limited
Songa Offshore Drilling Limited
Songa Offshore Enabler Limited
Songa Offshore Encourage Limited
Songa Offshore Endurance Limited
Songa Offshore Equinox Limited
Songa Offshore Equipment Rental Limited
Songa Offshore Malaysia Sdn. Bhd.
Songa Offshore Management Limited
Songa Offshore Pte. Ltd.
Songa Offshore Rig 2 AS
Songa Offshore Rig 3 AS
Songa Offshore Saturn Limited
Songa Offshore SE
Songa Offshore T & P Cyprus Limited
Sub-Saharan Drilling Inc.
T. I. International Mexico, S. de R.L. de C.V.
TILAM Holdings Limited
Transocean Africa Drilling Limited
Transocean Asia Services Sdn Bhd
Transocean Asset Holdings 1 Limited
Transocean Asset Holdings 2 Limited
Transocean Asset Holdings 3 Limited
Transocean Atlas Limited
Transocean Barents ASA
Netherlands
England & Wales
Delaware
Oklahoma
Netherlands
Cayman Islands
Delaware
Nevada
Malaysia
Delaware
Delaware
California
Saudi Arabia
England & Wales
Cayman Islands
France
Venezuela
Marshall Islands
Cyprus
Cyprus
Cyprus
Cyprus
Cyprus
Cyprus
Cyprus
Malaysia
Cyprus
Singapore
Norway
Norway
Cyprus
Cyprus
Cyprus
Marshall Islands
Mexico
Cayman Islands
Cayman Islands
Malaysia
Cayman Islands
Cayman Islands
Cayman Islands
Cayman Islands
Norway
Exhibit 21
Transocean Brasil Ltda.
Transocean Britannia Limited
Transocean Canada Drilling Services Ltd.
Transocean Conqueror Limited
Transocean Conqueror Opco LLC
Transocean Corporate Services Limited
Transocean Cyprus Capital Management Public Limited
Transocean Cyprus Drilling Operations Public Limited
Transocean Deepwater Drilling Services Limited
Transocean Deepwater Holdings Limited
Transocean Deepwater Inc.
Transocean Deepwater Mauritius
Transocean Deepwater Nautilus Limited
Transocean Deepwater Seafarer Services Limited
Transocean Discoverer 534 LLC
Transocean Drilling Enterprises S.a.r.l.
Transocean Drilling Israel Ltd.
Transocean Drilling Limited
Transocean Drilling Namibia Inc.
Transocean Drilling Offshore S.a.r.l.
Transocean Drilling Sdn. Bhd.
Transocean Drilling Services (India) Private Limited
Transocean Drilling U.K. Limited
Transocean DWA Limited
Transocean DWL Limited
Transocean Eastern Pte. Ltd.
Transocean Employee Support Fund
Transocean Enabler Limited
Transocean Enabler Rigco Limited
Transocean Encourage Limited
Transocean Encourage Rigco Limited
Transocean Endurance Limited
Transocean Endurance Rigco Limited
Transocean Entities Holdings GmbH
Transocean Equinox Limited
Transocean Equinox Rigco Limited
Transocean Finance Limited
Transocean Financing (Cayman) Limited
Transocean Financing GmbH
Transocean Guardian Limited
Transocean Holdings 1 Limited
Transocean Holdings 2 Limited
Transocean Holdings 3 Limited
Brazil
Cayman Islands
Nova Scotia
Cayman Islands
Delaware
Cayman Islands
Cyprus
Cyprus
Cayman Islands
Cayman Islands
Delaware
Mauritius
Cayman Islands
Cayman Islands
Delaware
Luxembourg
Cayman Islands
Scotland
Cayman Islands
Luxembourg
Malaysia
India
Scotland
Cayman Islands
Cayman Islands
Singapore
Texas
Cayman Islands
Cayman Islands
Cayman Islands
Cayman Islands
Cayman Islands
Cayman Islands
Switzerland
Cayman Islands
Cayman Islands
Cayman Islands
Cayman Islands
Switzerland
Cayman Islands
Cayman Islands
Cayman Islands
Cayman Islands
Exhibit 21
Transocean Holdings LLC
Transocean Hungary Holdings LLC
Transocean Hungary Investments LLC
Transocean Hungary Ventures LLC
Transocean Inc.
Transocean Innovation Labs Ltd.
Transocean International Holdings Limited
Transocean International Resources, Limited
Transocean Investimentos Ltda.
Transocean Investments Holdings LLC
Transocean Investments S.a.r.l.
Transocean Ltd.
Transocean Management Services GmbH
Transocean Minerals Holdings Limited
Transocean Nautilus Limited
Transocean North Sea Limited
Transocean Norway Operations AS
Transocean Offshore (North Sea) Ltd.
Transocean Offshore Deepwater Drilling Inc.
Transocean Offshore Deepwater Holdings Limited
Transocean Offshore Drilling Limited
Transocean Offshore Gulf of Guinea II Limited
Transocean Offshore Gulf of Guinea VI Limited
Transocean Offshore Gulf of Guinea VII Limited
Transocean Offshore Gulf of Guinea XII Limited
Transocean Offshore Gulf of Guinea XIII Limited
Transocean Offshore Holdings Limited
Transocean Offshore International Limited
Transocean Offshore International Ventures Limited
Transocean Offshore Limited
Transocean Offshore PR Limited
Transocean Offshore USA Inc.
Transocean Onshore Support Services Limited
Transocean Orion Limited
Transocean Phoenix 2 Limited
Transocean Phoenix 2 Opco LLC
Transocean Pontus Limited
Transocean Pontus Opco, Inc.
Transocean Poseidon Limited
Transocean Poseidon Opco, Inc.
Transocean Proteus Limited
Transocean Proteus Opco LLC
Transocean Quantum Holdings Limited
Delaware
Hungary
Hungary
Hungary
Cayman Islands
Cayman Islands
Cayman Islands
Cayman Islands
Brazil
Delaware
Luxembourg
Switzerland
Switzerland
Cayman Islands
Cayman Islands
Bahamas
Norway
Cayman Islands
Delaware
Cayman Islands
England & Wales
Cayman Islands
Cayman Islands
Cayman Islands
Cayman Islands
Cayman Islands
Cayman Islands
Cayman Islands
Cayman Islands
Delaware
Cayman Islands
Delaware
Scotland
Cayman Islands
Cayman Islands
Delaware
Cayman Islands
Delaware
Cayman Islands
Delaware
Cayman Islands
Delaware
Cayman Islands
Exhibit 21
Transocean Quantum Management Limited
Transocean Quantum Rig Holdings Limited
Transocean Quantum Sentry Holdings Limited
Transocean Rig 140 Limited
Transocean Rig Management Limited
Transocean Rig Ventures Limited
Transocean Sedco Forex Ventures Limited
Transocean Sentry Limited
Transocean Services (India) Private Limited
Transocean Services AS
Transocean Skyros Limited
Transocean Spitsbergen ASA
Transocean SPSF Holdings Limited
Transocean Sub Asset Holdings 1 Limited
Transocean Sub Asset Holdings 2 Limited
Transocean Sub Asset Holdings 3 Limited
Transocean Support Services Limited
Transocean Support Services Nigeria Limited
Transocean Support Services Private Limited
Transocean Technical Services Egypt LLC
Transocean Titan Financing Limited
Transocean U.S. Holdings LLC
Transocean UK Limited
Transocean Voyager 1 Limited
Transocean Voyager 2 Limited
Transocean West Africa Holdings Limited
Transocean Worldwide Inc.
Triton Asset Leasing GmbH
Triton Atlas GmbH
Triton Capital I GmbH
Triton Capital II GmbH
Triton Capital Mexico GmbH
Triton Conqueror GmbH
Triton Corcovado LLC
Triton Financing LLC
Triton Gemini GmbH
Triton Holdings Limited
Triton Hungary Asset Management LLC
Triton Hungary Investments 1 Limited Liability
Company
Triton Industries, Inc.
Triton KG2 GmbH
Triton Management Services LLC
Triton Mykonos LLC
Cayman Islands
Cayman Islands
Cayman Islands
Cayman Islands
Cayman Islands
Cayman Islands
Cayman Islands
Cayman Islands
India
Norway
Cayman Islands
Norway
Cayman Islands
Cayman Islands
Cayman Islands
Cayman Islands
Cayman Islands
Nigeria
India
Egypt
Cayman Islands
Delaware
England & Wales
Cayman Islands
Cayman Islands
Cayman Islands
Cayman Islands
Switzerland
Switzerland
Switzerland
Switzerland
Switzerland
Switzerland
Hungary
Hungary
Switzerland
British Virgin Islands
Hungary
Hungary
Cayman Islands
Switzerland
Hungary
Hungary
Exhibit 21
Triton Nautilus Asset Leasing GmbH
Triton Nautilus Asset Management LLC
Triton Offshore Leasing Services Limited
Triton Poseidon GmbH
Triton Titan GmbH
Triton Voyager Asset Leasing GmbH
TRM Holdings Limited
TSSA - Servicos de Apoio, Lda.
Wilrig Offshore (UK) Limited
Switzerland
Hungary
Malaysia
Switzerland
Switzerland
Switzerland
Cayman Islands
Angola
England & Wales
Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the following Registration Statements of Transocean Ltd. and subsidiaries:
(1) Registration Statement (Form S-4 No. 333-46374-99) as amended by Post-Effective Amendments on Form S-8 and Form S-3,
(2) Registration Statement (Form S-4 No. 333-54668-99) as amended by Post-Effective Amendments on Form S-8 and Form S-3,
(3) Registration Statement (Form S-8 No. 033-64776-99) as amended by Post-Effective Amendments on Form S-8,
(4) Registration Statement (Form S-8 No. 333-12475-99) as amended by Post-Effective Amendments on Form S-8,
(5) Registration Statement (Form S-8 No. 333-58211-99) as amended by Post-Effective Amendments on Form S-8,
(6) Registration Statement (Form S-8 No. 333-58203-99) as amended by Post-Effective Amendments on Form S-8,
(7) Registration Statement (Form S-8 No. 333-94543-99) as amended by Post-Effective Amendment on Form S-8,
(8) Registration Statement (Form S-8 No. 333-94569-99) as amended by Post-Effective Amendment on Form S-8,
(9) Registration Statement (Form S-8 No. 333-94551-99) as amended by Post-Effective Amendment on Form S-8,
(10) Registration Statement (Form S-8 No. 333-75532-99) as amended by Post-Effective Amendment on Form S-8,
(11) Registration Statement (Form S-8 No. 333-75540-99) as amended by Post-Effective Amendment on Form S-8,
(12) Registration Statement (Form S-8 No. 333-106026-99) as amended by Post-Effective Amendment on Form S-8,
(13) Registration Statement (Form S-8 No. 333-115456-99) as amended by Post-Effective Amendment on Form S-8,
(14) Registration Statement (Form S-8 No. 333-130282-99) as amended by Post-Effective Amendment on Form S-8,
(15) Registration Statement (Form S-8 No. 333-147669-99) as amended by Post-Effective Amendment on Form S-8,
(16) Registration Statement (Form S-8 No. 333-163320),
(17) Registration Statement (Form S-8 No. 333-204359),
(18) Registration Statement (Form S-4 No. 333-213146) as supplemented by Registration Statement (Form S-4 No. 333-214768),
(19) Registration Statement (Form S-4 No. 333-220791),
(20) Registration Statement (Form S-4 No. 333-222894),
(21) Registration Statement (Form S-3 No. 333-222895),
(22) Registration Statement (Form S-3 No. 333-222896),
(23) Registration Statement (Form S-4 No. 333-227487),
(24) Registration Statement (Form S-8 No. 333-227750),
(25) Registration Statement (Form S-8 No. 333-238091),
(26) Registration Statement (Form S-3 No. 333-248616);
(27) Registration Statement (Form S-3 No. 333-257093); and
(28) Registration Statement (Form S-8 No. 333-257804);
of our reports dated February 22, 2023, with respect to the consolidated financial statements of Transocean Ltd. and subsidiaries and the
effectiveness of internal control over financial reporting of Transocean Ltd. and subsidiaries included in this Annual Report (Form 10-K) of
Transocean Ltd. for the year ended December 31, 2022.
Houston, Texas
February 22, 2023
/s/ Ernst & Young LLP
Exhibit 24
TRANSOCEAN LTD.
Power of Attorney
WHEREAS, TRANSOCEAN LTD., a Swiss company (the “Company”), intends to file with the
Securities and Exchange Commission (the “Commission”) pursuant to the Securities Exchange Act
of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder, an
Annual Report on Form 10-K for the fiscal year ended December 31, 2022 of the Company,
together with any and all exhibits, documents and other instruments and documents necessary,
advisable or appropriate in connection therewith, including any amendments thereto (the “Form
10-K”);
NOW, THEREFORE, the undersigned, in his capacity as a director or officer or both, as the case
may be, of the Company, does hereby appoint Jeremy D. Thigpen, Mark L. Mey, Brady K. Long,
Sandro Thoma, David Tonnel, and Daniel Ro-Trock, and each of them severally, his true and
lawful attorney or attorneys with power to act with or without the other, and with full power of
substitution and resubstitution, to execute in his name, place and stead, in his capacity as director,
officer or both, as the case may be, of the Company, the Form 10-K and any and all amendments
thereto, including any and all exhibits and other instruments and documents said attorney or
attorneys shall deem necessary, appropriate or advisable in connection therewith, and to file the
same with the Commission and to appear before the Commission in connection with any matter
relating thereto. Each of said attorneys shall have the full power and authority to do and perform
in the name and on behalf of the undersigned, in any and all capacities, every act whatsoever
necessary or desirable to be done in the premises, as fully and to all intents and purposes as the
undersigned might or could do in person, the undersigned hereby ratifying and approving the acts
that said attorneys and each of them, or their or his substitutes or substitute, may lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney as of the 22nd day
of February 2023.
By: /s/ Chadwick C. Deaton
Name: Chadwick C. Deaton
Exhibit 24
TRANSOCEAN LTD.
Power of Attorney
WHEREAS, TRANSOCEAN LTD., a Swiss company (the “Company”), intends to file with the
Securities and Exchange Commission (the “Commission”) pursuant to the Securities Exchange Act
of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder, an
Annual Report on Form 10-K for the fiscal year ended December 31, 2022 of the Company,
together with any and all exhibits, documents and other instruments and documents necessary,
advisable or appropriate in connection therewith, including any amendments thereto (the “Form
10-K”);
NOW, THEREFORE, the undersigned, in her capacity as a director or officer or both, as the case
may be, of the Company, does hereby appoint Jeremy D. Thigpen, Mark L. Mey, Brady K. Long,
Sandro Thoma, David Tonnel, and Daniel Ro-Trock, and each of them severally, her true and
lawful attorney or attorneys with power to act with or without the other, and with full power of
substitution and resubstitution, to execute in her name, place and stead, in her capacity as director,
officer or both, as the case may be, of the Company, the Form 10-K and any and all amendments
thereto, including any and all exhibits and other instruments and documents said attorney or
attorneys shall deem necessary, appropriate or advisable in connection therewith, and to file the
same with the Commission and to appear before the Commission in connection with any matter
relating thereto. Each of said attorneys shall have the full power and authority to do and perform
in the name and on behalf of the undersigned, in any and all capacities, every act whatsoever
necessary or desirable to be done in the premises, as fully and to all intents and purposes as the
undersigned might or could do in person, the undersigned hereby ratifying and approving the acts
that said attorneys and each of them, or their or his substitutes or substitute, may lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney as of the 22nd day
of February 2023.
By: /s/ Diane de Saint Victor
Name: Diane de Saint Victor
Exhibit 24
TRANSOCEAN LTD.
Power of Attorney
WHEREAS, TRANSOCEAN LTD., a Swiss company (the “Company”), intends to file with the
Securities and Exchange Commission (the “Commission”) pursuant to the Securities Exchange Act
of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder, an
Annual Report on Form 10-K for the fiscal year ended December 31, 2022 of the Company,
together with any and all exhibits, documents and other instruments and documents necessary,
advisable or appropriate in connection therewith, including any amendments thereto (the “Form
10-K”);
NOW, THEREFORE, the undersigned, in his capacity as a director or officer or both, as the case
may be, of the Company, does hereby appoint Jeremy D. Thigpen, Mark L. Mey, Brady K. Long,
Sandro Thoma, David Tonnel, and Daniel Ro-Trock, and each of them severally, his true and
lawful attorney or attorneys with power to act with or without the other, and with full power of
substitution and resubstitution, to execute in his name, place and stead, in his capacity as director,
officer or both, as the case may be, of the Company, the Form 10-K and any and all amendments
thereto, including any and all exhibits and other instruments and documents said attorney or
attorneys shall deem necessary, appropriate or advisable in connection therewith, and to file the
same with the Commission and to appear before the Commission in connection with any matter
relating thereto. Each of said attorneys shall have the full power and authority to do and perform
in the name and on behalf of the undersigned, in any and all capacities, every act whatsoever
necessary or desirable to be done in the premises, as fully and to all intents and purposes as the
undersigned might or could do in person, the undersigned hereby ratifying and approving the acts
that said attorneys and each of them, or their or his substitutes or substitute, may lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney as of the 22nd day
of February 2023.
By: /s/ Edward R. Muller
Name: Edward R. Muller
Exhibit 24
TRANSOCEAN LTD.
Power of Attorney
WHEREAS, TRANSOCEAN LTD., a Swiss company (the “Company”), intends to file with the
Securities and Exchange Commission (the “Commission”) pursuant to the Securities Exchange Act
of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder, an
Annual Report on Form 10-K for the fiscal year ended December 31, 2022 of the Company,
together with any and all exhibits, documents and other instruments and documents necessary,
advisable or appropriate in connection therewith, including any amendments thereto (the “Form
10-K”);
NOW, THEREFORE, the undersigned, in his capacity as a director or officer or both, as the case
may be, of the Company, does hereby appoint Jeremy D. Thigpen, Mark L. Mey, Brady K. Long,
Sandro Thoma, David Tonnel, and Daniel Ro-Trock, and each of them severally, his true and
lawful attorney or attorneys with power to act with or without the other, and with full power of
substitution and resubstitution, to execute in his name, place and stead, in his capacity as director,
officer or both, as the case may be, of the Company, the Form 10-K and any and all amendments
thereto, including any and all exhibits and other instruments and documents said attorney or
attorneys shall deem necessary, appropriate or advisable in connection therewith, and to file the
same with the Commission and to appear before the Commission in connection with any matter
relating thereto. Each of said attorneys shall have the full power and authority to do and perform
in the name and on behalf of the undersigned, in any and all capacities, every act whatsoever
necessary or desirable to be done in the premises, as fully and to all intents and purposes as the
undersigned might or could do in person, the undersigned hereby ratifying and approving the acts
that said attorneys and each of them, or their or his substitutes or substitute, may lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney as of the 22nd day
of February 2023.
By: /s/ Frederico F. Curado
Name: Frederico F. Curado
Exhibit 24
TRANSOCEAN LTD.
Power of Attorney
WHEREAS, TRANSOCEAN LTD., a Swiss company (the “Company”), intends to file with the
Securities and Exchange Commission (the “Commission”) pursuant to the Securities Exchange Act
of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder, an
Annual Report on Form 10-K for the fiscal year ended December 31, 2022 of the Company,
together with any and all exhibits, documents and other instruments and documents necessary,
advisable or appropriate in connection therewith, including any amendments thereto (the “Form
10-K”);
NOW, THEREFORE, the undersigned, in his capacity as a director or officer or both, as the case
may be, of the Company, does hereby appoint Jeremy D. Thigpen, Mark L. Mey, Brady K. Long,
Sandro Thoma, David Tonnel, and Daniel Ro-Trock, and each of them severally, his true and
lawful attorney or attorneys with power to act with or without the other, and with full power of
substitution and resubstitution, to execute in his name, place and stead, in his capacity as director,
officer or both, as the case may be, of the Company, the Form 10-K and any and all amendments
thereto, including any and all exhibits and other instruments and documents said attorney or
attorneys shall deem necessary, appropriate or advisable in connection therewith, and to file the
same with the Commission and to appear before the Commission in connection with any matter
relating thereto. Each of said attorneys shall have the full power and authority to do and perform
in the name and on behalf of the undersigned, in any and all capacities, every act whatsoever
necessary or desirable to be done in the premises, as fully and to all intents and purposes as the
undersigned might or could do in person, the undersigned hereby ratifying and approving the acts
that said attorneys and each of them, or their or his substitutes or substitute, may lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney as of the 22nd day
of February 2023.
By: /s/ Frederik W. Mohn
Name: Frederik W. Mohn
Exhibit 24
TRANSOCEAN LTD.
Power of Attorney
WHEREAS, TRANSOCEAN LTD., a Swiss company (the “Company”), intends to file with the
Securities and Exchange Commission (the “Commission”) pursuant to the Securities Exchange Act
of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder, an
Annual Report on Form 10-K for the fiscal year ended December 31, 2022 of the Company,
together with any and all exhibits, documents and other instruments and documents necessary,
advisable or appropriate in connection therewith, including any amendments thereto (the “Form
10-K”);
NOW, THEREFORE, the undersigned, in his capacity as a director or officer or both, as the case
may be, of the Company, does hereby appoint Jeremy D. Thigpen, Mark L. Mey, Brady K. Long,
Sandro Thoma, David Tonnel, and Daniel Ro-Trock, and each of them severally, his true and
lawful attorney or attorneys with power to act with or without the other, and with full power of
substitution and resubstitution, to execute in his name, place and stead, in his capacity as director,
officer or both, as the case may be, of the Company, the Form 10-K and any and all amendments
thereto, including any and all exhibits and other instruments and documents said attorney or
attorneys shall deem necessary, appropriate or advisable in connection therewith, and to file the
same with the Commission and to appear before the Commission in connection with any matter
relating thereto. Each of said attorneys shall have the full power and authority to do and perform
in the name and on behalf of the undersigned, in any and all capacities, every act whatsoever
necessary or desirable to be done in the premises, as fully and to all intents and purposes as the
undersigned might or could do in person, the undersigned hereby ratifying and approving the acts
that said attorneys and each of them, or their or his substitutes or substitute, may lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney as of the 22nd day
of February 2023.
By: /s/ Glyn A. Barker
Name: Glyn A. Barker
Exhibit 24
TRANSOCEAN LTD.
Power of Attorney
WHEREAS, TRANSOCEAN LTD., a Swiss company (the “Company”), intends to file with the
Securities and Exchange Commission (the “Commission”) pursuant to the Securities Exchange Act
of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder, an
Annual Report on Form 10-K for the fiscal year ended December 31, 2022 of the Company,
together with any and all exhibits, documents and other instruments and documents necessary,
advisable or appropriate in connection therewith, including any amendments thereto (the “Form
10-K”);
NOW, THEREFORE, the undersigned, in his capacity as a director or officer or both, as the case
may be, of the Company, does hereby appoint Mark L. Mey, Brady K. Long, Sandro Thoma,
David Tonnel, and Daniel Ro-Trock, and each of them severally, his true and lawful attorney or
attorneys with power to act with or without the other, and with full power of substitution and
resubstitution, to execute in his name, place and stead, in his capacity as director, officer or both, as
the case may be, of the Company, the Form 10-K and any and all amendments thereto, including
any and all exhibits and other instruments and documents said attorney or attorneys shall deem
necessary, appropriate or advisable in connection therewith, and to file the same with the
Commission and to appear before the Commission in connection with any matter relating
thereto. Each of said attorneys shall have the full power and authority to do and perform in the
name and on behalf of the undersigned, in any and all capacities, every act whatsoever necessary
or desirable to be done in the premises, as fully and to all intents and purposes as the undersigned
might or could do in person, the undersigned hereby ratifying and approving the acts that said
attorneys and each of them, or their or his substitutes or substitute, may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney as of the 22nd day
of February 2023.
By: /s/ Jeremy D. Thigpen
Name: Jeremy D. Thigpen
Exhibit 24
TRANSOCEAN LTD.
Power of Attorney
WHEREAS, TRANSOCEAN LTD., a Swiss company (the “Company”), intends to file with the
Securities and Exchange Commission (the “Commission”) pursuant to the Securities Exchange Act
of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder, an
Annual Report on Form 10-K for the fiscal year ended December 31, 2022 of the Company,
together with any and all exhibits, documents and other instruments and documents necessary,
advisable or appropriate in connection therewith, including any amendments thereto (the “Form
10-K”);
NOW, THEREFORE, the undersigned, in her capacity as a director or officer or both, as the case
may be, of the Company, does hereby appoint Jeremy D. Thigpen, Mark L. Mey, Brady K. Long,
Sandro Thoma, David Tonnel, and Daniel Ro-Trock, and each of them severally, her true and
lawful attorney or attorneys with power to act with or without the other, and with full power of
substitution and resubstitution, to execute in her name, place and stead, in her capacity as director,
officer or both, as the case may be, of the Company, the Form 10-K and any and all amendments
thereto, including any and all exhibits and other instruments and documents said attorney or
attorneys shall deem necessary, appropriate or advisable in connection therewith, and to file the
same with the Commission and to appear before the Commission in connection with any matter
relating thereto. Each of said attorneys shall have the full power and authority to do and perform
in the name and on behalf of the undersigned, in any and all capacities, every act whatsoever
necessary or desirable to be done in the premises, as fully and to all intents and purposes as the
undersigned might or could do in person, the undersigned hereby ratifying and approving the acts
that said attorneys and each of them, or their or his substitutes or substitute, may lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney as of the 22nd day
of February 2023.
By: /s/ Margareth Øvrum
Name: Margareth Øvrum
Exhibit 24
TRANSOCEAN LTD.
Power of Attorney
WHEREAS, TRANSOCEAN LTD., a Swiss company (the “Company”), intends to file with the
Securities and Exchange Commission (the “Commission”) pursuant to the Securities Exchange Act
of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder, an
Annual Report on Form 10-K for the fiscal year ended December 31, 2022 of the Company,
together with any and all exhibits, documents and other instruments and documents necessary,
advisable or appropriate in connection therewith, including any amendments thereto (the “Form
10-K”);
NOW, THEREFORE, the undersigned, in his capacity as a director or officer or both, as the case
may be, of the Company, does hereby appoint Jeremy D. Thigpen, Mark L. Mey, Brady K. Long,
Sandro Thoma, David Tonnel, and Daniel Ro-Trock, and each of them severally, his true and
lawful attorney or attorneys with power to act with or without the other, and with full power of
substitution and resubstitution, to execute in his name, place and stead, in his capacity as director,
officer or both, as the case may be, of the Company, the Form 10-K and any and all amendments
thereto, including any and all exhibits and other instruments and documents said attorney or
attorneys shall deem necessary, appropriate or advisable in connection therewith, and to file the
same with the Commission and to appear before the Commission in connection with any matter
relating thereto. Each of said attorneys shall have the full power and authority to do and perform
in the name and on behalf of the undersigned, in any and all capacities, every act whatsoever
necessary or desirable to be done in the premises, as fully and to all intents and purposes as the
undersigned might or could do in person, the undersigned hereby ratifying and approving the acts
that said attorneys and each of them, or their or his substitutes or substitute, may lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney as of the 22nd day
of February 2023.
By: /s/ Samuel J. Merksamer
Name: Samuel J. Merksamer
Exhibit 24
TRANSOCEAN LTD.
Power of Attorney
WHEREAS, TRANSOCEAN LTD., a Swiss company (the “Company”), intends to file with the
Securities and Exchange Commission (the “Commission”) pursuant to the Securities Exchange Act
of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder, an
Annual Report on Form 10-K for the fiscal year ended December 31, 2022 of the Company,
together with any and all exhibits, documents and other instruments and documents necessary,
advisable or appropriate in connection therewith, including any amendments thereto (the “Form
10-K”);
NOW, THEREFORE, the undersigned, in her capacity as a director or officer or both, as the case
may be, of the Company, does hereby appoint Jeremy D. Thigpen, Mark L. Mey, Brady K. Long,
Sandro Thoma, David Tonnel, and Daniel Ro-Trock, and each of them severally, her true and
lawful attorney or attorneys with power to act with or without the other, and with full power of
substitution and resubstitution, to execute in her name, place and stead, in her capacity as director,
officer or both, as the case may be, of the Company, the Form 10-K and any and all amendments
thereto, including any and all exhibits and other instruments and documents said attorney or
attorneys shall deem necessary, appropriate or advisable in connection therewith, and to file the
same with the Commission and to appear before the Commission in connection with any matter
relating thereto. Each of said attorneys shall have the full power and authority to do and perform
in the name and on behalf of the undersigned, in any and all capacities, every act whatsoever
necessary or desirable to be done in the premises, as fully and to all intents and purposes as the
undersigned might or could do in person, the undersigned hereby ratifying and approving the acts
that said attorneys and each of them, or their or his substitutes or substitute, may lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney as of the 22nd day
of February 2023.
By: /s/ Vanessa C.L. Chang
Name: Vanessa C. L. Chang
Exhibit 24
TRANSOCEAN LTD.
Power of Attorney
WHEREAS, TRANSOCEAN LTD., a Swiss company (the “Company”), intends to file with the
Securities and Exchange Commission (the “Commission”) pursuant to the Securities Exchange Act
of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder, an
Annual Report on Form 10-K for the fiscal year ended December 31, 2022 of the Company,
together with any and all exhibits, documents and other instruments and documents necessary,
advisable or appropriate in connection therewith, including any amendments thereto (the “Form
10-K”);
NOW, THEREFORE, the undersigned, in his capacity as a director or officer or both, as the case
may be, of the Company, does hereby appoint Jeremy D. Thigpen, Mark L. Mey, Brady K. Long,
Sandro Thoma, David Tonnel, and Daniel Ro-Trock, and each of them severally, his true and
lawful attorney or attorneys with power to act with or without the other, and with full power of
substitution and resubstitution, to execute in his name, place and stead, in his capacity as director,
officer or both, as the case may be, of the Company, the Form 10-K and any and all amendments
thereto, including any and all exhibits and other instruments and documents said attorney or
attorneys shall deem necessary, appropriate or advisable in connection therewith, and to file the
same with the Commission and to appear before the Commission in connection with any matter
relating thereto. Each of said attorneys shall have the full power and authority to do and perform
in the name and on behalf of the undersigned, in any and all capacities, every act whatsoever
necessary or desirable to be done in the premises, as fully and to all intents and purposes as the
undersigned might or could do in person, the undersigned hereby ratifying and approving the acts
that said attorneys and each of them, or their or his substitutes or substitute, may lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney as of the 22nd day
of February 2023.
By: /s/ Vincent J. Intrieri
Name: Vincent J. Intrieri
CEO CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 31.1
I, Jeremy D. Thigpen, certify that:
1.
2.
3.
4.
I have reviewed this report on Form 10-K of Transocean Ltd.;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of,
and for, the periods presented in this report;
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period
in which this report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, 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;
c)
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control
over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of
directors (or persons performing the equivalent functions):
a)
all significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process,
summarize and report financial information; and
b)
any fraud, whether or not material, that involves management or other employees who have a significant role
in the registrant’s internal control over financial reporting.
Dated: February 22, 2023
/s/ Jeremy D. Thigpen
Jeremy D. Thigpen
Chief Executive Officer
CFO CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 31.2
I, Mark L. Mey, certify that:
1.
2.
3.
4.
I have reviewed this report on Form 10-K of Transocean Ltd.;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of,
and for, the periods presented in this report;
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period
in which this report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, 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;
c)
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control
over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of
directors (or persons performing the equivalent functions):
a)
all significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process,
summarize and report financial information; and
b)
any fraud, whether or not material, that involves management or other employees who have a significant role
in the registrant’s internal control over financial reporting.
Dated: February 22, 2023
/s/ Mark L. Mey
Mark L. Mey
Executive Vice President and Chief Financial Officer
CERTIFICATION PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002 (SUBSECTIONS (a) AND (b)
OF SECTION 1350, CHAPTER 63 OF TITLE 18, UNITED STATES CODE)
Exhibit 32.1
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63
of Title 18, United States Code), I, Jeremy D. Thigpen, Chief Executive Officer of Transocean Ltd., a Swiss corporation
(the “Company”), hereby certify, to my knowledge, that:
(1)
(2)
the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 (the “Report”) fully
complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
information contained in the Report fairly presents, in all material respects, the financial condition and
results of operations of the Company.
Dated: February 22, 2023
/s/ Jeremy D. Thigpen
Jeremy D. Thigpen
Chief Executive Officer
The foregoing certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) and is not being filed as part of the
Report or as a separate disclosure document.
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained
by the Company and furnished to the U.S. Securities and Exchange Commission or its staff upon request.
CERTIFICATION PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002 (SUBSECTIONS (a) AND (b)
OF SECTION 1350, CHAPTER 63 OF TITLE 18, UNITED STATES CODE)
Exhibit 32.2
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63
of Title 18, United States Code), I, Mark L. Mey, Executive Vice President and Chief Financial Officer of Transocean Ltd.,
a Swiss corporation (the “Company”), hereby certify, to my knowledge, that:
(1)
(2)
the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 (the “Report”) fully
complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
information contained in the Report fairly presents, in all material respects, the financial condition and
results of operations of the Company.
Dated: February 22, 2023
/s/ Mark L. Mey
Mark L. Mey
Executive Vice President and Chief Financial Officer
The foregoing certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) and is not being filed as part of the
Report or as a separate disclosure document.
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained
by the Company and furnished to the U.S. Securities and Exchange Commission or its staff upon request.