Transocean Ltd. Q1 FY2025 earnings call

Jeremy Thigpen announced Keelan Adamson will become Transocean's President and CEO effective May 1. Keelan Adamson mentioned Transocean's first quarter financial results, including adjusted EBITDA and contract drilling revenues. He also noted signing a priced option on the Deepwater Asgard and exercising options on the Transocean Equinox. Operationally, two programs started ahead of schedule. Discussion of industry macro dynamics, including customers' pivot to hydrocarbons, and regional market outlooks for various areas such as U.S. Gulf, Brazil, Africa, Mediterranean, etc. Thad Vayda recapped first quarter results, provided guidance for the second quarter and full year, and discussed liquidity and cost savings initiatives.

Transocean delivered adjusted EBITDA of $244 million on $906 million of contract drilling revenues in the first quarter of 2025, resulting in an adjusted EBITDA margin of approximately 27%.

For the second quarter, contract drilling revenues are expected to be between $970 million and $990 million. Second quarter O&M expense is expected to be within $610 million to $630 million. Full year 2025 contract drilling revenues are expected to be between $3.85 billion and $3.95 billion. Full year O&M expense is between $2.3 billion and $2.4 billion. 2025 capital expenditures are approximately $115 million. Year-end 2025 liquidity is forecasted to be between $1.45 billion and $1.55 billion. The company has identified approximately $100 million of cash cost savings expected in 2025 with similar savings anticipated in 2026.

Trade tensions and OPEC announcements have introduced market volatility and uncertainty. Tariffs could have direct impacts (importation of materials) and indirect impacts (supplier cost increases), though direct exposure is not expected to be significant currently.

Q: On contract announcement timing, when could most of the upcoming tenders and programs be announced?

A: Roddie Mackenzie said several awards over the summer and into the end of the year, with the second half of the year being prolific in terms of long-term awards.

Q: On expected day rates for upcoming contracts in the second half of the year, will there be day rate pressure?

A: Roddie Mackenzie said near-term short-term work may have pressure, but long-term work should be resilient at current levels.

Q: Implications from Shell Awards for Transocean?

A: Jeremy Thigpen and Keelan Adamson said Shell has more demand, Transocean is in good shape with long-term opportunities ahead.

Q: Activity assumptions for West Africa?

A: Jeremy Thigpen said West Africa has multiyear and multi-rig opportunities starting late 2026 into 2027.

Q: Cost savings identified, any costs to incur?

A: Jeremy Thigpen said at this point, no significant costs associated with achieving the savings.

Q: Fleet status, DD III and Discoverer Inspiration?

A: Still held for sale, looked at quarterly, with sustaining costs for cold-stacked assets minimal.

Q: Demand fundamentals and new contracts?

A: Roddie Mackenzie said fundamentals are strong, long-term contracts have a floor, near-term may have pressure but long-term is positive