Transocean (RIG -0.35%), a leading offshore drilling contractor specializing in deepwater and harsh environment rigs, announced its earnings on August 4, 2025. The key news from this release was the company’s GAAP revenue of $988 million, beating expectations of $976.4 million, and an adjusted non-GAAP earnings per share of $0.00, topping the anticipated $(0.01) loss. Year over year, GAAP revenue increased by 14.8%, and adjusted EBITDA reached $344 million. However, the quarter was also marked by a large GAAP net loss due to significant asset impairment charges. Overall, the period demonstrated solid operational momentum and cost discipline, balanced by persistent challenges in asset values and backlog trends.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $0.00 | $(0.01) | $(0.15) | 0.15 |
| Revenue | $988 million | $976.4 million | $861 million | 14.8 % |
| Adjusted EBITDA | $344 million | $284 million | 21.1 % | |
| Adjusted EBITDA Margin | 34.9 % | 33.0 % | 1.9 pp | |
| Free Cash Flow (Non-GAAP) | $104 million | Not provided |
Source: Analyst estimates for the quarter provided by FactSet.
Business Overview and Focus Areas
Transocean (RIG -0.35%) operates a fleet of offshore drilling rigs, providing services mainly to oil and gas companies seeking to access reserves beneath deep or challenging waters. Its rigs include ultra-deepwater floaters and harsh environment floaters, which can operate under extreme conditions in oceans around the world. The company’s core business revolves around leasing drilling time to major oil producers such as Shell, Petrobras, and Equinor.
Recent efforts have focused on technological innovations, such as dual-activity drilling on select rigs and use of automated safety systems, to drive operational efficiency and safety. Other priorities include maximizing rig utilization rates, managing operating expenses, and maintaining a robust contract backlog. Success for the company depends on high revenue efficiency, optimal fleet deployment, steady contract renewal, and prudent cost management in a volatile market.
Quarterly Highlights: Operational and Financial Results
In the second quarter, Contract drilling revenue (GAAP) increased by $127 million year-over-year. Both ultra-deepwater floaters and harsh environment floaters contributed: ultra-deepwater rigs delivered $699 million in revenue, while harsh environment rigs added $289 million in contract drilling revenues. The company improved its total fleet rig utilization rate to 67.3%, compared to 57.8% in Q2 2024. Also, Revenue efficiency, which measures the ability to generate expected revenue from available rig days, was 96.6%.
Cost control stood out, with Operating and maintenance expenses fell sequentially to $599 million. General and administrative expenses declined to $49 million, down from $59 million in Q2 2024. Management continued to emphasize expense discipline, with CEO Keelan Adamson reaffirmed progress toward Transocean’s goal to reduce debt by over $700 million in 2025.
Adjusted EBITDA, a measure of operating profitability excluding certain non-cash and non-recurring items, rose to $344 million, up 21.1% compared to Q2 2024. The adjusted EBITDA margin also expanded to 34.9%. The company reported free cash flow (non-GAAP) of $104 million, a turnaround from the prior quarter. This helped support continued deleveraging.
However, the quarter was impacted by a significant GAAP net loss of $938 million, mainly caused by $1.13 billion in asset impairment charges and a $24 million loss from debt conversion. These were partially offset by $195 million in discrete tax benefits. Backlog, which represents secured future revenue, declined to $7.2 billion as of July 2025, down from $8.74 billion at the end of December 2024.
Product Lines and Market Context
The company’s key products are ultra-deepwater floaters and harsh environment floaters, both types of mobile offshore drilling units. These rigs are specialized vessels capable of operating in deep ocean waters and harsh weather or sea conditions. The ultra-deepwater floaters, in particular, use dual-activity drilling technology which enables simultaneous drilling operations, improving efficiency and reducing downtime.
Dayrates—the daily price charged to oil companies for use of a rig—remained firm for both categories, with average fleet-wide daily revenue just above $458,600. The company’s contract backlog continued to have heavy exposure to major customers. Although some rigs were idle between contracts, management reported steady bidding activity and stable demand, reflecting constructive offshore oil and gas fundamentals. The company also returned to positive free cash generation of $104 million as capital expenditures declined and operating cash flow improved.
Looking Ahead: Outlook and Guidance
For the remainder of fiscal 2025, management reaffirmed its full-year 2025 guidance, targeting contract drilling revenue between $3.85 billion and $3.95 billion. Operating and maintenance expense is expected to be between $2.3 billion and $2.4 billion for 2025, and capital expenditures have been reduced to $115 million for 2025. The year-end 2025 liquidity position is forecast to be between $1.45 billion and $1.55 billion.
No explicit quarterly financial guidance was announced for the coming period. Management highlighted a focus on continued cost control, backlog replenishment, and executing on further debt reduction. Persistent headwinds include the risk of further asset impairments, the need to sustain high utilization levels, and ongoing debt management in what remains a cyclical sector.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
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