RIG

Transocean is the leading offshore deepwater and harsh-environment drilling contractor, and the operating fundamentals are genuinely improving even as the GAAP result is alarming. The headline FY2025 net loss of $2.92B (EPS -$3.04) is dominated by a non-cash $3.05B held-for-sale impairment on nine rigs being retired/sold — not an operational collapse. Underneath that, the business is recovering with the offshore cycle: contract drilling revenue rose 13% to $3.96B, rig utilization climbed to 72.4% from 60.5%, total-fleet average daily revenue rose to $456,700 from $430,100, and revenue efficiency held at 96.5%. Operating cash flow jumped 67.6% to $749M while capex was cut in half to $123M.

The problem is the balance sheet and capital structure. Transocean carries a very large debt load (around $9B historically) and interest expense surged 53% to $555M in 2025, swamping operating profitability — the company has now lost money for five consecutive years and retained earnings stand at -$7.46B. Management spent 2025 in heavy liability management (new 7.875% notes, redemptions, tender offers, debt-for-equity exchanges) and issued substantial equity (shares up 25.5%, including a 143.8M-share raise for $421M), so existing holders are being diluted to keep the structure intact. In February 2026 it agreed to acquire Valaris in an all-stock deal (15.235 Transocean shares per Valaris share), which would add scale but also further dilution and integration risk.