Transocean Adds $2 Billion to Backlog With New Contracts, Raises 2027 Coverage to 95%
Key Facts
Transocean said in its fleet status report issued on November 2 that 9 new contracts had added about $2.0 billion to its backlog since the August report, at a weighted average dayrate of about $423,000. The contracts lifted backlog to about $8.0 billion and improved the company’s contract coverage for 2027 to about 95%, according to Chief Executive Kilan Adamson. The awards span the Gulf of Mexico, Equatorial Guinea, India and Norway, with the operators of the Gulf and Equatorial Guinea contracts not disclosed. Adamson said, "New awards in deepwater and harsh environments have increased our backlog to about $8.0 billion and improved our 2027 contract coverage to about 95%." These figures provide greater visibility into contracted work for next year, while backlog remains a contractual value rather than realized revenue.
For the Deepwater Conqueror, the company reported an award to drill 2 wells in Equatorial Guinea and another contract for 5 wells in the U.S. Gulf of Mexico. The company did not name the operators for either contract, according to the fleet report filed with the U.S. Securities and Exchange Commission. The Deepwater Proteus also received a contract for 10 wells in the U.S. Gulf from an unnamed operator. The rig’s customer exercised an additional 1-well option, which the company estimates will involve about 60 days of work. These jobs add to the company’s activity in the Gulf and West Africa, alongside contracts announced in other regions.
In Asia, Transocean announced a binding 2-year letter of award with Oil and Natural Gas Corporation, "ONGC," for the Dhirubhai Deepwater KG2. In Norway, Transocean Norge received a 2-well contract with A/S Norske Shell, including an option for 1 well. A customer of Transocean Equinox exercised an option for an additional well, which the company estimates will involve about 50 days of work. These jobs add to contracts in the Gulf of Mexico and Equatorial Guinea, broadening the geographic spread of the new awards. Also in Norway, the company added about $1.0 billion to its backlog after receiving final approval in late September from Equinor for a previously announced agreement covering 3 harsh-environment semisubmersible rigs.
Backlog growth came alongside a decline in third-quarter contract drilling revenue to $937 million, compared with $966 million in the previous quarter and $1.028 billion a year earlier. The company attributed the sequential decline mainly to an expected decrease in rig utilization. Transocean reported net income of $26 million, adjusted EBITDA of $313 million and free cash flow of $131 million for the quarter. It ended the period with total liquidity of $1.3 billion, including an undrawn $510 million revolving credit facility. Adamson said strong cash flow enabled the company to repay the remaining $200 million of debt associated with the Deepwater Aquila notes ahead of schedule.
Regarding the pending deal with Valaris, Transocean said all regulatory approvals had been received and it expects to complete the transaction on December 1, 2026. The company said it is focused on integration planning and delivering annual synergies it has identified at $200 million. Preliminary 2027 guidance also included contract drilling revenue of between $3,850 million and $4,000 million, and total liquidity of between $1,500 million and $1,700 million at year-end. The company is scheduled to hold a conference call to discuss third-quarter results on November 3 at 9 a.m. Eastern Time. These dates and estimates mark the next steps the company identified after announcing the contracts and quarterly results.