Transocean Ltd. 10-K

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. ​ - 40 - Table of Contents ​ 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. ​ ​ ​ ​ Income Taxes Description of the Matter ​ 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, ​ 2022 2021 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Contract drilling revenues ​ $ 2,575 ​ $ 2,556 $ 3,152 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Costs and expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating and maintenance ​ ​ 1,679 ​ ​ 1,697 ​ ​ 2,000 ​ Depreciation and amortization ​ ​ 735 ​ ​ 742 ​ ​ 781 ​ General and administrative ​ ​ 182 ​ ​ 167 ​ ​ 183 ​ ​ ​ ​ 2,596 ​ ​ 2,606 ​ ​ 2,964 ​ Loss on impairment ​ ​ — ​ ​ — ​ ​ ( 597 ) ​ Loss on disposal of assets, net ​ ​ ( 10 ) ​ ​ ( 62 ) ​ ​ ( 84 ) ​ Operating loss ​ ​ ( 31 ) ​ ​ ( 112 ) ​ ​ ( 493 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other income (expense), net ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest income ​ ​ 27 ​ ​ 15 ​ ​ 21 ​ Interest expense, net of amounts capitalized ​ ​ ( 561 ) ​ ​ ( 447 ) ​ ​ ( 575 ) ​ Gain on restructuring and retirement of debt ​ ​ 8 ​ ​ 51 ​ ​ 533 ​ Other, net ​ ​ ( 5 ) ​ ​ 23 ​ ​ ( 27 ) ​ ​ ​ ​ ( 531 ) ​ ​ ( 358 ) ​ ​ ( 48 ) ​ Loss before income tax expense ​ ​ ( 562 ) ​ ​ ( 470 ) ​ ​ ( 541 ) ​ Income tax expense ​ ​ 59 ​ ​ 121 ​ ​ 27 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net loss ​ ​ ( 621 ) ​ ​ ( 591 ) ​ ​ ( 568 ) ​ Net income (loss) attributable to noncontrolling interest ​ ​ — ​ ​ 1 ​ ​ ( 1 ) ​ Net loss attributable to controlling interest ​ $ ( 621 ) ​ $ ( 592 ) $ ( 567 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loss per share, basic and diluted ​ $ ( 0.89 ) ​ $ ( 0.93 ) $ ( 0.92 ) ​ Weighted-average shares, basic and diluted ​ ​ 699 ​ ​ 637 ​ ​ 615 ​ ​ ​ ​ ​ See accompanying notes. ​ - 44 - Table of Contents TRANSOCEAN LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (in millions) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ended December 31, ​ 2022 2021 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net loss ​ $ ( 621 ) ​ $ ( 591 ) ​ $ ( 568 ) ​ Net income (loss) attributable to noncontrolling interest ​ ​ — ​ ​ 1 ​ ​ ( 1 ) ​ Net loss attributable to controlling interest ​ ​ ( 621 ) ​ ​ ( 592 ) ​ ​ ( 567 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Components of net periodic benefit (income) costs before reclassifications ​ ​ ( 109 ) ​ ​ 175 ​ ​ 38 ​ Components of net periodic benefit costs reclassified to net loss ​ ​ 3 ​ ​ 10 ​ ​ 25 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other comprehensive income (loss) before income taxes ​ ​ ( 106 ) ​ ​ 185 ​ ​ 63 ​ Income taxes related to other comprehensive income (loss) ​ ​ 5 ​ ​ ( 6 ) ​ ​ ( 2 ) ​ Other comprehensive income (loss) ​ ​ ( 101 ) ​ ​ 179 ​ ​ 61 ​ Other comprehensive income attributable to noncontrolling interest ​ ​ — ​ ​ — ​ ​ — ​ Other comprehensive income (loss) attributable to controlling interest ​ ​ ( 101 ) ​ ​ 179 ​ ​ 61 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total comprehensive loss ​ ​ ( 722 ) ​ ​ ( 412 ) ​ ​ ( 507 ) ​ Total comprehensive income (loss) attributable to noncontrolling interest ​ ​ — ​ ​ 1 ​ ​ ( 1 ) ​ Total comprehensive loss attributable to controlling interest ​ $ ( 722 ) ​ $ ( 413 ) ​ $ ( 506 ) ​ ​ ​ ​ ​ See accompanying notes. ​ - 45 - Table of Contents TRANSOCEAN LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in millions, except share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2022 2021 ​ ​ ​ ​ ​ ​ ​ Assets ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 683 ​ $ 976 ​ Accounts receivable, net ​ ​ 485 ​ ​ 492 ​ Materials and supplies, net ​ ​ 388 ​ ​ 392 ​ Restricted cash and cash equivalents ​ ​ 308 ​ ​ 436 ​ Other current assets ​ ​ 144 ​ ​ 148 ​ Total current assets ​ ​ 2,008 ​ ​ 2,444 ​ ​ ​ ​ ​ ​ ​ ​ ​ Property and equipment ​ ​ 24,217 ​ ​ 23,152 ​ Less accumulated depreciation ​ ​ ( 6,748 ) ​ ​ ( 6,054 ) ​ Property and equipment, net ​ ​ 17,469 ​ ​ 17,098 ​ Contract intangible assets ​ ​ 56 ​ ​ 173 ​ Deferred tax assets, net ​ ​ 13 ​ ​ 7 ​ Other assets ​ ​ 890 ​ ​ 959 ​ Total assets ​ $ 20,436 ​ $ 20,681 ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities and equity ​ ​ ​ ​ ​ ​ ​ Accounts payable ​ $ 281 ​ $ 228 ​ Accrued income taxes ​ ​ 19 ​ ​ 17 ​ Debt due within one year ​ ​ 719 ​ ​ 513 ​ Other current liabilities ​ ​ 539 ​ ​ 545 ​ Total current liabilities ​ ​ 1,558 ​ ​ 1,303 ​ ​ ​ ​ ​ ​ ​ ​ ​ Long-term debt ​ ​ 6,628 ​ ​ 6,657 ​ Deferred tax liabilities, net ​ ​ 493 ​ ​ 447 ​ Other long-term liabilities ​ ​ 965 ​ ​ 1,068 ​ Total long-term liabilities ​ ​ 8,086 ​ ​ 8,172 ​ ​ ​ ​ ​ ​ ​ ​ ​ 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 ​ ​ 71 ​ ​ 64 ​ Additional paid-in capital ​ ​ 13,984 ​ ​ 13,683 ​ Accumulated deficit ​ ​ ( 3,079 ) ​ ​ ( 2,458 ) ​ Accumulated other comprehensive loss ​ ​ ( 185 ) ​ ​ ( 84 ) ​ Total controlling interest shareholders’ equity ​ ​ 10,791 ​ ​ 11,205 ​ Noncontrolling interest ​ ​ 1 ​ ​ 1 ​ Total equity ​ ​ 10,792 ​ ​ 11,206 ​ Total liabilities and equity ​ $ 20,436 ​ $ 20,681 ​ ​ ​ ​ See accompanying notes. ​ - 46 - Table of Contents TRANSOCEAN LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EQUITY (in millions) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ended December 31, ​ Years ended December 31, ​ 2022 2021 2020 2022 2021 2020 Shares ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance, beginning of period ​ 655 ​ 615 ​ 612 ​ $ 64 ​ $ 60 ​ $ 59 ​ Issuance of shares ​ 67 ​ 40 ​ 3 ​ ​ 7 ​ ​ 4 ​ ​ 1 ​ Balance, end of period ​ 722 ​ 655 ​ 615 ​ $ 71 ​ $ 64 ​ $ 60 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional paid-in capital ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance, beginning of period ​ ​ ​ ​ ​ ​ ​ $ 13,683 ​ $ 13,501 ​ $ 13,424 ​ Share-based compensation ​ ​ ​ ​ ​ ​ ​ ​ 29 ​ ​ 28 ​ ​ 31 ​ Issuance of shares ​ ​ ​ ​ ​ ​ ​ ​ 256 ​ ​ 154 ​ ​ ( 1 ) ​ Issuance of warrants ​ ​ ​ ​ ​ ​ ​ ​ 16 ​ ​ — ​ ​ — ​ Equity component of convertible debt instruments ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ — ​ ​ 46 ​ Other, net ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ — ​ ​ 1 ​ Balance, end of period ​ ​ ​ ​ ​ ​ ​ $ 13,984 ​ $ 13,683 ​ $ 13,501 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated deficit ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance, beginning of period ​ ​ ​ ​ ​ ​ ​ $ ( 2,458 ) ​ $ ( 1,866 ) ​ $ ( 1,297 ) ​ Net loss attributable to controlling interest ​ ​ ​ ​ ​ ​ ​ ​ ( 621 ) ​ ​ ( 592 ) ​ ​ ( 567 ) ​ Effect of adopting accounting standards update ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ — ​ ​ ( 2 ) ​ Balance, end of period ​ ​ ​ ​ ​ ​ ​ $ ( 3,079 ) ​ $ ( 2,458 ) ​ $ ( 1,866 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated other comprehensive loss ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance, beginning of period ​ ​ ​ ​ ​ ​ ​ $ ( 84 ) ​ $ ( 263 ) ​ $ ( 324 ) ​ Other comprehensive income (loss) attributable to controlling interest ​ ​ ​ ​ ​ ​ ​ ​ ( 101 ) ​ ​ 179 ​ ​ 61 ​ Balance, end of period ​ ​ ​ ​ ​ ​ ​ $ ( 185 ) ​ $ ( 84 ) ​ $ ( 263 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total controlling interest shareholders’ equity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance, beginning of period ​ ​ ​ ​ ​ ​ ​ $ 11,205 ​ $ 11,432 ​ $ 11,862 ​ Total comprehensive loss attributable to controlling interest ​ ​ ​ ​ ​ ​ ​ ​ ( 722 ) ​ ​ ( 413 ) ​ ​ ( 506 ) ​ Share-based compensation ​ ​ ​ ​ ​ ​ ​ ​ 29 ​ ​ 28 ​ ​ 31 ​ Issuance of shares ​ ​ ​ ​ ​ ​ ​ ​ 263 ​ ​ 158 ​ ​ — ​ Issuance of warrants ​ ​ ​ ​ ​ ​ ​ ​ 16 ​ ​ — ​ ​ — ​ Equity component of convertible debt instruments ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ — ​ ​ 46 ​ Other, net ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ — ​ ​ ( 1 ) ​ Balance, end of period ​ ​ ​ ​ ​ ​ ​ $ 10,791 ​ $ 11,205 ​ $ 11,432 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Noncontrolling interest ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance, beginning of period ​ ​ ​ ​ ​ ​ ​ $ 1 ​ $ 3 ​ $ 5 ​ Total comprehensive income (loss) attributable to noncontrolling interest ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ 1 ​ ​ ( 1 ) ​ Acquisition of noncontrolling interest ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ( 3 ) ​ ​ — ​ Other, net ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ — ​ ​ ( 1 ) ​ Balance, end of period ​ ​ ​ ​ ​ ​ ​ $ 1 ​ $ 1 ​ $ 3 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total equity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance, beginning of period ​ ​ ​ ​ ​ ​ ​ $ 11,206 ​ $ 11,435 ​ $ 11,867 ​ Total comprehensive loss ​ ​ ​ ​ ​ ​ ​ ​ ( 722 ) ​ ​ ( 412 ) ​ ​ ( 507 ) ​ Share-based compensation ​ ​ ​ ​ ​ ​ ​ ​ 29 ​ ​ 28 ​ ​ 31 ​ Issuance of shares ​ ​ ​ ​ ​ ​ ​ ​ 263 ​ ​ 158 ​ ​ — ​ Issuance of warrants ​ ​ ​ ​ ​ ​ ​ ​ 16 ​ ​ — ​ ​ — ​ Acquisition of noncontrolling interest ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ( 3 ) ​ ​ — ​ Equity component of convertible debt instruments ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ — ​ ​ 46 ​ Other, net ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ — ​ ​ ( 2 ) ​ Balance, end of period ​ ​ ​ ​ ​ ​ ​ $ 10,792 ​ $ 11,206 ​ $ 11,435 ​ ​ ​ See accompanying notes. ​ - 47 - Table of Contents TRANSOCEAN LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ended December 31, ​ ​ 2022 2021 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash flows from operating activities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net loss ​ $ ( 621 ) ​ $ ( 591 ) ​ $ ( 568 ) ​ Adjustments to reconcile to net cash provided by operating activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Contract intangible asset amortization ​ ​ 117 ​ ​ 220 ​ ​ 215 ​ Depreciation and amortization ​ ​ 735 ​ ​ 742 ​ ​ 781 ​ Share-based compensation expense ​ ​ 29 ​ ​ 28 ​ ​ 31 ​ Loss on impairment ​ ​ — ​ ​ — ​ ​ 597 ​ Loss on impairment of investment in unconsolidated affiliates ​ ​ — ​ ​ 37 ​ ​ 62 ​ Loss on disposal of assets, net ​ ​ 10 ​ ​ 62 ​ ​ 84 ​ Fair value adjustment to bifurcated compound exchange feature ​ ​ 157 ​ ​ — ​ ​ — ​ Gain on restructuring and retirement of debt ​ ​ ( 8 ) ​ ​ ( 51 ) ​ ​ ( 533 ) ​ Deferred income tax expense ​ ​ 46 ​ ​ 128 ​ ​ 60 ​ Other, net ​ ​ 77 ​ ​ 77 ​ ​ 83 ​ Changes in deferred revenues, net ​ ​ ( 20 ) ​ ​ ( 108 ) ​ ​ ( 73 ) ​ Changes in deferred costs, net ​ ​ 1 ​ ​ ( 6 ) ​ ​ 12 ​ Changes in other operating assets and liabilities, net ​ ​ ( 75 ) ​ ​ 37 ​ ​ ( 353 ) ​ Net cash provided by operating activities ​ ​ 448 ​ ​ 575 ​ ​ 398 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash flows from investing activities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Capital expenditures ​ ​ ( 717 ) ​ ​ ( 208 ) ​ ​ ( 265 ) ​ Investments in equity of unconsolidated affiliates ​ ​ ( 42 ) ​ ​ ( 1 ) ​ ​ ( 19 ) ​ Investments in loans to unconsolidated affiliates ​ ​ ( 5 ) ​ ​ ( 33 ) ​ ​ ( 2 ) ​ Proceeds from disposal of assets, net ​ ​ 7 ​ ​ 9 ​ ​ 24 ​ Proceeds from maturities of unrestricted and restricted investments ​ ​ — ​ ​ — ​ ​ 5 ​ Net cash used in investing activities ​ ​ ( 757 ) ​ ​ ( 233 ) ​ ​ ( 257 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash flows from financing activities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Repayments of debt ​ ​ ( 554 ) ​ ​ ( 606 ) ​ ​ ( 1,637 ) ​ Proceeds from issuance of shares, net of issue costs ​ ​ 263 ​ ​ 158 ​ ​ — ​ Proceeds from issuance of debt, net of issue costs ​ ​ 175 ​ ​ — ​ ​ 743 ​ Proceeds from issuance of warrants, net of issue costs ​ ​ 12 ​ ​ — ​ ​ — ​ Other, net ​ ​ ( 8 ) ​ ​ ( 42 ) ​ ​ ( 36 ) ​ Net cash used in financing activities ​ ​ ( 112 ) ​ ​ ( 490 ) ​ ​ ( 930 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net decrease in unrestricted and restricted cash and cash equivalents ​ ​ ( 421 ) ​ ​ ( 148 ) ​ ​ ( 789 ) ​ Unrestricted and restricted cash and cash equivalents, beginning of period ​ ​ 1,412 ​ ​ 1,560 ​ ​ 2,349 ​ Unrestricted and restricted cash and cash equivalents, end of period ​ $ 991 ​ $ 1,412 ​ $ 1,560 ​ ​ ​ ​ ​ See accompanying notes. ​ - 48 - Table of Contents TRANSOCEAN LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1—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 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 - 49 - 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 . - 50 - 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 - 52 - 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 ​ Year ended December 31, 2021 ​ Year ended December 31, 2020 ​ ​ ​ Ultra- Harsh ​ ​ ​ Ultra- ​ Harsh ​ ​ ​ Ultra- ​ Harsh ​ ​ ​ ​ ​ ​ ​ ​ ​ deepwater environment ​ ​ ​ deepwater ​ environment ​ ​ ​ deepwater ​ environment ​ Midwater ​ ​ ​ ​ ​ ​ floaters floaters ​ Total ​ floaters ​ floaters ​ Total ​ floaters ​ floaters ​ floaters ​ Total ​ U.S. $ 1,135 ​ $ — ​ $ 1,135 ​ $ 1,096 ​ $ 2 ​ $ 1,098 ​ $ 1,302 ​ $ — ​ $ — ​ $ 1,302 ​ Norway ​ ​ — ​ ​ 835 ​ ​ 835 ​ ​ — ​ ​ 790 ​ ​ 790 ​ ​ — ​ ​ 876 ​ ​ — ​ ​ 876 ​ Other countries (a) ​ ​ 573 ​ ​ 32 ​ ​ 605 ​ ​ 624 ​ ​ 44 ​ ​ 668 ​ ​ 792 ​ ​ 170 ​ ​ 12 ​ ​ 974 ​ Total contract drilling revenues $ 1,708 ​ $ 867 ​ $ 2,575 ​ $ 1,720 ​ $ 836 ​ $ 2,556 ​ $ 2,094 ​ $ 1,046 ​ $ 12 ​ $ 3,152 ​ (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): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ 2022 2021 Deferred contract revenues, recorded in other current liabilities $ 124 ​ $ 83 ​ Deferred contract revenues, recorded in other long-term liabilities ​ ​ 204 ​ ​ 265 ​ Total contract liabilities $ 328 ​ $ 348 ​ Significant changes in contract liabilities were as follows (in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ended ​ ​ ​ December 31, ​ ​ 2022 2021 Total contract liabilities, beginning of period ​ $ 348 ​ $ 456 ​ Decrease due to recognition of revenues for goods and services ​ ​ ( 119 ) ​ ​ ( 149 ) ​ Increase due to goods and services transferred over time ​ ​ 99 ​ ​ 41 ​ Total contract liabilities, end of period ​ $ 328 ​ $ 348 ​ ​ - 53 - 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 ​ Year ended December 31, 2021 ​ ​ Gross ​ ​ ​ ​ Net ​ Gross ​ ​ ​ ​ Net ​ ​ carrying ​ Accumulated ​ carrying ​ carrying ​ Accumulated ​ carrying ​ amount ​ amortization ​ amount amount amortization amount Drilling contract intangible assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance, beginning of period $ 907 ​ $ ( 734 ) ​ $ 173 ​ $ 907 ​ $ ( 514 ) $ 393 ​ Amortization ​ ​ — ​ ​ ( 117 ) ​ ​ ( 117 ) ​ ​ — ​ ​ ( 220 ) ​ ​ ( 220 ) ​ Balance, end of period $ 907 ​ $ ( 851 ) ​ $ 56 ​ $ 907 ​ $ ( 734 ) $ 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): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2022 2021 Long-lived assets ​ ​ ​ ​ ​ ​ ​ U.S. $ 6,514 ​ $ 5,779 ​ Norway ​ ​ 3,255 ​ ​ 3,379 ​ Greece ​ ​ 3,022 ​ ​ 3,162 ​ Other countries (a) ​ ​ 5,171 ​ ​ 5,293 ​ Total long-lived assets $ 17,962 ​ $ 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. - 54 - 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, ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 2020 Construction work in progress, beginning of period ​ $ 1,017 ​ $ 828 ​ $ 753 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Capital expenditures ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Newbuild construction program ​ ​ 669 ​ ​ 174 ​ ​ 143 ​ Other equipment and construction projects ​ ​ 48 ​ ​ 34 ​ ​ 122 ​ Total capital expenditures ​ ​ 717 ​ ​ 208 ​ ​ 265 ​ Non-cash capital additions financed under Shipyard Loans ​ ​ 382 ​ ​ — ​ ​ — ​ Changes in accrued capital additions ​ ​ 3 ​ ​ 13 ​ ​ ( 33 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Property and equipment placed into service ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Newbuild construction program ​ ​ ( 882 ) ​ ​ — ​ ​ — ​ Other equipment and construction projects ​ ​ ( 42 ) ​ ​ ( 32 ) ​ ​ ( 157 ) ​ Construction work in progress, end of period ​ $ 1,195 ​ $ 1,017 ​ $ 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. - 55 - 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): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ended December 31, ​ Lease costs ​ 2022 2021 2020 ​ Short-term lease costs ​ $ 14 ​ $ 17 ​ $ 27 ​ Operating lease costs ​ ​ 12 ​ ​ 12 ​ ​ 13 ​ Finance lease costs, amortization of right-of-use asset ​ ​ 20 ​ ​ 20 ​ ​ 21 ​ Finance lease costs, interest on lease liability ​ ​ 30 ​ ​ 33 ​ ​ 36 ​ Total lease costs ​ $ 76 ​ $ 82 ​ $ 97 ​ ​ Lease payments —Supplemental cash flow information for our leases was as follows (in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ended December 31, ​ ​ ​ 2022 2021 2020 ​ Cash paid for amounts included in the measurement of lease liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating cash flows from operating leases ​ $ 14 ​ $ 13 ​ $ 17 ​ Operating cash flows from finance lease ​ ​ 8 ​ ​ 37 ​ ​ 36 ​ Financing cash flows from finance lease ​ ​ 3 ​ ​ 33 ​ ​ 35 ​ ​ At December 31, 2022, the aggregate future minimum lease payments were as follows (in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating Finance ​ ​ ​ ​ ​ ​ leases ​ lease ​ Years ending December 31, ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 ​ ​ ​ ​ $ 13 ​ $ 65 ​ 2024 ​ ​ ​ ​ ​ 13 ​ ​ 70 ​ 2025 ​ ​ ​ ​ ​ 12 ​ ​ 71 ​ 2026 ​ ​ ​ ​ ​ 12 ​ ​ 70 ​ 2027 ​ ​ ​ ​ ​ 12 ​ ​ 71 ​ Thereafter ​ ​ ​ ​ ​ 98 ​ ​ 118 ​ Total future minimum rental payment ​ ​ ​ ​ ​ 160 ​ ​ 465 ​ Less amount representing imputed interest ​ ​ ​ ​ ​ ( 53 ) ​ ​ ( 102 ) ​ Present value of future minimum rental payments ​ ​ ​ ​ ​ 107 ​ ​ 363 ​ Current portion, recorded in other current liabilities ​ ​ ​ ​ ​ 7 ​ ​ 40 ​ Long-term lease liabilities, recorded in other long-term liabilities ​ ​ ​ ​ $ 100 ​ $ 323 ​ ​ - 56 - Table of Contents TRANSOCEAN LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued Note 8—Debt Overview 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): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Principal amount ​ ​ Carrying amount ​ ​ ​ ​ December 31, ​ December 31, ​ December 31, ​ December 31, ​ ​ 2022 2021 2022 2021 5.52 % Senior Secured Notes due May 2022 ​ (a) ​ $ — ​ $ 18 ​ ​ $ — ​ $ 18 ​ 3.80 % Senior Notes due October 2022 ​ (b) ​ ​ — ​ ​ 27 ​ ​ ​ — ​ ​ 27 ​ 0.50 % Exchangeable Senior Bonds due January 2023 ​ (b) ​ ​ 49 ​ ​ 140 ​ ​ ​ 49 ​ ​ 140 ​ 5.375 % Senior Secured Notes due May 2023 ​ (c) ​ ​ 243 ​ ​ 306 ​ ​ ​ 242 ​ ​ 304 ​ 5.875 % Senior Secured Notes due January 2024 ​ (c) ​ ​ 352 ​ ​ 435 ​ ​ ​ 350 ​ ​ 430 ​ 7.75 % Senior Secured Notes due October 2024 ​ (c) ​ ​ 240 ​ ​ 300 ​ ​ ​ 238 ​ ​ 296 ​ 6.25 % Senior Secured Notes due December 2024 ​ (c) ​ ​ 250 ​ ​ 313 ​ ​ ​ 248 ​ ​ 309 ​ 6.125 % Senior Secured Notes due August 2025 ​ (c) ​ ​ 336 ​ ​ 402 ​ ​ ​ 332 ​ ​ 397 ​ 7.25 % Senior Notes due November 2025 ​ (d) ​ ​ 354 ​ ​ 411 ​ ​ ​ 351 ​ ​ 406 ​ 4.00 % Senior Guaranteed Exchangeable Bonds due December 2025 ​ (e) ​ ​ 294 ​ ​ 294 ​ ​ ​ 271 ​ ​ 264 ​ 7.50 % Senior Notes due January 2026 ​ (d) ​ ​ 569 ​ ​ 569 ​ ​ ​ 566 ​ ​ 565 ​ 2.50 % Senior Guaranteed Exchangeable Bonds due January 2027 ​ (e) ​ ​ 238 ​ ​ 238 ​ ​ ​ 265 ​ ​ 271 ​ 11.50 % Senior Guaranteed Notes due January 2027 ​ (e) ​ ​ 687 ​ ​ 687 ​ ​ ​ 1,008 ​ ​ 1,078 ​ 6.875 % Senior Secured Notes due February 2027 ​ (c) ​ ​ 482 ​ ​ 550 ​ ​ ​ 477 ​ ​ 544 ​ 8.00 % Senior Notes due February 2027 ​ (d) ​ ​ 612 ​ ​ 612 ​ ​ ​ 608 ​ ​ 607 ​ 7.45 % Notes due April 2027 ​ (b) ​ ​ 52 ​ ​ 52 ​ ​ ​ 52 ​ ​ 52 ​ 8.00 % Debentures due April 2027 ​ (b) ​ ​ 22 ​ ​ 22 ​ ​ ​ 22 ​ ​ 22 ​ 4.50 % Shipyard Loans due September 2027 ​ (f) ​ ​ 439 ​ ​ — ​ ​ ​ 389 ​ ​ — ​ 7.00 % Notes due June 2028 ​ (f) ​ ​ 261 ​ ​ 261 ​ ​ ​ 264 ​ ​ 265 ​ 4.625 % Senior Guaranteed Exchangeable Bonds due September 2029 ​ (d) ​ ​ 300 ​ ​ — ​ ​ ​ 440 ​ ​ — ​ 7.50 % Notes due April 2031 ​ (b) ​ ​ 396 ​ ​ 396 ​ ​ ​ 394 ​ ​ 394 ​ 6.80 % Senior Notes due March 2038 ​ (b) ​ ​ 610 ​ ​ 610 ​ ​ ​ 605 ​ ​ 605 ​ 7.35 % Senior Notes due December 2041 ​ (b) ​ ​ 177 ​ ​ 177 ​ ​ ​ 176 ​ ​ 176 ​ Total debt ​ ​ ​ ​ 6,963 ​ ​ 6,820 ​ ​ ​ 7,347 ​ ​ 7,170 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Less debt due within one year ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 5.52 % Senior Secured Notes due May 2022 ​ (a) ​ ​ — ​ ​ 18 ​ ​ ​ — ​ ​ 18 ​ 3.80 % Senior Notes due October 2022 ​ (b) ​ ​ — ​ ​ 27 ​ ​ ​ — ​ ​ 27 ​ 0.50 % Exchangeable Senior Bonds due January 2023 ​ (b) ​ ​ 49 ​ ​ — ​ ​ ​ 49 ​ ​ — ​ 5.375 % Senior Secured Notes due May 2023 ​ (c) ​ ​ 243 ​ ​ 63 ​ ​ ​ 242 ​ ​ 62 ​ 5.875 % Senior Secured Notes due January 2024 ​ (c) ​ ​ 83 ​ ​ 83 ​ ​ ​ 81 ​ ​ 80 ​ 7.75 % Senior Secured Notes due October 2024 ​ (c) ​ ​ 60 ​ ​ 60 ​ ​ ​ 59 ​ ​ 58 ​ 6.25 % Senior Secured Notes due December 2024 ​ (c) ​ ​ 62 ​ ​ 62 ​ ​ ​ 61 ​ ​ 61 ​ 6.125 % Senior Secured Notes due August 2025 ​ (c) ​ ​ 66 ​ ​ 66 ​ ​ ​ 64 ​ ​ 64 ​ 2.50 % Senior Guaranteed Exchangeable Bonds due January 2027 ​ (e) ​ ​ — ​ ​ — ​ ​ ​ 6 ​ ​ 6 ​ 11.50 % Senior Guaranteed Notes due January 2027 ​ (e) ​ ​ — ​ ​ — ​ ​ ​ 70 ​ ​ 70 ​ 6.875 % Senior Secured Notes due February 2027 ​ (c) ​ ​ 69 ​ ​ 69 ​ ​ ​ 67 ​ ​ 67 ​ 4.50 % Shipyard Loans due September 2027 ​ (f) ​ ​ 20 ​ ​ — ​ ​ ​ 20 ​ ​ — ​ Total debt due within one year ​ ​ ​ ​ 652 ​ ​ 448 ​ ​ ​ 719 ​ ​ 513 ​ Total long-term debt ​ $ 6,311 ​ $ 6,372 ​ $ 6,628 ​ $ 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 - 57 - 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 Shipyard Loans, including Deepwater Atlas , Deepwater Pontus , Deepwater Poseidon , Deepwater Proteus , 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): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Principal Other ​ ​ installments installments Total Years ending December 31, ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 ​ $ 652 ​ $ 76 ​ $ 728 ​ 2024 ​ ​ 875 ​ ​ 77 ​ ​ 952 ​ 2025 ​ ​ 1,054 ​ ​ 78 ​ ​ 1,132 ​ 2026 ​ ​ 788 ​ ​ 78 ​ ​ 866 ​ 2027 ​ ​ 1,850 ​ ​ 39 ​ ​ 1,889 ​ Thereafter ​ ​ 1,744 ​ ​ — ​ ​ 1,744 ​ Total installments of debt ​ $ 6,963 ​ $ 348 ​ ​ 7,311 ​ Total unamortized debt-related balances, net ​ ​ ​ ​ ​ ​ ​ ​ ( 259 ) ​ Bifurcated compound exchange feature, at estimated fair value ​ ​ ​ ​ ​ ​ ​ ​ 295 ​ Total carrying amount of debt ​ ​ ​ ​ ​ ​ ​ $ 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 - 58 - Table of Contents 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Implied ​ ​ ​ ​ Exchange exchange Shares ​ rate price issuable 0.50 % Exchangeable Senior Bonds due January 2023 ​ ​ 97.29756 ​ $ 10.28 ​ ​ 4.7 ​ 4.00 % Senior Guaranteed Exchangeable Bonds due December 2025 ​ ​ 190.47620 ​ ​ 5.25 ​ ​ 56.0 ​ 2.50 % Senior Guaranteed Exchangeable Bonds due January 2027 ​ ​ 162.16260 ​ ​ 6.17 ​ ​ 38.6 ​ 4.625 % Senior Guaranteed Exchangeable Bonds due September 2029 ​ ​ 290.66180 ​ ​ 3.44 ​ ​ 87.2 ​ ​ 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 - Table of Contents 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): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Effective Fair ​ interest rate value 0.50 % Exchangeable Senior Bonds due January 2023 ​ ​ ​ ​ ​ 0.5 % ​ $ 48 ​ 4.00 % Senior Guaranteed Exchangeable Bonds due December 2025 ​ ​ ​ ​ ​ 6.9 % ​ ​ 355 ​ 2.50 % Senior Guaranteed Exchangeable Bonds due January 2027 ​ ​ ​ ​ ​ 0.0 % ​ ​ 244 ​ 4.625 % Senior Guaranteed Exchangeable Bonds due September 2029 ​ ​ ​ ​ ​ 18.1 % ​ ​ 483 ​ ​ 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 - 60 - Table of Contents 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, 2022 ​ Year ended December 31, 2021 ​ Year ended December 31, 2020 ​ ​ Exchange Redeem Total Exchange Repurchase Total ​ Exchange Redeem Tender ​ Repurchase ​ Total 6.50 % Senior Notes due November 2020 ​ $ — ​ $ — ​ $ — ​ $ — ​ $ — ​ $ — ​ $ — ​ $ — ​ $ 38 ​ $ 15 ​ $ 53 ​ 6.375 % Senior Notes due December 2021 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 37 ​ ​ — ​ ​ 77 ​ ​ 69 ​ ​ 183 ​ 5.52 % Senior Secured Notes due May 2022 ​ ​ — ​ ​ 18 ​ ​ 18 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ 3.80 % Senior Notes due October 2022 ​ ​ — ​ ​ 27 ​ ​ 27 ​ ​ — ​ ​ — ​ ​ — ​ ​ 136 ​ ​ — ​ ​ 10 ​ ​ 16 ​ ​ 162 ​ 0.50 % Exchangeable Senior Bonds due January 2023 ​ ​ 73 ​ ​ 18 ​ ​ 91 ​ ​ 323 ​ ​ — ​ ​ 323 ​ ​ 397 ​ ​ — ​ ​ — ​ ​ 4 ​ ​ 401 ​ 5.375 % Senior Secured Notes due May 2023 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 11 ​ ​ 11 ​ ​ — ​ ​ — ​ ​ 103 ​ ​ 43 ​ ​ 146 ​ 9.00 % Senior Notes due July 2023 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 714 ​ ​ — ​ ​ — ​ ​ 714 ​ 5.875 % Senior Secured Notes due January 2024 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 68 ​ ​ 68 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ 7.25 % Senior Notes due November 2025 ​ ​ 43 ​ ​ 14 ​ ​ 57 ​ ​ — ​ ​ — ​ ​ — ​ ​ 207 ​ ​ — ​ ​ 132 ​ ​ — ​ ​ 339 ​ 7.50 % Senior Notes due January 2026 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 181 ​ ​ — ​ ​ — ​ ​ — ​ ​ 181 ​ 8.00 % Senior Notes due February 2027 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 138 ​ ​ — ​ ​ — ​ ​ — ​ ​ 138 ​ 7.45 % Notes due April 2027 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 35 ​ ​ — ​ ​ — ​ ​ — ​ ​ 35 ​ 8.00 % Debentures due April 2027 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 35 ​ ​ — ​ ​ — ​ ​ — ​ ​ 35 ​ 7.00 % Notes due June 2028 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 39 ​ ​ — ​ ​ — ​ ​ — ​ ​ 39 ​ 7.50 % Notes due April 2031 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 192 ​ ​ — ​ ​ — ​ ​ — ​ ​ 192 ​ 6.80 % Senior Notes due March 2038 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 390 ​ ​ — ​ ​ — ​ ​ — ​ ​ 390 ​ 7.35 % Senior Notes due December 2041 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 123 ​ ​ — ​ ​ — ​ ​ — ​ ​ 123 ​ Aggregate principal amount of debt retired ​ $ 116 ​ $ 77 ​ $ 193 ​ $ 323 ​ $ 79 ​ $ 402 ​ $ 1,910 ​ $ 714 ​ $ 360 ​ $ 147 ​ $ 3,131 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Aggregate cash payment ​ $ — ​ $ 75 ​ $ 75 ​ $ 11 ​ $ 79 ​ $ 90 ​ $ 10 ​ $ 767 ​ $ 222 ​ $ 110 ​ $ 1,109 ​ Aggregate principal amount of debt issued in exchanges ​ $ 112 ​ $ — ​ $ 112 ​ $ 294 ​ $ — ​ $ 294 ​ $ 925 ​ $ — ​ $ — ​ $ — ​ $ 925 ​ Aggregate fair value of warrants issued in exchanges ​ $ 5 ​ $ — ​ $ 5 ​ $ — ​ $ — ​ $ — ​ $ — ​ $ — ​ $ — ​ $ — ​ $ — ​ Aggregate net gain (loss) ​ $ 6 ​ $ 2 ​ $ 8 ​ $ 51 ​ $ — ​ $ 51 ​ $ 427 ​ $ ( 65 ) ​ $ 135 ​ $ 36 ​ $ 533 ​ ​ 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 - 61 - Table of Contents 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, 2022 ​ Year ended December 31, 2021 ​ Year ended December 31, 2020 ​ ​ U.S. ​ U.K. ​ OPEB ​ U.S. ​ Non-U.S. ​ OPEB ​ U.S. ​ Non-U.S. OPEB ​ ​ Plans Plan Plans Plans Plans Plans Plans Plans Plans ​ Discount rate ​ 2.92 % 1.90 % 1.83 % 2.60 % 1.50 % 1.21 % 3.27 % 2.10 % 2.39 % Expected rate of return ​ 4.81 % 2.00 % na ​ 5.51 % 3.20 % na ​ 5.90 % 3.10 % na ​ “na” means not applicable. - 62 - Table of Contents 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. ​ U.K. ​ OPEB ​ ​ ​ U.S. ​ Non-U.S. ​ OPEB ​ ​ ​ U.S. ​ Non-U.S. ​ OPEB ​ ​ ​ Plans Plan Plans Total Plans Plans Plans Total Plans Plans Plans Total Net periodic benefit costs ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Service cost ​ $ — ​ $ — ​ $ — ​ $ — ​ $ — ​ $ — ​ $ — ​ $ — ​ $ — ​ $ 1 ​ $ — ​ $ 1 ​ Interest cost ​ ​ 50 ​ ​ 6 ​ ​ — ​ ​ 56 ​ ​ 47 ​ ​ 6 ​ ​ — ​ ​ 53 ​ ​ 55 ​ ​ 8 ​ ​ — ​ ​ 63 ​ Expected return on plan assets ​ ​ ( 65 ) ​ ​ ( 7 ) ​ ​ — ​ ​ ( 72 ) ​ ​ ( 66 ) ​ ​ ( 13 ) ​ ​ — ​ ​ ( 79 ) ​ ​ ( 67 ) ​ ​ ( 14 ) ​ ​ — ​ ​ ( 81 ) ​ Settlements and curtailments ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 2 ) ​ ​ — ​ ​ ( 2 ) ​ ​ 1 ​ ​ 12 ​ ​ — ​ ​ 13 ​ Actuarial loss, net ​ ​ 5 ​ ​ — ​ ​ — ​ ​ 5 ​ ​ 11 ​ ​ 1 ​ ​ — ​ ​ 12 ​ ​ 9 ​ ​ 1 ​ ​ 1 ​ ​ 11 ​ Prior service gain, net ​ ​ — ​ ​ — ​ ​ ( 2 ) ​ ​ ( 2 ) ​ ​ — ​ ​ — ​ ​ ( 2 ) ​ ​ ( 2 ) ​ ​ — ​ ​ — ​ ​ ( 2 ) ​ ​ ( 2 ) ​ Net periodic benefit costs (income) ​ $ ( 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 ​ December 31, 2021 ​ ​ ​ ​ ​ ​ ​ ​ U.S. ​ U.K. ​ OPEB ​ U.S. ​ U.K. ​ OPEB ​ ​ ​ ​ ​ ​ ​ ​ Plans Plan Plans Plans Plan Plans Discount rate ​ ​ ​ ​ ​ ​ ​ 5.06 % 4.80 % 4.92 % 2.91 % 1.90 % 1.83 % Expected long-term rate of return ​ ​ ​ ​ ​ ​ ​ 6.41 % 5.00 % na ​ 4.82 % 2.00 % na ​ “na” means not applicable. The changes in funded status, balance sheet classifications and accumulated benefit obligations were as follows (in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, 2022 ​ Year ended December 31, 2021 ​ ​ U.S. ​ U.K. ​ OPEB ​ ​ ​ ​ U.S. ​ Non-U.S. ​ OPEB ​ ​ ​ ​ Plans Plan Plans Total Plans Plans Plans Total Change in projected benefit obligation ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Projected benefit obligation, beginning of period $ 1,724 ​ $ 348 ​ $ 13 ​ $ 2,085 ​ $ 1,825 ​ $ 384 ​ $ 16 ​ $ 2,225 ​ Actuarial gains, net ​ ​ ( 391 ) ​ ​ ( 119 ) ​ ​ ( 1 ) ​ ​ ( 511 ) ​ ​ ( 72 ) ​ ​ ( 21 ) ​ ​ ( 1 ) ​ ​ ( 94 ) ​ Interest cost ​ ​ 50 ​ ​ 6 ​ ​ — ​ ​ 56 ​ ​ 47 ​ ​ 6 ​ ​ — ​ ​ 53 ​ Currency exchange rate changes ​ ​ — ​ ​ ( 37 ) ​ ​ — ​ ​ ( 37 ) ​ ​ — ​ ​ ( 2 ) ​ ​ — ​ ​ ( 2 ) ​ Benefits paid ​ ​ ( 76 ) ​ ​ ( 10 ) ​ ​ ( 2 ) ​ ​ ( 88 ) ​ ​ ( 76 ) ​ ​ ( 17 ) ​ ​ ( 2 ) ​ ​ ( 95 ) ​ Settlements ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 2 ) ​ ​ — ​ ​ ( 2 ) ​ Projected benefit obligation, end of period ​ ​ 1,307 ​ ​ 188 ​ ​ 10 ​ ​ 1,505 ​ ​ 1,724 ​ ​ 348 ​ ​ 13 ​ ​ 2,085 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Change in plan assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair value of plan assets, beginning of period ​ ​ 1,621 ​ ​ 434 ​ ​ — ​ ​ 2,055 ​ ​ 1,565 ​ ​ 420 ​ ​ — ​ ​ 1,985 ​ Actual return on plan assets ​ ​ ( 403 ) ​ ​ ( 147 ) ​ ​ — ​ ​ ( 550 ) ​ ​ 131 ​ ​ 29 ​ ​ — ​ ​ 160 ​ Currency exchange rate changes ​ ​ — ​ ​ ( 45 ) ​ ​ — ​ ​ ( 45 ) ​ ​ — ​ ​ ( 3 ) ​ ​ — ​ ​ ( 3 ) ​ Employer contributions ​ ​ 1 ​ ​ — ​ ​ 2 ​ ​ 3 ​ ​ 1 ​ ​ 7 ​ ​ 2 ​ ​ 10 ​ Benefits paid ​ ​ ( 76 ) ​ ​ ( 10 ) ​ ​ ( 2 ) ​ ​ ( 88 ) ​ ​ ( 76 ) ​ ​ ( 17 ) ​ ​ ( 2 ) ​ ​ ( 95 ) ​ Settlements ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 2 ) ​ ​ — ​ ​ ( 2 ) ​ Fair value of plan assets, end of period ​ ​ 1,143 ​ ​ 232 ​ ​ — ​ ​ 1,375 ​ ​ 1,621 ​ ​ 434 ​ ​ — ​ ​ 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 $ — ​ $ 44 ​ $ — ​ $ 44 ​ $ 16 ​ $ 86 ​ $ — ​ $ 102 ​ Pension liability, current ​ ​ ( 1 ) ​ ​ — ​ ​ ( 3 ) ​ ​ ( 4 ) ​ ​ ( 1 ) ​ ​ — ​ ​ ( 3 ) ​ ​ ( 4 ) ​ Pension liability, non-current ​ ​ ( 163 ) ​ ​ — ​ ​ ( 7 ) ​ ​ ( 170 ) ​ ​ ( 118 ) ​ ​ — ​ ​ ( 10 ) ​ ​ ( 128 ) ​ Accumulated other comprehensive loss (income), before taxes ​ ​ 166 ​ ​ 76 ​ ​ ( 8 ) ​ ​ 234 ​ ​ 95 ​ ​ 42 ​ ​ ( 10 ) ​ ​ 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): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 ​ December 31, 2021 ​ ​ U.S. ​ U.K. ​ OPEB ​ ​ ​ ​ U.S. ​ U.K. ​ OPEB ​ ​ ​ ​ Plans Plan Plans Total Plans Plan Plans Total Projected benefit obligation $ 1,307 ​ $ — ​ $ 10 ​ $ 1,317 ​ $ 140 ​ $ — ​ $ 13 ​ $ 153 ​ Fair value of plan assets ​ ​ 1,143 ​ ​ — ​ ​ — ​ ​ 1,143 ​ ​ 20 ​ ​ — ​ ​ — ​ ​ 20 ​ ​ Certain amounts related to plans with an accumulated benefit obligation in excess of plan assets were as follows (in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 ​ December 31, 2021 ​ ​ U.S. ​ U.K. ​ OPEB ​ ​ ​ ​ U.S. ​ U.K. ​ OPEB ​ ​ ​ ​ Plans Plan Plans Total Plans Plan Plans Total Accumulated benefit obligation $ 1,307 ​ $ — ​ $ 10 ​ $ 1,317 ​ $ 140 ​ $ — ​ $ 13 ​ $ 153 ​ Fair value of plan assets ​ ​ 1,143 ​ ​ — ​ ​ — ​ ​ 1,143 ​ ​ 20 ​ ​ — ​ ​ — ​ ​ 20 ​ ​ - 63 - 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): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 ​ December 31, 2021 ​ ​ U.S. ​ U.K. ​ OPEB ​ ​ ​ ​ U.S. ​ U.K. ​ OPEB ​ ​ ​ ​ Plans Plan Plans Total Plans Plan Plans Total Actuarial loss, net $ 166 ​ $ 74 ​ $ ( 1 ) ​ $ 239 ​ $ 95 ​ $ 40 ​ $ — ​ $ 135 ​ Prior service cost, net ​ ​ — ​ ​ 2 ​ ​ ( 7 ) ​ ​ ( 5 ) ​ ​ — ​ ​ 2 ​ ​ ( 10 ) ​ ​ ( 8 ) ​ Accumulated other comprehensive loss (income), before taxes $ 166 ​ $ 76 ​ $ ( 8 ) ​ $ 234 ​ $ 95 ​ $ 42 ​ $ ( 10 ) ​ $ 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 ​ Actual allocation ​ Target allocation ​ Actual allocation ​ ​ U.S. ​ U.K. ​ U.S. ​ U.K. ​ U.S. ​ U.K. ​ U.S. ​ U.K. ​ Plans Plan Plans Plan Plans Plan Plans Plan Equity securities ​ 38 % 20 % 38 % 24 % 38 % 19 % 38 % 19 % Fixed income securities ​ 62 % 80 % 61 % 74 % 62 % 81 % 62 % 80 % Other investments ​ — % — % 1 % 2 % — ​ — % — ​ 1 % Total ​ 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % ​ 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): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 ​ ​ Significant observable inputs ​ Significant other observable inputs ​ Total ​ ​ U.S. ​ U.K. ​ ​ ​ U.S. ​ U.K. ​ ​ ​ U.S. ​ U.K. ​ ​ ​ Plans Plan Total Plans Plan Total Plans Plan Total Mutual funds ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. equity funds $ 301 ​ $ — ​ $ 301 ​ $ — ​ $ — ​ $ — ​ $ 301 ​ $ — ​ $ 301 ​ Non-U.S. equity funds ​ ​ 132 ​ ​ — ​ ​ 132 ​ ​ 4 ​ ​ 57 ​ ​ 61 ​ ​ 136 ​ ​ 57 ​ ​ 193 ​ Bond funds ​ ​ 698 ​ ​ — ​ ​ 698 ​ ​ 2 ​ ​ 171 ​ ​ 173 ​ ​ 700 ​ ​ 171 ​ ​ 871 ​ Total mutual funds ​ ​ 1,131 ​ ​ — ​ ​ 1,131 ​ ​ 6 ​ ​ 228 ​ ​ 234 ​ ​ 1,137 ​ ​ 228 ​ ​ 1,365 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other investments ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash and money market funds ​ ​ 6 ​ ​ 4 ​ ​ 10 ​ ​ — ​ ​ — ​ ​ — ​ ​ 6 ​ ​ 4 ​ ​ 10 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total investments $ 1,137 ​ $ 4 ​ $ 1,141 ​ $ 6 ​ $ 228 ​ $ 234 ​ $ 1,143 ​ $ 232 ​ $ 1,375 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2021 ​ ​ Significant observable inputs ​ Significant other observable inputs ​ Total ​ ​ U.S. ​ U.K. ​ ​ ​ U.S. ​ U.K. ​ ​ ​ U.S. ​ U.K. ​ ​ ​ Plans Plan Total Plans Plan Total Plans Plan Total Mutual funds ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. equity funds $ 421 ​ $ — ​ $ 421 ​ $ — ​ $ — ​ $ — ​ $ 421 ​ $ — ​ $ 421 ​ Non-U.S. equity funds ​ ​ 184 ​ ​ — ​ ​ 184 ​ ​ 7 ​ ​ 85 ​ ​ 92 ​ ​ 191 ​ ​ 85 ​ ​ 276 ​ Bond funds ​ ​ 999 ​ ​ — ​ ​ 999 ​ ​ 4 ​ ​ 346 ​ ​ 350 ​ ​ 1,003 ​ ​ 346 ​ ​ 1,349 ​ Total mutual funds ​ ​ 1,604 ​ ​ — ​ ​ 1,604 ​ ​ 11 ​ ​ 431 ​ ​ 442 ​ ​ 1,615 ​ ​ 431 ​ ​ 2,046 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other investments ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash and money market funds ​ ​ 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 - 64 - Table of Contents 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): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. ​ U.K. ​ OPEB ​ ​ ​ ​ Plans Plan Plans Total Years ending December 31, ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 $ 83 ​ $ 6 ​ $ 3 ​ $ 92 ​ 2024 ​ ​ 84 ​ ​ 6 ​ ​ 3 ​ ​ 93 ​ 2025 ​ ​ 84 ​ ​ 6 ​ ​ 3 ​ ​ 93 ​ 2026 ​ ​ 85 ​ ​ 7 ​ ​ — ​ ​ 92 ​ 2027 ​ ​ 85 ​ ​ 8 ​ ​ — ​ ​ 93 ​ 2028 - 2032 ​ ​ 428 ​ ​ 50 ​ ​ 1 ​ ​ 479 ​ ​ Note 10—Income Taxes 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): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ended December 31, ​ 2022 2021 2020 Current tax expense (benefit) $ 13 ​ $ ( 7 ) ​ $ ( 33 ) ​ Deferred tax expense ​ ​ 46 ​ ​ 128 ​ ​ 60 ​ Income tax expense $ 59 ​ $ 121 ​ $ 27 ​ ​ 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): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ended December 31, ​ 2022 2021 2020 Income tax benefit at Swiss federal statutory rate $ ( 44 ) ​ $ ( 36 ) ​ $ ( 42 ) ​ Earnings subject to rates different than the Swiss federal statutory rate ​ ​ 52 ​ ​ 78 ​ ​ 82 ​ Swiss Federal Act on Tax Reform and AHV Financing ​ ​ 96 ​ ​ ( 1,095 ) ​ ​ — ​ Changes in valuation allowance ​ ​ 79 ​ ​ 1,167 ​ ​ ( 31 ) ​ Audit settlement ​ ​ 12 ​ ​ — ​ ​ — ​ Withholding taxes ​ ​ 12 ​ ​ 10 ​ ​ 6 ​ Deemed profits taxes ​ ​ 10 ​ ​ 17 ​ ​ 19 ​ Changes in unrecognized tax benefits, net ​ ​ 2 ​ ​ ( 43 ) ​ ​ ( 15 ) ​ Changes due to organizational restructuring ​ ​ ( 162 ) ​ ​ 16 ​ ​ — ​ Losses on impairment ​ ​ — ​ ​ 5 ​ ​ 52 ​ Base erosion and anti-abuse tax ​ ​ — ​ ​ — ​ ​ 5 ​ U.S. Coronavirus Aid, Relief, and Economic Security Act ​ ​ — ​ ​ — ​ ​ ( 28 ) ​ Other, net ​ ​ 2 ​ ​ 2 ​ ​ ( 21 ) ​ Income tax expense $ 59 ​ $ 121 ​ $ 27 ​ ​ 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. - 65 - 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): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2022 2021 Deferred tax assets ​ ​ ​ ​ ​ ​ ​ Swiss historic depreciation and financing asset costs ​ $ 1,226 ​ $ 1,333 ​ Net operating loss carryforwards ​ 1,115 ​ ​ 915 ​ Interest expense limitation ​ ​ 77 ​ ​ 67 ​ United Kingdom charter limitation ​ ​ 53 ​ ​ 53 ​ Accrued expenses ​ ​ 36 ​ ​ 23 ​ Tax credits ​ ​ 11 ​ ​ 19 ​ Deferred income ​ ​ 7 ​ ​ 7 ​ Accrued payroll costs not currently deductible ​ ​ 18 ​ ​ 2 ​ Loss contingencies ​ ​ 4 ​ ​ 2 ​ Other ​ ​ 43 ​ ​ 31 ​ Valuation allowance ​ ​ ( 1,910 ) ​ ​ ( 1,820 ) ​ Total deferred tax assets ​ ​ 680 ​ ​ 632 ​ ​ ​ ​ ​ ​ ​ ​ ​ Deferred tax liabilities ​ ​ ​ ​ ​ ​ ​ Depreciation ​ ​ ( 1,150 ) ​ ​ ( 1,052 ) ​ Contract intangible amortization ​ ​ — ​ ​ ( 11 ) ​ Other ​ ​ ( 10 ) ​ ​ ( 9 ) ​ Total deferred tax liabilities ​ ​ ( 1,160 ) ​ ​ ( 1,072 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ Deferred tax assets (liabilities), net $ ( 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): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ended December 31, ​ ​ 2022 ​ 2021 ​ 2020 Balance, beginning of period $ 402 ​ $ 378 ​ $ 335 ​ Additions for current year tax positions ​ ​ 28 ​ ​ 28 ​ ​ 90 ​ Additions for prior year tax positions ​ ​ 62 ​ ​ 46 ​ ​ 11 ​ Reductions related to statute of limitation expirations and changes in law ​ ​ ( 13 ) ​ ​ ( 19 ) ​ ​ ( 7 ) ​ Reductions due to settlements ​ ​ ( 5 ) ​ ​ ( 31 ) ​ ​ — ​ Reductions for prior year tax positions ​ ​ ( 30 ) ​ ​ — ​ ​ ( 51 ) ​ Balance, end of period $ 444 ​ $ 402 ​ $ 378 ​ ​ - 66 - 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): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ ​ 2022 ​ 2021 Unrecognized tax benefits, excluding interest and penalties ​ $ 444 ​ $ 402 ​ Interest and penalties ​ ​ 27 ​ ​ 33 ​ Unrecognized tax benefits, including interest and penalties ​ $ 471 ​ $ 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, ​ ​ ​ 2022 ​ 2021 ​ 2020 ​ Numerator for loss per share, basic and diluted ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net loss attributable to controlling interest ​ $ ( 621 ) ​ $ ( 592 ) ​ $ ( 567 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Denominator for loss per share, basic and diluted ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted-average shares for per share calculation ​ ​ 699 ​ ​ 637 ​ ​ 615 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loss per share, basic and diluted ​ $ ( 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): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ended December 31, ​ ​ ​ 2022 ​ 2021 ​ 2020 ​ Exchangeable bonds ​ ​ 128.1 ​ ​ 104.4 ​ ​ 84.0 ​ Share-based awards ​ ​ 15.5 ​ ​ 12.6 ​ ​ 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 - 67 - 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): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Service ​ ​ ​ Purchase ​ agreement ​ ​ obligations ​ obligations ​ Years ending December 31, ​ ​ ​ ​ ​ ​ ​ 2023 $ 36 ​ $ 124 ​ 2024 ​ ​ 2 ​ ​ 138 ​ 2025 ​ ​ — ​ ​ 143 ​ 2026 ​ ​ — ​ ​ 147 ​ 2027 ​ ​ — ​ ​ 119 ​ Thereafter ​ ​ — ​ ​ 165 ​ Total $ 38 ​ $ 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. - 68 - 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. - 69 - Table of Contents TRANSOCEAN LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued Service awards 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number ​ Weighted-average ​ ​ ​ ​ ​ ​ ​ of ​ grant-date fair value ​ ​ ​ ​ ​ ​ units per unit Unvested at January 1, 2022 ​ ​ ​ ​ ​ ​ 10,662,865 ​ $ 3.13 Granted ​ ​ ​ ​ ​ ​ 6,768,943 ​ ​ 3.60 ​ Vested ​ ​ ​ ​ ​ ​ ( 5,075,374 ) ​ ​ 3.47 ​ Forfeited ​ ​ ​ ​ ​ ​ ( 308,934 ) ​ ​ 3.29 ​ Unvested at December 31, 2022 ​ ​ ​ ​ ​ ​ 12,047,500 ​ $ 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted-average ​ ​ ​ ​ Number ​ Weighted-average ​ remaining ​ Aggregate ​ ​ of shares ​ exercise price ​ contractual term ​ intrinsic value ​ under option per share (years) (in millions) Outstanding at January 1, 2022 ​ 4,263,274 ​ $ 11.45 ​ 5.70 ​ $ — ​ Forfeited ​ ( 25,155 ) ​ ​ 50.79 ​ ​ ​ ​ ​ ​ Expired ​ ( 62,599 ) ​ ​ 50.79 ​ ​ ​ ​ ​ ​ Outstanding at December 31, 2022 ​ 4,175,520 ​ $ 10.63 ​ 4.82 ​ $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Vested and exercisable at December 31, 2022 ​ 4,175,520 ​ $ 10.63 ​ 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number ​ Weighted-average ​ ​ ​ ​ ​ ​ ​ of ​ grant-date fair value ​ ​ ​ ​ ​ ​ units per unit Unvested at January 1, 2022 ​ ​ ​ ​ ​ ​ 5,389,390 ​ $ 2.59 ​ Granted ​ ​ ​ ​ ​ ​ 3,519,857 ​ ​ 3.91 ​ Vested ​ ​ ​ ​ ​ ​ ( 2,363,878 ) ​ ​ 1.80 ​ Unvested at December 31, 2022 ​ ​ ​ ​ ​ ​ 6,545,369 ​ $ 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. - 70 - 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): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2022 2021 Other current liabilities ​ ​ ​ ​ ​ ​ ​ Accrued employee benefits and payroll-related liabilities $ 156 ​ $ 178 ​ Accrued interest ​ ​ 113 ​ ​ 121 ​ Accrued taxes, other than income ​ ​ 41 ​ ​ 52 ​ Finance lease liability ​ ​ 40 ​ ​ 40 ​ Operating lease liabilities ​ ​ 7 ​ ​ 8 ​ Deferred revenues ​ ​ 124 ​ ​ 83 ​ Contingent liabilities ​ ​ 58 ​ ​ 60 ​ Other ​ ​ — ​ ​ 3 ​ Total other current liabilities $ 539 ​ $ 545 ​ ​ Other long-term liabilities were comprised of the following (in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2022 2021 Other long-term liabilities ​ ​ ​ ​ ​ ​ ​ Postemployment benefit plan obligations $ 170 ​ $ 128 ​ Finance lease liability ​ ​ 323 ​ ​ 366 ​ Operating lease liabilities ​ ​ 100 ​ ​ 109 ​ Income taxes payable ​ ​ 129 ​ ​ 157 ​ Deferred revenues ​ ​ 204 ​ ​ 265 ​ Other ​ ​ 39 ​ ​ 43 ​ Total other long-term liabilities $ 965 ​ $ 1,068 ​ ​ Note 16—Supplemental Cash Flow Information Additional cash flow information was as follows (in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ended December 31, ​ ​ ​ 2022 2021 2020 Certain cash operating activities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash payments for interest ​ ​ $ 355 ​ $ 429 ​ $ 593 ​ Cash payments for income taxes ​ ​ ​ ​ 66 ​ ​ 57 ​ ​ 70 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-cash investing and financing activities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Capital additions, accrued at end of period ​ (a) ​ $ 31 ​ $ 28 ​ $ 15 ​ Capital additions financed under Shipyard Loans ​ (b) ​ ​ 382 ​ ​ — ​ ​ — ​ Issuance of debt in exchange transactions ​ (c) ​ ​ 112 ​ ​ 294 ​ ​ 925 ​ Issuance of warrants in exchange transactions ​ (d) ​ ​ 5 ​ ​ — ​ ​ — ​ Settlement of finance lease payments ​ (e) ​ ​ 41 ​ ​ — ​ ​ — ​ Equity component of exchangeable debt ​ (f) ​ ​ — ​ ​ — ​ ​ 46 ​ (a) Additions to property and equipment for which we had accrued a corresponding liability in accounts payable at the end of the period. See Note 6—Long-Lived Assets . (b) 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 . (c) 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 . (d) 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 . (e) 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 . (f) 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 . - 71 - Table of Contents 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, ​ ​ ​ 2022 2021 2020 Changes in other operating assets and liabilities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Increase) decrease in accounts receivable ​ ​ $ ( 15 ) ​ $ 137 ​ $ 67 ​ Increase in other assets ​ ​ ​ ​ ( 12 ) ​ ​ ( 13 ) ​ ​ ( 113 ) ​ Increase (decrease) in accounts payable and other current liabilities ​ ​ ​ ​ 8 ​ ​ ( 52 ) ​ ​ ( 254 ) ​ Increase (decrease) in other long-term liabilities ​ ​ ​ ​ ( 2 ) ​ ​ ( 3 ) ​ ​ 2 ​ Change in income taxes receivable / payable, net ​ ​ ​ ​ ( 42 ) ​ ​ ( 17 ) ​ ​ ( 69 ) ​ Change in receivables from / payables to affiliates, net ​ ​ ​ ​ ( 12 ) ​ ​ ( 15 ) ​ ​ 14 ​ ​ ​ ​ $ ( 75 ) ​ $ 37 ​ $ ( 353 ) ​ ​ Note 17—Financial Instruments Overview — The carrying amounts and fair values of our financial instruments were as follows (in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 ​ December 31, 2021 ​ ​ Carrying ​ Fair ​ Carrying ​ Fair ​ amount value amount value Cash and cash equivalents $ 683 ​ $ 683 ​ $ 976 ​ $ 976 ​ Restricted cash and cash equivalents ​ ​ 308 ​ ​ 308 ​ ​ 436 ​ ​ 436 ​ Long-term loans receivable from unconsolidated affiliates ​ ​ 41 ​ ​ 43 ​ ​ 36 ​ ​ 33 ​ Total debt ​ ​ 7,347 ​ ​ 6,412 ​ ​ 7,170 ​ ​ 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. - 72 - 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. ​ ​ - 73 - 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.