What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-02-21 compared with 2023-02-23 · 326 added, 341 removed, 874 unchanged (43% of the section changed)

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and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, 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.

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, 2023 and 2022, the related consolidated statements of operations, comprehensive loss, equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and financial statement schedule listed in the Index at Item 15(a) and our report dated February 20, 2024 expressed an unqualified opinion thereon.

Basis for Opinion

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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, 2023, 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 20, 2024, expressed an unqualified opinion thereon.

Opinion on the Financial Statements

Basis for Opinion

These financial statements are the responsibility of the Company's management.

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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.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate 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 matters 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 matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Description of the Matter

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(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.

Loss on Disposal of Ocean Rig Olympia

Description of the Matter

As discussed in Notes 4 and 7 to the consolidated financial statements, the Company made a non-cash contribution of the ultra-deepwater floater Ocean Rig Olympia , and related assets, with an estimated fair value of $85 million, in exchange for a noncontrolling ownership interest in Global Sea Mineral Resources NV.

As a result, the Company recognized a loss of $169 million, associated with the disposal of the rig and related assets for the year ended December 31, 2023.

Auditing management’s estimate of the fair value of Ocean Rig Olympia and related assets was complex and judgmental due to the estimation required in determining the fair value of Ocean Rig Olympia .

In particular, the fair value estimate of Ocean Rig Olympia was sensitive to significant assumptions such as the discount rate, rig utilization, revenue efficiency and dayrates.

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 process to determine the fair value of the rig and related loss on disposal of assets calculation, including controls over management’s review of the significant assumptions described above as well as over the underlying data used in the fair value and related loss determination.

To test the estimated fair value of Ocean Rig Olympia we performed audit procedures that included, among others, (i) assessing the valuation methodologies utilized by management;

(ii) testing the significant assumptions discussed above;

(iii) testing the completeness and accuracy of the underlying data used by the Company in its analysis;

and (iv) testing the mathematical accuracy of the fair value and related loss on disposal of assets calculations.

We involved a valuation specialist to assist in our evaluation of the Company's model, valuation methodology and significant assumptions.

We reviewed for contrary evidence related to the determination of the fair value of the rig and related loss on disposal of assets, including reviewing relevant market data and internal Company forecasts.

/s/ Ernst & Young LLP

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General and administrative

Loss on impairment

Loss on impairment of assets

Loss on disposal of assets, net

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Interest expense, net of amounts capitalized

Gain on restructuring and retirement of debt

Gain (loss) on retirement of debt

Loss before income tax expense

Income tax expense

Net income (loss) attributable to noncontrolling interest

Net income attributable to noncontrolling interest

Net loss attributable to controlling interest

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Years ended December 31,

Net income (loss) attributable to noncontrolling interest

Net income attributable to noncontrolling interest

Net loss attributable to controlling interest

Components of net periodic benefit (income) costs before reclassifications

Components of net periodic benefit costs before reclassifications

Components of net periodic benefit costs reclassified to net loss

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Total comprehensive loss

Total comprehensive income (loss) attributable to noncontrolling interest

Total comprehensive income attributable to noncontrolling interest

Total comprehensive loss attributable to controlling interest

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Issuance of warrants

Equity component of convertible debt instruments

Balance, end of period

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Net loss attributable to controlling interest

Effect of adopting accounting standards update

Balance, end of period

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Issuance of warrants

Equity component of convertible debt instruments

Balance, end of period

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Balance, beginning of period

Total comprehensive income (loss) attributable to noncontrolling interest

Total comprehensive income attributable to noncontrolling interest

Acquisition of noncontrolling interest

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Acquisition of noncontrolling interest

Equity component of convertible debt instruments

Balance, end of period

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Adjustments to reconcile to net cash provided by operating activities:

Contract intangible asset amortization

Amortization of contract intangible asset

Depreciation and amortization

Share-based compensation expense

Loss on impairment

Loss on impairment of assets

Loss on impairment of investment in unconsolidated affiliates

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Fair value adjustment to bifurcated compound exchange feature

Gain on restructuring and retirement of debt

Amortization of debt-related balances, net

(Gain) loss on retirement of debt

Deferred income tax expense

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Investments in equity of unconsolidated affiliates

Investments in loans to unconsolidated affiliates

Investment in loans to unconsolidated affiliates

Proceeds from disposal of assets, net

Proceeds from maturities of unrestricted and restricted investments

Cash acquired in acquisition of unconsolidated affiliate

Net cash used in investing activities

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Repayments of debt

Proceeds from issuance of shares, net of issue costs

Proceeds from issuance of debt, net of issue costs

Proceeds from issuance of shares, net of issue costs

Proceeds from issuance of warrants, net of issue costs

Net cash used in financing activities

Net decrease in unrestricted and restricted cash and cash equivalents

Net cash provided by (used in) financing activities

Net increase (decrease) in unrestricted and restricted cash and cash equivalents

Unrestricted and restricted cash and cash equivalents, beginning of period

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(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.

As of December 31, 2023, we owned or had partial ownership interests in and operated a fleet of 37 mobile offshore drilling units, consisting of 28 ultra-deepwater floaters and nine harsh environment floaters.

As of December 31, 2023, we were 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.

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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.

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, assets held for sale, 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.

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See Note 4—Unconsolidated Affiliates and Note 14—Equity .

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, 2023, 2022 and 2021, we recognized a net gain of $ 10 million, a net loss of $ 8 million and a net loss of $ 1 million, respectively, related to currency exchange rates.

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.

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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 recognize revenues for demobilization

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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.

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 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.

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See Note 5—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.

Income taxes —We provide for income taxes based on expected taxable income, statutory rates and tax laws 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.

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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 .

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued

See Note 9—Debt .

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, 2023 and 2022, our allowance for excess items was $ 198 million and $ 199 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.

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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 consider our asset groups to be

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued

ultra-deepwater floaters and harsh environment floaters.

When an impairment of one or more of our asset groups is indicated, we measure an impairment as the amount by which the carrying amount of the asset group 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.

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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

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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.

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See Note 10—Postemployment Benefit Plans .

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 performance-based restricted share units subject to market factors, we use an average price at the performance start date and project performance based on a Monte Carlo simulation model under a risk-neutral approach 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 that are subject to performance targets, we use the market price of our shares on the grant date or modification date and adjust the value 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.

See Note 15—ShareBased Compensation .

Contingencies —We assess our contingencies on an ongoing basis to evaluate the appropriateness of our liabilities and disclosures for such contingencies.

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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—Accounting Standards Update

Recently issued accounting standards updates not yet adopted

Segment reporting —Effective no later than January 1, 2024, we will adopt the accounting standards update that requires incremental disclosures about a public entity’s reportable segments but does not change the definition or guidance for determining reportable segments.

The update, which explicitly applies to entities such as us with a single reportable segment, requires disclosure of the significant expense categories and amounts that are regularly provided to the chief operating decision-maker and included in the reported measure of segment profit or loss.

Additionally, the update requires disclosures about the individual or the group or committee identified as the chief

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operating decision-maker.

The update, which permits early adoption, is effective for annual periods beginning after December 15, 2023 and must be applied retrospectively to all periods presented, unless impracticable.

We continue to evaluate the requirements and do not expect our adoption to have a material effect on our consolidated statements of financial position, operations or cash flows or on the disclosures contained in our notes to consolidated financial statements.

Income taxes —Effective no later than January 1, 2025, we will adopt the accounting standards update that requires significant additional disclosures intended to enhance the transparency and decision-usefulness of income tax disclosures, particularly in the rate reconciliation table and disclosures about income taxes paid.

The new guidance will be applied prospectively and permits, but does not require, retrospective application.

The update, which permits early adoption, is effective for annual periods beginning after December 15, 2024.

We continue to evaluate the requirements.

Although we expect our adoption will require us to augment certain disclosures in our notes to consolidated financial statements, we do not expect our adoption to have a material effect on our consolidated statements of financial position, operations or cash flows.

Note 4—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.

Overview —At December 31, 2023, we hold equity investments in certain unconsolidated companies, including (a) our 16 percent ownership interest in Global Sea Mineral Resources NV (together with its subsidiaries, “GSR”), 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, (b) 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 , (c) our 19 percent ownership interest in Ocean Minerals LLC (together with its subsidiaries, “Ocean Minerals”), the parent company of Moana Minerals Ltd., a Cook Islands subsea resource development company that intends to explore and collect polymetallic nodules, (d) our 22 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, and (e) our ownership interests in other companies involved in researching and developing technology to improve efficiency, reliability, sustainability and safety for drilling and other activities.

In the years ended December 31, 2023, 2022 and 2021, we recognized a net loss of $ 14 million, $ 24 million and $ 10 million, respectively, recorded in other income and expense, associated with equity in losses of our equity investments.

At December 31, 2023 and 2022, the aggregate carrying amount of our equity investments was $ 216 million and $ 113 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.

Contributions —In February 2023, we made a cash contribution of $ 10 million and a non-cash contribution of the ultra-deepwater floater Ocean Rig Olympia , which had been cold stacked, and related assets, with an estimated fair value of $ 85 million (see Note 7—Long-Lived Assets ), in exchange for an equity ownership interest in GSR.

We estimated the fair value of the rig using projected discounted cash flows, and our estimate required us to use significant unobservable inputs, representative of Level 3 fair value measurements, including assumptions related to the future performance of the rig, projected demand for its services, rig availability and dayrates.

In the year ended December 31, 2022, we made an aggregate cash contribution of $ 42 million for partial equity ownerships in various companies, including among others, our initial investments in Liquila Ventures Ltd.

(together with its subsidiaries, “Liquila”) and Ocean Minerals.

Impairments —In the years ended December 31, 2023 and 2021, we recognized a loss of $ 5 million and $ 37 million, respectively, which had no tax effect, recorded in other, net, associated with the impairment of certain equity investments upon determination that the carrying amount exceeded the estimated fair value and that the impairment was other than temporary.

For the impairment in the year ended December 31, 2021, 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.

Related party transactions

Operating activities —We engage in certain related party transactions with our unconsolidated affiliates.

Our most significant transactions with our unconsolidated affiliates are under agreements with Orion as follows:

(a) we operate, stack and maintain Transocean Norge under a management services agreement, (b) we market Transocean Norge under a marketing services agreement and (c) during operations, we lease Transocean Norge under a bareboat charter 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

In the years ended December 31, 2023, 2022 and 2021, we incurred costs of approximately $ 55 million, $ 54 million and $ 24 million, respectively, for Transocean Norge , primarily for contract preparation and upgrade shipyard costs, which are reimbursable from Orion, the owner of the rig.

In the years ended December 31, 2023, 2022 and 2021, we received an aggregate cash payment of $ 49 million, $ 40 million and $ 16 million, respectively, for services and equipment provided to Orion.

Additionally, in the year ended December 31, 2023, we and Orion agreed to the non-cash net settlement of a balance of $ 25 million of accounts receivable and payable.

In the years ended December 31, 2023, 2022 and 2021, we recognized rent expense of $ 26 million, $ 11 million and $ 12 million, respectively, recorded in

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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.

operating and maintenance costs, and made an aggregate cash payment of $ 27 million, $ 10 million and $ 15 million, respectively, to charter the rig and rent other equipment from Orion.

In the years ended December 31, 2023, 2022 and 2021, we made an aggregate cash payment of $ 12 million, $ 7 million and $ 6 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, 2023 and 2022, our accounts receivable from affiliates was $ 14 million and $ 32 million, respectively, recorded in other current assets, and our accounts payable to affiliates was $ 4 million and $ 2 million, respectively, recorded in accounts payable.

Acquisition —In November 2022, we and Perestroika AS (together with its subsidiaries, “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, a previously unconsolidated variable interest entity, that is constructing the ultra-deepwater floater Deepwater Aquila .

Together with a contribution from the holder of the remaining 67 percent ownership interest, these contributions were used to make the initial payment to the shipyard to acquire the newbuild drillship for a purchase price of approximately $ 200 million.

At December 31, 2022, the aggregate carrying amount of our investment in Liquila was $ 15 million, recorded in other assets.

On September 15, 2023, we issued 11.9 million Transocean Ltd.

shares with an aggregate value of $ 99 million, which included 2.0 million Transocean Ltd.

shares with an aggregate value of $ 16.4 million issued to Perestroika, to acquire the outstanding ownership interests in Liquila, and as a result, Liquila became our wholly owned subsidiary.

See Note 7—Long Lived Assets and Note 14—Equity .

Debt investments —We occasionally invest in debt instruments of our unconsolidated affiliates.

In June 2021, we made a cash investment of $ 33 million in a $ 100 million financing arrangement for Orion to refinance its shipyard loans.

Borrowings under the financing arrangement were secured by Transocean Norge , and outstanding borrowings incurred interest at the London Interbank Offered Rate plus a margin of 6.50 percent per annum.

At December 31, 2022, the aggregate carrying amount of our investment in the financing arrangement was $ 37 million, recorded in other assets.

In September 2023, we agreed to exchange the borrowings under the financing arrangement for an additional equity investment in Orion, and Orion subsequently entered into a new credit facility with another lender.

At December 31, 2023 and 2022, the aggregate principal amount due to us under the various financing arrangements with our unconsolidated affiliates was $ 6 million and $ 41 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 5—Revenues

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(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.

These services represent a single performance obligation under most of our drilling contracts with customers that is satisfied over time, the duration of which varies by contract.

At December 31, 2023, the drilling contract with the longest expected remaining duration, excluding unexercised options, extends through July 2029.

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(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.

Major customers —For the year ended December 31, 2023, Shell plc (together with its affiliates, “Shell”), Equinor ASA (together with its affiliates, “Equinor”), TotalEnergies SE and Petróleo Brasileiro S.A.

(together with its affiliates, “Petrobras”) represented approximately 27 percent, 16 percent, 12 percent and 11 percent, respectively, of our consolidated operating revenues.

For the year ended December 31, 2022, Shell, Equinor and Petrobras 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.

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AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued

Contract liabilities —Contract liabilities for our contracts with customers were as follows (in millions):

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Total contract liabilities, end of period

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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, 2023, 2022 and 2021, we recognized pre-operating costs of $ 69 million, $ 47 million and $ 48 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.

At December 31, 2023 and 2022, the unrecognized pre-operating costs to obtain contracts was $ 221 million and $ 26 million, respectively, recorded in other assets, significantly increased as a result of six rigs mobilizing or preparing for contracts that commenced in the three months ended December 31, 2023, or expected to commence in the three months ending March 31, 2024.

Note 6—Contract Intangible Assets

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Balance, end of period

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.

We expect to recognize the remaining $ 4 million balance in contract drilling revenues in the three months ending March 31, 2024.

Note 7—Long-Lived Assets

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Total capital expenditures

Non-cash capital additions acquired in exchange for issuance of shares

Non-cash capital additions financed under Shipyard Loans

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Construction work in progress, end of period

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, 2023, 2022 and 2021, we capitalized interest costs of $ 39 million, $ 73 million and $ 50 million, respectively, for our construction work in progress.

Acquisition —In September 2023, we acquired $ 126 million of property and equipment associated with Deepwater Aquila , an ultra-deepwater drillship under construction for Liquila, together with $ 7 million of cash and cash equivalents, and we assumed $ 19 million of accounts payable.

See Note 4—Unconsolidated Affiliates and Note 14—Equity .

Disposals —During the year ended December 31, 2023, in connection with our investment in a partial ownership interest in GSR, we made a non-cash contribution of the cold-stacked ultra-deepwater floater Ocean Rig Olympia and related assets.

In the year ended December 31, 2023, we recognized a loss of $ 169 million ($ 0.22 per diluted share), which had no tax effect, associated with the disposal of the rig and related assets (see Note 4—Unconsolidated Affiliates ).

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.

In the year ended December 31, 2021, we received net cash proceeds of $ 4 million, and recognized an aggregate net loss of $ 57 million ($ 0.09 per diluted share), which had no tax effect, associated with the disposal of the rig and related assets.

In the years ended December 31, 2023, 2022 and 2021, we received aggregate net cash proceeds of $ 4 million, $ 7 million and $ 5 million, respectively and recognized an aggregate net loss of $ 14 million, $ 10 million and $ 5 million, respectively, associated with the disposal of assets unrelated to rig sales.

Impairment —In June 2023, we committed to the sale of the harsh environment floaters Paul B.

and Transocean Leader and related assets for expected aggregate net cash proceeds of $ 49 million.

In the year ended December 31, 2023, we recognized an aggregate loss of $ 57 million ($ 0.07 per diluted share), which had no tax effect, associated with the impairment of the rigs and 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 rigs 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 a binding contract for the sale of the rigs and related assets.

Assets held for sale —At December 31, 2023, the aggregate carrying amount of our assets held for sale, including Paul B.

and Transocean Leader and related assets, was $ 49 million, recorded in other current assets.

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AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued

Note 8—Leases

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We recognize expense for the amortization of the right-of-use asset in depreciation and amortization.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued

Lease costs —The components of our lease costs were as follows (in millions):

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Carrying amount

5.52 % Senior Secured Notes due May 2022

3.80 % Senior Notes due October 2022

0.50 % Exchangeable Senior Bonds due January 2023

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4.50 % Shipyard Loans due September 2027

8.375 % Senior Secured Notes due February 2028

7.00 % Notes due June 2028

8.00 % Senior Secured Notes due September 2028

4.625 % Senior Guaranteed Exchangeable Bonds due September 2029

8.75 % Senior Secured Notes due February 2030

7.50 % Notes due April 2031

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Less debt due within one year

5.52 % Senior Secured Notes due May 2022

3.80 % Senior Notes due October 2022

0.50 % Exchangeable Senior Bonds due January 2023

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4.50 % Shipyard Loans due September 2027

8.00 % Senior Secured Notes due September 2028

8.75 % Senior Secured Notes due February 2030

Total debt due within one year

Total long-term debt

(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”).

(a) 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.

(b) Each subsidiary issuer of the respective unregistered 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”).

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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.

and rank equal in right of payment of all 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 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.

(d) Transocean Inc.

is the issuer of the unregistered notes (together, the “Senior Priority Guaranteed Notes”).

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and certain wholly owned indirect subsidiaries of Transocean Inc.

and rank equal

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued

in right of payment of all of our existing and future unsecured unsubordinated obligations.

and rank equal 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.

(e) 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.

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.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued

(f) Transocean Inc.

is the issuer of the unregistered notes.

The senior secured notes are fully and unconditionally guaranteed on an unsecured basis by Transocean Ltd.

and on a limited senior secured basis by each of the wholly owned subsidiary owners of the collateral rigs.

Transocean Ltd.

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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.

The indentures that govern the 4.00% senior guaranteed exchangeable bonds due December 2025 (the “4.00% 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 the 6.875% senior secured notes due February 2027, the 8.375% senior secured notes due February 2028 (the “8.375% Senior Secured Notes”) and the 8.75% senior secured notes due February 2030 (the “8.75% Senior Secured Notes”) 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, 2023, we had restricted cash and cash equivalents of $ 198 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.

At December 31, 2023, the rigs encumbered for the senior secured notes and our Shipyard Loans, including Deepwater Aquila , which is under construction, Deepwater Atlas , Deepwater Pontus , Deepwater Poseidon , Deepwater Proteus , Deepwater Thalassa , Deepwater Titan , Transocean Enabler and Transocean Encourage , had an aggregate carrying amount of $ 6.13 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):

Interest rate adjustments —At December 31, 2023, the interest rate in effect for the 7.35% senior notes due December 2041 was 9.35 percent, which is subject to adjustment from time to time upon a change to the credit rating of our non-credit enhanced senior unsecured long-term debt.

Scheduled maturities —At December 31, 2023, the scheduled maturities of our debt, including other installments of contractual interest payments for previously restructured debt, were as follows (in millions):

Years ending December 31,

Total installments of debt

Total installments

Total unamortized debt-related balances, net

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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

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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.

Secured Credit Facility —As of December 31, 2023, we have a secured revolving credit facility established under a bank credit agreement (as amended from time to time, the “Secured Credit Facility”), which provides us with a borrowing capacity of $ 600 million through its scheduled maturity on June 22, 2025.

We may borrow under the Secured Credit Facility at a forward looking term rate based on the secured overnight financing rate (“Term SOFR”) plus a margin (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 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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued

Dhirubhai Deepwater KG2 and Discoverer Inspiration and the harsh environment floaters Transocean Barents and Transocean Spitsbergen , and at December 31, 2023, the aggregate carrying amount of which was $ 4.71 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.

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At December 31, 2023, we had no borrowings outstanding, $ 13 million of letters of credit issued, and we had $ 587 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 .

Shipyard financing arrangement —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.

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share and (c) aggregate shares, expressed in millions, issuable upon exchange of our exchangeable bonds were as follows:

0.50 % Exchangeable Senior Bonds due January 2023

4.00 % Senior Guaranteed Exchangeable Bonds due December 2025

2.50 % Senior Guaranteed Exchangeable Bonds due January 2027

4.625 % Senior Guaranteed Exchangeable Bonds due September 2029

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

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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.

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interest rate

0.50 % Exchangeable Senior Bonds due January 2023

4.00 % Senior Guaranteed Exchangeable Bonds due December 2025

2.50 % Senior Guaranteed Exchangeable Bonds due January 2027

4.625 % Senior Guaranteed Exchangeable Bonds due September 2029

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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued

Interest expense —We recognized interest expense for our exchangeable bonds as follows (in millions):

Years ended December 31,

Contractual interest

Bifurcated compound exchange feature

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.

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.

Accordingly, we recognize changes to the liability for the estimated fair value of the bifurcated compound exchange feature with a corresponding adjustment to interest expense.

At December 31, 2023 and 2022, the carrying amount of the bifurcated compound exchange feature, recorded as a component of the carrying amount of debt, was $ 350 million and $ 295 million, respectively.

Exchanges —In April 2023, Perestroika exchanged $ 213 million aggregate principal amount of the 2.50% senior guaranteed exchangeable bonds due January 2027 (the “2.50% Senior Guaranteed Exchangeable Bonds”) under the terms of the governing indenture at the applicable exchange rate of 162.1626 Transocean Ltd.

shares per $1,000 note.

As part of the transaction governing the exchange, we delivered 34.6 million Transocean Ltd.

shares and additional immaterial cash consideration to such exchanging holder.

The director’s beneficial ownership of our shares resulting from these transactions did not change.

In July 2023, the holders of the remaining outstanding $ 25 million aggregate principal amount of 2.50% Senior Guaranteed Exchangeable Bonds exchanged such bonds under the terms of the governing indenture at the applicable exchange rate of 162.1626 Transocean Ltd.

shares per $1,000 note.

As part of the transaction, we delivered 4.0 million Transocean Ltd.

In October 2023, holders of $ 60 million and $ 41 million aggregate principal amount of the 4.00% Senior Guaranteed Exchangeable Bonds and the 4.625% Senior Guaranteed Exchangeable Bonds, respectively, exchanged such bonds under the terms of the governing indenture at the applicable exchange rate of 190.4762 and 290.6618 Transocean Ltd.

shares, respectively, per $1,000 note.

As part of the transactions, we delivered an aggregate 26.5 million Transocean Ltd.

shares, including an aggregate 3.1 million additional shares to such holders.

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.

Senior secured notes— In January 2023, we issued $ 525 million aggregate principal amount of 8.375% Senior Secured Notes, and we received $ 516 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, and we received $ 1.148 billion aggregate cash proceeds, net of issue costs.

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.

We may redeem all or a portion of the 8.75% Senior Secured Notes on or prior to February 15, 2026 at a price equal to 100 percent of the aggregate principal amount plus a make-whole premium, and subsequently, at specified redemption prices.

In October 2023, we issued $ 325 million aggregate principal amount of 8.00 % senior secured notes due September 2028 (the “8.00% Senior Secured Notes”), and we received $ 319 million aggregate cash proceeds, net of issue costs.

The 8.00% Senior Secured Notes are secured by the assets and certain earnings associated with the ultra-deepwater floater Deepwater Aquila as well as the equity of certain of the wholly owned subsidiaries that own or operate 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 8.00% Senior Secured Notes on or prior to September 30, 2025 at a price equal to 100 percent of the aggregate principal amount plus a make-whole premium, and subsequently, at specified redemption prices.

Senior guaranteed exchangeable bonds —In September 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 due January 2023 (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

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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.

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See Note 14—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 February 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.

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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

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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.

Debt repayment, redemption, and retirement

Early retirement —During the three years ended December 31, 2023, we retired certain notes as a result of redemptions or private exchanges.

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

6.50 % Senior Notes due November 2020

6.375 % Senior Notes due December 2021

Years ended December 31,

5.52 % Senior Secured Notes due May 2022

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5.375 % Senior Secured Notes due May 2023

9.00 % Senior Notes due July 2023

5.875 % Senior Secured Notes due January 2024

7.75 % Senior Secured Notes due October 2024

6.25 % Senior Secured Notes due December 2024

6.125 % Senior Secured Notes due August 2025

7.25 % Senior Notes due November 2025

7.50 % Senior Notes due January 2026

8.00 % Senior Notes due February 2027

7.45 % Notes due April 2027

8.00 % Debentures due April 2027

7.00 % Notes due June 2028

7.50 % Notes due April 2031

6.80 % Senior Notes due March 2038

7.35 % Senior Notes due December 2041

Aggregate principal amount of debt retired

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Aggregate net gain (loss)

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

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of the outstanding 6.50% senior notes due November 2020.

Additionally, in the year ended December 31, 2023, we recognized a net gain of $ 1 million associated with the retirement of $ 41 million aggregate principal amount of the 4.625% Senior Guaranteed Exchangeable Bonds exchanged by holders in October 2023.

Scheduled maturities and installments —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.

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.

In the years ended December 31, 2023, 2022 and 2021, we made an aggregate cash payment of $ 262 million, $ 479 million and $ 478 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.

Additionally, we are required to maintain certain balances in a restricted cash account to satisfy debt service requirements.

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.

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 10—Postemployment Benefit Plans

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(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.

In the years ended December 31, 2023, 2022 and 2021, we recognized expense of $ 58 million, $ 61 million and $ 52 million, respectively, recorded in the same financial statement line item as cash compensation paid to the respective employees, related to our defined contribution plans.

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Defined benefit pension and other postemployment benefit plans

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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.

We maintain the benefit obligations under our defined benefit plans until they are fully satisfied.

Net periodic benefit costs —We estimated our net periodic benefit costs using the following weighted average assumptions:

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“na” means not applicable.

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The components of net periodic benefit costs, recognized in other income and expense, were as follows (in millions):

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Projected benefit obligation, beginning of period

Actuarial gains, net

Actuarial (gain) loss, net

Interest cost

Currency exchange rate changes

Currency exchange rate (gain) loss

Benefits paid

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Fair value of plan assets, beginning of period

Actual return on plan assets

Currency exchange rate changes

Actual return (loss) on plan assets

Currency exchange rate gain (loss)

Employer contributions

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Fair value of plan assets, end of period

Funded status, end of period

Funded status asset (liability), end of period

Balance sheet classification, end of period:

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Accumulated benefit obligation, end of period

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

Projected benefit obligation

Fair value of plan assets

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

Accumulated benefit obligation

Fair value of plan assets

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued

Because our defined benefit plans no longer accrue benefits for participants, the projected benefit obligation is equivalent to the accumulated benefit obligation.

Certain amounts related to plans with a projected benefit obligation and accumulated benefit obligation in excess of plan assets were as follows (in millions):

December 31, 2023

December 31, 2022

Projected benefit obligation / accumulated benefit obligation

Fair value of plan assets

The amounts in accumulated other comprehensive loss (income) that have not been recognized were as follows (in millions):

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December 31, 2022

Actuarial loss, net

Prior service cost, net

Actuarial (gain) loss, net

Prior service cost (credit), net

Accumulated other comprehensive loss (income), before taxes

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Cash and money market funds

Synthetic leveraged credit fund

Total other investments

Total investments

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Total investments

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.

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued

flows from operations.

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 securities within each asset category.

Given this discretion, the plans may occasionally hold either long or short positions in our debt or equity securities.

Funding contributions and benefit payments —In the years ended December 31, 2023, 2022 and 2021, we made an aggregate contribution of $ 8 million, $ 3 million and $ 10 million, respectively, to the defined benefit pension plans and the OPEB Plans using our cash flows from operations.

In the year ending December 31, 2024, 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.

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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):

Tax provision and rate —The components of our income tax provision (benefit) were as follows (in millions):

Years ended December 31,

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Income tax expense

In the years ended December 31, 2023, 2022 and 2021, our effective tax rate was ( 1.4 ) percent, ( 10.4 ) percent and ( 25.7 ) percent, respectively, based on loss before income tax expense.

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):

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Earnings subject to rates different than the Swiss federal statutory rate

Swiss Federal Act on Tax Reform and AHV Financing

Changes in valuation allowance

Audit settlement

Withholding taxes

Deemed profits taxes

Withholding taxes

Changes in valuation allowance

Changes in unrecognized tax benefits, net

Swiss Federal Act on Tax Reform and AHV Financing

Audit settlement

Changes due to organizational restructuring

Losses on impairment

Base erosion and anti-abuse tax

Coronavirus Aid, Relief, and Economic Security Act

Income tax expense

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.

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

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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.

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, 2023 and 2022, we had a deferred tax liability of $ 264 million and $ 226 million, respectively, and a deferred tax asset of $ 1.21 billion and $ 1.23 billion, respectively, offset with a valuation allowance of $ 1.10 billion, associated with TRAF.

Deferred taxes —The significant components of our deferred tax assets and liabilities were as follows (in millions):

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Valuation allowance

Total deferred tax assets

Total deferred tax assets, net of allowance

Deferred tax liabilities

Contract intangible amortization

Total deferred tax liabilities

Deferred tax assets (liabilities), net

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.

We include taxes related to the earnings of all of our subsidiaries since we do not consider the earnings of any of our subsidiaries to be indefinitely reinvested.

At December 31, 2023 and 2022, our deferred tax assets included U.S.

foreign tax credits of $ 11 million and $ 19 million, respectively, which will expire between 2024 and 2026.

tax credits of $ 4 million and $ 11 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.

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Unrecognized tax benefits, including interest and penalties

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.

In the years ended December 31, 2023, 2022 and 2021, we recognized, as a component of our income tax provision, benefit of $ 18 million, expense of $ 6 million and expense of $ 8 million, respectively, related to interest and penalties associated with our unrecognized tax benefits.

As of December 31, 2023, we have unrecognized benefits of $ 458 million, including interest and penalties, against which we have recorded net operating loss deferred tax assets of $ 411 million, resulting in net unrecognized tax benefits of $ 47 million, including interest and penalties, that upon reversal would favorably impact our effective tax rate.

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Share-based awards

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

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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.

Note 13—Commitments and Contingencies

Purchase and service agreement obligations

We have purchase obligations with shipyards and other contractors primarily related to our newbuild construction program for Deepwater Aquila .

We also have long-term service agreements with original equipment manufacturers to provide services and parts, primarily related to our pressure control systems and drilling systems.

The commitments for our service agreements were estimated based on projected operating activity, and actual operating activity could differ from such estimates.

At December 31, 2023, the aggregate future payments required under our purchase obligations and our service agreement obligations were as follows (in millions):

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At December 31, 2023 and 2022, we also had outstanding surety bonds totaling $ 198 million and $ 161 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.

At December 31, 2023 and 2022, the aggregate cash collateral held by institutions to secure our letters of credit and surety bonds was $ 7 million.

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.

Asbestos litigation —In 2014, several of our subsidiaries were named, along with numerous other unaffiliated defendants, in complaints 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.

One of our subsidiaries has been named in similar complaints filed in Illinois, Missouri and California.

At December 31, 2023, seven plaintiffs have claims pending in Louisiana and 15 plaintiffs in the aggregate have claims pending in either Illinois, Missouri, or California, 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.

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Note 14—Equity

Share issuance —We maintain an at-the-market equity offering program (the “ATM Program”).

Share issuance —In September 2023, we issued 11.9 million Transocean Ltd.

shares with an aggregate value of $ 99 million to acquire the outstanding ownership interests of Liquila (see Note 4—Unconsolidated Affiliates and Note 7—Long-Lived Assets ).

In the year ended December 31, 2023, we issued 65.1 million shares to certain holders that elected to exchange exchangeable bonds under terms of the governing indentures (see Note 9—Debt ).

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.

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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 year ended December 31, 2023, we did not issue any shares 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.

Warrants —In September 2022, we issued 22.2 million warrants to purchase Transocean Ltd.

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.

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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.

Service-based stock options, once fully vested, are typically exercisable during

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued

a seven-year period.

Performance awards are typically subject to a three-year measurement period and typically vest in one aggregate installment following the ultimate determination date.

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.

Restricted share units —A restricted share unit subject to service requirements 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, 2023 for service-based units granted under our incentive plan:

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In the year ended December 31, 2023, 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.

In the years ended December 31, 2022 and 2021, we granted 6,768,943 and 6,148,361 service-based units, respectively, with a per unit weighted-average grant-date fair value of $ 3.60 and $ 3.56 , respectively.

In the years ended December 31, 2022 and 2021, we had 5,075,374 and 4,368,749 service-based units, respectively, that vested with an aggregate grant-date fair value of $ 18 million and $ 16 million, respectively.

Stock options —The following table summarizes activity during the year ended December 31, 2023 for vested and unvested service-based stock options outstanding under our incentive plan:

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Vested and exercisable at December 31, 2023

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.

In the years ended December 31, 2022 and 2021, the stock options that vested had an aggregate grant-date fair value of $ 4 million and $ 9 million, respectively.

At December 31, 2023 and 2022, there were no outstanding unvested stock options to purchase our 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.

Restricted share units —A restricted share unit subject to performance requirements is a notional unit for which the awarded number of shares to be issued per unit remains uncertain until quantified as of the ultimate determination date following completion of the performance period.

The following table summarizes unvested activity during the year ended December 31, 2023 for performance-based units under our incentive plan:

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Unvested at December 31, 2023

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.

In the years ended December 31, 2023, 2022 and 2021, the performance-based units that vested had an aggregate grant-date fair value of $ 11 million, $ 5 million and $ 11 million, respectively.

In the years ended December 31, 2022 and 2021, we granted 3,519,857 and 3,025,512 performance-based units, respectively, with a per unit weighted-average grant-date fair value of $ 3.91 and $ 3.70 , respectively.

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Note 17—Supplemental Cash Flow Information

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,

Changes in other operating assets and liabilities

(Increase) decrease in accounts receivable

Increase in other assets

Increase (decrease) in accounts payable and other current liabilities

Decrease in other long-term liabilities

Change in income taxes receivable / payable, net

Change in receivables from / payables to affiliates, net

TRANSOCEAN LTD.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued

Additional cash flow information was as follows (in millions):

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Capital additions accrued at end of period

Capital additions financed under Shipyard Loans

Issuance of debt in exchange transactions

Issuance of warrants in exchange transactions

Settlement of finance lease payments

Equity component of exchangeable debt

Capital additions acquired in exchange for debt

Acquisition of outstanding ownership interests in exchange for shares

Debt investment exchanged for equity ownership interests

Finance lease installments settled with credits issued to customer

Shares issued in exchanges of exchangeable bonds

Debt and warrants issued in exchange transactions

(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 7—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 7—Long-Lived Assets and Note 9—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 to acquire the outstanding ownership interests in Liquila.

See Note 4—Unconsolidated Affiliates , Note 7—Long-Lived Assets and Note 14—Equity .

(d) In September 2023, we agreed to exchange borrowings due to us under a financing arrangement with Orion for additional equity ownership interests in Orion.

See Note 4—Unconsolidated Affiliates .

(e) In the years ended December 31, 2023 and 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 8—Leases .

(f) In the year ended December 31, 2023, we issued 65.1 million Transocean Ltd.

shares to certain holders that elected to exchange the 2.50% Senior Guaranteed Exchangeable Bonds, the 4.00% Senior Guaranteed Exchangeable Bonds and the 4.625% Senior Guaranteed Exchangeable Bonds.

See Note 9—Debt and Note 14—Equity .

(g) 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 with an estimated fair value of $ 105 million and 6.7 million warrants to purchase Transocean Ltd.

shares with an estimated fair value of $ 5 million.

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 with an estimated fair value of $ 260 million.

See Note 9—Debt and Note 14—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 .

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,

Changes in other operating assets and liabilities

(Increase) decrease in accounts receivable

Increase in other assets

Increase (decrease) in accounts payable and other current liabilities

Increase (decrease) in other long-term liabilities

Change in income taxes receivable / payable, net

Change in receivables from / payables to affiliates, net

Note 18—Financial Instruments

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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.

TRANSOCEAN LTD.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued

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.

4 unchanged sentences

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.

Equity price risk —We are exposed to equity price risk primarily related to the bifurcated compound exchange feature contained within the 4.625% Senior Guaranteed Exchangeable Bonds.

The market price of our shares is the primary driver of the fair value of the exchange feature.

An increase to the market price of our shares yields an increase to the carrying amount of the exchange feature, recorded as a component of our debt, and a corresponding increase to interest expense.

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.

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The currency exchange effect resulting from our international operations generally has not had a material impact on our operating results.

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.

5 unchanged sentences

Labor agreements —At December 31, 2023, we had a global workforce of approximately 5,800 individuals, including approximately 370 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.

Approximately 42 percent of our total workforce, working primarily in Norway and Brazil, 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.

4 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data