What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-02-18 compared with 2024-02-21 · 329 added, 343 removed, 857 unchanged (44% of the section changed)

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(the “Company,” “we” or “our”) is responsible for the integrity and objectivity of the financial information included in this annual report.

We have prepared our financial statements in accordance with accounting principles generally accepted in the United States, which require us to apply our best judgement to make estimates and assumptions for certain amounts.

We have prepared our financial statements in accordance with accounting principles generally accepted in the United States (“U.S.”), which require us to apply our best judgement to make estimates and assumptions for certain amounts.

We are responsible for establishing and maintaining a system of internal controls and procedures to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the consolidated financial statements.

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Also, projections of any evaluation of effectiveness in future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934.

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(e) and 15d-15(e) under the U.S.

Securities Exchange Act of 1934.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2024.

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We believe that our audits provide a reasonable basis for our opinion.

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.

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.

Description of the Matter

As discussed in Notes 2 and 11 to the consolidated financial statements, the Company operates in multiple jurisdictions through a complex operating structure and is subject to applicable tax laws, treaties or regulations in each jurisdiction where it operates.

As discussed in Notes 2 and 10 to the consolidated financial statements, the Company operates in multiple jurisdictions through a complex operating structure and is subject to applicable tax laws or regulations in each jurisdiction where it operates.

The Company’s provision for income taxes is based on the tax laws and rates applicable in each jurisdiction.

The Company recognizes tax benefits they believe are more likely than not to be sustained upon examination by the taxing authorities based on the technical merits of the position.

Auditing management’s provision for income taxes and related deferred taxes was complex because of the Company’s multi-national operating structure.

In addition, a higher degree of auditor judgment was required to evaluate the Company’s deferred tax provision as a result of the Company’s interpretation of tax law in certain jurisdictions across its multiple subsidiaries.

In particular, a higher degree of auditor judgment was required to evaluate the completeness of the Company’s deferred tax provision as a result of the Company’s interpretation of tax law in certain jurisdictions across its multiple subsidiaries.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s income tax provision process, including controls over management’s review of the identification and valuation of deferred income taxes and changes in tax laws and regulations that may impact the Company’s deferred income tax provision.

We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s income tax provision process, including controls over management’s review of the identification of deferred income taxes and changes in tax laws and regulations that may impact the completeness of the Company’s deferred income tax provision.

Our audit procedures also included, among others, (i) obtaining an understanding of the Company’s overall tax structure, evaluating changes in the Company’s tax structure that occurred during the year as well as changes in tax law, and assessing the interpretation of those changes under the relevant jurisdiction’s tax law;

(ii) utilizing tax resources with appropriate knowledge of local jurisdictional laws and regulations;

(iii) evaluating the completeness and accuracy of deferred income taxes, and (iv) assessing the reasonableness of the Company’s valuation allowance on deferred tax assets, including projections of taxable income from the future reversal of existing taxable temporary differences.

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.

and (iii) evaluating the completeness of deferred income taxes.

/s/ Ernst & Young LLP

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Gain (loss) on retirement of debt

Loss before income tax expense

Income tax expense

Loss before income tax expense (benefit)

Income tax expense (benefit)

Net income attributable to noncontrolling interest

Net loss attributable to controlling interest

Loss per share, basic and diluted

Weighted-average shares, basic and diluted

Loss per share

Weighted-average shares outstanding

See accompanying notes.

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Materials and supplies, net

Assets held for sale

Restricted cash and cash equivalents

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Commitments and contingencies

Shares, CHF 0.10 par value, 1,021,294,549 authorized, 142,362,093 conditionally authorized, 843,715,858 issued

and 809,030,846 outstanding at December 31, 2023, and 905,093,509 authorized, 142,362,675 conditionally

authorized, 797,244,753 issued and 721,888,427 outstanding at December 31, 2022

Shares, $ 0.10 par value, 1,057,879,029 authorized, 141,262,093 conditionally authorized, 940,828,901 issued

and 875,830,772 outstanding at December 31, 2024, and CHF 0.10 par value, 1,021,294,549 authorized,

142,362,093 conditionally authorized, 843,715,858 issued and 809,030,846 outstanding at December 31, 2023

Additional paid-in capital

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Balance, beginning of period

Total comprehensive income attributable to noncontrolling interest

Acquisition of noncontrolling interest

Balance, end of period

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Issuance of warrants

Acquisition of noncontrolling interest

Balance, end of period

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Loss on impairment of assets

Loss on impairment of investment in unconsolidated affiliates

Loss on disposal of assets, net

Fair value adjustment to bifurcated compound exchange feature

Amortization of debt-related balances, net

(Gain) loss on adjustment to bifurcated compound exchange feature

(Gain) loss on retirement of debt

Loss on impairment of investment in unconsolidated affiliates

Deferred income tax expense

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Capital expenditures

Investments in equity of unconsolidated affiliates

Investment in loans to unconsolidated affiliates

Proceeds from disposal of assets, net

Cash acquired in acquisition of unconsolidated affiliate

Investment in equity of unconsolidated affiliates

Proceeds from disposal of assets, net of costs to sell

Cash acquired in acquisition of unconsolidated affiliates

Net cash used in investing activities

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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, 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.

As of December 31, 2024, we owned or had partial ownership interests in and operated a fleet of 34 mobile offshore drilling units, consisting of 26 ultra-deepwater floaters and eight harsh environment floaters.

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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The location of our rigs and the allocation of our resources to build or upgrade rigs are determined by the activities and needs of our customers.

See Note 15—Supplemental Segment Information .

Note 2—Significant Accounting Policies

Accounting estimates —To prepare financial statements in accordance with accounting principles generally accepted in the United States (“U.S.”), we must make judgments by applying estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosures of contingent assets and liabilities.

On an ongoing basis, we evaluate our estimates and assumptions, including those related to our income taxes, property and equipment, equity investments, contingencies, allowance for excess materials and supplies, assets held for sale, 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, 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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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.

Consequently, our exposure to currency exchange rate fluctuations is limited.

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.

In the years ended December 31, 2024, 2023 and 2022, we recognized a net gain of $ 16 million, a net gain of $ 10 million and a net loss of $ 8 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

We recognize revenues for demobilization over the contract period unless otherwise constrained.

We recognize revenues from contract terminations as we fulfill our obligations and

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued

over the contract period unless otherwise constrained.

We recognize revenues from contract terminations as we fulfill our obligations and all contingencies have been resolved.

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.

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We recognize potential global intangible low-taxed income inclusions as a period cost.

We maintain liabilities for estimated tax exposures in our jurisdictions of operation, and we recognize the provisions and benefits resulting from changes to those liabilities in our income tax expense or benefit along with related interest and penalties.

We establish liabilities for estimated tax exposures, and we recognize the provisions and benefits resulting from changes to those liabilities, together with related interest and penalties, in income tax expense or benefit.

Income tax exposure items include potential challenges to permanent establishment positions, intercompany pricing, disposition transactions, and withholding tax rates and their applicability.

These tax exposures are resolved primarily through the settlement of audits within these tax jurisdictions or by judicial means, but can also be affected by changes in applicable tax law or other factors, which could cause us to revise past estimates.

Such tax exposures may be affected by changes in applicable tax law or other factors, which could cause us to revise our prior estimates, and are generally resolved through the settlement of audits within the tax jurisdictions or by judicial means.

We measure deferred tax assets and liabilities using enacted tax rates that will apply in the years in which the deferred tax assets and liabilities are expected to be recovered or paid.

In evaluating our ability to realize deferred tax assets, we consider all available positive and negative evidence, including projected future taxable income and the existence of cumulative losses in recent years.

To evaluate our ability to realize deferred tax assets, we consider all available positive and negative evidence, including projected future taxable income and the existence of cumulative losses in recent years.

We record a valuation allowance for deferred tax assets when it is more likely than not that some or all of the benefit from the deferred tax asset will not be realized.

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Restricted cash and cash equivalents —We maintain restricted cash and cash equivalents that are either pledged for debt service under certain bond indentures, as required under certain bank credit arrangements, or held in accounts that are subject to restrictions due to legislation, regulation or court order.

We classify such restricted cash and cash equivalents in current assets if the restriction is expected to expire or otherwise be resolved within one year or if such funds are considered to offset liabilities that are properly classified as current liabilities.

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 correspond to liabilities that are properly classified as current liabilities.

See Note 8—Debt .

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At December 31, 2024 and 2023, our allowance for excess items was $ 178 million and $ 198 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.

See Note 6—Long-Lived Assets .

Property and equipment —We apply judgment to account for our property and equipment, consisting primarily of offshore drilling rigs and related equipment, related to estimates and assumptions for cost capitalization, useful lives and salvage values.

We base our estimates and assumptions on historical experience and expectations regarding future industry conditions and operations.

At December 31, 2023, the aggregate carrying amount of our property and equipment represented approximately 84 percent of our total assets.

At December 31, 2024, the aggregate carrying amount of our property and equipment represented 82 percent of our total assets.

We capitalize expenditures for newbuilds, renewals, replacements and improvements, including capitalized interest, if applicable, and we recognize the expense for maintenance and repair costs as incurred.

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When evaluating the remaining useful lives of rigs, we also consider major capital upgrades required to perform certain contracts and the long-term impact of those upgrades on future marketability.

Long - lived asset impairment —We review the carrying amounts of long-lived assets, including property and equipment and right-of-use assets, for potential impairment when events occur or circumstances change that indicate that the carrying amount of such assets may not be recoverable.

For assets classified as held and used, we determine recoverability by evaluating the estimated undiscounted future net cash flows based on projected dayrates and utilization of the asset group under review.

We consider our asset groups to be

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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.

We consider our asset groups to be ultra-deepwater floaters and harsh environment floaters.

When an impairment of an asset group is indicated, we measure an impairment as the amount by which the carrying amount of the asset group exceeds its estimated fair value.

We estimate the fair value of an asset group by applying a variety of valuation methods, incorporating a combination of income, market and cost approaches, using projected discounted cash flows and estimates of the exchange price that would be received for the assets in the principal or most advantageous market for the assets in an orderly transaction between market participants as of the measurement date.

For an asset classified as held for sale, we consider the asset to be impaired to the extent its carrying amount exceeds its estimated fair value less cost to sell.

See Note 7—Long-Lived Assets .

See Note 6—LongLived Assets .

Equity investments and impairment —We review our equity-method investments, and other equity investments for which a readily determinable fair value is not available, for potential impairment when events or changes in circumstances indicate that the carrying amount of the investment might not be recoverable in the near term.

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To estimate the fair value of the investment, we apply valuation methods that rely primarily on the income and market approaches.

In the years ended December 31, 2023 and 2021, we recognized a loss of $ 5 million and $ 37 million, respectively, associated with the other-than-temporary impairment of the carrying amount of our equity investments.

We amortize the basis difference caused by such impairments using the straight-line method over the estimated life of the asset.

See Note 4—Unconsolidated Affiliates .

Pension and other postemployment benefit plans —We use a measurement date of January 1 for determining net periodic benefit costs and December 31 for determining plan benefit obligations and the fair values of plan assets.

Pension and other postemployment benefit plans —We use a measurement date of January 1 to determine net periodic benefit costs and December 31 to determine plan benefit obligations and the fair values of plan assets.

We determine our net periodic benefit costs based on a market-related value of assets that reduces year-to-year volatility by including investment gains or losses subject to amortization over a five-year period from the year in which they occur.

We calculate investment gains or losses for this purpose as the difference between the expected return calculated using the market-related value of assets and the actual return based on the market-related value of assets.

If gains or losses exceed 10 percent of the greater of plan assets or plan liabilities, we amortize such gains or losses over the average expected future service period of the employee participants.

If gains or losses exceed 10 percent of the greater of plan assets or plan liabilities, we amortize such gains or losses over the average expected future lifetime of the participants.

We measure the actuarially determined obligations and related costs for our defined benefit pension and other postemployment benefit plans, retiree life insurance and medical benefits, by applying assumptions, the most significant of which include long-term rate of return on plan assets, discount rates and mortality rates.

For the long-term rate of return, we develop our assumptions regarding the expected rate of return on plan assets based on historical experience and projected long-term investment returns, and we weight the assumptions based on each plan’s asset allocation.

For the long-term rate of return, we develop our assumptions regarding the expected rate of return on plan assets based on projected long-term investment returns, and we weight the assumptions based on each plan’s asset allocation.

For the discount rate, we base our assumptions on a yield curve approach using Aa-rated corporate bonds and the expected timing of future benefit payments.

At December 31, 2024 and 2023, the funded status of our pension and other postemployment benefit plans represented an aggregate liability of $ 104 million and $ 125 million, respectively, and an aggregate asset of $ 73 million and $ 31 million, respectively.

See Note 10—Postemployment Benefit Plans .

See Note 9—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.

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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

Note 3—Accounting Standards Updates

Recently adopted accounting standards

Segment reporting —Effective for the year ended December 31, 2024, we adopted 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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued

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.

Additionally, the update requires disclosures about the individual or the group or committee identified as the chief operating decision-maker.

We have provided new disclosures, as required, in our notes to consolidated financial statements.

See Note 1—Business and Note 15—Supplemental Segment Information .

Recently issued accounting standards updates not yet adopted

Income taxes —Effective for the year ending December 31, 2025, we will adopt the accounting standards update that requires significant incremental disclosures intended to enhance the transparency and decision-usefulness of income tax disclosures, particularly with regard to the effective tax rate reconciliation table and 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 will provide the new disclosures, as required, for annual periods beginning with our annual report on Form 10-K for the year ending December 31, 2025.

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.

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

Disaggregated income statement expenses —Effective for the year ending December 31, 2027, we will adopt the accounting standards update that requires disaggregated disclosures, in the notes to consolidated financial statements, of certain categories of expenses that are included in expense line items on the face of the consolidated statements of operations.

The disclosures will be required on an annual and interim basis.

We will provide the new disclosures, as required, for annual periods beginning with our annual report on Form 10-K for the year ending December 31, 2027, and subsequently, for interim periods beginning with our quarterly report on Form 10-Q for the quarterly period ending March 31, 2028.

We continue to evaluate the requirements.

Note 4—Unconsolidated Affiliates

Equity investments

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.

Overview —At December 31, 2024, 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 19 percent ownership interest in Ocean Minerals LLC (together with its subsidiaries, “OML”), the parent company of Moana Minerals Ltd., a Cook Islands subsea resource development company that intends to explore and collect polymetallic nodules, and (c) 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, 2024, 2023 and 2022, we recognized income of $ 4 million, a loss of $ 14 million and a loss of $ 24 million, respectively, recorded in other, net, associated with equity in earnings or losses of our equity investments.

At December 31, 2024 and 2023, the aggregate carrying amount of our equity investments was $ 123 million and $ 216 million, respectively, recorded in other assets.

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.

Contributions —In February 2023, we acquired a noncontrolling interest in GSR in exchange for 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 6—Long-Lived Assets ).

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 future performance of the rig, projected demand for its services, rig availability and dayrates.

In the year ended December 31, 2022, we acquired noncontrolling interests in various companies, including among others, our initial investment in OML and Liquila Ventures Ltd.

(together with its subsidiaries, “Liquila”), for an aggregate cash contribution of $ 42 million.

Acquisition —At December 31, 2023, we held a 33.0 percent noncontrolling interest in Orion Holdings (Cayman) Limited (together with its subsidiary, “Orion”), the Cayman Islands company that owned the harsh environment floater Transocean Norge , and the aggregate carrying amount of our investment in Orion was $ 86 million.

In June 2024, we acquired the outstanding 67.0 percent ownership interest in Orion in exchange for noncash consideration with an aggregate fair value of $ 431 million, including 55.5 million Transocean Ltd.

shares and $ 130 million aggregate principal amount of 8.00 % senior notes due February 2027 (the “8.00% Senior Notes”).

As a result, Orion became our wholly owned subsidiary.

We recorded the transaction using the asset acquisition method of accounting.

See Note 6—Long Lived Assets , Note 8—Debt and Note 13—Equity .

Impairments —In each of the years ended December 31, 2024 and 2023, we recognized a loss of $ 5 million, which had no tax effect, recorded in other, net, associated with the other-than-temporary impairment of the carrying amount of certain equity investments.

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, 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

Investment and acquisition —In November 2022, we and Perestroika (Cyprus) Ltd (together with its subsidiaries, “Perestroika”), an entity affiliated with one of our directors that beneficially owns approximately 10 percent of our shares, each acquired a noncontrolling

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued

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.

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.

interest in Liquila, a previously unconsolidated Bermuda company, that was constructing the ultra-deepwater floater Deepwater Aquila , in exchange for a cash contribution of $ 15 million and $ 10 million, respectively.

These initial contributions, together with a contribution from the holder of the remaining 67 percent ownership interest, were used to make an initial installment to the shipyard to acquire the newbuild drillship.

In September 2023, we acquired the outstanding 80 percent ownership interest in Liquila, in exchange for the issuance of 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.

shares with an aggregate value of $ 16 million issued to Perestroika.

As a result, Liquila became our wholly owned subsidiary.

We recorded the transaction using the asset acquisition method of accounting.

See Note 6—Long Lived Assets and Note 13—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.

Operating and lending activities —We procure and provide services and equipment from and to our unconsolidated affiliates for technological innovation and subsea minerals exploration, and we occasionally provide loans to our unconsolidated affiliates.

In the years ended December 31, 2024, 2023 and 2022, we made an aggregate cash payment of $ 14 million, $ 12 million and $ 7 million, respectively, to our unconsolidated affiliates primarily for research and development and for equipment.

At December 31, 2024 and 2023, our accounts receivable from affiliates was $ 3 million and $ 14 million, respectively, recorded in other current assets.

At December 31, 2024 and 2023, the aggregate carrying amount of balances due to us under various financing arrangements with our unconsolidated affiliates was $ 10 million and $ 6 million, respectively, recorded in other assets.

In the years ended December 31, 2024, 2023 and 2022, we received an aggregate cash payment of $ 11 million, $ 49 million and $ 40 million, respectively, for services and equipment provided to, and prior to our acquisition of, Orion.

In the years ended December 31, 2024, 2023, and 2022, we recognized rent expense of $ 25 million, $ 26 million and $ 11 million, respectively, recorded in operating and maintenance costs, and made an aggregate cash payment of $ 25 million, $ 27 million and $ 10 million, respectively, to charter the rig and rent other equipment from, and prior to our acquisition of, 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.

Note 5—Revenues

Overview —We earn revenues primarily by performing the following activities:

(i) providing our drilling rig, work crews, related equipment and services necessary to operate the rig (ii) delivering the drilling rig by mobilizing to and demobilizing from the drill location, and (iii) performing certain pre-operating activities, including rig preparation activities or equipment modifications required for the contract.

These services represent a single performance obligation under most 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.

(i) providing our drilling rig, together with the work crews, related equipment and services necessary to operate the rig, (ii) providing certain pre-operating activities, including rig preparation and equipment modifications required for the contract, and (iii) delivering the drilling rig by mobilizing to and demobilizing from the drill location.

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

At December 31, 2024, the drilling contract with the longest expected remaining duration, excluding unexercised options, extends through August 2029.

Disaggregation —Our contract drilling revenues, disaggregated by asset group and by country in which they were earned, were as follows (in millions):

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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, 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.

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Major customers —For the year ended December 31, 2024, Shell plc (together with its affiliates, “Shell”), Petróleo Brasileiro S.A.

(together with its affiliates, “Petrobras”) and Equinor ASA (together with its affiliates, “Equinor”) represented 27 percent, 21 percent and 13 percent, respectively, of our consolidated operating revenues.

For the year ended December 31, 2023, Shell, Equinor, TotalEnergies SE and Petrobras represented 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 33 percent, 25 percent and 11 percent, respectively, of our consolidated operating revenues.

Contract intangible assets —At December 31, 2024 and 2023, the gross carrying amount of our drilling contract intangible assets was $ 907 million and the corresponding accumulated amortization was $ 907 million and $ 903 million, respectively.

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

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Total contract liabilities

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Significant changes in contract liabilities were as follows (in millions):

Years ended December 31,

Total contract liabilities, beginning of period

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Pre-operating costs —In the years ended December 31, 2024, 2023 and 2022, we recognized pre-operating costs of $ 138 million, $ 69 million and $ 47 million, respectively, recorded in operating and maintenance costs.

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

The gross carrying amount and accumulated amortization of our drilling contract intangible assets were as follows (in millions):

Year ended December 31, 2023

Year ended December 31, 2022

Drilling contract intangible assets

Balance, beginning of period

Balance, end of period

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

Recognition increased in the year ended December 31, 2024, primarily as a result of the commencement of operations for two rigs that mobilized to Australia, one rig that mobilized to Brazil and one rig that we reactivated for a contract in Brazil.

At December 31, 2024 and 2023, the carrying amount of our unrecognized pre-operating costs to obtain contracts was $ 224 million and $ 221 million, respectively, recorded in other assets.

Note 6—Long-Lived Assets

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Although we are organized under the laws of Switzerland, we have minimal assets located in Switzerland, and we do not conduct any operations or earn operating revenues in Switzerland.

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Construction work in progress —The changes in our construction work in progress were as follows (in millions):

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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

Non-cash capital additions acquired in exchange for issuance of Transocean Ltd.

Non-cash capital additions financed under the Shipyard Loans

Changes in accrued capital additions

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In the years ended December 31, 2024, 2023 and 2022, we capitalized interest costs of $ 15 million, $ 39 million and $ 73 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.

Acquisitions —In June 2024 we acquired $ 517 million of property and equipment associated with Transocean Norge , together with $ 5 million of cash and cash equivalents and $ 4 million of accounts receivable from us.

In September 2023, we acquired $ 126 million of property and equipment associated with Deepwater Aquila , together with $ 7 million of cash and cash equivalents, and we assumed $ 19 million of accounts payable.

See Note 4—Unconsolidated Affiliates , Note 8—Debt and Note 13—Equity .

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued

Impairments —In the year ended December 31, 2024, we recognized a loss of $ 772 million ($ 755 million or $ 0.82 per diluted share, net of tax) associated with the impairment of the ultra-deepwater floaters Deepwater Nautilus , Development Driller III and Discoverer Inspiration , together with related assets, which we determined were impaired at the time that we classified the assets as held for sale.

In the year ended December 31, 2023, we recognized a loss of $ 57 million ($ 0.07 per diluted share), which had no tax effect, associated with the impairment of the harsh environment floaters Paul B.

and Transocean Leader , together with related assets, which we determined were impaired at the time that we classified the assets as held for sale.

We measured the impairment 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 binding contracts for the sale of the rigs and related assets.

Disposals —During the year ended December 31, 2024, we completed the sale of Deepwater Nautilus , Paul B.

and Transocean Leader , together with related assets, for aggregate net cash proceeds of $ 102 million, including $ 6 million received as a deposit in the year ended December 31, 2023.

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 Ocean Rig Olympia and related assets.

In the years ended December 31, 2024, 2023 and 2022, we received aggregate net cash proceeds of $ 5 million, $ 4 million and $ 7 million, respectively and recognized an aggregate net loss of $ 17 million, $ 14 million and $ 10 million, respectively, associated with the disposal of assets unrelated to rig sales.

Assets held for sale —At December 31, 2024, the aggregate carrying amount of our assets held for sale, including Development Driller III and Discoverer Inspiration , together with related assets, was $ 343 million.

The transactions contemplated by the binding purchase and sale agreements, executed in September 2024, for these rigs and related assets were subject to customary closing conditions, including the buyers’ ability to secure financing for the purchases.

In January 2025, after extending the originally agreed closing dates, we canceled the purchase and sale agreements as a result of the buyers’ failure to deliver the proceeds.

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.

Note 7—Leases

Overview —Our operating leases are principally for office space, storage facilities, operating equipment and land.

Overview —Our operating leases are principally for office space, storage facilities, land and operating equipment.

At December 31, 2024, our operating leases had a weighted-average discount rate of 6.5 percent and a weighted-average remaining lease term of 11.1 years.

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Financing cash flows from finance lease

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At December 31, 2024, the aggregate future minimum lease payments were as follows (in millions):

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Long-term lease liabilities, recorded in other long-term liabilities

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Outstanding debt —The aggregate principal amounts and aggregate carrying amounts, including the contractual interest payments of previously restructured debt, a bifurcated compound exchange feature, and unamortized debt-related balances, such as discounts, premiums and issue costs, were as follows (in millions):

Outstanding debt —The aggregate principal amounts and aggregate carrying amounts, including a bifurcated compound exchange feature and unamortized debt-related balances, such as discounts, premiums and issue costs, were as follows (in millions):

Principal amount

Carrying amount

0.50 % Exchangeable Senior Bonds due January 2023

5.375 % Senior Secured Notes due May 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

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7.50 % Senior Notes due January 2026

2.50 % Senior Guaranteed Exchangeable Bonds due January 2027

11.50 % Senior Guaranteed Notes due January 2027

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8.00 % Senior Secured Notes due September 2028

8.25 % Senior Notes due May 2029

4.625 % Senior Guaranteed Exchangeable Bonds due September 2029

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7.50 % Notes due April 2031

8.50 % Senior Notes due May 2031

6.80 % Senior Notes due March 2038

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Less debt due within one year

0.50 % Exchangeable Senior Bonds due January 2023

5.375 % Senior Secured Notes due May 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

2.50 % Senior Guaranteed Exchangeable Bonds due January 2027

4.00% Senior Guaranteed Exchangeable Bonds due December 2025

11.50% Senior Guaranteed Notes due January 2027

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4.50% Shipyard Loans due September 2027

8.375% Senior Secured Notes due February 2028

8.00% Senior Secured Notes due September 2028

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Total long-term debt

(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.

(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.

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

(a) Transocean International Limited, a wholly owned direct subsidiary of Transocean Ltd.

formerly known as Transocean Inc., is the issuer of the unregistered notes (collectively, the “Priority Guaranteed Notes”).

The guaranteed senior unsecured notes are fully and unconditionally, jointly and severally, guaranteed by Transocean Ltd.

and certain wholly owned indirect subsidiaries of Transocean Inc.

and rank equal in right of payment of all 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”).

and certain wholly owned indirect subsidiaries of Transocean International Limited 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, as defined below, 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.

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

The priority guaranteed senior unsecured notes are fully and unconditionally, jointly and severally, guaranteed by Transocean Ltd.

and certain wholly owned indirect subsidiaries of Transocean Inc.

and rank equal 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.

(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.

and certain wholly owned indirect subsidiaries of Transocean

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued

(f) Transocean Inc.

is the issuer of the unregistered notes.

International Limited 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.

(c) Each subsidiary issuer of the respective unregistered notes is a wholly owned indirect subsidiary of Transocean International Limited.

The senior secured notes are fully and unconditionally, jointly and severally, guaranteed by Transocean Ltd., Transocean International Limited and, in each case, the owner of the respective collateral rig or rigs.

(d) Transocean International Limited 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.

(e) The subsidiary borrowers under the Shipyard Loans and the subsidiary issuer of the registered notes are wholly owned indirect subsidiaries of Transocean International Limited.

The loans and notes are fully and unconditionally guaranteed by Transocean International Limited.

(f) Transocean International Limited 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.

and Transocean Inc.

are not subject to any significant restrictions on their ability to obtain funds from their consolidated subsidiaries by dividends, loans or capital distributions.

Indentures —The indentures that govern our debt generally contain covenants that, among other things, limit our ability to incur certain liens on our drilling units without equally and ratably securing the notes, to engage in certain sale and lease back transactions covering any of our drilling units, to allow our subsidiaries to incur certain additional debt, or to engage in certain merger, consolidation or reorganization transactions or to enter into a scheme of arrangement qualifying as an amalgamation.

Transocean Ltd.

and Transocean International Limited are not subject to any significant restrictions on their ability to obtain funds from their consolidated subsidiaries by dividends, loans or capital distributions.

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 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, 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.

or Transocean International Limited, (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 6.875% senior secured notes due February 2027, the 8.375% senior secured notes due February 2028 (the “8.375% Senior Secured Notes”), the 8.00% senior secured notes due September 2028 (the “8.00% Senior Secured Notes”) and the 8.75% senior secured notes due February 2030 (the “8.75% Senior Secured Notes”) contain certain covenants, among others, related to the debt and earnings attributable to the collateral rigs and the ability of our subsidiaries that own or operate the collateral rigs to declare or pay dividends to their affiliates.

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.

The indentures that govern our senior secured notes contain certain lien requirements, including the maintenance of certain balances in a restricted cash account to satisfy debt service requirements.

At December 31, 2024, we had restricted cash and cash equivalents of $ 351 million deposited in restricted accounts to satisfy debt service and reserve requirements for the senior secured notes.

At December 31, 2024, the rigs encumbered for the senior secured notes and our Shipyard Loans include the ultra-deepwater floaters Deepwater Aquila , Deepwater Atlas , Deepwater Pontus , Deepwater Poseidon , Deepwater Proteus , Deepwater Thalassa , Deepwater Titan , and the harsh environment floaters Transocean Enabler and Transocean Encourage , the aggregate carrying amount of which was $ 6.09 billion.

Interest rate adjustments —At December 31, 2024, 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):

Scheduled maturities —At December 31, 2024, the scheduled maturities of our debt were as follows (in millions):

Years ending December 31,

Total installments

Total principal amount of debt

Total unamortized debt-related balances, net

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Credit agreements

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.

Secured Credit Facility —As of December 31, 2024, 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, 2028.

In April 2024, we amended the Secured Credit Facility to, among other things, (a) extend the maturity date from June 22, 2025 to June 22, 2028 and (b) reduce

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the borrowing capacity from $ 600 million to $ 576 million through June 22, 2025 and thereafter reduce the borrowing capacity to $ 510 million through June 22, 2028.

Throughout the term of the Secured Credit Facility, we pay a facility fee on the amount of the underlying commitment, which ranges from 0.375 percent to 1.00 percent based on the credit rating of the Secured Credit Facility.

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 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 $ 325 million and available cash is less than $ 250 million.

2 unchanged sentences

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 ,

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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 is secured by, among other things, a lien on the ultra-deepwater floaters Deepwater Asgard , Deepwater Conqueror, Deepwater Corcovado , Deepwater Invictus , Deepwater Mykonos , Deepwater Orion , Deepwater Skyros and Dhirubhai Deepwater KG2 and the harsh environment floaters Transocean Barents and Transocean Spitsbergen , and at December 31, 2024, the aggregate carrying amount of which was $ 4.30 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 $ 200 million.

The Secured Credit Facility also restricts the ability of Transocean Ltd.

and certain of our subsidiaries to, among other things, merge, consolidate or otherwise make changes to the corporate structure, incur liens, incur additional indebtedness, enter into transactions with affiliates and pay dividends and other distributions.

In order to utilize the Secured Credit Facility, we must, at the time of the borrowing request, be in full compliance with the terms and conditions of the Secured Credit Facility and make certain representations and warranties, including with respect to compliance with laws and solvency, to the lenders.

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Under the agreements governing certain of our debt and finance lease, we are also subject to various covenants, including restrictions on creating liens, engaging in sale/leaseback transactions and engaging in certain merger, consolidation or reorganization transactions.

A default under our public debt indentures, the agreements governing our senior secured notes, our finance lease contract or any other debt owed to unaffiliated entities that exceeds $ 125 million could trigger a default under the Secured Credit Facility and, if not waived by the lenders, could cause us to lose access to the Secured Credit Facility.

At December 31, 2023, based on the credit rating of the Secured Credit Facility on that date, the Secured Credit Facility Margin was 2.875 percent and the facility fee was 0.625 percent.

A default under our public debt indentures, the agreements governing our senior secured notes, our finance lease contract or any other debt owed to unaffiliated entities that exceeds $ 125 million could trigger a default under the Secured Credit Facility and, if not waived by the lenders or otherwise cured, could cause us to lose access to the Secured Credit Facility.

At December 31, 2024, based on the credit rating of the Secured Credit Facility as of that date, the Secured Credit Facility Margin was 2.875 percent and the facility fee was 0.625 percent.

At December 31, 2024, we had no borrowings outstanding, $ 7 million of letters of credit issued, and we had $ 569 million of available borrowing capacity under the Secured Credit Facility.

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.

We have the right to prepay outstanding borrowings, in full or in part, without penalty.

The Shipyard Loans contain covenants that, among other things, limit the ability of the subsidiary owners of the drilling rigs to incur certain types of additional indebtedness or make certain additional commitments or investments.

In June 2022, we borrowed $ 349 million under the Shipyard Loan for Deepwater Atlas and made a cash payment of $ 46 million to satisfy the final milestone payment due upon delivery of the rig.

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The carrying amount of each Shipyard Loan at inception represented its estimated fair value using significant other observable inputs, representative of Level 2 fair value measurements, including the terms and credit spreads of our debt, by applying an estimated discount rate of 9.4 percent and 7.6 percent, respectively.

We have the right to prepay outstanding borrowings, in full or in part, without penalty.

At December 31, 2024, the Shipyard Loan for Deepwater Atlas had outstanding borrowings of $ 259 million, which are secured by, among other security, a lien on the rig, and the Shipyard Loan for Deepwater Titan had outstanding borrowings of $ 70 million, which are unsecured.

Exchangeable bonds

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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 exchange rates presented above are subject to adjustment upon the occurrence of certain events.

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.

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shares or a combination of cash and shares.

TRANSOCEAN LTD.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued

Effective interest rates and fair values —At December 31, 2024, the effective interest rates and estimated fair values of our exchangeable bonds were as follows (in millions, except effective interest rates):

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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):

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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.

(Gain) loss on adjustment to bifurcated compound exchange feature

The indenture governing the 4.625% Senior Guaranteed Exchangeable Bonds contains a compound exchange feature that, in addition to the exchange terms presented 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.

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At December 31, 2024 and 2023, the carrying amount of the bifurcated compound exchange feature, recorded as a component of the carrying amount of debt, was $ 136 million and $ 350 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.

Exchanges —In April 2023, Perestroika exchanged $ 213 million aggregate principal amount of 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.

As part of this related party transaction, we delivered 34.6 million Transocean Ltd.

shares and $ 3 million cash consideration.

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

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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.

In October 2023, holders of $ 60 million and $ 41 million aggregate principal amount of 4.00% Senior Guaranteed Exchangeable Bonds and 4.625% Senior Guaranteed Exchangeable Bonds, respectively, exchanged such bonds under the terms of the governing indentures 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.

shares, including an aggregate 3.1 million additional shares.

Debt issuance

Senior notes —In April 2024, we issued $ 900 million aggregate principal amount of 8.25% senior notes due May 2029 (the “8.25% Senior Notes”) and $ 900 million aggregate principal amount of 8.50% senior notes due May 2031 (the “8.50% Senior Notes”), and we received $ 1.77 billion aggregate cash proceeds, net of issue costs.

The 8.25% Senior Notes and the 8.50% Senior Notes are fully and unconditionally guaranteed on a senior unsecured basis by Transocean Ltd.

and certain of our wholly owned subsidiaries.

On or prior to May 15, 2026 and 2027, respectively, we may redeem all or a portion of the 8.25% Senior Notes and the 8.50% Senior Notes, respectively, at a price equal to 100 percent of the aggregate principal amount plus a make-whole premium, and subsequently, at specified redemption prices.

In June 2024, as partial consideration to acquire the outstanding 67.0 percent ownership interest in Orion, we issued $ 130 million aggregate principal amount of 8.00% Senior Notes, with an equivalent aggregate fair value, as additional debt securities under the indenture governing such notes.

See Note 4—Unconsolidated Affiliates , Note 6—Long-Lived Assets and Note 13—Equity

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.

The 8.375% Senior Secured Notes are secured by the assets and earnings associated with Deepwater Titan and the equity of the wholly owned subsidiary that owns or operates the collateral rig.

We may redeem all or a portion of the 8.375% Senior Secured Notes 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

The 8.75% Senior Secured Notes are secured by a lien on Deepwater Pontus , Deepwater Proteus , Deepwater Thalassa , Transocean Enabler and Transocean Encourage , together with certain related assets.

TRANSOCEAN LTD.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued

Exchangeable Bonds.

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, 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 Deepwater Aquila as well as the equity of certain of the wholly owned subsidiaries that own or operate the collateral rig.

Pursuant to the exchange and purchase agreements, we exchanged (the “2022 Private Exchange”) (a) $ 73 million aggregate principal amount of 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 7.25% senior notes due November 2025 for $ 39 million aggregate principal amount of 4.625% Senior Guaranteed Exchangeable Bonds.

In the year ended December 31, 2022, as a result of the 2022 Private Exchange, we recognized a gain of $ 6 million ($ 0.01 per diluted share), with no tax effect, associated with the retirement of debt.

Additionally, we sold $ 188 million aggregate principal amount of the 4.625% Senior Guaranteed Exchangeable Bonds and issued 15.5 million warrants to purchase Transocean Ltd.

Additionally, we sold $ 188 million aggregate principal amount of 4.625% Senior Guaranteed Exchangeable Bonds and issued 15.5 million warrants to purchase Transocean Ltd.

shares for aggregate net cash proceeds of $ 188 million.

On or after March 30, 2026, we may redeem for cash all or a portion of the 4.625% Senior Guaranteed Exchangeable Bonds at a price equivalent to the aggregate principal amount to be redeemed if the closing price of our shares has been greater than 115 percent of the exchange price for a period of at least 20 trading days.

We may redeem for cash all or a portion of the 4.625% Senior Guaranteed Exchangeable Bonds on or after March 30, 2026 at a price equivalent to the aggregate principal amount to be redeemed if the closing price of our shares has been greater than 115 percent of the exchange price for a period of at least 20 trading days.

The initial carrying amount of the 4.625% Senior Guaranteed Exchangeable Bonds, measured at the estimated fair value on the date of issuance, was $ 281 million.

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See Note 13—Equity .

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.

The initial carrying amount of the 4.00% Senior Guaranteed Exchangeable Bonds, measured at the estimated fair value on the date of issuance, was $ 260 million.

We estimated the fair value of the exchangeable debt instrument, including the exchange feature, by employing a binomial lattice model using significant other observable inputs, representative of Level 2 fair value measurements, including the terms and credit spreads of our debt and expected volatility of the market price for our shares.

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):

Early retirement —During the three years ended December 31, 2024, we retired certain notes for which the aggregate principal amounts, cash payments and recognized gain or loss were as follows (in millions):

Years ended December 31,

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7.25 % Senior Notes due November 2025

7.50 % Senior Notes due January 2026

11.50 % Senior Guaranteed Notes due January 2027

8.00 % Senior Notes due February 2027

Aggregate principal amount of debt retired

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Aggregate net gain (loss)

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.

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 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, 2024, 2023 and 2022, we made an aggregate cash payment of $ 355 million, $ 262 million and $ 479 million, respectively, to repay other indebtedness in scheduled installments.

Note 10—Postemployment Benefit Plans

Defined contribution plans

We sponsor defined contribution plans for our employees in most markets in which we operate worldwide, the most significant of which were as follows:

(1) a qualified savings plan covering certain eligible employees working in the U.S., (2) various savings plans covering eligible employees working in Norway, (3) a non-qualified savings plan covering certain eligible employees working outside the U.S., the United Kingdom (“U.K.”) and Norway and (4) a qualified savings plan covering certain eligible employees working in the U.K.

In the years ended December 31, 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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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued

Note 9—Benefit Plans

Defined contribution plans

We sponsor defined contribution plans for our employees in most markets in which we operate worldwide, the most significant of which were as follows:

(1) a qualified savings plan covering certain eligible employees working in the U.S., (2) various savings plans covering eligible employees working in Norway and (3) a non-qualified savings plan covering certain eligible expatriate employees.

In the years ended December 31, 2024, 2023 and 2022, we recognized expense of $ 63 million, $ 58 million and $ 61 million, respectively, related to our defined contribution plans and recorded in the same financial statement line item as cash compensation paid to the respective employees.

Defined benefit pension and other postemployment benefit plans

Overview —As of December 31, 2023, we had defined benefit plans in the U.S., including three funded and three unfunded defined benefit plans (the “U.S.

Plans”), and in the U.K., we had one funded defined benefit plan (the “U.K.

During the year ended December 31, 2021, as required by local authorities, we terminated our remaining plans in Norway (together with the U.K.

Plan, the “Non-U.S.

Overview —As of December 31, 2024, we had three funded and three unfunded defined benefit plans in the U.S.

Plans”) and one funded defined benefit plan in the United Kingdom (the “U.K.

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.

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Expected return on plan assets

Special termination benefits

Settlements and curtailments

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Discount rate

Expected long-term rate of return

“na” means not applicable.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued

The changes in funded status, balance sheet classifications and accumulated benefit obligations were as follows (in millions):

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Benefits paid

Special termination benefits

Projected benefit obligation, end of period

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Accumulated benefit obligation, end of period

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

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Other investments

We periodically review our investment policies, plan assets and asset allocation strategies to evaluate performance relative to specified objectives.

In determining our asset allocation strategies for the U.S.

Plans, we review the results of regression models to assess the most appropriate target allocation for each plan, given the plan’s status, demographics and duration.

Plan, the plan trustees establish the asset allocation strategies consistent with the regulations of the U.K.

pension regulators and in consultation with financial advisors and company representatives.

We periodically review our investment policies, plan assets and asset allocation strategies in conjunction with asset performance relative to specified objectives.

Plans, we establish our asset allocation strategies by reviewing the results of regression models to assess the most appropriate target allocation for each plan, given the plan’s status, demographics and duration.

Plan, the plan trustees establish the asset allocation strategies consistent with the regulations of the United Kingdom pension regulators and in consultation with financial advisors and company representatives.

Investment managers for the U.S.

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Plan are given established ranges within which the investments may deviate from the target allocations.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued

The investments for the funded defined benefit plans were categorized as follows (in millions):

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Cash and money market funds

Synthetic leveraged credit fund

Total other investments

Total investments

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued

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 trust funds.

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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.

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

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Years ending December 31,

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued

Note 10—Income Taxes

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Current tax expense (benefit)

Deferred tax expense

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.

Deferred tax expense (benefit)

Income tax expense (benefit)

In the years ended December 31, 2024, 2023 and 2022, our effective tax rate was 2.2 percent, ( 1.4 ) percent and ( 10.4 ) percent, respectively, based on loss before income tax expense (benefit).

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.

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):

A reconciliation of the income tax benefit computed at the Swiss holding company federal effective rate of 7.83 % and our reported consolidated income tax expense (benefit) was as follows (in millions):

Years ended December 31,

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Earnings subject to rates different than the Swiss federal statutory rate

Changes in valuation allowance

Tax attribute expirations

Deemed profits taxes

Withholding taxes

Changes in valuation allowance

Changes in unrecognized tax benefits, net

Changes due to organizational restructuring

Swiss Federal Act on Tax Reform and AHV Financing

Audit settlement

Changes due to organizational restructuring

Losses on impairment

Income tax expense

Income tax expense (benefit)

In the year ended December 31, 2024, as a result of operational and structural changes related to rig movements, we remeasured our deferred tax assets and liabilities related to Luxembourg, resulting in an increase of our net deferred tax asset from $ 8 million to $ 280 million, and such increase was substantially offset by an increase to our valuation allowance.

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

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, 2024 and 2023, we had a deferred tax liability of $ 218 million and $ 264 million, respectively, and a deferred tax asset of $ 1.05 billion and $ 1.21 billion, respectively, offset with a valuation allowance of $ 909 million, associated with TRAF.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued

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):

Deferred tax assets

Swiss historic depreciation and financing asset costs

Net operating loss carryforwards

Swiss historic depreciation and financing asset costs

Interest expense limitation

United Kingdom charter limitation

Accrued expenses

Deferred income

Accrued costs and expenses

Deferred revenues

Accrued payroll costs not currently deductible

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Total deferred tax liabilities

Deferred tax assets (liabilities), net

Deferred tax liabilities, net

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.

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Balance, end of period

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued

Our unrecognized tax benefits, including related interest and penalties that we recognize as a component of income tax expense, were as follows (in millions):

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Unrecognized tax benefits, including interest and penalties

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.

In the years ended December 31, 2024, 2023 and 2022, we recognized, as a component of our income tax provision, expense of $ 2 million, benefit of $ 18 million and expense of $ 6 million, respectively, related to interest and penalties associated with our unrecognized

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tax benefits.

As of December 31, 2024, we have unrecognized benefits of $ 414 million, including interest and penalties, against which we have recorded net operating loss deferred tax assets of $ 372 million, resulting in net unrecognized tax benefits of $ 42 million, including interest and penalties, that upon reversal would favorably impact our effective tax rate.

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We filed protests with the Brazilian tax authorities for the assessments and are engaged in the appeals process, and a portion of two cases were favorably closed.

As of December 31, 2023, the remaining aggregate tax assessment, including interest and penalties, was for corporate income tax of BRL 698 million, equivalent to approximately $ 144 million, and indirect tax of BRL 90 million, equivalent to $ 19 million.

In the year ended December 31, 2024, our remaining exposure decreased by BRL 219 million, equivalent to $ 35 million, following our confirmation of the applicability of a law that allows taxpayers to reduce exposure associated with applicable penalties, interest and legal fees following the receipt and confirmation of a specific type of administrative determination, such as we received.

As of December 31, 2024, the remaining aggregate tax assessment, including interest and penalties, was for corporate income tax of BRL 501 million, equivalent to $ 81 million, and indirect tax of BRL 90 million, equivalent to $ 15 million.

We believe our returns are materially correct as filed, and we are vigorously contesting these assessments.

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Years ended December 31,

Numerator for loss per share, basic and diluted

Numerator for loss per share

Net loss attributable to controlling interest

Denominator for loss per share, basic and diluted

Effect of convertible debt instruments, net of tax

Loss for per share calculation

Denominator for loss per share

Weighted-average shares outstanding

Effect of convertible debt instruments

Weighted-average shares for per share calculation

Loss per share, basic and diluted

Loss per share

We excluded from the computations certain shares issuable as follows because the effect would have been antidilutive (in millions):

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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 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):

Service agreement obligations

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

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

At December 31, 2024, the aggregate future payments required under our service agreement obligations were as follows (in millions):

Years ending December 31,

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At December 31, 2024 and 2023, we also had outstanding surety bonds totaling $ 147 million and $ 198 million, respectively, to secure customs obligations related to the importation of our rigs and certain performance and other obligations.

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.

At December 31, 2024 and 2023, the aggregate cash collateral held by institutions to secure our letters of credit and surety bonds was $ 8 million and $ 7 million, respectively.

Legal proceedings

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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.

At December 31, 2024, eight plaintiffs have claims pending in Louisiana and 25 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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In December 2021, the subsidiary and certain insurers agreed to a settlement of outstanding disputes that provide the subsidiary with cash.

An earlier settlement, achieved in September 2018, provided the subsidiary with cash and an annuity that begins making payments in 2024.

An earlier settlement, achieved in September 2018, provided the subsidiary with cash and an annuity for which installments began in December 2024.

Together with a coverage-in-place agreement with certain insurers and additional coverage issued by other insurers, we believe the subsidiary has sufficient resources to respond to both the current lawsuits as well as future lawsuits of a similar nature.

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Note 13—Equity

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 ).

Share capital currency change —In May 2024, at our annual general meeting, shareholders approved (a) redenominating the currency of our share capital from Swiss francs to U.S.

dollars and (b) reducing the par value of our shares for purposes of such redenomination.

As a result of the redenomination and reduction, made effective as of January 1, 2024, the par value of each of our shares was changed to $ 0.10 from CHF 0.10 .

Share issuance —In June 2024, we issued 55.5 million Transocean Ltd.

shares with an aggregate fair value of $ 297 million as partial consideration to acquire the outstanding 67.0 percent ownership interest in Orion.

In September 2023, we issued 11.9 million Transocean Ltd.

shares with an aggregate fair value of $ 99 million to acquire the outstanding 80.0 percent ownership interests in Liquila (see Note 4—Unconsolidated Affiliates and Note 6—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 8—Debt ).

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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.

In the years ended December 31, 2024 and 2023, we did not issue any shares under the ATM Program.

In the year ended December 31, 2022, we received aggregate cash proceeds of $ 263 million, net of issue costs, for the aggregate sale of 61.0 million shares under the ATM Program.

Shares held by us —We and one of our subsidiaries hold Transocean Ltd.

shares for future use to deliver shares in connection with sales under the ATM Program and in connection with awards granted under our incentive plans or other rights to acquire our shares.

At December 31, 2024, we and our subsidiary held 22.5 million and 42.5 million shares, respectively, and at December 31, 2023, our subsidiary held 34.7 million shares.

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

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shares or a combination of cash and shares.

If at any time prior to expiration, the closing price of Transocean Ltd.

shares equals or exceeds $ 10.00 per share, subject to adjustment upon the occurrence of certain events, for a period of five consecutive trading days, we will have the right to effect an exercise of all, but not less than all, of the warrants upon notice to holders.

If at any time prior to expiration, the closing price of our shares equals or exceeds $ 10.00 per share, subject to adjustment upon the occurrence of certain events, for a period of five consecutive trading days, we will have the right to effect an exercise of all, but not less than all, of the warrants upon notice to holders.

The initial carrying amount of the warrants, recorded in additional paid-in capital and measured at the estimated fair value on the date of issuance, was $ 16 million, net of issue costs.

We estimated the fair value of the warrants by employing a binomial lattice model and by using significant other observable inputs, representative of Level 2 fair value measurements, including the expected volatility of the market price for our shares.

Shares held by subsidiaries — One of our subsidiaries holds our shares for future use to deliver shares in connection with sales under the ATM Program and in connection with awards granted under our incentive plans or other rights to acquire our shares.

At December 31, 2023 and 2022, our subsidiary held 34.7 million and 75.4 million shares, respectively.

We estimated the fair value by employing a binomial lattice model and by using significant other observable inputs, representative of Level 2 fair value measurements, including the expected volatility of the market price for our shares.

At December 31, 2024, 22.2 million warrants were outstanding.

Note 14—Share-Based Compensation

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Awards may be granted as service awards that are earned over a defined service period or as performance awards that are earned based on the achievement of certain market factors or performance targets or a combination of market factors and performance targets.

The compensation committee of our board of directors determines the terms and conditions of the awards granted under the Long-Term Incentive Plan.

At December 31, 2023, we had 115.7 million shares authorized and 31.2 million shares available to be granted under the Long-Term Incentive Plan.

At December 31, 2023, the total unrecognized compensation cost related to our unvested share-based awards was $ 42 million, which we expect to recognize over a weighted-average period of 1.72 years.

Service awards typically vest either in three equal annual installments beginning on the first anniversary date of the grant or in an aggregate installment at the end of the stated vesting period.

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

The compensation committee of our board of directors determines the terms and conditions of the awards granted

TRANSOCEAN LTD.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued

a seven-year period.

under the Long-Term Incentive Plan.

At December 31, 2024, we had 138.2 million shares authorized and 36.4 million shares available to be granted under the Long-Term Incentive Plan.

At December 31, 2024, the total unrecognized compensation cost related to our unvested share-based awards was $ 35 million, which we expect to recognize over a weighted-average period of 1.7 years.

Service awards typically vest either in three equal annual installments beginning on the first anniversary date of the grant or in an aggregate installment at the end of the stated vesting period.

Service-based stock options, once fully vested, are typically exercisable during a seven-year period.

Performance awards 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 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.

Restricted share units —A restricted share unit subject to service requirements is a notional unit that is equivalent 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, 2024 for service-based units granted under our incentive plan:

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In the years ended December 31, 2023 and 2022, we granted 3,744,049 and 6,768,943 service-based units, respectively, with a per unit weighted-average grant-date fair value of $ 7.23 and $ 3.60 , 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:

In the years ended December 31, 2023 and 2022, we had 6,200,155 and 5,075,374 service-based units, respectively, that vested with an aggregate grant-date fair value of $ 18 million.

Stock options —The following table summarizes activity during the year ended December 31, 2024 for vested service-based stock options outstanding under our incentive plan:

Weighted-average

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Vested and exercisable at December 31, 2024

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, 2024 and 2023, there were no outstanding unvested stock options to purchase our shares.

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

Performance awards

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Unvested at December 31, 2024

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, 2024, the performance-based units that vested had an aggregate grant-date fair value of $ 21 million.

In the years ended December 31, 2023 and 2022, we granted 1,912,292 and 3,519,857 performance-based units, respectively, with a per unit weighted-average grant-date fair value of $ 6.74 and $ 3.91 , respectively.

In the years ended December 31, 2023 and 2022, we had 3,025,512 and 2,363,878 performance-based units, respectively, that vested with an aggregate grant-date fair value of $ 11 million and $ 5 million, respectively.

TRANSOCEAN LTD.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued

Note 15—Supplemental Segment information

Our Chief Executive Officer serves as our chief operating decision maker (“CODM”) and assesses performance for and allocates resources for our single contract drilling services segment based on our consolidated net income or loss, as presented on our consolidated statements of operations.

The significant segment expense categories regularly provided to our CODM includes our operating and maintenance costs and our general and administrative costs, as presented on our consolidated statements of operations.

Other segment items included in our consolidated net income or loss include depreciation and amortization, loss on impairment of assets, gain or loss on disposal of assets, interest expense, net of amounts capitalized, and income tax expense or benefit.

Additionally, our CODM reviews our segment assets, as presented on our consolidated balance sheets.

Our CODM uses our consolidated results of operations to evaluate income or loss generated from segment assets, or return on assets, to make decisions to deploy cash flows from operations for reinvestment in our contract drilling services segment or for other uses, such as for acquisitions, debt and equity investments, liability management or to pay dividends to our shareholders.

Consolidated results of operations are used to monitor actual results relative to historical, budgeted and forecasted results and to assess segment performance against our peers.

Note 16—Supplemental Balance Sheet Information

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Changes in other operating assets and liabilities

(Increase) decrease in accounts receivable

Increase in accounts receivable

Increase in other assets

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Cash payments for income taxes

Non-cash investing and financing activities

Noncash investing and financing activities

Capital additions accrued at end of period

Capital additions acquired in exchange for debt

Acquisition of outstanding ownership interests in exchange for shares

Debt investment exchanged for equity ownership interests

Acquisition of outstanding ownership interests in exchange for shares and debt

Debt investment exchanged for additional equity ownership interests

Finance lease installments settled with credits issued to customer

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See Note 6—Long-Lived Assets and Note 8—Debt .

shares to acquire the outstanding ownership interests in Liquila.

shares and $ 130 million aggregate principal amount of 8.00% Senior Notes to acquire the outstanding ownership interest in Orion.

In September 2023, we issued 11.9 million Transocean Ltd.

shares to acquire the outstanding ownership interest in Liquila.

See Note 4—Unconsolidated Affiliates , Note 6—Long-Lived Assets and Note 13—Equity .

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See Note 8—Debt and Note 13—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.

(g) In the year ended December 31, 2022, in connection with the 2022 Private Exchange, we issued $ 112 million aggregate principal amount of 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 8—Debt and Note 13—Equity .

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Restricted cash and cash equivalents

Long-term loans receivable from unconsolidated affiliates

Cash and cash equivalents —Our cash and cash equivalents are primarily invested in demand deposits, short-term time deposits and money market funds.

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The carrying amount of our restricted cash and cash equivalents represents the historical cost, plus accrued interest, which approximates fair value because of the short maturities of the instruments.

Long-term loans receivable from unconsolidated affiliates —The carrying amount of our long-term loans receivable from unconsolidated affiliates, recorded in other assets, represents the principal amount of the cash investment.

We estimated the fair value of our long-term loans receivable from unconsolidated affiliates using significant unobservable inputs, representative of Level 3 fair value measurements, including the terms and credit spreads for the instruments.

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.

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We estimated the fair value of our total debt using significant other observable inputs, representative of Level 2 fair value measurements, including the terms and credit spreads for the instruments and, with respect to the exchangeable debt instruments, the expected volatility of the market price for our shares.

TRANSOCEAN LTD.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued

Note 19—Risk Concentration

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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.

Equity price risk —We are exposed to equity price risk primarily related to the bifurcated compound exchange feature contained within the indenture governing 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.

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

We use a variety of techniques to minimize the exposure to currency exchange rate risk, including the structuring of customer contract payment terms and occasional use of forward exchange contracts.

Our primary tool to manage currency exchange rate risk involves structuring customer contracts to provide for payment in both U.S.

dollars and local currency.

The payment portion denominated in local currency is based on anticipated local currency requirements over the contract term.

Due to various factors, including customer acceptance, local banking laws, national content requirements, other statutory requirements, local currency convertibility, local inflation and revenue efficiency, actual local currency needs may vary from those realized in the customer contracts, resulting in partial exposure to currency exchange rate risk.

To minimize the exposure to currency exchange rate risk, we use a variety of techniques, including structuring customer payment terms and occasionally entering into forward exchange contracts.

We structure customer contracts, as our primary tool to manage currency exchange rate risk, to provide for payment in both U.S.

dollars and local currency where the local currency portion is based on our anticipated local currency requirements over the contract term.

Due to various factors, including customer acceptance, local banking laws, national content requirements, other statutory requirements, currency liquidity, local inflation and revenue efficiency, actual local currency needs may vary from those realized in the customer contracts, resulting in partial exposure to currency exchange rate risk.

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

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.

Credit risk —We are exposed to concentrations of credit risk primarily related to our restricted and unrestricted cash and cash equivalents and customer receivables.

We generally maintain our restricted and unrestricted cash and cash equivalents in time deposits at commercial banks with high credit ratings or mutual funds, which invest exclusively in high-quality money market instruments, and because we limit the amount of exposure to any one institution, we do not believe we are exposed to any significant credit risk.

Our customer receivables, which are dispersed in various countries, are due from integrated energy companies, government-owned or government-controlled energy companies and other independent energy companies.

For such receivables, we establish an allowance for credit losses by applying an expected loss rate based on current and forecasted future and historical experience.

Our customer receivables, dispersed across various countries, are due from integrated energy companies, government-owned or government-controlled energy companies and other independent energy companies.

For such receivables, we establish an allowance for credit losses by applying an expected loss rate based on current, forecasted and historical experience.

Although we have encountered only isolated credit concerns related to independent energy companies, we occasionally require collateral or other security to support customer receivables.

In certain infrequent instances, when we determine that collection is not reasonably assured, we may offer extended payment terms and recognize revenues associated with the contract on a cash basis.

Additionally, in certain infrequent instances, when we determine that collection is uncertain, we may offer extended payment terms and recognize revenues associated with the contract on a cash basis.

Labor agreements —At December 31, 2024, we had a global workforce of approximately 5,800 individuals, including approximately 330 contractors.

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.

Approximately 43 percent of our total workforce, working primarily in Brazil and Norway, is represented by, and some of our contracted labor work is subject to, collective bargaining agreements, substantially all of which are subject to annual salary negotiations.

Negotiations for annual salary or other labor matters could result in higher personnel or other costs or increased operational restrictions or disruptions.

The outcome of any such negotiation generally affects the market for all offshore employees, not only union members.

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What changed 10-K

Item 8. Financial Statements and Supplementary Data