What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-02-23 compared with 2025-02-18 · 327 added, 327 removed, 859 unchanged (43% of the section changed)

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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 of deferred income taxes and changes in tax laws and regulations that may impact the completeness of 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 the tax structure and 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;

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Loss on impairment of assets

Loss on disposal of assets, net

Gain (loss) on disposal of assets, net

Operating loss

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Gain (loss) on retirement of debt

Loss before income tax expense (benefit)

Loss before income taxes

Income tax expense (benefit)

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Property and equipment, net

Contract intangible assets

Deferred tax assets, net

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Shares, $ 0.10 par value, 1,204,009,681 authorized, 141,262,093 conditionally authorized, 1,204,009,681 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

and 1,101,528,481 outstanding at December 31, 2025, and 1,057,879,029 authorized, 141,262,093 conditionally

authorized, 940,828,901 issued and 875,830,772 outstanding at December 31, 2024

Additional paid-in capital

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Issuance of shares

Issuance of warrants

Balance, end of period

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Issuance of shares

Issuance of warrants

Balance, end of period

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Balance, beginning of period

Distribution to holder of noncontrolling interest

Balance, end of period

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Issuance of shares

Issuance of warrants

Distribution to holder of noncontrolling interest

Balance, end of period

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Loss on impairment of assets

Loss on disposal of assets, net

(Gain) loss on disposal of assets, net

Amortization of debt-related balances, net

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(Gain) loss on retirement of debt

Loss on impairment of investment in unconsolidated affiliates

Deferred income tax expense

Changes in deferred revenues, net

Loss on conversion of debt to equity

Loss on impairment of investment in unconsolidated affiliate

Deferred income tax expense (benefit)

Changes in contract liabilities, net

Changes in deferred costs, net

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Proceeds from disposal of assets, net of costs to sell

Proceeds from disposal of equity investment in unconsolidated affiliate

Cash acquired in acquisition of unconsolidated affiliates

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Proceeds from issuance of shares, net of issue costs

Proceeds from issuance of warrants, net of issue costs

Net cash provided by (used in) financing 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, 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.

As of December 31, 2025, we owned or had partial ownership interests in and operated a fleet of 27 mobile offshore drilling units, consisting of 20 ultra-deepwater drillships and seven harsh environment semisubmersibles.

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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See Note 15—Supplemental Segment Information .

Agreement to acquire Valaris Limited

On February 9, 2026, we and Valaris Limited, an exempted company limited by shares incorporated under the laws of Bermuda ("Valaris"), entered into a Business Combination Agreement (the "Agreement") providing for the combination of Transocean and Valaris (the "Business Combination").

Pursuant to the Agreement, and on the terms and subject to the conditions thereof, we will acquire all of the issued and outstanding common shares, par value $ 0.01 each, of Valaris (the “Valaris Shares”) in exchange for Transocean Ltd.

shares, par value $ 0.10 each, at an exchange ratio of 15.235 Transocean Ltd.

shares for each Valaris Share.

Pursuant to the Agreement, and on the terms and subject to the conditions thereof, at the time on which the order of the Supreme Court of Bermuda providing for its sanction of the Scheme of Arrangement is filed with the Registrar of Companies of Bermuda, the Business Combination will become effective and Valaris will become our wholly owned subsidiary.

The board of directors of Transocean and Valaris each unanimously approved and declared advisable the Agreement and the transactions contemplated thereby, including the Business Combination.

Note 2—Significant Accounting Policies

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued

We recognize currency exchange rate gains and losses in other, net.

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.

In the years ended December 31, 2025, 2024 and 2023, we recognized a net loss of $ 13 million, a net gain of $ 16 million and a net gain of $ 10 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 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

all contingencies have been resolved.

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

We apply the optional exemption that permits us to exclude disclosure of the estimated transaction price related to the variable portion of unsatisfied performance obligations at the end of the reporting period, as our transaction price is typically based on a single performance obligation consisting of a series of distinct hourly, or more frequent, periods, the variability of which will be resolved at the time of the future services.

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At December 31, 2025 and 2024, our allowance for excess items was $ 140 million and $ 178 million, respectively.

The decrease was primarily due to the disposal of materials and supplies associated with rigs and related assets sold or classified as held for sale.

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.

The carrying amount of our assets held for sale is measured at the lower of its carrying amount or fair value less

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued

cost to sell.

We consider a held-for-sale asset to be impaired to the extent its carrying amount exceeds its estimated fair value less cost to sell.

See Note 6—Long-Lived Assets .

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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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued

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.

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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 6—LongLived Assets .

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To measure the fair values of granted or modified performance-based restricted share units that are subject to performance targets, we use the market price of our shares on the grant date or modification date and adjust the value for the projected performance rate expected to be achieved at the end of the measurement period.

We recognize share-based compensation expense in the same financial statement line item as cash compensation paid to the respective employees or non-employee directors.

We recognize share-based compensation expense in the

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued

same financial statement line item as cash compensation paid to the respective employees or non-employee directors.

We recognize such compensation expense on a straight-line basis over the service period through the date the employee or non-employee director is no longer required to provide service to earn the award.

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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

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 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 .

Income taxes —Effective for the year ended December 31, 2025, we adopted 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.

We have provided new disclosures, as required, presented on a prospective basis in our notes to consolidated financial statements.

See Note 10—Income Taxes .

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.

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 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.

Disaggregated income statement expenses —Effective for the year ending December 31, 2027, we will adopt the accounting standards update that requires, in the notes to consolidated financial statements, disaggregated disclosures 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.

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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.

Overview —At December 31, 2025, 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, 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, 2025, 2024 and 2023, we recognized income of $ 1 million, income of $ 4 million and a loss of $ 14 million, respectively, recorded in other, net, associated with equity in earnings or losses of our equity investments.

At December 31, 2025 and 2024, the aggregate carrying amount of our equity investments was $ 121 million and $ 123 million, respectively, recorded in other assets.

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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”).

Acquisition —In June 2024, we acquired the outstanding 67.0 percent ownership interest in Orion Holdings (Cayman) Limited (together with its subsidiary, “Orion”), the Cayman Islands company that owned the harsh environment floater Transocean Norge , in a noncash transaction.

Prior to this transaction, we held a 33.0 percent noncontrolling interest in Orion and the aggregate carrying amount of our investment was $ 86 million.

To acquire Orion, we issued 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”) with an aggregate fair value of $ 431 million.

As a result, Orion became our wholly owned subsidiary.

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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

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

Impairments —In the year ended December 31, 2024, 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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued

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.

Related party transactions

Acquisition —In September 2023, we acquired the outstanding ownership interest in Liquila Ventures Ltd.

(together with its subsidiaries, “Liquila”), a previously unconsolidated Bermuda company, that was constructing the ultra-deepwater floater Deepwater Aquila .

Prior to this transaction, we and Perestroika (Cyprus) Ltd (together with its subsidiaries, “Perestroika”), an entity affiliated with one of our directors that beneficially owns approximately nine percent of our shares, held a noncontrolling interest of 20 percent and 13 percent, respectively, in Liquila.

To acquire the outstanding 80 percent ownership interest in Liquila, we issued 11.9 million Transocean Ltd.

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

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

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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.

In the years ended December 31, 2025, 2024 and 2023, we made an aggregate cash payment of $ 12 million, $ 14 million and $ 12 million, respectively, to our unconsolidated affiliates primarily for equipment and for research and development.

At December 31, 2025 and 2024, the aggregate carrying amount of balances due to us under certain financing arrangements with our unconsolidated affiliates was $ 8 million and $ 10 million, respectively, recorded in other assets.

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

In the years ended December 31, 2024, and 2023, we recognized rent expense of $ 25 million and $ 26 million, respectively, recorded in operating and maintenance costs, and made an aggregate cash payment of $ 25 million and $ 27 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.

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(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.

For 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.

As of December 31, 2025, the drilling contract with the longest expected remaining duration, excluding unexercised options, extends through May 2030.

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, 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.

Major customers —For the year ended December 31, 2025, Petróleo Brasileiro S.A.

(together with its affiliates, “Petrobras”), Shell plc (together with its affiliates, “Shell”), and Equinor ASA (together with its affiliates, “Equinor”) represented 22 percent, 22 percent and 12 percent, respectively, of our consolidated operating revenues.

For the year ended December 31, 2024, Shell, Petrobras and 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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Pre-operating costs —In the years ended December 31, 2025, 2024 and 2023, we recognized pre-operating costs of $ 158 million, $ 138 million and $ 69 million, respectively, recorded in operating and maintenance costs.

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.

Recognition increased in each of the two years in the period ended December 31, 2025, primarily as a result of the commencement of operations for one rig that mobilized to Brazil, two rigs that mobilized to Australia, one rig that mobilized to Romania and one rig that we reactivated for a contract in Brazil in the years ended December 31, 2024 and 2023.

At December 31, 2025 and 2024, the carrying amount of our unrecognized pre-operating costs to obtain contracts was $ 136 million and $ 224 million, respectively, recorded in other assets.

Note 6—Long-Lived Assets

Disaggregation —The aggregate carrying amount of our long-lived assets, including our property and equipment and our right-of-use assets, disaggregated by country in which they were located, was as follows (in millions):

Disaggregation — The aggregate carrying amount of our long-lived assets, including our property and equipment and our right-of-use assets, measured net of accumulated depreciation or amortization, disaggregated by country in which they were located, was as follows (in millions):

Long-lived assets

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Total long-lived assets

(a) The aggregate carrying amount of long-lived assets located in other countries that individually represented less than 10 percent of total long-lived assets.

(a) The aggregate net carrying amount of long-lived assets located in other countries that individually represented less than 10 percent of total long-lived assets on both dates.

Because the majority of our assets are mobile, the geographic locations of such assets at the end of the periods are not necessarily indicative of the geographic distribution of the operating revenues generated by such assets during the periods presented.

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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.

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

Years ended December 31,

Construction work in progress, beginning of period

Capital expenditures

Newbuild construction program

Other equipment and construction projects

Total capital expenditures

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

Property and equipment placed into service

Newbuild construction program

Other equipment and construction projects

Construction work in progress, end of period

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.

Property and equipment —At December 31, 2025 and 2024, our rigs and related equipment, measured at cost, had a carrying amount of $ 17.1 billion and $ 22.0 billion, respectively, representing 98 percent of our total property and equipment, measured at cost.

In the years ended December 31, 2024 and 2023, we capitalized interest costs of $ 15 million and $ 39 million, respectively, for our construction work in progress.

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.

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

Impairments —In the year ended December 31, 2025, we recognized an aggregate loss of $ 3.05 billion ($ 3.04 billion, or $ 3.16 per diluted share, net of tax), respectively, associated with the impairment of the ultra-deepwater floaters Deepwater Champion , Discoverer Americas, Discoverer Clear Leader , Discoverer India , Discoverer Luanda , GSF Development Driller I and the harsh environment semisubmersible Henry Goodrich , together with related assets, which we determined were impaired at the time that we classified the assets as held for sale, and the ultra-deepwater floaters Development Driller III and Discoverer Inspiration , together with related assets, which were previously classified as held for sale and we determined were further impaired.

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.

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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.

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.

Assets held for sale —At December 31, 2025, the aggregate carrying amount of our assets held for sale, including Deepwater Champion , Discoverer India and Henry Goodrich, together with related assets, was $ 24 million, and in the year ended December 31, 2025, we received an aggregate cash deposit of $ 3 million for the sale of the two drillships.

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.

Disposals —In the year ended December 31, 2025, we completed the sale of Development Driller III , Discoverer Americas, Discoverer Clear Leader, Discoverer Inspiration , Discoverer Luanda and GSF Development Driller I , together with related assets, for aggregate net cash proceeds of $ 71 million, and we recognized an aggregate net gain of $ 4 million, which had no tax effect, associated with the disposal of the rigs and related assets.

In 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 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 ).

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.

In the year ended December 31, 2023, we made a non-cash contribution of Ocean Rig Olympia and related assets in connection with our investment in a partial ownership interest in GSR, and 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 ).

In the years ended December 31, 2025, 2024 and 2023, we received aggregate net cash proceeds of $ 10 million, $ 5 million and $ 4 million, respectively and recognized an aggregate net gain of $ 3 million, an aggregate net loss of $ 17 million and an aggregate net loss of $ 14 million, respectively, associated with the disposal of assets unrelated to rig sales.

Subsequent event —In January 2026, we completed the sale of Discoverer India , together with related assets, for aggregate net cash proceeds of $ 14 million, including $ 1 million received as a deposit in the year ended December 31, 2025 .

Note 7—Leases

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

See Note 16—Supplemental Balance Sheet Information .

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

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Carrying amount

7.25 % Senior Notes due November 2025

4.00 % Senior Guaranteed Exchangeable Bonds due December 2025

7.50 % Senior Notes due January 2026

11.50 % Senior Guaranteed Notes due January 2027

6.875 % Senior Secured Notes due February 2027

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8.50 % Senior Notes due May 2031

7.875 % Senior Guaranteed Notes due October 2032

6.80 % Senior Notes due March 2038

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4.00 % Senior Guaranteed Exchangeable Bonds due December 2025

11.50% Senior Guaranteed Notes due January 2027

6.875 % Senior Secured Notes due February 2027

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Total long-term debt

(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”).

(a) Transocean International Limited, a wholly owned direct subsidiary of Transocean Ltd., 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 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, as defined below, to the extent of the value of the assets of the subsidiaries guaranteeing the notes.

(b) 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.

(c) Transocean International Limited 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 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

Such notes are structurally senior

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued

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.

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 to the extent of the value of the assets of the subsidiaries guaranteeing the notes.

(d) Transocean International Limited is the issuer of the notes and debentures (the “Legacy Guaranteed Notes”).

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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.

The indenture that governs the 4.625 % senior guaranteed exchangeable bonds due September 2029 (the “ 4.625 % Exchangeable Bonds”) requires 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 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.

The indentures that govern 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.

Assets encumbered for outstanding debt —At December 31, 2025, the rigs encumbered for the senior secured notes and our Shipyard Loans include the ultra-deepwater drillships Deepwater Aquila , Deepwater Atlas , Deepwater Pontus , Deepwater Proteus , Deepwater Thalassa , Deepwater Titan , and the harsh environment semisubmersibles Transocean Enabler and Transocean Encourage , the aggregate carrying amount of which was $ 5.19 billion.

At December 31, 2025, we had restricted cash and cash equivalents of $ 358 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, 2025, 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, 2024, the scheduled maturities of our debt were as follows (in millions):

Scheduled maturities and installments — At December 31, 2025, the scheduled repayments were as follows (in millions):

Years ending December 31,

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Credit agreements

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

Secured Credit Facility —As of December 31, 2025, we have a secured revolving credit facility established under a bank credit agreement (as amended from time to time, the “Secured Credit Facility”), which has a borrowing capacity of $ 510 million through its maturity on 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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued

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.

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.

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.

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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 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 is secured by, among other things, a lien on the ultra-deepwater drillships Deepwater Asgard , Deepwater Conqueror, Deepwater Corcovado , Deepwater Invictus , Deepwater Mykonos , Deepwater Orion , Deepwater Skyros and Dhirubhai Deepwater KG2 and the harsh environment semisubmersibles Transocean Barents and Transocean Spitsbergen , and at December 31, 2025, the aggregate carrying amount of which was $ 4.18 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.

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At December 31, 2025, we had no borrowings outstanding, $ 48 million of letters of credit issued, and we had $ 462 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 Deepwater Atlas and Deepwater Titan .

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

In December 2022, we borrowed $ 90 million under the Shipyard Loan for Deepwater Titan and made a cash payment of $ 325 million to satisfy the final milestone payment due upon delivery of the rig.

We recorded each Shipyard Loan, net of imputed interest, with an initial carrying amount of $ 300 million and $ 82 million, respectively, and corresponding non-cash capital additions, recorded in property and equipment.

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

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.

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 when we took delivery of Deepwater Atlas and Deepwater Titan in the year ended December 31, 2022 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.

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

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Exchangeable bonds

Exchange terms —At December 31, 2024, the (a) current exchange rates, expressed as the number of Transocean Ltd.

shares per $1,000 note, (b) implied exchange prices per Transocean Ltd.

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

4.00 % Senior Guaranteed Exchangeable Bonds due December 2025

4.625 % Senior Guaranteed Exchangeable Bonds due September 2029

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.

shares or a combination of cash and shares.

The 4.625% Senior Guaranteed Exchangeable Bonds may be exchanged by holders at any time prior to the close of business on the second business day immediately preceding the maturity date or redemption date and, at our election, such exchange may be settled by delivering cash, Transocean Ltd.

shares or a combination of cash and shares.

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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):

interest rate

4.00 % Senior Guaranteed Exchangeable Bonds due December 2025

4.625 % Senior Guaranteed Exchangeable Bonds due September 2029

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

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

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(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.

On or after March 30, 2026, we may redeem for cash all or a portion of the 4.625 % 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.

If we give notice of our election to exercise the right to redeem, the indenture governing the 4.625 % Exchangeable Bonds contains a compound exchange feature that, in addition to the exchange terms presented below, requires us to pay a make-whole premium of future interest through March 30, 2028 to any holders that exercise their right to exchange during the 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, 2025 and 2024, the carrying amount of the bifurcated compound exchange feature, recorded as a component of the carrying amount of debt, was $ 126 million and $ 136 million, respectively.

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 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.

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

Effective interest rate and fair value —At December 31, 2025, the 4.625 % Exchangeable Bonds had an effective interest rate of 18.3 % and an estimated fair value of $ 355 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 the expected volatility of the market price for our shares.

Exchange terms —At December 31, 2025, the 4.625 % Exchangeable Bonds had the following exchange terms:

(a) an exchange rate of 290.6618 Transocean Ltd.

shares per $1,000 note, (b) an implied exchange price of $ 3.44 per Transocean Ltd.

share and (c) an aggregate of 75.3 million shares issuable upon exchange of our exchangeable bonds.

The exchange rate is subject to adjustment upon the

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued

occurrence of certain events.

The 4.625 % Exchangeable Bonds may be exchanged by holders at any time prior to the close of business on the second business day immediately preceding the maturity date or redemption date and, at our election, such exchange may be settled by delivering cash, Transocean Ltd.

shares or a combination of cash and shares.

Exchanges —In the year ended December 31, 2025, we entered into separate, individually negotiated agreements (as amended, the “Exchange Agreements”) with certain holders of the 4.00 % senior guaranteed exchangeable bonds due December 2025 (the “ 4.00 % Exchangeable Bonds”).

In the year ended December 31, 2025, the holders exchanged $ 196 million aggregate principal amount of 4.00 % Exchangeable Bonds under the terms of the Exchange Agreements and received an aggregate 73.3 million Transocean Ltd.

shares, which included an aggregate 35.9 million shares incremental to the number of shares issuable pursuant to the governing indenture based upon the principal amount exchanged.

In the year ended December 31, 2025, we recognized a loss of $ 99 million, recorded in other, net, associated with these exchanges.

In the year ended December 31, 2023, holders of the outstanding $ 238 million aggregate principal amount of 2.50 % senior guaranteed exchangeable bonds due January 2027 (the “ 2.50 % Exchangeable Bonds”) exchanged such bonds under the terms of the governing indenture at the applicable exchange rate of 162.1626 Transocean Ltd.

shares per $1,000 note.

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

In October 2023, holders of $ 60 million and $ 41 million aggregate principal amount of 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.

In April 2023, as part of the transactions, we delivered 34.6 million Transocean Ltd.

shares, together with $ 3 million cash consideration, for $ 213 million aggregate principal amount of exchanged bonds in a related party transaction with Perestroika.

In the year ended December 31, 2023, we recognized a loss of $ 3 million, recorded in other, net, associated with these exchanges.

The director’s beneficial ownership of our shares resulting from the related party transaction did not change.

In July 2023, we delivered 4.0 million Transocean Ltd.

shares to holders of the remaining $ 25 million aggregate principal amount of 2.50 % Exchangeable Bonds.

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

shares, respectively, per $1,000 note.

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

shares, including an aggregate 3.1 million additional shares.

shares, including an aggregate 3.1 million shares incremental to the number of shares issuable pursuant to the governing indenture.

In the year ended December 31, 2023, we recognized a loss of $ 24 million, recorded in other, net, associated with these transactions.

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.

Senior notes —In October 2025, we issued $ 500 million aggregate principal amount of 7.875 % senior guaranteed notes due October 2032 (the “ 7.875 % Senior Guaranteed Notes”) and received $ 492 million aggregate cash proceeds, net of issue costs.

The 7.875 % Senior Guaranteed Notes are fully and unconditionally guaranteed on a senior unsecured basis by Transocean Ltd.

and certain of our wholly owned subsidiaries.

Prior to October 15, 2028, we may redeem up to 40 percent of the aggregate principal amount of the 7.875 % Senior Guaranteed Notes at a price equal to 107.875 percent, or we may redeem all or a portion at a price equal to 100 percent of the aggregate principal amount plus a make-whole premium.

On or after October 15, 2028, we may redeem the notes at specified redemption prices.

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.

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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.

We may redeem all or a portion of the 8.75 % Senior Secured Notes 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.

We may redeem all or a portion of the 8.00 % Senior Secured Notes at specified redemption prices.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued

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.

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 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 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.

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.

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

See Note 13—Equity .

Debt repayment, redemption, and retirement

Debt repayment, redemption, repurchases, tenders, and retirement

Scheduled maturities and installments —On the scheduled maturity date of December 15, 2025, we made a cash payment of $ 37 million to repay an equivalent aggregate principal amount of the outstanding 4.00 % Exchangeable Bonds.

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 due January 2023.

In the years ended December 31, 2025, 2024 and 2023, we made an aggregate cash payment of $ 480 million, $ 355 million and $ 262 million, respectively, to repay other indebtedness in scheduled installments.

Early retirement — During the three years ended December 31, 2025, 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,

5.52 % Senior Secured Notes due May 2022

3.80 % Senior Notes due October 2022

0.50 % Exchangeable Senior Bonds due January 2023

Redeem or repurchase

5.375 % Senior Secured Notes due May 2023

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8.00 % Senior Notes due February 2027

6.875 % Senior Secured Notes due February 2027

7.00 % Notes due June 2028

7.35 % Senior Notes due December 2041

Aggregate principal amount of debt retired

Aggregate cash payment

Aggregate principal amount of debt issued in exchanges

Aggregate fair value of warrants issued in exchanges

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 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.

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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued

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 % Exchangeable Bonds exchanged by holders in October 2023.

Note 9—Benefit Plans

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

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

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

Year ended December 31, 2025

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“na” means not applicable.

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

We estimated our benefit obligations using the following weighted-average assumptions:

December 31, 2025

December 31, 2024

Discount rate

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued

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

Year ended December 31, 2025

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Net periodic benefit costs (income)

Funded status —We estimated our benefit obligations using the following weighted-average assumptions:

December 31, 2024

December 31, 2023

Discount rate

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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):

Funded status — The changes in funded status were as follows (in millions):

Year ended December 31, 2025

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Funded status asset (liability), end of period

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

December 31, 2025

December 31, 2024

Balance sheet classification, end of period:

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Accumulated other comprehensive loss (income), before taxes

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Plan assets — The weighted-average target and actual allocations of assets for the funded defined benefit plans were as follows:

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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.

Plans and the U.K.

In August 2025, using trust assets for the largest of our U.S.

Plans, we purchased an insurance buy-in contract as a plan asset with an initial value of $ 1.107 billion.

Under the buy-in contract, the insurer reimburses the plan as it continues to satisfy benefit obligations for which it remains responsible, resulting in no net cash flows in the plan.

Plan, the plan trustees establish asset allocation strategies consistent with requirements of the United Kingdom pension regulators with guidance from financial advisors and company representatives.

Investment managers for the U.K.

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

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

The plan investment managers have discretion to select securities within each asset category.

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

Any such positions are expected to be immaterial relative to asset categories and total plan assets.

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

December 31, 2025

Significant observable inputs

Significant other observable inputs

Total mutual funds

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Cash and money market funds

Buy-in contract

Synthetic leveraged credit fund

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December 31, 2024

Significant observable inputs

Significant other observable inputs

Total mutual funds

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Total investments

Plans and the U.K.

Plan invest in passively and actively managed funds that are referenced to or benchmarked against market indices.

The plan investment managers have discretion to select securities within each asset category.

Given this discretion, the plans may occasionally hold 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.

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, (ii) significant other observable inputs, representative of Level 2 fair value measurements, including the market prices of underlying securities in trust funds, or (iii) significant unobservable inputs, representative of Level 3 fair value measurements, including the demographic inputs used to develop expected future cash flows, which were discounted at prevailing market discount rates, for the actuarial valuation of the buy-in contract.

Funding contributions and benefit payments —In the years ended December 31, 2025, 2024 and 2023, we made an aggregate contribution of $ 8 million, $ 2 million and $ 8 million, respectively, to the defined benefit pension plans and the OPEB Plans using our cash flows from operations.

In the year ending December 31, 2026, we expect to make an aggregate contribution of $ 5 million, including $ 3 million and $ 2 million to the defined benefit pension plans and the OPEB Plans, respectively.

The projected benefits payments were as follows (in millions):

Years ending December 31,

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued

The projected benefits payments were as follows (in millions):

Years ending December 31,

Note 10—Income Taxes

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Consequently, there is not a direct relationship between our Swiss earnings before income taxes and our Swiss income tax expense.

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

In the year ended December 31, 2025, the amount of our loss before income tax benefit derived in Switzerland and non-Swiss jurisdictions was $ 2.01 billion and $ 937 million, respectively.

Tax provision and rate —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.

In the year ended December 31, 2025, the amount of our income tax provision (benefit) derived in Switzerland, Switzerland cantons, and non-Switzerland jurisdictions was $( 21 ) million, $( 13 ) million and $ 1 million, respectively.

In the years ended December 31, 2025, 2024 and 2023, our effective tax rate was 1.1 percent, 2.2 percent and ( 1.4 ) percent, respectively, based on loss before income tax expense (benefit).

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

Years ended December 31,

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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 effective rate of 7.83 % and our reported consolidated income tax expense (benefit) was as follows (in millions):

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The following is a reconciliation of the income tax benefit computed at the Swiss holding company federal effective rate and our reported income tax benefit for the year ended December 31, 2025 (in millions, except percentages):

December 31, 2025

Switzerland, federal statutory tax rate

Switzerland, cantonal taxes

Switzerland, changes in valuation allowance

Non-Switzerland tax effects

Bermuda, changes in valuation allowance

Bermuda, tax rate differential

Bermuda, other, net

United States, tax rate differential

United States, changes in valuation allowance

United States, other, net

Luxembourg, changes due to operational restructuring

Luxembourg, changes in valuation allowance

Luxembourg, other, net

Norway, changes in currency exchange

Norway, other, net

Hungary, changes in valuation allowance

Hungary, changes in currency exchange

Hungary, other, net

Brazil, tax rate differential

Brazil, other, net

United Kingdom, changes in valuation allowance

United Kingdom, other, net

Changes in unrecognized tax benefits

Other adjustments

Switzerland, changes due to operational restructuring

Switzerland, other, net

Effective tax rate

In the year ended December 31, 2025, we recognized a net tax benefit of $ 33 million, primarily resulting from a release of an uncertain tax position.

For state and local income taxes, cantonal taxes in Zug, Switzerland made up the majority, greater than 50 percent, of the tax effect in this category .

The following is 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) for the years ended December 31, 2024 and 2023 (in millions):

Years ended December 31,

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Changes due to organizational restructuring

Swiss Federal Act on Tax Reform and AHV Financing

Audit settlement

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 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

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

Deferred tax assets

Net operating loss carryforwards

Swiss historic depreciation and financing asset costs

Interest expense limitation

United Kingdom charter limitation

Accrued costs and expenses

Deferred revenues

Accrued payroll costs not currently deductible

Loss contingencies

Valuation allowance

Total deferred tax assets, net of allowance

Deferred tax liabilities

Total deferred tax liabilities

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.

At December 31, 2024 and 2023, our deferred tax assets included U.S.

tax credits of $ 5 million and $ 4 million, respectively, which will expire between 2041 and 2043.

Deferred tax assets related to our net operating losses were generated in various worldwide tax jurisdictions.

At December 31, 2024, our net deferred tax assets related to our net operating loss carryforwards included $ 1,241 million, which do not expire, and $ 437 million, which will expire between 2025 and 2041.

As of December 31, 2024, our consolidated cumulative loss incurred over the recent three-year period represented significant objective negative evidence for the evaluation of the realizability of our deferred tax assets.

Because such evidence has limited our ability to consider other subjective evidence, we evaluate each jurisdiction separately.

We consider objective evidence, such as contract backlog activity, in jurisdictions in which we have profitable contracts, and the ability to carryback losses or utilize losses against potential exposures.

If estimated future taxable income changes during the carryforward periods or if the cumulative loss is no longer present, we may adjust the amount of deferred tax assets that we expect to realize.

At December 31, 2024 and 2023, due to uncertainty of realization, we had a valuation allowance of $ 2.09 billion and $ 1.88 billion, respectively, on net operating losses and other deferred tax assets due to the uncertainty of realization.

Unrecognized tax benefits — The changes to unrecognized tax benefits, excluding interest and penalties that we recognize as a component of income tax expense, were as follows (in millions):

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Additions for prior year tax positions

Reductions related to statute of limitation expirations and changes in law

Reductions due to settlements

Reductions related to statute of limitation expirations and changes in law

Reductions for prior year tax positions

Balance, end of period

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

Our unrecognized tax benefits were as follows (in millions):

Unrecognized tax benefits, excluding interest and penalties

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Unrecognized tax benefits, including interest and penalties

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.

In the years ended December 31, 2025, 2024 and 2023, we recognized, as a component of our income tax provision, expense of $ 11 million, benefit of $ 2 million and expense of $ 18 million, respectively, related to interest and penalties associated with our unrecognized tax benefits.

As of December 31, 2025, we have unrecognized benefits of $ 302 million, including interest and penalties, against which we have recorded net operating loss deferred tax assets of $ 235 million, resulting in net unrecognized tax benefits of $ 67 million, including interest and penalties, that upon reversal would favorably impact our effective tax rate.

During the year ending December 31, 2025, it is reasonably possible that our existing liabilities for unrecognized tax benefits may increase or decrease, primarily due to the progression of open audits and the expiration of statutes of limitation.

However, we cannot reasonably estimate a range of potential changes in our existing liabilities for unrecognized tax benefits due to various uncertainties, such as the unresolved nature of various audits.

Tax positions and returns —We conduct operations through our various subsidiaries in countries throughout the world.

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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.

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, 2025, the remaining aggregate tax assessment, including interest and penalties, was for corporate income tax of BRL 523 million, equivalent to $ 95 million, and indirect tax of BRL 96 million, equivalent to $ 17 million.

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An unfavorable outcome on these proposed assessments could have a material adverse effect on our consolidated statement of financial position, results of operations or cash flows.

Tax payments — The components of our income taxes paid, net of refunds received, disaggregated by country, were as follows (in millions):

Switzerland, federal

Switzerland, cantonal

Total Switzerland

United States

Other countries (a)

Total tax payments, net of refunds received

(a) The aggregate income taxes paid, net of refunds received, in other countries that individually represented less than 5 percent of total income taxes paid, net.

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In the years ended December 31, 2024 and 2023, aggregate income taxes paid were $ 60 million and $ 41 million, respectively, before deducting refunds received.

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

Deferred tax assets

Net operating loss carryforwards

Swiss historic depreciation and financing asset costs

Interest expense limitation

United Kingdom charter limitation

Accrued costs and expenses

Contract liabilities

Accrued payroll costs not currently deductible

Valuation allowance

Total deferred tax assets, net of allowance

Deferred tax liabilities

Total deferred tax liabilities

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.

At December 31, 2025 and 2024, our deferred tax assets included U.S.

tax credits of $ 5 million, which will expire between 2042 and 2044.

Deferred tax assets related to our net operating losses were generated in various worldwide tax jurisdictions.

At December 31, 2025, our net deferred tax assets related to our net operating loss carryforwards included $ 1.57 billion, which do not expire, and $ 563 million, which will expire between 2026 and 2041.

As of December 31, 2025, our consolidated cumulative loss incurred over the recent three-year period represented significant objective negative evidence for the evaluation of the realizability of our deferred tax assets.

Because such evidence has limited our ability to consider other subjective evidence, we evaluate each jurisdiction separately.

If estimated future taxable income changes during the carryforward periods or if the cumulative loss is no longer present, we may adjust the amount of deferred tax assets that we expect to realize.

At December 31, 2025 and 2024, due to uncertainty of realization, we had a valuation allowance of $ 2.48 billion and $ 2.09 billion, respectively, on net operating losses and other deferred tax assets due to the uncertainty of realization.

Note 11—Loss Per Share

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Loss per share

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

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Share-based awards

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(a) For the year ended December 31, 2025, the warrants were antidilutive since the exercise price was greater than the average price for our shares.

Note 12—Commitments and Contingencies

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Letters of credit and surety bonds

At December 31, 2024 and 2023, we had outstanding letters of credit totaling $ 9 million and $ 16 million, respectively, issued under various committed and uncommitted credit lines provided by banks to guarantee various contract bidding, performance activities and customs obligations.

At December 31, 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, 2025 and 2024, we had outstanding letters of credit totaling $ 51 million and $ 9 million, respectively, issued under various committed and uncommitted credit lines provided by banks to guarantee certain performance activities, tax commitments and customs or other obligations.

At December 31, 2025 and 2024, we also had outstanding surety bonds totaling $ 128 million and $ 147 million, respectively, to secure certain tax commitments and other obligations.

At December 31, 2025 and 2024, the aggregate cash collateral held by institutions to secure our letters of credit and surety bonds was $ 3 million and $ 8 million, respectively.

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

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.

At December 31, 2025, two plaintiffs have claims pending in Louisiana and 30 plaintiffs in the aggregate have claims pending in Illinois, Missouri, and 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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The operating assets of the subsidiary were sold in 1989.

In December 2021, the subsidiary and certain insurers agreed to a settlement of outstanding disputes that provide the subsidiary with cash.

An earlier settlement, achieved in September 2018, provided the subsidiary with cash and an annuity 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.

We have a coverage-in-place agreement with certain insurers and additional funding from settlement agreements with other insurers.

Overall, we believe the subsidiary has sufficient resources to respond to both the current lawsuits as well as future lawsuits of a similar nature.

While we cannot predict or provide assurance as to the outcome of these matters, we do not expect the ultimate liability, if any, resulting from these claims to have a material adverse effect on our consolidated statement of financial position, results of operations or cash flows.

Other matters —We are involved in various regulatory matters and a number of claims and lawsuits, asserted and unasserted, all of which have arisen in the ordinary course of our business.

We do not expect the liability, if any, resulting from these other matters to have a material adverse effect on our consolidated statement of financial position, results of operations or cash flows.

We cannot predict with certainty the outcome or effect of any of the litigation matters specifically described above or of any such other pending, threatened, or possible litigation or liability.

We can provide no assurance that our beliefs or expectations as to the outcome or effect of any tax, regulatory, lawsuit or other litigation matter will prove correct and the eventual outcome of these matters could materially differ from management’s current estimates.

We do not expect the liability, if any, resulting from these other matters to have

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued

a material adverse effect on our consolidated statement of financial position, results of operations or cash flows.

We cannot predict with certainty the outcome or effect of any of the litigation matters specifically described above or of any such other pending, threatened, or possible litigation or liability.

Environmental matters

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Note 13—Equity

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 ).

Share issuance in public offering —In September 2025, we issued 143.8 million Transocean Ltd.

shares in a public offering, including 4.0 million Transocean Ltd.

shares issued to Perestroika.

In connection with the issuance, we received $ 421 million aggregate cash proceeds, net of issue costs, including $ 12 million from Perestroika.

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

We intend to use the net proceeds from our ongoing ATM Program for general corporate purposes, which may include, among other things, the repayment or refinancing of indebtedness and the funding of working capital, capital expenditures, investments and additional balance sheet liquidity.

We may use the net proceeds from our ongoing ATM Program for general corporate purposes, which may include, among other things, the repayment or refinancing of indebtedness and the funding of working capital, capital expenditures, investments and additional balance sheet liquidity.

In June 2021, we entered into an equity distribution agreement with a sales agent for the offer and sale of our shares, with a maximum aggregate net offering price of up to $ 400 million, under the ATM Program.

In August 2022, we entered into an equity distribution agreement with a sales agent for the offer and sale of our shares, with a maximum aggregate net offering price of up to $ 435 million, under the ATM Program.

In the years ended December 31, 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.

In the three years in the period ended December 31, 2025, we did not issue any shares under the ATM Program.

Share issuance in debt exchanges —In the year ended December 31, 2025, we issued 73.3 million Transocean Ltd.

shares with an aggregate fair value of $ 201 million to certain holders that elected to exchange the 4.00 % Exchangeable Bonds pursuant to the Exchange Agreements.

In the year ended December 31, 2023, we issued 65.1 million shares with an aggregate fair value of $ 434 million to certain holders that elected to exchange the 2.50 % Exchangeable Bonds, the 4.00 % Exchangeable Bonds and the 4.625 % Exchangeable Bonds under terms of the governing indentures.

See Note 8—Debt .

Share issuance in acquisitions —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 .

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.

At December 31, 2025, we and our subsidiary held 82.9 million and 19.6 million shares, respectively, and at December 31, 2024, we and our subsidiary held 22.5 million and 42.5 million shares, respectively.

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 .

Warrants —At December 31, 2025 and 2024, we had 22.2 million outstanding warrants to purchase Transocean Ltd.

The warrants may be exercised by holders at any time prior to the close of business on March 13, 2026 at an exercise price equal to $ 3.71 per share, subject to certain anti-dilutive adjustments, and at our election, such exercise may be settled by delivering cash, Transocean Ltd.

shares or a combination of cash and shares.

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 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

We have a long-term incentive plan (the “Long-Term Incentive Plan”) for executives, key employees and non-employee directors under which awards can be granted in the form of restricted share units, restricted shares, stock options, stock appreciation rights and cash performance awards.

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

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

At December 31, 2025 and 2024, the carrying amount of the warrants, recorded as a component of additional paid-in capital, was $ 16 million, net of issue costs, which represented the initial estimated fair value on the date of issuance.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued

under the Long-Term Incentive Plan.

Note 14—Share-Based Compensation

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, 2025, we had 154.2 million shares authorized and 37.3 million shares available to be granted under the Long-Term Incentive Plan.

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In the years ended December 31, 2024 and 2023, we granted 5,116,762 and 3,744,049 service-based units, respectively, with a per unit weighted-average grant-date fair value of $ 5.29 and $ 7.23 , respectively.

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.

In the years ended December 31, 2024 and 2023, we had 6,727,943 and 6,200,155 service-based units, respectively, that vested with an aggregate grant-date fair value of $ 32 million and $ 18 million, respectively.

Stock options — The following table summarizes activity during the year ended December 31, 2025 for vested service-based stock options outstanding under our incentive plan:

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At December 31, 2025, 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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The following table summarizes unvested activity during the year ended December 31, 2025 for performance-based units under our incentive plan:

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Weighted-average

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Unvested at December 31, 2025

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 year ended December 31, 2025, the performance-based units that vested had an aggregate grant-date fair value of $ 10 million.

In the years ended December 31, 2024 and 2023, we granted 2,687,268 and 1,912,292 performance-based units, respectively, with a per unit weighted-average grant-date fair value of $ 5.10 and $ 6.74 , respectively.

In the years ended December 31, 2024 and 2023 we had 4,429,028 and 3,025,512 performance-based units, respectively, that vested with an aggregate grant-date fair value of $ 21 million and $ 11 million, respectively.

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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.

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

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

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Operating lease liabilities

Deferred revenues

Contract liabilities

Contingent liabilities

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Income taxes payable

Deferred revenues

Contract liabilities

Total other long-term liabilities

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Note 17—Supplemental Cash Flow Information

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Increase in accounts receivable

Increase in other assets

(Increase) decrease in other assets

Increase (decrease) in accounts payable and other current liabilities

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Change in receivables from / payables to affiliates, net

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

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Cash payments for interest

Cash payments for income taxes

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 and debt

Debt investment exchanged for additional equity ownership interests

Debt investment exchanged for equity ownership interests

Finance lease installments settled with credits issued to customer

Shares issued in exchanges of exchangeable bonds

Debt and warrants issued in exchange transactions

(a) Additions to property and equipment for which we had accrued a corresponding liability in accounts payable at the end of the period.

See Note 6—Long-Lived Assets .

(b) In the year ended December 31, 2022, we borrowed an aggregate principal amount of $ 439 million under the Shipyard Loans to satisfy a portion of the final milestone payments due upon delivery of Deepwater Atlas and Deepwater Titan and recorded the initial carrying amount, net of imputed interest, with a corresponding entry to construction in progress, recorded in property and equipment.

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

(b) In June 2024, we issued 55.5 million Transocean Ltd.

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

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

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

(c) In October 2025, we agreed to exchange borrowings due to us under a loan agreement with an unconsolidated affiliate for equity ownership interests.

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

See Note 4—Unconsolidated Affiliates .

(e) In the years ended December 31, 2024, 2023 and 2022, we agreed to settle installments due to the lessor under our finance lease by issuing corresponding credits to our customer for amounts due to us under the drilling contract.

(d) In the years ended December 31, 2025, 2024 and 2023, we agreed to settle installments due to the lessor under our finance lease by issuing corresponding credits to our customer for amounts due to us under the drilling contract.

See Note 7—Leases .

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

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

See Note 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 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.

(e) In the year ended December 31, 2025, we issued 73.3 million Transocean Ltd.

shares to certain holders that elected to exchange the 4.00 % Exchangeable Bonds pursuant to the Exchange Agreements.

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

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

See Note 8—Debt and Note 13—Equity .

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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.

Total debt —The carrying amount of our total debt represents the principal amount, contractual interest payments of previously restructured debt and unamortized discounts, premiums and issue costs.

The carrying amount and fair value of our total debt includes amounts related to certain exchangeable debt instruments (see Note 8—Debt ).

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

Total debt —The carrying amount of our total debt represents the principal amount, together with unamortized discounts, premiums and issue costs.

The carrying amount and fair value of our total debt includes amounts related to our exchangeable bonds (see Note 8—

TRANSOCEAN LTD.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued

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 our exchangeable bonds, the expected volatility of the market price for our shares.

Note 19—Risk Concentration

Interest rate risk —We are exposed to the interest rate risk related to our fixed-rate debt when we refinance maturing debt with new debt or when we early retire debt in open market repurchases, exchanges or other market transactions.

Interest rate risk —We are exposed to interest rate risk related to our fixed-rate debt when we refinance maturing debt with new debt or when we early retire debt in open market repurchases or other market transactions.

We are also exposed to interest rate risk related to our restricted and unrestricted cash equivalents, as the interest income earned on these investments is based on variable or short-term interest rates, which change with market interest rates.

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.

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 % Exchangeable Bonds.

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

9 unchanged sentences

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.

We occasionally require collateral or other security to support customer receivables when we have encountered isolated concerns related to the credit of independent energy companies.

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.

We establish an allowance for credit losses, recorded in accounts receivable, net, by applying an expected loss rate based on current, forecasted and historical experience.

At December 31, 2025 and 2024, our allowance for credit losses was $ 2 million.

Labor agreements —At December 31, 2025, we had a global workforce of approximately 5,600 individuals, including approximately 380 contractors.

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data