Transocean reports Q4 2024 profit as contract backlog reaches $8.3bn

Transocean Ltd. (NYSE: RIG) has reported a net income of $7 million for the fourth quarter of 2024, marking a significant turnaround from the previous quarter’s $494 million loss. The company’s contract drilling revenues grew to $952 million, driven by increased rig utilization and higher reimbursement revenues, while operating costs rose due to increased maintenance expenses. Despite these challenges, Transocean’s total contract backlog reached $8.3 billion, underscoring its strong positioning in the offshore drilling services market.

How Did Transocean’s Financial Performance Improve in Q4 2024?

Transocean’s contract drilling revenues increased by $4 million compared to the previous quarter, reflecting improved fleet utilization as a rig that was previously undergoing a special periodic survey returned to service. However, revenue efficiency declined slightly to 93.5% from 94.5% in the prior quarter, suggesting some operational inefficiencies across its floating offshore drilling fleet.

Despite revenue growth, the company faced higher costs. Operating and maintenance expenses rose to $579 million, an increase of $16 million from Q3, due to in-service maintenance activities. General and administrative expenses climbed to $56 million, up from $47 million, primarily due to increased legal and professional fees. These cost pressures contributed to a decline in adjusted EBITDA, which fell from $342 million in Q3 to $323 million in Q4, reducing the adjusted EBITDA margin from 36.0% to 33.9%.

The company’s net income of $7 million translates to a diluted loss per share of $0.11. However, after excluding unfavorable discrete tax items of $20 million, Transocean’s adjusted net income stood at $27 million, with an adjusted diluted loss per share of $0.09.

What Factors Contributed to Transocean’s Strong Backlog?

Transocean’s ability to secure new contracts has reinforced its contract backlog, which reached $8.3 billion as of February 2025. The company locked in approximately $2.4 billion in new contracts throughout 2024, highlighting sustained demand for offshore drilling services.

Key contract additions in Q4 included an extended four-well option in India for the Dhirubhai Deepwater KG1 at a day rate of $410,000. The Transocean Enabler secured a three-well extension in Norway at $428,000 per day, while the Transocean Endurance was awarded a one-well option in Australia at $390,000 per day. These contracts added approximately $175 million to Transocean’s contract backlog, providing revenue stability as the company looks ahead to 2026.

What Are Transocean’s Strategic Priorities for 2025?

CEO Jeremy Thigpen highlighted Transocean’s continued commitment to technological leadership, citing the company’s execution of the first two 20K subsea completions in offshore drilling history. He emphasized that Transocean’s adoption of cutting-edge technologies enhances operational efficiency, differentiating its fleet and reinforcing its reputation for safe and reliable drilling operations.

With long-term contract coverage extending into 2026, Transocean’s strategic focus remains on optimizing operational execution and cost control. The company aims to maximize cash conversion from its backlog, which will enable further balance sheet de-leveraging.

How Did Transocean Perform for the Full Year 2024?

For the full year, Transocean reported a net loss of $512 million, or $0.76 per diluted share. The loss was primarily attributed to a $755 million impairment charge on assets, alongside a $5 million impairment loss related to investments in unconsolidated affiliates. These negative impacts were partially offset by a $161 million gain from debt retirement and $141 million in discrete tax benefits.

After adjusting for these factors, Transocean’s adjusted net loss for 2024 stood at $54 million, or $0.26 per diluted share. The company’s cash flow from operations for the fourth quarter was $206 million, an increase of $12 million from Q3, driven by improved timing of interest payments and lower payments for accounts payable.

What Is the Outlook for Offshore Drilling in 2025?

The global offshore drilling services market is expected to remain robust, with sustained demand for ultra-deepwater drilling and harsh environment floaters. Transocean operates a fleet of 34 offshore drilling units, consisting of 26 ultra-deepwater floaters and 8 harsh environment floaters, positioning the company as a leader in high-specification drilling solutions.

With a strong contract backlog and a focus on cost management and operational efficiency, Transocean aims to further enhance its financial performance in 2025. The company’s ability to secure high-value contracts in key offshore markets will be critical in maintaining revenue stability and improving profitability.