• Total contract drilling revenues were $606 million, compared to $691 million in the third quarter of 2022 (total adjusted contract drilling revenues of $625 million, compared to $730 million in the third quarter of 2022);
• Revenue efficiency(1) was 98.0%, compared to 95.0% in the prior quarter;
• Operating and maintenance expense was $423 million, compared to $411 million in the prior period;
• Net loss attributable to controlling interest was $350 million, $0.48 per diluted share, compared to $28 million, $0.04 per diluted share, in the third quarter of 2022;
• Adjusted EBITDA was $140 million, compared to $268 million in the prior quarter; and
• Contract backlog was $8.5 billion as of the February 2023 Fleet Status Report.
Transocean Ltd. reported a net loss attributable to controlling interest of $350 million, $0.48 per diluted share, for the three months ended December 31, 2022.
Fourth quarter results included net favorable items of $6 million, or $0.01 per diluted share as follows:
• $5 million, $0.01 per diluted share, discrete tax items; and
• $1 million gain on retirement of debt.
After consideration of these net favorable items, fourth quarter 2022 adjusted net loss was $356 million, $0.49 per diluted share.
Contract drilling revenues for the three months ended December 31, 2022, decreased sequentially by $85 million to $606 million, primarily due to reduced activity for five rigs that were idle in the fourth quarter, partially offset by higher revenue efficiency and revenues earned by the newbuild ultra-deepwater floater Deepwater Atlas, which commenced operations in October 2022.
Contract intangible amortization represented a non-cash revenue reduction of $19 million. The reduction, compared to $39 million in the prior period, resulted from the accelerated recognition of remaining contract intangible for Transocean Equinox following the customer’s early termination of the drilling contract in the third quarter 2022.
Operating and maintenance expense was $423 million, compared with $411 million in the prior quarter. The sequential increase was primarily due to higher maintenance cost across our fleet and the commencement of operations of the newbuild Deepwater Atlas, partially offset by reduced activity from rigs that became idle in the fourth quarter.
General and administrative expense was $55 million, up from $42 million in the third quarter of 2022. The increase was primarily due to increased personnel costs and increased legal, professional fees and advisory fees.
Interest expense, net of amounts capitalized, was $263 million, compared with $96 million in the prior quarter. The increase was primarily due to a non-cash loss of $157 million associated with a fair value adjustment of the bifurcated exchange feature embedded in our exchangeable bonds issued in the third quarter. Interest income was $12 million, compared with $9 million in the previous quarter.
The Effective Tax Rate(2) was (11.0)% in the current quarter and 16.3% in the prior quarter. The change in the rate was primarily due to incurring over half of the actual earnings for the year in the current quarter. The Effective Tax Rate excluding discrete items was (12.6)% compared to (1.2)% in the previous quarter.
Cash provided by operating activities was $178 million, compared to $230 million in the prior quarter. The sequential decrease is primarily due to increased payments for accounts payable and income taxes, partially offset by the timing of interest payments.
Fourth quarter 2022 capital expenditures of $409 million, compared to $87 million in the prior quarter, were primarily related to our newbuild drillships under construction, including the cash component of the final milestone payment for the delivery of Deepwater Titan in December 2022.
“Looking back, 2022 will be remembered as a pivotal year in Transocean’s history,” said Chief Executive Officer, Jeremy Thigpen. “During the year, we continued to high-grade our fleet through the deployment of innovative technologies and the delivery of the industry’s only two 8th generation drillships, Deepwater Atlas and Deepwater Titan. Perhaps most importantly, we secured approximately $4 billion in incremental backlog, our largest annual backlog addition since prior to the industry downturn in 2014.”
Thigpen concluded, “As an industry, it is clear that we have finally emerged from eight exceptionally challenging years and are now in the early stages of what we believe will be a multi-year upcycle. To maximize value for our shareholders during this upcycle, Transocean will continue to secure high-quality backlog, maintain our acute focus on operational excellence, exercise capital discipline, and take the necessary steps to right-size our balance sheet.”
Full Year 2022
For the year ended December 31, 2022, net loss attributable to controlling interest totaled $621 million, or $0.89 per diluted share. Full year results included $27 million, or $0.04 per diluted share, net favorable items listed as follows:
• $19 million, $0.03 per diluted share, related to discrete tax items; and
• $8 million, $0.01 per diluted share, gain on retirement of debt.
After consideration of these net favorable items, adjusted net loss for 2022 was $648 million, $0.93 per diluted share.