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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 14A Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ) Filed by the Registrant ☒ Filed by a Party other than the Registrant ☐ Check the appropriate box: ☒ Preliminary Proxy Statement ☐ Confidential, for Use of the Commission Only (as permitted by Rule 14a‑6(e)(2)) ☐ Definitive Proxy Statement ☐ Definitive Additional Materials ☐ Soliciting Material under §240.14a‑12
Transocean Ltd. (Name of Registrant as Specified In Its Charter)
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PRELIMINARY PROXY MATERIALS – SUBJECT TO COMPLETION
TO THE OWNERS OF OUR COMPANY: In last year’s Letter to Shareholders, we stated that “2018 may be remembered as the start of the recovery in the offshore market.” As we turn the page on 2019, we are pleased to report that we exited the year in a much more favorable environment than the one we entered.
BRENT CRUDE PRICES ABOVE $60/bbl Despite intermittent fears of a global recession, Brent crude oil prices remained above $60/bbl for most of the year.
EFFICIENCIES SAFELY REDUCE COST STRUCTURE As an industry, we continued to realize sustainable efficiencies to safely reduce offshore project costs and compress the time to first oil production, thereby improving offshore project economics and increasing the number of commercially viable offshore programs.
SHALE GROWTH DECLINES Due to a number of challenges, including less favorable geology, accelerating decline rates, and well spacing complications, production growth from North American shale activity appears to have peaked in 2018. Shale growth noticeably slowed in 2019, and current expectations suggest that this trend will continue as we move through 2020 and beyond.
These factors, and others, have combined to enhance the attractiveness of offshore projects in our customers’ portfolios. In 2019, we observed a marked increase in customer demand, resulting in both an increase in the number of contracts awarded, and a lengthening of duration per contract. Importantly, this increase in demand was widespread, originating from private equity-backed E&P companies, to publicly traded independents, to national oil companies, to the super-majors, and spanning the world, with heightened demand in the Gulf of Mexico, Central America, Brazil, West Africa, Norway and Southeast Asia.
So, while its pace and trajectory will be largely dependent upon the health of the global economy, we believe that the offshore market is now in recovery. Marketed floater utilization exited the year at 80 percent, a 500-basis point improvement from 2018. Dayrates for harsh environment assets increased for the third consecutive year, with high-specification base dayrates now approaching U.S. $400,000 per day. Furthermore, ultra-deepwater rates are now 50 to 75 percent above prior year levels and continuing to trend higher for drilling campaigns commencing in the second half of 2020 and into 2021.
In this more constructive environment, we believe that our strategic business planning over the course of this downturn has positioned us well to continue to outperform our peer group and produce the long-term financial returns our investors trust us to deliver. We recognize that delivering these desired financial returns will occur over a multi-year recovery in the offshore space, and will demand our continued commitment to flawless execution. With the offshore industry’s highest specification floating fleet, and a steadfast focus on incident-free operations and superior well construction, we believe that we are best-positioned to support our customers in the delivery of their operational and business objectives, which will ultimately translate into solid returns for our shareholders. Table of Contents
LETTER TO SHAREHOLDERS
As we enter the next decade, we are proud of the resolve our employees have demonstrated as we have confronted the challenges of the past five years. By any measure, we have delivered industry-leading results throughout the most difficult days of the offshore drilling industry’s history. In 2019, we delivered the highest Revenue, EBITDA and EBITDA Margins from a floating fleet among all offshore drilling contractors. More importantly, we delivered these results while reducing our annual total recordable incident rate by 30 percent. We are, therefore, confident going forward that this team will continue to perform at peak levels operationally, leading to improved financial results.
As part of Transocean’s Annual Report, we are pleased to recognize and thank the entire Transocean team, as we summarize our accomplishments toward furthering our company’s strategic position. During the year: