Transocean Ltd. (RIG Quick QuoteRIG - Free Report) reported a first-quarter 2026 adjusted loss of 3 cents per share, in contrast to the Zacks Consensus Estimate of earnings of 7 cents. The underperformance was primarily due to higher interest expenses and tax-related impacts. However, the bottom line improved from the year-ago quarter’s adjusted loss of 10 cents, supported by higher revenues, stronger fleet utilization, improved revenue efficiency and higher average daily revenues.

The Switzerland-based offshore drilling contractor’s contract drilling revenues of $1.08 billion surpassed the Zacks Consensus Estimate of $1.03 billion by 5.2%. This was due to higher-than-expected revenues from ultra-deepwater and harsh environment floaters. Ultra-deepwater and harsh environment revenues beat the consensus mark of $480 million and $264 million, respectively. The top line also increased 19.3% from the year-ago quarter’s reported figure of $906 million.

Transocean Ltd. Price, Consensus and EPS Surprise

Transocean Ltd. price-consensus-eps-surprise-chart | Transocean Ltd. Quote

Adjusted EBITDA was $440 million, up from $244 million in the year-ago period and $385 million in the fourth quarter of 2025. Moreover, the figure beat our model estimate of $352.7 million. Adjusted EBITDA margin was 40.7% compared with 26.9% in the year-ago quarter and 36.8% in the prior quarter.

RIG’s Segmental Revenue Breakup

Ultra-deepwater floaters accounted for about 69.2% of total contract drilling revenues, while harsh environment floaters contributed the remaining 30.8%.

Transocean’s ultra-deepwater floaters generated revenues of $748 million in the reported quarter, up from $658 million in the year-ago period and $724 million in the prior quarter. Moreover, the figure beat our model estimate of $658 million.

Harsh environment floaters contributed $333 million, compared with $248 million in the year-ago quarter and $319 million in the fourth quarter of 2025. Moreover, the figure beat our model estimate of $248 million.

Revenue efficiency was 97.3%, up from 96.2% in the previous quarter and 95.5% in the year-ago period. Ultra-deepwater revenue efficiency improved to 97.6% from 94.3% a year ago, while harsh environment revenue efficiency came in at 96.7%.

Day Rates, Utilization & Backlog

Average daily revenues increased to $475,600 from $443,600 in the year-ago quarter and $461,300 in the prior quarter. However, the figure missed our estimate of $502,600.

Average daily revenues from ultra-deepwater floaters rose to $480,700 from $443,600 a year ago. However, the figure missed our estimate of $506,300. The metric for harsh environment floaters increased to $463,800 from $443,600 in the prior-year quarter. The figure missed our estimate of $492,600.

Fleet utilization improved to 86.7% from 63.4% in the year-ago period and 85.8% in the fourth quarter of 2025. Ultra-deepwater utilization was 82.1%, while harsh environment utilization reached 100%.

As of May 4, 2026, Transocean’s total backlog was approximately $7.1 billion. Since its February 2026 fleet status report, the company added five new fixtures, representing nearly $1.6 billion of incremental backlog at a weighted average day rate of about $410,000.

RIG’s Costs, Capex & Balance Sheet

The company reported costs and expenses of $798 million, which were 5.5% lower than the year-ago quarter’s level of $844 million.Additionally, operations and maintenance costs decreased to $606 million from $618 million a year ago.

The oil and gas drilling company spent $28 million on capital investments in the first quarter. Cash used in operating activities was $164 million. Cash and cash equivalents were $330 million as of March 31, 2026. Long-term debt amounted to $4.9 billion, with a debt-to-capitalization of 37.6% as of the same period.

During the quarter, the company retired the remaining $358 million principal amount of its 8.375% Senior Secured Notes due 2028, secured by Deepwater Titan. Management stated that the move reduced interest to maturity by nearly $40 million.

RIG’s Guidance

For the second quarter of 2026, this Zacks Rank #3 (Hold) company expects contract drilling revenues in the range of $930-$970 million. Fleet-wide revenue efficiency is projected at 96.5%. Operating and maintenance expenses are expected to be between $630 million and $660 million, while general and administrative expenses are projected in the $40-$45 million range. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The company expects $113 million in interest expense, while interest income is projected to be $5 million to $10 million. Capital expenditures are estimated at $30 million to $40 million and cash taxes paid are expected to be around $30 million during the same period.

For the full-year 2026, the company expects contract drilling revenues to be between $3.8 billion and $3.9 billion. Operating and maintenance expenses are projected between $2.25 billion and $2.38 billion, while general and administrative expenses are anticipated in the $170-$180 million range. Capital expenditures are expected to be around $150 million, while year-end liquidity is projected between $1.25 billion and $1.35 billion.

Full-year capital expenditures are estimated at approximately $150 million. Cash taxes paid are expected to range from $70 million to $75 million. Management said the upper end of the full-year revenue outlook was reduced by $50 million, primarily reflecting the passage of time and a lower probability of filling certain 2026 contract gaps. The company also raised its full-year capital expenditure outlook by $20 million, partly due to customer requirements, including environmental upgrades on a rig operating in Norway.

RIG’s Market Outlook

Transocean remains constructive on offshore drilling demand. Management said tendering opportunities and contract awards remained strong, with visibility into multiyear programs improving. The company now expects deepwater utilization to approach nearly 100% by the end of 2027, supported by rising offshore exploration and development activity.

Transocean also highlighted improving activity in Brazil, Africa, the Mediterranean, Southeast Asia, India and Norway. Management expects Brazil’s rig count to remain stable at 30-33 rigs over at least the next five years, while Africa’s regional rig count is expected to rise from roughly 15 units to at least 20 units over the next one to two years.

Transocean also reiterated confidence in its pending acquisition of Valaris, stating that it remains on track to close the transaction in the second half of 2026, subject to regulatory approvals. Management expects more than $200 million in cost synergies from the combination, in addition to its standalone cost-reduction initiatives.

Important Earnings at a Glance

While we have discussed RIG’s first-quarter results in detail, let us take a look at three other key reports in this space.

Halliburton Company (HAL Quick QuoteHAL - Free Report) , a Houston, TX-based oil and gas equipment and services provider, posted first-quarter 2026 adjusted net income per share of 55 cents, beating the Zacks Consensus Estimate of 49 cents. The outperformance primarily reflects successful cost reduction initiatives. However, the bottom line fell from the year-ago adjusted profit of 60 cents.

Halliburton reported first-quarter capital expenditure of $192 million. As of March 31, 2026, this Houston, TX-based oil and gas equipment and services company had approximately $2 billion in cash/cash equivalents and $7.1 billion in long-term debt, representing a debt-to-capitalization ratio of 39.6.

Kinder Morgan Inc. (KMI Quick QuoteKMI - Free Report) , a Houston, TX-based oil and gas storage and transportation company,posted first-quarter 2026 adjusted earnings per share of 48 cents, which beat the Zacks Consensus Estimate of 38 cents. The bottom line increased year over year from 34 cents. The strong quarterly results can be primarily attributed to contributions from the Natural Gas Pipelines business segment.

As of March 31, 2026, KMI reported $72 million in cash and cash equivalents. At the quarter's end, its long-term debt amounted to $29.72 billion. KMI’s project backlog was reported at $10.1 billion by the end of the first quarter. The midstream energy major added that natural gas projects comprise approximately 92% of its project backlog, with nearly 60% dedicated to supporting local distribution companies and power generation.

Fort Worth, TX-based oil and gas exploration and production company, Range Resources Corporation (RRC Quick QuoteRRC - Free Report) , posted first-quarter 2026 adjusted earnings of $1.52 per share, which beat the Zacks Consensus Estimate of $1.33. The bottom line also improved from the prior-year level of 96 cents. Strong quarterly results can be attributed to higher gas-equivalent production and increased natural gas price realization.

Drilling and completion expenditure totaled $130 million. An additional $5 million was spent on acreage and $4 million on infrastructure and other investments. At the end of the first quarter, Range Resources reported a total debt of $819.3 million, net of deferred financing costs.