Note 4—Unconsolidated Affiliates
Overview—In the six months ended June 30, 2024 and 2023, we recognized a gain of $5 million and a loss of $18 million, respectively, recorded in other, net, associated with equity in earnings or losses of our equity investments. In the six months ended June 30, 2024, we recognized a loss of $5 million, which had no tax effect, recorded in other, net, associated with the impairment of certain equity investments upon determination that the carrying amount exceeded the estimated fair value and that the impairment was other than temporary. At June 30, 2024 and December 31, 2023, the aggregate carrying amount of our equity investments in unconsolidated affiliates was $123 million and $216 million, respectively, recorded in other assets.
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 owns the harsh environment floater Transocean Norge, and the aggregate carrying amount of our investment in Orion was $86 million, recorded in other assets. In June 2024, we transferred noncash consideration with an aggregate fair value of $431 million, including $130 million aggregate principal amount of 8.00% senior notes due February 2027 (the “8.00% Senior Notes”) and 55.5 million Transocean Ltd. shares, to acquire the outstanding 67.0 percent ownership interest in Orion. As a result, Orion became our wholly owned subsidiary. We recorded the transaction using the asset acquisition method of accounting. See Note 6—Long-Lived Assets, Note 7—Debt and Note 11—Equity.
Contribution—In February 2023, we made a cash contribution of $10 million and a non-cash contribution of the ultra-deepwater floater Ocean Rig Olympia, which had been cold stacked, and related assets, with an estimated fair value of $85 million (see Note 6—Long-Lived Assets), in exchange for a noncontrolling ownership interest in Global Sea Mineral Resources NV (together with its subsidiaries, “GSR”), a Belgian company and leading developer of nodule collection technology engaged in the development and exploration of deep-sea polymetallic nodules that contain metals critical to the growing renewable energy market. 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 the future performance of the rig, projected demand for its services, rig availability and dayrates.
Related party transactions—In the six months ended June 30, 2024 and 2023, we received an aggregate cash payment of $11 million and $5 million, respectively, for services and equipment provided to, and prior to our acquisition of, Orion. In the six months ended June 30, 2024 and 2023, we made an aggregate cash payment of $25 million and $1 million, respectively, to charter Transocean Norge and rent other equipment from, and prior to our acquisition of, Orion. At June 30, 2024 and December 31, 2023, our accounts receivable from affiliates was $2 million and $14 million, respectively, recorded in other current assets. At December 31, 2023, our accounts payable to affiliates was $4 million, recorded in accounts payable.
Note 5—Revenues
Overview—Under most of our drilling 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 June 30, 2024, the drilling contract with the longest expected remaining duration, excluding unexercised options, extends through August 2029.
Disaggregation—Our contract drilling revenues, disaggregated by asset group and by country in which they were earned, were as follows (in millions):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three months ended June 30, | | Six months ended June 30, | |
| | 2024 | | 2023 | | 2024 | | 2023 | |
| | Ultra- | | Harsh | | | | Ultra- | | Harsh | | | | Ultra- | | Harsh | | | | Ultra- | | Harsh | | | |
| | deepwater | | environment | | | | deepwater | | environment | | | | deepwater | | environment | | | | deepwater | | environment | | | |
| | floaters | | floaters | | Total | | floaters | | floaters | | Total | | floaters | | floaters | | Total | | floaters | | floaters | | Total | |
U.S. | | $ | 406 | | $ | — | | $ | 406 | | $ | 365 | | $ | — | | $ | 365 | | $ | 776 | | $ | — | | $ | 776 | | $ | 717 | | $ | — | | $ | 717 | |
Brazil | | | 150 | | | — | | | 150 | | | 65 | | | — | | | 65 | | | 305 | | | — | | | 305 | | | 128 | | | — | | | 128 | |
Norway | | | — | | | 163 | | | 163 | | | — | | | 142 | | | 142 | | | — | | | 314 | | | 314 | | | — | | | 290 | | | 290 | |
Other countries (a) | | | 50 | | | 92 | | | 142 | | | 106 | | | 51 | | | 157 | | | 94 | | | 135 | | | 229 | | | | | | 68 | | | 243 | |
Total contract drilling revenues | | $ | 606 | | $ | 255 | | $ | 861 | | $ | 536 | | $ | 193 | | $ | 729 | | $ | 1,175 | | $ | 449 | | $ | 1,624 | | $ | 1,020 | | $ | 358 | | $ | 1,378 | |
(a)The aggregate contract drilling revenues earned in other countries that individually represented less than 10 percent of total contract drilling revenues.
Contract liabilities—Contract liabilities for our contracts with customers were as follows (in millions):
| | | | | | | |
| | June 30, | | December 31 | |
| | 2024 | | 2023 | |
Deferred contract revenues, recorded in other current liabilities | | $ | 264 | | $ | 165 | |
Deferred contract revenues, recorded in other long-term liabilities | | | 231 | | | 233 | |
Total contract liabilities | | $ | 495 | | $ | 398 | |