So, Transocean Ltd. (RIG) had a day. The offshore driller's stock closed higher Friday after the company served up a classic mixed-bag quarter: earnings that missed the mark but revenue that came in a bit better than expected. Oh, and there's that little matter of a multi-billion dollar merger in the works.

Let's break it down.

Earnings Took a Dip, But Revenue Held Steady

On the bottom line, Transocean reported adjusted earnings of two cents per share. That fell short of the eight cents per share Wall Street was looking for. Not a great look on the earnings front.

But the top line told a slightly different story. Revenue climbed to $1.04 billion, which was actually a touch ahead of what analysts had forecast. That contract drilling revenue was up 1.5% from the prior quarter, thanks to better utilization of its rigs. Of course, it wasn't all smooth sailing—operating and maintenance expenses jumped to $605 million, partly due to shipyard work being done on four rigs.

The Financial Foundation Looks Solid

Looking at the bigger picture for 2025, the company's financials show some real strength. Transocean generated $749 million in operating cash flow and $626 million in free cash flow. It ended the year sitting on $1.51 billion in total liquidity and, importantly, has a contract backlog of about $6.1 billion. That's a nice pile of future work already booked.

Management has also been busy cleaning up the balance sheet. They've retired roughly $1.3 billion of debt, which is expected to cut annual interest expenses by nearly $90 million. That's the kind of financial housekeeping investors like to see.

The Big Story: Creating an Offshore Behemoth

Beyond the quarterly numbers, the elephant in the room—or perhaps the giant rig in the harbor—is Transocean's plan to acquire its rival, Valaris Ltd. (VAL), in a deal valued at roughly $5.8 billion.

This isn't just any merger. The combined company would be an offshore drilling heavyweight with an estimated backlog of $10 billion. That's a huge amount of visibility into future cash flows. CEO Keelan Adamson framed it as a move that will "enhance financial flexibility and support continued investment in people, assets and technology." In simpler terms, they're betting that bigger is better and more stable in the volatile offshore world.

What the Charts Are Saying

For the technically inclined, the stock's picture is... mixed. The Relative Strength Index (RSI) is sitting at 68.98, which generally indicates neutral momentum—it's not screaming "overbought" just yet. Meanwhile, the Moving Average Convergence Divergence (MACD) is showing a bullish signal, with its value of 0.4874 sitting above its signal line at 0.3947.

So, the technical takeaway? There's still some upward momentum present, even if the stock isn't in extreme territory. Traders are watching key resistance at $6.50 and key support at $6.

The Bottom Line

Transocean shares closed up 2.84% at $6.52 on Friday, trading right near its 52-week high of $6.57. Investors seem to be weighing the disappointing earnings miss against the revenue beat, the solid financial footing, the debt reduction, and, most of all, the transformative potential of the Valaris deal. It's a classic case of the market looking past a quarterly stumble because it sees a potentially much bigger prize down the road.