Transocean Partners (RIGP) 10-Q 3 Aug 16 2016 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2016	Jul. 26, 2016
Entity Registrant Name	Transocean Partners LLC
Entity Central Index Key	1,607,250
Document Type	10-Q
Document Period End Date	Jun. 30, 2016
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Document Fiscal Year Focus	2,016
Document Fiscal Period Focus	Q2
Common units
Entity Common Stock, Shares Outstanding		40,914,962
Subordinated units
Entity Common Stock, Shares Outstanding		27,586,207

CONSOLIDATED STATEMENTS OF OPER

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Millions, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Operating revenues
Contract drilling revenues	$ 152	$ 157	$ 293	$ 293
Other revenues	3	4	6	8
Total operating revenues	155	161	299	301
Costs and expenses
Operating and maintenance	53	60	108	118
Depreciation	17	17	34	34
General and administrative	7	6	13	11
Total costs and expenses	77	83	155	163
Loss on impairment				(67)
Loss on disposal of assets		(1)		(1)
Operating income	78	77	144	70
Other income
Interest income		1	1	2
Interest expense	(1)	(1)	(1)	(1)
Income before income tax expense	77	77	144	71
Income tax expense	4	4	8	8
Net income	73	73	136	63
Net income attributable to noncontrolling interest	37	38	69	34
Net income attributable to controlling interest	$ 36	$ 35	67	29
Common units
Other income
Net income attributable to controlling interest			$ 40	$ 17
Earnings per unit—basic
Earnings per unit—basic	$ 0.52	$ 0.51	$ 0.97	$ 0.43
Earnings per unit—diluted
Earnings per unit—diluted	$ 0.52	$ 0.51	$ 0.97	$ 0.43
Weighted‑average units outstanding—basic
Weighted-average units outstanding—basic (in units)	41	41	41	41
Weighted‑average units outstanding—diluted
Weighted-average units outstanding—diluted (in units)	41	41	41	41
Subordinated units
Other income
Net income attributable to controlling interest			$ 27	$ 12
Earnings per unit—basic
Earnings per unit—basic	$ 0.52	$ 0.51	$ 0.97	$ 0.43
Earnings per unit—diluted
Earnings per unit—diluted	$ 0.52	$ 0.51	$ 0.97	$ 0.43
Weighted‑average units outstanding—basic
Weighted-average units outstanding—basic (in units)	28	28	28	28
Weighted‑average units outstanding—diluted
Weighted-average units outstanding—diluted (in units)	28	28	28	28

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions	Jun. 30, 2016	Dec. 31, 2015
Assets
Cash and cash equivalents	$ 171	$ 159
Accounts receivable	108	115
Accounts receivable from affiliates		1
Materials and supplies, net of allowance for obsolescence of $6 at June 30, 2016 and December 31, 2015	38	34
Prepaid assets	12	7
Total current assets	329	316
Property and equipment	2,313	2,296
Less accumulated depreciation	(440)	(401)
Property and equipment, net	1,873	1,895
Deferred income taxes, net	7	10
Other assets	8	10
Total assets	2,217	2,231
Liabilities and equity
Accounts payable to affiliates	60	51
Deferred revenues	7	15
Other current liabilities	1	2
Total current liabilities	68	68
Long-term tax liability	5	3
Drilling contract intangible liability	6	14
Other long-term liabilities	1	1
Total long-term liabilities	12	18
Commitments and contingencies
Total members' equity	1,284	1,262
Noncontrolling interest	853	883
Total equity	2,137	2,145
Total liabilities and equity	2,217	2,231
Common units
Liabilities and equity
Common units, 40,914,962 and 41,287,810 issued and outstanding at June 30, 2016 and December 31, 2015, respectively	769	757
Total equity	769	757
Subordinated units
Liabilities and equity
Subordinated units, 27,586,207 issued and outstanding at June 30, 2016 and December 31, 2015	515	505
Total equity	$ 515	$ 505

CONSOLIDATED BALANCE SHEETS (Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions	Jun. 30, 2016	Dec. 31, 2015
Allowance for obsolescence on materials and supplies	$ 6	$ 6
Common units
Units issued	40,914,962	41,287,810
Units outstanding	40,914,962	41,287,810
Subordinated units
Units issued	27,586,207	27,586,207
Units outstanding	27,586,207	27,586,207

CONSOLIDATED STATEMENTS OF EQUI

CONSOLIDATED STATEMENTS OF EQUITY - USD ($) shares in Millions, $ in Millions	Common units	Subordinated units	Total members' equity	Noncontrolling interest	Total
Balance, beginning of period at Dec. 31, 2014	$ 847	$ 564	$ 1,411	$ 1,040	$ 2,451
Balance, beginning of period (in shares) at Dec. 31, 2014	41.4	27.6
Increase (Decrease) in Partners' Capital
Net income attributable to controlling interest	$ 17	$ 12	29		29
Net income					63
Contributions for parent payment of patent royalties	7	5	12		12
Distributions of available cash to unitholders	(30)	(20)	(50)		(50)
Distributions to holder of noncontrolling interests				(40)	(40)
Net income attributable to noncontrolling interest				34	(34)
Balance, end of period at Jun. 30, 2015	$ 841	$ 561	1,402	1,034	2,436
Balance, end of period (in shares) at Jun. 30, 2015	41.4	27.6
Balance, beginning of period at Dec. 31, 2014	$ 847	$ 564	1,411	1,040	2,451
Balance, beginning of period (in shares) at Dec. 31, 2014	41.4	27.6
Balance, end of period at Dec. 31, 2015	$ 757	$ 505	1,262	883	2,145
Balance, end of period (in shares) at Dec. 31, 2015	41.3	27.6
Increase (Decrease) in Partners' Capital
Net income attributable to controlling interest	$ 40	$ 27	67		67
Net income					136
Contributions for parent payment of patent royalties	5	3	8		8
Distributions of available cash to unitholders	(30)	(20)	(50)		(50)
Distributions to holder of noncontrolling interests				(99)	(99)
Net income attributable to noncontrolling interest				69	(69)
Cancellation of repurchased common units	$ (3)		(3)		(3)
Cancellation of repurchased common units (in shares)	(0.4)
Balance, end of period at Jun. 30, 2016	$ 769	$ 515	$ 1,284	$ 853	$ 2,137
Balance, end of period (in shares) at Jun. 30, 2016	40.9	27.6

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Cash flows from operating activities
Net income	$ 136	$ 63
Adjustments to reconcile to net cash provided by operating activities
Amortization of drilling contract intangible	(8)	(7)
Depreciation	34	34
Patent royalties expense	8	12
Loss on impairment		67
Deferred income taxes	3	2
Other, net	1
Changes in deferred revenues, net	(8)	(7)
Changes in deferred costs, net	2
Changes in operating assets and liabilities	5	13
Net cash provided by operating activities	173	177
Cash flows from investing activities
Payments to affiliates for capital expenditures	(12)	(10)
Proceeds from affiliates for disposal of assets, net	3	4
Net cash used in investing activities	(9)	(6)
Cash flows from financing activities
Distributions of available cash to unitholders	(50)	(50)
Distributions to holder of noncontrolling interests	(99)	(40)
Payments to repurchase common units	(3)
Contributions for parent indemnification of lost revenues		10
Net cash used in financing activities	(152)	(80)
Net increase in cash and cash equivalents	12	91
Cash and cash equivalents at beginning of period	159	86
Cash and cash equivalents at end of period	$ 171	$ 177

Business

Business	6 Months Ended
	Jun. 30, 2016
Business
Business	Note 1—Business Transocean Partners LLC (together with its subsidiaries and predecessors, unless the context requires otherwise, “Transocean Partners”, “we”, “us”, or “our”), a Marshall Islands limited liability company, was formed on February 6, 2014 by Transocean Partners Holdings Limited, a Cayman Islands company (the “Transocean Member”) and a wholly owned subsidiary of Transocean Ltd. (together with its affiliates, unless the context requires otherwise, “Transocean”), to own, operate and acquire modern, technologically advanced offshore drilling rigs. At June 30, 2016, the drilling units in our fleet included the ultra ‑deepwater drillships Discoverer Inspiration and Discoverer Clear Leader and the ultra ‑deepwater semisubmersible Development Driller III , which are located in the United States (“U.S.”) Gulf of Mexico. We own a 51 percent interest in each of the entities that owns and operates the drilling units in our fleet (each individually, a “RigCo”, and collectively, the “RigCos”). The Transocean Member owns the remaining 49 percent noncontrolling interest in each of the RigCos. At June 30, 2016 and December 31, 2015, the Transocean Member held 21.3 million common units and 27.6 million subordinated units, which collectively represented a 71.3 percent and 70.9 percent, respectively, limited liability company interest in us, and all of our incentive distribution rights. See Note 8—Equity. See Note 11—Subsequent Events.

Significant Accounting Policies

Significant Accounting Policies	6 Months Ended
	Jun. 30, 2016
Significant Accounting Policies
Significant Accounting Policies	Note 2—Significant Accounting Policies Presentation —We have prepared our accompanying unaudited condensed consolidated financial statements in accordance with accounting principles generally accepted in the U.S. for interim financial information and with the instructions to Form 10 ‑Q and Article 10 of Regulation S ‑X of the U.S. Securities and Exchange Commission (“SEC”). Pursuant to such rules and regulations, these financial statements do not include all disclosures required by accounting principles generally accepted in the U.S. for complete financial statements. The condensed consolidated financial statements reflect all adjustments, which are, in the opinion of management, necessary for a fair presentation of financial position, results of operations and cash flows for the interim periods. Such adjustments are considered to be of a normal recurring nature unless otherwise noted. Operating results for the three and six months ended June 30, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016 or for any future period. The accompanying condensed consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements and notes thereto as of December 31, 2015 and 2014 and for each of the three years in the period ended December 31, 2015 included in our annual report on Form 10 ‑K filed on February 25, 2016. Accounting estimates —To prepare financial statements in accordance with accounting principles generally accepted in the U.S., we are required to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosures of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates and assumptions, including those related to our allocated costs and related party transactions, materials and supplies obsolescence, property and equipment, drilling contract intangible liability, income taxes and equity ‑based compensation. We base our estimates and assumptions on historical experience and on various other factors we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Actual results could differ from such estimates. Fair value measurements —We estimate fair value at a price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the principal market for the asset or liability. Our valuation techniques require inputs that we categorize using a three ‑level hierarchy, from highest to lowest level of observable inputs, as follows: (1) significant observable inputs, including unadjusted quoted prices for identical assets or liabilities in active markets (“Level 1”), (2) significant other observable inputs, including direct or indirect market data for similar assets or liabilities in active markets or identical assets or liabilities in less active markets (“Level 2”) and (3) significant unobservable inputs, including those that require considerable judgment for which there is little or no market data (“Level 3”). When multiple input levels are required for a valuation, we categorize the entire fair value measurement according to the lowest level of input that is significant to the measurement even though we may have also utilized significant inputs that are more readily observable. Reclassifications —We have made certain reclassifications to prior period amounts to conform with the current period’s presentation. Such reclassifications did not have a material effect on our condensed consolidated statement of financial position, results of operations or cash flows. Subsequent events —We evaluate subsequent events through the time of our filing on the date we issue our financial statements. See Note 11—Subsequent Events.

New Accounting Pronouncements

New Accounting Pronouncements	6 Months Ended
	Jun. 30, 2016
New Accounting Pronouncements
New Accounting Pronouncements	Note 3—New Accounting Pronouncements Recently issued accounting standards Presentation of financial statements —Effective with our annual report for the year ending December 31, 2016, we will adopt the accounting standards update that requires us to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date that the financial statements are issued. The update is effective for the annual period ending after December 15, 2016 and for interim and annual periods thereafter. We do not expect that our adoption will have a material effect on the disclosures contained in our notes to condensed consolidated financial statements. Stock compensation —Effective no later than our annual report for the year ending December 31, 2016, we will adopt the accounting standards update that allows for simplification of the accounting for share ‑based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. The update, which permits early adoption, is effective for the annual period ending after December 15, 2016 and for interim and annual periods thereafter. We do not expect that our adoption will have a material effect on our condensed consolidated statements of financial position, operations and cash flows or the notes thereto. Revenue from contracts with customers —Effective January 1, 2018, we will adopt the accounting standards update that requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The update, which permits early adoption, is effective for interim and annual periods beginning on or after December 15, 2017. We are evaluating the requirements to determine the effect such requirements may have on our condensed consolidated statements of financial position, operations and cash flows and on the disclosures contained in our notes to condensed consolidated financial statements. Leases —Effective no later than January 1, 2019, we will adopt the accounting standards update that (a) requires lessees to recognize a right–to–use asset and a lease liability for virtually all leases, and (b) updates previous accounting standards for lessors to align certain requirements with the updates to lessee accounting standards and the revenue recognition accounting standards. The update, which permits early adoption, is effective for interim and annual periods beginning on or after December 15, 2018. We are evaluating the requirements to determine the effect such requirements may have on our condensed consolidated statements of financial position, operations and cash flows and on the disclosures contained in our notes to condensed consolidated financial statements.

Goodwill Impairment

Goodwill Impairment	6 Months Ended
	Jun. 30, 2016
Goodwill Impairment
Goodwill Impairment	Note 4—Goodwill Impairment During the three months ended March 31, 2015, we noted impairment indicators that the fair value of our goodwill could have fallen below its carrying amount. Such impairment indicators included further reduction in the market value of our publicly traded common units and oil and natural gas prices as well as projected reductions in dayrates and utilization. As a result, we performed an interim goodwill impairment test as of March 31, 2015 and determined that the goodwill associated with our reporting unit was impaired. In the six months ended June 30, 2015, we recognized a loss of $67 million associated with the partial impairment of the carrying amount of our goodwill, which had no tax effect, including $34 million attributable to controlling interest ( $0.49 per diluted unit) and $33 million attributable to noncontrolling interest. We estimated the implied fair value of the goodwill using a variety of valuation methods, including the income and market approaches. Our estimate of fair value required us to use significant unobservable inputs, representative of a Level 3 fair value measurement, including assumptions related to the future performance of our reporting unit, such as future oil and natural gas prices, projected demand for our services, rig availability and dayrates. Subsequent to June 30, 2015, we identified additional indicators that the remaining goodwill associated with our contract drilling services reporting unit may have again fallen below its carrying amount. In the three months ended September 30, 2015, we recognized an incremental loss of $289 million, which had no tax effect, associated with the impairment of our then remaining goodwill.

Income Taxes

Income Taxes	6 Months Ended
	Jun. 30, 2016
Income Taxes
Income Taxes	Note 5—Income Taxes We are organized as a limited liability company under the laws of The Republic of the Marshall Islands and are a resident in the United Kingdom (the “U.K.”) for taxation purposes. We are treated as a corporation for U.S. federal income tax purposes. Certain of our controlled affiliates, including the RigCos, are subject to taxation in the jurisdictions in which they are organized, conduct business or own assets. We calculate our provision for income taxes based on the laws and rates applicable in the jurisdictions in which we operate and earn income. For the six months ended June 30, 2016 and 2015, our estimated annual effective tax rate was 5.4 percent and 6.2 percent , respectively, based on estimated annual income before income taxes, after excluding the loss on impairment.

Earnings (loss) per unit

Earnings (loss) per unit	6 Months Ended
	Jun. 30, 2016
Earnings (loss) per unit
Earnings (loss) per unit	Note 6—Earnings (Loss) Per Unit The numerator and denominator used for the computation of basic and diluted per unit earnings, were as follows (in millions, except per unit data): Three months ended June 30, Six months ended June 30, 2016 2015 2016 2015 Basic Diluted Basic Diluted Basic Diluted Basic Diluted Numerator for earnings per unit Net income attributable to controlling interest $ $ $ $ $ $ $ $ Undistributed earnings allocable to participating securities — — — — — — — — Net income available to unitholders $ $ $ $ $ $ $ $ Net income available to common unitholders $ $ $ $ $ $ $ $ Net income available to subordinated unitholders $ $ $ $ $ $ $ $ Denominator for earnings per unit – common units Weighted-average common units outstanding Effect of equity-based awards — — — — — — — — Weighted-average common units for per unit calculation Denominator for earnings per unit – subordinated units Weighted-average subordinated units outstanding Effect of equity-based awards — — — — — — — — Weighted-average subordinated units for per unit calculation Earnings per unit Earnings per common unit $ $ $ $ $ $ $ $ Earnings per subordinated unit $ $ $ $ $ $ $ $ Cash distributions declared and paid per unit Common units $ $ $ $ $ $ $ $ Subordinated units $ $ $ $ $ $ $ $ In the three and six months ended June 30, 2016, we excluded from the calculation 30,189 and 44,074 equity-based awards, respectively, since the effect would have been anti-dilutive. In the three and six months ended June 30, 2015, no equity ‑based awards were excluded from the calculation. See Note 8—Equity and Note 11—Subsequent Events.

Credit Agreement

Credit Agreement	6 Months Ended
	Jun. 30, 2016
Credit Agreement
Credit Agreement	Note 7—Credit Agreement Five ‑Year Revolving Credit Facility —On August 5, 2014, we entered into a credit agreement, which is scheduled to expire on August 5, 2019, with a Transocean affiliate to establish a committed $300 million five ‑year revolving credit facility that allows for uncommitted increases in amounts agreed to by the Transocean affiliate and us (the “Five ‑Year Revolving Credit Facility”). We may borrow under the Five ‑Year Revolving Credit Facility at either (1) the adjusted London Interbank Offered Rate plus a margin (the “revolving credit facility margin”), which ranges from 1.625 percent to 2.250 percent based on our leverage ratio, as defined, or (2) the base rate specified in the credit agreement plus the revolving credit facility margin, less one percent per annum. Throughout the term of the Five ‑Year Revolving Credit Facility, we are required to pay a commitment fee on the daily unused amount of the underlying commitment, which ranges from 0.225 percent to 0.325 percent based on our leverage ratio, as defined. Among other things, the Five ‑Year Revolving Credit Facility includes limitations on creating liens, incurring subsidiary debt, transactions with affiliates, sale/leaseback transactions, mergers and the sale of substantially all of our assets. The Five ‑Year Revolving Credit Facility also includes a covenant imposing a maximum debt ratio, as defined in the credit agreement. Borrowings under the Five ‑Year Revolving Credit Facility are subject to acceleration upon the occurrence of an event of default. At June 30, 2016, based on our leverage ratio on that date, the revolving credit facility margin was 1.625 percent. At June 30, 2016 and December 31, 2015, we had no borrowings outstanding and $300 million available borrowing capacity under the Five ‑Year Revolving Credit Facility.

Equity

Equity	6 Months Ended
	Jun. 30, 2016
Equity
Equity	Note 8—Equity Cash distributions to unitholders —On February 9 and May 5, 2016, our board of directors approved distributions of $0.3625 per unit to our unitholders. On February 25 and May 24, 2016, we made an aggregate cash distribution of $25 million on each date to our unitholders of record as of February 22 and May 17, 2016, respectively, including a cash distribution of $18 million on each date to the Transocean Member. See Note 11—Subsequent Events. On February 9 and May 4, 2015, our board of directors approved distributions of $0.3625 per unit to our unitholders. On February 26 and May 27, 2015, we made an aggregate cash distribution of $25 million on each date to our unitholders of record as of February 20 and May 15, 2015, respectively, including a cash distribution of $18 million on each date to the Transocean Member. Cash distributions to holder of noncontrolling interests —In the three and six months ended June 30, 2016, we made an aggregate cash distribution of $45 million and $99 million, respectively, to Transocean as holder of noncontrolling interests. In the three and six months ended June 30, 2015, we made an aggregate cash distribution of $15 million and $40 million, respectively, to Transocean as holder of noncontrolling interests. See Note 11—Subsequent Events. Unit repurchase program —On November 4, 2015, we announced that our board of directors approved a unit repurchase program authorizing us to repurchase up to $40 million of our publicly held common units for cancellation. Subject to market conditions, we may repurchase units from time to time in the open market or in privately negotiated transactions. We may suspend or discontinue the program at any time. In the six months ended June 30, 2016, under the unit repurchase program, we repurchased 386,876 of our publicly held common units at an average market price of $8.23 per unit for an aggregate purchase price of $3 million, and such common units were cancelled. In the year ended December 31, 2015, we repurchased 91,500 of our publicly held common units at an average market price of $9.20 per unit for an aggregate purchase price of $1 million, and such common units were cancelled. At June 30, 2016, the authorization remaining under the unit repurchase program was for the repurchase of up to $36 million of our publicly held common units.

Related Party Transactions

Related Party Transactions	6 Months Ended
	Jun. 30, 2016
Related Party Transactions
Related Party Transactions	Note 9—Related Party Transactions Master services and support agreements Secondment agreements —On August 5, 2014, we entered into secondment agreements with certain Transocean affiliates to provide the services of our chief executive officer, rig crews and other personnel. In the three and six months ended June 30, 2016, we recognized costs of $22 million and $45 million, respectively, recorded in operating and maintenance costs and expenses, and $1 million and $2 million, respectively, recorded in general and administrative costs and expenses, for personnel costs under the secondment agreements. In the three and six months ended June 30, 2015, we recognized costs of $23 million and $47 million, respectively, recorded in operating and maintenance costs and expenses, and $1 million and $2 million, respectively, recorded in general and administrative costs and expenses, for personnel costs under the secondment agreements. Master services agreements —On August 5, 2014, we entered into master services agreements, which have initial terms of five years, with certain Transocean affiliates, pursuant to which Transocean affiliates provide certain administrative, technical and non ‑executive management services to us. We agreed to reimburse Transocean for the cost of all direct labor, materials and expenses incurred in connection with the provision of such services, plus an allocated portion of Transocean’s shared and pooled direct costs, indirect costs and general and administrative costs as determined by Transocean’s internal accounting procedures, and a markup fee under certain circumstances. In the three and six months ended June 30, 2016, we recognized costs of $27 million and $52 million, respectively, recorded in operating and maintenance costs and expenses, and $6 million and $11 million, respectively, recorded in general and administrative costs and expenses, for services under the master services agreements. In the three and six months ended June 30, 2015, we recognized costs of $30 million and $57 million, respectively, recorded in operating and maintenance costs and expenses, and $5 million and $9 million, respectively, recorded in general and administrative costs and expenses, for services under the master services agreements. In the three and six months ended June 30, 2016, we acquired $5 million and $17 million, respectively, of materials and supplies and $12 million of capital equipment transferred to us by Transocean or purchased through Transocean’s procurement services. In the three and six months ended June 30, 2015, we acquired $6 million and $15 million, respectively, of materials and supplies and $7 million and $10 million, respectively, of capital equipment transferred to us by Transocean or purchased through Transocean’s procurement services. Other agreements Omnibus agreement —On August 5, 2014, we entered into an omnibus agreement with Transocean and certain of its affiliates (the “Omnibus Agreement”). Under the Omnibus Agreement, Transocean granted us a right of first offer for its remaining ownership interests in each of the RigCos should Transocean decide to sell such interests. Transocean also agreed to offer us within five years of the effective date of the Omnibus Agreement, the opportunity to purchase, subject to requisite government and other third ‑party consents, not less than a 51 percent interest in any four of the following six ultra ‑deepwater drillships: Deepwater Invictus , Deepwater Thalassa , Deepwater Proteus , Deepwater Pontus , Deepwater Poseidon and Deepwater Conqueror . The purchase price for each drillship will be equal to the greater of the fair market value, taking into account the anticipated cash flows under the associated drilling contracts, or the all ‑in construction cost, plus transaction costs. Transocean will select which of these drillships it will offer to us, the timing of the offers and whether it will offer us the opportunity to purchase a greater than 51 percent interest in any offered drillship. In addition, Transocean agreed not to acquire, own or operate any new drilling rig or contract for any drilling rig, in each case that was constructed in 2009 or later and is operating under a contract for five or more years (each, a “Five ‑Year Drilling Rig”), subject to certain exceptions, without offering us the opportunity to purchase such rig. We also agreed not to acquire, own, operate, or contract for any drilling rig that is not a Five ‑Year Drilling Rig, subject to certain exceptions, without first offering the contract to Transocean. Among other things, Transocean also agreed to indemnify us for any lost revenue, up to $100 million, arising out of the failure to receive an operating dayrate from our customer for Discoverer Clear Leader , for the period commencing on the closing date of our initial public offering through the completion of the rig’s 2014 special periodic survey, which occurred during the three months ended December 31, 2014. In the six months ended June 30, 2015, we received a cash payment of $10 million for such indemnification claims submitted in the year ended December 31, 2014. Dual ‑activity license agreements —All three of our drilling units are equipped with Transocean’s patented dual ‑activity technology. Dual ‑activity technology employs structures, equipment and techniques using two drilling stations within a dual derrick to perform drilling tasks. Dual ‑activity technology allows our rigs to perform simultaneous drilling tasks in a parallel rather than a sequential manner and reduces critical path activity, improving efficiency in both exploration and development drilling. Under our license agreements with Transocean, which expired in May 2016, we were required to pay quarterly patent royalties of between 3 percent and 5 percent of revenues. The Transocean Member agreed to retain and pay the obligation for the quarterly patent royalties. As a result, we recognized non ‑cash operating expense for patent royalties, recorded in operating and maintenance costs and expenses, representing the patent royalties paid by the Transocean Member on our behalf, with corresponding entries to members’ equity. In the three and six months ended June 30, 2016, we recognized patent royalties expense of $2 million and $8 million, respectively. In the three and six months ended June 30, 2015, we recognized patent royalties expense of $7 million and $12 million, respectively. Credit agreement —On August 5, 2014, we entered into the Five ‑ Year Revolving Credit Facility with a Transocean affiliate. See Note 7—Credit Agreement.

Financial Instruments

Financial Instruments	6 Months Ended
	Jun. 30, 2016
Financial Instruments
Financial Instruments	Note 10—Financial Instruments The carrying amounts and fair values of our financial instruments were as follows (in millions): June 30, 2016 December 31, 2015 Carrying Fair Carrying Fair amount value amount value Cash and cash equivalents $ $ $ $ The carrying amount of cash and cash equivalents represents the historical cost, plus accrued interest, which approximates fair value because of the short maturities of those instruments. We measured the estimated fair value of our cash equivalents using significant other observable inputs, representative of a Level 2 fair value measurement, including the net asset values of the investments. At June 30, 2016 and December 31, 2015, the aggregate carrying amount of our cash equivalents was $ 166 million and $ 153 million, respectively.

Subsequent Events

Subsequent Events	6 Months Ended
	Jun. 30, 2016
Subsequent Events.
Subsequent Events	Note 11—Subsequent Events Merger —On July 31, 2016, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Transocean and two wholly owned subsidiaries of Transocean. Upon the closing of the merger as contemplated by the Merger Agreement, we will merge with one of the Transocean subsidiaries, with Transocean Partners continuing as the surviving company as a wholly owned indirect subsidiary of Transocean Ltd. Each of our common units that is issued and outstanding immediately prior to the closing, other than units held by Transocean and its subsidiaries, will be converted into the right to receive 1.1427 Transocean Ltd. shares. If the transaction is completed, our common units will cease to be publicly traded on the New York Stock Exchange. The merger has been approved by our board of directors and our conflicts committee, by a special committee of the board of directors of Transocean Ltd., and by the boards of directors of the Transocean subsidiary companies that are parties to the Merger Agreement. Consummation of the merger is subject to various conditions, including approval of the Merger Agreement by our unitholders including at least 50.1 percent of the common units not held by Transocean, and other customary closing conditions. We estimate that the closing of the merger will take place in the fourth quarter of 2016. Cash distribution to unitholders —On August 2, 2016, our board of directors approved a distribution of $ 0.3625 per unit to our unitholders. We expect to pay the aggregate cash distribution of $25 million on August 24 , 2016 to our unitholders of record as of August 15, 2016, including an aggregate cash payment of $ 18 million to the Transocean Member. Cash distribution to holder of noncontrolling interests— Subsequent to June 30, 2016, we made an aggregate cash distribution of $12 million to Transocean as holder of noncontrolling interests.

Significant Accounting Polici18

Significant Accounting Policies (Policies)	6 Months Ended
	Jun. 30, 2016
Significant Accounting Policies
Presentation	Presentation —We have prepared our accompanying unaudited condensed consolidated financial statements in accordance with accounting principles generally accepted in the U.S. for interim financial information and with the instructions to Form 10 ‑Q and Article 10 of Regulation S ‑X of the U.S. Securities and Exchange Commission (“SEC”). Pursuant to such rules and regulations, these financial statements do not include all disclosures required by accounting principles generally accepted in the U.S. for complete financial statements. The condensed consolidated financial statements reflect all adjustments, which are, in the opinion of management, necessary for a fair presentation of financial position, results of operations and cash flows for the interim periods. Such adjustments are considered to be of a normal recurring nature unless otherwise noted. Operating results for the three and six months ended June 30, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016 or for any future period. The accompanying condensed consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements and notes thereto as of December 31, 2015 and 2014 and for each of the three years in the period ended December 31, 2015 included in our annual report on Form 10 ‑K filed on February 25, 2016.
Accounting estimates	Accounting estimates —To prepare financial statements in accordance with accounting principles generally accepted in the U.S., we are required to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosures of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates and assumptions, including those related to our allocated costs and related party transactions, materials and supplies obsolescence, property and equipment, drilling contract intangible liability, income taxes and equity ‑based compensation. We base our estimates and assumptions on historical experience and on various other factors we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Actual results could differ from such estimates.
Fair value measurements	Fair value measurements —We estimate fair value at a price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the principal market for the asset or liability. Our valuation techniques require inputs that we categorize using a three ‑level hierarchy, from highest to lowest level of observable inputs, as follows: (1) significant observable inputs, including unadjusted quoted prices for identical assets or liabilities in active markets (“Level 1”), (2) significant other observable inputs, including direct or indirect market data for similar assets or liabilities in active markets or identical assets or liabilities in less active markets (“Level 2”) and (3) significant unobservable inputs, including those that require considerable judgment for which there is little or no market data (“Level 3”). When multiple input levels are required for a valuation, we categorize the entire fair value measurement according to the lowest level of input that is significant to the measurement even though we may have also utilized significant inputs that are more readily observable.
Reclassifications	Reclassifications —We have made certain reclassifications to prior period amounts to conform with the current period’s presentation. Such reclassifications did not have a material effect on our condensed consolidated statement of financial position, results of operations or cash flows.
Subsequent events	Subsequent events —We evaluate subsequent events through the time of our filing on the date we issue our financial statements. See Note 11—Subsequent Events.

Earnings Per Unit (Tables)

Earnings Per Unit (Tables)	6 Months Ended
	Jun. 30, 2016
Earnings (loss) per unit
Schedule of numerator and denominator used for the computation of basic and diluted per unit earnings	The numerator and denominator used for the computation of basic and diluted per unit earnings, were as follows (in millions, except per unit data): Three months ended June 30, Six months ended June 30, 2016 2015 2016 2015 Basic Diluted Basic Diluted Basic Diluted Basic Diluted Numerator for earnings per unit Net income attributable to controlling interest $ $ $ $ $ $ $ $ Undistributed earnings allocable to participating securities — — — — — — — — Net income available to unitholders $ $ $ $ $ $ $ $ Net income available to common unitholders $ $ $ $ $ $ $ $ Net income available to subordinated unitholders $ $ $ $ $ $ $ $ Denominator for earnings per unit – common units Weighted-average common units outstanding Effect of equity-based awards — — — — — — — — Weighted-average common units for per unit calculation Denominator for earnings per unit – subordinated units Weighted-average subordinated units outstanding Effect of equity-based awards — — — — — — — — Weighted-average subordinated units for per unit calculation Earnings per unit Earnings per common unit $ $ $ $ $ $ $ $ Earnings per subordinated unit $ $ $ $ $ $ $ $ Cash distributions declared and paid per unit Common units $ $ $ $ $ $ $ $ Subordinated units $ $ $ $ $ $ $ $

Financial Instruments (Tables)

Financial Instruments (Tables)	6 Months Ended
	Jun. 30, 2016
Financial Instruments
Schedule of carrying amounts and fair values of our financial instruments	The carrying amounts and fair values of our financial instruments were as follows (in millions): June 30, 2016 December 31, 2015 Carrying Fair Carrying Fair amount value amount value Cash and cash equivalents $ $ $ $

Business (Details)

Business (Details) - shares shares in Millions	6 Months Ended	12 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Transocean
Common units held by parent	21.3	21.3
Subordinated units held by parent	27.6	27.6
Percentage of limited liability company interest held by parent	71.30%	70.90%
Rig Cos and subsidiaries
Ownership percentage	51.00%
Rig Cos and subsidiaries | Transocean
Ownership percentage	49.00%

Goodwill Impairment (Details)

Goodwill Impairment (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended	6 Months Ended
	Sep. 30, 2015	Jun. 30, 2015
Goodwill Impairment
Loss on impairment of goodwill	$ 289	$ 67
Loss on impairment of goodwill, tax effect	$ 0	0
Loss on impairment of goodwill attributable to controlling interest		$ 34
Loss on impairment of goodwill per diluted share		$ 0.49
Loss on impairment of goodwill attributable to noncontrolling interest		$ 33

Income Taxes (Details)

Income Taxes (Details)	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Tax rate
Annual effective tax rate (as a percent)	5.40%	6.20%

Earnings Per Unit (Details)

Earnings Per Unit (Details) - USD ($) $ / shares in Units, $ in Millions	May 05, 2016	Feb. 09, 2016	May 04, 2015	Feb. 09, 2015	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Numerator for earnings per unit, basic
Net income attributable to controlling interest					$ 36	$ 35	$ 67	$ 29
Net income available to unitholders					36	35	67	29
Denominator for earnings per unit, basic
Distribution (in dollars per unit)	$ 0.3625	$ 0.3625	$ 0.3625	$ 0.3625
Numerator for earnings per unit, diluted
Net income attributable to controlling interest					36	35	67	29
Net income available to unitholders					$ 36	$ 35	$ 67	$ 29
Denominator for earnings per unit, diluted
Distribution (in dollars per unit)	$ 0.3625	$ 0.3625	$ 0.3625	$ 0.3625
Share-based awards
Denominator for earnings per unit, diluted
Share-based awards excluded from earnings per unit calculation (in shares)					30,189	0	44,074	0
Common units
Numerator for earnings per unit, basic
Net income attributable to controlling interest							$ 40	$ 17
Net income available to common unitholders					$ 21	$ 21	$ 40	$ 17
Denominator for earnings per unit, basic
Weighted average units outstanding (in units)					41,000,000	41,000,000	41,000,000	41,000,000
Weighted-average common units for per unit calculation (in units)					41,000,000	41,000,000	41,000,000	41,000,000
Earnings per unit—basic					$ 0.52	$ 0.51	$ 0.97	$ 0.43
Distribution (in dollars per unit)					$ 0.3625	$ 0.3625	$ 0.7250	$ 0.7250
Numerator for earnings per unit, diluted
Net income attributable to controlling interest							$ 40	$ 17
Net income available to common unitholders					$ 21	$ 21	$ 40	$ 17
Denominator for earnings per unit, diluted
Weighted average units outstanding - diluted (in units)					41,000,000	41,000,000	41,000,000	41,000,000
Weighted-average common units for per unit calculation (in units)					41,000,000	41,000,000	41,000,000	41,000,000
Earnings per unit—diluted					$ 0.52	$ 0.51	$ 0.97	$ 0.43
Distribution (in dollars per unit)					$ 0.3625	$ 0.3625	$ 0.7250	$ 0.7250
Subordinated units
Numerator for earnings per unit, basic
Net income attributable to controlling interest							$ 27	$ 12
Net income available to subordinated unitholders					$ 15	$ 14	$ 27	$ 12
Denominator for earnings per unit, basic
Weighted average units outstanding (in units)					28,000,000	28,000,000	28,000,000	28,000,000
Weighted-average common units for per unit calculation (in units)					28,000,000	28,000,000	28,000,000	28,000,000
Earnings per unit—basic					$ 0.52	$ 0.51	$ 0.97	$ 0.43
Distribution (in dollars per unit)					$ 0.3625	$ 0.3625	$ 0.7250	$ 0.7250
Numerator for earnings per unit, diluted
Net income attributable to controlling interest							$ 27	$ 12
Net income available to subordinated unitholders					$ 15	$ 14	$ 27	$ 12
Denominator for earnings per unit, diluted
Weighted average units outstanding - diluted (in units)					28,000,000	28,000,000	28,000,000	28,000,000
Weighted-average common units for per unit calculation (in units)					28,000,000	28,000,000	28,000,000	28,000,000
Earnings per unit—diluted					$ 0.52	$ 0.51	$ 0.97	$ 0.43
Distribution (in dollars per unit)					$ 0.3625	$ 0.3625	$ 0.7250	$ 0.7250

Credit Agreement (Details)

Credit Agreement (Details) - Five Year Revolving Credit Facility - USD ($) $ in Millions	Aug. 05, 2014	Jun. 30, 2016	Dec. 31, 2015
Credit Agreements
Aggregate borrowing capacity	$ 300
Credit facility term	5 years
Basis spread on variable rate (as a percent)		1.625%
Credit facility amount outstanding		$ 0	$ 0
Available borrowing capacity		$ 300	$ 300
Minimum
Credit Agreements
Percentage of commitment fees	0.225%
Maximum
Credit Agreements
Percentage of commitment fees	0.325%
LIBOR | Minimum
Credit Agreements
Basis spread on variable rate (as a percent)	1.625%
LIBOR | Maximum
Credit Agreements
Basis spread on variable rate (as a percent)	2.25%
Base rate
Credit Agreements
Percentage reduction to the calculated variable rate	1.00%

Equity (Details)

Equity (Details) - USD ($) $ / shares in Units, $ in Millions	May 24, 2016	May 05, 2016	Feb. 25, 2016	Feb. 09, 2016	May 27, 2015	May 04, 2015	Feb. 26, 2015	Feb. 09, 2015	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015	Nov. 04, 2015
Distribution (in dollars per unit)		$ 0.3625		$ 0.3625		$ 0.3625		$ 0.3625
Distribution to unitholders	$ 25		$ 25		$ 25		$ 25				$ 50	$ 50
Distributions to holder of noncontrolling interests											99	40
Cancellation of repurchased common units											3
Transocean
Distribution to unitholders	$ 18		$ 18		$ 18		$ 18
Distributions to holder of noncontrolling interests									$ 45	$ 15	$ 99	$ 40
Common units
Distribution (in dollars per unit)									$ 0.3625	$ 0.3625	$ 0.7250	$ 0.7250
Cancellation of repurchased common units (in units)											400,000
Cancellation of repurchased common units											$ 3
Unit repurchase program | Common units
Cancellation of repurchased common units (in units)											386,876		91,500
Units repurchased amount (in dollars per unit)											$ 8.23		$ 9.20
Cancellation of repurchased common units											$ 3		$ 1
Authorized remaining repurchase amount									$ 36		$ 36
Unit repurchase program | Common units | Maximum
Authorized repurchase amount														$ 40

Related Party Transactions (Det

Related Party Transactions (Details) $ in Millions	Aug. 05, 2014USD ($)item	Jun. 30, 2016USD ($)	Jun. 30, 2015USD ($)	Jun. 30, 2016USD ($)item	Jun. 30, 2015USD ($)	Dec. 31, 2015USD ($)
Related Party Transactions
Payments to affiliates for capital expenditures				$ 12	$ 10
Contributions for parent indemnification of lost revenues					10
Accounts receivable from affiliates						$ 1
Number of drilling units equipped with patented dual activity technology | item				3
Number of drilling stations to employ structures, equipment and techniques of dual-activity technology | item				2
Five Year Revolving Credit Facility
Related Party Transactions
Credit facility term	5 years
Omnibus Agreement
Related Party Transactions
Term of agreement	5 years
Minimum percentage of interest to be offered for purchase of drillships	51.00%
Number of ultra deepwater drillships in which interest is required to be offered | item	4
Number of ultra deepwater drillships available for offer to purchase interest | item	6
Personnel costs | Secondment agreements | Operating and maintenance costs and expenses
Related Party Transactions
Costs and expenses		$ 22	$ 23	$ 45	47
Personnel costs | Secondment agreements | General and administrative costs and expenses
Related Party Transactions
Costs and expenses		1	1	2	2
Administrative, technical and non-executive management services | Master services agreements | Operating and maintenance costs and expenses
Related Party Transactions
Costs and expenses		27	30	52	57
Administrative, technical and non-executive management services | Master services agreements | General and administrative costs and expenses
Related Party Transactions
Costs and expenses		6	5	11	9
Payment for materials and supplies settled through net investment | Master services agreements
Related Party Transactions
Costs and expenses		5	6	17	15
Capital expenditures | Master services agreements
Related Party Transactions
Payments to affiliates for capital expenditures		12	7	$ 12	10
TODDI | License agreements | Minimum
Related Party Transactions
Percentage of quarterly royalty fees paid under license agreement				3.00%
TODDI | License agreements | Maximum
Related Party Transactions
Percentage of quarterly royalty fees paid under license agreement				5.00%
TODDI | Royalty fees | Operating and maintenance costs and expenses
Related Party Transactions
Costs and expenses		$ 2	$ 7	$ 8	12
Transocean
Related Party Transactions
Percentage of limited liability company interest held by parent				71.30%		70.90%
Transocean | Omnibus Agreement
Related Party Transactions
Maximum amount of lost revenue arising out of the failure to receive an operating dayrate from Chevron for Discoverer Clear Leader	$ 100
Contributions for parent indemnification of lost revenues					$ 10
Transocean affiliate | Five Year Revolving Credit Facility
Related Party Transactions
Credit facility term	5 years
Transocean affiliate | Master services agreements
Related Party Transactions
Term of agreement	5 years
Rig Cos and subsidiaries
Related Party Transactions
Ownership percentage		51.00%		51.00%
Rig Cos and subsidiaries | Transocean
Related Party Transactions
Ownership percentage		49.00%		49.00%

Financial Instruments (Details)

Financial Instruments (Details) - USD ($) $ in Millions	Jun. 30, 2016	Dec. 31, 2015
Financial Instruments
Carrying amount of cash equivalents	$ 166	$ 153
Carrying amount
Financial Instruments
Cash and cash equivalents	171	159
Fair value
Financial Instruments
Cash and cash equivalents	$ 171	$ 159

Subsequent Events (Details)

Subsequent Events (Details) $ / shares in Units, $ in Millions

Aug. 24, 2016USD ($)

Aug. 01, 2016$ / shares

Jul. 31, 2016itemshares

May 24, 2016USD ($)

May 05, 2016$ / shares

Feb. 25, 2016USD ($)

Feb. 09, 2016$ / shares

May 27, 2015USD ($)

May 04, 2015$ / shares

Feb. 26, 2015USD ($)

Feb. 09, 2015$ / shares

Sep. 30, 2016USD ($)

Jun. 30, 2016USD ($)

Jun. 30, 2015USD ($)

Dec. 31, 2015

Subsequent Events

Distribution (in dollars per unit) | $ / shares

$ 0.3625

$ 0.3625

$ 0.3625

$ 0.3625

Distribution to unitholders

$ 25

$ 25

$ 25

$ 25

$ 50

$ 50

Cancellation of repurchased common units

$ 3

Subsequent Events

Subsequent Events

Distribution (in dollars per unit) | $ / shares

$ 0.3625

Approved distribution to unitholders

$ 25

Transocean

Subsequent Events

Distribution to unitholders

$ 18

$ 18

$ 18

$ 18

Percentage of limited liability company interest held by parent

71.30%

70.90%

Transocean | Subsequent Events

Subsequent Events

Approved distribution to unitholders

$ 18

Distribution to unitholders

$ 12

Transocean | Subsequent Events | Merger Agreement

Subsequent Events

Number of subsidiaries party to agreement | item

2

Number of subsidiaries mergering | item

1

Number of securities to be issued for each unit | shares

1.1427

Unitholders excluding Transocean required to complete the merger (as a percent)

50.1