Transocean, the world’s largest offshore drilling contractor and leading provider of drilling management services released a smaller than expected loss in second quarter results Monday. Competitor Diamond Offshore Drilling $DO reported reported earlier.
Transocean, the world’s largest offshore drilling contractor and leading provider of drilling management services released a smaller than expected loss in second quarter results Monday. Competitor Diamond Offshore Drilling $DO reported an adjusted net loss of $0.50 per share earlier in the day.
$RIG again was affected by reduced activity but had higher revenue efficiency affecting contract drilling revenues. Before the market today competitor Diamond Offshore Drilling reported falling profits also.
Transocean Ltd (NYSE: $RIG) Beat Earnings After Close Monday
($0.04) Beat ($0.170) EPS and $790 million in revenue
Earnings
Net loss attributable to controlling interest was $1.135 billion, $2.46 per diluted share, compared with net loss attributable to controlling interest of $210 million, $0.48 per diluted share, in the first quarter of 2018; Adjusted net loss was $18 million, $0.04 per diluted share, excluding $1.117 billion of net unfavorable items. This compares with adjusted net loss of $210 million, $0.48 per diluted share, in the prior quarter;
Transocean Ltd NYSE: $RIG
Market Reaction > After Hours $13.55 +$0.17 (1.27%)
Highlights
- Total contract drilling revenues were $790 million, compared with $664 million in the first quarter of 2018;
- Revenue efficiency(1) was 97.4 percent, compared with 91.5 percent in the prior quarter;
- Operating and maintenance expense was $431 million, compared with $424 million in the prior period;
- During the second quarter, the company acquired a 33% interest in the newbuild, harsh environment semisubmersible Transocean Norge (formerly the West Rigel) through a joint venture with Hayfin Capital Management LLP (“Hayfin”);
- Contract backlog was $11.7 billion as of the July 2018 Fleet Status Report.
Second quarter 2018 results included net unfavorable items of $1.117 billion, or $2.42 per diluted share, as follows:
- $548 million, $1.18 per diluted share, loss on impairment of three floaters previously announced for retirement;
- $463 million, $1.00 per diluted share, associated with a goodwill impairment charge;
- $91 million, $0.20 per diluted share, in discrete tax expense;
- $11 million, $0.03 per diluted share, in restructuring charges;
- $3 million, $0.01 per diluted share, loss on impairment of the deepwater floater asset group; and
- $1 million loss related to the early retirement of debt, offset by gain on disposal of assets.
After consideration of these net unfavorable items, second quarter 2018 adjusted net loss was $18 million, or $0.04 per diluted share.
TransOcean Q2 Fleet Status Report – July 23, 2018
Transocean Ltd. issued a quarterly Fleet Status Report that provides the current status of, and contract information for, the company’s fleet of offshore drilling rigs.
Since the prior Fleet Status Report, the company has added approximately $405 million in contract backlog. As of today, the company’s backlog is $11.7 billion, which includes dayrate reductions on four of the company’s newbuild drillships related to cost de-escalations attributable to down-manning.
The ultra-deepwater semisubmersible Development Driller III was awarded a 180-day contract offshore Equatorial Guinea. Following maintenance, reactivation and a contract preparation period, the floater is expected to commence operations in the first quarter of 2019.
This report also includes the following new contracts:
- Deepwater Asgard – Customer exercised a one-well option;
- GSF Development Driller I – Awarded an 11-well contract plus four one-well options offshore Australia;
- Deepwater Nautilus – Customer exercised two one-well options offshore Malaysia;
- Transocean Spitsbergen – Awarded a three-well contract plus six one-well options offshore Norway.
In addition, customer exercised two one-well options;
- Transocean Barents – Awarded a six-month contract extension plus an option offshore Eastern Canada;
- Transocean Leader – Awarded a one-well contract in the U.K. North Sea;
- Transocean Arctic – Customer exercised a one-well option offshore Norway; and
- Transocean 712 – Awarded a 13-well contract plus a one-well option in the U.K. North Sea.
As previously announced, the company has retired, in an environmentally responsible manner, the following four floaters: Deepwater Discovery, Deepwater Frontier, Deepwater Millennium and Songa Trym. The report can be accessed on the company’s website: www.deepwater.com.
TransOcean Q1 Earnings Recap
Earnings
Loss of $0.48 per share for the first quarter of 2018 compared to earnings of $0.23 per share last year. Analysts had forecasted a narrower loss of $0.36 per share. Revenue was $664 million beating Street forecastsof $656.5 million.
Transocean Ltd NYSE: $RIG Reaction · April 30 After Hours $12.00▼ 0.37 (2.99%)
Highlights
- Contract drilling revenues fell 10% on the year to $664 million from soft drilling activities from ultra-deepwater floaters which has been Transocean’s revenue-driving segment.
- The company had combined contract backlog of $12.5 billion at the end of the quarter.
- Revenue efficiency was 91.5 percent, compared with 92.4 percent in the prior quarter;
- Operating and maintenance expense was $424 million, compared with $386 million in the previous quarter;
Offshore drillers car
ried much of the brunt of the oil price collapse and glut. Transocean’s revenue and earnings rely on the top energy companies breakeven costs, capex and R&D. Costs are higher than for onshore drillers as such demand increases when oil prices are relatively higher.
In 2016, 28 of Transocean’s 57 rigs were either idle or completely mothballed. On the supply side, one should not look at the absolute number of the supply side. The company has retired 31 rigs from its fleet over the course of the last two-and-a-half years.
Songa Offshore Aquisition Consunmated
“We consummated the Songa Offshore acquisition, which added four new, contracted, high‑specification, harsh environment semisubmersibles to our fleet, and further bolstered our industry-leading backlog,” said Transocean CEO Jeremy Thigpen.
Though the Songa acquisition and deployment of a new drillship contributed to offshore activities during the quarter, they were offset by reduced operating days and lower revenue efficiency of some rigs.
Outlook
Looking ahead Transocean expects stable oil prices, lower project breakeven economics and low global reserve replacement will drive demand for its products and services.
Source:Transocean, AlphaStreet
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