Offshore Driller Transocean $RIG Beats on Earnings and Revenue

Transocean $RIG, the world’s largest offshore drilling contractor and leading provider of drilling management services released better than expected 2Q17 results on Wednesday.

Transocean $RIG, the world’s largest offshore drilling contractor and leading provider of drilling management services released better than expected 2Q17 results on Wednesday. $RIG again was affected  by reduced activity and lower revenue efficiency hurting contract drilling revenues. Earlier in the week competitor Diamond Offshore Drilling swings to profit on Ultra Deepwater contracts with $DO up 5%.

Earnings: Net loss $1.690 billion, $4.32 per diluted share, included net unfavorable items of $1.691 billion, or $4.32 per diluted share (see below+). Q2 EPS of $0.00 beats expectations by $0.09. Revenue of $751 million, compared with $785 million in the first quarter of 2017; beat expectations by $39.03M.

Reaction: Transocean Ltd NYSE: RIG After-hours8.64 +0.01 (+0.12%)

Unfavorable items +

  • $1.597 billion, $4.08 per diluted share, loss on the divestiture of the jackup fleet;
  • $113 million, $0.29 per diluted share, loss on impairment of primarily the midwater floater asset group;
  • $48 million, $0.12 per diluted share, loss related to the early retirement of debt; and
  • $3 million associated with unfavorable litigation matters and restructuring charges.
  • These net unfavorable items were partially offset by $70 million, $0.17 per diluted share, in discrete tax benefits.

https://alphastreet.com/app#/home

Offshore drillers have carried 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. This month $RIG wrote off $1.597 billion, $4.08 per diluted share, loss on the divestiture of the jackup fleet.

Live From The Pit

 

 

Leave a Reply

Your email address will not be published.