Offshore Driller Transocean Announces Bigger Loss Than Expected

Transocean, the world’s largest offshore drilling contractor and leading provider of drilling management services released worse than expected first quarter results Wednesday. Competitor Diamond Offshore Drilling $DO reported an adjusted net loss of $0.16 per share earlier in the day.

Transocean, the world’s largest offshore drilling contractor and leading provider of drilling management services released worse than expected first quarter results Wednesday. Competitor Diamond Offshore Drilling $DO reported an adjusted net loss of $0.16 per share earlier in the day.

$RIG again was affected  by reduced activity and lower revenue efficiency hurting contract drilling revenues. Before the market today competitor Diamond Offshore Drilling reported falling profits also.

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%)

Hightlights

  • 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 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.

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 

Live From The Pit

 

 

Leave a Reply

Your email address will not be published.