Transocean (NYSE: RIG) stock price was down about 1% after the bell due to weak Q2 results. The company’s stock is down 23% this year and it touched a new 52-week low of $5.28 last month. Offshore drilling firms have been impacted by the ongoing trade wars and economic slowdown resulting in lower spending from the oil producers.
Revenue contracted 4% to $758 million coming in lower than $766.5 million expected by the street. The dip in sales was attributed to lower drilling revenues coupled with increase in expenses. Adjusted loss per share came in 34 cents comparing to 33 cents anticipated by the analysts.
Looking at the second quarter results, the offshore drilling sector is still not out of the woods due to tough macros which continues to act as a headwind for Transocean and its peers.
Average daily revenues rose 2% to $314,900 compared to $308,300 reported last year aided by improvements from the deepwater and midwater floaters.
On the Q2 performance, CEO Jeremy Thigpen said, “Despite some continued uncertainty around oil prices, offshore project economics remain compelling, driving increases in floater contracting and increasing day rates in both the harsh environment and ultra-deepwater markets.”
Thigpen also added, “Our industry-leading floater fleet, consistently strong operating performance, solid liquidity position, and enviable backlog, position us well as the market continues to recover.”
Contract backlog stood at $11.4 billion as of July 2019 compared to $11.7 billion reported last year and sequentially it decreased by 6% reflecting the industry weakness. Operating and maintenance expense surged 18% to $510 million due to increased maintenance expenses for servicing its fleet. Long-term debt contracted 2% to $9.37 billion.
Last quarter, the company reported 13.5% jump in revenues of $754 million, surpassing estimates. Adjusted loss per share came in at 30 cents failing to beat 29 cents per share expected by the street.