Transocean posts smaller than expected Q2 loss

Transocean Ltd (RIG) continued its losing streak that began more than a year ago and posted a narrower than expected loss in the second quarter helped by strong revenue efficiency, exceeding 97%, and higher activity as the quarter marked the first full operations for all five of its newest ultra-deepwater drillships. Revenues came in above estimates during the quarter.

The Switzerland-based offshore drilling company, which has its U.S. operations headquartered in Houston, stayed in the negative territory for the fifth consecutive quarter, posting a loss of $2.46 per share in the second quarter of 2018 compared to a loss of $4.32 per share last year.

The quarterly GAAP bottom line included loss on impairment of three floaters previously announced for retirement, goodwill impairment charge, discrete tax expense and restructuring charges. Adjusted loss per share was $0.04 compared to breakeven a year ago.

Contract drilling revenues rose 12% annually to $790 million during the quarter. The results were favorably impacted by higher revenue efficiency and utilization on the company’s ultra-deepwater fleet.

The company further strengthened its balance sheet and extended its liquidity runway by negotiating a new $1 billion revolving credit facility extending into 2023, refinancing debt associated with the Songa acquisition, and executing on a secured facility for the Deepwater Pontus.

During the quarter, Transocean purchased a 33% interest in the newbuild, harsh environment semisubmersible Transocean Norge (formerly the West Rigel) through a joint venture with Hayfin Capital Management LLP.

In the quarterly fleet status report, Transocean has added about $405 million in contract backlog since the previous report. As of July 23, the company’s backlog is $11.7 billion, which includes dayrate reductions on four of its newbuild drillships related to cost de-escalations attributable to down-manning.

Transocean’s competitor Diamond Offshore Drilling (DO) reported an adjusted net loss of $0.33 per share for the second quarter, compared to a $0.38 per share loss analysts had projected. Halliburton (HAL) posted a 24% growth in revenues for its most recent quarter.

Transocean’s shares gained 1.5% in the after-hours trading session following the impressive earnings report. The stock ended Monday’s regular trading session up 3.60% at $13.38 on the NYSE. Shares have shown an upward trend, rising by 54% for the past year and by 25% for the year-to-date.

Related Infographics: Q1 Earnings