Transocean posts wider-than-expected Q3 loss

Transocean (NYSE: RIG) reported a wider loss in the third quarter of 2019 due to a greater loss on impairment, loss on retirement of debt, and loss on disposal of assets. The bottom line was wider than the analysts’ expectations while the top line exceeded consensus estimates.

Net loss was $825 million or $1.35 per share, wider than a loss of $409 million or $0.88 per share in the previous year quarter. Adjusted loss per share was $0.38 compared to a profit of $0.06 a year ago.

Contract drilling revenues fell by 4% to $784 million. The results were hurt by increased shipyard days as well as contract intangible amortization associated with the Songa and Ocean Rig acquisitions.

On a sequential basis, operating and maintenance expenses rose to $547 million from $510 million due to higher shipyard costs and contract preparation. This is related to the reactivation of the ultra-deepwater drillships Deepwater Corcovado and Deepwater Mykonos, and the commencement of operations of the newbuild Transocean Norge.

The reduced collections of customer receivables and the timing of interest payments hurt cash flows provided by operating activities, which fell by 41% sequentially. Capital expenditures increased by 41% quarter-on-quarter due to the company’s newbuild drillships under construction at the Jurong shipyard along with capital upgrades for certain rigs in its fleet.

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Driven by strong uptime performance across the global fleet, the company delivered a revenue efficiency of 97%. However, this was down from 97.8% in the previous quarter.

Transocean said it is gaining improved visibility to additional opportunities in the harsh environment market of Norway, along with escalating interest in the fleet of high-specification ultra-deepwater assets for upcoming projects in the Gulf of Mexico, Brazil, and West Africa.

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