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Transocean CEO: Refitting Rigs Taking Longer Than Expected

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November 5, 2011

HOUSTON -(Dow Jones)- The third-party vendors refitting Transocean Ltd.’s (RIG) well control systems and blow-out preventers to comply with new rules can’t keep up with demand, hampering the profitability of the deepwater contractor’s rig fleet, Chief Executive Steve Newman said Thursday.

“Vendor capacity constraints continue to adversely impact our revenue generating ability,” Newman said in a conference call with investors.

The company, which owned the deepwater rig that exploded last year after a BP PLC (BP, BP.LN) well blowout in the U.S. Gulf of Mexico, needs to refit all of its deepwater systems to comply with stricter new regulations.

“It now seems likely that it will take longer than I originally anticipated to reach this goal,” Newman said. “I’m just really frustrated with the amount of time it’s taking.”

Higher shipyard and refitting costs are helping raise operating maintenance expenses in 2011 to a $5.8 billion to $6 billion range from $5.6 to $5.8 billion, Newman said.

For 2012, the company expects to have operating maintenance expenses of $6.2 billion to $6.5 billion, Chief Financial Officer Ricardo Rosa said. Capital expenditures will range from $1 billion to $1.5 billion for 2012, he said.

-By Angel Gonzalez, Dow Jones Newswires

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