Transocean Reports 3rd Quarter Loss: Rig Utilization and Aker Drilling Acquisition are Factors
Transocean Ltd. (RIG) swung to a third-quarter loss on acquisition-related charges as a revenue shortfall hurt the offshore-oil driller’s margins.
Shares were trading 7% lower at $52.05 aftermarket as the results missed estimates. The stock has fallen 12% over the past year.
The world’s biggest deep-water driller was the owner of the Deepwater Horizon, the rig that exploded and sank in the Gulf of Mexico last year, killing 11 people and setting off the worst offshore oil spill in U.S. history. A drilling moratorium imposed after the explosion was officially lifted last fall, but U.S. regulators didn’t begin approving deep-water drilling projects until late February.
Though Transocean has seen its bottom line hurt by lower utilization in recent quarters, offshore drillers are expected to gain from a broad-based recovery in day rates. The company also completed its $1.43 billion acquisition of rival Aker Drilling ASA last month, a move that expands its business into the harsher, more challenging sub-Arctic waters.
But Fitch Ratings and Standard & Poor’s Ratings Services both downgraded Transocean one notch to triple-B-minus, the verge of junk territory, citing the company’s increased debt load from the deal.
Transocean reported a loss of $71 million, or 22 cents a share, compared with a profit of $368 million, or $1.15, a year earlier. The most-recent quarter included a net charge of 27 cents for acquisition costs, asset impairments and legal costs. Year-earlier earnings from continuing operations were $1.10 a share. Revenue fell 1.7% to $2.24 billion.
Analysts polled by Thomson Reuters had most recently forecast earnings of 78 cents on revenue of $2.36 billion.
Operating margin fell to 12% from 27.8%.
Average daily revenue grew 6.8% from the year earlier but fell 7% from the prior quarter. Its utilization rate was 58% down from 64% in the previous year and up from 55% in the previous quarter.
-By Melodie Warner, Dow Jones Newswires
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