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Transocean (RIG) Q1 Earnings and Revenues Beat Estimates
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Offshore drilling giant Transocean Ltd. (RIG - Free Report) reported adjusted earnings from continuing operations of 1 cent per share, contrary to the Zacks Consensus Estimate for a loss of 8 cents. The outperformance came on the back of the company’s outstanding revenue efficiency (at 97.8%) and lower operating and maintenance expenses.
However, the bottom line deteriorated from the prior-year figure of 69 cents per share. Lower revenues and reduced drilling activity led to weaker results.
For the quarter ended Mar 31, 2017, Transocean reported revenues of $785 million, surpassing the Zacks Consensus Estimate of $735 million. However, revenues declined 41% from the year-ago quarter level of $1,341 million.
While Transocean’s ultra deepwater floaters contributed of about 64% to total revenue, harsh environment floaters and deepwater floaters accounted for 15% and 4% respectively. The remaining revenues came from other rig activities, customer early termination fees and others.
Operational Statistics
Transocean made operating profit of $173 million during the quarter compared with $424 million in the year-ago period. The decline primarily reflects lower contract drilling revenues resulting from idle/stacked and sold rigs along with lower dayrates. However, results were partially offset by increased revenues associated with three newbuild ultra-deepwater drillships and improvement in revenues efficiency.
However, net cash provided by operating activities was $184 million as against $631 million the year-ago quarter, reflecting a decline of 71%.
Expenses Break Up
Transocean was able to reduce its operating and maintenance expenses by 48% to $343 million. General and administrative expenses decreased to $39 million in the reported quarter as against $43 million in the prior-year quarter. Lower restructuring costs led to the decline in general and administrative expenses. However depreciation costs of $232 million was 7%higher in the quarter.
Dayrates, Utilization and Contract Backlog
Compared to the first quarter of 2016, dayrates fell 14.5% (from $395,400 to $337,700), unfavorably impacted by declines in deepwater floaters, midwater floaters, harsh environment and high???specification jackups. The decline was partially offset by rise in the dayrates for ultra-deepwater floaters.
Overall fleet utilization was 43% during the quarter, down from the year-ago utilization rate of 51%. The decline is attributed to the idle and stacked rigs and during shipyard and mobilization periods.
Contract backlog of the company was $10.8 billion as of Apr 2017.
Capital Expenditure & Balance Sheet
Transocean spent $122 million as capital expenditure in the first quarter of 2017, the amount came down sharply by 68% compared to the year-ago quarter. Capex were mainly related toward the newbuild drillships.
As of Mar 31, 2017, Transocean had cash and cash equivalents of $3,093 million. The long-term debt of the company was $6,937 million, leading to a debt capitalization ratio of 30.3%.
Switzerland-based Transocean is the world’s largest offshore drilling contractor and leading provider of drilling management services. The company under Zacks categorized Oil and Gas Drilling currently carries a zacks Rank #3 (Hold).
Better-ranked players in the broader energy space include Bellatrix Exploration Ltd , McDermott International, Inc. and Penn Virginia Corporation . All the three companies sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Bellatrix reported positive earnings surprise of 58.54% in the trailing four quarters.
McDermott posted positive average earnings surprise of 387.5% in the preceding four quarters.
Penn Virginia posted positive average earnings surprise of 36.67% in the preceding four quarters.
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Transocean (RIG) Q1 Earnings and Revenues Beat Estimates
Offshore drilling giant Transocean Ltd. (RIG - Free Report) reported adjusted earnings from continuing operations of 1 cent per share, contrary to the Zacks Consensus Estimate for a loss of 8 cents. The outperformance came on the back of the company’s outstanding revenue efficiency (at 97.8%) and lower operating and maintenance expenses.
However, the bottom line deteriorated from the prior-year figure of 69 cents per share. Lower revenues and reduced drilling activity led to weaker results.
For the quarter ended Mar 31, 2017, Transocean reported revenues of $785 million, surpassing the Zacks Consensus Estimate of $735 million. However, revenues declined 41% from the year-ago quarter level of $1,341 million.
While Transocean’s ultra deepwater floaters contributed of about 64% to total revenue, harsh environment floaters and deepwater floaters accounted for 15% and 4% respectively. The remaining revenues came from other rig activities, customer early termination fees and others.
Operational Statistics
Transocean made operating profit of $173 million during the quarter compared with $424 million in the year-ago period. The decline primarily reflects lower contract drilling revenues resulting from idle/stacked and sold rigs along with lower dayrates. However, results were partially offset by increased revenues associated with three newbuild ultra-deepwater drillships and improvement in revenues efficiency.
However, net cash provided by operating activities was $184 million as against $631 million the year-ago quarter, reflecting a decline of 71%.
Expenses Break Up
Transocean was able to reduce its operating and maintenance expenses by 48% to $343 million. General and administrative expenses decreased to $39 million in the reported quarter as against $43 million in the prior-year quarter. Lower restructuring costs led to the decline in general and administrative expenses. However depreciation costs of $232 million was 7%higher in the quarter.
Dayrates, Utilization and Contract Backlog
Compared to the first quarter of 2016, dayrates fell 14.5% (from $395,400 to $337,700), unfavorably impacted by declines in deepwater floaters, midwater floaters, harsh environment and high???specification jackups. The decline was partially offset by rise in the dayrates for ultra-deepwater floaters.
Overall fleet utilization was 43% during the quarter, down from the year-ago utilization rate of 51%. The decline is attributed to the idle and stacked rigs and during shipyard and mobilization periods.
Contract backlog of the company was $10.8 billion as of Apr 2017.
Capital Expenditure & Balance Sheet
Transocean spent $122 million as capital expenditure in the first quarter of 2017, the amount came down sharply by 68% compared to the year-ago quarter. Capex were mainly related toward the newbuild drillships.
As of Mar 31, 2017, Transocean had cash and cash equivalents of $3,093 million. The long-term debt of the company was $6,937 million, leading to a debt capitalization ratio of 30.3%.
Transocean Ltd. Price, Consensus and EPS Surprise
Transocean Ltd. Price, Consensus and EPS Surprise | Transocean Ltd. Quote
Zacks Rank & Key Picks
Switzerland-based Transocean is the world’s largest offshore drilling contractor and leading provider of drilling management services. The company under Zacks categorized Oil and Gas Drilling currently carries a zacks Rank #3 (Hold).
Better-ranked players in the broader energy space include Bellatrix Exploration Ltd , McDermott International, Inc. and Penn Virginia Corporation . All the three companies sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Bellatrix reported positive earnings surprise of 58.54% in the trailing four quarters.
McDermott posted positive average earnings surprise of 387.5% in the preceding four quarters.
Penn Virginia posted positive average earnings surprise of 36.67% in the preceding four quarters.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge. With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research. It's not the one you think. See This Ticker Free >>