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Transocean (RIG) Breaks Even in Q2 Earnings, Revenues Beat
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Offshore drilling giant Transocean Ltd. (RIG - Free Report) reported stronger-than-expected second-quarter 2017 results, buoyed by solid revenue efficiency and cost control initiatives. In particular, the company achieved another quarter of outstanding revenue efficiency at 97.4%, up from 96.2% a year ago.
Transocean’s earnings – after adjusting for impairment associated with the sale of jackup rigs to Borr Drilling – broke even in the quarter. The Zacks Consensus Estimate had pointed to a loss of 11 cents. However, the bottom line decreased from the year-ago adjusted earnings of 17 cents per share amid reduced activity and lower dayrates.
Total quarterly revenues of $751 million were down 20% year over year on lower contract drilling sales year but surpassed the Zacks Consensus Estimate of $716 million.
Transocean’s high-specification floaters contributed about 85% to total revenue, while midwater floaters, high-specification jackups, other rig activities, integrated services and others accounted for the remainder.
Transocean – which boasts long-term rig contracts with energy biggies such as Chevron Corp. (CVX - Free Report) , Royal Dutch Shell plc and Statoil ASA – was able to reduce its operating and maintenance expenses by an impressive 33% to $333 million. The cost discipline, coupled with lower capital expenditure, enabled the Zacks Rank #3 (Hold) company to generate $319 million in cash flow from operating activities. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Dayrates and Utilization
Compared with the second quarter of 2016, dayrates fell 6% (from $352,500 to $329,900), unfavorably impacted by declines in all types of rigs barring high-specification jackups.
Overall fleet utilization was 44% during the quarter, down from the year-ago utilization rate of 47%.
Capital Expenditure & Balance Sheet
While Transocean spend $458 million as capital expenditure in the second quarter of 2016, the amount came down sharply to just $136 million during the three months under review. The lion’s share of this $136 million went toward the newbuild program.
As of Jun 30, 2017, Transocean had cash and cash equivalents of $2,417 million.
Share Performance
Shares of Transocean have lost 33.9% during the second quarter versus the 28.7% decline of the industry.
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Transocean (RIG) Breaks Even in Q2 Earnings, Revenues Beat
Offshore drilling giant Transocean Ltd. (RIG - Free Report) reported stronger-than-expected second-quarter 2017 results, buoyed by solid revenue efficiency and cost control initiatives. In particular, the company achieved another quarter of outstanding revenue efficiency at 97.4%, up from 96.2% a year ago.
Transocean’s earnings – after adjusting for impairment associated with the sale of jackup rigs to Borr Drilling – broke even in the quarter. The Zacks Consensus Estimate had pointed to a loss of 11 cents. However, the bottom line decreased from the year-ago adjusted earnings of 17 cents per share amid reduced activity and lower dayrates.
Total quarterly revenues of $751 million were down 20% year over year on lower contract drilling sales year but surpassed the Zacks Consensus Estimate of $716 million.
Transocean’s high-specification floaters contributed about 85% to total revenue, while midwater floaters, high-specification jackups, other rig activities, integrated services and others accounted for the remainder.
Transocean Ltd. Price, Consensus and EPS Surprise
Transocean Ltd. Price, Consensus and EPS Surprise | Transocean Ltd. Quote
Costs
Transocean – which boasts long-term rig contracts with energy biggies such as Chevron Corp. (CVX - Free Report) , Royal Dutch Shell plc and Statoil ASA – was able to reduce its operating and maintenance expenses by an impressive 33% to $333 million. The cost discipline, coupled with lower capital expenditure, enabled the Zacks Rank #3 (Hold) company to generate $319 million in cash flow from operating activities. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Dayrates and Utilization
Compared with the second quarter of 2016, dayrates fell 6% (from $352,500 to $329,900), unfavorably impacted by declines in all types of rigs barring high-specification jackups.
Overall fleet utilization was 44% during the quarter, down from the year-ago utilization rate of 47%.
Capital Expenditure & Balance Sheet
While Transocean spend $458 million as capital expenditure in the second quarter of 2016, the amount came down sharply to just $136 million during the three months under review. The lion’s share of this $136 million went toward the newbuild program.
As of Jun 30, 2017, Transocean had cash and cash equivalents of $2,417 million.
Share Performance
Shares of Transocean have lost 33.9% during the second quarter versus the 28.7% decline of the industry.
More Stock News: Tech Opportunity Worth $386 Billion in 2017
From driverless cars to artificial intelligence, we've seen an unsurpassed growth of high-tech products in recent months. Yesterday's science-fiction is becoming today's reality. Despite all the innovation, there is a single component no tech company can survive without. Demand for this critical device will reach $387 billion this year alone, and it's likely to grow even faster in the future.
Zacks has released a brand-new Special Report to help you take advantage of this exciting investment opportunity. Most importantly, it reveals 4 stocks with massive profit potential. See these stocks now>>