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Transocean (RIG) Up 6.6% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Transocean (RIG - Free Report) . Shares have added about 6.6% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Transocean due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Transocean's Q1 Loss Wider Than Estimate

Transocean reported a first-quarter 2023 adjusted net loss of 38 cents per share, wider than the Zacks Consensus Estimate of a loss of 20 cents. This underperformance can be attributed to a weaker result from Harsh Environment floaters.

The bottom line also deteriorated from the year-ago period’s recorded loss of 28 cents.

Total adjusted revenues of $649 million beat the Zacks Consensus Estimate of $642 million. The top line also improved 5.5% from the prior-year figure of $615. This outperformance was primarily driven by higher operational days.

Segmental Revenue Breakup

Transocean’s Ultra-deepwater floaters contributed 74.6% to net contract drilling revenues, while Harsh Environment floaters accounted for the remaining 25.4%. Revenues from the Ultra-deepwater and Harsh Environment floaters totaled $484 million and $165 million, respectively, compared with the year-ago quarter’s reported figures of $390 million and $196 million.

Revenue efficiency was 97.8%, lower than 98.0% reported sequentially but higher than the year-ago quarter’s 94.9%.

Dayrates, Utilization & Backlog

Average dayrates in the reported quarter increased to $364,100 from $334,500 in the year-ago quarter. The figure also beat the Zacks Consensus Estimate of $340,000.

Average revenues per day from Ultra-deepwater floaters increased to $360,000 from $305,600 in the year-ago quarter. The same from Harsh Environment floaters, however, decreased to $376,000 from $399,100 in the comparable period of 2022.

Fleet utilization rate was 51.9% in the quarter, which reduced marginally from the prior-year period’s 52.7%.

Transocean’s backlog of $8.6 billion increased sequentially from $6.1 billion.

Costs, Capex & Balance Sheet

Operations and maintenance (O&M) costs decreased to $409 million from $412 million a year ago. The company spent $81 million on capital investments in the first quarter. Cash used in operating activities stood at $47 million. Cash and cash equivalents were $747 million as of Mar 31, 2023. Long-term debt amounted to $7.34 billion, with a debt-to-capitalization of 41.6% as of the same date.


For the second quarter of 2023, Transocean expects adjusted contract drilling revenues of $735 million. It also projects O&M expenses at approximately $460 million for the same time frame.

For full-year 2023, the company expects operations and maintenance expenses of $1.9 billion. It also anticipates adjusted contract revenues in the $2.9-$3 billion range.

RIG expects net interest expenses for the second quarter in the range of $118-$479 million.

Capital Expenditure (capex) is projected at $100 million, which includes $70 million related to new builds and $30 million for maintenance capex in the second quarter.

Cash taxes are expected at about $15 million for the same quarter and roughly $35 million for full-year 2023.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

Currently, Transocean has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.


Estimates have been broadly trending downward for the stock, and the magnitude of these revisions has been net zero. Notably, Transocean has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Transocean belongs to the Zacks Oil and Gas - Drilling industry. Another stock from the same industry, Helmerich & Payne (HP - Free Report) , has gained 4% over the past month. More than a month has passed since the company reported results for the quarter ended March 2023.

Helmerich & Payne reported revenues of $769.22 million in the last reported quarter, representing a year-over-year change of +64.5%. EPS of $1.26 for the same period compares with -$0.17 a year ago.

For the current quarter, Helmerich & Payne is expected to post earnings of $0.91 per share, indicating a change of +237% from the year-ago quarter. The Zacks Consensus Estimate has changed -8.3% over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #5 (Strong Sell) for Helmerich & Payne. Also, the stock has a VGM Score of A.

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