We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Transocean (RIG) Q2 Loss Wider Than Expected, Revenues Beat
Read MoreHide Full Article
Transocean (RIG - Free Report) reported a second-quarter 2023 adjusted net loss of 15 cents per share, wider than the Zacks Consensus Estimate of a loss of 12 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 10 cents.
Total adjusted revenues of $748 million beat the Zacks Consensus Estimate of $724 million. The top line also improved 3.6% from the prior-year quarter’s reported figure of $722 million. This outperformance was primarily driven by higher operational days.
Transocean’s Ultra-deepwater floaters contributed 73.5% to net contract drilling revenues, while Harsh Environment floaters accounted for the remaining 26.5%. Revenues from the Ultra-deepwater and Harsh Environment floaters totaled $536 million and $193 million, respectively, compared with the year-ago quarter’s reported figures of $451 million and $241 million.
Revenues from Ultra-deepwater exceeded our projection of $490.6 million, while that from Harsh Environment came in below our projection of $225.5 million.
Revenue efficiency was 97.2%, slightly lower than the 97.8% reported sequentially and year over year.
Day rates, Utilization & Backlog
Average day rates in the reported quarter increased to $367,000 from $358,100 in the year-ago quarter. The figure also beat our estimate of $365,600.
Average revenues per day from Ultra-deepwater floaters increased to $380,600 from $334,400 in the year-ago quarter. The same from Harsh Environment floaters, however, decreased to $332,000 from $406,000 in the comparable period of 2022.
The fleet utilization rate was 54.7% in the quarter, down from the prior-year period’s 528.2%.
Transocean’s backlog of $9.2 billion increased sequentially from $8.6 billion.
Costs, Capex & Balance Sheet
Operations and maintenance (O&M) costs increased to $484 million from $433 million a year ago. The company spent $76 million on capital investments in the second quarter. Cash used in operating activities totaled $157 million. Cash and cash equivalents amounted to $821 million as of Jun 30, 2023. Long-term debt totaled $7.15 billion, with a debt-to-capitalization of 40.7% as of the same date.
Guidance
For the third quarter of 2023, Transocean expects adjusted contract drilling revenues of $720 million. It also projects O&M expenses of approximately $540 million for the same time frame.
For full-year 2023, the company expects O&M expenses of $1.9 billion. It also anticipates adjusted contract revenues in the $2.9-$3 billion range.
General and administrative costs are projected to be $55 million. Annual expenses are anticipated to be $210 million.
RIG projects net interest expenses of $133 million in the third quarter and $470 million in 2023, including $38 million in capitalized interest.
Cash taxes are expected to reach $6.3 million for the same quarter and roughly $45 million for full-year 2023.
For the third quarter, the company expects capital expenditures (CapEx) of $705 million, of which $33 million will be spent on the Deepwater Atlas and Deepwater Titan. RIG anticipates $270 million in CapEx for the entire year.
Murphy USA is valued at around $6.55 billion. In the past year, its shares have risen 5.6%
MUSA currently pays a dividend of $1.52 per share, or 0.51% on an annual basis. Its payout ratio currently sits at 6% of earnings.
Evolution Petroleum is worth approximately $319.05 million. EPM currently pays a dividend of 48 cents per share, or 5.20% on an annual basis.
The company currently has a forward P/E ratio of 8.88. In comparison, its industry has an average forward P/E of 13.60, which means EPM is trading at a discount to the group.
Archrock is valued at around $2.01 billion. It delivered an average earnings surprise of 15.08% for the last four quarters and its current dividend yield is 4.67%.
Archrock is a provider of natural gas contract compression services and aftermarket services of compression equipment.
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
Transocean (RIG) Q2 Loss Wider Than Expected, Revenues Beat
Transocean (RIG - Free Report) reported a second-quarter 2023 adjusted net loss of 15 cents per share, wider than the Zacks Consensus Estimate of a loss of 12 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 10 cents.
Total adjusted revenues of $748 million beat the Zacks Consensus Estimate of $724 million. The top line also improved 3.6% from the prior-year quarter’s reported figure of $722 million. This outperformance was primarily driven by higher operational days.
Transocean Ltd. Price, Consensus and EPS Surprise
Transocean Ltd. price-consensus-eps-surprise-chart | Transocean Ltd. Quote
Segmental Revenue Breakup
Transocean’s Ultra-deepwater floaters contributed 73.5% to net contract drilling revenues, while Harsh Environment floaters accounted for the remaining 26.5%. Revenues from the Ultra-deepwater and Harsh Environment floaters totaled $536 million and $193 million, respectively, compared with the year-ago quarter’s reported figures of $451 million and $241 million.
Revenues from Ultra-deepwater exceeded our projection of $490.6 million, while that from Harsh Environment came in below our projection of $225.5 million.
Revenue efficiency was 97.2%, slightly lower than the 97.8% reported sequentially and year over year.
Day rates, Utilization & Backlog
Average day rates in the reported quarter increased to $367,000 from $358,100 in the year-ago quarter. The figure also beat our estimate of $365,600.
Average revenues per day from Ultra-deepwater floaters increased to $380,600 from $334,400 in the year-ago quarter. The same from Harsh Environment floaters, however, decreased to $332,000 from $406,000 in the comparable period of 2022.
The fleet utilization rate was 54.7% in the quarter, down from the prior-year period’s 528.2%.
Transocean’s backlog of $9.2 billion increased sequentially from $8.6 billion.
Costs, Capex & Balance Sheet
Operations and maintenance (O&M) costs increased to $484 million from $433 million a year ago. The company spent $76 million on capital investments in the second quarter. Cash used in operating activities totaled $157 million. Cash and cash equivalents amounted to $821 million as of Jun 30, 2023. Long-term debt totaled $7.15 billion, with a debt-to-capitalization of 40.7% as of the same date.
Guidance
For the third quarter of 2023, Transocean expects adjusted contract drilling revenues of $720 million. It also projects O&M expenses of approximately $540 million for the same time frame.
For full-year 2023, the company expects O&M expenses of $1.9 billion. It also anticipates adjusted contract revenues in the $2.9-$3 billion range.
General and administrative costs are projected to be $55 million. Annual expenses are anticipated to be $210 million.
RIG projects net interest expenses of $133 million in the third quarter and $470 million in 2023, including $38 million in capitalized interest.
Cash taxes are expected to reach $6.3 million for the same quarter and roughly $45 million for full-year 2023.
For the third quarter, the company expects capital expenditures (CapEx) of $705 million, of which $33 million will be spent on the Deepwater Atlas and Deepwater Titan. RIG anticipates $270 million in CapEx for the entire year.
Zacks Rank and Key Picks
Currently, RIG carries a Zacks Rank #4 (Sell).
Some better-ranked stocks for investors interested in the energy sector are Murphy USA (MUSA - Free Report) , sporting a Zacks Rank #1 (Strong Buy), and Evolution Petroleum (EPM - Free Report) and Archrock (AROC - Free Report) , both carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Murphy USA is valued at around $6.55 billion. In the past year, its shares have risen 5.6%
MUSA currently pays a dividend of $1.52 per share, or 0.51% on an annual basis. Its payout ratio currently sits at 6% of earnings.
Evolution Petroleum is worth approximately $319.05 million. EPM currently pays a dividend of 48 cents per share, or 5.20% on an annual basis.
The company currently has a forward P/E ratio of 8.88. In comparison, its industry has an average forward P/E of 13.60, which means EPM is trading at a discount to the group.
Archrock is valued at around $2.01 billion. It delivered an average earnings surprise of 15.08% for the last four quarters and its current dividend yield is 4.67%.
Archrock is a provider of natural gas contract compression services and aftermarket services of compression equipment.