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Transocean (RIG) Incurs Loss in Q4, Misses Revenue Estimates
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Transocean Ltd. (RIG - Free Report) posted narrower-than-expected loss per share in the fourth quarter of 2017. The offshore driller’s adjusted loss per share in the quarter came in at 24 cents compared with the Zacks Consensus Estimate of a loss of 27 cents. While investors should note that the company has not missed estimates in the past 19 quarters, Transocean reported an adjusted loss per share in the quarter under review, which compares unfavorably with adjusted earnings of 63 cents a share in the prior-year quarter. Lower revenues and higher costs led to weaker results.
Total quarterly revenues of $629 million were down 35.4% year over year on lower dayrates and lower revenue efficiency. The top line also missed the Zacks Consensus Estimate of $634 million. Contract drilling revenues in the quarter declined 25.7% to $589 million from the year-ago $793 million. Transocean’s high-specification floaters contributed about 86.4% to total contract drilling revenues, while deepwater floaters, midwater floaters, high-specification jackups and others accounted for the remainder.
Revenue efficiency in the quarter reduced to 92.4%, compared with 100.3% and 97.1% in the year-ago quarter and prior quarter, respectively.
Transocean’s operating and maintenance expenses rose 23.9% to $389 million year over year. The costs also increased from the prior-quarter figure of $323 million. The operational inefficiency and lost revenues resulted the company’s cash flow from operating activities to plunge 59.4% year over year. In the fourth quarter of 2017, cash flow from operating activities stood at $257 against $633 million and $384 million recorded in the fourth quarter of 2016 and third quarter of 2017, respectively.
Dayrates and Utilization
Compared with the fourth quarter of 2016, dayrates fell almost 10% (from $329,400 to $269,700), unfavorably impacted by declines in all types of rigs barring high-specification jackups.
However, the overall fleet utilization was 53% during the quarter, up from the year-ago utilization rate of 46%.
Capital Expenditure & Balance Sheet
Transocean spent $111 million on capital expenditures in the fourth quarter of 2017 versus $272 million recorded in the year-ago quarter. The capex was primarily allocated toward newbuild rigs namely Deepwater Poseidon and Deepwater Pontus.
As of Dec 31, 2017, Transocean had cash and cash equivalents of $2,519 million. Long-term debt of the company was $7,146 million with a debt-to-capitalization ratio of 36%.
Marathon Petroleum surpassed earnings estimates in three out of the last four quarters, with an average beat of 182.62%.
Statoil went past the earnings estimates in each of the four trailing quarters, with an average beat of 23.18%.
Pioneer Natural also topped earnings estimates in all the trailing four quarters, with an average beat of 66.92%.
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It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
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Transocean (RIG) Incurs Loss in Q4, Misses Revenue Estimates
Transocean Ltd. (RIG - Free Report) posted narrower-than-expected loss per share in the fourth quarter of 2017. The offshore driller’s adjusted loss per share in the quarter came in at 24 cents compared with the Zacks Consensus Estimate of a loss of 27 cents. While investors should note that the company has not missed estimates in the past 19 quarters, Transocean reported an adjusted loss per share in the quarter under review, which compares unfavorably with adjusted earnings of 63 cents a share in the prior-year quarter. Lower revenues and higher costs led to weaker results.
Total quarterly revenues of $629 million were down 35.4% year over year on lower dayrates and lower revenue efficiency. The top line also missed the Zacks Consensus Estimate of $634 million. Contract drilling revenues in the quarter declined 25.7% to $589 million from the year-ago $793 million. Transocean’s high-specification floaters contributed about 86.4% to total contract drilling revenues, while deepwater floaters, midwater floaters, high-specification jackups and others accounted for the remainder.
Revenue efficiency in the quarter reduced to 92.4%, compared with 100.3% and 97.1% in the year-ago quarter and prior quarter, respectively.
Transocean Ltd. Price, Consensus and EPS Surprise
Transocean Ltd. Price, Consensus and EPS Surprise | Transocean Ltd. Quote
Costs
Transocean’s operating and maintenance expenses rose 23.9% to $389 million year over year. The costs also increased from the prior-quarter figure of $323 million. The operational inefficiency and lost revenues resulted the company’s cash flow from operating activities to plunge 59.4% year over year. In the fourth quarter of 2017, cash flow from operating activities stood at $257 against $633 million and $384 million recorded in the fourth quarter of 2016 and third quarter of 2017, respectively.
Dayrates and Utilization
Compared with the fourth quarter of 2016, dayrates fell almost 10% (from $329,400 to $269,700), unfavorably impacted by declines in all types of rigs barring high-specification jackups.
However, the overall fleet utilization was 53% during the quarter, up from the year-ago utilization rate of 46%.
Capital Expenditure & Balance Sheet
Transocean spent $111 million on capital expenditures in the fourth quarter of 2017 versus $272 million recorded in the year-ago quarter. The capex was primarily allocated toward newbuild rigs namely Deepwater Poseidon and Deepwater Pontus.
As of Dec 31, 2017, Transocean had cash and cash equivalents of $2,519 million. Long-term debt of the company was $7,146 million with a debt-to-capitalization ratio of 36%.
Zacks Rank and Stocks to Consider
Transocean has a Zacks Rank #3 (Hold).
A few better-ranked stocks in the oil and energy sector are Marathon Petroleum Corporation (MPC - Free Report) , Statoil ASA and Pioneer Natural Resources Company (PXD - Free Report) . All these companies sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Marathon Petroleum surpassed earnings estimates in three out of the last four quarters, with an average beat of 182.62%.
Statoil went past the earnings estimates in each of the four trailing quarters, with an average beat of 23.18%.
Pioneer Natural also topped earnings estimates in all the trailing four quarters, with an average beat of 66.92%.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>