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) Q3 Loss Narrower Than Expected, Sales Beat
Read MoreHide Full Article
Transocean Ltd. (RIG - Free Report) posted third-quarter 2019 adjusted loss of 38 cents a share, narrower than the Zacks Consensus Estimated loss of 40 cents. Strong revenues from the Ultra-Deepwater and Harsh Environment floaters together with higher dayrates led to this outperformance. However, the bottom line came in against the year-ago earnings of 6 cents due to higher shipyard costs and lower fleet utilization.
Meanwhile, the offshore drilling powerhouse generated total revenues of $784 million, beating the Zacks Consensus Estimate of $780 million. But the top line declined 3.9% from the prior-year figure of $816 million.
Segmental Revenue Break-Up
Transocean’s Ultra-deepwater floaters contributed about 63.01% to total contract drilling revenues while Harsh Environment floaters and Midwater floaters accounted for the remainder. In the quarter under review, revenues from Ultra-Deepwater and Harsh Environment floaters totalled $494 million and $281 million, respectively.
Revenue efficiency was 97%, marginally lower than the second-quarter level. The figure reflected an increase from the year-ago number of 95%.
Dayrates and Utilization
On an encouraging note, average dayrate in the quarter under review rose to $314,500 from the year-ago level of $295,000 owing to an uptick in activity in the Asia Pacific, Brazil and GoM. The company witnessed year-over-year higher average revenue per day from midwater floaters. Overall fleet utilization was 58% during the quarter, down from the prior-year utilization rate of 65%.
Backlog
Transocean’s backlog, which was recorded at $10.8 billion as of October, reflects a decline of $700 million from the year-ago figure. In the third quarter, the company added approximately $130 million to its backlog.
Costs, Capex & Balance Sheet
Transocean’s costs and expenses rose 17.71% year over year to $804 million. Operating and maintenance costs also increased to $547 million from $447 million a year ago. Transocean spent $121 million on capital expenditure in the third quarter. Cash provided by operating activities totalled $91 million, inducing a negative free cash flow of $30 million. The company had cash and cash equivalents of $1.9 billion on Sep 30, 2019. Long-term debt was $9 billion with a debt-to-capitalization ratio of 43.08% as of the same date.
For the fourth quarter, the company expects its adjusted contract drilling revenues to be roughly $825 million. Meanwhile, capital expenses for maintenance are anticipated to be $106 million.
Full-year operating and maintenance costs are predicted to be around $2.1 billion. Further, the company projects its G&A expense in the range of $175-$185 million.
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.
This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
Image: Bigstock
Transocean (RIG) Q3 Loss Narrower Than Expected, Sales Beat
Transocean Ltd. (RIG - Free Report) posted third-quarter 2019 adjusted loss of 38 cents a share, narrower than the Zacks Consensus Estimated loss of 40 cents. Strong revenues from the Ultra-Deepwater and Harsh Environment floaters together with higher dayrates led to this outperformance. However, the bottom line came in against the year-ago earnings of 6 cents due to higher shipyard costs and lower fleet utilization.
Meanwhile, the offshore drilling powerhouse generated total revenues of $784 million, beating the Zacks Consensus Estimate of $780 million. But the top line declined 3.9% from the prior-year figure of $816 million.
Segmental Revenue Break-Up
Transocean’s Ultra-deepwater floaters contributed about 63.01% to total contract drilling revenues while Harsh Environment floaters and Midwater floaters accounted for the remainder. In the quarter under review, revenues from Ultra-Deepwater and Harsh Environment floaters totalled $494 million and $281 million, respectively.
Revenue efficiency was 97%, marginally lower than the second-quarter level. The figure reflected an increase from the year-ago number of 95%.
Dayrates and Utilization
On an encouraging note, average dayrate in the quarter under review rose to $314,500 from the year-ago level of $295,000 owing to an uptick in activity in the Asia Pacific, Brazil and GoM. The company witnessed year-over-year higher average revenue per day from midwater floaters. Overall fleet utilization was 58% during the quarter, down from the prior-year utilization rate of 65%.
Backlog
Transocean’s backlog, which was recorded at $10.8 billion as of October, reflects a decline of $700 million from the year-ago figure. In the third quarter, the company added approximately $130 million to its backlog.
Costs, Capex & Balance Sheet
Transocean’s costs and expenses rose 17.71% year over year to $804 million. Operating and maintenance costs also increased to $547 million from $447 million a year ago. Transocean spent $121 million on capital expenditure in the third quarter. Cash provided by operating activities totalled $91 million, inducing a negative free cash flow of $30 million. The company had cash and cash equivalents of $1.9 billion on Sep 30, 2019. Long-term debt was $9 billion with a debt-to-capitalization ratio of 43.08% as of the same date.
Transocean Ltd. Price, Consensus and EPS Surprise
Transocean Ltd. price-consensus-eps-surprise-chart | Transocean Ltd. Quote
Guidance
For the fourth quarter, the company expects its adjusted contract drilling revenues to be roughly $825 million. Meanwhile, capital expenses for maintenance are anticipated to be $106 million.
Full-year operating and maintenance costs are predicted to be around $2.1 billion. Further, the company projects its G&A expense in the range of $175-$185 million.
Zacks Rank & Key Picks
Transocean has a Zacks Rank #3 (Hold). Some better-ranked players in the energy space are Subsea 7 SA, Inc. (SUBCY - Free Report) , Phillips 66 (PSX - Free Report) and Sunoco LP (SUN - Free Report) , each holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.
This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
See their latest picks free >>