Offshore drilling giant
) reported better-than-expected fourth-quarter 2012 earnings,
reflecting better utilization levels and controlled operating
HELMERICH&PAYNE (HP): Free Stock Analysis
NORTHERN TIER (NTI): Free Stock Analysis
PATTERSON-UTI (PTEN): Free Stock Analysis
TRANSOCEAN LTD (RIG): Free Stock Analysis
To read this article on Zacks.com click here.
Earnings per share, excluding special items, came in at 91 cents,
surpassing the Zacks Consensus Estimate of 81 cents and the
year-ago adjusted profit of 26 cents.
Total quarterly revenues of $2,326.0 million fell short of the
Zacks Consensus Estimate of $2,348.0. However, comparing year
over year, revenue was up 9.0% mainly attributable to higher
Transocean's high-spec floaters contributed approximately 73% to
total revenue, while mid-water floaters and jackup rigs accounted
for 20% and 5% of the total, respectively. The remaining revenue
came from other rig activities, integrated services and others.
Transocean posted operating income of $541.0 million during the
quarter compared with a loss of $5,811.0 million in the year-ago
period. Total operating and maintenance expenses decreased 38.9%
to $1,438.0 million due to a drop in costs.
Dayrates & Utilization
Compared with the fourth quarter of 2011, dayrates moved up 3.3%
(to $382,000 from $369,900), thanks to improved dayrates among
midwater, high-spec floaters and jackups.
Overall fleet utilization was 79%, up from the year-ago
utilization rate of 72%.
Capital Expenditure & Balance Sheet
Capital expenditures during the quarter, totaled $657 million, of
which the lion's share went to Transocean's contract drilling
services segment. As of Dec 31, 2012, Transocean had cash and
cash equivalents of $5,134.0 million and long-term debt of
approximately $10,929.0 million (representing a
debt-to-capitalization ratio of approximately 41.0%).
The company currently retains a Zacks Rank #3 (Hold).
With less oil being discovered on land and companies having to
dig deeper to get to their reserves, Transocean is poised to
benefit from a market that has a robust multi-year demand trend,
given its technologically advanced and versatile drilling fleet.
In particular, Transocean is the industry leader in deep sea
drilling. The company's state-of-the-art mobile offshore drilling
fleets worldwide can function in most challenging environments,
such as the North Sea.
However, the introduction of new and more stringent regulations
due to the oil spill will likely make deepwater drilling activity
prohibitively expensive for exploration and production companies,
making many projects less profitable. This could reduce the
demand for deepwater drilling.
Meanwhile, there are other energy firms that offer value and are
worth buying now. These include
Northern Tier Energy LP
) with Zacks Rank #1 (Strong Buy) as well as
Helmerich & Payne Inc.
Patterson-UTI Energy Inc.
), each with a Zacks Rank #2 (Buy).