- Quarterly revenues rise 9% over last year to $2.3
billion as net profit climbs to $456 million compared to a loss
of over $6 billion in 2011.
- Demand for deepwater drilling helps boost operational
performance: annual utilization rates grow to 78% from 69% in
2011, and revenue efficiency also improves.
- Looking Ahead: New contracts ~$2 billion added, revenue
backlog of around $29 billion; Gulf of Mexico could continue to
), the world's largest offshore drilling contractor, released its
fourth quarter earnings on March 1, reporting its first fourth
quarter profit in three years. While the firm's operational
performance continued to be strong, the absence of significant
write-downs helped nudge the firm's results higher.
Quarterly revenues were around $2.3 billion compared to around
$2.13 billion last year while net income was around $456 million
compared to a loss of $6.1 billion (primarily due
to impairment charges) in 2011. The results were
largely in line with our expectations
and aided by stronger drilling in the U.S. Gulf of Mexico as well
as by better fleet utilization rates.
Operating Metrics Improve
Strong demand for offshore drilling helped the firm to boost the
utilization rate of its fleet. Utilization rates are a measure
of how many rigs are working on contracts in comparison to total
fleet size. These rates are an important metric given the high
capital expenditure that the firm incurs in constructing these
rigs. Rates improved to around 78% in 2012, up from around 69% a
The performance of the firm's ultra-deepwater floaters and harsh
environment floaters was particularly strong with utilization
growing by 6% and 12% respectively. This trend is quite encouraging
since these rigs also have the highest day rates within the fleet.
Revenues efficiency, a measure of performance of the rig once it is
contracted also improved from around 90.5% in 2011 to
Looking Ahead: Gulf Of Mexico Will Remain
U.S. Gulf Of Mexico Will Continue To Drive Grow
: The U.S. Gulf of Mexico is Transocean's most important geographic
market, accounting for a quarter of the firm's business.
Around 14 of 27 of the firm's ultra-deepwater rigs are contracted
in this region. These rigs command average dayrates nearing
$500,000, significantly higher than the firm's average dayrate of
around $370,000. The long-term prospects in this region are also
looking better as the U.S. Department of the Interior recently
announced plans to auction over 38 million acres of federally owned
waters, which would allow oil and gas companies to ramp up their
offshore drilling activities in the region.
Contract And Revenue Backlogs
: During the last three months, Transocean also added new contracts
of around $2 billion, bringing the revenue backlog to around $29
billion. As previously announced, the firm plans to add another 8
new rigs to its fleet by 2017, five of which are ultra-deepwater
rigs which will have dayrates of over $500,000.
Legal Issues Being Resolved
: In January, Transocean reached a $1.4 billion settlement with the
U.S. Department of Justice (DoJ), to resolve civil and criminal
disputes relating to the 2010 explosion of the Deepwater Horizon
rig that the firm was operating for BP (
) in the U.S. Gulf Of Mexico. More recently, Brazilian courts
dropped criminal charges against the firm relating
to its involvement in an oil spill in the Frade oil field, off the
coast of Brazil. These developments should allow the firm to put
much of its legal woes behind, and allow it to devote more
attention and resources to the growing deepwater drilling
We are in the process of updating
our model and price estimate for Transocean
following the firm's earnings release.
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