Before we dig into this quarter's report by
Transocean (NYSE: RIG), I thought I should
point out that the company has not "gone dark" and ceased
filing with the SEC. It looks that way if you plug the stock
ticker into EDGAR, and see that the latest filing is a
"Suspension of duty to report" form dating back to March.
You'll recall that the company
scuttled off to Switzerlandalongside
Noble (NYSE: NE) and
Weatherford (NYSE: WFT) this past year. For
some reason, you can still find those other firms' current
filings using their tickers. As for Transocean, you have to
search by company name, and then select "Transocean Ltd."
Now that we've cleared that up, let's take a look at the
numbers. Transocean's quarterly revenue of $2.8 billion was
off 12% compared to last year. Per-share earnings dropped by
more than a third, though there were some one-off items like
a large legal bill muddling the comparison somewhat. Field
operating income, a useful alternative measure of
Transocean's earning power, fell 19%.
Revenue efficiency -- which compares Transocean's revenue
to the maximum that could have been earned under contracts
with clients such as
Chevron (NYSE: CVX) and
Petrobras (NYSE: PBR) -- hit 95% in the
period, the highest since the second quarter of last year.
Operating rig costs, the expense component that deals
directly with drilling activity, dropped to their lowest
level in a year, but that's to be expected when fleet
utilization is falling. While Transocean's premium deepwater
rigs achieved 88% utilization in the quarter, the fleetwide
number fell to 75% from 89% last year and 84% last
quarter.
As with
Ensco (NYSE: ESV) -- which is
down, but not out-- stacked jackups are whacking
Transocean's overall utilization number. As readers like
ValuePEGhave pointed out, however, that reflects the
company's willingness to impose discipline on the marketplace
and protect dayrates from falling even further. Echoing
Rowan Companies (NYSE: RDC), Transocean cited
increased tendering activityin this market, and suggested
that a bottom may be in place.
The bottom line is that the ultra-deepwater remains "the
bright spot" in the current environment, and Transocean is
very well suited to capitalize on that trend. The firm's
10-rig newbuild program is 70% complete, and the company has
floated by possibility of an eleventh newbuild order by the
end of the year. The
long viewon deepwater drilling remains unchanged.
This article was originally published as
Transocean Can Still Turn Headson
Fool.com
Copyright © 2009 The Motley Fool, LLC. All rights
reserved.
|