Offshore drilling giant, Transocean Ltd. (RIG), reported in-line second-quarter 2013 earnings, favored by better utilization of rigs.
Earnings per share (excluding special items) came in at $1.08, in line with the Zacks Consensus Estimate. The figure came ahead of the year-ago adjusted profit of 89 cents.
Total quarterly revenue of $2,397.0 million surpassed the Zacks Consensus Estimate of $2,383.0 million. Comparing year over year, revenues were up 2.9% mainly attributed to higher average dayrates from high-specification floaters, high-spec jackups and midwater floaters.
Transocean's high-spec floaters contributed approximately 74.1% to the total revenue, while mid-water floaters and high-spec jackup rigs accounted for 15.9% and 6.6% of the total revenue, respectively. The remaining revenues came from other rig activities, integrated services and others.
Transocean posted operating income of $602.0 million during the quarter compared with a loss of $142.0 million in the year-ago period. Total operating and maintenance expenses decreased 33.8% to $1,393.0 million.
Dayrates & Utilization
Total average dayrates have increased to $382,900 in this quarter as compared to $371,000 in the second quarter of 2012. The increase is favored by higher day rates from high-specification jackups, midwater floaters and high-specification floaters.
Overall fleet utilization was 80%, up from the year-ago utilization rate of 77%.
Capital Expenditure & Balance Sheet
Capital expenditures during the quarter totaled $352.0 million.
As of Jun 30, 2013, Transocean had cash and cash equivalents of $3,357.0 million and long-term debt of $10,460.0 million (representing a debt-to-capitalization ratio of approximately 40.0%).
Transocean currently retains a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S equity market over the next one to three months.
Meanwhile, one can look at oil and pipeline master limited partnerships (MLP) like Delek Logistics Partners LP (DKL), Pioneer Southwest Energy Partners LP (PSE) and Magellan Midstream Partners LP (MMP) that offer value. All the stocks currently retain a Zacks Rank #2 (Buy).
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