Rough Waters for Transocean after 4Q15 Results?
Transocean’s 4Q15 revenues
Transocean (RIG) released its 4Q15 financial results on February 24, 2016, recording total revenue of nearly $1.9 billion for the quarter, which was down 17% from the more than $2.2 billion it recorded in 4Q14. Transocean’s revenues for the latest quarter decreased primarily due to rig cancellations and a slowdown in its North American rig count. By comparison, 4Q15 revenue for Helmerich & Payne (HP) decreased by 54% YoY (year-over-year).
Transocean’s 4Q15 earnings
RIG’s 4Q15 adjusted net EPS (earnings per share) was ~$1.05. Compared to the consensus sell-side analyst EPS estimate of $0.65, this was 61% higher. In 4Q15, adjusted earnings increased by 20% over the previous quarter. This is quite unlike most of its peers in the OFS (oilfield equipment and services) industry, which has been reeling under the energy price fall.
On average, RIG’s adjusted EPS has exceeded consensus EPS by 32.5% in the past 12 quarters. RIG makes up 2.5% of the Market Vectors Oil Services ETF (OIH), an ETF that tracks an index of 25 OFS companies.
What affected Transocean’s reported earnings in 4Q15?
In 4Q15, Transocean reported net income of $611 million—a considerable improvement over 4Q14, when it reported $739 million net loss. In 4Q15, Transocean’s performance was favorably impacted by $356 million receipts from early contract terminations on three of its floaters. In addition, the company’s operating and maintenance costs decreased by 39% during 4Q15 compared to one year earlier, due to lower activity and cost reductions in its onshore and offshore operations.
Transocean’s 2015 versus 2014
In 2015, RIG’s revenue was nearly $7.4 billion, down 19% compared to the ~$9.2 billion it recorded in 2014. The net income attributable to RIG in 2015 came in at $791 million, a switch over from the ~$1.9 billion net loss it saw in 2014.
Now let’s discuss Transocean’s 4Q15 performance by segment and analyze key growth drivers.
Browse this series on Market Realist: