U.S. Markets open in 3 hrs 8 mins
  • Crude Oil

    70.51
    -0.05 (-0.07%)
     
  • Gold

    1,768.40
    -9.80 (-0.55%)
     
  • Silver

    23.03
    +0.46 (+2.05%)
     
  • EUR/USD

    1.1696
    -0.0034 (-0.2924%)
     
  • 10-Yr Bond

    1.3360
    +0.0120 (+0.91%)
     
  • Vix

    20.87
    -3.49 (-14.33%)
     
  • GBP/USD

    1.3619
    -0.0045 (-0.3282%)
     
  • USD/JPY

    109.7800
    +0.5600 (+0.5127%)
     
  • BTC-USD

    43,778.92
    +1,381.84 (+3.26%)
     
  • CMC Crypto 200

    1,089.55
    +49.07 (+4.72%)
     
  • FTSE 100

    7,083.37
    +102.39 (+1.47%)
     
  • Nikkei 225

    29,639.40
    -200.31 (-0.67%)
     

Transocean (RIG) Q4 Loss Wider Than Expected, Sales Miss

  • Oops!
    Something went wrong.
    Please try again later.
·4 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.

Transocean Ltd. RIG reported an adjusted net loss of 34 cents per share for fourth-quarter 2020, wider than the Zacks Consensus Estimate of a loss of 16 cents. The underperformance reflects lower utilization.

However, Transocean’s bottom line improved from the year-ago adjusted loss of 43 cents due to impressive revenue efficiency and higher dayrates.

The offshore drilling powerhouse’s total revenues of $690 million missed the Zacks Consensus Estimate of $707 million. Moreover, the top line fell 12.9% from the year-earlier figure of $792 million primarily due to reduced drilling activities.

Segmental Revenue Break-Up

Transocean’s Ultra-deepwater floaters contributed to 63.8% of total contract drilling revenues, while Harsh Environment floaters accounted for the remainder. In fourth-quarter 2020, revenues from Ultra-deepwater and Harsh Environment floaters totaled $440 million and $250 million, respectively, compared with the year-ago reported figures of $502 million and $278 million.

Revenue efficiency was 97.2%, higher than 96.6% reported sequentially and the year-ago value of 96.2%.

Dayrates and Utilization

Average dayrates in the quarter rose to $347,500 from the year-ago level of $317,700. The company witnessed strong year-over-year average revenues per day from Harsh Environment floaters. Overall, fleet utilization was 58% in the quarter, down from the prior-year utilization rate of 61%.

Backlog

Transocean’s backlog record at $7.8 billion as of February reflects a decline of $2.4 billion from the year-ago figure.

Transocean Ltd. Price, Consensus and EPS Surprise

Transocean Ltd. Price, Consensus and EPS Surprise
Transocean Ltd. Price, Consensus and EPS Surprise

Transocean Ltd. price-consensus-eps-surprise-chart | Transocean Ltd. Quote

Costs, Capex & Balance Sheet

Operating and maintenance costs decreased to $465 million from $575 million a year ago. The company spent $47 million on capital investment in the fourth quarter. Cash provided by operating activities totaled $278 million. The company had cash and cash equivalents worth $1.15 billion as of Dec 31, 2020. Long-term debt was $7.30 billion, with debt-to-capitalization of 40% as of the same date, declining from the sequential quarter’s 40.6%.

Guidance

For 2021, Transocean projects adjusted contract drilling revenues of $2.7 billion. Notably, the company expects operations and maintenance expenses of $1.6 billion for 2021, while G&A expenses are expected to be $160 million.

Meanwhile, capital spending for 2021, comprising capitalized interest, is estimated to be $1.3 billion. The amount also assumes $1.2 billion for the newbuild drillships under construction and the remaining $100 billion for maintenance.

For the first quarter of 2021, this offshore drilling contractor expects adjusted contract drilling revenues of $680 million, with first-quarter operations and maintenance expenses of $445 million. Notably, its G&A expenses are expected to be $40 million, while capital expenditure, including capitalized interest, is estimated to be $115 million.

Zacks Rank & Stocks to Consider

Transocean currently has a Zacks Rank #5 (Strong Sell).

Some better-ranked players in the energy space are EOG Resources, Inc. EOG, ConocoPhillips COP and China Petroleum & Chemical Corporation SNP, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

EOG’s bottom line for 2021 is expected to surge 213.8% year over year.

ConocoPhillips’s bottom line for 2021 is expected to grow 14.8% year over year.

China Petroleum’s bottom line for 2021 is expected to rise 10% year over year.

More Stock News: This Is Bigger than the iPhone!

It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 77 billion devices by 2025, creating a $1.3 trillion market.

Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 4 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2022.

Click here for the 4 trades >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Transocean Ltd. (RIG) : Free Stock Analysis Report

China Petroleum & Chemical Corporation (SNP) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research