Transocean Inc. (RIG) announced financial results for its second quarter, reporting that profit more than doubled year-over-year on higher vessel day rates and improved drilling efficiency. The company also said that revenue rose 8% from last year on a higher average vessel day rate, increased drilling, and the addition of new contracts for six vessels. In addition, Transocean said it expects total costs to rise about 10% in 2008, due partly to higher service and labor costs. Following the news, shares of Transocean were up $1.00 to $108.45 on the New York Stock Exchange.
The Houston, Texas-based provider of offshore contract drilling services reported net income for the quarter of $549 million or $1.84 per share, compared to net income of $249 million or $0.75 per share in the same period last year.
Transocean stated that net income for the second quarter of 2006 included after-tax gains of $110 million or $0.33 per share, resulting from the sales of the semisubmersible rig Transocean Explorer and drilling barge Searex XII.
On an average, thirty-one analysts polled by First Call/ Thomson Financial expected the company to report earnings of $1.72 per share for the second quarter.
Revenues for the three months ended June 30, 2007 increased 8% to $1.43 billion compared to revenues of $1.33 billion during the three months ended March 31, 2007. Fifteen analysts had a revenue consensus estimate of $1.37 billion for the second quarter.
The quarter-to-quarter increase in revenues was primarily due to a combination of a higher average dayrate, increased rig activity, and decreased shipyard time. The second quarter 2007 average dayrate reached a record high $202,400, up 2% compared to $198,000 during the first quarter 2007.
The fleet-wide quarterly average dayrate exceeded $200,000. Over the same period, rig utilization rose to 91% from 88%. Improved utilization was consistent across the company's fleet as six rigs came out of shipyard and commenced new contracts.
In addition, the Jack Bates and Deepwater Expedition had increased activity levels compared to the first quarter of 2007 as the Jack Bates was in a shipyard through mid-May and the Deepwater Expedition mobilized from Brazil to Egypt to begin a new contract in January.
For the three months ended June 30, 2007, operating income before general and administrative expenses totaled $705 million, a 3% increase from $683 million reported for the first quarter.
The $22 million increase in operating income before general and administrative expense was due to higher revenues, driven by increased dayrates and rig utilization.
Partially offsetting the higher revenues relative to the first quarter 2007 were $59 million in increased operating and maintenance expenses, $20 million less in after-tax gains from the disposal of assets and a decrease in operating days related to the shipyard projects for the Sedco 700 and Trident 15.
The increase in operating and maintenance expenses for the second quarter was primarily due to increased operating days on six rigs, an increased number of maintenance projects and scheduled pay increases.
In addition to the Jack Bates and Deepwater Expedition, four other rigs had increased operating days in the second quarter, as the J.T. Angel, Randolph Yost and Trident 2 returned to service after shipyard projects in the first quarter, and the Kirk Rhein, Jr. mobilized to India in January 2007 to begin a new contract.
Partially offsetting the increased operating days were second-quarter shipyard projects for the Sedco 700 and Trident 15. Field operating income (defined as revenues less operating and maintenance expenses) increased 6% to $807 million compared to $760 million over the prior three-month period.
Cash flow from operations totaled $607 million for the second quarter compared to $176 million for the second quarter of 2006.
For the six months ended June 30, 2007, net income totaled $1,102 million or $3.67 per share, on revenues of $2,762 million. For the same period last year, net income totaled $455 million or $1.36 per share, on revenues of $1,671 million.
Net income for the first half of 2007 included an after-tax gain of $20 million or $0.07 per share, resulting primarily from the sale of the tender rig Charley Graves during the first quarter 2007.
For the same period last year, net income included after-tax gains of $153 million or $0.46 per share, resulting from the sale of the Transocean Explorer, Searex XII, Peregrine III and a platform rig.
For the six-month period, cash flow from operations increased to $1,261 million compared to $444 million for the same period last year. As of June 30, 2007, total debt was $3,064 million, down $420 million compared to $3,484 million as of March 31, 2007.
Of the $420 million of debt reduction during the second quarter 2007, $230 million was repayment of term credit facilities and $190 million was reductions in the company's revolving credit facility.
For its first quarter, the company reported net income of $553 million or $1.84 per share, compared to net income of $206 million or $0.61 per share in the prior year quarter. Quarterly revenues grew to $1.33 billion from $817 million recorded in the equivalent quarter previous year.
Sequentially, revenues rose 12% to $1.33 billion from $1.19 billion, primarily due to an improvement in average daily revenue and increases in rig revenue efficiency. Average daily revenue climbed 15% to $198 thousand from $171,700 during the fourth quarter of 2006.
Going forward, Transocean said it expects total costs to rise about 10% in 2008, due partly to higher service and labor costs. Additionally, the company forecast maintenance expense of $2.75 billion to $2.8 billion, due to shipyard inflation.
In 2007, those costs were projected to be $2.47 billion to $2.53 billion, the company noted. Transocean also said it expects 2008 capital spending of $1.2 billion to $1.3 billion, down from $1.5 billion in 2007.
Among others in the industry, Noble Corp. (NE) posted a 61% rise in second-quarter profits, driven by strong demand for contract oil and gas drilling services.
The Sugar Land, Texas-based company reported net earnings of $290 million or $2.16 per share, compared with a year-earlier profit of $179.8 million or $1.30 per share. Revenue rose to $726 million from $517.5 million a year earlier.
The most recent quarter included charges of $0.08 per share related to asset sales, executive retirements, and investigation costs. Analysts on average expected earnings per share of $2.14 on revenue of $707.7 million. Contract drilling services revenue rose 41% in the period.
RIG is currently trading at $108.09, up 64 cents, on the New York Stock Exchange.
The Houston, Texas-based provider of offshore contract drilling services reported net income for the quarter of $549 million or $1.84 per share, compared to net income of $249 million or $0.75 per share in the same period last year.
Transocean stated that net income for the second quarter of 2006 included after-tax gains of $110 million or $0.33 per share, resulting from the sales of the semisubmersible rig Transocean Explorer and drilling barge Searex XII.
On an average, thirty-one analysts polled by First Call/ Thomson Financial expected the company to report earnings of $1.72 per share for the second quarter.
Revenues for the three months ended June 30, 2007 increased 8% to $1.43 billion compared to revenues of $1.33 billion during the three months ended March 31, 2007. Fifteen analysts had a revenue consensus estimate of $1.37 billion for the second quarter.
The quarter-to-quarter increase in revenues was primarily due to a combination of a higher average dayrate, increased rig activity, and decreased shipyard time. The second quarter 2007 average dayrate reached a record high $202,400, up 2% compared to $198,000 during the first quarter 2007.
The fleet-wide quarterly average dayrate exceeded $200,000. Over the same period, rig utilization rose to 91% from 88%. Improved utilization was consistent across the company's fleet as six rigs came out of shipyard and commenced new contracts.
In addition, the Jack Bates and Deepwater Expedition had increased activity levels compared to the first quarter of 2007 as the Jack Bates was in a shipyard through mid-May and the Deepwater Expedition mobilized from Brazil to Egypt to begin a new contract in January.
For the three months ended June 30, 2007, operating income before general and administrative expenses totaled $705 million, a 3% increase from $683 million reported for the first quarter.
The $22 million increase in operating income before general and administrative expense was due to higher revenues, driven by increased dayrates and rig utilization.
Partially offsetting the higher revenues relative to the first quarter 2007 were $59 million in increased operating and maintenance expenses, $20 million less in after-tax gains from the disposal of assets and a decrease in operating days related to the shipyard projects for the Sedco 700 and Trident 15.
The increase in operating and maintenance expenses for the second quarter was primarily due to increased operating days on six rigs, an increased number of maintenance projects and scheduled pay increases.
In addition to the Jack Bates and Deepwater Expedition, four other rigs had increased operating days in the second quarter, as the J.T. Angel, Randolph Yost and Trident 2 returned to service after shipyard projects in the first quarter, and the Kirk Rhein, Jr. mobilized to India in January 2007 to begin a new contract.
Partially offsetting the increased operating days were second-quarter shipyard projects for the Sedco 700 and Trident 15. Field operating income (defined as revenues less operating and maintenance expenses) increased 6% to $807 million compared to $760 million over the prior three-month period.
Cash flow from operations totaled $607 million for the second quarter compared to $176 million for the second quarter of 2006.
For the six months ended June 30, 2007, net income totaled $1,102 million or $3.67 per share, on revenues of $2,762 million. For the same period last year, net income totaled $455 million or $1.36 per share, on revenues of $1,671 million.
Net income for the first half of 2007 included an after-tax gain of $20 million or $0.07 per share, resulting primarily from the sale of the tender rig Charley Graves during the first quarter 2007.
For the same period last year, net income included after-tax gains of $153 million or $0.46 per share, resulting from the sale of the Transocean Explorer, Searex XII, Peregrine III and a platform rig.
For the six-month period, cash flow from operations increased to $1,261 million compared to $444 million for the same period last year. As of June 30, 2007, total debt was $3,064 million, down $420 million compared to $3,484 million as of March 31, 2007.
Of the $420 million of debt reduction during the second quarter 2007, $230 million was repayment of term credit facilities and $190 million was reductions in the company's revolving credit facility.
For its first quarter, the company reported net income of $553 million or $1.84 per share, compared to net income of $206 million or $0.61 per share in the prior year quarter. Quarterly revenues grew to $1.33 billion from $817 million recorded in the equivalent quarter previous year.
Sequentially, revenues rose 12% to $1.33 billion from $1.19 billion, primarily due to an improvement in average daily revenue and increases in rig revenue efficiency. Average daily revenue climbed 15% to $198 thousand from $171,700 during the fourth quarter of 2006.
Going forward, Transocean said it expects total costs to rise about 10% in 2008, due partly to higher service and labor costs. Additionally, the company forecast maintenance expense of $2.75 billion to $2.8 billion, due to shipyard inflation.
In 2007, those costs were projected to be $2.47 billion to $2.53 billion, the company noted. Transocean also said it expects 2008 capital spending of $1.2 billion to $1.3 billion, down from $1.5 billion in 2007.
Among others in the industry, Noble Corp. (NE) posted a 61% rise in second-quarter profits, driven by strong demand for contract oil and gas drilling services.
The Sugar Land, Texas-based company reported net earnings of $290 million or $2.16 per share, compared with a year-earlier profit of $179.8 million or $1.30 per share. Revenue rose to $726 million from $517.5 million a year earlier.
The most recent quarter included charges of $0.08 per share related to asset sales, executive retirements, and investigation costs. Analysts on average expected earnings per share of $2.14 on revenue of $707.7 million. Contract drilling services revenue rose 41% in the period.
RIG is currently trading at $108.09, up 64 cents, on the New York Stock Exchange.