Offshore drilling giant Transocean Ltd. (RIG) reported higher-than-expected second-quarter 2014 results on higher dayrates and reduced operating and maintenance costs. The favorable result led to more than 2% share price rise on the NYSE, in after-market trade hours.
Earnings per share (excluding special items) came in at $1.61, surpassing the Zacks Consensus Estimate of $1.09. The bottom line also improved from the year-ago adjusted profit of $1.08 per share.
Quarterly total revenue of $2,328 million beat the Zacks Consensus Estimate of $2,266 million. However, the top line deteriorated from the year-ago figure of $2,364 million.
Transocean's high-spec floaters contributed approximately 72% of the total revenue, while mid-water floaters and high-spec jackup rigs accounted for 19% and 7%, respectively. The remaining revenues came from rig activities, integrated services and others.
Operating Statistics
Transocean reported operating income of $765 million during the quarter, up 27% from $605 million in second-quarter 2013.
Meanwhile, total operating and maintenance expenses decreased 10.6% year over year to $1,213 million.
Dayrates & Utilization
Total average dayrates increased to $410,000 in the quarter under review from $382,800 in the year-earlier quarter. The upside was driven by higher dayrates from High-Specification Floaters, Midwater Floaters and High-Specification Jackups.
Overall fleet utilization was 78%, down from the year-ago utilization rate of 80%.
Capital Expenditure & Balance Sheet
Capital expenditures during the quarter totaled $351 million.
As of Jun 30, 2014, Transocean had cash and cash equivalents of $2,117 million and long-term debt of $10,298 million (representing a debt-to-capitalization ratio of approximately 38.4%).
Zacks Rating
Transocean currently carries 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 better-ranked players in the same industry like Patterson-UTI Energy Inc. (PTEN), Pioneer Energy Services Corp. (PES) and Nabors Industries Ltd. (NBR). All the stocks sport a Zacks Rank #1 (Strong Buy).
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