Transocean: second quarter results

In brief:

• Revenues were US$ 2.328 billion, compared with US$ 2.339 billion in Q1 2014.
• Operating and maintenance expenses were US$ 1.213 billion, down from US$ 1.269 billion in the prior quarter.
• Net income attributable to controlling interest was US$ 587 million versus US$ 456 million in Q1 2014, which included US$ 64 million of net unfavorable items.
• The Annual Effective Tax Rate was 12.6%, down from 15.1% sequentially.
• Net income attributable to controlling interest and adjusted earnings from continuing operations, were each US$ 587 million, or US$ 1.61 per diluted share.
• Cash flows from operating activities were US$ 636 million, compared with US$ 136 million in Q1 2014.
• Fleet revenue efficiency was 95.0%, compared with 95.7% in Q1 2014. Revenue efficiency on ultra-deepwater rigs was 94.0%, compared with 96.4% in the prior quarter.
• Fleet utilisation was 78%, unchanged sequentially.
• Contract backlog was US$ 25.0 billion as of the 16 July, 2014 Fleet Status Report. Since this report, additional contracts totaling US$ 78 million were secured.

Transocean Ltd. has reported net income attributable to controlling interest for the three months ended 30 June, 2014 of US$ 587 million, or US$ 1.61 per diluted share. After consideration of several non-material and offsetting items, Q2 2014 adjusted earnings from continuing operations were also US$ 587 million, or US$ 1.61 per diluted share.

For the three months ended 30 June, 2013 the company reported net income attributable to controlling interest of US$ 307 million, US$ 0.84 per diluted share, which included net unfavorable items of US$ 87 million, or US$ 0.24 per diluted share. After consideration of these net unfavorable items, Q2 2013 adjusted earnings from continuing operations were US$ 394 million, or US$ 1.08 per diluted share. A reconciliation of the non-GAAP adjusted net income and diluted earnings per share is included in the accompanying schedules.

Revenues for the three months ended 30 June, 2014 were US$ 2.328 billion, compared with revenues of US$ 2.339 billion during the quarter ended 31 March, 2014. Revenue efficiency for Transocean's entire fleet was 95.0% in Q2, compared with 95.7% in Q1 2014. Ultra-deepwater revenue efficiency was 94.0%, compared with 96.4% in the prior quarter. Fleet utilisation was 78%, unchanged from the prior quarter.

Operating and maintenance expenses decreased US$ 56 million sequentially to US$ 1.213 billion. The decrease was due primarily to lower shipyard expenses.

General and administrative expenses increased US$ 6 million to US$ 63 million. The increase was due mainly to project-related legal and professional fees, and severance costs associated with the company's organisational efficiency initiative.

Transocean's Q2 Effective Tax Rate decreased to 10.7% from 14.4% in Q1 2014. The decrease was the result of idle time on certain rigs in high-tax jurisdictions and the movement of rigs between jurisdictions. Transocean's Annual Effective Tax Rate for Q2 2014 was 12.6 % versus 15.1% for the prior quarter.

Interest expense, net of amounts capitalized, was US$ 112 million in Q2 2014, compared with US$ 126 million in the prior quarter. Capitalized interest was US$ 42 million, a sequential increase of approximately US$ 8 million. Interest income was US$ 15 million, compared with US$ 10 million in Q1 2014.

Cash flows from operating activities increased US$ 500 million sequentially to US$ 636 million. The increase was due primarily to Q1 2014 payment of US$ 472 million associated with the January 2013 agreement with the US Department of Justice.

Capital expenditures decreased US$ 780 million from Q1 2014 to US$ 351 million. The decrease relates to the timing of payments associated with the company's newbuild programme.

Edited from source by Elizabeth Corner

Read the article online at: https://www.worldpipelines.com/business-news/07082014/transocean-second-quarter-results/