Transocean books loss, but sees improving longer-term market fundamentals

Offshore drilling contractor Transocean has booked a loss for the last quarter of 2019 as its revenues increased. However, the company has reduced the loss sequentially and year-over-year helped by gain on termination of construction contract, tax items, and disposal of assets, but partially offset by impairments and restructuring costs.

Transocean Endurance; Author: SP Mac

Transocean’s contract drilling revenues were $792 million in 4Q 2019 compared with $784 million in the third quarter of 2019 and $748 million in 4Q 2018.

It is worth reminding that Transocean completed the acquisition of another drilling contractor, Ocean Rig, in the 4Q 2018, specifically in December 2018.

Net loss attributable to controlling interest was $51 million compared with net loss attributable to controlling interest of $825 million in the third quarter of 2019 and net loss of $242 million for the fourth quarter of 2018.

Fourth quarter 2019 results included net favorable items of $212 million. This included $132 million gain on termination of construction contracts, $110 million related to discrete tax items, and $2 million gain on disposal of assets.

This was partially offset by $25 million loss on impairment of assets, $5 million in acquisition and restructuring costs, and $2 million loss on retirement of debt.

After consideration of these net favorable items, fourth quarter 2019 adjusted net loss was $263 million. This compares with adjusted net loss of $234 million in the third quarter of 2019.

Contract drilling revenues for the three months ended December 31, 2019, increased sequentially by $8 million, primarily due to rig reactivations, including of the ultra‑deepwater floaters Deepwater Mykonos and Deepwater Corcovado.

The quarter was also favorably impacted by higher utilization on the rest of the company’s ultra‑deepwater fleet and a full quarter of revenues from the newbuild harsh environment floater Transocean Norge. These increases were partially offset by lower reimbursable revenue and lower revenue efficiency.

Transocean President and Chief Executive Officer, Jeremy Thigpen, said: “As utilization across our floating fleet improved for the first time in over five years, and dayrates for high‑specification ultra‑deepwater assets increased 75% over the course of the year, we believe that 2019 marked the beginning of the much-anticipated recovery in the offshore drilling industry.”

Thigpen added: “Looking forward, we are mindful of the risks COVID-19 presents to near-term oil demand, but believe that improving longer-term market fundamentals, along with an increasing list of opportunities, bodes well for a year-over-year increase in contracting activity, utilization and dayrates.”

Offshore Energy Today Staff

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