Transocean encouraged by upward momentum in oil prices

Offshore driller Transocean believes that the offshore drilling market is in the early stages of a recovery, despite recording a loss for the fourth quarter of 2017.

Commenting on the company’s fourth quarter 2017 results on Tuesday, Transocean President and COE, Jeremy Thigpen, said: “We are encouraged by the upward momentum we continue to see in oil prices, and the resulting increase in demand for our assets and services.

“In the harsh environment market, we are experiencing strong demand for high-specification semi-submersibles, resulting in a meaningful year-over-year improvement in dayrates. While demand in ultra-deepwater is not as strong, we are encouraged to see customers seeking multi-year fixtures for assets in various basins around the world.”

Transocean, which recently bought rival rig company Songa Offshore, on Tuesday reported net loss attributable to controlling interest of $111 million for the fourth quarter 2017 compared with net loss of $1.42 billion in the third quarter of 2017.

Fourth quarter 2017 results included net unfavorable items of $18 million, including $20 million in discrete tax expense; and $6 million loss on the early retirement of debt. These net unfavorable items were partially offset by $6 million gain on disposal of assets; and $2 million associated with other favorable items.

After consideration of these net unfavorable items, fourth quarter 2017 adjusted net loss was $93 million.

Transocean’s total revenues in 4Q 2017 dropped to $629 million from $974 million in the same period of 2016.

Contract drilling revenues for the three months ended December 31, 2017, decreased $110 million sequentially from $699 million to $589 million. The decline was primarily due to fewer operating days and lower revenue efficiency. In the fourth quarter 2016, Transocean’s contract drilling revenues were $793 million.

In the company’s fourth quarter 2017 results earnings call, Thigpen also said: “Oil prices have been steadily climbing since late 2017, with Brent recently reaching a three-year high above $70 per barrel. This upward price momentum has provided some needed confidence among our customers. Indeed, new 2018 offshore project commitments are forecasted to rise approximately 140% as compared with 2017.

“As we move into 2018, we see a handful of near-term opportunities in the Gulf, primarily driven by the independents. We are also encouraged to see recent ultra-deepwater tenders for some of the majors and regions around the world, indicating long-term sentiment is shifting for the better.

Thigpen concluded: “In conclusion, today’s outlook is certainly more encouraging than it was a year ago. Given the improvements that we have witnessed in harsh environment utilization and dayrates, we feel strongly that this market is in the early stages of a recovery. And while we have yet to see a point of inflection in the ultra-deepwater market, the increase in tendering activity certainly bodes well for the future.

“Still, since the precise timing and trajectory of the recovery is ever-evolving, we will continue to take the necessary actions to best position Transocean to effectively manage our business throughout the cycles and deliver long-term value to our stakeholders.”

Offshore Energy Today Staff

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