Deepwater Atlas drillship; Source: Transocean

Transocean ends 2023 on high note with ‘company-best’ uptime performance, says CEO

Business & Finance

Offshore drilling contractor Transocean has secured a $3.2 billion boost in contract backlog during 2023, thanks to a series of new assignments for its rig fleet. With the upturn in the offshore drilling market still in effect, higher day rates and fleet utilization enabled the rig owner to score an uptime performance of 97.6% in 2023, according to its Chief Executive Officer (CEO).

Deepwater Atlas drillship; Source: Transocean

A report from Fortune Business Insights, which indicates that the offshore drilling market is poised to grow from $36.52 billion in 2023 to $65.63 billion by 2030, supports Transocean’s multi-year upcycle expectations. On the other hand, Maritime Strategies International (MSI) recently pointed out that the demand for MODUs would decrease as countries progress further in the energy transformation endeavors since fewer oil and gas drilling activities would be carried out.

Transocean’s latest fleet status report from February 2024 shows that the rig owner got its hands on an aggregate incremental backlog associated with new deals and extensions of around $326 million since October 2023 while the company’s total backlog jumped to approximately $9.1 billion. In its previous fleet status report, the rig owner revealed more work for drillships, but the latest one comes with both drillship and semi-submersible rig assignments.

The drilling giant’s results for 4Q 2023 show a net loss attributable to controlling interest of $104 million for the three months ended on December 31, 2023, compared to a loss of $220 million in 3Q 2023. The results for 4Q 2023 entailed net unfavorable items of $30 million, including a $24 million loss on conversion of debt to equity; a $5 million loss on impairment of the firm’s investment in an unconsolidated affiliate; and a $3 million discrete tax items.

After consideration of these net favorable items, the fourth quarter of 2023 adjusted net loss was $74 million, compared to the third quarter of 2023 adjusted net loss of $280 million. The firm’s adjusted EBITDA was $122 million in 4Q 2023, compared to $162 million in the prior quarter. In addition, the rise in capital expenditures to $220 million in 4Q 2023 from $50 million in 3Q 2023 is primarily associated with the Deepwater Aquila newbuild ultra-deepwater drillship.

The rig owner’s total contract drilling revenues increased sequentially by $28 million to $741 million in 4Q 2023 due to increased average daily revenue and higher fleet revenue efficiency, as well as higher utilization on four rigs that were undergoing contract preparation and one rig that underwent a special periodic survey in the third quarter. This was partially offset by lower revenue generated by two rigs that were idle and two rigs that were undergoing contract preparation during the fourth quarter.

Furthermore, the drilling contractor’s total fleet average revenue efficiency was 97% in 4Q 2023, compared to 95.4% in the prior quarter and 98% in 4Q 2022. The ultra-deepwater floaters’ revenue efficiency for 4Q 2023 was 96.8%, compared to 94.3% in 3Q 2023 and 97.8% in 4Q 2022. On the other hand, the company’s harsh environment floaters recorded revenue efficiency for 4Q 2023 of 97.6%, compared to 98.1% during the previous quarter and 98.4% in 4Q 2022.

Transocean’s total fleet utilization in 4Q 2023 was 51.6%, compared to 49.4% in the third quarter of 2023 and 49.4% in 4Q 2022. While the ultra-deepwater floaters’ utilization for 4Q 2023 was 46.8%, compared to 45% in 3Q 2023 and 47.9% in 4Q 2022, the harsh environment floaters’ utilization for 4Q 2023 was 66.7%, compared to 63% during the previous quarter and 53.5% during 4Q 2022.

Jeremy Thigpen, Transocean’s Chief Executive Officer, commented: “We are very proud of our performance in 2023. We added $3.2 billion of backlog in the calendar year, providing additional visibility to future cash flows. In addition to delivering standout personal and process safety results, we finished the year with a company-best 97.6% uptime performance.

“Notably, we generated these results in a year that included eight large-scale projects, including installation of the 20K BOP on the Deepwater Atlas, the industry’s first eighth-generation drillship, and the timely delivery and commissioning of the Deepwater Titan, our second eighth-generation drillship. Finally, we took delivery of our eighth 1,400 short ton drillship, the Deepwater Aquila.”

Based on Transocean’s results, the contract intangible amortization represented a non-cash revenue reduction of $7 million in 4Q 2023, compared with $8 million in the prior period while the operating and maintenance expense was $569 million, compared to $524 million in 3Q 2023.

The sequential increase was primarily due to rigs returning to work after undergoing contract preparation in the prior quarter and higher in-service maintenance costs across the company’s fleet, partially offset by lower activity for two rigs that were idle in the fourth quarter.

According to Transocean, the cash provided by operating activities was $98 million during the fourth quarter of 2023, representing an increase of $142 million compared to the prior quarter. The sequential increase was driven by the timing of interest payments and increased collections from customers partially offset by decreased cash collected from, and increased payments to, the firm’s unconsolidated affiliates.

“We remain encouraged by the continued tightness in the market and remain focused on delivering value to our shareholders as we progress through what we expect to be a multi-year upcycle,” underscored Thigpen.

Recently, one of Transocean’s rigs became the first semi-submersible to sport DNV’s Abate (Power+) notation. After reviewing the available day rate information, Offshore Energy concluded that Transocean earned the top spot as the highest-paid offshore drilling contractor in 2H 2023.

Related Article

The Deepwater Proteus drillship was the highest-paid rig in 2H 2023 in the rig owner’s fleet.


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