Transocean revenue, utilization drop

Transocean, one of the world’s largest offshore drilling contractors saw its revenue and utilization drop, due to a shrinking demand for drilling services caused by plunging oil prices. The market situation is not expected to change any time soon, the company said.

The company on Thursday reported revenues of $1.61 billion, down from $2.27 billion a year ago. The company’s net income was $321 million, versus $2.21 billion loss in the third quarter of 2014.

According to the Switzerland-based driller, revenues fell due to lower fleet utilization. Also, Transocean said on Wednesday night that during the quarter it managed to keep its operating and maintenance costs at $880 million. Operating and maintenance expenses were lower when compared to 1.32 billion in the same quarter of 2014.

Costs and expenses fell due to fewer mobilizations, due to rigs sold or classified as held for sale, and also resulting from rigs being stacked.

Capital expenditures for the quarter were $940, with the majority of the sum spent on the final shipyard payment for the Deepwater Thalassa ultra-deepwater drillship. The company’s capex in the corresponding quarter of 2014 was 365 million.

As for its drilling fleet, 62 units as of September 30, the average daily revenue fell to $385.300 from $403.000 in the same period of 2014. Rig utilization fell to 70%, down from 76% a year ago.

Rig utilization is defined as the total number of operating days divided by the total number of available rig calendar days in the measurement period, expressed as a percentage.

As of October 26, 2015, Transocean’s contract backlog was $16.9 billion.

In a separate filing, Transocean said that the company’s stance was the drilling market in the near to medium term would be especially challenging given the sustained weak oil pricing, coupled with the oil companies’ focus on reducing costs, and in delays of many exploration and development programs

Transocean said that oil and natural gas prices do not currently support sustained demand for drilling rigs across all asset classes and regions.

“As a result of this reduced demand, we have seen a sharp decline in the execution of drilling contracts for the global offshore drilling fleet. We do not currently expect the number of drilling contract awards to increase in 2016, exacerbating the current excess rig capacity, leading to lower utilization and dayrates. In this environment, older and less capable assets are more likely to be permanently retired, ultimately reducing the available supply of drilling rigs,” the company said.

Offshore Energy Today Staff