Transocean’s 2Q profit jumps to $587M

Transocean Ltd. has reported net income attributable to controlling interest for the three months ended June 30, 2014 of $587 million, or $1.61 per diluted share.

After consideration of several non-material and offsetting items, second quarter 2014 adjusted earnings from continuing operations were also $587 million, or $1.61 per diluted share.

For the three months ended June 30, 2013 the company reported net income attributable to controlling interest of $307 million, $0.84 per diluted share, which included net unfavorable items of $87 million, or $0.24 per diluted share.

After consideration of these net unfavorable items, second quarter 2013 adjusted earnings from continuing operations were $394 million, or $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 June 30, 2014 were $2.328 billion, compared with revenues of $2.339 billion during the quarter ended March 31, 2014. Revenue efficiency for Transocean’s entire fleet was 95.0 percent in the second quarter, compared with 95.7 percent in the first quarter of 2014. Ultra-deepwater revenue efficiency was 94.0 percent, compared with 96.4 percent in the prior quarter. Fleet utilization was 78 percent, unchanged from the prior quarter.

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

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

Transocean’s second quarter Effective Tax Rate(4) decreased to 10.7 percent from 14.4 percent in the first quarter of 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 the second quarter of 2014 was 12.6 percent versus 15.1 percent for the prior quarter.

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

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

Capital expenditures decreased $780 million from the first quarter of 2014 to $351 million. The decrease relates to the timing of payments associated with the company’s newbuild program.