Transocean Ltd. announce Third Quarter 2013 Earnings Results

Transocean Ltd. announce Third Quarter 2013 Earnings Results

Third quarter 2013 revenues were $2.558 billion, compared with $2.397 billion in the second quarter of 2013

Operating and maintenance expenses for the third quarter were $1.491 billion, compared with $1.393 billion in the second quarter of 2013.

Third quarter 2013 net income attributable to controlling interest was $546 million, which included $47 million of net favorable items. This compares with the second quarter 2013 net income attributable to controlling interest of $307 million, which included $85 million of net unfavorable items;

Third quarter Annual Effective Tax Rate(1) was 19.0 percent, compared with 23.5 percent in the second quarter of 2013

Third quarter 2013 net income attributable to controlling interest was $546 million, or $1.50 per diluted share. After adjusting for net favorable items, adjusted earnings from continuing operations were $499 million, or $1.37 per diluted share;

Cash flows from operating activities were $623 million in the third quarter, compared with $416 million in the second quarter of 2013.

Revenue efficiency(2) was 94.0 percent in the third quarter, compared with 93.1 percent in the second quarter of 2013. Ultra-deepwater revenue efficiency was 92.5 percent, compared with 91.1 percent in the prior quarter;

Total fleet rig utilization(3) was 83 percent in the third quarter, compared with 80 percent in the prior quarter; and
Contract backlog was $29.8 billion as of the October 16, 2013 Fleet Status Report. Since October 16, 2013, additional backlog totaling $166 million was secured.

Transocean Ltd. (NYSE: RIG) (SIX: RIGN) today reported net income attributable to controlling interest of $546 million, or $1.50 per diluted share, for the three months ended September 30, 2013. Third quarter 2013 results included net favorable items, after tax, of $47 million, or $0.13 per diluted share, as follows:

$55 million, or $0.14 per diluted share, in favorable discrete tax benefits;
22 million, or $0.06 per diluted share, associated with gains on disposal of assets; and
$4 million, or $0.02 per diluted share, in income associated with discontinued operations.
These net favorable items were partially offset by:

$19 million, or $0.05 per diluted share, related to an unfavorable adjustment in contingencies associated with the Macondo well incident; and $15 million, or $0.04 per diluted share, of costs associated with severance plans established for the company’s previously announced shore-based organizational efficiency initiative.

After consideration of these net favorable items, third quarter 2013 adjusted earnings from continuing operations were $499 million, or $1.37 per diluted share. A reconciliation of the non-GAAP adjusted net income and diluted earnings per share is included in the accompanying schedules.

In addition to the items above, third quarter 2013 results also included approximately $11 million, or $0.03 per diluted share, in charges related to accelerated recognition of existing compensation plans associated with the implementation of the company’s shore-based organizational efficiency initiative.

The third quarter 2013 results compare with a net loss attributable to controlling interest of $381 million, or $1.06 per diluted share, for the three months ended September 30, 2012, which included net unfavorable items of $887 million, or $2.46 per diluted share. The net unfavorable items were mostly due to $881 million, or $2.45 per diluted share, associated with the loss on impairment of assets included in discontinued operations primarily related to exiting the standard jackup market. After consideration of these net unfavorable items, third quarter 2012 adjusted earnings from continuing operations were $506 million, or $1.40 per diluted share.

Operations Quarterly Review
Revenues for the three months ended September 30, 2013 were $2.558 billion, compared with revenues of $2.397 billion during the quarter ended June 30, 2013. Contract drilling revenues increased $81 million primarily due to higher utilization on the Discoverer Seven Seas and the GSF Explorer. Higher fleet revenue efficiency, and higher dayrates, primarily in the North Sea, also contributed to the sequential increase in contract drilling revenues. Total fleet utilization was 83 percent in the third quarter of 2013, compared with 80 percent in the prior quarter. Total fleet revenue efficiency was 94.0 percent in the third quarter, compared with 93.1 percent in the second quarter of 2013. Other revenues increased $80 million to $156 million for the third quarter of 2013, compared with $76 million in the prior quarter, primarily due to increased drilling management services activity.

Operating and maintenance expenses increased $98 million to $1.491 billion for the third quarter of 2013, compared with $1.393 billion for the prior quarter. The sequential increase in operating and maintenance expenses was primarily due to $64 million associated with drilling management services activity. Contract drilling expenses were also higher mainly due to shipyard costs and an unfavorable adjustment in contingencies associated with the Macondo well incident.

General and administrative expenses were $67 million for the third quarter of 2013, compared with $77 million in the previous quarter. Second quarter 2013 general and administrative expenses included certain overhead costs that were not repeated in the third quarter of 2013.

Third quarter 2013 results included approximately $27 million in costs associated with severance and the accelerated recognition of existing compensation plans due to the implementation of the shore-based organizational efficiency initiative. Approximately $22 million of this cost was included in operating and maintenance expenses and $5 million was included in general and administrative expenses.

Annual Effective Tax Rate
Transocean’s third quarter Effective Tax Rate(4) was 10.4 percent, compared with 28.8 percent in the second quarter of 2013. The decrease in the Effective Tax Rate was due to changes in estimates, primarily related to settlements of prior years’ tax liabilities. Transocean’s Annual Effective Tax Ratefrom continuing operations for the third quarter of 2013 was 19.0 percent. This compares with 23.5 percent for the prior quarter. The decrease was primarily due to changes in the annual provision estimate due to favorable tax legislation and court rulings, the blend of income that is taxed based on gross revenues versus pre-tax income and rig movements between taxing jurisdictions, among other items. Third quarter 2013 income tax expense included a favorable tax benefit of $9 million, or $0.03 per diluted share, to reflect the decrease in the Annual Effective Tax Rate to 20.6 percent for the nine months ended September 30, 2013, from 21.6 percent for the six months ended June 30, 2013.

Other Items
Interest expense, net of amounts capitalized, was $142 million in the third quarter of 2013, compared with $146 million in the prior quarter. Capitalized interest for the third quarter was $19 million, compared with $16 million in the second quarter of 2013. Interest income was $11 million in the third quarter of 2013, unchanged from the prior quarter.

Cash flows from operating activities were $623 million for the third quarter, compared with $416 million for the second quarter of 2013. Capital expenditures increased $98 million to $450 million for the third quarter, compared with $352 million in the second quarter of 2013. The increase in capital expenditures was primarily associated with the company’s newbuild program.

Source: www.deepwater.com

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