Transocean Reports Second Quarter 2008 Financial Results

Source: www.gulfoilandgas.com 8/6/2008, Location: North America

Transocean reported net income for the three months ended June 30, 2008 of $1.107 billion, or $3.45 per diluted share, compared to net income of $549 million, or $2.63 per diluted share for the three months ended June 30, 2007. Revenues for the second quarter of 2008 were $3.102 billion compared to $1.434 billion for the second quarter of 2007.

For the six months ended June 30, 2008, net income totaled $2.296 billion, or $7.15 per diluted share, on revenues of $6.212 billion. For the same period last year, net income totaled $1.102 billion, or $5.24 per diluted share, on revenues of $2.762 billion. Net income for the first half of 2008 included after-tax charges of $31 million, or $0.10 per diluted share, resulting primarily from $25 million of discrete tax items, $3 million of merger-related costs and a $3 million loss from the early retirement of debt. For the same period last year, net income included after-tax gains of $33 million, or $0.15 per diluted share, resulting primarily from a $20 million gain on the sale of the tender rig Charley Graves and $13 million of discrete tax items during the first quarter 2007.

On November 27, 2007, Transocean Inc. merged with GlobalSantaFe Corporation and reclassified its ordinary shares into cash and shares. Reported results for the second quarter and first half of 2008 include a full three and six months, respectively, from GlobalSantaFe's operations. Diluted earnings per share for the second quarter and first half of 2007 exclude GlobalSantaFe's operations and are based on a weighted average diluted share count of 210 million and 211 million shares, respectively, which includes the effect of restating the historical diluted share count for the Reclassification.

Operations Quarterly Review

Revenues for the three months ended June 30, 2008 were $3.102 billion compared to revenues of $3.110 billion during the three months ended March 31, 2008. The $8 million quarter-to-quarter decrease in total revenues included $53 million of lower contract drilling revenues reflecting an increase in out-of-service time for planned shipyards, which were partially offset by an increase in average dayrates, and $34 million of lower non-cash contract drilling intangible revenues. These net declines were offset by a $79 million increase in other revenues, primarily from non-drilling activities. The average dayrate for the fleet increased four percent from $229,000 in the first quarter to $238,600 in the second quarter, primarily as a result of rigs commencing new contracts at higher dayrates in the second quarter.

Operating and maintenance expenses for the three months ended June 30, 2008 were $1.364 billion compared to $1.157 billion for the prior three-month period. The $207 million increase in operating and maintenance expenses primarily reflects an increase in shipyard and maintenance projects as previously anticipated and scheduled pay increases.

Depreciation, depletion and amortization totaled $337 million in the second quarter of 2008, a decline of 8.2 percent compared to $367 million in the first quarter of 2008. The quarter-to-quarter decrease in depreciation, depletion and amortization is related to recently sold rigs and rigs classified as held for sale.

General and administrative expenses decreased 8.2 percent to $45 million in the second quarter of 2008 compared to $49 million in the prior three-month period. The decrease primarily reflects a reduction in merger-related compensation costs relative to the first quarter of 2008.

Interest Expense and Liquidity

Interest expense, net of amounts capitalized, for the second quarter of 2008 decreased to $111 million compared to $137 million for the first quarter of 2008. The decrease resulted primarily from a quarter-to-quarter reduction in total debt of approximately $1.316 billion. As of June 30, 2008, total debt was $15.279 billion compared to $16.6 billion as of March 31, 2008.

Cash flow from operating activities totaled $1.011 billion for the second quarter of 2008 compared to $1.482 billion for the first quarter of 2008. Lower quarter-to-quarter cash flow during the second quarter of 2008 primarily reflects an increase in working capital and deferred expenses, as well as lower net income.

Effective Tax Rate

The Annual Effective Tax Rate for the second quarter and first half of 2008 was 11.4 percent and 12.5 percent, respectively. The Effective Tax Rate for the first half of 2008 was 13.5 percent, which reflects the impact of various discrete tax items totaling $25 million, primarily related to changes in estimates. The Effective Tax Rate for the second quarter of 2008 was 11.2 percent.


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Related Categories: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Industrial Development  Insurance  Investment  Mergers and Acquisitions  Risk Management 

Related Articles: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Industrial Development  Insurance  Investment  Mergers and Acquisitions  Risk Management 


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