Transocean Ltd. Reports Third Quarter 2021 Results

Source: www.gulfoilandgas.com 11/1/2021, Location: Europe

• Total contract drilling revenues were $626 million, compared to $656 million in the second quarter of 2021 (total adjusted contract drilling revenues of $683 million, compared to $713 million in the second quarter of 2021);
• Revenue efficiency(1) was 98.1%, compared to 98.0% in the prior quarter;
• Operating and maintenance expense was $398 million, compared to $434 million in the prior quarter;
• Net loss attributable to controlling interest was $130 million, $0.20 per diluted share, compared to $103 million, $0.17 per diluted share, in the second quarter of 2021;
• Adjusted EBITDA was $245 million, compared to $255 million in the prior quarter; and
• Contract backlog was $7.1 billion as of the October 2021 Fleet Status Report.

Transocean Ltd. reported a net loss attributable to controlling interest of $130 million, $0.20 per diluted share, for the three months ended September 30, 2021.

Third quarter 2021 results included a net unfavorable item of $8 million, or $0.01 per diluted share, related to discrete tax items. After consideration of this net unfavorable item, third quarter 2021 adjusted net loss was $122 million, $0.19 per diluted share, compared to $109 million, $0.18 per diluted share, in the second quarter of 2021.

Contract drilling revenues for the three months ended September 30, 2021 decreased sequentially by $30 million to $626 million, primarily due to reduced activity for two rigs that went idle and one rig that commenced a planned shipyard stay during the third quarter, partially offset by higher revenue efficiency, and one rig that returned to work following a shipyard stay.

A non-cash revenue reduction of $57 million was recognized in both the third and second quarter as a result of contract intangible amortization associated with the Songa and Ocean Rig acquisitions in 2018.

Operating and maintenance expense was $398 million, compared with $434 million in the prior quarter. The sequential decrease was primarily the result of reduced activity due to rigs that became idle and lower COVID-19-related costs, partially offset by shipyard and contract preparation activities.

General and administrative expense was $40 million, up from $39 million in the second quarter of 2021. The increase was primarily due to legal and professional fees.

Interest expense, net of amounts capitalized, was $110 million, compared with $115 million in the prior quarter. Interest income was $4 million, which is in line with the second quarter of 2021.

The Effective Tax Rate(2) was (26.1)%, down from (4.6)% in the prior quarter. The decrease was primarily due to the discrete tax impact of jurisdictional ownership changes of certain assets, lower earnings before tax and releases of uncertain tax positions related to settlements. The Effective Tax Rate excluding discrete items was (18.1)% compared to (10.2)% in previous quarter.

Cash flows provided by operating activities were $141 million, compared to $153 million in the prior quarter. The third quarter decrease was primarily due to the timing of interest payments and increased income tax payments, partially offset by annual insurance prepayments made in the second quarter of 2021.

Third quarter 2021 capital expenditures of $37 million, compared to $41 million in the prior quarter, were primarily related to the company’s newbuild drillships under construction.

“I would like to thank the entire Transocean team for their continued dedication to delivering safe, reliable, and efficient operations for our customers. We once again produced strong financial results,” said President and Chief Executive Officer, Jeremy Thigpen. “Notably, our strong uptime performance during the quarter drove an impressive revenue efficiency of 98%, resulting in adjusted revenues of $683 million.”

“Furthermore, during the quarter, we were excited to secure the maiden contract for Deepwater Atlas, solidifying Transocean’s position as the undisputed leader in the 20,000 psi deepwater drilling market. As you know, Transocean has a history of firsts in the most technically demanding environments; and, we look forward to enhancing that legacy upon delivery of Deepwater Atlas and Deepwater Titan in the coming year.”

“Further demonstrating our technical leadership, we recently announced our commitment to reduce our greenhouse gas emissions intensity 40 percent by 2030 as compared to 2019. Our industry plays an important role in the ever-growing global demand for energy; and, we are proud to continue to employ our operational and technical expertise to support our customers in the delivery of efficient energy to the world, while simultaneously reducing our impact on the environment.”

Thigpen concluded, “We grow increasingly encouraged as we observe continuously improving market fundamentals and the resulting strength exhibited in oil prices. With tightening utilization for high-specification ultra-deepwater and harsh environment assets, and longer tender durations across multiple markets, dayrates are steadily increasing, which bodes well for the offshore drilling industry, and Transocean.”


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