Transocean Beats Q4 Earnings Estimates On Higher Dayrates

Offshore drilling giant Transocean Ltd. (RIG - Analyst Report) reported better-than-expected fourth-quarter 2014 results backed by higher dayrates as well as reduced operating and maintenance cost.

Earnings per share (excluding special items) came in at 95 cents, surpassing the Zacks Consensus Estimate of 79 cents and improving from the year-ago adjusted figure of 71 cents.

Quarterly total revenue of $2,237 million beat the Zacks Consensus Estimate of $2,116 million but fell from the year-ago quarter figure of $2,252 million.

Transocean's high-spec floaters contributed approximately 71% to the total revenue, while mid-water floaters and high-spec jackup rigs accounted for 19.1% and 6.7%, respectively. The remaining revenues came from rig activities, integrated services and others.

For the year ended Dec 31, 2014, Transocean reported income (excluding non-operating items) of $4.94 per share, above the Zacks Consensus Estimate of $4.78. Moreover, the figure came ahead of the year-ago adjusted profit of $4.09. Revenues were recorded at $9,174 million against the year-ago number of $9,249 million.

Operating Statistics

Transocean reported operating loss of $647 million during the quarter compared with earnings of $398 million in fourth-quarter 2013. Significant loss on impairment activities hampered the results.

Meanwhile, total operating and maintenance expenses decreased about 10.3% year over year to $1,310 million.

Dayrates & Utilization

Total average dayrates increased to $413,500 in the quarter under review from $393,100 in the year-earlier quarter. The increase is attributable to higher dayrates from all its assets.

Overall fleet utilization was 72%, down from the year-ago utilization rate of 75%.

Capital Expenditure & Balance Sheet

Capital expenditures during the quarter totaled $318 million.

As of Dec 31, 2014, Transocean had cash and cash equivalents of $2,635 million and long-term debt of $9,059 million (representing a debt-to-capitalization ratio of approximately 41.9%).

Guidance

Transocean is expected to spend roughly $1.8 billion during full-year 2015, lower than $2.2 billion expended in 2014.

Zacks Rating

Transocean currently carries a Zacks Rank #3 (Hold).

Better-ranked players in the energy sector include VTTI Energy Partners LP (VTTI - Snapshot Report), Western Gas Equity Partners LP (WGP - Snapshot Report) and Valero Energy Partners LP (VLP - Snapshot Report). All these stocks sport a Zacks Rank #1 (Strong Buy).