Transocean Ltd. Reports First Quarter 2020 Results

Source Press Release
Company Transocean Ltd. 
Tags Capital Spending, Guidance, Strategy - Corporate, Financial & Operating Data
Date April 29, 2020

Transocean Ltd. (NYSE: RIG) today reported net loss attributable to controlling interest of $392 million, $0.64 per diluted share, for the three months ended March 31, 2020.

First quarter 2020 results included net unfavorable items of $205 million, or $0.34 per diluted share, as follows:

  • $167 million, $0.28 per diluted share, loss on impairment of assets; and
  • $57 million, $0.09 per diluted share, loss on retirement of debt.

These unfavorable items were partially offset by:

  • $19 million, $0.03 per diluted share, related to discrete tax items.

After consideration of these net unfavorable items, first quarter 2020 adjusted net loss was $187 million, or $0.30 per diluted share.

Contract drilling revenues for the three months ended March 31, 2020, decreased sequentially by $33 million, primarily due to reduced activity related to rigs that were idle and lower revenue efficiency. These decreases were partially offset by a full quarter of revenues from the recently reactivated ultra‑deepwater floaters Deepwater Mykonos and Deepwater Corcovado.

First quarter 2020 results reflected a non-cash revenue reduction of $48 million, compared to $47 million in the prior quarter, from contract intangible amortization associated with the Songa and Ocean Rig acquisitions.

Operating and maintenance expense was $540 million, compared with $575 million in the prior quarter. The sequential decrease was the result of lower in-service maintenance cost across our fleet, activation costs in the prior quarter, and reduced activity due to lower utilization. This was partially offset by higher expense reimbursed by our customers and higher severance cost.

General and administrative expense was $43 million, as compared to $54 million in the fourth quarter of 2019. The decrease was primarily due to legal, professional and advisory fees incurred in the fourth quarter that were not repeated in the first quarter.

Interest expense, net of amounts capitalized, was $160 million, in line with the fourth quarter. Interest income was $9 million, compared with $10 million in the previous quarter.

The Effective Tax Rate(2) was 1.1%, down from 30.3% in the prior quarter. The decrease was primarily due to various discrete period tax items, including the carryback of net operating losses in the U.S. as a result of the Coronavirus Aid, Relief and Economic Security Act, settlements and expirations of uncertain tax positions, gains and losses on currency exchange rates and changes in valuation allowance. The Effective Tax Rate excluding discrete items was (9.5)% compared to (47.2)% in previous quarter.

Cash flows used in operating activities were $48 million, compared to cash provided by operating activities of $147 million in the prior quarter. The first quarter cash used in operating activities increased sequentially from operating cash generated in the fourth quarter, during which we experienced a high level of collections. This was primarily a result of more normalized collections on customer receivables combined with increased cash used in our operations including the timing of interest disbursements and payments as well as tax withholdings and tax payments in a number of non-U.S. jurisdictions.

First quarter 2020 capital expenditures of $107 million decreased primarily due to reduced expenditures for the reactivation of two rigs and leasehold improvements, partially offset by increased expenditures for our newbuild rigs under construction. This compares with $128 million in the previous quarter.

“With the challenges we confronted related to COVID-19, I am very proud of the strong quarterly financial results we delivered,” said Jeremy Thigpen, President and Chief Executive Officer. “Through outstanding effort across our entire organization, we delivered revenue in line with our guidance, and at lower than projected costs; even with the additional hurdles we overcame crewing and equipping our rigs to meet their contractual requirements for our customers. Looking forward, we recognize the dramatic decline in oil prices, coupled with the continued uncertainties surrounding the containment of COVID-19, and the resumption of the global economy, will invariably delay the contracting activity that we expected in 2020. However, with our industry-leading backlog and proven track record for managing costs, we expect to continue to deliver industry-best margins. With continued strong operating performance, and the prudent management of our liquidity, Transocean is well-positioned to continue delivering the highest level of service while keeping our employees and our customers safe.”

All non-GAAP measure reconciliations to the most comparative U.S. GAAP measures are displayed in quantitative schedules on the company’s website at: .

https://www.globenewswire.com/news-release/2020/04/29/2024622/0/en/Transocean-Ltd-Reports-First-Quarter-2020-Results.html

Source: EvaluateEnergy® ©2020 EvaluateEnergy Ltd