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Transocean (RIG) Replies |
HenryTo
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Joined: 06 Aug 2004
Posts: 11743
Location: Los Angeles, California
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 Posted: Sat May 05, 2012 5:52 am Post subject: |
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Morningstar on RIG's 1Q results.
| Quote: | | Transocean's RIG first-quarter results generally struck us as positive. Revenue continued to decline quarter over quarter, to $2.33 billion from $2.42 billion, but adjusted operating income jumped to $326 million from $250 million over the same time frame. Transocean did take another $184 million in net charges, which included a $118 million increase in the goodwill-impairment charge from last quarter, but the underlying trends in the business improved. In particular, operating and maintenance expenditures were $1.41 bi llion in the quarter compared with $1.57 billion last quarter, as the firm benefited from lower shipyard-related costs ($70 million) and reduced activity levels in the drilling management unit ($40 million). The biggest improvement in operating and maintenance costs was in the ultra-deep-water unit, where costs declined to $402 million from $531 million sequentially, which is the best result for the firm since late 2010. We're now seeing some small pieces of evidence that Transocean is getting better control over its rig downtime and fleet maintenance issues. The timing couldn't be better, as the ultra-deep-water and deep-water rig markets are rapidly tightening and we've seen recent contract fixtures around $650,000 per day. The potential upside from Transocean's struggles over the past few years is that it has considerable open rig capacity in 2013 and 2014 to take advantage of this surge in day rates. About 34% and 60% of Transocean's high-specification floaters days are available in 2013 and 2014. As a result, we're not surprised to see the firm highlight its $1.3 billion in contract signing over the past few months, and we expect more lucrative contracts to be awarded over the rest of the year. |
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HenryTo
Site Admin
Joined: 06 Aug 2004
Posts: 11743
Location: Los Angeles, California
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| Posted: Tue Feb 21, 2012 9:57 pm Post subject: |
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Morningstar's latest update on RIG.
| Quote: | | Transocean RIG announced another series of painful developments for its suffering investors Monday. Following the release of a disastrous fleet status report in mid-January and the resignation of its CFO, principal accounting officer, and executive vice president of operations integrity, the firm indicated the board will not propose a dividend at its 2012 shareholder meeting, and it will take an unspecified but substantial goodwill-i mpairment charge against contract drilling services unit. The decision to eliminate the dividend was driven by the desire to maintain an investment-grade balance sheet and still be able to reinvest in the business. We believe the dividend elimination indicates that Transocean has very limited visibility on its rig downtime challenges and, in light of the uncertainty, didn't deem it prudent to commit to another large dividend payout while it is still in operational turmoil. CEO Steven Newman indicated a few weeks ago that it may take several years to fully work through its rig fleet because the firm needs to coordinate with customers in some cases about when to take the rig into the shipyard. This development is in line with our thesis, which assumes elevated levels of rig downtime and out-of-service costs for several years but diminishing numbers after 2012. The elimination also marks an embarrassing reversal for Newman after he received shareholder approval for the dividend in May 2011. We still believe Transocean can support a healthy dividend payment at some point after it fully addresses its existing fleet headaches. The goodwill impairment follows Transocean's decision to impair $1 billion of goodwill against its standard jackups in the fourth quarter of 2010. The company still has another $8 billion in goodwill left on its balance sheet and anticipates it will complete its assessment of the charge by March 31. The charge is primarily due to the decline in the market value of the business. We expect a large, potentially multi-billion-dollar charge, as Transocean seems to be trying to taking its lumps in the proverbial big bath rather than spread them out over numerous quarters. We continue to believe Transocean faces severe operational headwinds in 2012, and it is unlikely that we'll see much good news from the company until 2013. |
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HenryTo
Site Admin
Joined: 06 Aug 2004
Posts: 11743
Location: Los Angeles, California
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HenryTo
Site Admin
Joined: 06 Aug 2004
Posts: 11743
Location: Los Angeles, California
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HenryTo
Site Admin
Joined: 06 Aug 2004
Posts: 11743
Location: Los Angeles, California
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| Posted: Fri Jun 10, 2011 12:16 am Post subject: |
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Morningstar lowers its risk rating on oil drillers:
| Quote: | | We are lowering our fair value uncertainty ratings for Transocean RIG, Helmerich & Payne HP, and Ensco ESV. Our new uncertainty rating for Transocean is medium. For H&P and Ensco, our new rating is high. All three drillers own some of the newest and most advanced rigs in the offshore and land drilling industries. We believe their premium asset profiles, which constitute a significant portion of their rig fleets, will generally lead to higher day rates and higher utilization levels. In addition, given the attractiveness of the rigs from a technical and economic standpoint for customers, we believe they will obtain higher utilization and day rate levels than peers during cyclical downturns. Finally, all three drillers have large backlogs of work, which ensures a certain level of earnings stability. Therefore, in our view, lower uncertainty ratings are appropriate for these drillers. |
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HenryTo
Site Admin
Joined: 06 Aug 2004
Posts: 11743
Location: Los Angeles, California
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| Posted: Sat May 07, 2011 4:04 pm Post subject: |
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Morningstar on RIG's 1Q earnings:
| Quote: | | Transocean's RIG first-quarter report didn't contain any surprises. Year over year, revenue declined 17% to $2.14 billion, and operating income dropped 61% to $372 million, thanks to lower ultra-deep-water and deep-water fleet utilization. The company continues to experience downtime for its ultra-deep-water and deep-water rigs as it seeks to comply with new well control equipment certifications and higher standards for equipment condition, in addition to capacity constraints from its venders. At first glance, there were no new and material Macondo-related disclosures in the firm's 10-Q filing. We view the opportunistic asset sales of the Trident 20 and the Transocean Mercury as useful, as they will provide additional cash to upgrade the rest of the fleet while shedding older and less productive assets. We'd expect to see more asset sales, as the company has already committed to sell its oil and gas operations and two more old jackup rigs. |
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