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Analyzing Transocean’s 2Q17 Earnings

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2Q17 results

Transocean’s (RIG) revenue exceeded analysts’ revenue estimates by 0.5% in the second quarter. However, it missed the earnings estimate. The company’s profitability has also fallen. On a good note, the company secured a few new contracts. The company still doesn’t have a very good outlook for the offshore drilling industry in 2017.

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Transocean on 2Q17

In its second quarter earnings report, the company stated it has operated for 15 consecutive months without a single lost time incident. Transocean’s revenue efficiency, which is a proxy for rig uptime, was more than 97%. Despite a decline in its revenue, the company’s adjusted normalized EBITDA rose to 49%.

Transocean’s CEO Jeremy Thigpen said, “In addition to this excellent and consistent operating performance, during the quarter, we continued to further strengthen our balance sheet, including the private offering of $410 million in senior secured notes, the divesture of the jackup fleet for a total consideration of $1.35 billion, and a successful cash tender offer resulting in the repurchase of approximately $1.2 billion in existing notes with maturities between 2017 and 2021.”

Stock performance

Transocean’s stock closed at $9.07 on August 4, 2017. The stock has risen 4.4% in the last five trading days. The following are the stock returns for other offshore drilling (IYE) companies for the same period:

  • Seadrill (SDRL) fell 6.9%.
  • Noble (NE) fell 4%.
  • Diamond Offshore (DO) rose 3.6%.
  • Ensco (ESV) rose 0.19%.
  • Atwood Oceanics (ATW) fell 4.4%.

Series focus

In this series, we’ll analyze Transocean’s 2Q17 results. We’ll see how the company’s jack-up divesture impacted the company’s financials. We’ll also see Transocean’s views on the industry outlook. We’ll analyze the company’s current position and management’s plans for the future. We’ll also look at discussions between management and analysts.

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