uploads///Costs

Transocean’s 3Q17 Earnings: What Analysts Expect

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Dec. 4 2020, Updated 10:53 a.m. ET

3Q17 earnings estimate

Along with a fall in its revenue, analysts expect Transocean’s (RIG) 3Q17 EBITDA (earnings before interest, tax, depreciation, and amortization) to fall to $313 million—a 10% fall from $349 million reported in 2Q17 and a 31% fall year-over-year. For 4Q17, the company’s estimated EBITDA stands at $287 million. For 2017, analysts expect Transocean’s EBITDA to be ~$1.3 billion—much lower than the EBITDA of ~$1.7 billion in 2016. Falling EBITDA has been common among offshore drillers (IYE) during the current downturn.

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Costs

In 3Q17, Transocean expects its costs to be $350 million–$360 million—compared to $333 million in 2Q17. The company lowered its 2017 cost guidance 25%.

EBITDA margin

Based on its second quarter EBITDA and revenue, Transocean’s EBITDA margin is 49.1%. Analysts estimate that Transocean’s EBITDA margin will fall to 44.8% in the third quarter. Peers’ EBITDA margins based on their 2Q17 EBITDA and revenues are as follows:

  • Rowan Companies’ (RDC) EBITDA margin was 40.8%.
  • Diamond Offshore’s (DO) EBITDA margin was 44.6%.
  • Seadrill’s (SDRL) EBITDA margin was 41.8%.
  • Noble’s (NE) EBITDA margin was 33.3%.

EPS estimate

Wall Street analysts expect Transocean’s EPS (earnings per share) to fall as well. Analysts estimate -$0.07 per share in 3Q17—compared to $0.25 per share in 3Q16. A drastic fall is also expected in the coming years. The 2017 EPS is expected to fall 105% to -$0.10 from $1.75 in 2016. Analysts also expect Transocean’s EPS to be negative in 2018.

In the next part, we’ll see what analysts recommend for Transocean.

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