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Transocean’s Second-Quarter and 2018 Capex Guidance

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May. 31 2018, Updated 3:15 p.m. ET

Cash flow

The operating cash flow represents the cash flow from a company’s core operations. In the first quarter, Transocean’s (RIG) cash flow from operations dropped to $103 million from $244 million in the previous quarter.

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Capital expenditure

Transocean’s capex stood at $53 million in the first quarter. The expenditure was mainly related to the company’s contracted newbuild drillships—Deepwater Poseidon and Deepwater Pontus. The expenditure was lower than $111 million in the previous quarter.

Guidance

In the second quarter, Transocean expects its capex to be $55 million, which includes capitalized interest. In 2018, the company expects its capex to be ~$175 million, which includes $77 million towards the newbuild capex and the remaining towards the maintenance capex. Going forward, Transocean expects its 2019 capex to be $200 million, which includes $97 million towards two newbuild drillships and $103 for maintenance capex. For 2018 and 2019, the capex doesn’t include any speculative rig activations.

Free cash flow

In the first quarter, Transocean’s capex was lower than its cash flow from operations, which left the company with a positive cash flow of $50 million. Transocean had a positive free cash flow in 2016 and fiscal 2017. The company had a positive free cash flow of $647 million in 2017.

In the first quarter, Ensco’s (ESV) free cash flow was -$227 million. Rowan Companies (RDC) had a free cash flow of -$117 million in the first quarter. In 2017, Diamond Offshore (DO) and Noble (NE) had positive free cash flows.

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