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Transocean Ltd. Reports Fourth Quarter and Full-Year 2010 Results

February 23, 2011

ZUG, SWITZERLAND, Feb 23, 2011 (MARKETWIRE via COMTEX) --

Transocean Ltd. (NYSE: RIG) (SIX: RIGN) today reported a net loss attributable to controlling interest for the three months ended December 31, 2010 of $799 million or $2.51 per diluted share. The results compare to net income attributable to controlling interest of $723 million, or $2.24 per diluted share for the three months ended December 31, 2009.

Fourth Quarter 2010

Fourth quarter 2010 results were adversely impacted by $1.017 billion of after tax items, or $3.19 per diluted share, which include:

-- An after-tax, non-cash charge of $1.010 billion, or $3.16 per diluted
   share. The charge resulted from an impairment of our Standard Jackup
   asset group. Calculated based on U.S. Generally Accepted Accounting
   Principles, the charge is due to a current and projected decline in
   dayrates and utilization that has adversely impacted this asset group.
-- a $13 million loss on retirement of debt associated with repurchases
   of a portion of our convertible senior notes, and
-- $6 million of income as a result of the TODCO tax sharing agreement
   and other matters.

Fourth quarter 2010 results also included expenses associated with the Macondo well incident of $28 million, or $25 million, after tax, or $0.08 per diluted share. These expenses include legal and internal investigation costs, professional fees and increased insurance premiums.

Full Year 2010

For the year ended December 31, 2010, net income attributable to controlling interest totaled $961 million, or $2.99 per diluted share. Net income for the year ended December 31, 2010 included after-tax charges of $854 million, or $2.65 per diluted share, resulting primarily from the $1.010 billion impairment of our Standard Jackups. Other charges for the full year totaled $111 million and included litigation matters, an impairment of oil and gas properties, a loss on the sale of two rigs and losses on the early retirement of debt and other matters. Partially offsetting these charges was a $267 million after-tax gain resulting from insurance recoveries associated with the loss of the Deepwater Horizon.

Full-year 2010 results also included additional expenses associated with the Macondo well incident of $137 million, or $116 million after tax, or $0.36 per diluted share. These expenses include legal costs, internal investigation costs, professional fees and increased insurance premiums.

For 2009, net income attributable to controlling interest was $3.181 billion, or $9.84 per diluted share. Net income for the year ended December 31, 2009 included after-tax charges of $498 million, or $1.55 per diluted share, resulting primarily from impairments of intangible assets and two rigs held for sale, litigation matters, losses on the early retirement of debt and adjustments associated with the GlobalSantaFe merger. These charges were partially offset by gains on the sale of our interest in a joint venture and settlements of certain tax matters.

Operations Quarterly Review

Revenues for the three months ended December 31, 2010 were $2.160 billion, compared to revenues of $2.309 billion during the three months ended September 30, 2010. The $149 million decrease was primarily due to:

-- $90 million of decreased utilization, primarily from rigs that were
   stacked or idled,
-- a $52 million charge related to a customer dispute in the U.S. Gulf
   of Mexico,
-- $41 million from increased shipyard activity,
-- $18 million of reduced revenue on completion of the GSF Arctic IV
   charter,
-- offset by $44 million due to increased drilling management services
   revenue, and
-- $8 million of other net favorable variances.

Operating and maintenance expenses totaled $1.352 billion for the fourth quarter 2010, up approximately 11 percent compared to $1.213 billion for the prior quarter. The $139 million quarter-to-quarter increase in operating and maintenance costs was primarily due to:

-- $73 million of increased shipyard and contract preparation costs,
-- $35 million of increased costs associated with drilling management
   services activity,
-- $34 million resulting from increased maintenance expense,
-- offset by $3 million of net favorable variances.

General and administrative expenses were $67 million for the fourth quarter 2010 compared to $59 million in the previous quarter. The $8 million increase was due, in part, to increases in non-rig related insurance costs and other miscellaneous items.

Liquidity and Interest Expense

Interest expense, net of amounts capitalized for the fourth quarter 2010, was $152 million, compared to $142 million in the third quarter 2010, reflecting the full quarter impact of the issuance of $2 billion of new senior notes during the third quarter. Interest expense, for the full year 2010 net of amounts capitalized, was $567 million, compared to $484 million for the full year 2009. The increase in interest expense was mainly due to lower capitalized interest expense in 2010.

Cash flow from operating activities increased to $796 million for the fourth quarter 2010 compared to $709 million for the third quarter 2010. For the full year 2010, cash flow from operating activities totaled $3.946 billion compared to $5.598 billion for the full year 2009.

Effective Tax Rate

Transocean's Annual Effective Tax Rate(1), which excludes various discrete items, for the fourth quarter 2010 and the full year ended December 31, 2010 was a benefit of 18.7 percent and an expense of 13.8 percent, respectively. The Effective Tax Rate(2) for the fourth quarter 2010 and the full year ended December 31, 2010 was 4.1 percent and 23.9 percent, respectively. Transocean's Effective Tax Rate reflects the impact of changes in estimates as well as the impact of impairments. The decline in the Annual Effective Tax Rate for the full year 2010 was due to a tax benefit realized in the fourth quarter resulting primarily from the relocation of certain rigs.

Conference Call Information

Transocean will conduct a teleconference call at 10:00 a.m. EST, 4:00 p.m. Swiss time, on February 24, 2011. To participate, dial +1 719-325-2327 and refer to confirmation code 1432993 approximately five to 10 minutes prior to the scheduled start time of the call.

In addition, the conference call will be simultaneously broadcast over the Internet in a listen-only mode and can be accessed by logging onto Transocean's website at www.deepwater.com and selecting "Investor Relations." A file containing four charts to be discussed during the conference call, titled "4Q10 Charts," has been posted to Transocean's website and can also be found by selecting "Investor Relations/Quarterly Toolkit." The conference call may also be accessed via the Internet at www.CompanyBoardroom.com by typing in Transocean's New York Stock Exchange trading symbol, "RIG."A telephonic replay of the conference call should be available after 1:00 p.m. EST, 7:00 p.m. Swiss time, on February 24, 2011, and can be accessed by dialing +1 719-457-0820 and referring to the passcode 1432993. Also, a replay will be available through the Internet and can be accessed by visiting either of the above-referenced Worldwide Web addresses. Both replay options will be available for approximately 30 days.

About Transocean

Transocean is the world's largest offshore drilling contractor and the leading provider of drilling management services worldwide. With a fleet of 138 mobile offshore drilling units as well as one ultra-deepwater drillship and three high-specification jackups under construction, Transocean's fleet is considered one of the most modern and versatile in the world due to its emphasis on technically demanding segments of the offshore drilling business. Transocean owns or operates a contract drilling fleet of 47 High-Specification Floaters (Ultra-Deepwater, Deepwater and Harsh-Environment semisubmersibles and drillships), 25 Midwater Floaters, nine High-Specification Jackups, 54 Standard Jackups and other assets utilized in the support of offshore drilling activities worldwide.

(1) Annual Effective Tax Rate is defined as income tax expense excluding various discrete items (such as changes in estimates and tax on items excluded from income before income tax expense) divided by income before income tax expense excluding gains on sales and similar items pursuant to the accounting standards for income taxes and estimating the annual effective tax rate. See the accompanying schedule entitled "Supplemental Effective Tax Rate Analysis."

(2) Effective Tax Rate is defined as income tax expense divided by income before income taxes. See the accompanying schedule entitled "Supplemental Effective Tax Rate Analysis."

For more information about Transocean, please visit our website at www.deepwater.com.

                     TRANSOCEAN LTD. AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF OPERATIONS
                   (In millions, except per share data)
                               (Unaudited)
                                    Three months ended  Twelve months ended
                                        December 31,       December 31,
                                    ------------------  ------------------
                                      2010      2009      2010      2009
                                    --------  --------  --------  --------
Operating revenues
Contract drilling revenues          $  2,032  $  2,546  $  8,967  $ 10,607
Contract drilling intangible
 revenues                                 13        44        98       281
Other revenues                           115       143       511       668
                                    --------  --------  --------  --------
                                       2,160     2,733     9,576    11,556
                                    --------  --------  --------  --------
Costs and expenses
Operating and maintenance              1,352     1,296     5,119     5,140
Depreciation, depletion and
 amortization                            394       382     1,589     1,464
General and administrative                67        46       247       209
                                    --------  --------  --------  --------
                                       1,813     1,724     6,955     6,813
                                    --------  --------  --------  --------
Loss on impairment                    (1,010)       --    (1,012)     (334)
Gain (loss) on disposal of assets,
 net                                       1        (6)      257        (9)
                                    --------  --------  --------  --------
Operating income                        (662)    1,003     1,866     4,400
                                    --------  --------  --------  --------
Other income (expense), net
Interest income                            6         3        23         5
Interest expense, net of amounts
 capitalized                            (152)     (119)     (567)     (484)
Loss on retirement of debt               (13)      (12)      (33)      (29)
Other, net                                (8)       23        10        32
                                    --------  --------  --------  --------
                                        (167)     (105)     (567)     (476)
                                    --------  --------  --------  --------
Income (loss) before income tax
 expense                                (829)      898     1,299     3,924
Income tax expense (benefit)             (34)      181       311       754
                                    --------  --------  --------  --------
Net income (loss)                       (795)      717       988     3,170
Net income (loss) attributable to
 noncontrolling interest                   4        (6)       27       (11)
                                    --------  --------  --------  --------
Net income (loss) attributable to
 controlling interest               $   (799) $    723  $    961  $  3,181
                                    ========  ========  ========  ========
Earnings per share
Basic                               $  (2.51) $   2.24  $   2.99  $   9.87
Diluted                             $  (2.51) $   2.24  $   2.99  $   9.84
Weighted average shares outstanding
Basic                                    319       321       320       320
Diluted                                  319       322       320       321
                     TRANSOCEAN LTD. AND SUBSIDIARIES
                        CONSOLIDATED BALANCE SHEETS
                     (In millions, except share data)
                                                           December 31,
                                                        ------------------
                                                          2010      2009
                                                        --------  --------
Assets
Cash and cash equivalents                               $  3,394  $  1,130
Accounts receivable, net
Trade                                                      1,811     2,330
Other                                                        189        55
Materials and supplies, net                                  517       462
Deferred income taxes, net                                   115       104
Assets held for sale                                          --       186
Other current assets                                         169       209
                                                        --------  --------
Total current assets                                       6,195     4,476
                                                        --------  --------
Property and equipment                                    27,007    27,383
Property and equipment of consolidated variable
 interest entities                                         2,214     1,968
Less accumulated depreciation                              7,763     6,333
                                                        --------  --------
Property and equipment, net                               21,458    23,018
                                                        --------  --------
Goodwill                                                   8,132     8,134
Other assets                                               1,026       808
                                                        --------  --------
Total assets                                            $ 36,811  $ 36,436
                                                        ========  ========
Liabilities and equity
Accounts payable                                        $    847  $    780
Accrued income taxes                                         116       240
Debt due within one year                                   1,917     1,568
Debt of consolidated variable interest entities due
 within one year                                              95       300
Other current liabilities                                    861       730
                                                        --------  --------
Total current liabilities                                  3,836     3,618
                                                        --------  --------
Long-term debt                                             8,354     8,966
Long-term debt of consolidated variable interest
 entities                                                    855       883
Deferred income taxes, net                                   594       726
Other long-term liabilities                                1,772     1,684
                                                        --------  --------
Total long-term liabilities                               11,575    12,259
                                                        --------  --------
Commitments and contingencies
Redeemable noncontrolling interest                            25        --
Shares, CHF 15.00 par value, 335,235,298 authorized,
 167,617,649 conditionally authorized, 335,235,298
 issued and 319,080,678 outstanding at December 31,
 2010; and 502,852,947 authorized; 167,617,649
 conditionally authorized, 335,235,298 issued
 and 321,223,882 outstanding at December 31, 2009          4,482     4,472
Additional paid-in capital                                 7,504     7,407
Treasury shares, at cost, 2,863,267 and none held at
 December 31, 2010 and 2009, respectively                   (240)       --
Retained earnings                                          9,969     9,008
Accumulated other comprehensive loss                        (332)     (335)
                                                        --------  --------
Total controlling interest shareholders' equity           21,383    20,552
                                                        --------  --------
Noncontrolling interest                                       (8)        7
                                                        --------  --------
Total equity                                              21,375    20,559
                                                        --------  --------
Total liabilities and equity                            $ 36,811  $ 36,436
                                                        ========  ========
                    TRANSOCEAN LTD. AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF CASH FLOWS
                              (In millions)
                                    Three months ended  Twelve months ended
                                       December 31,        December 31,
                                    ------------------  ------------------
                                      2010      2009      2010      2009
                                    --------  --------  --------  --------
Cash flows from operating
 activities
Net income (loss)                   $   (795) $    717  $    988  $  3,170
Adjustments to reconcile net income
 to net cash provided by operating
 activities:
Amortization of drilling contract
 intangibles                             (13)      (44)      (98)     (281)
Depreciation, depletion and
 amortization                            394       382     1,589     1,464
Share-based compensation expense          23        15       102        81
Excess tax benefit from share-based
 compensation plans                        -         8        (1)       (2)
(Gain) loss on disposal of assets,
 net                                      (1)        6      (257)        9
Loss on impairment                     1,010         -     1,012       334
Loss on retirement of debt                13        12        33        29
Amortization of debt issue costs,
 discounts and premiums, net              41        49       189       209
Deferred income taxes                    (71)      (37)     (145)       13
Other, net                                (2)      (23)       (1)        7
Deferred revenue, net                      -        97       205       169
Deferred expenses, net                   (24)        -       (79)      (38)
Changes in operating assets and
 liabilities                             221        (7)      409       434
                                    --------  --------  --------  --------
Net cash provided by operating
 activities                              796     1,175     3,946     5,598
                                    --------  --------  --------  --------
Cash flows from investing activities
Capital expenditures                    (428)     (857)   (1,411)   (3,052)
Proceeds from disposal of assets,
 net                                       9         8        60        18
Proceeds from insurance recoveries
 for loss of drilling unit                 -         -       560         -
Proceeds from payments on notes
 receivable                                6         -        37         -
Proceeds from short-term investments      32       142        37       564
Purchases of short-term investments        -        (1)        -      (269)
Joint ventures and other
 investments, net                          1        40        (4)       45
                                    --------  --------  --------  --------
Net cash used in investing
 activities                             (380)     (668)     (721)   (2,694)
                                    --------  --------  --------  --------
Cash flows from financing activities
Change in short-term borrowings, net     (62)     (136)     (193)     (382)
Proceeds from debt                         -       169     2,054       514
Repayments of debt                    (1,599)     (288)   (2,565)   (2,871)
Purchases of shares held in treasury       -         -      (240)        -
Financing costs                            -         -       (15)       (2)
Proceeds from (taxes paid for)
 share-based compensation plans, net       2         1        (1)       17
Excess tax benefit from share-based
 compensation plans                        -        (8)        1         2
Other, net                                 1        (1)       (2)      (15)
                                    --------  --------  --------  --------
Net cash used in financing
 activities                           (1,658)     (263)     (961)   (2,737)
                                    --------  --------  --------  --------
Net increase (decrease) in cash
 and cash equivalents                 (1,242)      244     2,264       167
Cash and cash equivalents at
 beginning of period                   4,636       886     1,130       963
                                    --------  --------  --------  --------
Cash and cash equivalents at end
 of period                          $  3,394  $  1,130  $  3,394  $  1,130
                                    ========  ========  ========  ========
                             TRANSOCEAN LTD.
                       FLEET OPERATING STATISTICS
                                Operating Revenues ($ Millions) (1)
                          ------------------------------------------------
                                                          Twelve months
                               Three months ended       ended December 31,
                          ----------------------------  ------------------
                          December  September December
                          31, 2010  30, 2010  31, 2009    2010      2009
                          --------  --------  --------  --------  --------
Contract Drilling
 Revenues
  High-Specification
   Floaters:
    Ultra Deepwater
     Floaters             $    740  $    720  $    890  $  3,171  $  2,997
    Deepwater Floaters         339       350       449     1,461     1,731
    Harsh Environment
     Floaters                  155       178       155       674       613
  Total High-
   Specification Floaters    1,234     1,248     1,494     5,306     5,341
  Midwater Floaters            477       572       537     2,093     2,507
  High-Specification
   Jackups                      56        78        86       320       469
  Standard Jackups             259       298       422     1,222     2,257
  Other Rigs                     6         8         7        26        33
Subtotal                     2,032     2,204     2,546     8,967    10,607
Contract Intangible
 Revenue                        13        23        44        98       281
Other Revenues
  Client Reimbursable
   Revenues                     34        40        46       152       194
  Integrated Services
   and Other                    15        10        48        68       206
  Drilling Management
   Services                     57        25        41       261       239
  Oil and Gas Properties         9         7         8        30        29
Subtotal                       115        82       143       511       668
Total Company             $  2,160  $  2,309  $  2,733  $  9,576  $ 11,556
                                      Average Daily Revenue  (1)
                          ------------------------------------------------
                                                        Twelve months ended
                               Three months ended           December 31,
                          ----------------------------  ------------------
                          December  September December
                          31, 2010  30, 2010  31, 2009    2010      2009
                          --------  --------  --------  --------  --------
  High-Specification
   Floaters:
    Ultra Deepwater
     Floaters             $435,900  $422,800  $486,200  $457,300  $462,700
    Deepwater Floaters    $395,600  $365,600  $346,600  $384,900  $344,900
    Harsh Environment
     Floaters             $366,800  $414,100  $405,800  $401,900  $378,000
  Total High-
   Specification Floaters $414,500  $403,900  $425,900  $427,600  $407,200
  Midwater Floaters       $298,500  $328,400  $325,100  $319,600  $322,800
  High-Specification
   Jackups                $162,600  $138,100  $175,100  $152,000  $166,300
  Standard Jackups        $110,600  $113,200  $147,300  $118,700  $152,600
  Other Rigs              $ 73,000  $ 72,900  $ 72,300  $ 72,700  $ 54,700
Total Drilling Fleet      $276,600  $271,200  $295,700  $282,700  $271,400
                                          Utilization (1)
                          ------------------------------------------------
                                                        Twelve months ended
                               Three months ended           December 31,
                          ----------------------------  ------------------
                          December  September December
                          31, 2010  30, 2010  31, 2009    2010      2009
                          --------  --------  --------  --------  --------
  High-Specification
   Floaters:
    Ultra Deepwater
     Floaters                   76%       77%       91%       79%       92%
    Deepwater Floaters          58%       65%       88%       65%       86%
    Harsh Environment
     Floaters                   92%       93%       83%       92%       89%
  Total High-
   Specification Floaters       71%       75%       89%       76%       89%
  Midwater Floaters             68%       73%       69%       69%       79%
  High-Specification
   Jackups                      38%       61%       53%       58%       77%
  Standard Jackups              46%       52%       57%       51%       74%
  Other Rigs                    48%       50%       50%       49%       66%
Total Drilling Fleet            58%       64%       69%       63%       80%
(1) Average daily revenue is defined as contract drilling revenue earned
    per revenue earning day in the period. A revenue earning day is defined
    as a day for which a rig earns dayrate after commencement of
    operations. Utilization is defined as the total actual number of
    revenue earning days in the period as a percentage of the total number
    of calendar days in the period for all drilling rigs in our fleet.
                     Transocean Ltd. and Subsidiaries
                 Supplemental Effective Tax Rate Analysis
                              (In millions)
                               Three months ended       Twelve months ended
                          ----------------------------  ------------------
                           Dec 31,   Sept 30,  Dec 31,   Dec 31,   Dec 31,
                            2010      2010      2009      2010      2009
                          --------  --------  --------  --------  --------
Income before income
 taxes                    $   (829) $    497  $    898  $  1,299  $  3,924
  Add back (subtract):
   Litigation matters            1        14       (24)       27       108
   Gain on loss of
    Deepwater Horizon            -         -         -      (267)        -
   (Gain) Loss on
    disposal of other
    assets, net                  -         -         -        14        (2)
   Loss on impairment of
    other assets, net        1,010         -         -     1,012       334
   Loss of impairment of
    oil and gas
    properties                   -         -         -        21         -
   GSF merger related
    costs and other, net        (8)        -         4        (2)        5
   (Gain) loss on
    retirement of debt          13        22        12        33        29
   Gain on sale of
    interests in joint
    ventures                     -         -       (34)        -       (30)
                          --------  --------  --------  --------  --------
Adjusted income before
 income taxes                  187       533       856     2,137     4,368
Income tax expense             (34)      118       181       311       754
  Add back (subtract):
   Loss of impairment of
    oil and gas properties       -         -         -         7         -
   Loss on impairment of
    other assets, net            -         -        18         -        18
   GSF merger related
    costs                        -         -         -         1         2
   Tax effect of the
    Patient Proctection
    and Affordable
    Care Act                     -         -         -        (2)        -
   Changes in
    estimates (1)               (1)       (7)      (50)      (21)      (74)
                          --------  --------  --------  --------  --------
Adjusted income tax
 expense (2)              $    (35) $    111  $    149  $    296  $    700
                          ========  ========  ========  ========  ========
Effective Tax Rate (3)         4.1%     23.8%     20.1%     23.9%     19.2%
Annual Effective Tax
 Rate (4)                    -18.7%     20.8%     17.4%     13.8%     16.0%
(1) Our estimates change as we file tax returns, settle disputes with tax
    authorities or become aware of other events and include changes in (a)
    deferred taxes, (b) valuation allowances on deferred taxes and (c)
    other tax liabilities.
(2) The three months ended December 31, 2010 includes ($61) million of
    additional tax expense (benefit) reflecting the catch-up effect of an
    increase (decrease) in the annual effective tax rate from the previous
    quarter estimate.
(3) Effective Tax Rate is income tax expense divided by income before
    income taxes.
(4) Annual Effective Tax Rate is income tax expense excluding various
    discrete items (such as changes in estimates and tax on items excluded
    from income before income taxes) divided by income before income taxes
    excluding gains and losses on sales and similar items pursuant to the
    accounting standards for income taxes and estimating the annual
    effective tax rate.

SOURCE: Transocean Ltd.