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Transocean Ltd. Reports Third Quarter 2011 Results

November 2, 2011

ZUG, SWITZERLAND, Nov 02, 2011 (MARKETWIRE via COMTEX) --

Transocean Ltd. (NYSE: RIG) (SIX: RIGN)

--  Revenues decreased four percent to $2.242 billion compared to $2.334    billion in the second quarter 2011--  Third quarter 2011 net loss attributable to controlling interest was    $71 million, which included $81 million of certain net unfavorable    items, compared to net income attributable to controlling interest of    $155 million in the second quarter 2011, which included $36 million of    certain net unfavorable items--  Revenue efficiency(1) was 89.5 percent, down from 92.1 percent in the    second quarter 2011--  Fleet utilization(2) was 58 percent, up from 55 percent in the second    quarter 2011--  Operating and maintenance expenses were $1.540 billion, up from $1.492    billion in the second quarter 2011--  Cash flows from operating activities were $492 million, up from $340    million in the second quarter 2011--  The Annual Effective Tax Rate(3) for 2011 has increased to 34.1    percent from 22.6 percent in the second quarter 2011--  New contracts totaling $1.4 billion were secured in the Fleet Status    Report period July 13, 2011 through October 17, 2011--  New contracts totaling $325 million have been secured since the    October 17, 2011 Fleet Status Report--  The acquisition of Aker Drilling was completed on October 4, 2011,    further strengthening Transocean's industry leadership position as    well as adding approximately $900 million in backlog

Transocean Ltd. (NYSE: RIG) (SIX: RIGN) today reported a net lossattributable to controlling interest of $71 million, or $0.22 perdiluted share, for the three months ended September 30, 2011. Theresults compare to net income attributable to controlling interest of$368 million, or $1.15 per diluted share, for the three months endedSeptember 30, 2010.

Third quarter 2011 results included the following items, after tax,that resulted in a net unfavorable impact of approximately $81million, or $0.25 per diluted share:

--  $78 million loss resulting from a forward foreign exchange contract    executed to address the potential exchange rate variability associated    with the company's acquisition of Aker Drilling,--  $11 million related to impairment charges, discontinued operations,    and discrete tax items,--  $5 million of Aker Drilling acquisition costs, and--  $13 million gain related to the sale of our equity interest in    Overseas Drilling Limited, which owns the research vessel Joides    Resolution.

Third quarter 2011 results also included expenses associated with theMacondo well incident of approximately $9 million, $6 million aftertax, or $0.02 per diluted share. These expenses were primarilyrelated to legal costs and other professional fees that are notexpected to be recoverable from insurance.

Operations Quarterly Review

Revenues for the three months ended September 30, 2011 were $2.242billion, compared to revenues of $2.334 billion during the threemonths ended June 30, 2011. Third quarter contract drilling revenueswere $2.061 billion compared to $2.086 billion in the second quarter.The company reported revenue efficiency of 89.5 percent compared to92.1 percent in the second quarter. Consistent with recent trends,revenue efficiency and out-of-service time continue to be adverselyimpacted by the need to comply with new well control equipmentrecertification requirements, higher standards for equipmentcondition and capacity constraints affecting our vendors. Otherrevenues decreased $69 million to $169 million, primarily due tolower drilling management services activity. Operating andmaintenance expenses totaled $1.540 billion for the third quarter2011, up from $1.492 billion for the prior quarter. The increase wasprimarily due to higher costs and expenses associated with rigsundergoing shipyard, maintenance, repair and equipment certificationprojects.

Cash Flow and Capital Expenditures

Cash flows from operating activities increased to $492 million forthe third quarter 2011 compared to $340 million for the secondquarter 2011. The increase in cash flows from operations resultedprimarily from a reduction in working capital during the thirdquarter. Capital expenditures decreased to $137 million for the thirdquarter compared to $293 million in the second quarter 2011. Thelower expenditures were primarily due to the timing of shipyardmilestone payments associated with our newbuild construction program.

Effective Tax Rate

Transocean's third quarter Effective Tax Rate(4) was 212.8 percentcompared to 33.5 percent in the second quarter. The company's thirdquarter Annual Effective Tax Rate(3) for 2011, which excludesvarious discrete items, was 82.6 percent compared to 25.6 percent inthe second quarter. The increase in the Annual Effective Tax Rate wasprimarily due to reduced profitability in certain jurisdictions whereactivities are either taxed on a deemed profit basis or subject tolower tax rates. The third quarter amounts were also impacted by thecatch-up adjustment required to reflect the change in the forecastedAnnual Effective Tax Rate for the first and second quarteractivities. The increase in the Effective Tax Rate was primarily dueto the items noted above as well as the impact of the $78 millionloss on the forward foreign exchange contact, which provides no taxbenefit. Please see the accompanying schedule entitled \"SupplementalEffective Tax Rate Analysis.\"

Conference Call Information

Transocean will conduct a teleconference call at 10:00 a.m. ET, 3:00p.m. CET, on November 3, 2011. To participate, dial +1 719-325-2223and refer to confirmation code 8774614 approximately five to 10minutes prior to the scheduled start time of the call.

In addition, the conference call will be simultaneously broadcastover the Internet in a listen-only mode and can be accessed bylogging onto Transocean's website at www.deepwater.com and selecting\"Investor Relations.\" A file containing four charts to be discussedduring the conference call, titled \"3Q11 Charts,\" has been posted toTransocean's website and can also be found by selecting \"InvestorRelations/Quarterly Toolkit.\" The conference call may also beaccessed via the Internet at www.CompanyBoardroom.com by typing inTransocean's New York Stock Exchange trading symbol, \"RIG.\"

A telephonic replay of the conference call should be available after1:00 p.m. ET, 6:00 p.m. CET, on November 3, 2011, and can be accessedby dialing +1 719-457-0820 or +1 888-203-1112 and referring to theconfirmation code 8774614. Also, a replay will be available throughthe Internet and can be accessed by visiting either of theabove-referenced internet addresses. Both replay options will beavailable for approximately 30 days.

About Transocean

Transocean is the world's largest offshore drilling contractor andthe leading provider of drilling management services worldwide. Witha fleet of 135 mobile offshore drilling units, excluding twoUltra-Deepwater Drillships and four High-Specification Jackups underconstruction, Transocean's fleet is considered one of the most modernand versatile in the world due to its emphasis on technicallydemanding segments of the offshore drilling business. Transocean ownsor operates a contract drilling fleet of 50 High-SpecificationFloaters (Ultra-Deepwater, Deepwater and Harsh-Environmentsemisubmersibles and drillships), 25 Midwater Floaters, nineHigh-Specification Jackups, 50 Standard Jackups and one swamp barge.

(1) Revenue efficiency is defined as actual revenue divided by thehighest amount of total revenue which could have been earned duringthe relevant period(s). See the accompanying schedule entitled\"Revenue Efficiency.\"

(2) Utilization is defined as the total actual number of revenueearning days in the period as a percentage of the total number ofcalendar days in the period for all drilling rigs in our fleet. Seethe accompanying schedule entitled \"Utilization.\"

(3) Annual Effective Tax Rate is defined as income tax expense fromcontinuing operations excluding various discrete items (such aschanges in estimates and tax on items excluded from income beforeincome tax expense) divided by income from continuing operationsbefore income tax expense excluding gains on sales and similar itemspursuant to the accounting standards for income taxes. See theaccompanying schedule entitled \"Supplemental Effective Tax RateAnalysis.\"

(4) Effective Tax Rate is defined as income tax expense fromcontinuing operations divided by income from continuing operationsbefore income taxes. See the accompanying schedule entitled\"Supplemental Effective Tax Rate Analysis.\"

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

                      TRANSOCEAN LTD. AND SUBSIDIARIES              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS                    (In millions, except per share data)                                (Unaudited)                               Three months ended       Nine months ended                                  September 30,           September 30,                             ----------------------  ----------------------                                2011        2010        2011        2010                             ----------  ----------  ----------  ----------                                             (As                     (As                                          adjusted)               adjusted)Operating revenues  Contract drilling revenues $    2,061  $    2,183  $    6,097  $    6,880  Contract drilling   intangible revenues               12          23          32          85  Other revenues                    169          75         591         374                             ----------  ----------  ----------  ----------                                  2,242       2,281       6,720       7,339                             ----------  ----------  ----------  ----------Costs and expenses  Operating and maintenance       1,540       1,202       4,391       3,735  Depreciation and   amortization                     362         388       1,075       1,155  General and administrative         67          59         200         180                             ----------  ----------  ----------  ----------                                  1,969       1,649       5,666       5,070                             ----------  ----------  ----------  ----------Loss on impairment                   (3)         --         (28)         --Gain (loss) on disposal of assets, net                         (2)          2           5         256                             ----------  ----------  ----------  ----------Operating income                    268         634       1,031       2,525                             ----------  ----------  ----------  ----------Other income (expense), net  Interest income                     7           7          27          17  Interest expense, net of   amounts capitalized             (151)       (142)       (443)       (415)  Other, net                        (77)        (13)        (79)         (1)                             ----------  ----------  ----------  ----------                                   (221)       (148)       (495)       (399)                             ----------  ----------  ----------  ----------Income from continuing operations before income tax expense                         47         486         536       2,126Income tax expense                  100         123         263         368                             ----------  ----------  ----------  ----------Income (loss) from continuing operations              (53)        363         273       1,758Income (loss) from discontinued operations, net of tax                          (7)         15         171          25                             ----------  ----------  ----------  ----------Net income (loss)                   (60)        378         444       1,783Net income attributable to noncontrolling interest             11          10          50          23                             ----------  ----------  ----------  ----------Net income (loss) attributable to controlling interest                    $      (71) $      368  $      394  $    1,760                             ==========  ==========  ==========  ==========Earnings (loss) per share- basic  Earnings (loss) from   continuing operations     $    (0.20) $     1.10  $     0.69  $     5.39  Earnings (loss) from   discontinued operations        (0.02)       0.05        0.53        0.08                             ----------  ----------  ----------  ----------  Earnings (loss) per share  $    (0.22) $     1.15  $     1.22  $     5.47                             ==========  ==========  ==========  ==========Earnings (loss) per share- diluted  Earnings (loss) from   continuing operations     $    (0.20) $     1.10  $     0.69  $     5.39  Earnings (loss) from   discontinued operations        (0.02)       0.05        0.53        0.08                             ----------  ----------  ----------  ----------  Earnings (loss) per share  $    (0.22) $     1.15  $     1.22  $     5.47                             ==========  ==========  ==========  ==========Weighted-average shares outstanding  Basic                             320         319         320         320  Diluted                           320         319         320         320                      TRANSOCEAN LTD. AND SUBSIDIARIES                   CONDENSED CONSOLIDATED BALANCE SHEETS                      (In millions, except share data)                                (Unaudited)                                               September 30,   December 31,                                                    2011           2010                                               -------------  -------------                                                              (As adjusted)AssetsCash and cash equivalents                      $       3,286  $       3,394Accounts receivable, net of allowance for doubtful accounts of $28 and $38 at September 30, 2011 and December 31, 2010, respectively          2,046          1,843Materials and supplies, net of allowance for obsolescence of $76 and $70 at September 30, 2011 and December 31, 2010, respectively                578            514Deferred income taxes, net                               120            115Assets held for sale                                     118             --Other current assets                                     421            329                                               -------------  -------------    Total current assets                               6,569          6,195                                               -------------  -------------Property and equipment                                26,886         26,721Property and equipment of consolidated variable interest entities                            2,248          2,214Less accumulated depreciation                          8,413          7,616                                               -------------  -------------  Property and equipment, net                         20,721         21,319                                               -------------  -------------Goodwill                                               8,132          8,132Other assets                                           1,223          1,165                                               -------------  -------------    Total assets                               $      36,645  $      36,811                                               =============  =============Liabilities and equityAccounts payable                               $         755  $         832Accrued income taxes                                      23            109Debt due within one year                               1,830          1,917Debt of consolidated variable interest entities due within one year                             96             95Other current liabilities                              1,566            883                                               -------------  -------------    Total current liabilities                          4,270          3,836                                               -------------  -------------Long-term debt                                         8,402          8,354Long-term debt of consolidated variable interest entities                                       772            855Deferred income taxes, net                               588            575Other long-term liabilities                            1,730          1,791                                               -------------  -------------    Total long-term liabilities                       11,492         11,575                                               -------------  -------------Commitments and contingenciesRedeemable noncontrolling interest                        71             25Shares, CHF 15.00 par value, 335,235,298 authorized, 167,617,649 conditionally authorized, 335,235,298 issued at September 30, 2011 and December 31, 2010; 319,853,371 and 319,080,678 outstanding at September 30, 2011 and December 31, 2010, respectively              4,493          4,482Additional paid-in capital                             6,545          7,504Treasury shares, at cost, 2,863,267 held at September 30, 2011 and December 31, 2010               (240)          (240)Retained earnings                                     10,363          9,969Accumulated other comprehensive loss                    (338)          (332)                                               -------------  -------------  Total controlling interest shareholders'   equity                                             20,823         21,383                                               -------------  -------------  Noncontrolling interest                                (11)            (8)                                               -------------  -------------    Total equity                                      20,812         21,375                                               -------------  -------------    Total liabilities and equity               $      36,645  $      36,811                                               =============  =============                      TRANSOCEAN LTD. AND SUBSIDIARIES              CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                               (In millions)                                (Unaudited)                                  Three months ended     Nine months ended                                     September 30,         September 30,                                 --------------------  --------------------                                    2011       2010       2011       2010                                 ---------  ---------  ---------  ---------Cash flows from operating activitiesNet income (loss)                $     (60) $     378  $     444  $   1,783Adjustments to reconcile to net cash provided by operating activities  Amortization of drilling   contract intangibles                (12)       (23)       (32)       (85)  Depreciation and amortization        362        388      1,075      1,155  Share-based compensation   expense                              20         26         74         79  Loss on impairment                     3         --         28         --  (Gain) loss on disposal of   discontinued operations, net          4         --       (169)        --  (Gain) loss on disposal of   assets, net                           2         (2)        (5)      (256)  Amortization of debt issue   costs, discounts and   premiums, net                        33         48         95        148  Deferred income taxes                (14)       (40)         2        (74)  Other, net                            82         30         93         62  Changes in deferred revenue,   net                                 (36)        47          7        205  Changes in deferred expenses,   net                                  18        (18)       (66)       (55)  Changes in operating assets   and liabilities                      90       (125)      (324)       188                                 ---------  ---------  ---------  ---------Net cash provided by operating activities                            492        709      1,222      3,150                                 ---------  ---------  ---------  ---------Cash flows from investing activities  Capital expenditures                (137)      (300)      (670)      (969)  Investment in marketable   security                           (199)        --       (199)        --  Proceeds from disposal of   assets, net                          88         --        106         51  Proceeds from disposal of   discontinued operations, net         --         --        259         --  Proceeds from insurance   recoveries for loss of   drilling unit                        --         --         --        560  Payment for settlement of   forward exchange contract,   net                                 (78)        --        (78)        --  Other, net                             6          2        (27)        17                                 ---------  ---------  ---------  ---------Net cash used in investing activities                           (320)      (298)      (609)      (341)                                 ---------  ---------  ---------  ---------Cash flows from financing activities  Change in short-term   borrowings, net                       2         46         58       (131)  Proceeds from debt                    --      2,000          5      2,054  Repayments of debt                   (23)      (691)      (272)      (966)  Distribution of qualifying   additional paid-in capital         (254)        --       (508)        --  Purchases of shares held in   treasury                             --         --         --       (240)  Other, net                            --        (18)        (4)       (20)                                 ---------  ---------  ---------  ---------Net cash provided by (used in) financing activities                 (275)     1,337       (721)       697                                 ---------  ---------  ---------  ---------Net increase (decrease) in cash and cash equivalents                 (103)     1,748       (108)     3,506Cash and cash equivalents at beginning of period                 3,389      2,888      3,394      1,130                                 ---------  ---------  ---------  ---------Cash and cash equivalents at end of period                       $   3,286  $   4,636  $   3,286  $   4,636                                 =========  =========  =========  =========                      TRANSOCEAN LTD. AND SUBSIDIARIES                         FLEET OPERATING STATISTICS                                  Operating Revenues (in millions) (1)                           -------------------------------------------------                                                          Nine months ended                                 Three months ended         September 30,                           ----------------------------- -------------------                           September  June 30, September                            30, 2011    2011    30, 2010    2011      2010                           --------- --------- --------- --------- ---------Contract Drilling Revenues  High-Specification   Floaters:    Ultra Deepwater     Floaters              $   1,030 $   1,005 $     720 $   2,878 $   2,430    Deepwater Floaters           187       238       350       716     1,122    Harsh Environment     Floaters                    190       181       178       522       520                           --------- --------- --------- --------- ---------  Total High-Specification   Floaters                    1,407     1,424     1,248     4,116     4,072  Midwater Floaters              352       376       572     1,129     1,616  Jackups:    High-Specification     Jackups                      69        48        57       148       209    Standard Jackups             226       230       298       685       963                           --------- --------- --------- --------- ---------  Total Jackups                  295       278       355       833     1,172  Other Rigs                       7         8         8        20        20                           --------- --------- --------- --------- ---------Total Contract Drilling Revenues                      2,061     2,086     2,183     6,098     6,880                           --------- --------- --------- --------- ---------Contract Intangible Revenue                          12        10        23        32        85Other Revenues  Client Reimbursable   Revenues                       43        40        40       121       118  Integrated Services and   Other                          14        15        11        42        52  Drilling Management   Services                      112       183        25       427       204                           --------- --------- --------- --------- ---------Total Other Revenues             169       238        76       590       374                           --------- --------- --------- --------- ---------Total Company              $   2,242 $   2,334 $   2,282 $   6,720 $   7,339                           ========= ========= ========= ========= =========                                       Average Daily Revenue (1)                           -------------------------------------------------                                                          Nine months ended                                 Three months ended         September 30,                           ----------------------------- -------------------                           September  June 30, September                            30, 2011    2011    30, 2010    2011      2010                           --------- --------- --------- --------- ---------  High-Specification   Floaters:    Ultra Deepwater     Floaters              $ 524,800 $ 516,600 $ 422,800 $ 504,000 $ 464,200    Deepwater Floaters       348,400   396,400   365,600   382,400   381,800    Harsh Environment     Floaters                433,800   430,100   414,100   423,100   413,600  Total High-Specification   Floaters                  478,900   479,900   403,900   466,800   431,800  Midwater Floaters          287,400   333,000   328,400   310,600   326,300  High-Specification   Jackups                   115,600   110,300   120,800   111,800   140,500  Standard Jackups           100,400   111,700   113,200   106,900   121,100  Other Rigs                  73,800    76,400    72,900    74,500    72,600                           --------- --------- --------- --------- ---------Total Drilling Fleet       $ 290,200 $ 312,100 $ 271,700 $ 298,100 $ 285,500                           ========= ========= ========= ========= =========(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.                      TRANSOCEAN LTD. AND SUBSIDIARIES                   FLEET OPERATING STATISTICS (continued)                                            Utilization (2)                           -------------------------------------------------                                                          Nine months ended                                 Three months ended         September 30,                           ----------------------------- -------------------                           September  June 30, September                            30, 2011    2011    30, 2010    2011      2010                           --------- --------- --------- --------- ---------  High-Specification   Floaters:    Ultra Deepwater     Floaters                 79%       80%       77%       79%       80%    Deepwater Floaters        37%       41%       65%       43%       67%    Harsh Environment     Floaters                 95%       93%       93%       90%       92%  Total High-Specification   Floaters                   67%       69%       75%       68%       77%  Midwater Floaters           55%       54%       73%       56%       70%  High-Specification   Jackups                    69%       56%       57%       56%       61%  Standard Jackups            48%       43%       52%       45%       53%  Other Rigs                  100%      50%       50%       60%       50%                           --------- --------- --------- --------- ---------Total Drilling Fleet          58%       55%       64%       56%       64%(2) 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.                                    Revenue Efficiency (3)                          Trailing Five Quarters and Historical Data                 -----------------------------------------------------------                  3Q 2011   2Q 2011   1Q 2011   4Q 2010   3Q 2010   FY 2010                 --------- --------- --------- --------- --------- ---------                                                  (As       (As       (As                                               adjusted) adjusted) adjusted)Ultra Deepwater    86.4%     89.3%     85.3%     86.1%     86.5%     88.6%Deepwater          87.7%     93.9%     88.2%     88.6%     90.1%     90.3%Harsh Environment Floaters          94.4%     98.4%     99.2%     96.1%     96.4%     96.0%Midwater Floaters          90.8%     91.9%     93.6%     85.0%     96.2%     92.5%High- Specification Jackups           97.3%     95.6%     95.1%     97.7%     93.3%     95.3%Standard Jackups   98.2%     98.4%     97.7%     98.9%     96.4%     97.3%Others             99.5%     97.6%     99.0%     96.1%     99.6%     98.4%                 --------- --------- --------- --------- --------- ---------Total Fleet        89.5%     92.1%     90.0%     88.7%     91.8%     91.7%                 ========= ========= ========= ========= ========= =========(3) Revenue efficiency is defined as actual revenue divided by the highest amount of total revenue which could have been earned during the relevant period(s).
                      TRANSOCEAN LTD. AND SUBSIDIARIES                  SUPPLEMENTAL EFFECTIVE TAX RATE ANALYSIS                   (In US$ millions, except percentages)                             Three months ended          Nine months ended                      -------------------------------  --------------------                      September   June 30,  September  September  September                       30, 2011     2011     30, 2010   30, 2011   30, 2010                      ---------  ---------  ---------  ---------  ---------                                               (As                   (As                                            adjusted)             adjusted)Income from continuing operations before income taxes         $      47  $     244  $     486  $     536  $   2,126  Add back   (subtract):  Litigation matters         --         --         14          8         26  Acquisition costs           5         --         --          5         --  Loss on impairment   of assets                  3         25         --         28         --  (Gain) loss on   disposal of other   assets, net               --         --          1         (9)        14  Loss on forward   exchange contract         78         --         --         78         --  Gain on loss of   Deepwater Horizon         --         --         --         --       (267)  Gain on sale of   interest in   Overseas Drilling   Limited                  (13)        --         --        (13)        --  Gain on retirement   of debt                   --         --         21         --         20  Other, net                  1         --         --          6          5                      ---------  ---------  ---------  ---------  ---------Adjusted income from continuing operations before income taxes               121        269        522        639      1,924                      ---------  ---------  ---------  ---------  ---------Income tax expense from continuing operations                 100         82        123        263        368  Add back   (subtract):  Changes in   estimates (1)             --        (13)       (12)       (48)       (29)  Other, net                 --         --         (2)         2         (1)                      ---------  ---------  ---------  ---------  ---------Adjusted income tax expense from continuing operations (2)       $     100  $      69  $     109  $     217  $     338                      ---------  ---------  ---------  ---------  ---------Effective Tax Rate (3)                      212.8%      33.5%      25.3%      49.1%      17.3%Annual Effective Tax Rate (4)                  82.6%      25.6%      21.0%      34.1%      17.6%(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 and nine months ended September 30, 2011 include $60 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.