NYSE: RIG 4.44 0.1 2.2% 11:26 A.M. ET
Share Page Print Page
Back to all news articles

Transocean Ltd. Reports First Quarter 2012 Results

May 2, 2012

ZUG, SWITZERLAND, May 02, 2012 (MARKETWIRE via COMTEX) --Transocean Ltd. (NYSE: RIG) (SIX: RIGN)

--  First quarter 2012 revenues were $2.331 billion compared with $2.422    billion in the fourth quarter 2011,--  First quarter 2012 net income attributable to controlling interest was    $42 million, which included $184 million of net unfavorable items.    This compares with the fourth quarter 2011 net loss attributable to    controlling interest of $6.119 billion, which included $6.176 billion    of net unfavorable items,--  Revenue efficiency(1) was 90.4 percent in the first quarter, compared    with 91.9 percent in the fourth quarter 2011,--  Fleet utilization(2) was 61 percent in the first quarter, unchanged    from the fourth quarter 2011,--  First quarter 2012 operating and maintenance expenses were $1.410    billion. Excluding $1.0 billion for estimated loss contingencies    associated with the Macondo Well incident, fourth quarter 2011    operating and maintenance expenses were $1.565 billion,--  Cash flows from operating activities were $540 million in the first    quarter, which compares with $563 million in the fourth quarter 2011,--  First quarter 2012 Annual Effective Tax Rate(3) was 25.5 percent    compared with 59.6 percent in the fourth quarter 2011, and--  New contracts totaling $834 million were secured in the Fleet Status    Report periods February 14, 2012 through April 18, 2012. Since April    18, 2012, additional contracts totaling $430 million were secured.

Transocean Ltd. (NYSE: RIG) (SIX: RIGN) today reported net incomeattributable to controlling interest of $42 million, or $0.12 perdiluted share, for the three months ended March 31, 2012. Firstquarter 2012 results include net unfavorable items of $184 million,or $0.52 per diluted share. The results compare with net incomeattributable to controlling interest of $310 million, or $0.96 perdiluted share, for the three months ended March 31, 2011. Firstquarter 2011 results included net favorable items of $139 million, or$0.43 per diluted share, primarily associated with the gain on saleof the Trident 20, partially offset by charges mainly related tounfavorable discrete tax items.

Net unfavorable items, after tax, impacting the first quarter of 2012include the following:

--  $118 million, or $0.34 per diluted share, increase in the charge    associated with the completion of the measurement of the estimated    goodwill impairment recorded in the fourth quarter 2011 for the    contract drilling services reporting unit,--  $62 million, or $0.17 per diluted share, impairment of the intangible    assets of ADTI, the drilling management services reporting unit,--  $29 million, or $0.08 per diluted share, of favorable discrete tax    items,--  $17 million, or $0.05 per diluted share, impairment charge associated    with the sale of GSF Rig 136,--  $15 million, or $0.04 per diluted share, loss associated with the sale    of Challenger Minerals (North Sea) Limited and the impairment of the    properties of Challenger Minerals Inc., and--  $1 million associated with the company's acquisition of Aker    Drilling.

Operations Quarterly Review

Revenues for the three months ended March 31, 2012 were $2.331billion, compared with revenues of $2.422 billion during the threemonths ended December 31, 2011. Contract drilling revenues decreased$35 million due mainly to lower revenue efficiency primarily onDeepwater and Midwater Floaters. Total fleet revenue efficiency was90.4 percent for the first quarter, compared with 91.9 percent in thefourth quarter 2011. Other revenues decreased $54 million to $117million for the first quarter 2012, compared with $171 million in theprior quarter, primarily due to decreased levels of low-margindrilling management services activity.

Operating and maintenance expenses totaled $1.410 billion for thefirst quarter 2012. This compares with $1.565 billion in the fourthquarter 2011, which excludes $1.0 billion for estimated losscontingencies associated with the Macondo Well incident. Thesequential decline in operating and maintenance expenses relates tothe timing of certain projects and various other items. These includeapproximately $70 million in net lower costs incurred on rigsundergoing shipyard, maintenance, repair and equipment certificationprojects during the period; approximately $40 million associated withreduced activity in the company's low-margin drilling managementservices reporting unit; and approximately $35 million related to thefourth quarter 2011 termination of the Deepwater Expedition contract.

Depreciation and amortization expense was $351 million in the firstquarter 2012 compared with $374 million in the prior quarter. The $23million decrease was due mainly to assets that are now fullydepreciated and the impact of Standard Jackups classified as held forsale or sold.

General and administrative expenses were $69 million for the firstquarter 2012 compared with $88 million in the previous quarter,including $1 million and $17 million, respectively, associated withthe Aker Drilling acquisition.

Annual Effective Tax Rate

Transocean's Annual Effective Tax Rate (3) for the first quarter2012, which excludes various discrete items, was 25.5 percent. Thiscompares with 59.6 percent for the prior quarter.

Other Items

For the first quarter, interest expense, net of amounts capitalized,was $180 million, compared with $178 million in the fourth quarter2011. Capitalized interest for the first quarter 2012 was $13 millioncompared with $10 million in the prior quarter. Interest incomedecreased to $15 million in the first quarter, compared with $17million in the fourth quarter 2011.

Cash flows from operating activities decreased $23 million to $540million for the first quarter 2012 compared with $563 million for thefourth quarter 2011. Capital expenditures decreased to $260 millionfor the first quarter compared with $350 million in the fourthquarter of 2011. The lower capital expenditures were primarily due tothe timing of shipyard milestone payments associated with thecompany's newbuild program.

Forward-Looking Statements

Statements included in this news release, including those regardingestimates of Transocean's goodwill or long-lived asset impairmentsand the estimated loss contingencies associated with the Macondo Wellincident, are forward-looking statements that involve certainassumptions. These statements are based on currently availablecompetitive, financial, and economic data along with our currentoperating plans and involve risks and uncertainties including, butnot limited to, market conditions, Transocean's results of operationsand other factors detailed in \"Risk Factors\" and elsewhere inTransocean's filings with the Securities and Exchange Commission.Should one or more of these risks or uncertainties materialize (orthe other consequences of such a development worsen), or shouldunderlying assumptions prove incorrect, actual outcomes may varymaterially from those forecasted or expected. Transocean disclaimsany intention or obligation to update publicly or revise suchstatements, whether as a result of new information, future events orotherwise.

Conference Call Information

Transocean will conduct a teleconference call at 10:00 a.m. EDT, 4:00p.m. CEST, on Thursday, May 3, 2012. To participate, dial +1800-768-6563 or +1 785-830-7991 and refer to confirmation code9219164 approximately 10 minutes prior to the scheduled start time ofthe 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 three charts that may bediscussed during the conference call, titled \"1Q12 Charts,\" has beenposted to Transocean's website and can also be found by selecting\"Investor Relations/Quarterly Toolkit.\" The conference call may alsobe accessed 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. EDT, 7:00 p.m. CEST, on May 3, 2012, and can be accessed bydialing +1 719-457-0820 or +1 888-203-1112 and referring to theconfirmation code 9219164. 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 a leading international provider of offshore contractdrilling services for oil and gas wells. We own or have partialownership interests in and operate a fleet of 129 mobile offshoredrilling units consisting of 50 High-Specification Floaters(Ultra-Deepwater, Deepwater and Harsh-Environment semisubmersiblesand drillships), 25 Midwater Floaters, nine High-SpecificationJackups, 44 Standard Jackups and one swamp barge. In addition, wehave two Ultra-Deepwater drillships and four High-SpecificationJackups under construction. The company specializes in technicallydemanding sectors of the global offshore drilling business with aparticular focus on deepwater and harsh environment drillingservices. We believe we operate one of the most versatile offshoredrilling fleets in the world.

(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 the company'sfleet. See the 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 the website atwww.deepwater.com.

                      TRANSOCEAN LTD. AND SUBSIDIARIES              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS                    (In millions, except per share data)                                (Unaudited)                                                     Three months ended                                                          March 31,                                                 --------------------------                                                     2012          2011                                                 ------------  ------------Operating revenues  Contract drilling revenues                     $      2,203  $      1,950  Contract drilling intangible revenues                    11            10  Other revenues                                          117           184                                                 ------------  ------------                                                        2,331         2,144                                                 ------------  ------------Costs and expenses  Operating and maintenance                             1,410         1,359  Depreciation and amortization                           351           354  General and administrative                               69            67                                                 ------------  ------------                                                        1,830         1,780                                                 ------------  ------------Loss on impairment                                       (227)           --Gain (loss) on disposal of assets, net                     (4)            8                                                 ------------  ------------Operating income                                          270           372                                                 ------------  ------------Other income (expense), net  Interest income                                          15            15  Interest expense, net of amounts capitalized           (180)         (145)  Other, net                                               (7)            3                                                 ------------  ------------                                                         (172)         (127)                                                 ------------  ------------Income from continuing operations before income tax expense                                               98           245Income tax expense                                         24            81                                                 ------------  ------------Income from continuing operations                          74           164Income (loss) from discontinued operations, net of tax                                                   (15)          176                                                 ------------  ------------Net income                                                 59           340Net income attributable to noncontrolling interest                                                  17            30                                                 ------------  ------------Net income attributable to controlling interest  $         42  $        310                                                 ============  ============Earnings per share-basic  Earnings from continuing operations            $       0.16  $       0.42  Earnings (loss) from discontinued operations          (0.04)         0.54                                                 ------------  ------------  Earnings per share                             $       0.12  $       0.96                                                 ============  ============Earnings per share-diluted  Earnings from continuing operations            $       0.16  $       0.42  Earnings (loss) from discontinued operations          (0.04)         0.54                                                 ------------  ------------  Earnings per share                             $       0.12  $       0.96                                                 ============  ============Weighted-average shares outstanding  Basic                                                   350           319  Diluted                                                 350           320                      TRANSOCEAN LTD. AND SUBSIDIARIES                   CONDENSED CONSOLIDATED BALANCE SHEETS                      (In millions, except share data)                                (Unaudited)                                                   March 31,   December 31,                                                     2012          2011                                                 ------------  ------------AssetsCash and cash equivalents                        $      3,982  $      4,017Accounts receivable, net of allowance for doubtful accounts of $28 at March 31, 2012 and December 31, 2011                                      2,238         2,176Materials and supplies, net of allowance for obsolescence of $76 and $73 at March 31, 2012 and December 31, 2011, respectively                      663           627Deferred income taxes, net                                142           142Assets held for sale                                       53            26Other current assets                                      595           621                                                 ------------  ------------    Total current assets                                7,673         7,609                                                 ------------  ------------Property and equipment                                 28,960        29,037Property and equipment of consolidated variable interest entities                                      2,255         2,252Less accumulated depreciation                           8,892         8,760                                                 ------------  ------------  Property and equipment, net                          22,323        22,529                                                 ------------  ------------Goodwill                                                3,087         3,205Other assets                                            1,632         1,745                                                 ------------  ------------    Total assets                                 $     34,715  $     35,088                                                 ============  ============Liabilities and equityAccounts payable                                 $        841  $        880Accrued income taxes                                       70            89Debt due within one year                                2,695         1,942Debt of consolidated variable interest entities due within one year                                       97            97Other current liabilities                               2,061         2,350                                                 ------------  ------------    Total current liabilities                           5,764         5,358                                                 ------------  ------------Long-term debt                                          9,940        10,756Long-term debt of consolidated variable interest entities                                                 724           741Deferred income taxes, net                                512           523Other long-term liabilities                             1,914         1,903                                                 ------------  ------------    Total long-term liabilities                        13,090        13,923                                                 ------------  ------------Commitments and contingenciesRedeemable noncontrolling interest                        138           116Shares, CHF 15.00 par value, 402,282,355 authorized, 167,617,649 conditionally authorized, 365,135,298 issued at March 31, 2012 and December 31, 2011; 350,500,518 and 349,805,793 outstanding at March 31, 2012 and December 31, 2011, respectively                        4,991         4,982Additional paid-in capital                              7,216         7,211Treasury shares, at cost, 2,863,267 held at March 31, 2012 and December 31, 2011                    (240)         (240)Retained earnings                                       4,286         4,244Accumulated other comprehensive loss                     (515)         (496)                                                 ------------  ------------  Total controlling interest shareholders'   equity                                              15,738        15,701                                                 ------------  ------------  Noncontrolling interest                                 (15)          (10)                                                 ------------  ------------    Total equity                                       15,723        15,691                                                 ------------  ------------    Total liabilities and equity                 $     34,715  $     35,088                                                 ============  ============                      TRANSOCEAN LTD. AND SUBSIDIARIES              CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                               (In millions)                                (Unaudited)                                                     Three months ended                                                          March 31,                                                 --------------------------                                                     2012          2011                                                 ------------  ------------Cash flows from operating activities  Net income                                     $         59  $        340  Adjustments to reconcile to net cash provided   by operating activities:    Amortization of drilling contract     intangibles                                          (11)          (10)    Depreciation and amortization                         351           354    Share-based compensation expense                       23            27    Loss on impairment                                    227            --    (Gain) loss on disposal of assets, net                  4            (8)    (Gain) loss on disposal of discontinued     operations, net                                       14          (173)    Amortization of debt issue costs, discounts     and premiums, net                                     18            26    Deferred income taxes                                 (30)           11    Other, net                                             21            (3)    Changes in deferred revenue, net                      (12)           46    Changes in deferred expenses, net                     (49)          (36)    Changes in operating assets and liabilities           (75)         (184)                                                 ------------  ------------Net cash provided by operating activities                 540           390                                                 ------------  ------------Cash flows from investing activities  Capital expenditures                                   (260)         (240)  Proceeds from disposal of assets, net                    41            13  Proceeds from disposal of discontinued   operations, net                                         --           259  Other, net                                               12            (6)                                                 ------------  ------------Net cash provided by (used in) investing activities                                              (207)           26                                                 ------------  ------------Cash flows from financing activities  Changes in short-term borrowings, net                    --            51  Proceeds from debt                                       --             5  Repayments of debt                                     (147)          (47)  Proceeds from restricted cash investments               108            --  Deposits to restricted cash investments                 (42)           --  Distribution of qualifying additional paid-in   capital                                               (278)           --  Other, net                                               (9)           (7)                                                 ------------  ------------Net cash provided by (used in) financing activities                                              (368)            2                                                 ------------  ------------Net increase (decrease) in cash and cash equivalents                                              (35)          418                                                 ------------  ------------Cash and cash equivalents at beginning of period        4,017         3,394                                                 ------------  ------------Cash and cash equivalents at end of period       $      3,982  $      3,812                                                 ============  ============                      TRANSOCEAN LTD. AND SUBSIDIARIES                         FLEET OPERATING STATISTICS                                        Operating Revenues (in millions) (1)                                        ------------------------------------                                                 Three months ended                                        ------------------------------------                                         March 31,  December 31,   March 31,                                           2012         2011         2011                                        ----------  ------------  ----------Contract Drilling Revenues High-Specification Floaters:  Ultra Deepwater Floaters              $    1,092  $      1,066  $      844  Deepwater Floaters                           236           259         290  Harsh Environment Floaters                   255           285         150                                        ----------  ------------  ---------- Total High-Specification Floaters           1,583         1,610       1,284 Midwater Floaters                             347           333         400 Jackups:  High-Specification Jackups                    78            68          31  Standard Jackups                             189           220         229                                        ----------  ------------  ---------- Total Jackups                                 267           288         260 Other Rigs                                      6             7           6                                        ----------  ------------  ----------Total Contract Drilling Revenues             2,203         2,238       1,950                                        ----------  ------------  ----------Contract Intangible Revenue                     11            13          10Other Revenues Client Reimbursable Revenues                   48            41          37 Integrated Services and Other                   -            13          15 Drilling Management Services                   69           117         132                                        ----------  ------------  ----------Total Other Revenues                           117           171         184                                        ----------  ------------  ----------Total Company                           $    2,331  $      2,422  $    2,144                                        ==========  ============  ==========                                              Average Daily Revenue (1)                                        ------------------------------------                                                 Three months ended                                        ------------------------------------                                         March 31,  December 31,   March 31,                                           2012         2011         2011                                        ----------  ------------  ---------- High-Specification Floaters:  Ultra Deepwater Floaters              $  534,900  $    542,900  $  467,700  Deepwater Floaters                       348,900       351,600     395,900  Harsh Environment Floaters               478,600       468,300     402,400 Total High-Specification Floaters         486,900       486,600     441,300 Midwater Floaters                         275,600       274,300     313,000 High-Specification Jackups                116,900       111,900     106,200 Standard Jackups                           91,200        93,400     109,200 Other Rigs                                 73,300        73,800      73,400                                        ----------  ------------  ----------Total Drilling Fleet                    $  300,300  $    295,400  $  292,600                                        ==========  ============  ==========(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)                                          ----------------------------------                                                  Three months ended                                          ----------------------------------                                          March 31,  December 31,  March 31,                                             2012        2011         2011                                          ---------  ------------  ---------  High-Specification Floaters:    Ultra Deepwater Floaters                 83%          79%         77%    Deepwater Floaters                       47%          50%         51%    Harsh Environment Floaters               84%          95%         83%  Total High-Specification Floaters          71%          72%         69%  Midwater Floaters                          56%          55%         60%  High-Specification Jackups                 81%          74%         40%  Standard Jackups                           47%          51%         43%  Other Rigs                                 98%          99%         49%                                          ---------  ------------  ---------Total Drilling Fleet                         61%          61%         55%                                          =========  ============  =========(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                     -------------------------------------------------------                     1Q 2012 4Q 2011 3Q 2011 2Q 2011 1Q 2011 FY 2011 FY 2010                     ------- ------- ------- ------- ------- ------- -------Ultra Deepwater       89.4%   89.5%   86.4%   89.3%   85.3%   87.7%   88.6%Deepwater             81.1%   88.1%   87.7%   93.9%   88.2%   89.4%   90.3%Harsh Environment Floaters             97.8%   98.0%   94.4%   98.4%   99.2%   97.4%   96.0%Midwater Floaters     90.8%   94.2%   90.8%   91.9%   93.6%   92.6%   92.5%High Specification Jackups              93.4%   94.3%   97.3%   95.6%   95.1%   95.6%   95.3%Standard Jackups      97.8%   96.4%   98.2%   98.4%   97.7%   97.7%   97.3%Others                97.3%   98.6%   99.5%   97.6%   99.0%   98.7%   98.4%                     ------- ------- ------- ------- ------- ------- -------Total Fleet           90.4%   91.9%   89.5%   92.1%   90.0%   90.9%   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                                       ------------------------------------                                        March 31,  December 31,   March 31,                                          2012         2011         2011                                       ----------  ------------  ----------Income (loss) from continuing operations before income taxes        $       98  $     (5,970) $      245  Add back (subtract):  Litigation matters                           --         1,000           8  Acquisition costs                             1            17          --  Gain on disposal of other assets,   net                                         --           (11)         (9)  Loss on impairment of goodwill and   other assets                               227         5,201          --  Loss on marketable security                  --            13          --  Other, net                                   --            --           5                                       ----------  ------------  ----------Adjusted income from continuing operations before income taxes               326           250         249                                       ----------  ------------  ----------Income tax expense from continuing operations                                    24           132          81  Add back (subtract):  Loss on impairment                           30            --          --  Changes in estimates (1)                     29            18         (35)  Other, net                                   --            --           2                                       ----------  ------------  ----------Adjusted income tax expense from continuing operations (2)             $       83  $        150  $       48                                       ----------  ------------  ----------Effective Tax Rate (3)                       24.7%         -2.2%       33.1%Annual Effective Tax Rate (4)                25.5%         59.6%       19.3%(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, 2011 include $46 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.