Transocean Ltd. RIG reported a fourth-quarter 2024 adjusted net loss of 9 cents per share, which missed the Zacks Consensus Estimate of a profit of 1 cent. This underperformance can be attributed to year-over-year higher costs and expenses. However, the bottom line was in line with the year-ago level.

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This Switzerland-based offshore drilling powerhouse’s total adjusted revenues of $952 million missed the Zacks Consensus Estimate of $959 million due to poor revenue efficiency and weak average revenues per day from its segments. However, the top line increased 27.3% from the prior-year figure of $748 million. This was due to higher-than-expected revenues from ultra-deepwater and harsh environment floaters. Ultra-deepwater and harsh environment revenues surpassed the respective consensus mark of $667 million and $244 million. 

Transocean Ltd. Price, Consensus and EPS Surprise

Transocean Ltd. price-consensus-eps-surprise-chart | Transocean Ltd. Quote

Transocean’s Segmental Revenue Breakup

Transocean’s ultra-deepwater floaters contributed 71% to net contract drilling revenues, while harsh environment floaters accounted for the remaining 29%.

Revenues from the ultra-deepwater and harsh environment floaters totaled $675 million and $277 million, respectively, compared with the year-ago quarter’s reported figures of $536 million and $205 million. However, revenues from ultra-deepwater and harsh environment operations missed the model prediction of $679.8 million and $280.2 million, respectively.

Revenues efficiency was 93.5%, a decrease from the previous quarter's 94.5%. This was also lower than the year-ago quarter’s 97%.

RIG’s Day Rates, Utilization & Backlog   

Average day rates in the reported quarter increased to $434,700 from $407,800 in the year-ago quarter. However, the figure missed the model prediction of $461,400.  

Average revenues per day from ultra-deepwater floaters decreased to $428,200 from $432,100 in the year-ago quarter. Moreover, the figure missed the model estimation of $453,400.  

The same from harsh environment floaters also decreased to $452,600    from $464,900 in the comparable period of 2023. Moreover, the figure missed the model prediction of $482,100.  

Fleet utilization rate was 66.8% in the quarter, which increased from the prior-year period’s 51.6%.

Transocean’s backlog of $8.3 billion decreased sequentially from $9.3 billion.

RIG’s Costs, Capex & Balance Sheet

This Zacks Rank #3 (Hold) company reported $815 million in costs and expenses, which was 1.5% higher than the year-ago quarter’s level of $803 million.

Operating and maintenance expenses (O&M) rose to $579 million from $569 million a year ago. General and administrative expenses (G&A) rose to $56 million from the prior-year figure of $50 million. However, depreciation and amortization decreased to $180 million from the prior-year figure of $190 million.

The oil and gas drilling company spent $29 million on capital investments in the fourth quarter. Cash used in operating activities was $206 million. The company generated a free cash flow of $177 million.

Cash and cash equivalents were $560 million as of Dec. 31, 2024. Long-term debt amounted to $6.2 billion, with a debt-to-capitalization of 37.6% as of the same period.

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Guidance for Transocean

The company expects first-quarter O&M expenses to be between $610 million and $630 million, with G&A expenses ranging from $50 million to $55 million. Capital expenditures for the first quarter are forecasted at about $59 million and cash taxes are expected to be around $13 million.

For the full year, O&M expenses are expected to be between $2.3 billion and $2.4 billion, in line with the prior guidance. G&A expenses for the year are anticipated to be between $190 million and $200 million. The company expects net interest expense for the year to be between $550 million and $555 million, including an interest expense of about $580 million and interest income in the range of $25-$30 million.

Cash taxes for the full year are expected to be between $65 million and $70 million. These estimations are consistent with previous guidance and reflect the company’s focus on maintaining financial discipline and supporting long-term growth.

Important Earnings at a Glance

While we have discussed RIG’s fourth-quarter results in detail, let us take a look at three other key reports of this space.

Oil and gas equipment and services provider Liberty Energy LBRT reported a fourth-quarter 2024 adjusted net income of 10 cents per share, which marginally beat the Zacks Consensus Estimate of 9 cents, due to a year-over-year decrease in costs and expenses.  However, the bottom line underperformed the year-ago quarter’s reported figure of 54 cents, due to poor equipment and service execution, along with lower activity.

As of Dec. 31, Liberty had approximately $20 million in cash and cash equivalents. The pressure pumper’s long-term debt of $190.5 million represented a debt-to-capitalization of 8.8%.

Another oil and gas equipment and services provider Halliburton Company HAL posted a fourth-quarter 2024 adjusted net income per share of 70 cents, same as the Zacks Consensus Estimate but below the year-ago quarter’s profit of 86 cents (adjusted). The numbers indicated softer activity in the region of North America, partly offset by improved fluid work in the Gulf of Mexico.

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