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Transocean's (RIG) Q1 Earnings Miss Estimates, Revenues Beat
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Transocean (RIG - Free Report) reported a first-quarter 2023 adjusted net loss of 38 cents per share, wider than the Zacks Consensus Estimate of a loss of 20 cents. This underperformance can be attributed to a weaker result from Harsh Environment floaters.
The bottom line also deteriorated from the year-ago period’s recorded loss of 28 cents.
Total adjusted revenues of $649 million beat the Zacks Consensus Estimate of $642 million. The top line also improved 5.5% from the prior-year figure of $615. This outperformance was primarily driven by higher operational days.
Transocean’s Ultra-deepwater floaters contributed 74.6% to net contract drilling revenues, while Harsh Environment floaters accounted for the remaining 25.4%. Revenues from the Ultra-deepwater and Harsh Environment floaters totaled $484 million and $165 million, respectively, compared with the year-ago quarter’s reported figures of $390 million and $196 million.
Revenue efficiency was 97.8%, lower than 98.0% reported sequentially but higher than the year-ago quarter’s 94.9%.
Dayrates, Utilization & Backlog
Average dayrates in the reported quarter increased to $364,100 from $334,500 in the year-ago quarter. The figure also beat the Zacks Consensus Estimate of $340,000.
Average revenues per day from Ultra-deepwater floaters increased to $360,000 from $305,600 in the year-ago quarter. The same from Harsh Environment floaters, however, decreased to $376,000 from $399,100 in the comparable period of 2022.
Fleet utilization rate was 51.9% in the quarter, which reduced marginally from the prior-year period’s 52.7%.
Transocean’s backlog of $8.6 billion increased sequentially from $6.1 billion.
Costs, Capex & Balance Sheet
Operations and maintenance (O&M) costs decreased to $409 million from $412 million a year ago. The company spent $81 million on capital investments in the first quarter. Cash used in operating activities stood at $47 million. Cash and cash equivalents were $747 million as of Mar 31, 2023. Long-term debt amounted to $7.34 billion, with a debt-to-capitalization of 41.6% as of the same date.
Guidance
For the second quarter of 2023, Transocean expects adjusted contract drilling revenues of $735 million. It also projects O&M expenses at approximately $460 million for the same time frame.
For full-year 2023, the company expects operations and maintenance expenses of $1.9 billion. It also anticipates adjusted contract revenues in the $2.9-$3 billion range.
General and administrative expenses are anticipated in the band of $49-$200 million for the entire year.
RIG expects net interest expenses for the second quarter in the range of $118-$479 million.
Capital Expenditure (capex) is projected at $100 million, which includes $70 million related to new builds and $30 million for maintenance capex in the second quarter.
Cash taxes are expected at about $15 million for the same quarter and roughly $35 million for full-year 2023.
Zacks Rank and Key Picks
Currently, Transocean carries a Zacks Rank #3 (Hold).
CVR Energy: CVI is worth approximately $2.63 billion. CVI currently pays investors $2.00 per share, or 7.63%, on an annual basis.
The company currently has a forward P/E ratio of 6.59. In comparison, its industry has an average forward P/E of 8.60, which means CVI is trading at a discount to the group.
Marathon Petroleum: MPC is valued at around $58.02 billion. It delivered an average earnings surprise of 20.91% for the last four quarters and its current dividend yield is 2.30%.
The company currently has a forward P/E ratio of 6.36. In comparison, its industry has an average forward P/E of 9.10, which means MPC is trading at a discount to the group.
Ranger Energy Services: RNGR is valued at around $242.99 million. In the past year, its shares have gained 16.8%.
Ranger Energy Services currently has a forward P/E ratio of 5.30. In comparison, its industry has an average forward P/E of 11.60, which means RNGR is trading at a discount to the group.
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Transocean's (RIG) Q1 Earnings Miss Estimates, Revenues Beat
Transocean (RIG - Free Report) reported a first-quarter 2023 adjusted net loss of 38 cents per share, wider than the Zacks Consensus Estimate of a loss of 20 cents. This underperformance can be attributed to a weaker result from Harsh Environment floaters.
The bottom line also deteriorated from the year-ago period’s recorded loss of 28 cents.
Total adjusted revenues of $649 million beat the Zacks Consensus Estimate of $642 million. The top line also improved 5.5% from the prior-year figure of $615. This outperformance was primarily driven by higher operational days.
Transocean Ltd. Price, Consensus and EPS Surprise
Transocean Ltd. price-consensus-eps-surprise-chart | Transocean Ltd. Quote
Segmental Revenue Breakup
Transocean’s Ultra-deepwater floaters contributed 74.6% to net contract drilling revenues, while Harsh Environment floaters accounted for the remaining 25.4%. Revenues from the Ultra-deepwater and Harsh Environment floaters totaled $484 million and $165 million, respectively, compared with the year-ago quarter’s reported figures of $390 million and $196 million.
Revenue efficiency was 97.8%, lower than 98.0% reported sequentially but higher than the year-ago quarter’s 94.9%.
Dayrates, Utilization & Backlog
Average dayrates in the reported quarter increased to $364,100 from $334,500 in the year-ago quarter. The figure also beat the Zacks Consensus Estimate of $340,000.
Average revenues per day from Ultra-deepwater floaters increased to $360,000 from $305,600 in the year-ago quarter. The same from Harsh Environment floaters, however, decreased to $376,000 from $399,100 in the comparable period of 2022.
Fleet utilization rate was 51.9% in the quarter, which reduced marginally from the prior-year period’s 52.7%.
Transocean’s backlog of $8.6 billion increased sequentially from $6.1 billion.
Costs, Capex & Balance Sheet
Operations and maintenance (O&M) costs decreased to $409 million from $412 million a year ago. The company spent $81 million on capital investments in the first quarter. Cash used in operating activities stood at $47 million. Cash and cash equivalents were $747 million as of Mar 31, 2023. Long-term debt amounted to $7.34 billion, with a debt-to-capitalization of 41.6% as of the same date.
Guidance
For the second quarter of 2023, Transocean expects adjusted contract drilling revenues of $735 million. It also projects O&M expenses at approximately $460 million for the same time frame.
For full-year 2023, the company expects operations and maintenance expenses of $1.9 billion. It also anticipates adjusted contract revenues in the $2.9-$3 billion range.
General and administrative expenses are anticipated in the band of $49-$200 million for the entire year.
RIG expects net interest expenses for the second quarter in the range of $118-$479 million.
Capital Expenditure (capex) is projected at $100 million, which includes $70 million related to new builds and $30 million for maintenance capex in the second quarter.
Cash taxes are expected at about $15 million for the same quarter and roughly $35 million for full-year 2023.
Zacks Rank and Key Picks
Currently, Transocean carries a Zacks Rank #3 (Hold).
Some better-ranked stocks for investors interested in the energy sector are CVR Energy (CVI - Free Report) , sporting a Zacks Rank #1 (Strong Buy), and Marathon Petroleum (MPC - Free Report) and Ranger Energy Services (RNGR - Free Report) , each holding a Zacks Rank #2 (Buy) at present. You can seethe complete list of today’s Zacks #1 Rank stocks here.
CVR Energy: CVI is worth approximately $2.63 billion. CVI currently pays investors $2.00 per share, or 7.63%, on an annual basis.
The company currently has a forward P/E ratio of 6.59. In comparison, its industry has an average forward P/E of 8.60, which means CVI is trading at a discount to the group.
Marathon Petroleum: MPC is valued at around $58.02 billion. It delivered an average earnings surprise of 20.91% for the last four quarters and its current dividend yield is 2.30%.
The company currently has a forward P/E ratio of 6.36. In comparison, its industry has an average forward P/E of 9.10, which means MPC is trading at a discount to the group.
Ranger Energy Services: RNGR is valued at around $242.99 million. In the past year, its shares have gained 16.8%.
Ranger Energy Services currently has a forward P/E ratio of 5.30. In comparison, its industry has an average forward P/E of 11.60, which means RNGR is trading at a discount to the group.