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Transocean Ltd. Reports Second Quarter 2022 Results

Transocean Ltd. (NYSE: RIG) today reported a net loss attributable to controlling interest of $68 million, $0.10 per diluted share, for the three months ended June 30, 2022.

Contract drilling revenues for the three months ended June 30, 2022, increased sequentially by $106 million to $692 million, primarily due to three rigs that returned to work after being idle in the prior quarter, increased dayrate for three rigs, higher revenue efficiency and one additional calendar day in the second quarter, partially offset by reduced activity for two rigs that were warm stacked in the second quarter of 2022.

Contract intangible amortization represented a non-cash revenue reduction of $30 million, compared to $29 million in the first quarter of 2022.

Operating and maintenance expense was $433 million, compared with $412 million in the prior quarter. The sequential increase was primarily due to returning the three rigs to work, as mentioned above, and higher in-service maintenance cost across our fleet.

General and administrative expense was $43 million, which is in line with the $42 million in the first quarter of 2022.

Interest expense, net of amounts capitalized, was $100 million, compared with $102 million in the prior quarter. Interest income was $4 million, compared with $2 million, in the previous quarter.

The Effective Tax Rate(2) was (4.7)% in the current quarter and (17.6)% in the prior quarter. The change in the rate was primarily due to the reduced loss before income tax expense and reduction of tax expense; however, the loss before income tax movement was much greater causing a shift in the effective tax rate. In addition, there were lower releases of uncertain tax positions as compared to last quarter. The Effective Tax Rate excluding discrete items was (5.2)% compared to (22.8)% in the previous quarter.

Cash provided by operating activities was $41 million during the second quarter of 2022, representing an increase of $42 million compared to the prior quarter. The sequential increase is primarily due to the higher level of operating activity in the second quarter and reduced payments for payroll-related items and interest.
Second quarter 2022 capital expenditures increased to $115 million from $106 million in the prior quarter, primarily due to payments related to the company’s newbuild drillships under construction, including the cash component of the final milestone payment for the delivery of Deepwater Atlas in June 2022.

“The Transocean team continued to operate at an extremely high level throughout the second quarter, once again delivering safe, reliable, and efficient operations for our customers,” said Jeremy Thigpen, Chief Executive Officer. “Our strong uptime performance and contractual bonus conversion resulted in revenue efficiency of approximately 98% across our global floater fleet.”

Thigpen added, “While the past eight years have been extremely challenging for the entire industry, it is clear that the recovery in offshore drilling is underway, as contracting activity, utilization rates for high-specification ultra-deepwater and harsh-environment assets, and dayrates all continue to rise. And, with a backdrop of hydrocarbon supply challenges, we are increasingly encouraged that this momentum could continue for the foreseeable future.”

Non-GAAP Financial Measures
We present our operating results in accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”). We believe certain financial measures, such as Adjusted Contract Drilling Revenues, EBITDA, Adjusted EBITDA and Adjusted Net Income, which are non-GAAP measures, provide users of our financial statements with supplemental information that may be useful in evaluating our operating performance. We believe that such non-GAAP measures, when read in conjunction with our operating results presented under U.S. GAAP, can be used to better assess our performance from period to period and relative to performance of other companies in our industry, without regard to financing methods, historical cost basis or capital structure. Such non-GAAP measures should be considered as a supplement to, and not as a substitute for, financial measures prepared in accordance with U.S. GAAP.
Source: Transocean

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