Transocean LTD (NYSE:RIG) reported a net loss attributable to controlling interest for the three months ended March 31, 2015 of $483 million, or $1.33 per diluted share. First quarter 2015 results included net unfavorable items of $881 million, $2.43 per diluted share, as follows:
- $481 million, or $1.34 per diluted share, associated with an impairment of the Deepwater Floater asset group;
- As previously announced, $393 million, or $1.07 per diluted share, in impairments of assets classified as held for sale;
- $5 million, or $0.01 per diluted share, in costs related to one-time termination benefits; and
- $2 million, or $0.01 per diluted share, primarily associated with discontinued operations and other items.
After consideration of these net unfavorable items, first quarter adjusted net income was $398 million, or $1.10 per diluted share.
For the three months ended March 31, 2014, the company reported net income attributable to controlling interest of $456 million, or $1.25 per diluted share, which included net unfavorable items of $64 million, or $0.18 per diluted share. After consideration of these net unfavorable items, adjusted net income was $520 million, or $1.43 per diluted share.
Revenues for the three months ended March 31, 2015 decreased $194 million sequentially to $2.043 billion due primarily to reduced activity associated with stacked and idle rigs, and asset disposals, partly offset by fewer out-of-service days.
Operating and maintenance expenses decreased $226 million sequentially to $1.084 billion. The decrease was mainly associated with the company’s onshore and offshore cost reduction initiatives including the optimization of maintenance and out-of-service costs, asset disposals, and stacking of rigs.
General and administrative expenses decreased $16 million from the prior quarter to $46 million due primarily to the company’s cost reduction initiatives and certain costs incurred in the fourth quarter of 2014 that were not repeated in the first quarter.
Due primarily to the asset impairments and favorable changes in estimates related to prior years’ tax liabilities, Transocean’s first quarter 2015 Effective Tax Rate(4) was (21.6) percent, compared with (1.3) percent in the fourth quarter of 2014. Transocean’s Annual Effective Tax Rate for the first quarter of 2015 was 25.8 percent, compared with the full year 2014 Annual Effective Tax Rate of 18.7 percent. The increase was due partly to the overall level of pre-tax income and to U.K. legislation associated with bareboat charter payments to affiliates. The Annual Effective Tax Rate excludes the effect of the impairments.
Interest expense, net of amounts capitalized, was $116 million in the first quarter of 2015, down from $123 million in the prior quarter. Interest income was $6 million, compared with $8 million in the fourth quarter of 2014. Capitalized interest was $26 million, compared with $24 million in the prior quarter.
Cash flows from operating activities decreased $40 million from the fourth quarter of 2014 to $526 million.
Capital expenditures decreased $117 million sequentially to $201 million due primarily to lower project costs on the existing fleet. (Original Source)
Shares of Transocean closed today at $18.99, up $0.01 or 0.05%. RIG has a 1-year high of $46.12 and a 1-year low of $13.28. The stock’s 50-day moving average is $16.42 and its 200-day moving average is $18.80.
On the ratings front, Transocean has been the subject of a number of recent research reports. In a report issued on April 23, Morgan Stanley analyst Ole Slorer downgraded RIG to Sell, with a price target of $19.50, which represents a slight upside potential from current levels. Separately, on April 22, Edward Jones’ Rob Desai downgraded the stock to Sell .
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Ole Slorer and Rob Desai have a total average return of -3.5% and 2.1% respectively. Slorer has a success rate of 34.8% and is ranked #3183 out of 3590 analysts, while Desai has a success rate of 33.3% and is ranked #2340.
The street is mostly Bearish on RIG stock. Out of 10 analysts who cover the stock, 8 suggest a Sell rating , one suggest a Buy and one recommend to Hold the stock. The 12-month average price target assigned to the stock is $13.21, which reflects a potential downside of -31.8% from last closing price.
Transocean Ltd is an international provider of offshore contract drilling services for oil and gas wells. The Company has two operating segments; contract drilling services and drilling management services.