Transocean bleeds red ink in fourth quarter

Offshore drilling contractor Transocean sank to a net loss in the last quarter of 2020 compared to the prior quarter of the year as its revenues decreased but managed to reduce its losses in the year-over-year comparison.

Transocean said in its quarterly report on Monday that its total contract drilling revenues were $690 million in the fourth quarter of 2020 compared with $773 million in the third quarter of 2020 and $792 million in the fourth quarter of 2019.

According to Transocean, contract drilling revenues for 4Q 2020 decreased sequentially by $83 million primarily due to reduced activities for two rigs that were idle, one rig that demobilized from Canada to Norway and two rigs undertaking out-of-service maintenance in Brazil.

Revenue efficiency in 4Q 2020 was 97.2 per cent, compared with 96.6 per cent in the prior quarter.

Net loss attributable to controlling interest in 4Q 2020 was $37 million, compared with net income attributable to controlling interest of $359 million in the third quarter of 2020 and a net loss of $51 million in 4Q 2019.

Fourth-quarter 2020 results included net favourable items of $172 million, including $137 million gain on retirement of debt and
$37 million related to discrete tax items, partially offset by $2 million of other net unfavourable items.

Excluding these $172 million of net favourable items, the adjusted net loss was $209 million. This compares with an adjusted net loss of $69 million in the previous quarter.

As of February 2021, Transocean’s contract backlog was $7.8 billion.

Transocean reduced its operating and maintenance expense in 4Q 2020 to $465 million from $470 million in the prior quarter.

The sequential decrease was primarily the result of decreased activity partially offset by higher in-service maintenance costs, out-of-service costs for the two rigs in Brazil, and a $20 million increase in our allowance for excess materials and supplies.

Transocean President and Chief Executive Officer, Jeremy Thigpen, said: “As a direct result of our strong performance in 2020, we generated over $1 billion in EBITDA, which, when combined with the multiple financing transactions consummated throughout the year, further bolstered our liquidity position. This liquidity, coupled with our industry-leading $7.8 billion backlog, provides us the financial stability to continue to invest in our people, the maintenance of our assets, and the development and deployment of new technologies that will further differentiate us in the eyes of our customers and shareholders”.

Thigpen added: “Looking forward, we are mindful of the various challenges facing us; however, we believe that improving longer-term market fundamentals, and the increasing list of opportunities on the horizon bode well for an improvement in contracting activity later this year and into next”.

Looking at Transocean’s full-year performances over the last three years, the company has been managing to increase its revenues and reduce losses.

For the full year 2020, Transocean’s contract drilling revenues were $3.15 billion, compared to $3.09 billion in 2019 and $3.02 billion in 2018.

For the year ended 31 December 2020, net loss attributable to controlling interest totalled $567 million compared to the loss of $1.26 billion in 2019 and loss of $1.996 billion in 2018.

Full-year 2020 results included $101 million net unfavourable items, including $597 million loss on impairment of assets, $62 million loss on impairment of investments in unconsolidated affiliates, $61 million loss on disposal of assets, and $5 million in restructuring costs, including severance.

These unfavourable items were partially offset by a $533 million gain on restructuring and retirement of debt and $91 million related to discrete tax items.