Before market open this morning, major oilfield services players Foster Wheeler Ltd (NYSE:FWLT) and Transocean Inc. (NYSE:RIG) reported third quarter earnings. The short version is both missed EPS estimates, while surpassing revenue expectations.

At Foster Wheeler, revenues were up 32%, and costs up 35% compared withthe year-ago quarter. Transocean’s revenues were up a breath-taking107%; unfortunately, costs were up an even more breath-taking 128%.

Foster Wheeler reported new orders booked in the third quarter were up24% from a year ago, and that the order backlog totaled $1.8 billion.The company also announced that its chairman and CEO has signed a newthree-year contract, putting his previously announced retirement planson hold.

Transocean noted a sequential increase in dayrates for its drillingfleet of just 1.5%. Year over year, the increase in dayrates is about10%. Utilization rates were up 2% sequentially to 89%, flat with lastyear’s rate. Lack of growth in day rates and flat utilization don’tpresent a picture of growth going forward.

Neither of these reports is better than okay. Foster Wheeler closed at$31.60 yesterday, but has gained $0.72 in pre-open trading. That’s 62%below 52-week highs. Transocean is trading down $3.52 in pre-opentrading at $81.00. That’s about 50% lower than its 52-week high.

Paul Ausick
November 5, 2008

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