Transocean Profits Sink, Yet Surprise (RIG, DO)

The world’s largest offshore driller, Transocean Ltd. (NYSE:RIG), reported first quarter 2009 EPS of $2.93 on net income of $942 million and revenue of $3.12 billion. In the first quarter of 2008, Transocean reported EPS of $3.58 and revenues of $3.11 billion. Analysts had been expecting EPS for the first quarter of $3.51 on $3.10 billion in revenue.

Transocean took a total of $221 million in write-downs on the value of two semisubmersibles it is trying to sell and another $43 million in payments related to its merger with GlobalSantaFe. Excluding those items, the company’s EPS would have reached $3.75.

The company did not refer to future prospects in its earnings release, but it did note a 17% drop in its operating and maintenance expenses for the quarter. Transocean did see a rise in its contract drilling revenues, year-over-year, but that was more than offset by substantial drops in its contract drilling intangible and other revenues categories.

Compared with Diamond Offshore Drilling Inc. (NYSE:DO), which beat analysts’ expectations on both EPS and revenues and declared a special cash dividend into the bargain, Transocean showed just mixed results.

Transocean shares are up about 3% in pre-market trading, to $75.00. The company’s 52-week range is $41.95-$163.00. Diamond is up about 1% on Transocean’s coat tails.

Paul Ausick
May 6, 2009