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In a sign that the oil price bust continues to weigh on drilling activity, offshore rig operator Transocean Ltd (NYSE:RIG) reported on Wednesday third-quarter earnings down from the same period last year, but beating consensus estimates for both profit and sales.
Transocean’s adjusted net income came in at US$93 million for the third quarter this year, or US$0.25 per diluted share, compared to the analyst estimate for earnings per share (EPS) of US$0.14.
For the same period last year, Transocean had reported adjusted net income of US$316 million, or US$0.87 per diluted share. For the second quarter of this year, Transocean’s adjusted net profit was US$64 million, or US$0.17 per diluted share.
Revenues for the third quarter of 2016 dropped to US$903 million from US$943 million for the second quarter, due to reduced activity associated with rig retirements, which was partly offset by higher revenue efficiency. Analysts had expected the third-quarter revenues to stand at US$862 million.
Transocean reduced operating and maintenance expenses to US$404 million in the third quarter, from US$500 million in the second quarter, mostly due to lower costs linked with stacked rigs and rig retirements, and lower personnel expense as part of cost-management initiatives.
The company’s contract backlog was US$12.2 billion as of the October 2016 Fleet Status Report.
In September, Transocean said that the bottom for the market could arrive by the middle of next year, with rig utilization rates stabilizing at some point in 2017.
Before the results release, Wall Street analysts had predicted that Transocean would see its revenues drop in both the third and fourth quarter of this year, as a weak backlog and a low chance of signing new contracts in the near term would weigh on the results.
The fourth-quarter revenue is expected to further drop to US$805 million, compared to US$1.85 billion in revenue the company reported for the fourth quarter last year. Analysts also forecast that Transocean’s full-year 2016 revenue would plunge by 49 percent on the year, to US$3.75 billion, compared to the US$7.39 billion the rig operator reported last year.
For 2017, revenue is projected to further drop to US$2.9 billion.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.