Transocean Q1 profit beats estimates

SAN FRANCISCO (Reuters) - Transocean Ltd RIGN.S, owner of the rig at the center of one of the worst oil spills in U.S. history, posted a quarterly profit on Wednesday that topped analysts' expectations, and its shares rose.

But the after-hours rise in its stock was tempered after the world's largest offshore drilling contractor (RIG.N) set out many risks associated with the rig disaster, including legal costs, government investigations and lost revenue.

Shares of Transocean have lost one-fifth of their value since the April 20 explosion and fire on the drilling platform, which sank in the Gulf of Mexico off Louisiana's coast.

"If the quarter stood on its own, we'd feel OK," said Roger Read, oilfield services analyst at investment bank Natixis Bleichroeder. "But it doesn't stand on its own," he added, referring to the results being overshadowed by the sunken rig.

In its quarterly filing with the U.S. Securities and Exchange Commission, Transocean said that along with a federal investigation into the lost rig, various congressional committees had requested its participation in hearings, and the Department of Justice had asked it to preserve information.

"There have also been numerous lawsuits filed related to the incident, and we expect additional lawsuits to be filed," Transocean said. "We expect to incur significant legal fees and costs in responding to these matters."

First-quarter net profit fell to $677 million, or $2.09 per share, from $942 million, or $2.93 per share, a year earlier. Revenue dropped 17 percent to $2.60 billion.

The Switzerland-based company earned $2.22 per share, excluding net charges of $42 million, or 13 cents per share, for losses on two rigs it sold, impairment and tax items.

Analysts, on average, had expected profit of $2.10 a share on revenue of $2.65 billion, Thomson Reuters I/B/E/S said.

Analysts will look for more details during a Thursday company conference call to discuss earnings.

RIG WAS CONTRACTED TO BP

The Deepwater Horizon, contracted out to BP Plc (BP.L) at variable rates in the range of $500,000 per day, sank and has been gushing oil into the Gulf of Mexico at a rate of 5,000 barrels (210,000 gallons/795,000 liters) a day.

Transocean said it had received a partial payment of $401 million in insurance for the Horizon, which was insured for $560 million, but that would not cover the impact of increased operating costs due to greater regulation, or other losses.

"As a result of the incident, our business will be negatively impacted by the loss of revenue from the rig," the company said. "We do not carry insurance for loss of revenue."

Transocean's stock has lost 21 percent of its value since April 20, compared with an 8 percent decline in the Philadelphia Stock Exchange oil service index .OSX.

"Given the ongoing headline risks associated with the accident, we believe there could be lower levels at which to enter Transocean," UBS analyst Angie Sedita said of the stock, which she rates a "buy," in a note to clients.

Read at Natixis Bleichroeder said he had been nervous going into the quarter given the number of rigs set aside by Transocean and the nature of some recent contracts.

Transocean has idled 25 of its 65 shallow-water jackup rigs, whereas in early 2009, all but one were at work or undergoing maintenance.

The company, which moved its headquarters to Switzerland from Houston in 2008 to save on taxes and get closer to its Eastern Hemisphere clients, made a secondary listing of shares in Switzerland on April 20.

Transocean's New York-listed shares rose to $73.84 after hours after closing at $72.76 on the New York Stock Exchange.

(Reporting by Braden Reddall; Editing by Toni Reinhold, Leslie Gevirtz and Carol Bishopric)