UPDATE 2-Transocean Q2 revenue up, adds $750 mln Macondo cost

Wed Aug 1, 2012 7:41pm EDT

* Adj second-quarter profit 74 cents/share vs 45 cents expected

* Revenue rises 10 pct to $2.58 bln, costs up 5 pct

* $750 mln in Macondo estimated cost adds to $1 bln in Q4 2011

* Shares rise 20 cents after hours to $48

By Braden Reddall

Aug 1 (Reuters) - Transocean Ltd posted higher-than-expected revenue on Wednesday but made a loss as the contract driller took an extra $750 million charge related to a potential settlement for the Macondo well disaster in the Gulf of Mexico.

Transocean said operating and maintenance costs rose 5 percent in the second quarter to $1.6 billion as a result of rig maintenance, a persistent challenge for the owner of the world's largest offshore drilling fleet.

Expectations of a potential settlement by Transocean and its client on Macondo, BP Plc, have been raised ever since Transocean announced in late February a $1 billion estimated loss it booked for the fourth quarter of 2011.

Speculation picked up in late June after the U.S. Congress removed an obstacle to settling legal claims from the 2010 spill, when it approved a spending plan for the billions of dollars it expects the government to collect.

UBS analyst Angie Sedita expected much of the focus for investors to be on the Macondo settlement reserves, which she said now totaled $1.95 billion, below initial estimates of between $2 billion and $4 billion.

As for the results, Sedita said costs came in under her estimate. She had been targeting the lower end of the company's full-year forecast costs of $6.15 billion to $6.35 billion, and said that range might come down during Transocean's conference call on Thursday.

The company reported on Wednesday a second-quarter net loss of $304 million, or 86 cents per share, compared with a profit of $124 million, or 39 cents per share, a year earlier.

Excluding the $750 million estimated loss contingency for Macondo and other items, it earned 74 cents per share compared with the average estimate of 45 cents on Thomson Reuters I/B/E/S. Revenue grew 10 percent to $2.58 billion, above the average estimate of $2.49 billion.

Among the other items was a $64 million gain on the sale of four shallow-water rigs. The company has already matched its 2011 total of five jackup sales this year, and is targeting up to $1 billion worth of 2012 disposals.

Transocean shares rose 20 cents to $48 in after-hours trading, after having gained 2.1 percent in the regular session.

Transocean said its revenue efficiency, or how much it earned compared with what it could have made, rose to 92.5 percent from 90.6 percent after dipping below 90 percent last year. The company is targeting a gradual improvement toward somewhere around the 94 percent level of 2009.

Growing demand for rigs has tightened up the market across the board. Last month, Noble Corp and Diamond Offshore Drilling Inc, two of the top five global rig contractors, beat profit expectations and said strong demand had whittled down the number of available rigs for 2013 to near zero.

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California state worker Albert Jagow (L) goes over his retirement options with Calpers Retirement Program Specialist JeanAnn Kirkpatrick at the Calpers regional office in Sacramento, California October 21, 2009. Calpers, the largest U.S. public pension fund, manages retirement benefits for more than 1.6 million people, with assets comparable in value to the entire GDP of Israel. The Calpers investment portfolio had a historic drop in value, going from a peak of $250 billion in the fall of 2007 to $167 billion in March 2009, a loss of about a third during that period. It is now around $200 billion. REUTERS/Max Whittaker   (UNITED STATES) - RTXPWOZ

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