* Transocean shares retreat as cost outlook steady
* Ensco says aims to improve on "unacceptable" Q1 downtime
* Ensco outlook positive, shares up 0.9 pct
By Braden Reddall
May 3 Transocean Ltd topped
profit expectations for the first quarter as costs fell on the
timing of maintenance and project spending, but it expects those
costs to rise sharply this quarter before returning to normal
later this year.
Transocean shares rose as much as 4 percent early on
Thursday. They were up 1.3 percent at $50.60 in midday trade.
Greg Cauthen, chief financial officer of the owner of the
world's largest offshore drilling fleet, stuck with his 2012
operating and maintenance cost estimate of between $6.15 billion
and $6.35 billion.
"We expect operating and maintenance costs in the third and
fourth quarter to be higher than the first quarter but
significantly lower than the second quarter, as our expected
level of shipyard activity decreases in the second half of the
year," Cauthen told analysts on a conference call.
Excluding one-time items, Transocean earned a first-quarter
profit of 68 cents per share, compared with the average 33 cents
per share expected by analysts on Thomson Reuters I/B/E/S.
The outperformance was driven almost entirely by the lower
costs in the quarter, analysts said.
On the other hand, nearest rival Ensco Plc reported
a first-quarter profit just short of expectations, and said the
effects of rig downtime had been a particular problem that it
expected to improve.
"We are working through these issues and other causes of
downtime, such as human error, that added to unacceptable levels
of downtime in the first quarter, including some for seasoned
rigs that should not be experiencing extended downtime," Ensco
Chief Executive Dan Rabun said on a conference call.
Ensco predicted a 6 percent rise in second-quarter revenue
from the first quarter. Ensco shares were up 0.9 percent at
Separately, Transocean said that, as part of a yearlong
ambition to dispose of its older and less-capable shallow-water
jackup rigs, it would put its 44 "standard" jackups into an
operating unit separate from its other 84 drilling units.
CEO Steven Newman said the company was trying to create "as
much of a robust entity as possible" for when it comes time to
divest those 44 rigs - a third of them are currently "stacked"
and not being actively marketed.
Transocean has already been whittling away at the standard
jackup fleet, reducing its size by seven in the past 10 months,
including three rigs recently set aside for sale.
Newman had said in late March the company was planning on
selling assets worth between $500 million and $1 billion this