Transocean Posts $487M Loss on Impairments. Revenues Rise on Dispute Settlement

July 30, 2020

Illustration only: Image by nikkytok
Illustration only: Image by nikkytok

Deepwater drilling company Transocean reported a second-quarter net loss of $487 million, mostly on impairment of assets. The adjusted net loss was $1 million, an improvement from an adjusted loss of $187 million in the previous quarter.

Total contract drilling revenues were $930 million, compared with $759 million in the first quarter of 2020.

Contract drilling revenues in the quarter rose by $171 million. However, Transocean said, this was primarily due to $177 million of revenues recognized in the second quarter 2020, resulting from a settlement agreement with a customer for performance disputes.

While Transocean did not say it specifically, this might have been related to a settlement reached with any over a long-standing dispute over a drillship work in the Gulf of Mexico. (More on that here).

Additionally, Transocean said that the second quarter was favorably impacted by higher revenue efficiency, and an early termination fee of $21 million for Paul B. Loyd Jr. drilling rig with Hurricane Energy, offset by lower revenues due to reductions in dayrates and a non-cash revenue reduction of $53 million, compared to $48 million in the prior quarter, from contract intangible amortization associated with the Songa and Ocean Rig acquisitions.

The contract backlog was $8.9 billion as of the July 2020 Fleet Status Report.

"I recognize and thank the entire Transocean team for producing strong second-quarter operating and financial results during these unprecedented times," said Jeremy Thigpen, President and Chief Executive Officer. 

"Our revenue efficiency of 97% demonstrates our unwavering commitment to delivering reliable and efficient operations for our customers, while keeping personnel on our rigs safe and healthy.”

Transocean has recently secured a contract for its under-construction drillship Deepwater Atlas. The rig will be used at the Shenandoah project in the U.S. Gulf of Mexico.

Transocean CEO commented on the deal in the Q2 statement released Wednesday.

He said: "...We are excited to have secured a contract, subject to a final investment decision by our customers, that will result in upgrading Deepwater Atlas into the industry’s second 20,000 PSI ultra-deepwater drillship. This contract is meaningful as it moves us closer towards securing backlog for our remaining newbuild drillship, and clearly demonstrates our customer’s confidence in Transocean as the undisputed leader in ultra-deepwater drilling."

At the end of the quarter, Transocean's debt due within one year was $578 million. Total long term liabilities were $10,25 billion.




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