Transocean Incurs Loss in Fourth Quarter, Misses on Revenues

Transocean Ltd. RIG reported a fourth-quarter 2024 adjusted net loss of 9 cents per share, which missed the Zacks Consensus Estimate of a profit of 1 cent. This underperformance can be attributed to year-over-year higher costs and expenses. However, the bottom line was in line with the year-ago level.Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.This Switzerland-based offshore drilling powerhouse’s total adjusted revenues of $952 million missed the Zacks Consensus Estimate of $959 million due to poor revenue efficiency and weak average revenues per day from its segments. However, the top line increased 27.3% from the prior-year figure of $748 million. This was due to higher-than-expected revenues from ultra-deepwater and harsh environment floaters. Ultra-deepwater and harsh environment revenues surpassed the respective consensus mark of $667 million and $244 million. Transocean Ltd. Price, Consensus and EPS Surprise Transocean Ltd. price-consensus-eps-surprise-chart | Transocean Ltd. Quote Transocean’s Segmental Revenue BreakupTransocean’s ultra-deepwater floaters contributed 71% to net contract drilling revenues, while harsh environment floaters accounted for the remaining 29%.Revenues from the ultra-deepwater and harsh environment floaters totaled $675 million and $277 million, respectively, compared with the year-ago quarter’s reported figures of $536 million and $205 million. However, revenues from ultra-deepwater and harsh environment operations missed the model prediction of $679.8 million and $280.2 million, respectively.Revenues efficiency was 93.5%, a decrease from the previous quarter's 94.5%. This was also lower than the year-ago quarter’s 97%. RIG’s Day Rates, Utilization & Backlog   Average day rates in the reported quarter increased to $434,700 from $407,800 in the year-ago quarter. However, the figure missed the model prediction of $461,400.  Average revenues per day from ultra-deepwater floaters decreased to $428,200 from $432,100 in the year-ago quarter. Moreover, the figure missed the model estimation of $453,400.  The same from harsh environment floaters also decreased to $452,600    from $464,900 in the comparable period of 2023. Moreover, the figure missed the model prediction of $482,100.  Fleet utilization rate was 66.8% in the quarter, which increased from the prior-year period’s 51.6%.Transocean’s backlog of $8.3 billion decreased sequentially from $9.3 billion. RIG’s Costs, Capex & Balance SheetThis Zacks Rank #3 (Hold) company reported $815 million in costs and expenses, which was 1.5% higher than the year-ago quarter’s level of $803 million.Operating and maintenance expenses (O&M) rose to $579 million from $569 million a year ago. General and administrative expenses (G&A) rose to $56 million from the prior-year figure of $50 million. However, depreciation and amortization decreased to $180 million from the prior-year figure of $190 million.The oil and gas drilling company spent $29 million on capital investments in the fourth quarter. Cash used in operating activities was $206 million. The company generated a free cash flow of $177 million.Cash and cash equivalents were $560 million as of Dec. 31, 2024. Long-term debt amounted to $6.2 billion, with a debt-to-capitalization of 37.6% as of the same period.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Guidance for TransoceanThe company expects first-quarter O&M expenses to be between $610 million and $630 million, with G&A expenses ranging from $50 million to $55 million. Capital expenditures for the first quarter are forecasted at about $59 million and cash taxes are expected to be around $13 million.For the full year, O&M expenses are expected to be between $2.3 billion and $2.4 billion, in line with the prior guidance. G&A expenses for the year are anticipated to be between $190 million and $200 million. The company expects net interest expense for the year to be between $550 million and $555 million, including an interest expense of about $580 million and interest income in the range of $25-$30 million.Cash taxes for the full year are expected to be between $65 million and $70 million. These estimations are consistent with previous guidance and reflect the company’s focus on maintaining financial discipline and supporting long-term growth. Important Earnings at a GlanceWhile we have discussed RIG’s fourth-quarter results in detail, let us take a look at three other key reports of this space.Oil and gas equipment and services provider Liberty Energy LBRT reported a fourth-quarter 2024 adjusted net income of 10 cents per share, which marginally beat the Zacks Consensus Estimate of 9 cents, due to a year-over-year decrease in costs and expenses.  However, the bottom line underperformed the year-ago quarter’s reported figure of 54 cents, due to poor equipment and service execution, along with lower activity.As of Dec. 31, Liberty had approximately $20 million in cash and cash equivalents. The pressure pumper’s long-term debt of $190.5 million represented a debt-to-capitalization of 8.8%.Another oil and gas equipment and services provider Halliburton Company HAL posted a fourth-quarter 2024 adjusted net income per share of 70 cents, same as the Zacks Consensus Estimate but below the year-ago quarter’s profit of 86 cents (adjusted). The numbers indicated softer activity in the region of North America, partly offset by improved fluid work in the Gulf of Mexico.As of Dec. 31, 2024, the company had approximately $2.6 billion in cash/cash equivalents and $7.2 billion in long-term debt, representing a debt-to-capitalization ratio of 40.4. The company generated $1.5 billion of cash flow from operations in the fourth quarter, leading to a free cash flow of $1.1 billion. Energy infrastructure provider Kinder Morgan KMI reported fourth-quarter adjusted earnings per share of 32 cents, shy of the Zacks Consensus Estimate of 33 cents. The lower-than-expected quarterly earnings were primarily due to decreased volumes on certain systems, asset divestitures and lower crude, CO2 and NGL volumes. KMI’s fourth-quarter DCF was $1.3 billion, up from $1.2 billion a year ago.As of Dec. 31, 2024, Kinder Morgan reported $88 million in cash and cash equivalents. Its long-term debt amounted to $29.8 billion at the quarter-end. For 2025, Kinder Morgan anticipates a net income of $2.8 billion, up 8% from the prior-year level, and an adjusted EPS of $1.27, up 10%. The company expects to declare dividends of $1.17 per share, up 2% from the prior-year figure. It also anticipates budgeted adjusted EBITDA of $8.3 billion, up 4% from the previous-year level.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is among the most innovative financial firms. With a fast-growing customer base (already 50+ million) and a diverse set of cutting edge solutions, this stock is poised for big gains. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Transocean Ltd. (RIG): Free Stock Analysis Report Halliburton Company (HAL): Free Stock Analysis Report Kinder Morgan, Inc. (KMI): Free Stock Analysis Report Liberty Energy Inc. 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