Houston-based Transocean is one of the few major companies in the oil and gas industry to have a positive 2Q 2015, which was due to multiple factors including Macondo-related settlement agreements.
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Image from Transocean. |
The company’s adjusted net income came in at US$408 million for the period, a 2.5% increase from $398 million in 1Q 2015.
Total fleet revenue efficiency for 2Q 2015 was an “impressive” 97.3%, up from 95.9% in the previous quarter.
Transocean’s total value of new contracts it secured was approximately $178 million, and its contract backlog was at $18.6 billion. Fleet utilization came in at 75%, compared to 79% in 1Q 2015.
“This high level of operating performance results are from steps that the company has taken to advance maintenance programs to reduce subsea-related downtime, as well as downtime associated with other critical rig components,” Jeremy Thigpin, Transocean president and CEO said.
Excluding $788 million ($735 million after taxes) in net favorable items associated with Macondo-related insurance proceeds, reimbursements of legal fees, crew claims and other contingent liability adjustments, operating and maintenance expenses were $985 million. This compares with $1.084 billion in 1Q 2015. The decrease of $99 million was due primarily to reduced activity mainly related to rig retirements, stacked and idle rigs, and the company's ongoing cost reduction initiatives, the global rig provider said in its 2Q 2015 report.
The company reached two important Macondo-related settlement agreements that cover almost all outstanding claims against Transocean, arising from the April 2010 disaster in the Gulf of Mexico. Although this is not the end of all Macondo-related litigations, Transocean has to put behind what the company considers to be the significant financial exposure, Thigpin added.
Fleet update
As for its fleet, Transocean will scrap a total of 20 of its floaters. In addition, the Transocean Amirante semisubmersible will be recycled in an environmentally responsible manner, and the Celtic Sea semisubmersible will either be sold or used in a non-drilling capacity, or recycled.
The two newbuild drillships Transocean has on order are expected to be delivered in 2Q 2019 and 1Q 2020.
Ultra deepwater floaters Sedco Express, Development Driller II, Deepwater Champion; harsh environment floater Transocean Barents; midwater floaters GSF Rig 140, Sedco 704; and jackups Transocean Andaman and GSF Galaxy II all received contracts.
“As the oil and gas industry continues to struggle, Transocean reported that the ultra deepwater market utilization is down to 88%, with 17 rigs idle, and 10 cold stacked. Year-to-date, 17 ultra deepwater fixtures have been executed primarily in the Golden Triangle, Mexico, and UK Norway. Deepwater is down to 73%, with only four fixtures being reported, primarily in Australia. Mid-water utilization is at 75%, posting nine fixtures contracted mainly in UK Norway,” Terry B. Bonno, Transocean senior VP of marketing said.
As of today, there are a total of 25 cold stacked and 38 retired floaters. Transocean expects these numbers to increase with the over capacity of supply, and simply not enough demand in the near- to medium-term. The company is however seeing NOCs and independents providing some term work primarily in India, Australia, UK, and Africa, Bonno said.
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