Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - Transocean Ltd. | d8k.htm |
Exhibit 99.1
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Transocean Ltd. Investor Relations and Communications Dept. |
| Analyst Contact: | Gregory S. Panagos | |||
| +1 713-232-7551 | ||||
| Media Contact: | Guy A. Cantwell | FOR RELEASE: May 4, 2011 | ||
| +1 713-232-7647 | ||||
TRANSOCEAN LTD. REPORTS FIRST QUARTER 2011 RESULTS
ZUG, SWITZERLAND— Transocean Ltd. (NYSE: RIG) (SIX: RIGN) today reported net income attributable to controlling interest of $310 million, or $0.96 per diluted share, for the three months ended March 31, 2011. The results compare to net income attributable to controlling interest of $677 million, or $2.09 per diluted share for the three months ended March 31, 2010.
First quarter 2011 results included the following items, after tax, that resulted in a net positive impact of approximately $139 million, or $0.43 per diluted share:
| • | $176 million of income from discontinued operations, nearly all of which is from the gain on the sale of the Trident 20, |
| • | $9 million from the gain on the sale of the Transocean Mercury, |
| • | $8 million of net charges related to litigation matters not associated with the Macondo well incident, and |
| • | $38 million of net charges primarily related to discrete tax items. |
First quarter 2011 results also included expenses associated with the Macondo well incident of $23 million, $19 million after tax, or $0.06 per diluted share. These expenses were primarily related to increased insurance premiums and legal costs.
Operations Quarterly Review
Revenues for the three months ended March 31, 2011 were $2.144 billion, compared to revenues of $2.127 billion during the three months ended December 31, 2010. First quarter contract drilling revenues were impacted by lower utilization and revenue efficiency. Our Deepwater and Midwater Floater fleets experienced lower utilization due to the stacking of rigs, as well as increased shipyard time related to contract preparation, special periodic surveys and major maintenance projects. Compliance with new well control equipment certification requirements, higher standards for equipment condition and capacity constraints on our vendors contributed to reduced revenue efficiency among our Ultra-Deepwater and Deepwater Floaters. Partially offsetting lower contract drilling revenue was additional revenue from two newbuild rigs commencing operations. Other revenues increased primarily from additional drilling management services activity.
Operating and maintenance expenses totaled $1.359 billion for the first quarter 2011, up slightly from $1.339 billion for the prior quarter. The change was due to increased drilling management services activity, which was partially offset by reduced rig-related maintenance costs.
Depreciation and amortization expense was $354 million in the first quarter 2011 compared to $381 million in the prior quarter. The $27 million decrease was primarily due to the reduced carrying amounts of our Standard Jackups resulting from the approximately $1 billion asset impairment recognized on that asset group during the fourth quarter 2010.
Liquidity and Interest Expense
Interest expense, net of amounts capitalized for the first quarter 2011, was $145 million, compared to $152 million in the fourth quarter 2010.
Cash flow from operating activities decreased to $390 million for the first quarter 2011 compared to $796 million for the fourth quarter 2010. The decline in cash flow from operations resulted primarily from an increase in working capital.
Effective Tax Rate
Transocean’s Annual Effective Tax Rate(1) for the first quarter 2011, which excludes various discrete items, was 19.3 percent. The Effective Tax Rate(2) for the first quarter was 33.1 percent, primarily reflecting the impact of discrete items resulting from changes in estimates.
Conference Call Information
Transocean will conduct a teleconference call at 10:00 a.m. EDT, 4:00 p.m. CEST, on May 5, 2011. To participate, dial +1 719-325-2234 and refer to confirmation code 8570996 approximately five to 10 minutes prior to the scheduled start time of the call.
In addition, the conference call will be simultaneously broadcast over the Internet in a listen-only mode and can be accessed by logging onto Transocean’s website at www.deepwater.com and selecting “Investor Relations.” A file containing four charts to be discussed during the conference call, titled “1Q11 Charts,” has been posted to Transocean’s website and can also be found by selecting “Investor Relations/Quarterly Toolkit.” The conference call may also be accessed via the Internet at www.CompanyBoardroom.com by typing in Transocean’s New York Stock Exchange trading symbol, “RIG.”
A telephonic replay of the conference call should be available after 1:00 p.m. EDT, 7:00 p.m. CEST, on May 5, 2011, and can be accessed by dialing +1 719-457-0820 or +1 888-203-1112 and referring to the confirmation code 8570996. Also, a replay will be available through the Internet and can be accessed by visiting either of the above-referenced internet addresses. Both replay options will be available for approximately 30 days.
About Transocean
Transocean is the world’s largest offshore drilling contractor and the leading provider of drilling management services worldwide. With a fleet of 137 mobile offshore drilling units as well as one ultra-deepwater drillship and three high-specification jackups under construction, Transocean’s fleet is considered one of the most modern and versatile in the world due to its emphasis on technically demanding segments of the offshore drilling business. Transocean owns or operates a contract drilling fleet of 47 High-Specification Floaters (Ultra-Deepwater, Deepwater and Harsh-Environment semisubmersibles and drillships), 25 Midwater Floaters, nine High-Specification Jackups, 53 Standard Jackups and other assets utilized in the support of offshore drilling activities worldwide.
| (1) | Annual Effective Tax Rate is defined as income tax expense excluding various discrete items (such as changes in estimates and tax on items excluded from income before income tax expense) divided by income before income tax expense excluding gains on sales and similar items pursuant to the accounting standards for income taxes and estimating the annual effective tax rate. See the accompanying schedule entitled “Supplemental Effective Tax Rate Analysis.” |
| (2) | Effective Tax Rate is defined as income tax expense divided by income before income taxes. See the accompanying schedule entitled “Supplemental Effective Tax Rate Analysis.” |
For more information about Transocean, please visit our website at www.deepwater.com.
TRANSOCEAN LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share data)
(Unaudited)
| Three months
ended March 31, |
||||||||
| 2011 | 2010 | |||||||
| (As adjusted) | ||||||||
| Operating revenues |
||||||||
| Contract drilling revenues |
$ | 1,950 | $ | 2,425 | ||||
| Contract drilling intangible revenues |
10 | 33 | ||||||
| Other revenues |
184 | 121 | ||||||
| 2,144 | 2,579 | |||||||
| Costs and expenses |
||||||||
| Operating and maintenance |
1,359 | 1,186 | ||||||
| Depreciation and amortization |
354 | 374 | ||||||
| General and administrative |
67 | 63 | ||||||
| 1,780 | 1,623 | |||||||
| Gain (loss) on disposal of assets, net |
8 | (14 | ) | |||||
| Operating income |
372 | 942 | ||||||
| Other income (expense), net |
||||||||
| Interest income |
15 | 5 | ||||||
| Interest expense, net of amounts capitalized |
(145 | ) | (132 | ) | ||||
| Other, net |
3 | 15 | ||||||
| (127 | ) | (112 | ) | |||||
| Income from continuing operations before income tax expense |
245 | 830 | ||||||
| Income tax expense |
81 | 147 | ||||||
| Income from continuing operations |
164 | 683 | ||||||
| Income from discontinued operations, net of tax |
176 | 2 | ||||||
| Net income |
340 | 685 | ||||||
| Net income attributable to noncontrolling interest |
30 | 8 | ||||||
| Net income attributable to controlling interest |
$ | 310 | $ | 677 | ||||
| Earnings per share-basic |
||||||||
| Earnings from continuing operations |
$ | 0.42 | $ | 2.09 | ||||
| Earnings from discontinued operations |
0.54 | 0.01 | ||||||
| Earnings per share |
0.96 | 2.10 | ||||||
| Earnings per share-diluted |
||||||||
| Earnings from continuing operations |
$ | 0.42 | $ | 2.08 | ||||
| Earnings from discontinued operations |
0.54 | 0.01 | ||||||
| Earnings per share |
0.96 | 2.09 | ||||||
| Weighted-average shares outstanding |
||||||||
| Basic |
319 | 321 | ||||||
| Diluted |
320 | 322 | ||||||
TRANSOCEAN LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except share data)
(Unaudited)
| March 31, 2011 |
December 31, 2010 |
|||||||
| (As adjusted) | ||||||||
| Assets |
||||||||
| Cash and cash equivalents |
$ | 3,812 | $ | 3,394 | ||||
| Accounts receivable, net of allowance for doubtful accounts of $33 and $38 at March 31, 2011 and December 31, 2010, respectively |
2,161 | 1,978 | ||||||
| Materials and supplies, net of allowance for obsolescence of $70 at March 31, 2011 and December 31, 2010 |
541 | 514 | ||||||
| Deferred income taxes, net |
116 | 115 | ||||||
| Assets held for sale |
77 | — | ||||||
| Other current assets |
197 | 194 | ||||||
| Total current assets |
6,904 | 6,195 | ||||||
| Property and equipment |
26,819 | 26,721 | ||||||
| Property and equipment of consolidated variable interest entities |
2,241 | 2,214 | ||||||
| Less accumulated depreciation |
7,887 | 7,616 | ||||||
| Property and equipment, net |
21,173 | 21,319 | ||||||
| Goodwill |
8,132 | 8,132 | ||||||
| Other assets |
1,001 | 1,165 | ||||||
| Total assets |
$ | 37,210 | $ | 36,811 | ||||
| Liabilities and equity |
||||||||
| Accounts payable |
$ | 808 | $ | 832 | ||||
| Accrued income taxes |
67 | 109 | ||||||
| Debt due within one year |
1,965 | 1,917 | ||||||
| Debt of consolidated variable interest entities due within one year |
95 | 95 | ||||||
| Other current liabilities |
906 | 883 | ||||||
| Total current liabilities |
3,841 | 3,836 | ||||||
| Long-term debt |
8,361 | 8,354 | ||||||
| Long-term debt of consolidated variable interest entities |
820 | 855 | ||||||
| Deferred income taxes, net |
586 | 575 | ||||||
| Other long-term liabilities |
1,840 | 1,791 | ||||||
| Total long-term liabilities |
11,607 | 11,575 | ||||||
| Commitments and contingencies |
||||||||
| Redeemable noncontrolling interest |
57 | 25 | ||||||
| Shares, CHF 15.00 par value, 335,235,298 authorized, 167,617,649 conditionally authorized, 335,235,298 issued at March 31, 2011 and December 31, 2010; 319,538,901 and 319,080,678 outstanding at March 31, 2011 and December 31, 2010, respectively |
4,488 | 4,482 | ||||||
| Additional paid-in capital |
7,518 | 7,504 | ||||||
| Treasury shares, at cost, 2,863,267 held at March 31, 2011 and December 31, 2010 |
(240 | ) | (240 | ) | ||||
| Retained earnings |
10,279 | 9,969 | ||||||
| Accumulated other comprehensive loss |
(335 | ) | (332 | ) | ||||
| Total controlling interest shareholders’ equity |
21,710 | 21,383 | ||||||
| Noncontrolling interest |
(5 | ) | (8 | ) | ||||
| Total equity |
21,705 | 21,375 | ||||||
| Total liabilities and equity |
$ | 37,210 | $ | 36,811 | ||||
TRANSOCEAN LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
| Three months ended March 31, |
||||||||
| 2011 | 2010 | |||||||
| (As adjusted) | ||||||||
| Cash flows from operating activities |
||||||||
| Net income |
$ | 340 | $ | 685 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Amortization of drilling contract intangibles |
(10 | ) | (33 | ) | ||||
| Depreciation and amortization |
354 | 374 | ||||||
| Share-based compensation expense |
27 | 35 | ||||||
| Gain on disposal of discontinued operations |
(173 | ) | — | |||||
| (Gain) loss on disposal of assets, net |
(8 | ) | 14 | |||||
| Amortization of debt issue costs, discounts and premiums, net |
26 | 49 | ||||||
| Deferred income taxes |
11 | (22 | ) | |||||
| Other, net |
(3 | ) | 31 | |||||
| Deferred revenue, net |
46 | 151 | ||||||
| Deferred expenses, net |
(36 | ) | (14 | ) | ||||
| Changes in operating assets and liabilities |
(184 | ) | (98 | ) | ||||
| Net cash provided by operating activities |
390 | 1,172 | ||||||
| Cash flows from investing activities |
||||||||
| Capital expenditures |
(240 | ) | (369 | ) | ||||
| Proceeds from disposal of assets, net |
13 | 41 | ||||||
| Proceeds from disposal of discontinued operations |
259 | — | ||||||
| Other, net |
(6 | ) | 5 | |||||
| Net cash provided by (used in) investing activities |
26 | (323 | ) | |||||
| Cash flows from financing activities |
||||||||
| Change in short-term borrowings, net |
51 | (131 | ) | |||||
| Proceeds from debt |
5 | 54 | ||||||
| Repayments of debt |
(47 | ) | (253 | ) | ||||
| Purchases of shares held in treasury |
— | (60 | ) | |||||
| Other, net |
(7 | ) | (3 | ) | ||||
| Net cash provided by (used in) financing activities |
2 | (393 | ) | |||||
| Net increase in cash and cash equivalents |
418 | 456 | ||||||
| Cash and cash equivalents at beginning of period |
3,394 | 1,130 | ||||||
| Cash and cash equivalents at end of period |
$ | 3,812 | $ | 1,586 | ||||
TRANSOCEAN LTD.
FLEET OPERATING STATISTICS
| Operating Revenues ($ Millions) (1) | ||||||||||||
| Three months ended | ||||||||||||
| March 31, 2011 |
December 31, 2010 |
March 31, 2010 |
||||||||||
| Contract Drilling Revenues |
||||||||||||
| High-Specification Floaters: |
||||||||||||
| Ultra Deepwater Floaters |
$ | 844 | $ | 740 | $ | 901 | ||||||
| Deepwater Floaters |
290 | 339 | 390 | |||||||||
| Harsh Environment Floaters |
150 | 155 | 176 | |||||||||
| Total High-Specification Floaters |
1,284 | 1,234 | 1,467 | |||||||||
| Midwater Floaters |
400 | 477 | 522 | |||||||||
| High-Specification Jackups |
31 | 33 | 77 | |||||||||
| Standard Jackups |
229 | 259 | 352 | |||||||||
| Other Rigs |
6 | 6 | 7 | |||||||||
| Subtotal |
1,950 | 2,009 | 2,425 | |||||||||
| Contract Intangible Revenue |
10 | 13 | 33 | |||||||||
| Other Revenues |
||||||||||||
| Client Reimbursable Revenues |
37 | 34 | 40 | |||||||||
| Integrated Services and Other |
15 | 15 | 30 | |||||||||
| Drilling Management Services |
132 | 56 | 51 | |||||||||
| Subtotal |
184 | 105 | 121 | |||||||||
| Total Company |
$ | 2,144 | $ | 2,127 | $ | 2,579 | ||||||
| Average Daily Revenue (1) | ||||||||||||
| Three months ended | ||||||||||||
| March 31, 2011 |
December 31, 2010 |
March 31, 2010 |
||||||||||
| High-Specification Floaters: |
||||||||||||
| Ultra Deepwater Floaters |
$ | 467,700 | $ | 435,900 | $ | 486,000 | ||||||
| Deepwater Floaters |
$ | 395,900 | $ | 395,600 | $ | 383,800 | ||||||
| Harsh Environment Floaters |
$ | 402,400 | $ | 366,800 | $ | 400,100 | ||||||
| Total High-Specification Floaters |
$ | 441,300 | $ | 414,500 | $ | 443,200 | ||||||
| Midwater Floaters |
$ | 313,000 | $ | 298,500 | $ | 331,600 | ||||||
| High-Specification Jackups |
$ | 106,200 | $ | 129,400 | $ | 162,600 | ||||||
| Standard Jackups |
$ | 109,200 | $ | 110,600 | $ | 133,100 | ||||||
| Other Rigs |
$ | 73,400 | $ | 73,000 | $ | 72,700 | ||||||
| Total Drilling Fleet |
$ | 292,600 | $ | 276,900 | $ | 299,600 | ||||||
| Utilization (1) | ||||||||||||
| Three months ended | ||||||||||||
| March 31, 2011 |
December 31, 2010 |
March 31, 2010 |
||||||||||
| High-Specification Floaters: |
||||||||||||
| Ultra Deepwater Floaters |
77 | % | 76 | % | 88 | % | ||||||
| Deepwater Floaters |
51 | % | 58 | % | 71 | % | ||||||
| Harsh Environment Floaters |
83 | % | 92 | % | 98 | % | ||||||
| Total High-Specification Floaters |
69 | % | 71 | % | 83 | % | ||||||
| Midwater Floaters |
60 | % | 68 | % | 67 | % | ||||||
| High-Specification Jackups |
40 | % | 31 | % | 59 | % | ||||||
| Standard Jackups |
43 | % | 46 | % | 53 | % | ||||||
| Other Rigs |
49 | % | 48 | % | 50 | % | ||||||
| Total Drilling Fleet |
55 | % | 58 | % | 66 | % | ||||||
Transocean Ltd. and Subsidiaries
Supplemental Effective Tax Rate Analysis
(In US$ millions)
| Three months ended | ||||||||||||
| Mar 31, | Dec 31, | Mar 31, | ||||||||||
| 2011 | 2010 | 2010 | ||||||||||
| (As adjusted) | (As adjusted) | |||||||||||
| Income from continuing operations before income taxes |
245 | (836 | ) | 830 | ||||||||
| Add back (subtract): |
||||||||||||
| Litigation matters |
8 | 1 | — | |||||||||
| (Gain) loss on disposal of other assets, net |
(9 | ) | — | 14 | ||||||||
| Loss on impairment of other assets, net |
— | 1,010 | — | |||||||||
| (Gain) loss on retirement of debt |
— | 13 | (2 | ) | ||||||||
| Other, net |
5 | (8 | ) | 5 | ||||||||
| Adjusted income from continuing operations before income taxes |
249 | 180 | 847 | |||||||||
| Income tax expense from continuing operations |
81 | (32 | ) | 147 | ||||||||
| Add back (subtract): |
||||||||||||
| Changes in estimates (1) |
(35 | ) | (8 | ) | (17 | ) | ||||||
| Other, net |
2 | — | (1 | ) | ||||||||
| Adjusted income tax expense from continuing operations (2) |
48 | (40 | ) | 129 | ||||||||
| Effective Tax Rate (3) |
33.1 | % | 3.8 | % | 17.7 | % | ||||||
| Annual Effective Tax Rate (4) |
19.3 | % | -22.1 | % | 15.2 | % | ||||||
| 1) | Our estimates change as we file tax returns, settle disputes with tax authorities or become aware of other events and include changes in (a) deferred taxes, (b) valuation allowances on deferred taxes and (c) other tax liabilities. |
| 2) | The three months ended December 31, 2010 includes ($65) million of additional tax expense (benefit) reflecting the catch-up effect of an increase (decrease) in the annual effective tax rate from the previous quarter estimate. |
| 3) | Effective Tax Rate is income tax expense divided by income before income taxes. |
| 4) | Annual Effective Tax Rate is income tax expense excluding various discrete items (such as changes in estimates and tax on items excluded from income before income taxes) divided by income before income taxes excluding gains and losses on sales and similar items pursuant to the accounting standards for income taxes and estimating the annual effective tax rate. |