Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Transocean Ltd (RIG, Financial) reported an adjusted EBITDA of $284 million with a strong EBITDA margin of approximately 33% for Q2 2024.
- The company achieved a high revenue efficiency of approximately 97%, reflecting superior operational performance.
- Transocean Ltd (RIG) secured several new contracts, including a two-well contract for the Deepwater Atlas at an industry-leading rate of $580,000 per day.
- The company has more than 90% of its working fleet committed through the end of 2025, with expectations to be fully booked well into 2026.
- Transocean Ltd (RIG) has an industry-leading backlog of $8.64 billion, excluding recent contracts, providing strong visibility into future cash flows.
Negative Points
- Transocean Ltd (RIG) reported a net loss attributable to controlling interest of $123 million for Q2 2024.
- The company faced delays in contract drilling revenues due to prolonged 15K PSI drilling operations and customer delays in India.
- Operating and maintenance expenses are expected to increase in the third quarter, impacting overall profitability.
- The company has two idle rigs, the DD3 and the Inspiration, which are not expected to be active in 2024, potentially affecting revenue generation.
- Transocean Ltd (RIG) continues to face challenges in reducing its overall debt, with no specific targets articulated for debt reduction.
Q & A Highlights
Q: With BP's FID of the Kaskida development needing a 20K PSI rig, would the Atlas be a good candidate for that when it comes off contract with Beacon in early 2017? Or is there a likelihood of another upgrade to 20K PSI capabilities?
A: Jeremy Thigpen, CEO, explained that the Atlas was proactively upgraded to be available for 20K completion activity. Keelan Adamson, President & COO, added that upgrading another rig to 20K PSI would take about 30 months for equipment and an additional 4-6 months for upgrades, costing over $200 million.
Q: Does the full year '24 EBITDA guidance assume incremental work for idle rigs like the DD3 and the Inspiration?
A: Roddie Mackenzie, EVP & Chief Commercial Officer, stated that the guidance does not assume these rigs will be active this year. They are being kept available for longer-term opportunities rather than short-term work.
Q: What is the strategy for the Gulf of Mexico, especially with the Invictus rig being locked up?
A: Roddie Mackenzie noted that customers are locking up available 7G hot rigs. The Invictus was a market mover, and now it's on meaningful work with a new customer. The Gulf of Mexico fleet is nearly sold out, with significant contracting activity recently.
Q: How does Transocean plan to manage its balance sheet and debt reduction?
A: Thad Vayda, EVP & CFO, mentioned that the goal is to reach a credit rating level of double B-ish by 2026. The company plans to use available cash flow to reduce debt, aiming for a debt level of around $4.7 billion by the end of 2026.
Q: Are you seeing any change in competitive behavior among asset owners, especially with benign ultra Deepwater semis?
A: Roddie Mackenzie explained that operators are focused on booking higher specification assets. As these run out, attention may shift to benign environment semis, but currently, the focus is on securing rigs needed for drilling programs.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
