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Energy company Transocean reports its second-quarter results as competition heats up

Published: 21:55 30 Jul 2018 BST

Oil rig
The company currently operates 43 mobile offshore drilling units

Transocean Ltd (NYSE:RIG) announced its second-quarter results, reporting an earnings loss narrower than the previous year’s second quarter as competition in the offshore drilling market heats up.

The energy company reported earnings loss of US$2.46 per share on revenue of US$790mln compared with a loss of US$4.32 per share on revenue of US$705mln in the previous year’s second quarter.

The oil and gas company provides offshore contract drilling services, specializing in deep water and harsh environments.

“Our industry-leading floater fleet, consistently strong operating performance, solid liquidity position, and enviable backlog, which includes several new contracts approximating $400 million, positions us well at a time when our optimism about the market’s recovery is growing,” said chief executive officer Jeremy Thigpen in a press release.

Transocean currently operates 43 mobile offshore drilling units.

Shares of the Switzerland-based company were up slightly to US$13.55 in Monday after-hours trading.

An analyst weighs in on Transocean

While oil prices have moved higher, the offshore drilling market has been faced with an oversupply of rigs, according to Bernstein analyst Colin Davies.

As competition heats up, newer rigs are pulling attention away from older ones.

"Older rigs built before this decades' massive new build cycle are squeezed out and eventual scrappage is inevitable,” said Davies in a June analyst note.

The company recently announced that it would retire three of its drillships and one semi-submersible rig, leading to a US$520mln charge this quarter.

The analyst pointed to Transocean, Ensco plc (NYSE:ESV) and Seadrill Limited (NYSE:SDRL) as the companies with the highest ownership of rigs at risk of scrapping.

Davies reiterated a Market Weight rating on the shares.

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