Transocean issues warning on earnings, drilling outlook

Petroleum News Houston staff

Big offshore drilling contractor Transocean ran up the red flag ahead of its scheduled July 29 second-quarter earnings release, saying July 17 that it would report a net loss between 13 cents and 15 cents per share. Analysts had expected the company to make around 5 cents per share.

Transocean attributed the expected loss to several factors, including downtime on rigs and a labor strike in Nigeria. Excluding charges, the company said it still expected to lose between 5 cents and 7 cents per share.

Transocean also warned that it is expects “a difficult earnings environment” for the remainder of 2003. The company said it anticipates lower profitability in the company’s Gulf of Mexico shallow water and inland water jackup and barge fleet and “diminishing opportunities” for semi-submersibles and drillships in the North Sea, Brazil and Southeast Asia.

The company said it expected second-quarter revenues of roughly $604 million versus $616 million reported in the first quarter.

In addition, operating costs during the second quarter were expected to exceed previously announced guidance of $400 million to $410 million, largely due to unexpected costs associated with a drilling riser separation from its Discoverer Enterprise in deepwater Gulf of Mexico, Transocean said.

The drillship is now back at work at BP’s big Thunder Horse field in Mississippi Canyon following the May 21 incident, the company said, adding that it is exploring whether modifications to the riser system used on eight of its drillships are necessary.