Transocean Ltd. (RIG) shares were down 4.3% during pre-market trading on November 2, after the offshore oil and gas drilling contractor reported worse-than-expected Q3 results, falling short of both earnings and revenue estimates.
The company reported an adjusted loss of $0.20 per share, missing analysts’ expectations of a loss of $0.16 per share. In stark comparison, the company reported earnings of $0.51 per share in the same quarter last year.
Similarly, revenues also declined 19% year-over-year to $626 million, failing to meet consensus estimates of $658.57 million. The revenue shortfall was mainly attributed to decreased activity from two rigs, while another rig commenced a planned shipyard stay during the quarter. (See RIG stock charts on TipRanks)
During Q3, the company reported revenue efficiency of 98.1% against 98% in the last quarter. Meanwhile, operating and maintenance expenses decreased to $398 million, compared to $470 million in the same quarter last year.
Despite poor results, Transocean CEO, Jeremy Thigpen, shared his optimism for the future and commented, “We grow increasingly encouraged as we observe continuously improving market fundamentals and the resulting strength exhibited in oil prices.”
He further added, “With tightening utilization for high-specification ultra-deepwater and harsh environment assets, and longer tender durations across multiple markets, day-rates are steadily increasing, which bodes well for the offshore drilling industry, and Transocean.”
Overall, the stock has a Hold consensus rating based on 3 Holds and 1 Sell. At the time of writing, the average Transocean price target was $3.28, which implies 12.77% downside potential from current levels.
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