Transocean’s Profit Falls on Surfeit of Offshore Gas Rigs
Transocean Ltd., the world’s largest offshore oil driller, said its quarterly profit fell as a surfeit of rigs used to drill for natural gas in coastal waters dragged down rental rates.
Net income declined to $218 million, or 68 cents a share, during the final three months of 2010 from $723 million, or $2.24, a year earlier, the Vernier, Switzerland-based company said in a statement. Per-share profit was expected to be 90 cents, based on the average estimate of 14 analysts, according to data compiled by Bloomberg.
Transocean and other rig owners have been idling shallow- water rigs for the past year as an onshore drilling boom in North America led to oversupplies of natural gas and sinking prices. Natural-gas futures traded in New York lost one-fifth of their value in the past year as new wells in Wyoming, Colorado, Texas and Louisiana glutted the North American market.
Rig demand is most affected because the majority of coastal, shallow-water drilling involves gas prospects. Transocean’s fourth-quarter results included a $1.01 billion after-tax charge as the value of its shallow-water fleet plunged, the company said last month.
Transocean had 35 jack-up rigs inactive as of Jan. 13, or 55 percent of its jack-up fleet, according to a company filing with the U.S. Securities and Exchange Commission. The rigs were parked in shipyards from the North Sea to Malaysia. The company’s most-sophisticated jack-up rigs rent for more than $150,000 a day.
Transocean fell 50 cents to $81.12 at 3:24 p.m. The shares have fallen 12 percent since the April 20 explosion of the company’s Deepwater Horizon rig in the Gulf while under contract to BP Plc. The disaster killed 11 rig workers, injured 17 and triggered the worst offshore oil spill in U.S. history.
(Transocean scheduled a conference call to discuss third- quarter results for 10 a.m. New York time tomorrow. To access the call, dial +1-719-325-2327 and use confirmation code 1432993, or go to http://www.deepwater.com.)
To contact the reporter on this story: Joe Carroll in Chicago at jcarroll8@bloomberg.net.
To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net.
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