Transocean Ltd. (RIG), the world’s largest offshore-rig operator, reported a fourth-quarter loss after the company’s contract-drilling business lost market value, resulting in a writedown.
Transocean posted a loss of $6.12 billion, or $18.62 a share, from a loss of $799 million, or $2.51, a year earlier, the Vernier, Switzerland-based company said in a statement today. The company was expected to earn 19 cents a share, the average of 19 analysts’ estimates compiled by Bloomberg.
The writedown, in addition to a $1 billion reserve for BP Plc’s Macondo oil spill and other one-time items, reduced profit by $18.80. Excluding these items, the company reported a profit of 18 cents, three cents less than the average of 32 analysts’ estimates compiled by Bloomberg. Revenue rose 14 percent to $2.42 billion in the quarter.
“It’s a sloppy quarter,” said James C. West, an analyst at Barclays Capital in New York who rates the shares “overweight” and owns none. “If you back out everything, the quarter actually looks OK operationally.”
Operating profit margin of 35.4 percent were better than expected, Brian Uhlmer, an analyst at Global Hunter Securities LLC in Houston, who rates the shares “neutral” and owns none, said in an interview. Uhlmer expected margins of 32.9 percent.
Contract drilling is Transocean’s largest business unit and accounted for 92 percent of revenue in the fourth quarter. An annual test of the unit’s value prompted the company to take the writedown.
Transocean rose 5.3 percent to $53.43 at the close in New York, the most since Oct. 10.
“The fourth quarter’s results provide hope that a new era is just over the horizon,” Scott Gruber, an analyst at Sanford Bernstein in New York, said in a note to investors today. The $1 billion Macondo-related charge is below the $5 billion in losses that the stock appears to imply, he wrote.
Transocean owned the $365 million Deepwater Horizon rig that was destroyed in the BP oil spill in the Gulf. The company employed nine of the 11 workers who died in the April 2010 disaster.
“If they could settle for $1 billion, I think people would be pretty happy,” Luke Lemoine, an analyst at Capital One Southcoast in New Orleans, who rates the shares am “add” and owns none.
Transocean lowered its forecast for operating expenses in 2012 to a range of $6.15 billion to $6.35 billion, according to the statement. Previously, Transocean forecast a range of $6.2 billion to $6.5 billion, Lemoine said.
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