Transocean reported net income attributable to controlling interest of $155 million, or $0.48 per diluted share, for the three months ended June 30, 2011. The results compare to net income attributable to controlling interest of $715 million, or $2.22 per diluted share, for the three months ended June 30, 2010.
Second quarter 2011 results included the following items, after tax, that resulted in a net unfavorable impact of approximately $36 million, or $0.11 per diluted share:
$25 million loss on impairment relating to the three Standard Jackups, George H. Galloway, GSF Labrador and GSF Britannia, classified as assets held for sale at June 30, 2011, and
Second quarter 2011 results also included expenses associated with the Macondo well incident of approximately $26 million, $19 million after tax, or $0.06 per diluted share. These expenses were primarily related to legal costs and professional service fees.
Operations Quarterly Review
Revenues for the three months ended June 30, 2011 were $2.334 billion, compared to revenues of $2.144 billion during the three months ended March 31, 2011. Second quarter contract drilling revenues, which increased to $2.086 billion from $1.95 billion in the first quarter, were positively impacted by improved activity in the Gulf of Mexico, the commencement of operations of the newbuild Ultra-Deepwater Floater Deepwater Champion, the reactivation of previously idled rigs, and higher revenue efficiency for our Ultra-Deepwater and Deepwater Floaters, partially offset by the stacking of additional Deepwater and Midwater Floaters. Overall utilization was flat during the period compared to the first quarter.
Other revenues increased $54 million to $238 million, primarily due to additional drilling management services activity.
The company reported improved revenue efficiency for our Ultra-Deepwater and Deepwater Floaters compared to the first quarter, as our program to improve efficiency yielded results. Similar to the first quarter, compliance with new well control equipment certification requirements, higher standards for equipment condition and capacity constraints on our vendors continued to adversely impact revenue efficiency and out-of-service time compared to the prior year.
Operating and maintenance expenses totaled $1.492 billion for the second quarter 2011, up from $1.359 billion for the prior quarter. The increase was primarily due to higher maintenance expenses along with increased levels of contract drilling and drilling management services activity.
Net Interest Expense, Capital Expenditures and Cash Flow
Net Interest Expense was $142 million in the period compared to $130 million in the first quarter. The increase is due primarily to interest income associated with a tax refund recognized in the first quarter.
Capital expenditures increased to $293 million for the second quarter compared to $240 million in the first quarter 2011. The higher expenditures were primarily due to our newbuild construction program.
Cash flows from operating activities decreased to $340 million for the second quarter 2011 compared to $390 million for the first quarter 2011. The decrease in cash flows from operations resulted primarily from an increase in working capital.
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