Transocean Loss Widens On Impairment Charges

HOUSTON - Transocean Ltd.'s fourth-quarter loss widened sharply as the offshore-oil driller reported higher charges, partially due to impairment related with the 2010 Deepwater Horizon oil spill in the U.S. Gulf of Mexico.

Transocean, the world's largest offshore drilling company, reported a loss of $6.12 billion, or $18.62 a share, compared with a year-earlier loss of $799 million, or $2.51 a share.

The most recent period included $6.18 billion, or $18.80 a share, in after-tax charges related to impairment, loss contingencies associated with the oil spill, acquisition-related expense and other items. The year-ago period included net charges of $1.02 billion, or $3.19 a share, mostly related to a current and projected decline in day rates and utilization that has hurt the Standard Jackup asset group, the company said.

Excluding all special items, Transocean reported earnings of 18 cents per share, which were about in line with analysts' estimates of 20 cents per share, says Bill Herbert, an analyst with Simmons & Co.

"This is probably one of [Transocean's] best behaved quarters in a couple of years," said Herbert. The company has missed analyst expectations in the last seven quarter.

Transocean was the owner of the Deepwater Horizon, the rig that exploded and sank in the Gulf of Mexico in 2010, killing 11 people and setting off the worst offshore oil spill in U.S. history.

The company said its fourth-quarter results included $1 billion of estimated loss contingencies associated with the Deepwater Horizon incident. The company said it believes that estimate "is probable" at this time. The estimate will be adjusted to reflect new information and future developments as they become known, the company said.

The civil trial over the Deepwater Horizon disaster had been scheduled to begin Monday morning in a New Orleans federal court. But it was delayed Sunday for a week so that BP PLC and lawyers for thousands of individuals and businesses suing the company can continue settlement talks.

"Though we are still interested in finding a solution that allows us to put uncertainty behind us we are well prepared argue the merits of our case at the trial scheduled to begin next week," Transocean Chief Executive Officer Steven Newman told analysts Monday in a conference call.

Transocean's fourth quarter operating and maintenance expenses jumped 92% due primarily to estimated loss contingencies associated with the Gulf of Mexico oil spill.

Average daily revenue grew 6.7% from a year earlier and grew 1.8% from the prior quarter. Its fleet utilization rate was 61%, up from 58% in both the previous quarter and in the prior year.

Copyright (c) 2012 Dow Jones & Company, Inc.


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