Transocean Inc. Reports Second Quarter 2002 Results
Transocean Inc. announced that net income for the three months ended June 30, 2002 was $80.0 million, or $0.25 per diluted share, on revenues of $646.2 million. During the corresponding three months in 2001, net income was $68.5 million, or $0.21 per diluted share, on revenues of $752.2 million. Results for the prior year period include a net extraordinary loss of $17.3 million, or $0.05 per diluted share, relating to the early retirement of debt and goodwill amortization of $41.4 million, or $0.13 per diluted share. Excluding the net extraordinary loss and goodwill amortization, net income for the three months ended June 30, 2001 was $127.2 million, or $0.39 per diluted share. For the six months ended June 30, 2002, the company reported a net loss of $1,206.4 million, or $3.73 per diluted share, on revenues of $1,314.1 million. Results for the first six months of 2002 included a non-cash charge of $1,363.7 million, or $4.22 per diluted share, pertaining to the adoption in January 2002 of Statement of Financial Accounting Standards 142, Goodwill and Other Intangible Assets. Excluding the non-cash charge, net income for the six months ended June 30, 2002 was $157.3 million, or $0.49 per diluted share. During the corresponding six months in 2001, net income totaled $99.0 million, or $0.32 per diluted share, on revenues of $1,302.3 million. Results for the prior year period include the previously mentioned $17.3 million, or $0.06 per diluted share, net extraordinary after-tax loss and goodwill amortization of $71.6 million, or $0.23 per diluted share, partially offset by a $15.9 million, or $0.05 per diluted share, gain resulting from the sale of a semisubmersible rig owned by a joint venture in which the company has a 25% equity interest. Excluding the net extraordinary loss, goodwill amortization and gain from the rig sale, net income for the six months ended June 30, 2001 was $172.0 million, or $0.56 per diluted share.
Transocean Inc. completed a merger transaction with R&B Falcon Corporation on January 31, 2001. Consequently, results for the six months ended June 30, 2001 reflect only five months of operating results of R&B Falcon Corporation.
The company's International and U.S. Floater Contract Drilling Services segment experienced a 2% decline in operating revenues during the three months ended June 30, 2002 to $609.1 million from $623.2 million reported during the first quarter of 2002. Operating income, before depreciation and general and administrative expenses, also declined 2% to $289.0 million from $294.5 million over the same comparative period. Segment fleet utilization declined to 78% during the three months ended June 30, 2002, from 82% during the three months ended March 31, 2002.
Operating revenues from the company's Gulf of Mexico Shallow and Inland Water segment totaled $37.1 million during the three months ended June 30, 2002 compared to $44.7 million during the first three months of 2002. Although a modest improvement in utilization was seen in the segment's jackup and submersible rig fleet during the second quarter of 2002, utilization of the drilling barge fleet did not improve until late in the quarter, resulting in a decline in segment utilization to 27% and an operating loss, before depreciation and general and administrative expenses, for the three months ended June 30, 2002 of $8.4 million. The results compare to utilization of 31% and an operating loss of $7.6 million during the three months ended March 31, 2002.
The company's net debt (defined as long-term debt plus debt due within one year, less cash and cash equivalents) at June 30, 2002 was $3,871 million, down $300 million and $827 million from net debt at December 31, 2001 and June 30, 2001, respectively. For the six months ended June 30, 2002, net cash generated by operating activities totaled $381 million.
J. Michael Talbert, Chief Executive Officer of Transocean Inc., commented, "A weak conventional semisubmersible rig market in the U.S. Gulf of Mexico, West Africa and Norway, combined with idle time on several of our international jackup rigs, due in part to planned shipyard programs and inter-country rig mobilizations, resulted in a 3% decline in second quarter 2002 operating revenues from levels experienced during the first quarter of 2002. However, reductions in operating and maintenance costs, general and administrative expenses and net interest expense resulted in a 3% improvement in net income, before cumulative effect of a change in accounting principle during the quarter, compared to the first quarter of 2002. Although operating and maintenance expenses have been significantly reduced over the preceding six months, current expense levels are expected to trend higher during the balance of the year due to the expected improvement in fleet utilization and execution of discretionary fleet maintenance programs."
Talbert described a mixed demand outlook for global offshore drilling over the remaining months of 2002, stating, "With the exception of the North Sea, jackup rig markets around the world reflect stable to improved demand. Jackup rig and inland drilling barge demand in the U.S. Gulf of Mexico is currently expected to remain stable to modestly higher. In the floater rig market, demand for semisubmersibles and drillships possessing intermediate water depth drilling capabilities, defined as up to 3,500 feet, is expected to remain weak in most regions, with a pronounced reduction in demand expected in the U.K. and Norwegian sectors of the North Sea. Finally, demand for rigs possessing deepwater drilling capabilities is expected to be stable or improve in most markets, as development drilling programs commence in areas such as Angola and Nigeria and new exploration opportunities emerge in other areas, such as India. Deepwater drilling rigs, such as our Enterprise- and Pathfinder-class drillships and Express-class semisubmersibles, are demonstrating enhanced efficiencies in well construction while recognizing improved operating performance, and are increasingly a preferred choice by our customers for deepwater drilling programs."