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Transocean 4Q Revenue Up

Maritime Activity Reports, Inc.

February 25, 2016

Transocean Ltd. Reports Fourth Quarter And Full Year 2015 Results:-
Revenues were $1.85 billion, up from $1.61 billion in the third quarter of 2015; Operating and maintenance expenses were $794 million, down from $880 million in the prior period; Adjusted net income was $615 million, $1.68 per diluted share, excluding $4 million of net unfavorable items. This compares with $316 million, $0.87 per diluted share, in the third quarter of 2015, excluding $5 million of net favorable items
- Net income attributable to controlling interests was $611 million, $1.66 per diluted share, compared with $321 million, $0.88 per diluted share, in the prior quarter;
- The Annual Effective Tax Rate(1) was 13.1 percent, compared with 7.5 percent in the third quarter of 2015;
- Cash flows from operating activities were $960 million, up sequentially from $648 million;
- Revenue efficiency(2) was 95.9 percent, up from 95.0 percent in the third quarter of 2015;
- Rig utilization(3) was 60 percent, compared with 70 percent in the prior quarter; and
- Contract backlog was $15.5 billion as of the February 11, 2016, Fleet Status Report.

 
ZUG, SWITZERLAND-February 24, 2016-Transocean Ltd. (NYSE: RIG) (SIX: RIGN) today reported net income attributable to controlling interest of $611 million, $1.66 per diluted share, for the three months ended December 31, 2015. Fourth quarter 2015 results included net unfavorable items of $4 million, $0.02 per diluted share, as follows:

  * $29 million, $0.08 per diluted share, related to loss on impairment of the GSF Grand Banks and Deepwater Navigator, which the company has classified as held for sale;
  * $22 million, $0.06 per diluted share, related to restructuring costs; and $1 million in discontinued operations.
 
These net unfavorable items were partially offset by:

  * $27 million, $0.07 per diluted share, in favorable discrete tax benefits; and
  * $21 million, $0.05 per diluted share, in net gains on early debt retirements and asset disposals.
 
After consideration of these net unfavorable items, fourth quarter 2015 adjusted net income was $615 million, or $1.68 per diluted share.
 
For the three months ended December 31, 2014, the company reported a net loss attributable to controlling interest of $739 million, or $2.04 per diluted share. Fourth quarter 2014 included net unfavorable items of $1.08 billion, $2.99 per diluted share, mainly associated with the impairment of goodwill. Excluding the net unfavorable items, adjusted net income was $344 million, or $0.95 per diluted share.

Total revenues for the three months ended December 31, 2015, increased $243 million sequentially to $1.85 billion. Other revenues increased $356 million due to early contract terminations on the Polar Pioneer, Discoverer Americas, and Sedco 714. Contract drilling revenues decreased $113 million due to reduced activity and rig retirements partially offset by higher ultra-deepwater revenue efficiency and higher demobilization revenues.

Operating and maintenance expense decreased $86 million sequentially to $794 million.  The decrease was due primarily to lower activity and the impact of the company's actions to reduce onshore and offshore costs.

General and administrative expense was $58 million, compared with $45 million in the prior quarter. The increase was due largely to restructuring costs.

Depreciation expense was $213 million, compared with $210 million in the prior period.

The Effective Tax Rate(4) was 9.7 percent, up from 4.9 percent in the third quarter of 2015. The Annual Effective Tax Rate was 13.1 percent, up from 7.5 percent in the previous quarter. The increase was due largely to changes in adjusted pre-tax income, currency exchange rates, and the impact of jurisdictional and operational structure changes for certain rigs implemented in the third quarter of 2015.

Interest expense, net of amounts capitalized, decreased $22 million sequentially to $87 million, reflecting, in part, the company's early debt retirements. Capitalized interest was $49 million, compared with $36 million in the third quarter of 2015. Interest income was $5 million, unchanged from the prior quarter.

Cash flows from operating activities increased $312 million sequentially to $960 million due primarily to early contract terminations.

Capital expenditures totaled $665 million, down from $940 million in the prior quarter. The decrease was associated with the company's newbuild program. During the quarter, the company took delivery of the newbuild ultra-deepwater drillship Deepwater Proteus, and the floater is expected to be placed into service in the second quarter of 2016.

"I would like to thank the Transocean team for delivering very solid operating and financial results throughout an extremely challenging year for our industry," said President and Chief Executive Officer Jeremy Thigpen. "While predicting the timing of an industry recovery is nearly impossible, we take comfort in knowing that our strong liquidity, combined with our market-leading backlog, will sustain us through this downturn. Until that time, we will continue to take the necessary steps to keep our employees safe, to drive performance improvements for our customers, to further streamline our business, and to enhance our financial position and returns."

Full Year 2015

For the year ended December 31, 2015, net income attributable to controlling interest totaled $791 million, or $2.16 per diluted share. Full year results included $946 million, $2.58 per diluted share, of net unfavorable items as follows:

$1.71 billion, $4.67 per diluted share, associated with the impairment of the Deepwater and Midwater Floater asset groups, and held for sale or scrapped rigs; and
$40 million, $0.11 per diluted share, related to restructuring costs.
 
These net unfavorable items were partially offset by:

$735 million, $2.02 per diluted share, associated with favorable settlement agreements and insurance recoveries related to Macondo; and
$72 million, $0.18 per diluted share, in net gains on early debt retirements and asset disposals, discrete tax benefits, and discontinued operations.

After excluding the net unfavorable items, adjusted net income for 2015 was $1.74 billion, or $4.74 per diluted share.

For the year ended December 31, 2014, net loss attributable to controlling interest totaled $1.91 billion, $5.29 per diluted share, which included net unfavorable items of $3.71 billion, $10.23 per diluted share primarily associated with the impairment of goodwill. After consideration of the net unfavorable items, adjusted net income for 2014 was $1.80 billion, or $4.94 per diluted share.

Non-GAAP Financial Measures


All non-GAAP financial measure reconciliations to the most comparative GAAP measure are displayed in quantitative schedules on the company's website at: www.deepwater.com.

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