According to Bloomberg
, shares of Transocean Inc.
had their biggest drop since 2001 on concern rising costs and delays getting rigs ready for new contracts will keep profit from growing. Fourth-quarter net income was $151.6 million, or 45 cents a share, compared with a loss of $73.4 million, or 23 cents, a year earlier. A doubling of oil prices in two years generated record profits for producers such as Exxon Mobil Corp.
and raised demand for drilling rigs. Costs to provide more rigs to its customers are rising as it refits idled units for new contracts. Shipyards also are charging more for maintenance and repairs. Shares of Transocean fell $6.04, or 7.7 percent, to $72.55 at 12:59 p.m. in New York Stock Exchange composite trading. A close at that price would mark Transocean's biggest decline since November 2001. Transocean expects operating and maintenance costs in the first quarter to exceed fourth-quarter levels by $30 million to $50 million. In the second quarter, costs will rise by an additional $40 million. Transocean said possible delays in getting rigs ready for higher-rate contracts may hold back profit. Rig demand is surging as Exxon Mobil, Chevron Corp. and other oil and natural- gas producers increase exploration spending. Drillers are commanding not only higher rates, but also longer contract durations from customers. (Source: Bloomberg)