Two giant offshore drilling contractors, Transocean and Valaris, are encouraged by continued significant signs of improvement in the market environment and rising rig day rates and contract lengths.
Reasons for optimism are also apparent in recent rig owner fleet status reports, in which both companies reported a number of new contracts for their rigs.
Now, digging deeper into each company’s financial performance during the third quarter of 2021, the numbers show that Transocean posted a decrease in contract drilling revenue sequentially, as well as in year-over-year comparison, and posted a net loss compared to the same period in 2020.
Transocean’s total contract drilling revenue was $626 million, a decrease compared to $656 million in the second quarter of 2021, and compared to $773 million in the third quarter of 2020.
The sequential decrease of $30 million was primarily due to reduced activity from two rigs that became idle and one rig that began a planned stay in the yard during the third quarter. This was partially offset by higher revenue efficiencies and one rig returning to work after a stay in the yard.
Net loss attributable to controlling interest was $130 million, compared with $103 million in the second quarter of 2021, and compared with a profit of $359 million in the third quarter of 2020. Third-quarter 2021 results included an unfavorable net item of $8 million related to discrete tax items.
Despite posting a loss in Q3 2021, Transocean president and CEO Jeremy Thigpen is not discouraged. Reporting the company’s results, Thigpen commented, “We are increasingly encouraged as we see continued improvement in market fundamentals and the resulting strength shown by oil prices.
“With increasingly tight utilization of high-specification assets in ultra-deepwater and challenging environments, and with longer bid durations in multiple markets, dayrates are steadily increasing, which bodes well for the offshore drilling industry, and for Transocean.”
It is also worth mentioning that, as of the end of October 2021, Transocean’s contract backlog was $7.1 billion.
Separately, Valaris emerged on April 30 of this year from Chapter 11 bankruptcy protection, making its financial statements and notes after the effective date not comparable to those prior to that date due to the application of fresh start accounting and now becoming a new reporting entity.
Accordingly, second quarter results are presented separately for the predecessor period, April 1, 2021 through April 30, 2021, and the successor period, May 1, 2021 through June 30, 2021.