By Maria Armental
Offshore oil driller Transocean Ltd. logged a $992 million
charge in the fourth quarter to correct the value of its contract
drilling business, amid falling demand as sharply lower oil prices
have led energy companies to slash spending and shelve
projects.
As a result of the impairment charge, the company said it has no
goodwill remaining on its balance sheet.
In November, Transocean said it was booking $2.8 billion in
charges for its third quarter, including $1.97 billion for an
impairment of goodwill, and a $788 million write-down of the
company's deep-water rigs.
Overall for the fourth quarter, Transocean reported a net loss
of $739 million, or $2.04 a share, compared with a net profit of
$233 million, or 64 cents a share, a year earlier.
Earlier Wednesday, Moody's Investors Service cut Transocean's
corporate rating to junk. Standard Poor's Ratings Services and
Fitch Ratings, which currently rate the company just above junk,
also have indicated possible downgrades.
The Switzerland-based company, which boasts the world's largest
fleet of offshore drilling rigs, spent billions of dollars over the
past few years expanding its fleet--just before oil prices
collapsed.
The ill-timed expansion led to Chief Executive Steven Newman's
abrupt resignation last week. Mr. Newman had assumed the company's
reins just weeks before Transocean's Deepwater Horizon rig blew out
in 2010, killing 11 workers and spewing the largest offshore oil
spill in U.S. history. The company also said last week it would ask
shareholders to approve an 80% cut in its quarterly dividend to 15
cents, from 75 cents a share.
Excluding write-off charges and other items, adjusted profit was
95 cents a share, up from 71 cents a share a year earlier.
Revenue edged lower to $2.24 billion. The company said the
revenue decrease was primarily due to increased idle time on
several rigs.
Analysts surveyed by Thomson Reuters expected a profit of 77
cents a share on $2.1 billion in revenue.
Contract backlog was $21.2 billion as of its Feb. 17 fleet
status report, compared with $23.6 billion as of Oct. 15.
Fleet utilization was 72% for the quarter, compared with 75% in
the third quarter and 83% in the year-ago period.
Transocean said it expects capital expenditures of $1.8 billion
for 2015.
Shares were down 1.3% to $15.85 in after-hours trading. Through
Wednesday's close, Transocean's stock had fallen 63% over the past
12 months.
Write to Maria Armental at maria.armental@wsj.com
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