Transocean Ltd.'s second-quarter profit narrowed sharply as the offshore oil driller logged nearly $800 million in charges as it continues to trim its fleet amid lower crude prices.

The latest charges, part of what the company called "near fanatical" cost-cutting, are largely tied to its midwater floater fleet and assets held for sale.

Still, the results beat the Wall Street consensus, sending shares up nearly 4% to $12.80 in late trading.

Through Wednesday's closing, the company's stock was down nearly 33% for the year.

The Switzerland-based company, which boasts the world's largest fleet of offshore drilling rigs, is trying to recover from an ill-timed expansion just before oil prices collapsed. It slashed its dividend to 60 cents a share, from $3 a share, and sharply cut its number of rigs, taking some out of service and scrapping others. It projects it would spend $1.7 billion in capital projects, compared with $2.17 billion in 2014.

Meanwhile, the oil-price slump has also impaired results of the master limited partnership it formed to boost its financial structure and mollify friction with billionaire investor Carl C. Icahn. Shares of Transocean Partners LLC, closed at $12.61 on Wednesday, down 43% from its initial public offering price.

Oil prices—down about 56% from a $114 high for Brent crude oil price a barrel in 2014—remain volatile amid a supply glut, economic slowdown in China, and the prospect that Iranian oil may flood markets following a nuclear accord with the U.S. and other world powers.

On Wednesday, oil prices fell again on disappointing weekly inventory data from the U.S. Energy Information Administration.

Overall, Transocean reported a profit of $342 million, or 93 cents a share, compared with $587 million, or $1.61 a share, a year earlier. The year-ago results included a two-cent loss from discontinued operations.

Excluding the impact of assets impairment, legal matters and other items, profit was $1.11 a share.

Revenue fell 19% to $1.88 billion.

Analysts surveyed by Thomson Reuters expected a profit of 50 cents a share on $1.7 billion in revenue.

Contract backlog was $18.6 billion as of July 15, down from $19.9 billion as of April 16 and $21.2 billion on Feb. 17.

Royal Dutch Shell PLC and Chevron Corp. accounted for about 41% and 20%, respectively, of Transocean's contract backlog as of Feb. 17, according to regulatory filings. Both companies have cut spending to counter the sharp decline in crude prices, but oil still trades below their lowered price assumptions, suggesting further cuts.

Fleet utilization, meanwhile, declined to 75%, from 79% in the previous quarter and 78% in the year-ago period. For the first six months of the year, however, fleet utilization was slightly down at 77%, compared with 78% for the year-ago period.

Transocean recognized $788 million from settlements related to the 2010 Deepwater Horizon oil spill. Transocean owned and operated the Deepwater Horizon drilling rig.

Write to Maria Armental at maria.armental@wsj.com

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