Transocean reported net income attributable to controlling interest of $229 million, $0.62 per diluted share, for the third quarter ended September 30, 2016.
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Third quarter 2016 results included net favorable items of $136 million, $0.37 per diluted share.
After consideration of some net favorable items, third quarter 2016 adjusted net income was $93 million, or $0.25 per diluted share.
For the three months ended September 30, 2015, the company reported a net income attributable to controlling interest of $321 million, or $0.88 per diluted share.
Third quarter 2015 included net favorable items of $5 million, or $0.01 per diluted share. After consideration of these net favorable items, adjusted net income was $316 million, or $0.87 per diluted share.
Revenues for the three months ended September 30, 2016, decreased $40 million sequentially to $903 million due primarily to reduced activity associated with rig retirements partly offset by higher revenue efficiency.
The company's average revenue efficiency was 100.7 percent, compared with 96.5 percent in the second quarter of 2016. Additionally, third quarter 2016 was favorably impacted by the full quarter's contribution from the newbuild, ultra-deepwater drillship Deepwater Proteus.
The floater commenced operations on its 10 year contract in May 2016.
Operating and maintenance expense was $404 million, down from $500 million in the previous quarter. The decrease was due largely to lower costs associated with stacked rigs and rig retirements, and lower personnel expense related to the company's continuing cost management initiatives. These decreases were partly offset by $21 million related to the grounding, salvage and preparation for recycling of the Transocean Winner.
General and administrative expense was $39 million, down from $42 million in the second quarter of 2016. The decrease was due primarily to lower share-based compensation expense.
The Effective Tax Rate excluding discrete items was 21.2 percent, compared with 16.3 percent in the previous quarter. The increase was due to changes in adjusted pre-tax income, and certain operating losses where the company does not expect to realize a tax benefit.
The Effective Tax Rate was (3.8) percent, down from 16.2 percent in the prior quarter. The decrease was due largely to $38 million in discrete items related primarily to the recognition of tax benefits.
Interest expense, net of amounts capitalized, was $112 million, compared with $95 million in the prior quarter.
The increase was due primarily to the company's senior unsecured notes issued in July 2016, partly offset by early debt retirements.
Capitalized interest increased $1 million sequentially to $41 million. Interest income was $5 million, compared with $4 million in the prior quarter.
Cash flows from operating activities increased $233 million sequentially to $440 million. The increase was associated with a release of working capital and higher operating performance.
Third quarter 2016 capital expenditures of $246 million were primarily associated with the final shipyard payment on the newbuild, ultra-deepwater drillship Deepwater Conqueror.
This compares with capital expenditures of $458 million in the previous quarter. ■