Transocean Q2 Earnings & Sales Surpass Estimates, Improve Y/Y

Transocean Ltd. RIG reported second-quarter 2025 breakeven adjusted earnings per share in contrast to the Zacks Consensus Estimate of a loss of 1 cent. The bottom line also improved from the year-ago period’s reported loss of 15 cents. This improvement can be attributed to a strong second-quarter result from RIG's segments.

This Switzerland-based offshore drilling powerhouse’s total adjusted revenues of $988 million beat the Zacks Consensus Estimate of $968 million. The top line also increased 14.8% from the prior-year figure of $861 million. This was due to higher-than-expected revenues from ultra-deepwater and harsh environment floaters. Ultra-deepwater and harsh environment revenues beat the consensus mark of $690 million and $257 million, respectively.

Transocean Ltd. Price and EPS Surprise

Transocean Ltd. price-eps-surprise | Transocean Ltd. Quote

Transocean’s Segmental Revenue Breakup

Transocean’s ultra-deepwater floaters contributed 70.7% to net contract drilling revenues, while harsh environment floaters accounted for the remaining 29.3%.

Revenues from the ultra-deepwater and harsh environment floaters totaled $699 million and $289 million, respectively, compared with the year-ago quarter’s reported figures of $606 million and $255 million.

Revenues from ultra-deepwater operations were down from the model estimate of $703.5 million, while the same from harsh environment operations exceeded the prediction of $267.9 million. Revenue efficiency was 96.6%, up from 95.5% in the previous quarter but a slight decline from 96.9% in the year-ago quarter.

RIG’s Day Rates, Utilization & Backlog         

Average day rates in the reported quarter increased to $458,600 from $438,300 in the year-ago quarter. However, the figure missed the Zacks Consensus Estimate of $462,400.

Average revenues per day from ultra-deepwater floaters increased to $457,200 from $433,900 in the year-ago quarter. The same from harsh environment floaters also increased to $462,400 from $449,600 in the prior-year quarter.

Fleet utilization rate was 67.3% in the quarter, which increased from the prior-year period’s 57.8%.

As of June 2025, Transocean’s total backlog was $7.2 billion.

RIG’s Costs, Capex & Balance Sheet

This Zacks Rank #3 (Hold) company reported $823 million in costs and expenses, which was 5.9% higher than the year-ago quarter’s level of $777 million. Additionally, operations and maintenance costs increased to $599 million from $534 million a year ago.

The oil and gas drilling company spent $24 million on capital investments in the second quarter. Cash used in operating activities was $128 million. Cash and cash equivalents were $377 million as of June 30, 2025. Long-term debt amounted to $6.5 billion, with a debt-to-capitalization of 38.6% as of the same period.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Guidance for Transocean

For the third quarter of 2025, the company expects contract drilling revenues between $1 billion and $1.02 billion, including $60 million to $70 million from additional services and reimbursable expenses. This outlook assumes a fleet-wide revenue efficiency of 96.5%. Operating and maintenance expenses are predicted to range from $600 million to $620 million. General and administrative expenses are expected to be between $50 million and $55 million.

Net cash interest expense is anticipated to be approximately $136 million, indicating $143 million in interest expense and $7 million in interest income. Capital expenditures are estimated at $25 million to $30 million and cash taxes paid are expected to total around $16 million.

For the full year 2025, the company expects contract drilling revenues of $3.9 billion to $3.95 billion, which includes $255 million to $265 million from additional services and reimbursables. Operating and maintenance expenses are predicted at $2.38 billion to $2.43 billion, while G&A expenses are expected to range from $190 million to $200 million. Net cash interest expense is anticipated to be between $540 million and $545 million, comprising approximately $575 million in interest expense and $30 million to $35 million in interest income.

Full-year capital expenditures are estimated at approximately $120 million, with $55 million allocated for customer-required upgrades and capital spares, and $65 million for sustaining capital investments. Cash taxes paid are expected to range from $70 million to $75 million. The company also expects year-end liquidity of $1.45 billion to $1.55 billion, which includes the impact of cost-saving initiatives, an undrawn revolving credit facility and approximately $440 million in restricted cash. Additionally, the company remains on track to reduce debt by more than $700 million in 2025.

Important Energy Earnings at a Glance

While it is early in the earnings season, there have been a few key energy releases so far. Let us glance through a couple of them.

San Antonio, TX-based oil and gas refining and marketing service provider, Valero Energy Corporation VLO, reported second-quarter 2025 adjusted earnings of $2.28 per share, which beat the Zacks Consensus Estimate of $1.73. However, the bottom line declined from the year-ago quarter’s level of $2.71. The better-than-expected quarterly results can be attributed to an increase in refining margins per barrel of throughput and lower total cost of sales. The positives were partially offset by a decline in refining throughput volumes and renewable diesel sales volumes.

The company had cash and cash equivalents of $4.5 billion at the end of the second quarter. As of June 30, 2025, it had a total debt of $8.4 billion and finance-lease obligations of $2.3 billion.

Houston, TX-based oil and gas equipment and services provider, Halliburton Company HAL, reported second-quarter 2025 adjusted net income of 55 cents per share, which was in line with the Zacks Consensus Estimate but below the year-ago quarter’s profit of 80 cents (adjusted). The numbers reflect softer activity in the North American region, partly offset by international growth.

As of June 30, 2025, the company had approximately $2 billion in cash/cash equivalents and $7.2 billion in long-term debt, representing a debt-to-capitalization ratio of 40.4. Halliburton reported second-quarter capital expenditure of $354 million, up from our projection of $338.2 million.

Norway-based integrated oil and gas operator, Equinor ASA EQNR, reported second-quarter 2025 adjusted earnings per share of 64 cents, which missed the Zacks Consensus Estimate of 66 cents. The bottom line declined 25% from the year-ago quarter’s level of 84 cents. Weak quarterly results can be attributed to lower liquids production across major segments and reduced liquids prices. Natural declines and portfolio divestments in Nigeria and Azerbaijan also contributed to the decrease in overall production.

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