Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Transocean Misses the Mark

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

Everything seemed to be going swimmingly for deepwater drillers. Transocean (NYSE: RIG  ) , SeaDrill (NYSE: SDRL  ) , and Ocean Rig (Nasdaq: ORIG  ) , which is majority owned by DryShips (Nasdaq: DRYS  ) , are building deepwater rigs as fast as they can to keep up with demand from companies like BP (NYSE: BP  ) and Shell (NYSE: RDS-A  ) . But new safety regulations following the Deepwater Horizon oil spill last year are having an impact on Transocean's business.

In the third quarter, revenue fell to $2.24 billion, from $2.33 billion in the prior quarter, and revenue efficiency fell to 89.5% from 92.1%. The company blamed the need to comply with new regulations and standards as the reason for the drop in revenue.

The bottom line looked even worse, where net loss fell to $71 million, including $81 million in special items, compared to a profit of $155 million last quarter.

What's concerning for Transocean is that the poor results haven't been widespread so far for drillers. Hercules Offshore (Nasdaq: HERO  ) , which focuses on less desirable shallow water, posted a lower-than-expected $0.12 loss last week and revenue was up as dayrates rose for the company.

Also concerning is an expected rise in operating and maintenance costs for Transocean, both for operating and out-of-service rigs.

It's all about the oil
The rough patch Transocean is going through could be helped by higher oil prices, which could be on their way if Europe gets its act together. But operationally speaking, the company isn't hitting on all cylinders.

We'll find out later this month if other drillers have to spend the same kind of time and money meeting regulations, but right now Transocean looks like it wasn't prepared for the regulations. There's also the cloud of a BP lawsuit hanging over Transocean, which will be costly even if the company wins. This drilling leader looks like it's lost a bit of its touch.

Interested in reading more about offshore oil drillers? Add them to My Watchlist below, and My Watchlist will find all of our Foolish analysis on these stocks.

Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

The Motley Fool owns shares of Transocean. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1583479, ~/Articles/ArticleHandler.aspx, 10/23/2016 9:40:21 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 2 days ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2016 4:03 PM
RIG $10.50 Down -0.09 -0.85%
Transocean CAPS Rating: ****
BP $36.25 Up +0.20 +0.55%
BP CAPS Rating: ****
DRYS $0.36 Down -0.03 -7.23%
DryShips CAPS Rating: **
HERO.DL $1.16 Down -0.02 -1.50%
Hercules Offshore CAPS Rating: **
ORIG $0.92 Up +0.03 +2.84%
Ocean Rig UDW CAPS Rating: No stars
RDS-A $50.82 Down -0.17 -0.33%
Royal Dutch Shell… CAPS Rating: ****
SDRL $2.31 Down -0.04 -1.70%
Seadrill CAPS Rating: ***