The ghosts of oil spills past are still haunting Transocean
While most of the drilling industry is returning to normal, Transocean is treading water due to past mistakes. In addition to the $1 billion impairment, Transocean wrote down its contract-drilling unit to the tune of $5.2 billion. All of this led to a $6.12 billion, or a whopping $18.62 per share, loss. On an adjusted basis, earnings per share were $0.18.
At least revenue was up 8%, in contrast to Hercules Offshore
Management said that the ultra-deepwater segment continues to be constrained and should be a driver of earnings in the future. Like SeaDrill
Assuming there aren't any big surprises in an oil spill settlement, the writedowns should be about over. There's not as much goodwill left from previous acquisitions to write down after taking most of it out this quarter.
Foolish bottom line
The clouds over Transocean appear to be clearing, but I still think there are better drilling stocks out there. SeaDrill, my top pick, still pays a higher dividend and is reporting profitable earnings. We'll find out tomorrow just how the fourth quarter looked, but with positive comments out of the ultra-deepwater segment from Transocean and Noble, I expect good numbers.