What happened

Shares of Transocean (RIG -0.69%) plunged nearly 10% by 3:30 p.m. EDT on Tuesday. Driving down the offshore-driller's stock was its first-quarter results.

So what

Transocean hauled in $754 million of revenue during the first quarter. That was up nearly 14% year over year, driven by the acquisition of Ocean Rig last year, as well as a 6.5% increase in dayrates.

Those factors helped offset lower utilization of its ultra-deepwater fleet and reduced activity due to rigs that it retired. Despite that uptick in revenue, Transocean reported an adjusted loss of $181 million, or $0.30 per share. On a positive note, that was $0.01 per share better than the consensus estimate and an improvement from the year-ago loss of $0.34 per share.

Silhouette of an offshore drilling rig at sunset.

Image source: Getty Images.

The offshore driller added $370 million in future revenue to its contract backlog during the quarter, boosting its industry-leading total to $12.1 billion. That's after the company signed two new contracts with Brazilian oil giant Petrobras for some of its recently acquired ultra-deepwater drillships.

The company has signed contracts totaling $2 billion in the past 12 months, thanks to an improvement in the oil market. That trend should continue, given that oil prices appear to have stabilized, which is giving oil companies the confidence to move forward with more offshore projects. This outlook leads the company to "expect that utilization and day rates for our fleet are both poised to improve as we move through 2019 and into 2020," according to comments by CEO Jeremy Thigpen on the first-quarter conference call.

Now what

Transocean lost money again during the first quarter, which seems to be what's weighing on the stock. The company's financial results, however, should continue improving in the coming quarters as oil companies ramp up recently approved offshore-drilling projects. While shares will likely remain volatile as the offshore market recovers, conditions are clearly improving, which bodes well for the company's future.