If you're an investor in the oil services space, this is exactly what you didn't need.
The top dog in the deepwater drilling space, Transocean
Looking at the fourth-quarter results, Transocean reported that revenue rose 14% over last year, but only 1% from the third quarter. Dayrates were fine -- up 21% annually and 6% sequentially on a company-wide basis (excluding TODCO
Likewise, the operational picture was a mixed bag. Year-over-year operating income growth of 234% is great, but it was down sequentially. The culprit wasn't anything too surprising -- higher maintenance and repair costs and the ongoing overall inflation in operating costs for drilling companies.
What really ticked off the Street, though, was the company's guidance for the first half. Because of delays in moving rigs over to new higher-priced contracts and higher costs from maintenance and mobilization, management is looking for earnings in the first and second quarters to be basically flat with this quarter. As you might imagine, that's a fair bit below what analysts were expecting.
So what, then, should investors do with Transocean's stock, which is down about 12% from its highs? With a firm backlog of contracted business, I don't think we'll be seeing revenue declines anytime soon. Heck, Devon
These are the trying times that come with investing in sectors like energy services. If you already have big gains in stocks like Transocean or Schlumberger
For more Foolish thoughts on drillers:
Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).