Transocean(US:RIG)2021-11-02 18:19Financial Data and Key Metrics Changes - For Q3 2021, Transocean reported adjusted EBITDA of $245 million on adjusted revenue of $683 million, resulting in an adjusted EBITDA margin of over 36% [5][28] - The company achieved a quarterly free cash flow of $104 million, marking the sixth consecutive quarter of positive cash generation [6] - The average day rate for the quarter was $367,000, reflecting strong conversion of contractual backlog [29] Business Line Data and Key Metrics Changes - Fleet-wide revenue efficiency matched a company best of 98% for the second consecutive quarter, maintaining a revenue efficiency of 97% or higher for six sequential quarters [6][28] - Operating and maintenance expenses for Q3 were $398 million, favorable relative to guidance due to optimized labor use and lower COVID-related personnel expenses [30] Market Data and Key Metrics Changes - The global floating rig fleet's marketed utilization is nearing 80% to 85%, historically a point for material increases in day rates [13] - Active utilization in the Golden Triangle (U.S. Gulf of Mexico, South America, and Africa) is currently around 90% [13] - In Brazil, 10 rig years have been awarded by Petrobras for commencement in the next 18 months, with expectations for continued strong demand growth [17][18] Company Strategy and Development Direction - Transocean aims to capitalize on the recovery in ultra-deepwater and harsh environment markets, supported by high oil prices and increasing utilization [12][34] - The company is focused on maintaining a disciplined approach to expenditures and will assess cold-stacked assets on a case-by-case basis [34] - Transocean has a $7.1 billion backlog, providing visibility to future cash flows and enabling continued investment in employee training and asset maintenance [26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the gradual recovery of the ultra-deepwater market, with oil prices remaining supportive [12] - The company noted that many customers are seeking to establish long-term partnerships rather than going through competitive tenders, indicating a positive market sentiment [61] - Management highlighted the importance of maintaining operational integrity and safety while navigating the recovery [35] Other Important Information - The company has completed $9.8 billion of liability management transactions since 2016, including the repurchase of $1.7 billion of debt [25] - Transocean is committed to reducing greenhouse gas emissions intensity by 40% by 2030 compared to 2019 levels [6] Q&A Session Summary Question: Outlook for 2022 and day rate growth - Management indicated that 2022 may be a transition year with expectations for incremental day rate growth as rig contracts are secured in the latter half of the year [37][40] Question: Brazil's market dynamics - Petrobras has been prolific in awarding contracts, but there is an expected shift towards a more balanced split between Petrobras and IOCs in future project approvals [46][48] Question: Inflation and labor costs - Management acknowledged wage inflation and labor availability challenges, particularly in the Gulf of Mexico, but indicated the ability to pass on costs through contract adjustments [50][52] Question: Partnership approach with customers - Management noted a trend towards direct negotiations and partnership models with customers, emphasizing the value of continuity and operational efficiency [60][62]