Looks like the oil service sector getting hit -Rig down 5
Transocean posts profit, warns on first half '06
Tue Feb 14, 2006 9:08 AM ET
(Updates stock, adds analyst)
NEW YORK, Feb 14 (Reuters) - Oil drilling rig contractor Transocean Inc. (RIG.N: Quote, Profile, Research) on Tuesday said it swung to a profit for the fourth quarter on strong drilling demand, but it warned that results for the first half of 2006 will be constrained by lost service time and higher maintenance costs.
Transocean shares shed more than 8 percent in pre-market trading. Stanford Group analyst Philip Dodge downgraded the stock to "hold" from "buy" on the news and cut his 2006 earnings per share estimate to $3.10 from $3.80.
The company posted a net profit of $151.6 million, or 45 cents a share, compared with a year-earlier loss of $73.4 million, or 23 cents a share. Sales rose to $771.2 million from $676.9 million a year ago.
Analysts polled by Reuters Estimates on average expected earnings per share of 48 cents on revenue of $783.2 million.
The company said earnings in the first two quarters of this year should be "generally flat" with the fourth quarter, excluding gains from rig sales, from higher operating and maintenance expenses and lost revenue due to out-of-service time for rigs.
Analysts were expecting earnings per share of 69 cents in the first quarter and 95 cents a share in the second quarter.
The company said its operating and maintenance costs should decline in the second half of the year to be closer to the level of the fourth quarter, though the rate of decline could be slowed by the potential reactivation of two rigs and inflationary cost pressures.
Transocean shares were off $6.38 at $72.21 in active pre-market trading on Inet. Through Monday's close, the stock was up about 13 percent on the year, compared with a gain over the same period of about 10 percent for the oil services index <.OSX>, of which it is a component.
AI
