Why Transocean Stock Lost Over 3% of its Value Today

• The specialty oil and gas company released its first-quarter results.

• Its revenue fell on a year-over-year basis, and it flipped into the red on the bottom line.

The stock of offshore oil drilling specialist Transocean (NYSE: RIG) wasn’t exactly a hot item on the market Tuesday. The company’s latest quarterly earnings report was published after market close the day before, and investors subsequently expressed their displeasure by trading the stock down by more than 3%.

Transocean’s first-quarter figures were topped by a revenue line of $906 million, representing a nearly 5% year-over-year decline. The situation was hardly better on the bottom line, where on an adjusted basis, the company flipped to a net loss of $65 million (or $0.10 per share) from the year-ago profit of $27 million.

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That meant a mixed quarter for Transocean, as the analysts following the stock were modeling a revenue figure for the quarter of just under $885 million. They were expecting a slightly narrower net loss of $0.09 per share.

In its earnings release, Transocean attributed the top-line decline to operational hiccups. Specifically, it said one of its rigs required contract preparation and mobilization, and another stood idle between contracts.

The company sounded a hopeful and bullish note on its future. It quoted CEO Jeremy Thigpen as saying that “While uncertain macroeconomic conditions have resulted in near-term market volatility, including commodity prices, Transocean is very well-positioned to navigate this evolving landscape.”

He also said, “In addition to continuing to deliver strong operating performance across our highly contracted fleet, we remain engaged in constructive conversations with our customers on opportunities several years in the future.”

No investor likes a quarterly revenue slide or a net loss. Still, I don’t consider Transocean’s first quarter to have been a disaster. Rather, it was a disappointing frame posted by a decent company that can and probably will do better. I wouldn’t sell out of the stock if I were an investor.

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