Fleet Update Status for Transocean - Analyst Blog

On Apr 17, 2014, offshore drilling giant Transocean Ltd. RIG offered a fleet status report for the period commencing Mar 17, 2014 to date. The value of all the new deals and contract extensions in the same time frame is estimated at roughly $209.0 million.  

The update covers the company's offshore drilling rig status along with contract information. The expected out-of-service time for 2014 has increased by roughly 105 days. Transocean projects the total out-of-service time for 2015 at 1,306 days.  

Per the report, Transocean Marianas – a semisubmersible rig – has received a contract to operate four wells located off the coast of South Africa. The rig which was previously out of work will be operating at a dayrate of $370,000. The deal will likely add $118.0 million to the company's backlog.

Also included in the report, another semisubmersible rig, Transocean Arctic, will operate two wells in the North Sea's Norwegian region. The rig was previously operating at a dayrate of $419,000 but will now work at $519,000. The company expects the deal to add $83.0 million to backlog. The company also stated its intentions to vend the semisubmersible rig, Sedneth 701.

Switzerland-based Transocean is the world's largest offshore drilling contractor and a leading provider of drilling management services. With its technologically-advanced and versatile offshore drilling fleet, strong backlog and considerable pricing power, the company offers an unmatched level of earnings and cash flow visibility. However, we remain concerned about the offshore driller's high debt level and operational issues such as fluctuating dayrates and costs.

Transocean currently holds a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.

Meanwhile, one can look at better-ranked players in the oil and gas drilling sector like Helmerich & Payne Inc HP, Pioneer Energy Services Corp. PES and Seadrill Partners LLC SDLP. Helmerich & Payne and Pioneer Energy Services sport a Zacks Rank #1 (Strong Buy), while Seadrill Partners carries a Zacks Rank #2 (Buy).