Credit Suisse Sees 'More Of The Same' At Transocean

In a report published Tuesday, Credit Suisse analysts maintained an Underperform rating on Transocean LTD RIG, with a price target of $12, after reports of more short-term extensions and a rise in idle fleets. The Development Driller II (6G), Sedco Express (5G) and GSF Rig 140 (3G) were all extended by an average of about 80 days. The Development Driller II continues to be in Romania, with a 14 percent dayrate reduction to $315k/d for 100 days. The GSF Rig 140 suffers a 40 percent reduction to $156k/d, fixed for 120 days. The Sedco Express was extended for 18 days and rolls off in May, although there was no rate change. "These extensions are in-line with industry expectations of extension work, not new contracts," the analysts pointed out. "Deepwater floater Marianas (4G) joins the idle fleet along with the Celtic Sea (4G) and M.G. Hulme Jr (3G) pushing the idle fleet count to 9 rigs (including 1 jackup). The M.G. Hulme Jr. was originally expected to roll off contract in June with RMA, however the customer lost its operatorship by the Philippines Department of Energy," the analysts wrote. Now that three deepwater rigs have been added to the idle fleet, only the Navigator (4G), Sedco 702 (4G) and Jack Bates (4G) are working, and all of these are expected to roll off 1Q16. The EPS estimate for 2016 has been reduced from -$0.20 to -$0.39 to reflect the latest fleet status report.