Transocean Fleet 'Dropping Like Flies'
In a report published Friday, Credit Suisse analysts maintained an Underperform rating on Transocean LTD (NYSE: RIG), with a price target of $12.
"RIG continues to prune its fleet announcing the scrapping of the GSF Explorer. The GSF Explorer (4G drillship) was built in the 1970s and upgraded in the late 1990s. The rig last worked in November at $412k/d. This boosts the number of floaters RIG intends to scrap to 19 – up from 11 at the end of 2014. We expect more," the analysts said.
The Sedco Energy (5G Semi) was returned six months early by Total. Although the contract includes a payment for early re-delivery, due to which Transocean would get paid, the company now has another idle floater. The analysts expect Transocean to receive a cash payment of roughly $55M. However, the return of Sedco Energy increases the company's idle floater count to six.
In the report Credit Suisse noted, "The Sedco Express received a 45 day extension at $300k/d in Nigeria – rate unchanged. The rig has been working with CAMAC since December at $300k (multiple extensions). The Galaxy II (jackup in the UK North Sea) received a two-month extension at $190k/d – down 11% from previous rate."
Latest Ratings for RIG
|Feb 2017||Credit Suisse||Upgrades||Neutral||Outperform|
|Feb 2017||Morgan Stanley||Downgrades||Equal-Weight||Underweight|
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