Market Overview

This Transocean Data Is Making Waves On Wall Street

Related RIG
Watch These 8 Huge Call Purchases In Thursday Trade
Benzinga's Option Alert Recap From February 8
Offshore Drilling - 2 Floaters Needed In The Verbier Field And In The Partridge Prospect In UK North Sea (Seeking Alpha)

Transocean LTD (NYSE: RIG) shares gained a bit after the offshore contract driller posted a monthly fleet status report that included several contract extensions and a new contract at a higher-than-expected rate.

Transocean traded recently at $17.24, up $0.30, but has begun to sell off.

But Barclays' J. David Anderson expects that industry-wide, up to 70 rigs need to be retired by the end of 2018 to reduce oversupply.

Transocean "will be the biggest contributor to rig retirements" over the next year or so, according to Anderson, who had expected a faster pace of rig idling.

Anderson gave a slight boost to his earnings estimates for Transocean, but reaffirmed his Neutral rating and $14 target.

Transocean on Monday said it obtained a new 45-day contract with Eni SpA (NYSE: E) and short-term extensions from Exxon Mobil Corporation (NYSE: XOM), Chevron Corporation (NYSE: CVX) and GDF Suez SA (OTC: GDFZY).

Since March, longer-term contracts within the industry have been "few and far between," Anderson said.

The Swiss-based company's plan disclosed Monday to delay delivery on two drill ships not yet under construction "follows an industry trend that threatens to drag out oversupply further," Anderson said.

Transocean's new Eni contract rate was about 8 percent higher than Anderson expected.

Susquehanna's Charles P. Minervino maintained a Negative rating and $14 target, but reduced his earnings estimates slightly.

Transocean's idling of its Spitzbergen and GSF Monarch rigs resulted in Minervino's lower earnings estimate.

The company has now scrapped 21 rigs since 2014, and additional retirements are likely, "given the continued lack of tailwinds in the industry and its oversupplied and competitive nature," Minervino said.

Latest Ratings for RIG

Feb 2017Credit SuisseUpgradesNeutralOutperform
Feb 2017Morgan StanleyDowngradesEqual-WeightUnderweight
Jan 2017PiperJaffrayUpgradesUnderweightNeutral

View More Analyst Ratings for RIG
View the Latest Analyst Ratings

Posted-In: Barclays Charles P. Minervino J. David Anderson SusquehannaAnalyst Color Contracts Analyst Ratings


Related Articles (RIG + GDFZY)

View Comments and Join the Discussion!