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Transocean Perma-Bear Sees...12% Upside?

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Transocean Perma-Bear Sees...12% Upside?

Credit Suisse’s Gregory Lewis maintained an Underperform rating for Transocean LTD (NYSE: RIG), with a price target of $10. There are about 1,200 floater days contracted year to date, which includes approximately 250 incremental days from the company’s fleet status report.

“RIGs marketing team deserves kudos for winning ~40 percent of YTD floater days contracted,” analyst Gregory Lewis wrote. Management indicated that since late October, the company had won $500 million in new contracts.

The drillship Thalassa has begun its 10-year contract. It is expected to generate cash flow, with about $125 million projected in EBITDA annually. Moreover, the drillship Proteus is scheduled to commence its 10-year contract next quarter. Thus, Transocean is expected to have increased financial flexibility.

Related Link: Natural Gas Rig Count Hits Lowest Level In 29 Years

The company would have even more options when the startups of the Pontus and Poseidon would begin generating cash, although this is unlikely before late 2017 or 2018, Lewis mentioned.

In the report Credit Suisse noted, “RIG also announced three contracts on the Arctic (4G), MG Hulme (3G) and Cajun Express (5G), which filtered into the market over the last 3 months. We estimate the contracted days on these rigs at ~500 days and the total backlog at ~$80 million.”

The analyst commented that Transocean had recently been “punching its weight in the floater market.”

Image Credit: Public Domain

Latest Ratings for RIG

DateFirmActionFromTo
May 2021SusquehannaMaintainsNeutral
Apr 2021Morgan StanleyMaintainsEqual-Weight
Mar 2021BarclaysDowngradesEqual-WeightUnderweight

View More Analyst Ratings for RIG
View the Latest Analyst Ratings

 

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