Transocean
(
RIG
), the world's largest provider of offshore drilling services, will
have a total of eight of its ten ultra-deepwater and deepwater rigs
in Brazil and Africa. These rigs will be working on projects for a
number of customers such as Petrobras, Anadarko, (
APC
) Devon and Exxon Mobil (
XOM
) over the next few months according to its latest fleet update.
The company's fleet positioning is a good indicator of spending on
deepwater exploration in these regions. Transocean competes with
other offshore drillers such as Diamond Offshore (
DO
), Hercules Offshore (
HERO
), Seahawk Drilling (HAWKQ), ENSCO International (ESV) and Rowan
Companies (RDC).
We have a $85.70
price estimate
for Transocean, which is almost a 40% premium over its current
marketprice.
Brazil to Lead in Deepwater Capital Expenditure
In a report published last year, E&P estimated that 38% of
the capital expenditure on deepwater projects will be concentrated
in Brazil and that Petrobras, the state-owned oil firm, will dwarf
competitors such as Statoil, BP, Exxon Mobil and Chevron in
deepwater production. Brazil has approximately 12.9 billion barrels
of proven reserves and more than 90% of its present production is
from offshore fields.
E&P also reported that Petrobras will continue to remain
dependent on deepwater production in the future as approximately
90% of its new output comes from deepwater sources. The company's
production is expected to peak at 1,700 million barrels of oil
equivalents per day (MMboe/d) around the year 2017.
Most of the country's reserves are concentrated in the pre-salt
zone that occurs 18,000 feet below the ocean's surface. These
challenging conditions will necessitate the use of
high-specification rigs - which would increase revenues for
Transocean due to higher rates charged per day for these
rigs.
Deepwater Exploration in West Africa
In contrast to Brazil, where most exploration activity is
dominated by the NOC (National Oil Company) Petrobras, deepwater
spending in West African countries such as Angolia, Nigeria and
Ghana is dominated by oil majors such as BP, Exxon Mobil, Chevron
and Shell. Recently, independent players such as Anadarko and some
Indian and Chinese firms have also made forays into this market as
well.
Although investments in these countries have been hampered in
the past by uncertain uncertain political environments, deepwater
production will continue to grow in several countries such as
Angolia, Ghana and Equatorial Guinea. We expect the deepwater
exploration in these regions to positively impact Transocean's
revenue outlook in the future.
Click here for our full analysis of Transocean
.