Recently, offshore drilling giant
Transocean Ltd.
(
RIG
) issued a monthly 'Fleet Update Summary' covering the company's
drilling rig status and contract information.
Per the report, the company's drillship Deepwater Expedition
received a two-year contract from an undisclosed customer. The
contract will be executable from December 2012 at an initial
dayrate of $650,000.
Another drillship - Discoverer Seven Seas - won a three-well
contract (approximately 180 days) from
Eni SpA
(
E
) to operate in offshore Indonesia. The rig is expected to work at
a current dayrate of $445,000, against a prior dayrate of
$295,000.
Transocean's midwater floater GSF Arctic III received a
three-month extension of its existing contract and will operate in
the U.K. sector of the North Sea. The rig was contracted by
Nexen Inc.
(
NXY
) at a dayrate of $315,000, higher than the previous dayrate of
$280,000.
However, two jackups Transocean Shelf Explorer and Transocean
Nordic has been put up for sale, and hence will no longer be a part
of the company's fleet.
Leading offshore drilling contractor and the provider of
drilling management services globally, Transocean's current
contract drilling fleet comprises 50 high-specification deepwater
floaters, 25 midwater floaters, 9 high-specification jackups, 47
standard jackups and one swamp barge in support of offshore
drilling activities across the globe.
We are maintaining our long-term Neutral recommendation on the
stock. Transocean currently retains a Zacks #3 Rank, translating
into a short-term Hold rating.
We believe that given a technologically-advanced and versatile
offshore drilling fleet, strong backlog and considerable pricing
power, Transocean will offer strong earnings and cash flow
visibility
Additionally, Transocean recently won a favorable court verdict
in the Deepwater Horizon rig disaster. According to a federal judge
in Louisiana, the company is not liable for some of the cleanup
expense that could have run into tens of billions of dollars. We
believe the court's ruling will remove at least some overhang from
the company's future
However, we apprehend that operational issues - such as the
decline in utilization rates and high operating costs - along with
high debt level will likely continue to weigh down the stock.
ENI SPA-ADR (
E
): Free Stock Analysis Report
NEXEN INC (
NXY
): Free Stock Analysis Report
TRANSOCEAN LTD (
RIG
): Free Stock Analysis Report
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