Global offshore drilling giant
) issued equal portions of $750 million in 2.5 %, five-year
securities and 3.8 %, 10-year notes. The company sold this $1.5
billion of debt to fund the construction of four drillships.
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The 2.5 % securities will yield 190 basis points more than similar
securities in the market while the 3.8 % notes will yield 220 basis
points more than benchmarks.
Transocean stated that the transaction proceeds will be used for
shipbuilding, failing which it will be utilized for general
As of June 30, 2012, Switzerland-based Transocean owned, had
partial ownership interests in, or operated 130 mobile offshore
drilling rigs. Transocean's drilling fleet consists of 50
high-specification deepwater floaters, 25 mid-water floaters, 10
high specification jackups, 44 standard jackups, and one other rig
utilized to support offshore drilling activities worldwide.
Additionally, the company had 2 ultra-deepwater drillships and 3
high-specification jackups under construction.
Transocean conducts operations in various regions throughout the
world, with a substantial portion of its total revenues and
earnings coming from international markets. As such, the company is
exposed to risks associated with operating in international
markets. Such risks include embargoes and/or expropriation of
assets, exchange rate risks, terrorism and political/civil
The company's fleet is considered to be one of the most modern and
versatile in the world due to its emphasis on technically demanding
segments of the offshore drilling business. Transocean's drillships
are contracted by oil biggies such as
Royal Dutch Shell plc
We are maintaining our Neutral recommendation on the stock, as we
see limited upside over the near term. Transocean currently retains
a Zacks #3 Rank, (short-term Hold rating).