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Transocean (RIG) Buys Stake in New Harsh Environment Rig


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Transocean Ltd. RIG recently announced that the company has bought 33.3% interest in a newly built harsh environment semisubmersible, West Rigel. The semisubmersible was built by Sembcorp Marine Ltd.'s subsidiary, Jurong Shipyard Pte Ltd. and is worth $500 million.

Transocean acquired the stake through its joint venture (JV) with Hayfin Capital Management LLP. So far, Transocean invested $83 million in the JV and has plans to invest the same amount again at a later date. Moreover, the drilling contractor has invested $8 million as working capital, which includes upgradation and activation costs.

The investment in the new Moss Maritime CS60 designed rig, as well as the recent acquisition of Songa Offshore marks the company's effort toward improving its fleet, so that it can provide the clients with strong expertise for projects in the harsh environment and ultra-deepwater environments. It will create long-term opportunities for the company and result in increased value for the investors. Transocean's divestment of old and less-competitive rigs have made way for new high-specification assets, making the company's operations more technically capable.

The company's state-of-the-art mobile offshore drilling fleets worldwide can function in the most challenging environments, enabling Transocean to navigate the current uncertain drilling market better than many of its peers.

The new rig - that has been renamed to Transocean Norge - is anticipated to be delivered in the fourth quarter of this year and will be open for contracts by the first quarter of 2019. Notably, the Steinhausen, Switzerland-based company has exclusive right to operate and market the rig.

Price Performance

Transocean has gained 18.2% last year compared with 0.5% rise of its industry .

Zacks Rank and Stocks to Consider

Currently, Transocean carries a Zacks Rank #3 (Hold).

Investors interested in the Energy sector can opt for some better-ranked stocks in the same space like Nine Energy Service, Inc. NINE , Oasis Midstream Partners LP OMP and CNOOC Ltd. CEO . While Nine Energy Service and CNOOC sport a Zacks Rank #1 (Strong Buy), Oasis Midstream carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

Houston, TX-based Nine Energy Service is an onshore service provider. For 2018, the bottom line is likely to be up 33.4%. In the last reported quarter, the company delivered a positive earnings surprise of 6.3%.

Hong Kong-based CNOOC is an integrated energy company. The company's top line for 2018 is anticipated to improve 49% year over year, while its bottom line is expected to increase 82.8%.

Houston, TX-based Oasis Midstream is an integrated energy partnership. The company's revenues for 2018 are anticipated to improve 29.3% from the prior-year quarter, while its earnings are expected to increase 346.5%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



This article appears in: Investing , Business , Stocks
Referenced Symbols: CEO , RIG , OMP , NINE



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