VAL - Transocean: Disappointing Contracting Activity And More Dilution Ahead - Hold

2024-06-04 21:36:14 ET

Summary

• News of OPEC+ phasing out voluntary production cuts later this year caused crude oil prices to tumble to new four-month lows.
• Not surprisingly, offshore drilling stocks have sold off alongside the commodity, with highly leveraged market leader Transocean underperforming peers.
• The company announced an aggregate $161 million in contract extensions and option exercises for a number of harsh environment floaters, but overall contracting activity remains disappointing.
• Transocean also disclosed its intent to acquire the remaining 67% in the 6th generation harsh environment rig Transocean Norge against a combination of new common shares and senior notes.
• Valuation-wise , the company remains expensive relative to peers. With the stock price close to my $5.50 price target, I am reiterating my "Hold" rating on the shares.

Note:

I have covered Transocean Ltd. or "Transocean" ( RIG ) previously, so investors should view this as an update to my earlier articles on the company. ...

For further details see: