SDRL - Transocean: Lowering Estimates After Disappointing 2024 Outlook - Hold

2024-02-21 18:34:37 ET

Summary

• Leading offshore driller Transocean Ltd. reported slightly weaker-than-expected Q4 2023 results and issued disappointing Q1 2024 and full-year guidance.
• The company continues to deal with an elevated number of contract startup delays. In addition, customer TotalEnergies abstained from exercising options after suspending its drilling campaign offshore Lebanon.
• Moreover, the 8th generation ultra-deepwater drillship Deepwater Atlas will remain on a low-margin dayrate in Q1 as the customer does not yet require the rig's 20,000 Psi drilling capability.
• Lowering estimates and price target on Transocean but reiterating "Hold" rating following the 25% decline year-to-date.
• Transocean stock remains expensive relative to peers. Investors looking for industry exposure should rather consider competitors Seadrill, Noble Corporation, Valaris and Diamond Offshore Drilling.

Note:

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

Last week, leading offshore driller Transocean Ltd. or "Transocean" released a disappointing new fleet status report which reflected the recent slowdown in contracting activity. Operators are increasingly looking to secure rig capacity for the long term, thus resulting in higher lead times....

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