DO - Transocean: Raising Estimates After Encouraging Drillship Contract Extension - Hold

2024-04-08 08:24:21 ET

Summary

• Increased oil prices have caused a swing in sentiment for most offshore drillers over the past month with market leader Transocean outperforming peers by a wide margin.
• Last week, the company announced a 12-month contract extension for the 7th generation drillship Deepwater Asgard in the U.S. Gulf of Mexico at highly encouraging terms.
• With the recent lull in deepwater contracting activity apparently not impacting dayrates for high-specification assets, I am raising my profitability expectations for 2025.
• However, Transocean remains overvalued relative to peers based on a number of key metrics. Reiterating "Hold" rating with an increased price target of $6.

Note:

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

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