Transocean (RIG) Continues to Secure Drilling Contracts
Transocean Ltd. RIG, the world’s largest offshore drilling contractor and leading provider of drilling management services, recently informed that it has secured contracts for two of its harsh environment semisubmersibles. The deals add a significant $113 million to the company’s contract backlog. This announcement comes on the heels of its contract wins from Equinor, wherein the Norwegian energy major entered into agreements for two of Transocean’s semisubmersibles drilling rigs. These developments are great news for RIG and its investors and further solidify the company’s position as a leading provider of offshore drilling services.
As part of the latest order, one of the contracts was awarded to Transocean Endurance in Australia, where it will enter into a multi-well plug and abandonment contract with an unnamed operator. This particular contract alone will contribute an impressive $91 million to RIG’s backlog. The 240-day contract is scheduled to commence in January 2024 and comes with a series of options that could potentially keep the rig in Australia through the end of 2025.
The Transocean Endurance, specifically designed for harsh environments, is a dynamic positioning semi-submersible rig that can operate in water depths of up to 10,000 feet. It is equipped with advanced drilling and completion technology and has a maximum hook load capacity of 1,250,000 pounds.
In addition to the Australian contract, Transocean also secured a deal with Wintershall DEA in Norway. The one-well option on the Transocean Norge is expected to begin in May 2023, ahead of the existing firm term of 60 days. It will contribute a further $22 million to the company's backlog. This additional contract will further solidify Transocean's presence in the Norwegian drilling market, which is a key operation area for the company.
The Transocean Norge is another exceptional rig in the company’s harsh environment fleet. This 6th generation semi-submersible can operate in water depths of up to 7,500 feet and has a maximum hook load capacity of 1,125,000 pounds. The rig is also equipped with advanced drilling and completion technology, making it an ideal choice for harsh environment operations.
These contract wins are a significant achievement for Transocean, as the offshore drilling industry has been going through a challenging phase due to low oil prices and reduced demand of late. Despite these setbacks, Transocean has been able to maintain its strong position in the market, thanks to its focus on harsh environment drilling and its ability to offer a wide range of drilling services to its customers. Earlier this week, Equinor granted two harsh environment semisubmersibles drilling rigs contracts, off the coast of Norway.
One of Transocean’s key strengths lies in its ability to provide cutting-edge technology and expertise in harsh environment drilling. The demand for such innovative technology and proficiency is constantly increasingly due to oil exploration and production’s move to more challenging locations. With a focus on safety, efficiency and innovation, Transocean is expected to continue to lead the harsh environment drilling industry.
Transocean is a Switzerland-based, global offshore drilling company. It operates a fleet of high-specification floaters, which include drillships, semisubmersibles and harsh environment rigs. These rigs are designed to operate in challenging offshore environments and are equipped with advanced drilling technologies. The objective is to provide customers with safe, reliable and efficient drilling services.
Zacks Rank and Key Picks
Currently, Transocean carries a Zacks Rank #3 (Hold). Investors interested in the energy sector might look at some better-ranked stocks like NGL Energy Partners NGL, sporting a Zacks Rank #1 (Strong Buy), and Liberty Energy LBRT and Ranger Energy Services RNGR, each holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
NGL Energy Partners: The company is worth approximately $367.70 million. Its shares have increased 19.5% in the past year.
NGL is a limited partnership company that operates a vertically-integrated propane business with three segments — retail propane, wholesale supply and marketing, and midstream.
Liberty Energy: The company is valued at around $2.28 billion. It delivered an average earnings surprise of 81.53% for the last four quarters and its current dividend yield is 1.55%.
LBRT currently has a forward P/E ratio of 3.76. In comparison, its industry has an average forward P/E of 11.60, which means the company is trading at a discount to the group.
Ranger Energy Services: The company is valued at around $242.99 million. In the past year, its shares have decreased 4.7%.
RNGR currently has a forward P/E ratio of 5.30. In comparison, its industry has an average forward P/E of 11.60, which means the company is trading at a discount to the group.
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