Transocean Wins Major Rig Contracts

Recently, offshore drilling giant – Transocean Ltd. ( RIG - Analyst Report ) issued a monthly ‘Fleet Update Summary’ covering the company’s drilling rig status and contract information.

Per the report, the company’s midwater floater GSF Rig 135 won a two-year contract from Total SA ( TOT - Analyst Report ) to work in the offshore region of Congo. The contract is executable from March 2013 at a revised dayrate of $365,000 against a prior dayrate of $340,000.

Another drillship – Transocean prospect – received a four-well contract to operate in the U.K. waters of North Sea – from ConocoPhillips ( COP - Analyst Report ) . The dayrate for the first two wells is fixed at $405,000, while the remaining wells will operate at a dayrate of $375,000.

Transocean’s GSF Parameswara – got two-year extension from Total to work in the Indonesian waters at a dayrate of $136,000, higher than the previous dayrate of $122,000.

The contract for high specification floater – GSF Development Driller I – was extended for 20 months at a better dayrate of $580,000, versus prior one of $522,000. The rig was contracted by BHP Billiton ( BHP - Analyst Report ) and will work in the U.S. Gulf of Mexico.

Transocean also received a three-year contract for newbuild drillship – Deepwater Invictus. This rig is currently being manufactured at the DSME shipyard in Korea and will most likely be operational from the second quarter of 2014, at a dayrate of $595,000.

However, two deepwater floaters Jim Cunningham and Discoverer 534 have been sold for an undisclosed amount.

Last week, Transocean announced plans to suspend operations in the standard jackup and swamp barge markets and hence, all associated drillships have been put up for sale.

Since the last update on August 15, new contract and extensions totaled a backlog of about $1.7 billion.

Transocean is the leading offshore drilling contractor and the provider of drilling management services worldwide. Its current contract drilling fleet comprises 115 mobile offshore drilling facilities, which again include 48 high-specification deepwater floaters, 25 midwater floaters, 9 high-specification jackups, 32 standard jackups and one swamp barge (these have been termed as discontinued operations) in support of offshore drilling activities across the globe.

We are maintaining our long-term Neutral recommendation on the stock. Transocean currently retains a Zacks #3 Rank, translating into a short-term Hold rating.