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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 high specification deewater floater Sedco Express won a 20-month contract from Eni SpA (E - Analyst Report) to work in the offshore region of Nigeria. The contract is executable from February 2013 at a revised dayrate of $600,000 against a prior dayrate of $500,000.
Transocean’s GSF Constellation II received 30-month contract to operate in the waters of Gabon – from Total SA (TOT - Analyst Report). The dayrate for the job is fixed at $160,000, higher than the earlier dayrate of $109,000.
Midwater floater – Transocean Amirante– got the 180-day option from Burullus Gas Company to work in the Egyptian waters at a dayrate of $305,000. The drillship’s previous dayrate was $275,000.
However, drillship GSF Rig 103 has been sold for an undisclosed amount.
Since the last update on September 18, new contract and extensions totaled a backlog of about $8.1 billion. This includes the $7.6 billion contract value of the 10-year agreement signed between Transocean and Royal Dutch Shell plc (RDS.A - Analyst Report), whereby the former will build four new drillships.
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 mid-water floaters and 9 high-specification jackups. The fleet also has 32 standard jackups and one swamp barge that have been termed as discontinued operations.
Transocean currently has six ultra deepwater drillships and three high-specification jackups under construction.
We are maintaining our long-term ‘Neutral’ recommendation on the stock. We believe that Transocean is the industry leader in deep sea drilling with its state-of-the-art mobile offshore drilling fleet that can function in most challenging environments across the globe.
However, operational issues such as fluctuating dayrates and high costs along with the company’s high debt have kept us on the sidelines.
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