Transocean Issues Fleet Update

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

Per the report, the company’s high specification deepwater floater Discoverer Americas won a two-year contract from Statoil ASA (STO - Analyst Report) to work in the U.S. Gulf of Mexico. The contract would be effective from May 2014 at a revised dayrate of $600,000 against a prior dayrate of $509,000.

Transocean’s midwater floater GSF Grand Banks received a 32-month contract to operate in offshore Canada. The dayrate for the work has been fixed at $410,000, higher than the earlier dayrate of $297,000.

For another midwater floater, Transocean Winner, a six-well option was exercised by the customers to operate in Norway part of the North Sea at a dayrate of $461,000.

The high-specification jackup rig – GSF Monarch – received an 18-month contract to work in the North Sea at a dayrate of $162,000. The jackup’s previous dayrate was $95,000.

Since the last update on October 17, new contract and extensions totaled a backlog of about $1.1 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 mid-water floaters and 9 high-specification jackups. The fleet also includes 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.

With its state-of-the-art mobile offshore drilling fleet that can function in most challenging environments across the globe, Transocean is the industry leader in this field.

However, operational issues such as fluctuating dayrates and high costs along with the company’s high debt have kept us on the sidelines.

Transocean holds a Zacks #3 Rank (Short term Hold rating). Longer term, we maintain our Neutral recommendation on its shares.