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Transocean (RIG) Receives $286M Worth Contract From Statoil
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Transocean Ltd. (RIG - Free Report) recently reported that its harsh environment semisubmersible, Transocean Spitsbergen has received a 22-well contract from Statoil ASA in the Norwegian North Sea. The duration of the contract is 33 months and it includes two one-well options. Since the news of the contract, the stock has gained 9.5%.
The Aker H-6e type Transocean Spitsbergen was built in 2009. It has been deployed earlier this year on Statoil’s UK drilling campaign, completing which the semisubmersible will move to the Norwegian North Sea. The latest deal further strengthens the relationship of the two companies.
Per Transocean, the contract, which is expected to begin in the third quarter of 2019, is valued at around $286 million (excluding performance incentive opportunities) or $289,000 per day. Notably, as of Feb 21, 2017, Transocean, a leader in the offshore drilling industry, has a total backlog of more than $14 billion, which is much higher than its peers in the field like Ensco plc , Diamond Offshore Drilling, Inc. (DO - Free Report) , Noble Corporation plc and Rowan Companies plc. The total backlog of these companies is around $10.1 billion.
Lately, oil price has been on the rise. We are awaiting its positive effects on the offshore drilling industry. This deal shows that the industry is recovering.
Lately, oil price has been on the rise. Although, its effect on the offshore drilling space is yet to be fully reflected, this deal shows that the industry is recovering.
About Transocean
Switzerland-based Transocean is the world’s largest offshore drilling contractor and leading provider of drilling management services. The Zacks Rank #3 (Hold) carrying company’s fleet is considered one of the most modern and versatile in the world due to its emphasis on technically demanding segments of the offshore drilling business.
We appreciate Transocean's aggressive cost reduction programs, which will enable it to shore up its operational performance in this volatile crude environment. As part of this strategy, the company has embarked on a policy to optimize overhead and maintenance expenses. In the last reported quarter, the company reduced its operating costs by an impressive 21%.Transocean has also set itself an ambitious target to achieve 95% revenue efficiency through 2019. However, the company is facing top-line pressure. Like other players in the offshore rig leasing industry, Transocean's revenues have been dropping quarter after quarter as its old contracts have been completed. Due to this, the company has either had to stack those rigs or accept much lower dayrates leading to a decline in revenues.
Price Performance
Transocean has lost 27.9% of its value year to date compared with 29% fall of its industry.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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Transocean (RIG) Receives $286M Worth Contract From Statoil
Transocean Ltd. (RIG - Free Report) recently reported that its harsh environment semisubmersible, Transocean Spitsbergen has received a 22-well contract from Statoil ASA in the Norwegian North Sea. The duration of the contract is 33 months and it includes two one-well options. Since the news of the contract, the stock has gained 9.5%.
The Aker H-6e type Transocean Spitsbergen was built in 2009. It has been deployed earlier this year on Statoil’s UK drilling campaign, completing which the semisubmersible will move to the Norwegian North Sea. The latest deal further strengthens the relationship of the two companies.
Per Transocean, the contract, which is expected to begin in the third quarter of 2019, is valued at around $286 million (excluding performance incentive opportunities) or $289,000 per day. Notably, as of Feb 21, 2017, Transocean, a leader in the offshore drilling industry, has a total backlog of more than $14 billion, which is much higher than its peers in the field like Ensco plc , Diamond Offshore Drilling, Inc. (DO - Free Report) , Noble Corporation plc and Rowan Companies plc. The total backlog of these companies is around $10.1 billion.
Lately, oil price has been on the rise. We are awaiting its positive effects on the offshore drilling industry. This deal shows that the industry is recovering.
Lately, oil price has been on the rise. Although, its effect on the offshore drilling space is yet to be fully reflected, this deal shows that the industry is recovering.
About Transocean
Switzerland-based Transocean is the world’s largest offshore drilling contractor and leading provider of drilling management services. The Zacks Rank #3 (Hold) carrying company’s fleet is considered one of the most modern and versatile in the world due to its emphasis on technically demanding segments of the offshore drilling business.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
We appreciate Transocean's aggressive cost reduction programs, which will enable it to shore up its operational performance in this volatile crude environment. As part of this strategy, the company has embarked on a policy to optimize overhead and maintenance expenses. In the last reported quarter, the company reduced its operating costs by an impressive 21%. Transocean has also set itself an ambitious target to achieve 95% revenue efficiency through 2019. However, the company is facing top-line pressure. Like other players in the offshore rig leasing industry, Transocean's revenues have been dropping quarter after quarter as its old contracts have been completed. Due to this, the company has either had to stack those rigs or accept much lower dayrates leading to a decline in revenues.
Price Performance
Transocean has lost 27.9% of its value year to date compared with 29% fall of its industry.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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