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Transocean Gains 14.7% in 3 Months: Should Investors Buy the Stock?
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Key Takeaways
RIG gained 15% in three months, outperforming its sub-industry and the broader energy sector.
RIG secured $550 million in Gulf of Mexico contracts, extending work visibility into 2027.
RIG raised 2026 revenue guidance, with contract coverage at 94% for 2026 and 81% for 2027.
Over the past three months, Transocean (RIG - Free Report) has outperformed both its Oil and Gas-Drilling sub-industry and the broader Oil and Energy sector. RIG’s shares gained 14.7%, compared with an 8.8% increase for the Oil and Gas-Drilling sub-industry (ZSI134M) and a 10.8% rise for the broader Oil and Energy sector (ZS12M). This outperformance highlights Transocean’s stronger share-price performance relative to both benchmarks over the period.
Three-month share-price performance comparison
Image Source: Zacks Investment Research
With shares outperforming the broader energy sector, Transocean is attracting attention as new contract wins and improving earnings estimates strengthen its outlook. But can the offshore driller sustain its momentum, and what factors could drive further upside?
What Makes Transocean an Attractive Investment?
Energy Security Supports Offshore Demand: Geopolitical instability and Middle East conflicts are highlighting the importance of energy security, potentially supporting offshore exploration and production spending. Transocean expects deepwater projects to remain attractive, although management noted that recent contract awards were based on oil-price breakeven of $30-$40 per barrel, not elevated prices.
New $550 Million Contracts: Transocean announced firm contract awards worth approximately $550 million for two ultra-deepwater drillships in the U.S. Gulf. The Deepwater Proteus secured a 10-well, 700-day campaign worth about $325 million, while the Deepwater Conqueror won a five-well, 450-day campaign worth about $225 million, extending visibility into 2027.
Strong Contract Coverage: Transocean reported that nearly all its active drillships were contracted or mobilizing to new work, except the KG2, which was bidding on multiple opportunities. Management said contract coverage reached 94% for the remainder of 2026 and 81% for 2027, providing meaningful revenue visibility across upcoming periods.
Higher 2026 Revenue Guidance: Transocean increased its 2026 revenue guidance after contract extensions on several rigs and a new contract for the Deepwater Proteus. Management said the updated outlook reflects additional activity not previously expected to continue through the year. More contracted work supports visibility, although the upper end depends on customer options and extensions.
Specialized Drilling Fleet: Transocean operates 27 offshore drilling units, comprising 20 ultra-deepwater drillships and seven harsh-environment semisubmersibles. Its filings emphasize technically demanding offshore markets. This specialized fleet gives the company exposure to deepwater and harsh-environment programs where customers need high-specification equipment and operating expertise.
Tightening Deepwater Market: Through the second quarter, Transocean secured nearly 100 rig years in new contracts, with another 75-80 rig years tied to about 40 open tenders. Management expects deepwater rig utilization to reach nearly 100% by the end of 2027, which could support stronger demand and future contract opportunities.
Multiyear Equinor Contracts: Transocean secured seven years of work for three harsh-environment semisubmersibles under an agreement with Equinor (EQNR - Free Report) . Management said base day rates, excluding third-party services, are likely to exceed $400,000 when contracts begin, reflecting escalation provisions. These multiyear commitments can provide extended utilization and revenue visibility.
Improving Earnings Estimates: Transocean’s earnings estimates point to strong growth, with the Zacks Consensus Estimate for earnings per share projected at 18 cents for 2026 and 29 cents for 2027. The estimates imply year-over-year growth of 350% in 2026 and 57.22% in 2027, reflecting expectations for continued earnings improvement over the next two years.
Image Source: Zacks Investment Research
Verdict for RIG Stock
Transocean is poised to benefit from growing energy security concerns, a tightening deepwater drilling market and new contract awards worth $550 million, which extend work into 2027. Strong contract coverage, higher 2026 revenue guidance and multiyear Equinor contracts provide revenue visibility, while its specialized fleet positions the company to capitalize on demand for offshore drilling services.
Improving Zacks Consensus Estimate points to continued earnings growth over the next two years. This Zacks Rank #1 (Strong Buy) stock represents an attractive choice for investors seeking exposure to the oil and gas sector, given its strong competitive positioning, expanding international business and improving earnings outlook.
Marathon Petroleum is valued at $136.62 billion. The company is a leading U.S. independent refiner, marketer and transporter of petroleum products, with a strong refining footprint and an extensive midstream business. Marathon Petroleum benefits from its integrated operations, strategic refining assets and diversified earnings streams across the energy value chain.
Equinor is valued at $110.26 billion. It is a Norway-based international energy company engaged in oil and natural gas exploration and production, renewable energy and low-carbon solutions. Equinor is a major offshore operator and an important supplier of energy to Europe, with operations spanning Norway and several international markets.
Delek US Holdings is valued at $4.79 billion. It is a diversified downstream energy company engaged in petroleum refining, renewable fuels, asphalt production and logistics operations. Delek US Holdings operates multiple refineries in the United States and is committed to delivering safe, reliable energy while investing in cleaner energy initiatives.
View the Zacks #1 Rank List
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Transocean Gains 14.7% in 3 Months: Should Investors Buy the Stock?
Key Takeaways
Over the past three months, Transocean (RIG - Free Report) has outperformed both its Oil and Gas-Drilling sub-industry and the broader Oil and Energy sector. RIG’s shares gained 14.7%, compared with an 8.8% increase for the Oil and Gas-Drilling sub-industry (ZSI134M) and a 10.8% rise for the broader Oil and Energy sector (ZS12M). This outperformance highlights Transocean’s stronger share-price performance relative to both benchmarks over the period.
Three-month share-price performance comparison
Image Source: Zacks Investment Research
With shares outperforming the broader energy sector, Transocean is attracting attention as new contract wins and improving earnings estimates strengthen its outlook. But can the offshore driller sustain its momentum, and what factors could drive further upside?
What Makes Transocean an Attractive Investment?
Energy Security Supports Offshore Demand: Geopolitical instability and Middle East conflicts are highlighting the importance of energy security, potentially supporting offshore exploration and production spending. Transocean expects deepwater projects to remain attractive, although management noted that recent contract awards were based on oil-price breakeven of $30-$40 per barrel, not elevated prices.
New $550 Million Contracts: Transocean announced firm contract awards worth approximately $550 million for two ultra-deepwater drillships in the U.S. Gulf. The Deepwater Proteus secured a 10-well, 700-day campaign worth about $325 million, while the Deepwater Conqueror won a five-well, 450-day campaign worth about $225 million, extending visibility into 2027.
Strong Contract Coverage: Transocean reported that nearly all its active drillships were contracted or mobilizing to new work, except the KG2, which was bidding on multiple opportunities. Management said contract coverage reached 94% for the remainder of 2026 and 81% for 2027, providing meaningful revenue visibility across upcoming periods.
Higher 2026 Revenue Guidance: Transocean increased its 2026 revenue guidance after contract extensions on several rigs and a new contract for the Deepwater Proteus. Management said the updated outlook reflects additional activity not previously expected to continue through the year. More contracted work supports visibility, although the upper end depends on customer options and extensions.
Specialized Drilling Fleet: Transocean operates 27 offshore drilling units, comprising 20 ultra-deepwater drillships and seven harsh-environment semisubmersibles. Its filings emphasize technically demanding offshore markets. This specialized fleet gives the company exposure to deepwater and harsh-environment programs where customers need high-specification equipment and operating expertise.
Tightening Deepwater Market: Through the second quarter, Transocean secured nearly 100 rig years in new contracts, with another 75-80 rig years tied to about 40 open tenders. Management expects deepwater rig utilization to reach nearly 100% by the end of 2027, which could support stronger demand and future contract opportunities.
Multiyear Equinor Contracts: Transocean secured seven years of work for three harsh-environment semisubmersibles under an agreement with Equinor (EQNR - Free Report) . Management said base day rates, excluding third-party services, are likely to exceed $400,000 when contracts begin, reflecting escalation provisions. These multiyear commitments can provide extended utilization and revenue visibility.
Improving Earnings Estimates: Transocean’s earnings estimates point to strong growth, with the Zacks Consensus Estimate for earnings per share projected at 18 cents for 2026 and 29 cents for 2027. The estimates imply year-over-year growth of 350% in 2026 and 57.22% in 2027, reflecting expectations for continued earnings improvement over the next two years.
Image Source: Zacks Investment Research
Verdict for RIG Stock
Transocean is poised to benefit from growing energy security concerns, a tightening deepwater drilling market and new contract awards worth $550 million, which extend work into 2027. Strong contract coverage, higher 2026 revenue guidance and multiyear Equinor contracts provide revenue visibility, while its specialized fleet positions the company to capitalize on demand for offshore drilling services.
Improving Zacks Consensus Estimate points to continued earnings growth over the next two years. This Zacks Rank #1 (Strong Buy) stock represents an attractive choice for investors seeking exposure to the oil and gas sector, given its strong competitive positioning, expanding international business and improving earnings outlook.
Other Key Picks
Investors interested in the energy sector might consider other top-ranked stocks, such as Marathon Petroleum (MPC - Free Report) , Equinor and Delek US Holdings (DK - Free Report) , each sporting a Zacks Rank #1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Marathon Petroleum is valued at $136.62 billion. The company is a leading U.S. independent refiner, marketer and transporter of petroleum products, with a strong refining footprint and an extensive midstream business. Marathon Petroleum benefits from its integrated operations, strategic refining assets and diversified earnings streams across the energy value chain.
Equinor is valued at $110.26 billion. It is a Norway-based international energy company engaged in oil and natural gas exploration and production, renewable energy and low-carbon solutions. Equinor is a major offshore operator and an important supplier of energy to Europe, with operations spanning Norway and several international markets.
Delek US Holdings is valued at $4.79 billion. It is a diversified downstream energy company engaged in petroleum refining, renewable fuels, asphalt production and logistics operations. Delek US Holdings operates multiple refineries in the United States and is committed to delivering safe, reliable energy while investing in cleaner energy initiatives.