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Transocean: Speculating On Offshore Drilling

Transocean Ltd. (NYSE:RIG) primarily offers deepwater and harsh environment oil and gas drilling services worldwide. The company owns or has partial ownership interests in 61 mobile offshore drilling units, including 28 ultra-deepwater floaters, 7 harsh environment floaters, 5 deepwater floaters, 11 midwater floaters, and 10 high-specification jackups. As of February, the company has stacked 27 rigs and idled 4 rigs. The cold stacked rigs serve as a company liability as they cost money and are unlikely to reenter the fleet.

RIG's stock price has outperformed the GICS Oil and Gas Drilling subindustry the last few months, including its offshore competitors such as Diamond Offshore Drilling Inc. (NYSE:DO), Ensco PLC (NYSE:ESV), and Rowan Companies plc (NYSE:RDC).

In a world of offshore drilling musical chairs, where companies are scrambling to unload rigs before the music stops, RIG seems to have found a chair to sit on. A recently published report indicates that RIG is considering selling its fleet of 15 shallow-water rigs for $1.2 billion. This would help out their balance sheet tremendously.

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by Steve Auger