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Press reports put it at around 60 billion. I think PXD has about 233 million shares outstanding. If my math is correct that would put it at about 259-260 per share, but like most things no one knows for sure until the offer is made public
The entire piece sounds good. Especially the optimistic assessment of the debt load. If it continues to trend in a positive direction (debt going down) I can see it going up by a lot. There are 2 positive things happening simultaneously. Revenue going up (increasing day rates and backlog) and debt going down. As long as that continues, we will be fine. Of course, all that has to continue. Good luck to us
Hopefully this works:
Transocean: May Soar By 200% In The Next 36 Months
Oct. 03, 2023 5:26 AM ETTransocean Ltd. (RIG)NE, VAL22 Comments
Anna Sokolidou profile picture
Anna Sokolidou
Summary
Transocean's stock is struggling to break through the $9 resistance line, but could reach double digits this year.
New drilling contracts and rising oil prices are positive indicators for offshore drillers.
The current conditions for offshore drillers suggest an upcycle.
Night Time Offshore Oil Rig Drilling and Fracking Operation, Brightly Lit, on Calm Seas
grandriver
Transocean (NYSE:RIG)'s stock is struggling to get past the $9 resistance line. But if everything goes the way it is going now, then the stock may trade well in the double digits as soon as this year. In fact, some analysts expect the stock price to triple in the next 36 months. New drilling contracts are announced, and the oil prices are high and seem to be growing.
New contracts
Here are a few quotes from the company's earnings conference where Jeremy Thigpen, Transocean's CEO, summarizes the contract awards of the past quarter.
"First in the Gulf of Mexico, we signed an agreement with a major operator for two years on the Deepwater Conqueror and direct continuation of the current program at a leading edge rate of $440,000 per day,... adding approximately $321 million in firm backlog..."
"In Norway, Equinor exercised two one-well options on the Spitsbergen at a rate of $305,000 per day, extending the current firm term through June 2023." With Equinor another contract was signed "at a rate of $335,000 per day commencing October 2023".
In the UK a contract was signed at a rate of $175,000 per day, adding approximately $17.5 million to the company's backlog. "If all options are exercised, this will keep the rig busy through April 2024."
So far, Brazil's day rates seem to be the best. "Down in Brazil, the Deepwater Mykonos was awarded a 435-day contract at a rate of approximately $364,000 per day... Also in Brazil..., the Petrobras 10,000 received a 5.8-year contract at $399,000 per day escalating annually to $462,000 per day..." This "adds an estimated $915 million to our backlog".
"In India, Reliance Industries awarded an estimated 86 day contract extension plus up to four option wells for the KG1 at a local market-leading rate of $330,000 per day... And if all options are exercised, the campaign will extend through April 2024..."
In total, approximately $1.3 billion in backlog was added since the release of RIG's fleet status report.
So, from this release, we can clearly see that the contracts were concluded at reasonably high rates and in different regions of operation. But most importantly in the past quarter alone $1.3 billion in new backlog was added, which is really substantial. Soon after the earnings conference call, two more contracts were announced. The first one was the $222M ultra-deepwater drillship contract awarded by Oil and Natural Gas Corporation Ltd. for the Dhirubhai Deepwater KG1 for work offshore India. The second one was a $486M contract for the Deepwater Aquila drillship. All this signals a clear improvement in Transocean's business activity.
In addition to the new contracts announced, the company also issued some debt. Transocean Aquila Limited, Transocean's wholly owned indirect subsidiary, commenced a private offering of $300M of senior secured notes due 2028. In other words, RIG had to borrow money to afford Aquila, the new build. But I do not think the debt load increase will be that significant.
Debt history
In order to have a better idea of Transocean's debt situation, let us have a look at the company's debt history. The data were obtained from Morning Star's website.
Transocean debt
Morning Star
If we have a look at Transocean's total liabilities, these were substantially lower in 2Q 2023 compared to the year 2020. As concerns the company's total debt, it has been falling since 2020. So, the general picture seems to be improving. Even if the debt load rises by $300 million, nothing horrible will happen, it seems. Not to mention that Aquila, the new asset, will generate cash flows and revenues.
Growth potential
Transocean has been criticized for having too many cold-stacked rigs. But it does not mean these cold-stacked rigs will have to be recycled. Rather the opposite is true. The company is deploying its cold-stacked rigs by bidding them on open tenders or through direct negotiations. Transocean has 10 cold-stacked ultra-deepwater rigs and 1 harsh environment semisubmersible. Interestingly, 8 of these vessels are highly demanded sixth- and seventh-generation drillships. Globally, there are just 12 of these cold-stacked vessels and 4 stranded new builds that are now owned by anyone.
The market for offshore drilling equipment is currently far too tight, whilst it takes years to construct an ultra-deepwater ship and also plenty of money investments. Even if we assume the budget to reactivate a deepwater or an ultra-deepwater drillship is above $75-125 million, it will still be substantially lower compared to the amount of money used to construct say the new 7th generation drillship Deepwater Aquila. So, apart from the warm-stacked or active rigs, cold-stacked drillships can still potentially be reactivated and used to generate cash flows and revenues. According to one of the recent Transocean presentations, buying and activating a stranded shipyard asset could result in an investment of $300 - $500 million, substantially more than any reactivation of any cold-stacked ship.
Oil prices
In my recent article, I wrote quite a bullish prediction for the oil prices this coming winter. The fossil fuel markets in Europe and the Northern Hemisphere in general are very tight and more is yet to come, it seems. I absolutely agree that offshore drillers invest for the long term. Seasonal oil price fluctuations are not a very good reason to invest in costly offshore exploration, of course. However, if the oil markets remain tight, the supply stays low, and green energy sources do not manage to become a perfect alternative to fossil fuels in the next several years, then oil majors will keep investing in offshore drilling, whilst signing new contracts with Transocean.
The latest data out of Cushing, Oklahoma, the US major oil storage hub once again showed a steep drop in inventories. Once again investors were reminded of the tight global supply. In fact, crude has soared by about 40% over the past three months. This summer was really bullish for oil. Not only are Saudi Arabia and Russia willing to cut the supply. Inventory levels in Cushing have decreased by almost 50% since June. So, they are now at less than 23 million barrels. This is close to the operational minimum. But if the storage levels fall below 20 million barrels, the oil can become difficult to remove, which will again add to oil market deficits. According to Investing Group Leader HFI Research, "U.S. crude storage will not build during refinery maintenance season in October". So, the only bearish factor is demand destruction, which is not happening right now.
I agree that "this too shall pass". After all, higher inflation readings can lead to further rate hikes by the Fed and other central banks. Moreover, as I have mentioned before, Transocean's business benefits from long-term demand. However, there is a correlation between RIG's stock price and the oil prices.
Chart
Data by YCharts
At the same time, in my opinion, the company's stock price is currently trading quite low compared to the oil prices.
Chart
Data by YCharts
This is explainable, of course. After all, before the 2014-2015 crisis, RIG used to have a larger fleet, higher revenues, and cash flows. But still, there could be some growth potential, given the current situation.
Technical analysis
Transocean's stock has been on the rise in the last several years. You can say that all rallies eventually pass. But it seems that the momentum is really strong for this stock. If you just draw the trend line assuming that the wider recovery of the offshore drilling sector continues, you will see that the stock price will be well in the double digits by 2024 or at the beginning of 2024 at the latest.
Transocean's technical analysis
Investing.com
Fundamental analysis is much more superior to any trend following. Anything can happen. For example, no one knew back in 2019 that the coronavirus pandemic and the resulting lockdowns would drive the oil prices to negative values. But if everything goes the way it is currently going, then we can see RIG in the double digits by 2024.
Valuations
If we see Transocean's current valuation multiples, we will see that they are at multi-year highs.
RIG stock valuations
Morning Star
However, they are still not extremely high if we compare these to the S&P 500's averages. For example, the S&P 500's average P/S (price-to-sales) ratio is currently standing at 2.39, whilst RIG's P/S is 2.31. S&P 500's price-to-cash flow ratio is 15.32, whilst Transocean's is less than 12. Yes, most S&P 500 companies are currently profitable but RIG is expected to report a sound net profit next year.
Risks
The risks are clear. First, as I have mentioned many times before, this is the likelihood the Fed and other central banks would raise the interest rates, thus provoking a full-scale recession. Then, the oil supply situation may change. The OPEC+ may start extracting more oil, whilst US oil majors may also do the same. After all, all rallies end.
You might also say that Transocean is not free of debt and is overvalued. But paradoxically in an upcycle, this is the company's big advantage. In other words, RIG's stock is more sensitive to any good announcements because it is more speculative than its peers - Valaris (VAL), Noble (NE) - that have emerged from bankruptcy and are now almost free of debt.
So, the most important thing now for Transocean is the continuation of an upcycle, I think.
Conclusion
Transocean is in a very good situation, it seems. The oil market is tight and is highly likely to stay so in the near future. New contracts get announced, and the debt load is not as high as it was in 2020. RIG is expected to report a sound net profit in 2024. The stock has a very strong momentum too. In my view, the biggest risks are that of a prolonged recession and a supply glut. In my view, however, the increase of 200% in the next 36 months may not be too farfetched. RIG stock may trade in the double digits as early as 2024.
"Why Institutional Traders Started Selling Oil And Fuel Futures"
https://oilprice.com/Energy/Energy-General/Why-Institutional-Traders-Started-Selling-Oil-And-Fuel-Futures.html
Another offshore endorsement:
"“The offshore market is demonstrating a sustained resurgence as operators across the world look to accelerate development cycle times and increase the productivity of their offshore assets,” said SLB Chief Executive Officer Olivier Le Peuch"
Really talking up RIG on CNBC right now
I wonder if this is tied to their investment into Global Sea Mineral Resources NV (“GSR”)
Given Transocean's business, it seems reasonable to invest in AI enhanced autonomous undersea equipment with an annual return on investment of 12.5%. I see this as a positive step. They also must feel comfortable with their current debt situation to make this investment.
Loaning money To "Nauticus" ticker KITT
"All obligations under the Loans are secured by a first priority lien on substantially all assets of the Company. The outstanding principal amount of the Loans under the Term Loan Agreement will bear interest at the rate of 12.50% per annum, payable quarterly in arrears on the first day of each calendar quarter commencing April 1, 2024. The Loans are coterminous with the Company's existing convertible debt (the “Debentures”), which now holds a second lien position, as disclosed in the Amendment to Securities Purchase Agreement, Senior Secured Convertible Debentures and Pledge and Security Agreement."
Nauticus Robotics, Inc. is a developer of ocean robots, autonomy software, and services delivered to the marine industries. It offers autonomous robots using artificial intelligence for data collection and intervention services for the ocean industries. The Company’s autonomous robots use artificial intelligence for data collection and intervention services for the ocean industries. Its services provide customers with the necessary data collection, analytics, and subsea manipulation capabilities. The Company’s product platforms include ToolKITT, Aquanaut, Hydronaut, and. ToolKITT is a cloud software platform consisting of interrelated products for ocean sensing, manipulation, autonomous behaviors, survey, search and recovery, and manual intervention. It develops a portfolio of ocean robotic vehicles and manipulators controlled by its multi-layered software suite. This software provides sensed perception of the environment combined with guidance, navigation, and control of the vehicle."
1,978,396 shares purchase by Wilhelm Mohn bringing his total holding to 84,574,894.
me too. Hopefully 100+
"Costs For Equinor’s Arctic Oil Project Jump By $1.2 Billion "
https://oilprice.com/Latest-Energy-News/World-News/Costs-For-Equinors-Arctic-Oil-Project-Jump-By-12-Billion.html
"Transocean Enabler will provide drilling services for 19 firm wells and up to eight optional wells for Equinor on the Johan Castberg field in the Barents Sea. The estimated 570-day contract is expected to commence in April 2024 and contribute approximately $217 million in backlog, excluding additional services and potential performance bonuses."
https://www.deepwater.com/news/detail?ID=27656
That's around the time I stopped following it. I realized that ship had sailed and all I could do is watch.
A customer told me to buy this stock(1998). It was 2 bucks/share. I thought he was nuts. After 2008/2021 I was determined not to make the same mistake twice
Josh Brown (on CNBC today) says he bought RIG (maybe Friday or today) based on contracts (I assume backlogs). Also spoke about a disconnect between oil spot price and Stock price. Somewhat Bullish looking forward a few years. (This is my interpretation of the conversation and there was give & take from other participants)
This is tough to translate precisely because it is a conversation between 4 people, but the bottom line is he bought some and said so on the air.
Got a Buy recommendation today ($12.00). Kurt Hallead Benchmark CO. analyst
I expect to see revenue growth. Hoping for 15%. However, that will be contingent on their day rates, and I don't know how they are set and whether the increase in BNSC & WTI will filter down to them.
Looks to me like RIG bought out Perestroika and Lime Rock Partners interests in Liquila Ventures Ltd. with shares. (don't know if I'm stating the obvious)
"Transocean has also agreed to acquire the outstanding interests in Liquila Ventures Ltd., a company formed to acquire the Deepwater Aquila, from its joint venture partners, Perestroika and Lime Rock Partners.
The Deepwater Aquila is expected to be delivered from the shipyard in October 2023."
https://www.offshore-mag.com/rigs-vessels/article/14299003/transocean-announces-486million-contract-for-deepwater-aquila
"he contract is expected to commence in the third quarter of 2024 and represents approximately $486 million in firm backlog, excluding a mobilization fee of approximately 90 times the contract dayrate."
This is all great news, but I would like to see some of this backlog impact the top line. Sometime this year
"Oil Prices Continue To Climb Toward $100"
https://oilprice.com/Energy/Energy-General/Oil-Prices-Continue-To-Climb-Toward-100.html
"Oil Prices Continue To Climb Toward $100"
https://oilprice.com/Energy/Energy-General/Oil-Prices-Continue-To-Climb-Toward-100.html
"China’s August Oil Imports Surge To The Third-Highest Level Ever"
https://oilprice.com/Latest-Energy-News/World-News/Chinas-August-Oil-Imports-Surge-To-The-Third-Highest-Level-Ever.html
"What’s Behind The Surge In Investment In North Sea Oil And Gas?"
https://oilprice.com/Energy/Crude-Oil/Whats-Behind-The-Surge-In-Investment-In-North-Sea-Oil-And-Gas.html
"Equinor ASA: Share buy-back
Please see below information about transactions made under the share buy-back programme for Equinor ASA (OSE:EQNR, NYSE:EQNR).
Date on which the third tranche of the share buy-back programme for 2023 was announced: 26 July 2023.
The duration of the third tranche of the buy-back programme for 2023: 27 July to no later than 26 October 2023.
Size of the buy-back programme: Up to 94,000,0000 shares, with a maximum total consideration for the third tranche: USD 550,000,000."
9/4/2023--WTI $87.12 at 10:30 EST
"TRANSOCEAN LTD. : Entry into a Material Definitive Agreement, Financial Statements and Exhibits (form 8-K)"
https://www.marketscreener.com/quote/stock/TRANSOCEAN-LTD-14246/news/TRANSOCEAN-LTD-Entry-into-a-Material-Definitive-Agreement-Financial-Statements-and-Exhibits-for-41221596/
9/1/23 @ 9:47. WTI currently at $84.82
9/1/23 @ 9:47. WTI currently at $84.82
"Equinor Boosts Oil And Gas Production With New Expansion Project"
https://oilprice.com/Energy/Crude-Oil/Equinor-Boosts-Oil-And-Gas-Production-With-New-Expansion-Project.html
Hans Mosesmann
Rosenblatt Securities
Buy 08/16/23 Price Target $800.00
"Inflation Reduction Act May Lead To Major Metals Supply Crunch"
https://oilprice.com/Energy/Energy-General/Inflation-Reduction-Act-May-Lead-To-Major-Metals-Supply-Crunch.html
More entertainment for those interested in this Fiasco:
Mr. Peter J. Harry
Husch Blackwell LLP
2001 Ross Avenue, Suite 2000
Dallas, TX 75201-6929
* DELIVERED VIA E-MAIL *
Mr. Richard S. Wade
2825 Oak Lawn Avenue
#190402
Dallas, TX 75219
* DELIVERED VIA E-MAIL *
RE: Case Number: 23-0443
Court of Appeals Number: 05-22-00454-CV
Trial Court Number: DC-21-06094
Style: RICHARD WADE
v.
LUIZ VALDETARO AND VERTICAL COMPUTER SYSTEMS, INC.
Dear Counsel:
The Supreme Court of Texas requests that respondents file a response to the petition for
review in the above-referenced case. The response is due in this office on August 28, 2023.
PLEASE NOTE pursuant to TEX. R. APP. P. 9.2(c)(2) all documents (except documents
submitted under seal) must be e-filed through eFileTexas.gov. You may file up to midnight on
the due date.
"U.S. Shale Shakes Off Slowdown Predictions"
https://oilprice.com/Energy/Crude-Oil/US-Shale-Shakes-Off-Slowdown-Predictions.html
Thought you would get a kick out of this:
ORDER GRANTING MOUNTAIN RESERVOIR CORP. PETITION FOR BILL OF REVIEW
On this day, the Court considered Mountain Reservoir Cam‘s Petition for Bill of Review.
Upon due consideration, the Court is of the Opinion that the following order should be entered.
ITVIS\ THEREFORE ORDERED. ADJUDGED, AND DECREED that the Final Default
Judgment signed on May 2, 2022,
in Cause No. CC—Zl-OZSSS-D styled Luiz szidetaro vi Richard
S. Wade and Mountain ReServoz‘r Corp is hereby VACATED AND SET ASIDE, and the same shall
be no}! and void.
IT IS SO ORDERED
SIGNEDMMday of, 2023
I just looked this up what a laugh. It just continues new trial 10/23
"Ships Warned Of Increased Iranian Threat Near Strait Of Hormuz"
"The Persian Gulf exports approximately 18.2 million barrels of oil per day; approximately 17 million barrels per day transit through the Strait of Hormuz in tankers. Additionally, over 3.5 billion cubic feet of natural gas, approximately 18 percent of world shipments, travel through the Strait via LNG tankers."
"Ships Warned Of Increased Iranian Threat Near Strait Of Hormuz"
"The Persian Gulf exports approximately 18.2 million barrels of oil per day; approximately 17 million barrels per day transit through the Strait of Hormuz in tankers. Additionally, over 3.5 billion cubic feet of natural gas, approximately 18 percent of world shipments, travel through the Strait via LNG tankers."
"Ships Warned Of Increased Iranian Threat Near Strait Of Hormuz"
"The Persian Gulf exports approximately 18.2 million barrels of oil per day; approximately 17 million barrels per day transit through the Strait of Hormuz in tankers. Additionally, over 3.5 billion cubic feet of natural gas, approximately 18 percent of world shipments, travel through the Strait via LNG tankers."
ORDER GRANTING MOUNTAIN RESERVOIR CORP. PETITION FOR BILL OF REVIEW
On this day, the Court considered Mountain Reservoir Cam‘s Petition for Bill of Review.
Upon due consideration, the Court is of the Opinion that the following order should be entered.
ITVIS\ THEREFORE ORDERED. ADJUDGED, AND DECREED that the Final Default
Judgment signed on May 2, 2022,
in Cause No. CC—Zl-OZSSS-D styled Luiz szidetaro vi Richard
S. Wade and Mountain ReServoz‘r Corp is hereby VACATEDAND SET ASIDE, and the same shall
be no}! and void.
IT IS SO ORDERED
SIGNEDMMday of, 2023
I just looked this up what a laugh. It just continues new trial 10/23
"IEA: Global Oil Demand Hits Record High"
https://oilprice.com/Energy/Energy-General/IEA-Global-Oil-Demand-Hits-Record-High.html