Transocean Ltd. (RIG)

[ogbull]

TRAQNSOCEAN TOP PICK OF THE ZEPHIRIN GROUP.

The Zephirin Group, Inc. is widely recognized as one of the World's Leading Independent Investment Research Companys. It's chairman is considered a leading expert in the Oil & Gas Sector.

He said: Transocean Ltd. (BUY) is our top pick because we expect the company to consistently continue to deliver strong free-cash-flow (FCF), much more so than its competitors (i.e., sell-rated Seadrill Ltd (SDRL) and sell-rated Diamond Offshore (DO).

The negative we see impacting the share performance of Transocean Ltd. is the potential downgrade by the debt rating agency Moody’s. From our view it would be an incredible slight for Moody’s to consider at this current level a downgrade of Transocean Ltd. debt now or through 2017.

Currently, Transocean Ltd. has approximately $1.1 billion of 4.95% Senior Notes due November 2015. In our normalized FCF analysis, we are estimating FCF of a negative $551.4 million – this is based on estimated cash-from-operation (CFO) of $2.7 billion (up from our 2014 estimates of $2.4 billion) minus cap-x spending of $1.5 billion, debt payment of $1.1 billion and new dividend of $572 million. This is before the usage of cash on hand of $2.9 billion. This also assumed that zero new debt is raised in 2015. The backlog that is due in 2015 is approximately $5.8 billion and $13.4 billion thereafter – which in our opinion fully covered the company’s debt payment.

Source:

http://blogs.barrons.com/stockstowatchtoday/2015/01/08/time-to-buy-transocean/