Transocean leads offshore drillers lower as Benchmark downgrades trio

Transocean (NYSE:RIG) -4.6%, Noble (NE) -4% and Valaris (VAL) -3% in Tuesday’s trading after Benchmark downgrades all three offshore drillers to Hold from Buy as deepwater drilling contract and pricing momentum has slowed from the torrid pace through this year’s H1.

Industry sources indicate the cadence of contract awards should accelerate during H2 2025, but in the near term, “intermittent rig utilization aka ‘white space’ will be a drag on investor sentiment,” Benchmark analyst Kurt Hallead writes.

The analyst reduces his FY 2025 EBITDA estimates for Transocean (RIG) by 9% to $1.6B and Valaris (VAL) by 4% to $860M, while raising his 2025 EBITDA estimate for Noble (NE) to $1.5B vs. $1.2B previously.

The three companies remain well positioned to generate free cash flow in 2025 and return excess cash to shareholders, according to Hallead.