Transocean: The Cold Stacked Rigs May Be The Next Question


  • After the recent re-financing moves, the bankruptcy possibility looks now to be in the rearview mirror.
  • The credit de-risking sent the stock a lot higher, but further growth should track closer the operational improvements in dayrates and utilization.
  • The dayrate outlook is great, but 10 of Transocean’s 39 rigs remain cold stacked; the company’s base case implies 2 re-activations, but there is no specific news yet.
  • Transocean owns a majority of the cold stacked ultra-deepwater drillships worldwide, so statistically there should be a call on its fleet, especially after Valaris already re-activated some of its rigs.
  • I retain my long position in Transocean’s common shares but took profits on my LEAPS.

Drillships near coastal city

leskas/iStock via Getty Images

Investment thesis

Transocean Ltd. (NYSE:RIG) made two back-to-back re-financing moves that should take the bankruptcy risk off the table:

Transocean commences $500M senior secured notes offering

Transocean unit commences $1.75B senior secured notes offering

Predictably, the

Data by YCharts

Data by YCharts

Maturity Option-adjusted spread, 01/20/2023 Option-adjusted spread, 01/04/2023
15-Apr-2031 900 bps 1,127 bps
15-Mar-2038 760 bps 854 bps
15-Dec-2041 950 bps 1,129 bps

Transocean Investor Presentation; dayrates; EBITDA: cash flow; scenarios

Transocean Investor Presentation

Ultra-deepwater rigs; drillship; stacked

Woodmac; FSRs; Author’s research

Transocean; bonds; exchangeable

Transocean 10-Q

Disclosure: I/we have a beneficial long position in the shares of RIG, SLB either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: My articles, blog posts, and comments on this platform do not constitute investment recommendations, but rather express my personal opinions and are for informational purposes only. I am not a registered investment advisor and none of my writings should be considered as investment advice. While I do my best to ensure I present correct factual information, I cannot guarantee that my articles or posts are error-free. You should perform your own due diligence before acting upon any information contained therein.

Leave a Reply

Your email address will not be published. Required fields are marked *