Transocean: Improved Balance Sheet And Catalyst On The Horizon

Summary:

• Transocean owns 26 ultra-deepwater floaters and eight harsh-environment floaters. RIG has a substantial $9.3 billion backlog, positioning it well for future profitability.
• The industry’s big news is Seadrill’s potential acquisition. I believe RIG and SDRL will benefit from the transaction.
• For 3Q24, RIG reported $948 million in revenue and $338 million in EBITDA. YoY revenue grew by 32.9% and EBITDA by 117%.
• The company has an adequate capital structure with 68% total debt to equity and 47.6% total assets to total liabilities. The next significant maturity is in 2027.
• I have opened a small position. I will add more size if the deal with Seadrill gets a green light. I give RIG a Buy rating.

Introduction

Transocean (NYSE:RIG) is one of the leading oil rigs owners. Investors dislike it because of its leveraged balance sheet. RIG is the only company that has survived the previous market cycle. However, there is a reason for that. Transocean made it because

Analyst’s Disclosure: I/we have a beneficial long position in the shares of RIG 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.

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