Leading offshore drilling contractor Transocean Ltd. ([stock]RIG[/stock]) announced that its rig Dhirubhai Deepwater KG2 has drilled to the deepest water depth of 10,194 feet, offshore India. The ultra-deepwater drillship was jointly owned by Quantum Pacific Group and was operating for India’s listed company, Reliance Industries.
The Dhirubhai Deepwater KG2 rig commenced operations, under a five-year drilling contract, about a year ago and capable of functioning in water depths of up to 12,000 feet. The rig is outfitted to construct wells up to 35,000 feet deep. The vessel features advanced drilling capabilities in offshore operations including significant offline tubular-handling and stand-building capabilities, advanced mud system designs, systems for building, storing and running several subsea trees and efficient riser and blowout preventer handling systems.
The Dhirubhai Deepwater KG2 drilling depth surpassed the prior record set, also by a Transocean rig, Discoverer Deep Seas (10,011 feet of water), which was working in the U.S. Gulf of Mexico for Chevron Corp. ([stock] [/stock]) in 2003.
Switzerland-based Transocean contracts rigs, related equipments, and work crew primarily on a day-rate basis to drill oil and gas wells with a focus on deepwater and harsh environment drilling services. As of December 31, 2010, the company owned, had partial ownership interests in, or operated 138 mobile offshore drilling rigs.
The company primarily operates in the Far East, India, Gulf of Mexico, the United Kingdom, Nigeria, the Mediterranean as well as the Middle East, Brazil, Norway, other West African countries, Australia, Canada, the Caspian Sea and Venezuela.
We believe that Transocean exhibits a strong earnings visibility given its technologically advanced and versatile offshore drilling fleet, strong backlog and considerable pricing power. However, we maintain long-term Neutral rating on the stock considering the challenging deepwater as well as jackup environment, slow recovery of global economic conditions and volatile oil and gas prices.
Transocean currently retains a Zacks #3 Rank (short-term Hold rating).
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