Offshore drilling giant, Transocean Ltd. (RIG), recently issued a Fleet Update Summary for the period commencing May 15, 2013 to date. The value of all the new deals and extensions in contracts, in the same time frame, is estimated to be roughly $262 million. The update covers the company's offshore drilling rig status and contract information.
Per the report, GSF Explorer, an Ultra-Deepwater Drillship, got a contract to operate offshore India for a year. The dayrate is expected to be around $412,000. Previously, the rig was not operational. The contract is expected to add $150 million to the existing backlog.
Sedco 704, a semi-submersible rig, got a contract extension offer to work for 6 months. The unit will operate at a dayrate of $373,000. The contract is estimated to add $80 million to the backlog of Transocean. The company added that, the dayrate of the current contract of two years has been improved from $353,000 to $373,000.
Additionally, Falcon 100, a midwater floater, got a contract to operate offshore Congo for 35 days. The dayrate is expected to be roughly $300,000. The contract is estimated to add $11 million to the backlog of Transocean. Previously, the rig was out of work.
Included in the report, the expected out-of-service time in 2013, will be up by 138 days.
In addition, Transocean Andaman, a high-specification jackup, has started operating offshore Thailand on May 17, 2013. The jackup is in a three-year contract.
Switzerland-based Transocean is the world’s largest offshore drilling contractor and the leading provider of drilling management services worldwide. With less oil being discovered on land and with companies having to dig deeper to get to their reserves, Transocean is poised to benefit from a market with robust multi-year demand trends. Its technologically-advanced and versatile drilling fleet is a promising growth driver.
On the flip side, Transocean conducts operations in various regions throughout the world, with a substantial portion of its total revenues and earnings coming from international markets. As such, the company is exposed to risks associated with operating in international markets. Such risks include embargoes and/or expropriation of assets, exchange rate risks, terrorism and political/civil sentiment, etc.
Transocean currently carries a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.
Meanwhile, firms in the energy sector that are expected to perform better in the broader U.S. equity market over the next one to three months are Ferrellgas Partners LP (FGP), InterOil Corporation (IOC) and EQT Midstream Partners LP (EQM). All the firms sport a Zacks Rank #1 (Strong Buy).
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