Offshore drilling giant, Transocean Ltd. (RIG) has provided a fleet status report that covers the company's offshore drilling rig status, contract and out-of-service time information.
Per the report, M.G. Hulme, Jr., a deepwater floater, is now out of contract. Transocean also mentioned that the estimated planned out-of-service time for 2014 has increased by net 141 days, while for the next year, this estimate has been extended by a net amount of 11 days. Transocean added that the net increase in 2014 out-of-service time includes 168 days related to the semi-submersible, Transocean Amirante.
Switzerland-based Transocean is the world’s largest offshore drilling contractor and the leading provider of drilling management services. The company’s latest fleet comprises 77 mobile offshore drilling units that include 46 high-specification floaters, 21 midwater floaters and 10 high-specification jackups. Additionally, Transocean has nine ultra-deepwater drillships and five high-specification jackups in the construction phase.
Though it has a strong backlog that provides support to earnings and cash flow, the company’s exposure to the volatile and cyclical oil and gas exploration and production sector could limit deepwater drilling and lower equipment demand, thereby affecting bookings at Transocean.
The company has consistently performed well in the past few quarters, reporting earnings well above the Zacks Consensus Estimate. For the trailing four quarters, the company has an average earnings surprise of 24.55%.
Transocean is expected to release second-quarter results in early August. At present, it has an Earnings ESP of +0.90% and a Zacks Rank #3 (Hold). The combination of a favorable Zacks Rank and positive earnings ESP could lead to another beat in the upcoming results.
Meanwhile, one can consider better-ranked players from the same industry such as Helmerich & Payne, Inc. (HP), Nabors Industries Ltd. (NBR) and Patterson-UTI Energy Inc. (PTEN). All these stocks have a Zacks Rank #2 (Buy).
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