Transocean secures funds for Gulf of Mexico contract By Investing.com

STEINHAUSEN, Switzerland – Transocean Ltd . (NYSE:), a leading international provider of offshore contract drilling services, announced today that it has been awarded a significant contract in the U.S. Gulf of Mexico. The contract, secured with energy giant bp, entails a 1,095-day drilling program for the Deepwater Invictus rig, expected to commence in the first quarter of 2025.

The deal is projected to contribute approximately $531 million to Transocean’s backlog, excluding potential additional services and a mobilization fee. This development is a noteworthy addition to Transocean’s business, which specializes in ultra-deepwater and harsh environment drilling services. The company boasts the highest specification floating offshore drilling fleet globally and currently operates 36 mobile offshore drilling units, which include 28 ultra-deepwater floaters and eight harsh environment floaters.

While the announcement reflects positive news for Transocean, the company’s statement also included forward-looking disclaimers. These cautionary notes highlight that the actual results could differ materially from those indicated due to various risks and uncertainties inherent in the offshore drilling industry.

Transocean Ltd., a major player in the oil and gas drilling industry, has seen significant developments in its operations. The company reported an adjusted EBITDA of $199 million and adjusted contract drilling revenues of $767 million in Q1 2024. In line with this, Transocean secured new contracts for three of its harsh environment semisubmersible rigs, amassing a firm backlog of approximately $161 million.

The company also announced amendments to its Articles of Association, reflecting an increase in share capital due to the issuance of 22.5 million additional shares. This adjustment was filed with the U.S. Securities and Exchange Commission (SEC) and the shares are earmarked for fulfilling the company’s obligations under its equity benefits plans.

In terms of future expectations, analysts predict a sustained tightness in the offshore drilling market, which could positively impact Transocean’s long-term contract prospects and financial performance. Notable upcoming projects include BP (NYSE:)’s Atlantis 4 and 20K Kaskida, Shell (LON:)’s Bonga North, TotalEnergies (EPA:)’ Kaminho, and ExxonMobil (NYSE:)’s Whiptail.

InvestingPro Insights

As Transocean Ltd. (NYSE:RIG) secures a new contract with energy titan bp, its financial and operational metrics from InvestingPro provide a deeper understanding of the company’s current market position. With a market capitalization of $5.31 billion, Transocean exhibits a significant presence in the offshore drilling sector. Despite not paying dividends, which could be a consideration for income-focused investors, the company’s recent contract win could signal a potential shift in its financial trajectory.

InvestingPro data indicates a notable revenue growth of 11.68% over the last twelve months as of Q1 2024, coupled with a more impressive quarterly revenue growth of 17.57% in Q1 2024. This suggests an upward trend in the company’s earning potential, which may be bolstered by the new bp contract. However, the company’s financials also show challenges, with an adjusted operating income margin of -2.51% and an EBITDA growth decrease of -20.65% over the same period, reflecting some operational inefficiencies that Transocean may need to address.

An InvestingPro Tip indicates that Transocean operates with a significant debt burden, a crucial factor for investors to consider when assessing the company’s risk profile. Moreover, analysts do not anticipate the company will be profitable this year, which aligns with the negative P/E ratio of -11.83, suggesting that the market expects lower earnings. Nevertheless, a significant return over the last week of 7.98% could reflect market optimism following the announcement of the bp contract.

For those interested in a more comprehensive analysis, there are additional InvestingPro Tips available, providing more in-depth insights into Transocean’s performance and prospects. These tips can be accessed through the InvestingPro platform for a more informed investment decision-making process.

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