Opinions Gordon Reid
Transocean Inc.RIGCOMMENTNov 03, 2014
Stock price when the opinion was issued
As of Jun 04, 2026. Market Open.
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Good free cash flow, valuation and contracts that generate revenue.
Jim Lebenthal
They reported earnings last night: cash flow and debt were lower than expected. They're merging with Valaris.
Jim LebenthalLargest in the space. Only company that didn't go bankrupt during Covid, but now has a bit more debt than peers (though it's manageable). JPM downgraded it today on worries about Petrobras exposure.
He took profits, but would look to re-enter (not today, but likely lower). Demand will grow for next several decades. Biggest bear in the world (the IEA) just pivoted on peak demand. US shale growth is over, so where is oil going to come from? Macro's very good, but we just have to get through the next 3-6 months. Of all the names in services, the one he's most inclined to own.
11 of their cold-stacked rigs have been mothballed for a while but will return to operation soon.
Jim LebenthalThe day rates on these offshore drilling rigs has been climbing well, so idle rigs will return to service. Is up sharply this month.
Jim LebenthalThey report later today, but he's not interest in that, but rather the conference call about how tight the market is for deep-drilling rigs. He thinks it's a matter of when, not if, their rigs will be reactivated.
Jim LebenthalHigh debt, which they are paying down from free cashflow. Rig counts are up, a big milestone. Super-duper, high beta name to own when oil's not falling 5% in a day. Be strategic when to add. 12-ish% free cashflow yield, but see his Top Picks for a more compelling name.
Eric NuttallGiven the high spot price of oil now, you need to go to a high-beta oil name to capture a return.
Joe Terranova
Pete Najarian
Drillers have probably been unduly punished, but it is not a surprise. They are affected by long dated events. The big oil corporations make capital allocation and expenditure decisions many, many years in advance. With oil prices dropping in the $80 range, there is a lot of fear that these drillers are going to lose contracts and have idle rigs. Management has been questioned as they have done some questionable things. He prefers Ensco (ESV-N) whose fleet is much newer and their utilization rates are much higher at 96%.