Mohsin BashirTransocean Inc.RIGHOLDNov 13, 2014

Good free cash flow, valuation and contracts that generate revenue.

It can go higher, but carries a lot of debt. Not his favourite in this space.

They reported earnings last night: cash flow and debt were lower than expected. They're merging with Valaris.

Largest 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.

A high-beta name. Peer Valaris came out with a very good report, expecting contracting opportunities ahead. Expects the same from RIG.

Doesn't like SLB either, and RIG isn't as good as SLB.

11 of their cold-stacked rigs have been mothballed for a while but will return to operation soon.

The day rates on these offshore drilling rigs has been climbing well, so idle rigs will return to service. Is up sharply this month.

They 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.

High 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.

Given the high spot price of oil now, you need to go to a high-beta oil name to capture a return.

It's the highest paid way to play oil.

A very choppy chart. Trade it. It's on the upswing now, so be ready to unload it.