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Jim Lebenthal Transocean Inc. RIG-N BUY May 31, 2024

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

Jim Lebenthal

Owned

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$6.200

Stock price when the opinion was issued

oil gas field services

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SELL ON STRENGTH

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

BUY

options action It's trading at $462. There was a buyer of 13,000 of the April 22 5 calls. What followed was six other energy companies had unusual options. He is overloaded in the energy space, but he added to his RIG calls.

WATCH

Transocean is highly risky, but if these day rates continue to rise on oil rigs, this will be many multiples of its current share price. That said, they have an upside-down balance sheet. Don't rush into this. Do your homework.

BUY

It's the highest paid way to play oil.

BUY

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

RISKY

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.

BUY

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.

BUY

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

DON'T BUY

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

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Jim Lebenthal Transocean Inc. RIG-N BUY May 31, 2024

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