Transocean's Deepwater Drillship Invictus Wins New Contract
Zacks Investment Research | Oct 20, 2017 03:59AM ET
Offshore driller Transocean Ltd. (NYSE:RIG) recently reported that its ultra-deepwater drillship Deepwater Invictus has received a two-year contract from a subsidiary of mining company, BHP Billiton (LON:BLT) Limited (NYSE:BHP) . Per Transocean, the contract will begin in the second quarter of 2018.
The contract for Deepwater Invictus, which joined Transocean's fleet in 2014, includes three one-year priced options. Transocean expects the backlog related to the contract to be around $106 million. The company is yet to declare the exact dayrate for the rig. In this context, we would like to remind investors that Deepwater Invictus’ first contract with BHP in 2014 had a dayrate of $595,000.
Built in Korea's DSME shipyard, Invictus can operate in water depth of up to 12,000 feet. It can drill 40,000 feet deep wells. The drillship worked for BHP in the U.S. Gulf of Mexico and Trinidad. Invictus is presently in the Gulf of Mexico, south of Louisiana.
About the Company
Switzerland-based Transocean is one of the world’s largest offshore drilling contractors and leading provider of drilling management services. Its drilling fleet consists of 40 high-specification deepwater floaters, 6 mid-water floaters, and 10 high specification jackups. Transocean's fleet is considered one of the most modern and versatile in the world due to its emphasis on technically demanding segments of the offshore drilling business.
Transocean's aggressive cost reduction programs will enable it to shore up its operational performance in this volatile crude environment. As part of this strategy, the company has embarked on a policy to optimize overhead and maintenance expenses. Transocean has also set itself an ambitious target to achieve an impressive revenue efficiency of 95% through 2019.
However, Transocean conducts operations in various regions throughout the world, with a substantial portion of its total revenue and earnings coming from international markets. As such, the company is exposed to risks associated with operating in international markets. Such risks include embargoes and/or expropriation of assets, exchange rate risks, terrorism and political/civil sentiment, etc.
Price Performance
Transocean has lost 31% of its value year to date compared with 36.5% fall of its industry .
Zacks Rank and Stocks to Consider
Get The News You Want
Transocean presently has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the oil and energy sector are JA Solar Holdings, Co., Ltd. (NASDAQ:JASO) , Par Pacific Holdings, Inc. (NYSE:PARR) and Canadian Natural Resources Ltd. (TO:CNQ) . JA Solar and Par Pacific sport a Zacks Rank #1 (Strong Buy) while Canadian Natural carries a Zacks Rank #2 (Buy). You can see .
JA Solar’s earnings for the third quarter of 2017 are expected to surge 20% year over year. The partnership delivered a positive average earnings surprise of 716.7% in the last four quarters.
Par Pacific’s sales for the third quarter of 2017 are expected to increase 28.5% year over year. The company delivered a positive average earnings surprise of 9.1% in the last four quarters.
Canadian Natural’s sales for the third quarter of 2017 are expected to increase 82.3% year over year. The company delivered a positive earnings surprise of 46.9% in the second quarter of 2017.
Wall Street’s Next Amazon (NASDAQ:AMZN)
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Zacks Investment Research
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.