Transocean Ltd. RIG, a leading offshore drilling services company,recently announced its quarterly fleet status report. In its report, the company stated that it has secured new contract wins and extensions for its fleet, adding $175 million to its backlog. The new contracts not only strengthen Transocean’s market position but also provide geographical diversification, which helps it mitigate regional market risks.
For investors, the growth in backlog is of utmost importance as it directly influences Transocean's sales, earnings and cash flows. As the offshore driller secures new contracts, its financial outlook is bolstered, creating a positive trajectory for the company and its stakeholders.
Transocean informed that it secured contract extensions from customers like Reliance Industries, Equinor and Woodside Energy.
Reliance Industries exercised a four-well option in India for its ultra-deepwater rig Dhirubhai Deepwater KG1 at a day rate of $410,000. The Dhirubhai Deepwater KG1 drillship, currently deployed with India’s ONGC, will start working for Reliance from April 2026 through May 2029.
Equinor exercised a three-well option in Norway for the drillship Transocean Enabler at a day rate of $428,000 and the drillship will work for Equinor through 2027.
Woodside Energy exercised a one-well option in Australia for the drillship Transocean Endurance at a day rate of $390,000, with the drillship working for it through mid-2026.
The total backlog associated with these contracts stands at $175 million, aggregating the company’s total backlog to about $8.3 billion as of Feb. 12, 2025. Transocean’s strong backlog not only provides clear visibility to future cash flows but also a cushion against market downturns, offering stability in a cyclical industry.
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. Based on their capabilities, the company deals in drillships that can be categorized asultra-deepwater floaters and harsh environment floaters. Therefore, the day rates secured by Transocean are noteworthy as they indicate robust demand for high-specification assets and represent healthy levels that contribute to improved cash flow generation.
Switzerland-based Transocean is the world’s largest offshore drilling contractor and leading provider of drilling management services. Currently, RIG has a Zacks Rank #3 (Hold).
Investors interested in the energy sector might look at some top-ranked stocks like SM Energy Company SM, Prairie Operating Co. PROP and Gulfport Energy Corporation GPOR.While SM Energy and Prarie operating currently sport a Zacks Rank #1 (Strong Buy) each, Gulfport Energy carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Denver, CO-based SM Energy Company is an independent oil and gas company engaged in the exploration, exploitation, development, acquisition and production of natural gas and crude oil in North America. The Zacks Consensus Estimate for SM’s 2024 earnings indicates 15.11% year-over-year growth.
Houston-based Prairie Operating Co. is an independent energy company engaged in the development and acquisition of proven, producing oil and natural gas resources principally in the United States. The Zacks Consensus Estimate for PROP’s 2024 earnings indicates 81.19% year-over-year growth.
Gulfport Energy is an independent natural gas and oil company focused on the exploration and development of natural gas and oil properties in North America. The Zacks Consensus Estimate for GPOR’s 2024 earnings indicates 108.53% year-over-year growth.
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