I used to watch this one carefully years ago. I took a look at it this morning and was shocked to see the hard times that have befallen this company over the last few years but did notice that it has gone up several fold from its lows. I work deepwater GOM but do not work on the E&A or production side of things, but more midstream. Wondering if anyone has any thoughts on picking up a small position in Transocean? Notice that the book value per share is over $14, yet the stock only trades for $8 and change. Anyone have any insight into their prospects? I know there is quite a lot of drilling activity right now going on in the Gulf. Help is appreciated.

I would stay away. Drilling stocks can be volatile. RIG doesnt pay a dividend either. I would just stick to investing in the super majors that pay a good dividend.

RightWingConspirator said:

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I used to watch this one carefully years ago. I took a look at it this morning and was shocked to see the hard times that have befallen this company over the last few years but did notice that it has gone up several fold from its lows. I work deepwater GOM but do not work on the E&A or production side of things, but more midstream. Wondering if anyone has any thoughts on picking up a small position in Transocean? Notice that the book value per share is over $14, yet the stock only trades for $8 and change. Anyone have any insight into their prospects? I know there is quite a lot of drilling activity right now going on in the Gulf. Help is appreciated.

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I guess you know they report quarterly earnings at 4:15PM today.

I was an owner of RIG at $150 a long time ago and have had former bosses as well as direct reports of mine work in fairly high levels at the company. Their debt is always concerning to me and it's not a company I would make a mainstay of my portfolio. However, I've been sitting on some $8C for about 9 months that expire in August and am cutting half of that position today before earnings.

They do what they do better than nearly anyone else but they've seemingly never been able to get their cost structure under control which is bad news when your bread and butter is ultra deepwater and you need high commodities prices to make the finances work there.

I see near and mid term appreciation but I'd have a hard time holding for anything more than a trade.

Yes, this is not a long term hold for me at all. I picked up a measly 50 shares today and will not lose any sleep if I lose $450.

down 3.5% in after hours trading after quarter results were announced.

Ah RIg I remember owning it around $2 a share and gave up
On it

txaggieacct85 said:

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down 3.5% in after hours trading after quarter results were announced.

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That's about $0.25

The average stock analyst doesn't appreciate that offshore drillers require a "sustained up cycle" to meaningfully improve their financial performance. I think a sustained up cycle in the offshore drilling business is likely for the next couple years.

Right now, new drilling contracts are being awarded at their highest rates in a decade. It can take years thou for the rigs which were contracted during a weaker market to roll off contract, so higher rates can be negotiated.

Even more important than higher lease rates being negotiated are securing better contract terms. If (when) the oil price crashes then the clients often use the threat of termination to renegotiate rig's lease rate down.

The offshore rigs which can be deployed within a few months are close to being sold out. It takes 3 years to build a new offshore rig. Since offshore drilling companies are trading for less than their fleet's replacement cost… I'm bullish, but prefer VAL over RIG…

VAL has very little debt due to a financial restructure during the industry downturn.

VAL has exclusive rights to purchase deep water ($$$) rigs which are partially built from a shipyard. The current market conditions could result in VAL buying those drill-ships against great contracts.

VAL has a joint venture with Saudi Aramco called ARO. Aramco may elect to buy out the JV in a strong market which results in a major liquidity event (dividend).

Been buying $KNOP under 5$ and hoping they turn that dividend back on so I can make 2$ a year off every 5$. It's almost to 6$ now