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Transocean LTD (RIG)
NYSE:RIG
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Transocean
(NYSE:RIG)
60Neutral
Positive Factors
Contract Commitments
Transocean’s contract commitments through 1H2026 should be sufficient to mitigate investor concerns about intermittent rig utilization and re-pricing.
Demand for Rigs
Oil companies are looking to secure rigs for projects starting in 2026 as project economics remain favorable, with Brazil, South America, and West Africa as primary drivers of demand.
New Contracts
New contracts booked in 2025 will provide increased EBITDA and FCF visibility into the 2027-2030 timeframe, aiding in debt reduction and enabling a shareholder return program.
Negative Factors
Pricing Pressure
Pricing for 7G drillships has held firm in the mid-to-high $400k/d range while rates for drillships with 20k psi BOPs could exceed $500k/d.
Transocean (RIG) vs. S&P 500 (SPY)
Market Cap
$2.09B
Dividend YieldN/A
Average Volume (3M)43.78M
Price to Earnings (P/E)―
Beta (1Y)1.38
Revenue Growth24.47%
EPS Growth-55.45%
CountryUS
Employees5,470
SectorEnergy
Sector Strength43
IndustryOil & Gas Drilling
Share Statistics
EPS (TTM)-0.10
Shares Outstanding883,261,500
10 Day Avg. Volume38,296,006
30 Day Avg. Volume43,780,601
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.00
Price to Cash Flow (P/CF)0.00
P/FCF Ratio0.00
Enterprise Value/Market Cap4.18
Enterprise Value/RevenueN/A
Enterprise Value/Gross Profit3.14
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$4.10Price Target Upside64.00% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering9
Transocean Business Overview & Revenue Model
Company DescriptionTransocean Ltd., together with its subsidiaries, provides offshore contract drilling services for oil and gas wells worldwide. It contracts its mobile offshore drilling rigs, related equipment, and work crews to drill oil and gas wells. As of February 14, 2022, the company had partial ownership interests in and operated a fleet of 37 mobile offshore drilling units, including 27 ultra-deep water and 10 harsh environment floaters. It serves integrated energy companies, government-owned or government-controlled oil companies, and other independent energy companies. The company was founded in 1926 and is based in Steinhausen, Switzerland.
How the Company Makes MoneyTransocean generates revenue primarily by providing offshore contract drilling services to major energy companies worldwide. The company leases its drilling rigs to customers on a contractual basis, typically through long-term agreements known as drilling contracts. These contracts specify terms such as day rates, duration, and operating conditions, which form the basis for Transocean's earnings. Revenue is primarily driven by the day rates charged for its drilling rigs, which can vary significantly depending on the rig's capabilities, the complexity of the drilling operation, and market conditions. Additionally, Transocean may earn revenue from integrated services such as project management, engineering, and logistics support, enhancing its value proposition to clients. The company's earnings are influenced by factors such as global oil prices, demand for offshore drilling, and technological advancements in drilling equipment.
Transocean Financial Statement Overview
Summary
Transocean shows strong gross margins and improved cash flow generation. However, persistent net losses and declining revenues highlight profitability issues. The balance sheet is robust with manageable leverage, but the low return on equity remains a concern.Income Statement
The company demonstrates a strong gross profit margin at 57.55% TTM, indicating efficient cost management. However, the net profit margin is negative due to significant losses, with a TTM net income of -$689M, reflecting ongoing profitability challenges. Revenue has decreased in the TTM period compared to the previous year, with a revenue decline of 21.65%. EBIT and EBITDA margins are also negative, suggesting operational inefficiencies.65
Positive
Balance Sheet
Transocean maintains a moderate debt-to-equity ratio of 0.65, suggesting a stable capital structure. The equity ratio is 53.69%, reflecting a solid equity base relative to assets. However, the return on equity remains negative due to net losses, indicating issues in generating returns from shareholder investments.70
Positive
Cash Flow
The company shows a positive free cash flow of $328M in the TTM period, a significant improvement from previous periods. The operating cash flow to net income ratio is negative due to losses, but the positive free cash flow indicates better cash management. Free cash flow to net income ratio is not meaningful due to negative net income.60
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 3.52B | 2.83B | 2.58B | 2.56B | 3.15B | Gross Profit |
| 2.79B | 2.09B | 1.84B | 1.81B | 2.37B | EBIT |
| -417.00M | -325.00M | 1.00M | -12.00M | 182.00M | EBITDA |
| 582.00M | 501.00M | 851.00M | 939.00M | 1.18B | Net Income Common Stockholders |
| -512.00M | -954.00M | -621.00M | -591.00M | -568.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 941.00M | 995.00M | 683.00M | 976.00M | 1.15B | Total Assets |
| 19.37B | 20.25B | 20.44B | 20.68B | 21.80B | Total Debt |
| 7.25B | 7.85B | 7.35B | 7.17B | 8.37B | Net Debt |
| 5.94B | 7.09B | 6.66B | 6.19B | 7.22B | Total Liabilities |
| 9.09B | 9.84B | 9.64B | 9.47B | 10.37B | Stockholders Equity |
| 10.28B | 10.41B | 10.79B | 11.21B | 11.43B |
| Cash Flow | Free Cash Flow | |||
| 193.00M | -263.00M | -269.00M | 367.00M | 133.00M | Operating Cash Flow |
| 447.00M | 164.00M | 448.00M | 575.00M | 398.00M | Investing Cash Flow |
| -151.00M | -423.00M | -757.00M | -233.00M | -257.00M | Financing Cash Flow |
| -350.00M | 263.00M | -112.00M | -490.00M | -930.00M |
Transocean Technical Analysis
Neutral
2.50
Price Trends
2.67
Negative
3.21
Negative
3.88
Negative
Market Momentum
-0.09
Negative
52.32
Neutral
73.66
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RIG, the sentiment is Neutral. The current price of 2.5 is above the 20-day moving average (MA) of 2.26, below the 50-day MA of 2.67, and below the 200-day MA of 3.88, indicating a neutral trend. The MACD of -0.09 indicates Negative momentum. The RSI at 52.32 is Neutral, neither overbought nor oversold. The STOCH value of 73.66 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for RIG.
Transocean Peers Comparison
Overall Rating
UnderperformOutperform
Sector (56)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $2.61B | 8.62 | 14.66% | ― | 30.82% | -62.91% | |
69 Neutral | $1.42B | 3.60 | 15.12% | ― | -7.79% | 57.21% | |
66 Neutral | $1.91B | 6.43 | 7.58% | 7.05% | 12.23% | -36.94% | |
60 Neutral | $2.09B | ― | -6.65% | ― | 24.47% | -55.45% | |
56 Neutral | $6.91B | 3.33 | -4.86% | 5.95% | 0.04% | -50.82% | |
53 Neutral | $2.14B | ― | -24.93% | 5.75% | 5.82% | -481.39% | |
43 Neutral | $413.60M | ― | -44.38% | ― | -0.94% | -19.18% |
* Energy Sector Average
Performance Comparison
RIG
Transocean
2.50
-3.38
-57.48%
HP
Helmerich & Payne
18.34
-19.41
-51.42%
NBR
Nabors Industries
26.94
-49.55
-64.78%
PTEN
Patterson-UTI
5.84
-4.93
-45.78%
VAL
Valaris
37.47
-37.12
-49.77%
SDRL
Seadrill Limited
23.81
-28.03
-54.07%
Transocean Earnings Call Summary
Earnings Call Date:Apr 28, 2025
(Q1-2025)
| % Change Since: 8.23%|
Next Earnings Date:Aug 04, 2025
Earnings Call Sentiment Neutral
The earnings call provided a balanced view with strong financial performance and significant backlog highlighted as positives. However, these were countered by a reported net loss and market uncertainties. The company remains optimistic about future opportunities and has initiated cost-saving measures.Q1-2025 Updates
Positive Updates
Strong Adjusted EBITDA and Revenue
Transocean delivered an adjusted EBITDA of $244 million on $906 million of contract drilling revenues, resulting in an adjusted EBITDA margin of approximately 27%.
Significant Backlog and New Contracts
Transocean signed a priced option on the Deepwater Asgard and exercised options on the Transocean Equinox, representing $40 million of backlog. The company also highlighted a $7.9 billion backlog.
Positive Market Outlook
Transocean expects a significant increase in deepwater investment by 2030, with a 40% increase projected by Mackenzie, and anticipates numerous new projects in various regions including the U.S. Gulf, Brazil, and West Africa.
Cost Savings Initiative
Transocean identified approximately $100 million of cash cost savings expected to be realized over 2025 with similar savings anticipated for 2026.
Negative Updates
Net Loss for the Quarter
Transocean reported a net loss attributable to controlling interest of $79 million, or a net loss of $0.11 per diluted share for the first quarter.
Customer Dispute Charge
The company incurred a $34 million non-cash charge due to an unfavorable conclusion to a customer dispute, resulting in the write-off of an uncollected receivable.
Volatility and Market Uncertainty
Recent trade tensions and OPEC announcements have introduced broad market uncertainty not seen since the COVID pandemic, although this has not yet materially impacted the company’s business.
Company Guidance
During the Q1 2025 earnings call, Transocean provided detailed guidance, showcasing significant metrics. The company reported an adjusted EBITDA of $244 million on contract drilling revenues of $906 million, achieving an adjusted EBITDA margin of roughly 27%. They highlighted a $40 million backlog from the Transocean Equinox and noted a fleet status update with potential extensions and new contracts. The upcoming opportunities include multiple tenders and projects, particularly in the U.S. Gulf of Mexico and Brazil, with potential rig demands also noted in regions like West Africa and the Mediterranean. For Q2 2025, Transocean expects contract drilling revenues between $970 million and $990 million, with an average fleet-wide revenue efficiency of 96.5%. Full-year 2025 guidance includes contract drilling revenues in the $3.85 billion to $3.95 billion range, and operational expenses between $2.3 billion and $2.4 billion. Additionally, they announced a $100 million cost savings target for 2025, with a similar amount expected in 2026, primarily through renegotiations and operational efficiencies.Transocean Corporate Events
Business Operations and Strategy
Transocean Releases April 2025 Fleet Status Report
Positive
Apr 16, 2025
Transocean has released its Fleet Status Report as of April 16, 2025, detailing the status and contract information for its drilling rigs. The report highlights significant updates in the company’s operations, including firm contracts with major clients like Chevron, Shell, and Petrobras, indicating stable business operations and potential revenue streams for the coming years.
Spark’s Take on RIG Stock
According to Spark, TipRanks’ AI Analyst, RIG is a Neutral.
Transocean’s stock score reflects its financial challenges, including negative income and high leverage, which weigh heavily on its overall performance. The bearish technical indicators further contribute to a cautious outlook. However, the positive sentiment from the earnings call, highlighting operational achievements and future market opportunities, supports a slightly higher score. Valuation concerns persist with a negative P/E ratio, indicating potential risks for investors.
To see Spark’s full report on RIG stock, click here.
Financial Disclosures
Transocean Releases 2024 Financial Statements
Neutral
Feb 18, 2025
On February 18, 2025, Transocean Ltd. presented its audited consolidated financial statements for the years ending December 31, 2024, and December 31, 2023, confirming alignment with U.S. GAAP and Swiss law. The audit revealed the complexity of the company’s multinational tax provisions, highlighting the need for meticulous evaluation due to varied jurisdictional tax laws, impacting the completeness of deferred tax provisions.
Executive/Board Changes
Transocean Announces Upcoming Leadership Transition
Neutral
Feb 18, 2025
On February 18, 2025, Transocean Ltd. announced a leadership transition as part of its multi-year succession plan. Keelan Adamson, currently President and Chief Operating Officer, will become President and CEO, succeeding Jeremy Thigpen by the second quarter of 2025. This change is expected to support Transocean’s continued industry leadership and operational success, with Thigpen transitioning to Executive Chair of the Board, subject to shareholder approval.
Business Operations and StrategyFinancial Disclosures
Transocean Releases February 2025 Fleet Status Report
Positive
Feb 12, 2025
On February 12, 2025, Transocean released its Fleet Status Report, detailing the status and contracts of its drilling rigs. The report highlights contracts with significant companies like Chevron, Beacon, and Petrobras, indicating firm commitments and day rates for various rigs. This report underscores Transocean’s strong position in the offshore drilling market, with significant operations in critical regions such as the US Gulf of Mexico and Brazil. The disclosed contracts reflect a stable revenue forecast, impacting stakeholders positively by showcasing the company’s operational stability and market relevance.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.