Transocean’s strong management, superior high specification fleet and best in class backlog revenue at the bottom of the cycle positions the company well for an impending recovery in the sector
FROM THE SALES DESK
Transocean’s ability to maintain margins (EBITDA Margins 49% 3Q17) through a severe downturn is testament to management’s ability to guide the company through a range of market conditions. Its recent acquisition of Songa Offshore further strengthens and solidifies its position as the leading offshore harsh environment deepwater driller.
Transocean’s strong management, superior high specification fleet and best in class backlog revenue at the bottom of the cycle positions the company well for an impending recovery in the sector.
Summary
- Transocean reported 3Q17 Revenues of USD808m (+7.6% QoQ, -11% YoY), adjusted normalised EBITDA of USD349m* (EBITDA margin of 49%) and adjusted net income was USD64m vs USD1m in previous quarter
- These results continue to exemplify the quality of Transocean as a company in their ability to maintain margins through a severe downturn
- The acquisition of Songa Offshore will further solidify Transocean’s position as the leading deepwater harsh environment offshore driller. The company’s strategy to divest its Jackup fleet and focus on niche Harsh Environment markets has begun to bear fruit as they have seen dayrates in Harsh Environment contracts increasing 70% from 2016
- Within the ‘new normal’ oil environment, Transocean’s segmentation towards a higher margin product is likely to improve its short term prospects of being awarded new rigs and, in the long term when Deepwater recovers, its ability to command a premium for its rigs
The company met with analysts last week and spoke to their outlook on the market; explaining oil prices were more constructive resulting in a ‘change of tone’ from its customers and this has been shown in tenders increasing 40% YoY.
*As reported by the company
Financials
Highlights
- The company has seen a 75% increase in dayrates in the last year for its Harsh Environment assets – this reinforces the company’s strategy to invest in the segment.
- Maintenance through the downturn has been extraordinary. In the face of rapidly declining revenues, the company has cut costs to maintain margins while maintaining operational efficiency.
Source: Bloomberg Intelligence, Company Reports
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