Is Transocean (NYSE: RIG) Ltd (NYSE: RIG) Still Paying For the Gulf Disaster?


Transocean Ltd is a Swiss based offshore drilling contractors, and are among the largest contractors in the world. The company provides mobile drill rigs equipment and stuff for the operation. Their clients are usually big oil and gas companies. The company hit a rough patch when the Deepwater Horizon rig exploded back in 2010, in the Gulf of Mexico. The incident caused 11 deaths, along with 5 million barrels of oil ending up in the ocean.

The company is willing to take a non-cash charge worth $1.97 billion for the damage of goodwill it cost, along with a $788 million charge for asset destruction of Deepwater Rig.

Transocean (NYSE: RIG) hasn’t been able to fully recover from the incident. However, the offshore drilling business seems to be getting tougher. The company at this point has 29 ultra-deepwater and 12 deepwater rigs available. Yet, according to its October report, the company suffered 296 days of no service for 29 ultra-deepwater rigs. That number is likely to increase up to 435 days by the end of the fourth quarter. The 12 deepwater rigs, on the other hand suffered a loss of 87 out of service days for its third quarter. But fourth quarter results prediction is only 42 out of service days.

This has had a huge impact on the dayrate contract. The 29 ultra-deepwater rate for the third quarter was $555,000, and is expected to fall to $549000 for the fourth quarter. Further prediction claims that the rate would be as low as $539000 in the third quarter of 2015. On the other hand, the 12 deepwater rigs dayrate seems to be rising from $376000 to $380000, as it progresses into the fourth quarter. However, for some odd reason, analysts predict the rates to drop back to $378000 for next year’s third quarter.

Transocean (NYSE: RIG) does have big plans for its future. At this point Transocean (NYSE: RIG) has 7 ultra-deepwater and 10 deepwater semi-submersible rigs, along with 22 ultra-deepwater drillships and 2 deepwater drill ships. An additional 7 drillships are expected to arrive at the end of 2016 or beginning of 2017. According to the Rigzone rate list, day rate for floating drills are $436000 for semi-submersible rig and $523000 for drillship.

Transocean (NYSE: RIG) lost 40% of its shares in the beginning of the year. The stock’s 52 week high point was back in November last year, and the stock hit its all-time high, back in September 2007, with $170 per share price. The shares were still being traded at a good price of $88 per share, until the Deepwater Horizon explosion. This led to a dramatic fall in the figures by 50% in just a matter of few weeks. The company ended up paying $1.4 billion worth in damages for the Gulf mishap.

On Friday, the company shares closed at $29.71. The 52 week ranging was between $27.08 and $55.74. Another fall of 0.9% occurred within hours and 19 million shares circulated that day, which is double the normal numbers.