Transocean Ltd.
Energy · Oil & Gas Drilling
Structural: pure-play ultra-deepwater + harsh-environment driller; 26-rig active fleet (~13 7th-gen drillships, ~10 harsh-env semis) is the highest-spec public stack. 5B annual revenue run-rate gives multi-year visibility, but every dollar is contracted-not-collected.
Operates in the only offshore segment where supply destruction (cold-stacking + scrapping through 2016-2022) actually tightened the market.
- Leading-edge 7th-gen drillship dayrates rebuilt from $200k (2020) to $480k-$540k (2025-2026 fixtures); incremental contracts roll on at higher rates
- $8B backlog with majors (Shell, Equinor, Petrobras, Reliance, BP, Chevron) underwrites debt service through 2027-2028
- Deepwater FIDs from Brazil pre-salt, Guyana, Namibia, Suriname keep tender pipeline thick into 2027
- Newbuild supply locked: no shipyard has ordered a speculative drillship since 2014; rig count cannot grow without 3-yr lead time
- Operating leverage: every $50k/day dayrate increase across active fleet ~$400M EBITDA
- ~$5.7B net debt, ~$650M annual interest expense, refinancing wall 2027-2030; FCF goes to debt before equity
- Oil price sensitivity is two-step removed: $60 Brent triggers majors to defer FIDs, contract pipeline thins 6-9 months later
- Aging fleet: idle stacked rigs (Dhirubhai Deepwater KG2, Discoverer Inspiration) carry holding costs without revenue
- Equity dilution risk if refinancing tightens (history of converts, secondary issuance during prior cycles)
- Cyclicality: prior cycle saw stock go from $160 (2008) to $0.70 (2020); no structural floor
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