RIG - Embedded Expectations Analysis - 2018 09 10
Transocean Ltd. (RIG:USA) currently trades above recent averages relative toUAFRS-based (Uniform) Assets, with a 0.9x Uniform P/B, implying bearish expectations for the firm. Moreover, management has concerns about oil prices, the Transocean Norge, and cost levels
Specifically, management may lack confidence in expectations for oil prices to remain above $60 per barrel, and may be concerned about declining production in Venezuela and Libya. Additionally, they may be concerned about whether OPEC will continue to adhere to plans for supply cuts and about their contracts with Quadrant and Chevron. Also, they may lack confidence in the potential of some of their offshore assets, including their new high specification semisubmersible, the Transocean Norge, and in their ability to enhance their fleet of harsh environment and ultra deep-water floaters. Furthermore, they may lack confidence in their ability to maintain robust cash reserves, and sustain relatively low project cost levels. Finally, they may lack confidence in their ability to meet forecasted operating and maintenance expense expectations, and may be concerned about their newbuild CapEx levels
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