reports
- Martin Huseby Karlsen
Strategic, defensive and expensive
Strategic, defensive and expensive We welcome Transocean’s efforts to consolidate the harsh environment space and extract synergies, but still struggle with the overall economics of the Songa deal. We consider the transaction accretive on near-term EV and credit multiples, but highly dilutive for asset values. To justify the implied value paid per rig, we estimate long-term dayrates for harsh semis of around USD450k are needed, roughly double the current level. As the rigs each have 12-year op...
- Martin Huseby Karlsen
Strategic, but expensive
Transocean’s acquisition of Songa Offshore should strengthen its position in the North Sea, a niche market on which we are positive. However, the deal is expensive and we would not be surprised to see Transocean trade meaningfully lower today. On a relative basis, we estimate Transocean is paying USD160m–210m more per rig than its own valuation, resulting in a total premium of USD1.6–2.1 per Transocean share to its current valuation. Also, to justify the implied value paid per rig, we esti...
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