Transocean (RIG) AI Stock Analysis

• Market Cap: $2.67B
• Dividend Yield: N/A
• Average Volume (3M): 32.69M
• Price to Earnings (P/E): ―
• Beta (1Y): 1.11
• Revenue Growth: 24.44%
• EPS Growth: 53.99%
• Country: US
• Employees: 5,800
• Sector: Energy
• Sector Strength: 57
• Industry: Fossil Fuels
• EPS (TTM): -0.75
• Shares Outstanding: 878,886,960
• 10 Day Avg. Volume: 39,907,000
• 30 Day Avg. Volume: 32,693,980
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.76
• Price to Cash Flow (P/CF): 3.20
• P/FCF Ratio: 3.60
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $4.46
• Price Target Upside: 46.71% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 6

Transocean's overall stock score reflects significant financial and technical challenges. Weak revenue generation and profitability, coupled with negative valuation metrics, weigh heavily on the score. However, positive earnings call sentiment and recent corporate events highlight operational strengths and future potential, slightly offsetting the negatives. The stock's bearish technical indicators further underscore the need for cautious optimism.

Positive Factors

Contract Commitments

Transocean’s contract commitments through 1H2026 should be sufficient to mitigate investor concerns about intermittent rig utilization and re-pricing.

New Contracts

New contracts booked in 2025 will provide increased EBITDA and FCF visibility into the 2027-2030 timeframe, aiding in debt reduction and enabling a shareholder return program.

Negative Factors

Market Rates

Pricing for 7G drillships has held firm in the mid-to-high $400k/d range while rates for drillships with 20k psi BOPs could exceed $500k/d.

Transocean Business Overview & Revenue Model

Company Description

Transocean Ltd. is a leading international provider of offshore contract drilling services for oil and gas wells. The company specializes in technically demanding regions of the global offshore drilling business with a particular focus on ultra-deepwater and harsh environments. Transocean's fleet is one of the most versatile and modern in the world, comprising ultra-deepwater, deepwater, and harsh-environment floaters, which are equipped to support complex drilling operations across various global locations.

How the Company Makes Money

Transocean generates revenue primarily by providing offshore contract drilling services to major energy companies worldwide. The company leases its drilling rigs to customers on a contractual basis, typically through long-term agreements known as drilling contracts. These contracts specify terms such as day rates, duration, and operating conditions, which form the basis for Transocean's earnings. Revenue is primarily driven by the day rates charged for its drilling rigs, which can vary significantly depending on the rig's capabilities, the complexity of the drilling operation, and market conditions. Additionally, Transocean may earn revenue from integrated services such as project management, engineering, and logistics support, enhancing its value proposition to clients. The company's earnings are influenced by factors such as global oil prices, demand for offshore drilling, and technological advancements in drilling equipment.

Transocean Financial Statement Overview

Summary

Transocean faces significant challenges with revenue generation and profit margins, impacting overall financial health. High leverage and negative net income have resulted in limited profitability, although the company maintains a stable equity ratio. Cash flow management shows strengths in operational cash generation but requires improvement in free cash flow consistency to ensure financial stability.

Income Statement

Transocean has experienced fluctuating revenues with a sharp decline in the most recent year to zero, significantly impacting its gross and net profit margins, both of which are negative. The company has been unable to maintain profitability, reflected in consistent net losses over the past years. This indicates challenges in revenue generation and cost control, affecting overall profitability.

Balance Sheet

The balance sheet shows a high level of debt relative to equity, with a debt-to-equity ratio averaging around 0.67 over recent years. However, the equity ratio remains stable around 50%, indicating a balanced approach to financing through equity. The company’s return on equity is negative due to net losses, suggesting inefficiencies in generating returns from shareholders' equity.

Cash Flow

Transocean has demonstrated volatility in cash flows, with fluctuating free cash flow growth and a negative free cash flow in some years. The operating cash flow to net income ratio is positive, indicating operational cash generation despite net losses, but free cash flow is inconsistent, which could impact future investments and debt servicing.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
3.52B	2.83B	2.58B	2.56B	3.15B
	Gross Profit
2.79B	2.09B	1.84B	1.81B	2.37B
	EBIT
-417.00M	-325.00M	1.00M	-12.00M	182.00M
	EBITDA
582.00M	501.00M	851.00M	939.00M	1.18B
	Net Income Common Stockholders
-512.00M	-954.00M	-621.00M	-591.00M	-568.00M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
941.00M	995.00M	683.00M	976.00M	1.15B
	Total Assets
19.37B	20.25B	20.44B	20.68B	21.80B
	Total Debt
6.88B	7.85B	7.35B	7.17B	8.37B
	Net Debt
5.94B	7.09B	6.66B	6.19B	7.22B
	Total Liabilities
9.09B	9.84B	9.64B	9.47B	10.37B
	Stockholders Equity
10.28B	10.41B	10.79B	11.21B	11.43B
Cash Flow		Free Cash Flow
193.00M	-263.00M	-269.00M	367.00M	133.00M
	Operating Cash Flow
447.00M	164.00M	448.00M	575.00M	398.00M
	Investing Cash Flow
-151.00M	-423.00M	-757.00M	-233.00M	-257.00M
	Financing Cash Flow
-350.00M	263.00M	-112.00M	-490.00M	-930.00M

Transocean Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 3.04
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RIG, the sentiment is Negative. The current price of 3.04 is below the 20-day moving average (MA) of 3.28, below the 50-day MA of 3.64, and below the 200-day MA of 4.49, indicating a bearish trend. The MACD of -0.26 indicates Positive momentum. The RSI at 40.45 is Neutral, neither overbought nor oversold. The STOCH value of 34.14 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for RIG.

Transocean Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
HP	67 Neutral	$2.49B	8.29	10.50%	5.34%	-2.59%	-27.85%
BORR	62 Neutral	$559.40M	6.94	8.30%	11.20%	38.38%	―
VAL	62 Neutral	$2.47B	7.28	17.67%	―	32.42%	-56.26%
Sector *	57 Neutral	$8.34B	5.35	-5.98%	7.29%	0.20%	-69.45%
RIG	52 Neutral	$2.67B	―	-4.95%	―	24.44%	53.99%
NBR	42 Neutral	$386.64M	―	-89.17%	―	-2.52%	-450.75%

Transocean Corporate Events

Transocean Releases 2024 Financial Statements

On February 18, 2025, Transocean Ltd. presented its audited consolidated financial statements for the years ending December 31, 2024, and December 31, 2023, confirming alignment with U.S. GAAP and Swiss law. The audit revealed the complexity of the company’s multinational tax provisions, highlighting the need for meticulous evaluation due to varied jurisdictional tax laws, impacting the completeness of deferred tax provisions.

Transocean Announces Upcoming Leadership Transition

On February 18, 2025, Transocean Ltd. announced a leadership transition as part of its multi-year succession plan. Keelan Adamson, currently President and Chief Operating Officer, will become President and CEO, succeeding Jeremy Thigpen by the second quarter of 2025. This change is expected to support Transocean’s continued industry leadership and operational success, with Thigpen transitioning to Executive Chair of the Board, subject to shareholder approval.

Transocean Releases February 2025 Fleet Status Report

On February 12, 2025, Transocean released its Fleet Status Report, detailing the status and contracts of its drilling rigs. The report highlights contracts with significant companies like Chevron, Beacon, and Petrobras, indicating firm commitments and day rates for various rigs. This report underscores Transocean’s strong position in the offshore drilling market, with significant operations in critical regions such as the US Gulf of Mexico and Brazil. The disclosed contracts reflect a stable revenue forecast, impacting stakeholders positively by showcasing the company’s operational stability and market relevance.

Transocean Secures $111 Million Contract Extension

Transocean Ltd. announced that Reliance Industries Limited has exercised a four-well option for the Dhirubhai Deepwater KG1 in India. This program is estimated to last 270 days, commencing immediately after the current term, and will add approximately $111 million to Transocean’s backlog, excluding additional services.