Transocean (RIG) AI Stock Analysis

• Market Cap: $2.86B
• Dividend Yield: N/A
• Average Volume (3M): 24.25M
• Price to Earnings (P/E): ―
• Beta (1Y): 1.28
• Revenue Growth: 23.26%
• EPS Growth: -284.22%
• Country: US
• Employees: 5,470
• Sector: Energy
• Sector Strength: 69
• Industry: Oil & Gas Drilling
• EPS (TTM): 0.00
• Shares Outstanding: 943,125,000
• 10 Day Avg. Volume: 20,881,451
• 30 Day Avg. Volume: 24,248,673
• PEG Ratio: 0.12
• Price to Book (P/B): 0.31
• Price to Sales (P/S): 0.90
• P/FCF Ratio: 16.52
• Enterprise Value/Market Cap: 2.83
• Enterprise Value/Revenue: 2.13
• Enterprise Value/Gross Profit: 6.63
• Enterprise Value/Ebitda: -16.97
• 1Y Price Target: $3.63
• Price Target Upside: 19.80% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 7

• Rating: 58 Neutral
• Price Target: $3.00 ▼(-0.99% Downside)

Transocean's overall stock score reflects a company with potential but facing significant challenges. The most significant factor is its financial performance, which shows revenue growth but struggles with profitability. Technical analysis suggests moderate positive momentum, while the earnings call highlights a strong backlog and cost management. Valuation remains a concern due to ongoing losses.

Positive Factors

Contract Commitments

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

Future Earnings

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.

Market Demand

Oil companies are looking to secure rigs for projects starting in 2026 as project economics remain favorable, with Brazil, South America, and West Africa as primary drivers of demand.

Negative Factors

Transocean Business Overview & Revenue Model

Company Description

Transocean Ltd., together with its subsidiaries, provides offshore contract drilling services for oil and gas wells worldwide. It contracts its mobile offshore drilling rigs, related equipment, and work crews to drill oil and gas wells. As of February 14, 2022, the company had partial ownership interests in and operated a fleet of 37 mobile offshore drilling units, including 27 ultra-deep water and 10 harsh environment floaters. It serves integrated energy companies, government-owned or government-controlled oil companies, and other independent energy companies. The company was founded in 1926 and is based in Steinhausen, Switzerland.

How the Company Makes Money

Transocean generates revenue primarily through day-rate contracts for its drilling rigs, whereby customers pay for the time the rig is operational. This model allows Transocean to earn money based on the duration of contracts, which can range from several months to multiple years. Key revenue streams include drilling services for major oil and gas companies, which often involve long-term contracts for exploration and production projects. Additionally, Transocean may receive performance bonuses and incentives tied to operational efficiency and safety metrics. The company also benefits from strategic partnerships with leading energy firms, enhancing its market position and securing long-term contracts that contribute to stable revenue streams.

Transocean Financial Statement Overview

Summary

Transocean exhibits strong gross margins and improved cash flow generation. However, persistent net losses and declining revenues highlight profitability issues. The balance sheet is robust with manageable leverage, but low return on equity remains a concern. Continued focus on operational efficiency and revenue growth is necessary to enhance financial health.

Income Statement

The company demonstrates a strong gross profit margin at 57.55% TTM, indicating efficient cost management. However, the net profit margin is negative due to significant losses, with a TTM net income of -$689M, reflecting ongoing profitability challenges. Revenue has decreased in the TTM period compared to the previous year, with a revenue decline of 21.65%. EBIT and EBITDA margins are also negative, suggesting operational inefficiencies.

Balance Sheet

Transocean maintains a moderate debt-to-equity ratio of 0.65, suggesting a stable capital structure. The equity ratio is 53.69%, reflecting a solid equity base relative to assets. However, the return on equity remains negative due to net losses, indicating issues in generating returns from shareholder investments.

Cash Flow

The company shows a positive free cash flow of $328M in the TTM period, a significant improvement from previous periods. The operating cash flow to net income ratio is negative due to losses, but the positive free cash flow indicates better cash management. Free cash flow to net income ratio is not meaningful due to negative net income.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	3.79B	3.52B	2.83B	2.58B	2.56B	3.15B
Gross Profit	1.22B	2.79B	2.09B	1.84B	1.81B	2.37B
EBITDA	-476.00M	582.00M	501.00M	851.00M	939.00M	1.18B
Net Income	-1.50B	-512.00M	-954.00M	-621.00M	-591.00M	-568.00M
Balance Sheet
Total Assets	17.81B	19.37B	20.25B	20.44B	20.68B	21.80B
Cash, Cash Equivalents and Short-Term Investments	772.00M	560.00M	995.00M	683.00M	976.00M	1.15B
Total Debt	6.55B	7.25B	7.85B	7.35B	7.17B	8.37B
Total Liabilities	8.46B	9.09B	9.84B	9.64B	9.47B	10.37B
Stockholders Equity	9.35B	10.28B	10.41B	10.79B	11.21B	11.43B
Cash Flow
Free Cash Flow	383.00M	193.00M	-263.00M	-269.00M	367.00M	133.00M
Operating Cash Flow	554.00M	447.00M	164.00M	448.00M	575.00M	398.00M
Investing Cash Flow	-107.00M	-151.00M	-423.00M	-757.00M	-233.00M	-257.00M
Financing Cash Flow	-550.00M	-350.00M	263.00M	-112.00M	-490.00M	-930.00M

Transocean Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 3.03
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RIG, the sentiment is Positive. The current price of 3.03 is above the 20-day moving average (MA) of 2.98, above the 50-day MA of 2.87, and below the 200-day MA of 3.18, indicating a neutral trend. The MACD of 0.05 indicates Negative momentum. The RSI at 53.27 is Neutral, neither overbought nor oversold. The STOCH value of 75.56 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for RIG.

Transocean Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
VAL	72 Outperform	$3.54B	12.93	12.23%	―	18.78%	-72.57%
HP	67 Neutral	$2.08B	7.12	-1.19%	4.79%	25.92%	-109.50%
SDRL	67 Neutral	$1.98B	27.35	2.60%	―	-13.36%	-82.21%
Sector *	66 Neutral	$15.46B	7.35	3.20%	5.24%	4.31%	-62.31%
RIG	58 Neutral	$2.86B	―	-14.99%	―	23.26%	-284.22%
NBR	54 Neutral	$586.67M	―	-49.08%	―	3.49%	18.16%
PTEN	54 Neutral	$2.24B	―	-27.16%	5.51%	-7.98%	-1011.04%

Transocean Corporate Events

Transocean Announces Rig Sales for Recycling

On August 27, 2025, Transocean Ltd. announced its decision to sell several rigs, including Discoverer Clear Leader and Discoverer Americas, for recycling or alternative use. This move is expected to result in a non-cash charge of approximately $1.9 billion in the third quarter of 2025, impacting the company’s financial results and possibly its market positioning.

Transocean Completes Bond Exchange to Optimize Capital

On August 19, 2025, Transocean Ltd. completed transactions under previously announced Exchange Agreements with certain bondholders to optimize its capital structure. These agreements involved exchanging $39.7 million of 4.0% Senior Guaranteed Exchangeable Bonds for approximately 13.9 million shares and a small cash payment for accrued interest, leaving $37.3 million in bonds outstanding.

Transocean Announces Bond Exchange for Shares

On August 11, 2025, Transocean Ltd. announced that its subsidiary, Transocean International Limited, entered into agreements to exchange approximately $39.7 million of its 4.0% Senior Guaranteed Exchangeable Bonds for company shares. This move is part of Transocean’s strategy to optimize its capital structure. The number of shares to be exchanged will be determined based on the volume-weighted average price over a five-day trading period, with a limit price set at $2.50 per share. The transactions are expected to close by the end of the trading period, subject to customary conditions.

Transocean Completes Bond Exchange to Optimize Capital

On July 22, 2025, Transocean Ltd. completed transactions under previously negotiated Exchange Agreements with holders of its 4.0% Senior Guaranteed Exchangeable Bonds due 2025. These agreements involved exchanging approximately $157 million of bonds for around 59 million shares and a small cash payment for interest, leaving $77 million in bonds outstanding. This move is part of Transocean’s strategy to optimize its capital structure, potentially impacting its financial stability and stakeholder interests.

Transocean Releases Fleet Status Report on July 16

On July 16, 2025, Transocean released its Fleet Status Report, detailing the status and contract information of its drilling rigs. The report highlights firm contracts with major clients like Chevron, Shell, and Petrobras, indicating strong operational commitments and potential revenue streams. This update underscores Transocean’s robust market position in the offshore drilling industry, with significant engagements in regions such as the US Gulf of Mexico and Brazil, which are critical for stakeholders monitoring the company’s performance and future prospects.

Transocean Amends Bond Agreements with Price Limit

On July 3, 2025, Transocean International Limited, a subsidiary of Transocean Ltd., amended its agreements with holders of its 4.0% Senior Guaranteed Exchangeable Bonds due 2025. The amendment introduces a limit price of $2.50 per share, effective July 7, 2025, which will halt daily transactions if the share price falls below this threshold.

Transocean Announces Bond Exchange for Company Shares

On June 20, 2025, Transocean Ltd. announced that its subsidiary, Transocean International Limited, entered into agreements to exchange approximately $157 million of its 4.0% Senior Guaranteed Exchangeable Bonds for company shares. The transactions, which began on June 20, 2025, are subject to a limit price condition and are expected to close by the end of the trading period, impacting the company’s financial structure and shareholder value.

Transocean Secures New Drilling Contract in Norway

Transocean Ltd. announced on June 4, 2025, that a two-well option for the Transocean Spitsbergen in Norway was exercised. This program is set to begin in the first quarter of 2026, directly following the current program, and is expected to add approximately $100 million to the company’s backlog, excluding additional services.

Transocean Plans Rig Disposal Amid Asset Impairment

On June 3, 2025, Transocean Ltd. announced its intention to dispose of certain drilling rigs, anticipating a non-cash charge of $1.1 billion to $1.2 billion in its second quarter results due to asset impairment. At the 2025 Annual General Meeting held on May 30, shareholders approved several proposals, including amendments to the Long-Term Incentive Plan and changes to the Articles of Association, impacting the company’s share capital and governance structure.