Transocean (RIG) AI Stock Analysis

• Market Cap: $6.85B
• Dividend Yield: N/A
• Average Volume (3M): 53.99M
• Price to Earnings (P/E): ―
• Beta (1Y): 1.35
• Revenue Growth: 16.93%
• EPS Growth: -335.82%
• Country: US
• Employees: 5,470
• Sector: Energy
• Sector Strength: 52
• Industry: Oil & Gas Drilling
• EPS (TTM): 0.02
• Shares Outstanding: 1,101,441,200
• 10 Day Avg. Volume: 91,545,343
• 30 Day Avg. Volume: 53,988,461
• PEG Ratio: >-0.01
• Price to Book (P/B): 0.49
• Price to Sales (P/S): 1.00
• P/FCF Ratio: 6.33
• Enterprise Value/Market Cap: 1.54
• Enterprise Value/Revenue: 2.66
• Enterprise Value/Gross Profit: 11.72
• Enterprise Value/Ebitda: 7.73
• 1Y Price Target: $5.89
• Price Target Upside: -9.66% Downside
• Rating Consensus: Hold
• Number of Analyst Covering: 8
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 68 Neutral
• Price Target: $7.00 ▲(7.36% Upside)
• Action: Reiterated Date: 02/22/26
• Date: Action: Reiterated 02/22/26

The score is driven primarily by improving financial momentum (strong 2025 operating and free-cash-flow rebound and declining debt) and a constructive earnings-call outlook (2026 free cash flow and liquidity targets supported by backlog and synergy/cost plans). Technicals are supportive but stretched (RSI/Stoch elevated), while valuation is constrained by ongoing losses (negative P/E and no dividend yield provided).

Positive Factors

Free Cash Flow Recovery

Transocean's $626M free cash flow in 2025 reflects a structural improvement in cash generation after multi-year negatives. Sustained FCF underpins deleveraging, funds maintenance capex in a capital‑intensive fleet business, and improves resilience to cyclic demand swings if maintained.

Backlog and Scale Expansion

A multi-billion-dollar backlog plus pro forma scale from the Valaris combination materially lengthens revenue visibility and smooths utilization across basins. Higher contract coverage and identified cost synergies can lift medium-term cash flows and support sustained margin and liquidity improvements.

Operational Reliability

Near-98% fleet uptime and strong safety performance reduce downtime risk and raise dayrate capture and margin sustainability. Reliable operations foster client stickiness in harsh-environment and deepwater markets, supporting durable cash generation and competitive positioning.

Negative Factors

Large 2025 Net Loss

A massive impairment-driven loss signals past overinvestment or asset obsolescence and has eroded equity. Persistent below-the-line charges constrain return metrics and limit capital allocation flexibility until write-down effects are absorbed and sustainable net profitability returns.

Cash Flow Volatility

While 2025 FCF improved, historical swings and periods where FCF didn’t cover EBITDA expose the business to cyclical downturns. For a capital-heavy driller, inconsistent cash conversion raises refinancing and capex funding risk and complicates durable deleveraging plans.

Integration & Execution Risk

The large all‑stock Valaris combination increases regulatory, integration and execution risk through H2 2026. Realizing >£200M synergies and backlog benefits requires smooth integration; assumed idle rig time and contract timing slips could delay cash-flow and leverage targets.

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 contracts for drilling services offered to oil and gas companies. The company has a diversified revenue model that includes dayrate contracts, which charge clients based on the number of days a rig is in operation, and lump-sum contracts, which provide a fixed price for specific drilling projects. Key revenue streams include long-term contracts with major oil companies, which provide stability to earnings, and spot market contracts that can fluctuate based on demand and supply conditions in the offshore drilling market. Additionally, Transocean benefits from strategic partnerships and collaborations with energy firms, which enhance its market reach and operational capabilities. Factors such as global oil prices, exploration activities, and regulatory changes in the energy sector also significantly impact the company's earnings.

Transocean Financial Statement Overview

Summary

Operations and cash flow have improved meaningfully (2025 revenue +235% YoY, positive EBIT with ~17.8% margin, and strong 2025 free cash flow of $626M alongside declining debt). However, persistent net losses (including a very weak 2025 net margin of -73.5%) and historically volatile free cash flow keep financial strength only mid-range.

Income Statement

Revenue has accelerated strongly in 2025 (+235% year-over-year) after steady growth in 2022–2024, and operating profitability has improved materially with positive EBIT in 2025 (17.8% margin) and solid EBITDA margins (~26–36% over the period). However, the company is still not consistently profitable at the bottom line: net income remains negative every year shown, with a particularly weak 2025 net margin (-73.5%), indicating heavy below-the-line costs (e.g., charges/interest) continue to overwhelm operating gains.

Balance Sheet

Leverage looks manageable for the sector with debt-to-equity around ~0.69–0.75 across the period, and total debt has declined meaningfully by 2025 versus 2023–2024, which is a constructive trend. Offsetting this, equity and total assets have stepped down since 2021–2022, and returns on equity have been persistently negative (where provided), reflecting continued losses and limiting balance-sheet quality despite improving operations.

Cash Flow

Cash generation has strengthened: operating cash flow rose to $749M in 2025 from $447M in 2024 and $164M in 2023, and free cash flow turned strongly positive at $626M in 2025 after being negative in 2022–2023. Cash flow covers a meaningful portion of EBITDA (coverage improving to ~0.56 in 2025 from ~0.12–0.29 in 2022–2024), but it still does not fully cover EBITDA, and free cash flow has shown volatility across the cycle (negative in 2022–2023), which is a key risk for a capital-intensive driller.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	3.96B	3.52B	2.83B	2.58B	2.56B
Gross Profit	900.00M	1.35B	872.00M	907.00M	871.00M
EBITDA	1.36B	1.14B	732.00M	844.00M	930.00M
Net Income	-2.92B	-512.00M	-954.00M	-621.00M	-591.00M
Balance Sheet
Total Assets	15.64B	19.37B	20.25B	20.44B	20.68B
Cash, Cash Equivalents and Short-Term Investments	997.00M	560.00M	995.00M	683.00M	976.00M
Total Debt	5.66B	7.25B	7.85B	7.82B	7.69B
Total Liabilities	7.53B	9.09B	9.84B	9.64B	9.47B
Stockholders Equity	8.11B	10.28B	10.41B	10.79B	11.21B
Cash Flow
Free Cash Flow	626.00M	193.00M	-263.00M	-269.00M	367.00M
Operating Cash Flow	749.00M	447.00M	164.00M	448.00M	575.00M
Investing Cash Flow	-33.00M	-151.00M	-423.00M	-757.00M	-233.00M
Financing Cash Flow	-660.00M	-350.00M	263.00M	-112.00M	-490.00M

Transocean Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 6.52
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Negative

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 6.52 is above the 20-day moving average (MA) of 5.49, above the 50-day MA of 4.72, and above the 200-day MA of 3.58, indicating a bullish trend. The MACD of 0.51 indicates Negative momentum. The RSI at 70.98 is Negative, neither overbought nor oversold. The STOCH value of 87.65 is Negative, 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	75 Outperform	$6.30B	16.49	36.35%	―	6.81%	-61.94%
RIG	68 Neutral	$6.85B	-1.95	-31.70%	―	16.93%	-335.82%
BORR	67 Neutral	$1.77B	33.70	4.33%	5.99%	5.83%	-11.86%
Sector *	65 Neutral	$15.17B	7.61	4.09%	5.20%	3.87%	-62.32%
NBR	64 Neutral	$1.10B	4.64	68.44%	―	6.52%	―
SDRL	62 Neutral	$2.72B	89.53	1.18%	―	-9.31%	-91.57%
HP	54 Neutral	$3.47B	-11.29	-11.41%	3.24%	35.89%	-148.39%

Transocean Corporate Events

Transocean Reports Strong 2025 Results Amid Net Loss

On February 19, 2026, Transocean reported its fourth-quarter and full-year 2025 results, highlighting a 13% rise in operating revenues to $3.965 billion and revenue efficiency of 96.5%. Adjusted EBITDA increased 19% to $1.37 billion, cash flow from operations jumped 68% to $749 million, free cash flow climbed to $626 million, and the company cut total debt by $1.258 billion to $5.686 billion while adding $839 million of new contract backlog.

Despite these operational gains, Transocean posted a 2025 net loss attributable to controlling interest of $2.915 billion, or $3.04 per diluted share, largely driven by $3.036 billion in asset impairment and a $99 million loss on debt conversion, partially offset by discrete tax benefits. Excluding these items, the company generated adjusted net income of $37 million and ended 2025 with 1.1 billion shares outstanding, as management emphasized record uptime, balance sheet strengthening ahead of its 2026 centennial, and strategic benefits from its planned combination with Valaris to expand its high-spec fleet and enhance cash flow and financial flexibility.

The most recent analyst rating on (RIG) stock is a Hold with a $6.00 price target. To see the full list of analyst forecasts on Transocean stock, see the RIG Stock Forecast page.

Transocean Expands Norwegian Backlog With New Rig Contracts

Transocean Ltd. has secured new contract fixtures for two of its harsh environment semisubmersible rigs operating in Norway, adding approximately $184 million to its firm contract backlog. The Transocean Encourage received a seven-well contract extension expected to begin in the first quarter of 2027, in direct continuation of its current program, contributing about $152 million in backlog and enhancing the company’s long-term revenue visibility in the region.

In addition, two one-well options were exercised for the Transocean Enabler, adding roughly 70 days of incremental work and around $32 million in backlog while keeping the rig committed through December 2027. These awards bolster Transocean’s position in the Norwegian harsh-environment market, extend utilization of key assets, and provide improved operational certainty for both the company and its offshore customers over the coming years.

The most recent analyst rating on (RIG) stock is a Hold with a $5.30 price target. To see the full list of analyst forecasts on Transocean stock, see the RIG Stock Forecast page.

Transocean to Acquire Valaris in All-Stock Merger

On February 9, 2026, Transocean and Valaris agreed to an all-stock business combination in which Transocean will acquire all outstanding Valaris shares via a Bermuda court-approved scheme of arrangement, offering 15.235 Transocean shares for each Valaris share. Post-closing, existing Transocean and Valaris investors are expected to own roughly 53% and 47% of the combined company, respectively, with two Valaris directors joining the Transocean board and key Valaris equity awards and warrants converted into Transocean securities.

The deal, unanimously approved by both boards, is framed as a transformational merger that creates what management describes as the most technologically advanced and diversified offshore drilling fleet, spanning high-spec floaters, harsh-environment rigs and a large modern jackup portfolio. Management highlighted over $200 million in identified cost synergies, a pro forma contract backlog above $10 billion and a targeted reduction in leverage to about 1.5 times within 24 months of closing, while noting that the transaction remains subject to customary shareholder, court and regulatory approvals, with support agreements already secured from sizable shareholder blocs at both companies.

The most recent analyst rating on (RIG) stock is a Hold with a $5.30 price target. To see the full list of analyst forecasts on Transocean stock, see the RIG Stock Forecast page.

Transocean to Acquire Valaris in All-Stock Merger

On Feb. 9, 2026, Transocean and Valaris unveiled a definitive all-stock merger agreement in which Transocean will acquire all Valaris shares in a deal valued at about $5.8 billion, creating a combined offshore driller with an enterprise value near $17 billion. The transaction, backed unanimously by both boards and key shareholders and slated to close in the second half of 2026 pending approvals, will unite 73 rigs across deepwater, harsh-environment and jackup segments, supported by a $10 billion backlog and over $200 million in planned cost synergies.

Post-merger, Transocean holders are expected to own roughly 53% of the enlarged group and Valaris investors 47%, based on a fixed exchange ratio of 15.235 Transocean shares per Valaris share. The company, which will remain Swiss-incorporated with its primary office in Houston and be led by Transocean’s existing leadership and a board blending nine Transocean and two Valaris directors, aims to strengthen its financial flexibility, accelerate deleveraging and bolster its competitive standing and liquidity in global capital markets.

The most recent analyst rating on (RIG) stock is a Hold with a $5.00 price target. To see the full list of analyst forecasts on Transocean stock, see the RIG Stock Forecast page.

Transocean Expands Offshore Backlog With Brazil and Norway Contracts

Transocean Ltd. reported it has secured a new contract in Brazil and an extension in Norway for two of its offshore drilling rigs, adding approximately $168 million in firm backlog. The Deepwater Mykonos was awarded a 302-day drilling campaign with bp in Brazil, expected to start in the third quarter of 2026 and contribute about $120 million in backlog, while three additional one-well options exercised for the Transocean Enabler in Norway will add roughly 105 days of continuous work, $48 million in backlog, and keep the rig committed through September 2027, bolstering the company’s revenue visibility and utilization in two key offshore markets.

The most recent analyst rating on (RIG) stock is a Hold with a $4.50 price target. To see the full list of analyst forecasts on Transocean stock, see the RIG Stock Forecast page.

Transocean Secures Major Australian Drillship Contract

Transocean Ltd. has secured a six-well contract in Australia for its Deepwater Skyros drillship, expected to start in the first quarter of 2027. This contract will add approximately $130 million to the company’s backlog and includes options that could extend operations into early 2030, indicating a strong future presence in the Australian market.

The most recent analyst rating on (RIG) stock is a Hold with a $4.00 price target. To see the full list of analyst forecasts on Transocean stock, see the RIG Stock Forecast page.