Selected Reads

Smartkarma

Equity Bottom-Up

Featuring Puerto Rico, Cineworld, Transocean and Mallinckrodt. And for our Deep Dive, Americas Core Credit Legal Analyst Sean Daly returns to follow up last week’s discussion of bankruptcy lockup and voting agreements in the Grupo Aeroméxico and LATAM bankruptcies to give an update on some important recent developments in both cases.<a target="_blank" rel="noopener nofollow" href="https://soundcloud.com/reorg-radio/reorg-podcast-february-4-2022">Continue listening on Reorg Ruminations»</a>

Morningstar

Morningstar, Inc.

Consolidation has become a necessity in the supply-rich offshore rig environment, and Transocean has been an active participant in the deal market. Recent measures, including agreeing to acquire Songa Offshore and Ocean Rig, retiring numerous rigs, and selling off its jackups under construction, have resulted in the largest floater fleet and one of the highest-specification among our coverage. However, these attributes won't protect Transocean from enduring weakness in offshore drilling markets…

After reviewing our long-term forecasts, we are revising our fair value estimates for offshore drillers. Diamond moves down to $7.25 per share from $10.50 previously, Transocean moves to $6.75 from $6.50, Ensco moves to $10.25 from $15, and Noble to $1.50 from $2.50. Our no-moat ratings for each of the names remain unchanged. With the exception of Transocean, our fair value estimates are moving significantly down as a result of more pessimistic long-term industry assumptions
In the floater…

Falling in line with industry trends, no-moat Transocean posted flat revenue, although the company benefited from a $40 million bump (5% of quarterly revenue) from the inclusion of a full quarter of results from Ocean Rig, which it acquired in December. Altogether, a decrease in rig utilization was offset by a negligible increase in dayrates, as anticipated. Adjusted operating margin fell to negative 3% from negative 1% previously, owing chiefly to higher depreciation expense from the larger…

Switzerland

Transocean Ltd. is an offshore drilling contractor.  The Company owns or operates mobile offshore drilling units, inland drilling barges, and other assets utilized in the support of offshore drilling activities worldwide. Transocean specializes in technically demanding segments of the offshore drilling business, including deepwater and harsh environment drilling services.

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