Transocean LTD (RIG): Finally Time To Buy This Oil Rig Contractor?

Page 1 of 2

Transocean LTD (NYSE:RIG), the largest offshore drilling rig contractor in the world, has been one of my favorite stocks to watch for years now, however I have not pulled the trigger.  When the 2007-08 oil bubble was happening and you were seeing headlines such as “Oil Going to $200 a Barrel?” Transocean was trading at up to $188 per share.  Something told me that the oil madness wouldn’t last and I was right.

After the bubble burst, and the Deepwater Horizon disaster happened, Transocean fell to a low of $38.21.  While the company has rebounded some, I was hesitant to make a call on it either way until the company had some closure in regards to that situation.  With the lawsuits and penalties pretty much settled at this point, it might finally be time to make a move on Transocean LTD (NYSE:RIG).

Transocean LTD (NYSE:RIG)Profile

Transocean focuses mainly on oil rigs for deepwater drilling, which is defined as depths of over 4,500 feet.  The company currently has a fleet of 134 drilling rigs, with another six under construction.

As of the end of the last fiscal year, Transocean had a contract backlog of $21.4 billion. This was down 10.8% from the year before, but still included $2.7 in contracts with BP (NYSE:BP), who was operating the Deepwater Horizon rig.

Deepwater Horizon Saga

Most people know the general details about the Deepwater Horizon disaster.  In April 2010, the rig (one of Transocean’s) had an explosion, burned, and sank in the Gulf of Mexico while being operated by BP.

The reason that BP was mainly held responsible was that as the operator of the rig, the contract between the two companies provides that BP cannot hold Transocean responsible for containing a blowout, or for the cost of cleaning up the spilled oil resulting from it.

However, Transocean was not completely absolved.  In late 2010, the Department of Justice filed a civil lawsuit against Transocean for violations of the Oil Pollution Act of 1990 and the Clean Water Act.  The company set aside a $2 billion reserve fund to deal with this and any other charges.

Page 1 of 2
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

Richest Doctors in the World

The Best Movie Sountracks Ever

The Highest Grossing Musicals on Broadway

The Most Successful Reality TV Stars

Cheapest Cities to Visit in the US

Most Expensive Summer Camps

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

Top 10 Highest Paying Jobs in the World

Most Expensive Day-Care in New York City

The 10 Cheapest Places to Retire Abroad

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!