Is RIG a good stock to buy? We came across a bullish thesis on Transocean Ltd. on The Mispricing Desk’s Substack. In this article, we will summarize the bulls’ thesis on RIG. Transocean Ltd.’s share was trading at $6.04 as of June 12th. RIG’s forward P/E was 3.55 according to Yahoo Finance.
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Transocean Ltd., together with its subsidiaries, provides offshore contract drilling services for oil and gas wells in Switzerland and internationally. RIG is being valued by the market primarily as a highly leveraged offshore driller facing regulatory uncertainty and cyclical risks, yet the company’s recent operating performance and contract backlog suggest a more favorable outlook than its current valuation implies. The investment case centers on a growing backlog, improving cash generation, and the pending acquisition of Valaris, which could create a larger and more resilient offshore drilling platform.
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In the first quarter of 2026, Transocean reported revenue of $1.081 billion, adjusted EBITDA of $440 million, free cash flow of $136 million, and total contract backlog of $7.1 billion. Importantly, the company secured more than $1.6 billion of additional backlog since its prior fleet-status report at average dayrates of approximately $410,000, while its overall backlog carries an implied average dayrate above $450,000, demonstrating continued strength in the high-specification offshore rig market.
The proposed all-stock acquisition of Valaris would add nearly $4.9 billion of backlog and further strengthen contracted revenue visibility. While the Department of Justice’s Second Request has delayed the regulatory process, the relatively narrow merger spread indicates that investors largely view the issue as a timing matter rather than a sign of deal failure.
If the transaction closes and management successfully converts backlog into sustained EBITDA, free cash flow, and debt reduction, the market may begin to assign greater value to Transocean’s earnings power and contracted revenue base. With shares trading around $6.17 and a probability-weighted value estimate of $6.81, the thesis offers roughly 10.3% upside, with additional potential if offshore demand remains healthy, dayrates stay firm, and balance-sheet concerns continue to ease.
Previously, we covered a bullish thesis on Transocean Ltd. (RIG) by Unemployed Value Degen in February 2025, which highlighted strengthening offshore drilling fundamentals, rising day rates, expanding EBITDA, and a large contract backlog supporting future profitability. RIG’s stock price has appreciated by approximately 89.34% since our coverage. The Mispricing Desk shares a similar view but emphasizes the Valaris acquisition, regulatory developments, and backlog-driven free cash flow generation as the next catalysts for value creation.
Transocean Ltd. is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 63 hedge fund portfolios held RIG at the end of the first quarter which was 46 in the previous quarter. While we acknowledge the risk and potential of RIG as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than RIG and that has 10,000% upside potential, check out our report about this cheapest AI stock.
Disclosure: None.
