Transocean Ltd. (RIG): A Bull Case Theory

We came across a bullish thesis on Transocean Ltd. on Lasse’s Substack. In this article, we will summarize the bulls’ thesis on RIG. Transocean Ltd.’s share was trading at $2.9100 as of August 5^th. RIG’s forward P/E was 18.15 according to Yahoo Finance.

Transocean Ltd. (RIG) is a leading provider of ultra-deepwater and harsh-environment drilling services, operating 34 mobile offshore drilling units, including 26 ultra-deepwater and 8 harsh-environment floaters. The company reported $952 million in contract drilling revenues for Q4 2024 and generated an adjusted EBITDA of $323 million, reflecting a healthy margin of 33.9%. This performance highlights the strength of its operational model and its strategic positioning in high-specification offshore drilling markets.

Transocean’s fleet gives it substantial exposure to ultra-deepwater projects, which are typically long-cycle and high-margin opportunities, making the company well-placed to benefit from rising global demand for deepwater exploration and production as operators prioritize reserve replacement and energy security. However, its capital structure remains a key concern, with a net debt-to-EBITDA ratio of 7.58x, signaling significant leverage that amplifies risks in a cyclical and volatile industry. While this high debt load could limit financial flexibility and increase vulnerability during downturns, it also creates the potential for equity holders to capture meaningful upside if the company successfully deleverages as day rates improve.

For investors with a higher risk tolerance, Transocean represents a leveraged play on the ongoing recovery in offshore drilling, supported by a robust backlog, tightening rig supply, and favorable pricing dynamics. If debt reduction initiatives and operational execution align with strengthening market fundamentals, the company could unlock material value for stakeholders, but risk management remains critical given its current balance sheet profile.

Previously, we covered a bullish thesis on Transocean Ltd. (RIG) by Unemployed Value Degen in February 2025, highlighting leadership transition, strong revenue growth, and an $8.3 billion backlog. The stock has depreciated about 8.7% since, as contract awards slowed and acquisition uncertainty weighed. The thesis still stands given the tight offshore supply. Lasse shares a similar view but emphasizes deleveraging risks and upside potential.

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Disclosure: None.