Transocean Ltd. (RIG): A Bull Case Theory

We came across a bullish thesis on Transocean Ltd. on Deepwater Insight’s Substack by Tommy Lee. In this article, we will summarize the bulls’ thesis on RIG. Transocean Ltd.’s share was trading at $3.1 as of September 29th. RIG’s trailing P/E was 18.15 according to Yahoo Finance.

Transocean (RIG) is a leading deepwater driller with a top-tier fleet, including two 8G drillships with 20k-psi completion capability, eight ‘7G+’ drillships with 1,400-st hookload, and seven harsh-environment semisubmersibles qualified for the Norwegian market. While competitors like Noble, Valaris, and Seadrill have strong fleets, none currently match Transocean’s warm-water rig capability, highlighting its technical advantage.

The company announced a $381 million equity raise in September 2025, at a roughly 16% discount, aimed at strengthening its balance sheet and enabling potential debt refinancings. With over $6.6 billion of debt outstanding, Transocean faces structural leverage constraints, as secured debt terms and required Debt Service Reserves direct most operating cash flow to creditors, limiting equity upside.

A significant portion of secured debt, including the Secured 2030 notes, becomes callable in early 2026, presenting an opportunity for Transocean to refinance and loosen indenture terms, potentially unlocking trapped cash for equity and shareholder returns. Despite short-term setbacks and ongoing leverage, the company’s contracted cash flows support scheduled principal amortizations, with strong dayrates and utilization in the US Gulf and limited West Africa exposure bolstering revenue visibility.

Equity has outperformed since April 2025 but remains volatile, while debt offers attractive yields with lower risk. Looking ahead, Transocean’s ability to refinance debt, reduce structural constraints, and redirect cash to shareholder returns could materially improve equity value, with parallels drawn to Odfjell Drilling’s deleveraging-driven rerating. While contracts remain important, successfully navigating upcoming debt maturities and refinancing will likely be the most decisive catalyst for long-term equity upside, offering a compelling risk/reward opportunity in a market with resilient deepwater fundamentals.

Previously we covered a bullish thesis on Transocean Ltd. (RIG) by Unemployed Value Degen in February 2025, which highlighted the company’s strong backlog, improving day rates, and robust EBITDA growth. The company’s stock price has depreciated approximately by 2.5% since our coverage. The thesis still stands as Transocean remains technically strong. Tommy Lee shares a similar perspective but emphasizes the equity raise and debt refinancing potential.

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Disclosure: None.