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Transocean Ltd. RIG

Three-pass checkedFresh as companies report

Transocean's contract backlog has fallen from $9.0B to $6.7B over two years, during what everyone describes as an offshore drilling recovery.

In the same stretch the company wrote off $3.8B of rigs, and in February it agreed to buy its largest competitor using its own shares.

RIG · price with moving averages

Daily · 6MWeekly · 3Y
$2$3$5$7$9 Sep '23Apr '24Nov '24Jun '25Jan '26Aug '26 BID
EMAs82140

Source: market data.

The business

Transocean owns 27 offshore drilling rigs, 20 ultra-deepwater drillships and 7 harsh-environment semisubmersibles, and rents them to oil companies by the day. It does not own any oil. The customer pays a day rate whether the well finds anything or not, which sounds safe and is not, because when exploration budgets get cut the rigs sit idle and the costs do not.

These are among the most capital-intensive machines in commercial use. A modern drillship costs several hundred million dollars and there is no alternative use for it.

Inside the complete Back of Napkin

  1. 01The business
  2. 02The numbers
  3. 03Management
  4. 04How it fails or surprises you
  5. 05The shape of the payoff
  6. 06Closing thoughts
  7. 07Methodology

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