Transocean secures $123 million contract with Reliance Industries

STEINHAUSEN, Switzerland - Transocean Ltd . (NYSE:RIG), a major provider of offshore drilling services, has secured a contract from Reliance Industries Limited for its ultra-deepwater drillship Dhirubhai Deepwater KG1. The contract, for drilling six wells offshore India, is set to begin in the second quarter of 2026 and is expected to add approximately $123 million to Transocean's backlog, excluding potential additional services and mobilization fees.

The company announced today that the 300-day drilling program could extend until the end of 2029 if all options included in the contract are exercised. This development represents a significant commitment from Reliance Industries, bolstering Transocean's presence in the offshore drilling sector in India.

Transocean is recognized for its specialization in ultra-deepwater and harsh environment drilling services, claiming the highest specification floating offshore drilling fleet globally. The company's fleet comprises 34 mobile offshore drilling units, including 26 ultra-deepwater floaters and eight harsh environment floaters.

The announcement made by Transocean contains forward-looking statements, which are based on current expectations and assumptions of the management. These statements are subject to various risks and uncertainties, and actual outcomes may differ materially from those projected. Factors that could influence the actual results include the duration of customer contracts, dayrate amounts, future contract commencement dates, shipyard projects, and other operational risks.

Investors are cautioned not to rely unduly on these forward-looking statements, which are valid only as of their respective dates. Transocean disclaims any obligation to update any forward-looking statements to reflect changes in expectations or circumstances.

The information on this contract award is based on a press release statement from Transocean Ltd. and does not constitute an offer to sell securities or a solicitation of an offer to buy securities.

In other recent news, Transocean Ltd., a major player in the oil and gas drilling industry, has reported robust Q2 2024 results. The company announced an adjusted EBITDA of $284 million and contract drilling revenues of $861 million. Despite a net loss of $123 million for the quarter, Transocean secured significant contract awards, including a 3-year contract with BP (NYSE:BP) and a 2-well contract with Beacon Offshore Energy.

In line with its recent developments, Transocean has also amended its Organizational Regulations, merging the Health, Safety, Environment & Sustainability Committee with the Corporate Governance Committee to form the new Governance, Safety & Environment Committee. This restructuring aims to streamline its governance structure and enhance operational efficiency.

Transocean's fleet is largely committed through 2025, with potential contract extensions into 2026. The company has expressed a positive outlook for the offshore drilling market, anticipating strong growth driven by increasing global oil consumption. Focused on automation and reducing its carbon footprint, these developments reflect Transocean's strategic positioning to benefit from favorable market trends.

InvestingPro Insights

Transocean Ltd. (NYSE:RIG) has recently secured a promising contract with Reliance Industries, which could significantly enhance its revenue backlog. Despite this positive development, it's important for investors to consider the broader financial context of the company. According to InvestingPro data, Transocean is currently operating with a market capitalization of $3.78 billion. Its Price / Book ratio, as of the last twelve months leading into Q2 2024, stands at a low 0.35, indicating that the stock may be undervalued relative to the company's assets. This could present an opportunity for investors looking for potential bargains in the market.

However, Transocean faces challenges as evidenced by its negative P/E ratio of -9.88, reflecting investor concerns about profitability. The company has not been profitable over the last twelve months, and analysts do not anticipate it will be profitable this year. Moreover, the stock price has been quite volatile, taking a significant hit over the last week with a one-week total price return of -8.47%, and has fared poorly over the last month with a one-month total price return of -16.92%.

InvestingPro Tips highlight that Transocean operates with a significant debt burden and has been trading near its 52-week low, which could be a sign of investor skepticism about the company's future performance. Additionally, seven analysts have revised their earnings estimates downwards for the upcoming period, which may suggest a cautious outlook on the company's earnings potential.

For investors interested in a more comprehensive analysis, there are additional InvestingPro Tips available at https://www.investing.com/pro/RIG that can provide deeper insights into Transocean's financial health and market position.

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