IB Net Payout Yields Model

Transocean: When Dividends Fail

Transocean (RIG) used to be regarded as the top deepwater driller in the world. Its stock was considered a must-wn large cap in the energy sector. All that changed for the worse with the dramatic blowout of the Macondo well in 2010.

Unfortunately, what seemed like an isolated event was just the beginning of a downward spiral for shareholders. Since then RIG continues to have problems meeting analyst estimates. On top of that, RIG just announced a shocking share issuance of up to 30M shares that pushed the stock down to 7 year lows. Yes, lows greater than from the financial crisis of 2008 and lows greater than 2010 lows after the explosion. Both those lows were eclipsed.

How can Brent oil exceed $110 and a former premier driller be making a run at new lows? Other drillers such as Noble Drilling (NE), Atwood Oceanics (ATW), and SeaDrill (SDRL) are all currently attempting to claw their way to 3 year highs.

Read the full article at Seeking Alpha.

Disclosure: Long ATW. Please review the disclaimer page for more details. 


Mark Holder said…
Based on trading action so far today, the stock wants to go lower. Weak bounce considering the market and the drop yesterday.

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