Transocean Ltd. Faces a Daunting Contract Book
The debate over the current slowdown in the deepwater market covers a wide range of opinion regarding the duration and impact. Regardless of an investor's ultimate opinion, the offshore drilling sector always faces cyclical troughs and peaks. The key is the ability of the driller to take advantage of weakness and thrive during the following rebound.
In the case of Transocean (NYSE: RIG ), the company is the largest deepwater driller with 79 rigs in total and 46 of those listed as either deepwater, ultra-deepwater, or harsh environment. The deepwater specialist is now facing a bifurcated market that it is quickly finding itself on the wrong side of the contract ledger. On top of that, Carl Icahn is pressing the company for changes, but his actions can't fight industry momentum. Idled rigs in a weak market might is never a good thing, but will the stock continue to plunge?
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