Transocean LTD (NYSE:RIG) Gets Early Termination Notification On The Discoverer Clear Leader


Transocean LTD (NYSE:RIG) reported that a subsidiary of Chevron selected to exercise its contractual option to end the drilling deal for the Discoverer Clear Leader, effective this November, prior to its expiration in next October. As per the contract terms, the company will be compensated via a lump sum payment of around $148 million in deal termination fees, which is the current value of the operating dayrate minus the operating costs per day. The compensation is anticipated to be received in the Q4 2017.

The highlights

More recently, Transocean released a presentation wherein the company stated that the cost declines in the offshore drilling segment have resulted in a dramatic decline of the breakeven price of key offshore projects. As per the company, the breakeven price for numerous offshore projects has declined to $46 per barrel from $91 per barrel. The biggest contributor for this drop was the drop in the price of floating rigs.

The company’s also released its view on its biggest competition that is the shale industry. Transocean anticipates the shale costs to continue to rise and expects an increase of 20% price inflation in the coming 12 months. Considering the positive case, this can lead to a breakeven price of $46/barrel for shale. However, in the conservative scenario, the breakeven price declines to $43 per barrel. Taking in consideration these numbers, the deepwater environment is expected to remain tough in the coming period.

In the last trading session, the stock price of Transocean gained more than 4% to close the day at $9.77. The gains came at a share volume of 24.76 million compared to average share volume of 15.83 million. After the recent gains, the market cap of firm now stands at around $3.8 billon. The 52-week high of the stock stands at $16.66 whereas the 52-week low is noted at $7.20.

This report is for information purposes only, and is neither a solicitation or recommendation to buy nor an offer to sell securities. Financials Trend is not-a-registered-investment-advisor. Financials Trend is not a broker-dealer. Information, opinions and analysis contained herein are based on sources believed to be reliable, but no representation, expressed or implied, is made as to its accuracy, completeness or correctness. The opinions contained herein reflect our current judgment and are subject to change without notice. Financials Trend accepts no liability for any losses arising from an investor's reliance on the use of this material. Financials Trend sometimes gets compensated up to one hundred and fifty thousand dollars per month for featuring particular stocks. See site disclaimer for complete compensation. Financials Trend and its affiliates or officers currently hold no shares of these stocks. Financials Trend and its affiliates or officers will purchase and sell shares of common stock of these stocks, in the open market at any time without notice. Financials Trend will not update its purchases and sales of these stocks in any future postings on Financials Trend's websites. Certain information included herein is forward-looking within the context of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements concerning manufacturing, marketing, growth, and expansion. The words "may", "would," "will," "expect," "estimate," "anticipate," "believe," "intend," " project," and similar expressions and variations thereof are intended to identify for ward-looking statements. Such forward- looking information involves important risks and uncertainties that could affect actual results and cause them to differ materially from expectations expressed herein. *Financials Trend does not set price targets on securities. Never invest into a stock discussed on this web site or in this email alert unless you can afford to lose your entire investment.