Transocean +1.4% as Citigroup calls a bottom for shares, rig market


Shares of offshore drillers have been sinking, but Citigroup is calling a bottom, at least for Transocean (RIG +1.4%), which the firm upgrades to Neutral from Sell.

The firm believes the fall in deepwater rig rates amid a softening of rig demand in 2014 will transition to stability and eventual recovery over the next 12 months; against a backdrop of strong oil prices and improving economic conditions, along with the large inventory of deepwater oil discoveries awaiting development, the firm thinks the current pain in the rig market will be short lived.

Drillers likely will be forced to settle for short-term contracts at dayrates of $400K-$450K for rigs that once commanded $600K, the firm says, but RIG shares should be able shrug off the bad news, as they did yesterday.

Other offshore drillers also are higher: DO +1.1%, NE +1.6%, ESV +1.2%, ATW +1.6%, SDRL +2.1%, HERO +2.4%, RDC +1.2%.

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Comments (11)
  • Cfritter
    , contributor
    Comments (66) | Send Message
     
    Pesky Bears...Go on get
    19 Mar 2014, 12:07 PM Reply Like
  • maudie
    , contributor
    Comments (487) | Send Message
     
    We've been hearing about "improving economic conditions" for some time now. I guess they really really mean it, this time. Honest injun.
    19 Mar 2014, 12:07 PM Reply Like
  • mbn
    , contributor
    Comments (866) | Send Message
     
    Guess Citi has too much of the drillers in inventory, and needs to unload.
    19 Mar 2014, 12:10 PM Reply Like
  • kgerickson
    , contributor
    Comments (446) | Send Message
     
    If you follow candlestick patterns..... ATW, RIG, SLB, PKD had buy signals this am. DO, NE, RDC have buy if patterns going into todays trading.

     

    Personally bought sdrl as a trade this am
    19 Mar 2014, 12:24 PM Reply Like
  • Chris Lau
    , contributor
    Comments (3872) | Send Message
     
    (C) is always following my lead. The only difference is that they have a big inventory of (RIG) stock to unload. (SDRL) just trades on its strong merits.
    19 Mar 2014, 12:35 PM Reply Like
  • Quatum73
    , contributor
    Comments (56) | Send Message
     
    What about HERO?
    19 Mar 2014, 12:38 PM Reply Like
  • Melvin7501
    , contributor
    Comments (75) | Send Message
     
    I bought DO@bottom and is poised to have positive quarters going forward. I say buy at the bottom for continual uptrend and nice Dividend.. BUY!!
    19 Mar 2014, 01:44 PM Reply Like
  • gmmpa
    , contributor
    Comments (661) | Send Message
     
    We don't need citibank to help us call the bottom. Anyone that can read a chart can come to that conclusion on their own. Off shore drillers are hated as a sector. Take your pick of drillers. RIG has an annualized yield of 5.72 and bounding off a 52 week low of 38.47. It definitely has more upside than down. All that is needed is for a pick up of more off shore drilling and a change in new lease grants. Rig also needs delivery of its scheduled deep water drilling rigs. They should come right around the change in the Obama administration for a more friendly administration for energy growth. Time to add money to the position, collect dividends and wait.
    19 Mar 2014, 08:38 PM Reply Like
  • sethmcs
    , contributor
    Comments (3534) | Send Message
     
    Couldn't upgrade wait until after options expiration Friday? I sold SDRL March 35 puts that are $1.48 in the money to complete a full position. A $1.48 isn't much for a high beta name like SDRL. Will be biting my nails until expiration.
    19 Mar 2014, 10:01 PM Reply Like
  • AlbionWood
    , contributor
    Comments (928) | Send Message
     
    Well, crud. Guess that's why SDRL ran away from my limit order (read: bottom-fishing) today.
    19 Mar 2014, 11:13 PM Reply Like
  • Unclebob9
    , contributor
    Comments (30) | Send Message
     
    I have been following HERO for 6 months, it's ready to explode. They were the victim of "Naked Short Selling" to the tune of 13.9 million shares. stock is 77% owned by institutions. The SEC has just busted the firm mostly responsible for the Naked Short Selling and pointed out HEARO as their main target. this Firm will soon be forced to cover. Add this to all the new oil and gas leases the Gov't just auctioned off in the Gulf and HERO is in a Super position right now.
    22 Mar 2014, 12:58 PM Reply Like
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