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

|About: Transocean Ltd. (RIG)|By:, SA News Editor

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%.