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Is Transocean's Entire Jack-Up Rig Fleet Divestiture Really A Competitive Advantage?

Jul. 11, 2017 2:18 PM ETTransocean Ltd. (RIG)26 Comments


  • Borr Drilling has received a letter of commitment from Total for a firm one year contract, with an option to extend.
  • I view Transocean's divestment of the entire jack-up fleet as an evident competitive advantage.
  • Transocean is the uncontested leader in the deep water sector (floaters segment) with an impressive backlog estimated at over $10 billion.

Image: Jackup Borr Frigg (Formerly the Hercule Resilience). The Jack-up is a Kfels Super A class, high-spec jack-up which entered into service in 2013. The rig can operate in water depths of up to 400 feet, with a maximum drilling depth of 35000 feet.

Investment Thesis:

The offshore drilling Industry is suffering through the worst bear cycle in history. The oil crash that began late in 2014 has had a terrible effect, particularly for the offshore drilling players such as Transocean (NYSE:RIG), Seadrill (SDRL), Rowan Companies (RDC), Ensco PLC., (ESV) or Noble Corporation (NE) and another dozen or more companies struggling to avoid a financial meltdown due to a basic lack of drilling contracts, dismal day rates at below breakeven levels in some cases, and concerning rig oversupply.

However, Transocean is the uncontested leader in the deep water sector (floaters segment) with an impressive backlog estimated at over $10 billion (see graph below as of July 11, 2017), and I am confident that the company will survive this unprecedented downturn.

Today's news:

According to OffshoreEnergyToday:

Borr Drilling, a recently established offshore drilling company, has received a letter of commitment from Total for the use of one of its jack-up rigs in Nigeria.

According to the driller, which recently bought Transocean’s entire jack-up rig fleet, the company has, together with its Nigerian partner Valiant Energy Services West Africa, received the commitment letter from Total in Nigeria, for employment of the Frigg jack-up drilling rig.

The commitment is for a firm one year contract, with an option to extend. The contract is expected to start in the third quarter of 2017.

Borr Drilling is a new offshore drilling company, which bought Transocean's entire jack-up fleet for $1.35 billion, including $320 million of cash. Please click here to read my article on

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