Transocean, offshore drillers taking their lumps

|By:, SA News Editor

Transocean (RIG -3.5%) enjoyed healthy gains after reporting better than expected Q2 results but shares have since given back nearly the entire advance, capped by a 3.5% thrashing today as oil and gas related stocks are lower across the board.

Instinet analysts find RIG's valuation remains "unappealing," calculating RIG’s current book of contracts as worth ~$3.65B vs. an enterprise value of $8B, "implying that RIG needs to win ~$4.35B in awards over the next several years to justify its current share price."

Meanwhile, Zephirin maintains its Sell Speculative Risk rating on Noble Corp. (NE -7.7%), saying litigation risks as well as still ongoing dayrate weakness and falling backlog could put additional pressure on the shares; the firm cuts its stock target price to $2 from $3.

Also among offshore drillers: ESV -6%, ATW -7.3%, DO -1.8%, RDC -4.2%.

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