Transocean Secures New Drilling Assignment in the Gulf of Mexico

Transocean Ltd. RIG has secured a new assignment with the British oil major, BP plc BP, in the U.S. Gulf of Mexico. The company's Deepwater Atlas ultra-deepwater drillship has been contracted for the assignment. The contract, valued at $232 million, has a duration of 365 days, with a 365-day option. Work related to the assignment is expected to begin in the second quarter of 2028. 

The Deepwater Atlas drillship is one of the two eighth-generation drillships to join Transocean's fleet in 2022.  Notably, it is known to be one of the first drillships to be equipped with 20,000-psi well control capabilities, along with a hoisting capacity of 3.4 million pounds. Another eighth-generation drillship, Deepwater Titan, joined Transocean's fleet the same year. With the help of these drillships, the Gulf of Mexico region is entering a new exploration phase under high-pressure and high-temperature conditions.

The seventh-generation drillships have a hoisting capacity of 2.5-2.8 million pounds, while the sixth-generation ones have a hoisting capacity of up to 2.0 million pounds. Seventh-generation drillships are limited to 15,000 psi well control systems.

The new eighth-generation drillships offer unique features with improved capabilities and cutting-edge tools that are well-suited for drilling wells in deepwater environments. These drillships, in particular, can operate at water depths of 12,000 feet and drill up to a depth of 40,000 feet.

Designed to improve sustainability, these drillships help optimize fuel consumption and reduce greenhouse gas emissions. Consequently, they have a lower carbon footprint associated with their offshore operations.

The Deepwater Atlas drillship was built by Seatrium, erstwhile known as Sembcorp Marine. It was delivered to Transocean in June 2022. Before its delivery, Transocean secured a drilling assignment for the rig with Beacon Offshore in August 2021.

Zacks Rank and Key Picks

Currently, RIG carries a Zacks Rank #3 (Hold), while BP has a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks in the energy sector are PEDEVCO Corp. PED and MPLX LP MPLX, presently sporting a Zacks Rank #1 (Strong Buy) each.

PEDEVCO is engaged in the acquisition and development of energy assets in the United States and Pacific Rim countries. The company stands to benefit significantly from its holdings in the Permian Basin, one of the most prolific oil-producing regions in the United States, as well as in the D-J Basin in Colorado, which includes more than 150 high-quality drilling locations. Combined with bullish oil prices, this is expected to boost PEDEVCO's production and overall profitability.

MPLX LP owns and operates a wide range of midstream assets. The partnership's midstream assets include oil and natural gas gathering systems and transportation pipelines for crude, natural gas and refined petroleum products. MPLX is least exposed to commodity price fluctuations as it generates stable fee-based revenues. Furthermore, it surpasses its industry peers in terms of distribution yield, reflecting its commitment to returning capital to its unitholders.

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