Global Hunter Securities Has $72 Price Target On Transocean (RIG)

Global Hunter Securities has a price target on shares of Transocean RIG at $72. In a note to clients, Global writes, "Yesterday AMC, RIG released its quarterly fleet status report. Increased downtime offset a handful of non-headline worthy contracts, with most of the report in line with expectations. The impact has us reducing our 1Q11 and 2011 EPS estimates by 8c and 7c to 69c, and $4.80, respectively (consensus: 85c and $5.63). Excluding 4Q11 introduced downtime (which is modest…so far), total out of service days increased ~53% for the year to 2,228. Need we say this is negative? The Jack Bates (4th gen. semi) and GSF Monarch (361' IC) confirmed the contracts we discussed earlier in the week, albeit at slightly lower rates than expected. In addition, the Galaxy III (394' IC) picked up a 1-yr contract, the Sedneth 701 (2nd gen. semi) received a 1-well job, the Adriatic IX (350' IC) got a 1-yr extension, and Rig 105 (250' IC) received a 1-yr contract, all at rates in line with our forecast. RIG also received a handful of extensions from Chevron (CVX; $104.88; Not Rated) for jackups in SE Asia at flat rates. Marked the GSF Britannia (200' IC) and GSF Labrador (300' IC) for sale. Both rigs are stacked, with the Britannia having not working since 2009 and the Labrador since last year. This has no impact on our EPS estimates or NAV. The UD 5th gen. semi the Sedco Energy remains uncontracted with availability in mid-June and it has 4 stacked and 2 idle deepwater rigs. We wonder how the drillers talk up the floater market on next week calls with the unprecedented level of near-term availability. We are reducing our 4Q11 and 2011 EPS estimates to 69c and $4.80, down from 77c and $4.87. Currently, we stand 19% and 15% below consensus of 85c and $5.63." Shares of RIG are down $1.62 in early Friday trading.