Transocean to Pay $195M for New Rig - Analyst Blog

World's largest offshore driller Transocean Inc. (RIG) has agreed to buy a shallow water jackup rig being built by Singaporean outfit Sembcorp Marine's subsidiary, PPL Shipyard for $195 million. The high-specification jackup, which is scheduled for delivery in the fourth quarter of 2011, will be capable of operating in water depths up to 400 feet and constructing wells in depths of 30,000 feet.

Based on PPL Shipyard's latest proprietary design, the shallow water Pacific Class 400 design jackup rig will exhibit the most sophisticated offshore drilling technology, including offline tubular handling features and simultaneous operations support. Additionally, the rig is equipped to accommodate 150 personnel, 30 more than in the earlier series of Pacific Class 375 jackup rigs.

Transocean, which currently owns and operates five drilling rigs built by Sembcorp Marine's yards, sees growing demand for the latest technology in shallow water drilling. The recent jackup rig purchase agreement will help the company to utilize this strengthening fundamental and increase its participation. Transocean further believes that the one-year delivery schedule gives it enough time to secure an attractive contract for the rig.         

Switzerland-based Transocean, Inc., with the very appropriate NYSE ticker of RIG, possesses one of the most modern and versatile rig fleet in the world due to its emphasis on technically demanding segments of the offshore drilling business. As of September 30, 2010, the company owned, had partial ownership interests in, or operated 139 mobile offshore drilling rigs.

Transocean's drilling fleet consists of 45 high-specification deepwater floaters, 26 mid-water floaters, 10 high specification jackups, 55 standard jackups and other assets utilized to support offshore drilling activities worldwide. Additionally, the company has 3 ultra-deepwater floaters under construction.

Transocean, which competes with Diamond Offshore ( ">DO ) , and Noble Corp (NE), currently retains a Zacks #3 Rank, translating into a short-term Hold rating. We are also maintaining our long-term Neutral recommendation on the stock.

 
DIAMOND OFFSHOR (DO): Free Stock Analysis Report
 
NOBLE CORP (NE): Free Stock Analysis Report
 
TRANSOCEAN LTD (RIG): Free Stock Analysis Report
 
Zacks Investment Research