Transocean Bags $352.9 Million In New Backlog - I Am Not Dazzled by Fun Trading

Summary

Transocean released a fleet status update indicating an additional backlog of $352.9 million since October. It is encouraging but still insufficient.
Transocean owns a record backlog estimated at ~$10.4 billion as of January 2020
I am not impressed by the company's optimism and reassuring tone. Shareholders need fact and cash flow not words of some future recovery "around the corner".

Transocean - The SemiSub Leiv Eiriksson

Investment Thesis

Transocean (RIG) has been my first and only choice amongst the offshore drillers group, and the reason is quite manifest. Despite a stressful environment that does seem to get better, despite what the company is asserting for the past year or so, Transocean is the most likely survivor in this drillers' group that may eventually withstand its debt load shock and remain as it is, evading a harsh restructuring.

Transocean owns a record backlog estimated at ~$10.4 billion as of January 2020. Besides, the company shows numerous options that could add many more billions after the acquisition of Songa Offshore and, more recently, Ocean Rig UDW on a much smaller scale. I have considered as a definitive mistake because of the lack of backlog attached to the merger.

The offshore drilling industry has underperformed the oil industry, and I still have a hard time to imagine what could change this situation even two or three years ahead?

We have probably reached a "rock bottom" in terms of daily rates and contracting activities in the floaters' segment. However, it is still debatable with the extension of the recent contracts agreed well below $200K/d that I will talk about later.

It is unquestionably not an invitation to turn mildly bullish or support a long-term investment in the offshore drilling sector. RIG had been my most significant long-term investment in the offshore drilling sector up until about two years, and I have been reducing my position significantly since then.

Instead, my investment thesis is still promoting a very cautious tiny long-term investment in RIG, that I was recommending at or below $4 in my preceding article last October:

Finally, the stock is now close to an attractive valuation again and assuming oil prices remaining at appropriate levels. RIG is offering a chance to profit especially below ~$4.15.

And most importantly, adopt a very active short-term trading that presents an excellent opportunity for a quick profit, especially in this sad and unsettled environment.

Transocean has been performing better than its peers (e.g., Diamond Offshore (DO) and Valaris Plc (VAL)) or compared to the VanEck Vectors Oil Services ETF (OIH). RIG is the only stock that has outperformed OIH since January 2018, while DO and VAL scored very poorly, with VAL down 74%.

ChartData by YCharts Complete Fleet Status as of January 8, 2019 The company's fleet status was released on January 9, 2019. It was not a fleet status per se this time but more a new update in which Transocean indicated that it added $352.9 million in additional contract backlog.

Below, there are the fleet status details after applying the recent changes, the best I could. However, it is not perfect, and I have to caution readers that it is only my estimate.

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