fabriziof
Forumer storico
Ma scusa non è la notizia postata da cat stamane?
Obbligazioni societarie HIGH YIELD e oltre, verso frontiere inesplorate - Vol. 2 (19 lettori)
- Creatore Discussione gionmorg
- Data di Inizio
IL MARATONETA
Forumer storico
Ero in bici stamani, sul telefonino non avevo visto.
Grazie Fabrizio
fabriziof
Forumer storico
anice
Nuovo forumer
Transocean: Thoughts On The Potential Equity Sale
Jun. 15, 2021 10:23 PM ETTransocean Ltd. (RIG)15 Comments14 Likes
Summary
Ion-Creations/iStock Editorial via Getty Images
I haven’t written about Transocean (RIG) since February and it’s high time to catch up with the latest developments, especially since the company has just announced that it could issue up to $400 million worth of its shares.
This move comes after the recent favorable agreement with the shipyard to delay delivery and defer payments for its two newbuild drillships. This agreement has been recently discussed by fellow contributor Henrik Alex, so anyone interested in this deal should read his article.
I will focus on the latest news and the outlook for Transocean in the light of recent developments.
Transocean’s filing states that the company may sell up to $400 million worth of its shares from time to time, which means that the company will evaluate market conditions and will not push the whole lot to the market at one specific moment. More, Transocean is not obliged to sell shares (although I think that it will use the opportunity to capitalize on the recent upside of its stock).
Over the years, I have criticized Transocean’s reluctance to issue equity at much higher levels, so now I can say that it’s better late than never. Transocean created a major problem for itself with the unfortunate acquisition of Ocean Rig, so now it has to use all opportunities to deal with debt and extend its liquidity runway.
Source: Transocean’s presentation
According to Transocean’s latest numbers, the company plans to finish the year 2022 with $1.5 billion-1.7 billion of liquidity. This liquidity estimate includes the $1.3 billion revolving credit facility and an estimated $350 million of secured debt related to drillship Deepwater Titan. Thus, the liquidity picture has improved compared to previous quarters as Transocean expects to finish the year 2022 with some money. In previous estimates, Transocean was expected to finish 2022 with no money left outside the revolving credit facility. Obviously, Transocean’s chances to extend this credit facility beyond 2023 have improved.
In this light, it’s not surprising to see that Transocean’s stock reacted positively to the news about dilution as selling more shares will improve its liquidity profile and increase its survival chances.
Source: Transocean 10-Q
Transocean carries plenty of debt, but the situation for 2023 looks brighter if we assume that the company gets $400 million from share sale. At this point, it looks that recent management actions and significant support from rising oil prices have finally pushed the liquidity outlook to the point when Transocean has realistic chances to deal with the problems in 2023 and beyond.
I’d note that the outlook depends on the company’s ability to sell its shares at reasonable prices. The latest oil price move failed to provide big support to the company’s stock, which continues to trade below yearly highs that were reached in March. If oil rally stops, the stock may find itself under pressure. Also, the stock will likely remain sensitive to general market developments, which depend (in your author’s opinion) mostly on Fed's moves. I’m writing this ahead of Fed’s meeting which may bring some changes to Fed’s tone due to rising inflation (although I expect that Fed will stay hostage of markets and reiterate its dovish message), but more hawkish Fed and higher interest rates are a material risk for Transocean’s outlook.
To sum it up, I’m neutral on Transocean in the near term. I do not share Henrik’s enthusiasm, which he described in detail in his above-mentioned article, due to various risks that include higher interest rates (I think they are inevitable as inflation will have to be curbed at some point), recent focus on energy transition (and the unprecedented court decision against Shell (RDS.A) (RDS.B), which will ultimately put pressure on all majors), big debt load and strong competition which emerged from bankruptcies. It looks that Transocean has avoided the worst thanks to the timely improvement in the oil market (which I underestimated), but the company still needs a robust rebound of the offshore drilling market.
This article was written by
Vladimir ZernovFollow
16.16K Followers
I'm a trader who trades both short-term and long-term. I started my career as a day-trader for a trading fi...
Jun. 15, 2021 10:23 PM ETTransocean Ltd. (RIG)15 Comments14 Likes
Summary
- Transocean announced that it may sell up to $400 million worth of its stock.
- Market's reaction was positive as the equity sale improves the liquidity outlook for the company.
- The recent oil rally provided support to the company, but it still needs a robust rebound of offshore drilling activity.
I haven’t written about Transocean (RIG) since February and it’s high time to catch up with the latest developments, especially since the company has just announced that it could issue up to $400 million worth of its shares.
This move comes after the recent favorable agreement with the shipyard to delay delivery and defer payments for its two newbuild drillships. This agreement has been recently discussed by fellow contributor Henrik Alex, so anyone interested in this deal should read his article.
I will focus on the latest news and the outlook for Transocean in the light of recent developments.
Transocean’s filing states that the company may sell up to $400 million worth of its shares from time to time, which means that the company will evaluate market conditions and will not push the whole lot to the market at one specific moment. More, Transocean is not obliged to sell shares (although I think that it will use the opportunity to capitalize on the recent upside of its stock).
Over the years, I have criticized Transocean’s reluctance to issue equity at much higher levels, so now I can say that it’s better late than never. Transocean created a major problem for itself with the unfortunate acquisition of Ocean Rig, so now it has to use all opportunities to deal with debt and extend its liquidity runway.
Source: Transocean’s presentation
According to Transocean’s latest numbers, the company plans to finish the year 2022 with $1.5 billion-1.7 billion of liquidity. This liquidity estimate includes the $1.3 billion revolving credit facility and an estimated $350 million of secured debt related to drillship Deepwater Titan. Thus, the liquidity picture has improved compared to previous quarters as Transocean expects to finish the year 2022 with some money. In previous estimates, Transocean was expected to finish 2022 with no money left outside the revolving credit facility. Obviously, Transocean’s chances to extend this credit facility beyond 2023 have improved.
In this light, it’s not surprising to see that Transocean’s stock reacted positively to the news about dilution as selling more shares will improve its liquidity profile and increase its survival chances.
Source: Transocean 10-Q
Transocean carries plenty of debt, but the situation for 2023 looks brighter if we assume that the company gets $400 million from share sale. At this point, it looks that recent management actions and significant support from rising oil prices have finally pushed the liquidity outlook to the point when Transocean has realistic chances to deal with the problems in 2023 and beyond.
I’d note that the outlook depends on the company’s ability to sell its shares at reasonable prices. The latest oil price move failed to provide big support to the company’s stock, which continues to trade below yearly highs that were reached in March. If oil rally stops, the stock may find itself under pressure. Also, the stock will likely remain sensitive to general market developments, which depend (in your author’s opinion) mostly on Fed's moves. I’m writing this ahead of Fed’s meeting which may bring some changes to Fed’s tone due to rising inflation (although I expect that Fed will stay hostage of markets and reiterate its dovish message), but more hawkish Fed and higher interest rates are a material risk for Transocean’s outlook.
To sum it up, I’m neutral on Transocean in the near term. I do not share Henrik’s enthusiasm, which he described in detail in his above-mentioned article, due to various risks that include higher interest rates (I think they are inevitable as inflation will have to be curbed at some point), recent focus on energy transition (and the unprecedented court decision against Shell (RDS.A) (RDS.B), which will ultimately put pressure on all majors), big debt load and strong competition which emerged from bankruptcies. It looks that Transocean has avoided the worst thanks to the timely improvement in the oil market (which I underestimated), but the company still needs a robust rebound of the offshore drilling market.
This article was written by
Vladimir ZernovFollow
16.16K Followers
I'm a trader who trades both short-term and long-term. I started my career as a day-trader for a trading fi...
Palmiro Tognazzi
Forumer attivo
acquistato INTRADO 8,5% gia WEST CORP a 99,50
IL MARATONETA
Forumer storico
Isin grazie!
Palmiro Tognazzi
Forumer attivo
USU6816PAA04 illiquida da giorni tentavo l'acquisto
Palmiro Tognazzi
Forumer attivo
TALEN, il cadavere da segni di vita, anzi è molto vispo.
Ultima modifica: