Eurobench.com

IEX - Forummoderator 16 augustus 2017 19:07

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Transocean Ltd. provides offshore contract drilling services for oil and gas wells worldwide. The company primarily offers deepwater and harsh environment drilling services.
As of February 9, 2017, it owned or had partial ownership interests in, and operated 56 mobile offshore drilling units that consist of 30 ultra-deepwater floaters, 7 harsh environment floaters, 3 deepwater floaters, 6 midwater floaters, and 10 high-specification jackups. The company serves government-controlled oil companies and independent oil companies.

Transocean Ltd. was founded in 1953 and is based in Vernier, Switzerland.

Groet Henk

Gaston Lagaffe 16 augustus 2017 19:34

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Transocean (RIG) heeft met de geplande overname van Songa Offshore (SGAZF) een belangrijke stap gezet in de consolidatie die nu in de olieboorsector plaatsvind. De eerste stap is enige weken geleden gezet door Ensco (ESV) welke Atwood Oceanics (ATW) overnam. In deze sector zijn nog 4 grotere partijen actief die een kans maken deze slechte tijd te overleven : Transocean (RIG) - ENSCO (ESV) - Noble Corporation (NE) - Rowan Companies (RDC). Nummer 5 en grootste concurrent : Seadrill (SDRL) zal binnenkort wel geherstructureerd worden.

Gaston Lagaffe 16 augustus 2017 19:42

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In de afgelopen 4 maanden ben ik begonnen met het opbouwen van een aandelenbelang hetgeen wat aan de vroege kant bleek te zijn. Komende maanden zal ik RIG blijven bijkopen daar het mi een risicovolle maar mogelijk zeer lucratieve belegging kan zijn. Voorwaarde is wel dat Transocean het overleeft en je een beleggingshorizon van minimaal 5 jaar acceptabel vind. In deze tijd moet de olieprijs stijgen tot ca. $ 60 - $ 65. Komende maanden zal ik regelmatig wat nieuws inzake Transocean en de "Offshore drillers" posten. Ik ben zeer geïnteresseerd wat andere forumleden van dit aandeel / deze sector vinden.

Mangy_Scoundrel 17 augustus 2017 10:41

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Valt me op dat de handel op zowel Borse Frankfurt als Swiss Stock Exchange erg dun is, terwijl er in Amerika per dag vele miljoenen stukken per dag van eigenaar wisselen.

Mag ik vragen waar jij je stukken koopt Gaston? Want dit lijkt een mooi aandeel voor een klein gokje.

Gaston Lagaffe 17 augustus 2017 13:13

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quote:
Mangy_Scoundrel schreef op 17 augustus 2017 10:41:
Valt me op dat de handel op zowel Borse Frankfurt als Swiss Stock Exchange erg dun is, terwijl er in Amerika per dag vele miljoenen stukken per dag van eigenaar wisselen.

Mag ik vragen waar jij je stukken koopt Gaston? Want dit lijkt een mooi aandeel voor een klein gokje.

Ik heb ze (via RABO) op de Swiss Stock Exchange gekocht maar zou, bv via De Giro(?), er de voorkeur aangeven voortaan via de NYSE te handelen. (ik maak om veiligheidsredenen gebruik van verschillende banken) Op dit moment heb ik even weinig tijd maar binnenkort zal ik hier wat info en analyses kunnen plaatsen. Kijk er nu al bijna 3 jaar naar. Voor alle duidelijkheid : dit is een zeer risicovol aandeel in een op dit moment extreem slechte sector. Veel haast met het opbouwen van een positie moet men mi niet hebben want dit gaat jaren duren. Mijn doel van $ 70 zal misschien wel nooit bereikt worden (maar ik verwacht dat dit wel gaat gebeuren, aan de rand van de afgrond bloeien de mooiste bloemen die niemand durft te plukken)

TimCh 17 augustus 2017 15:49

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plukje gekocht op 7,56 dollar...

Mangy_Scoundrel 17 augustus 2017 16:04

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Via NYSE lijkt idd het beste, veel handel en de kleinste spread.

Bijlage:

Gaston Lagaffe 18 augustus 2017 11:21

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Transocean-Songa Offshore: Who Is Next On My Bucket List?
Summary : Whether we like it or not, a new phase has clearly begun in the offshore drilling industry, as I was predicting as far as a year ago: The consolidation phase. As an investor, it is paramount to recognize this trend as early as possible and take advantage of the market by selectively accumulating stocks that are selling off now. I believe Noble Corp., Diamond Offshore, and Odfjell Drilling, are the three companies most likely to announce a deal soon.

Investment Thesis: Consolidation phase : Whether we like it or not, a new phase has clearly begun in the offshore drilling industry, as I was predicting as far as a year ago. I call it, the "consolidation" phase. It is a normal stage in the life of an industry in which components in the industry start to merge to form fewer components, in order to cope with a new and tougher business model and reduce cost by synergies. It started slowly later last year with Rowan (RDC) and Saudi Aramco's new 50/50 joint venture on November 21, 2016. Please read my article about the deal, click here. However, it is early 2017 that the process of consolidation increased significantly, with the creation of a new offshore company called Borr Drilling (BORR.OSE) in Norway.
1 - On January 24, 2017, Borr Drilling completed the delivery of the two Hercules JUs, the Triumph and the Resilience, now called the Borr drilling Ran (formerly the Hercules Triumph - 2013) and the Borr drilling Frigg (formerly the Hercules Resilience - 2013).
2 - On March 20, 2017, Borr Drilling acquired Transocean's (NYSE:RIG) entire jackup fleet for $1.35 billion, including $320 million of cash. Please click here to read my article on March 21, 2017.
3 - I could also mention here John "big John" Fredriksen and its new Northern Drilling venture, but it is purely an investment company and not really a rig operator, created to ease the Seadrill (SDRL) restructuring.
4 - On May 30, 2017, with the controversial proposed acquisition of Atwood Oceanics (ATW) by Ensco (ESV) in an all-stock transaction. Please click here to read my article about the deal.
5 - More recently, on August 15, 2017, Transocean announced that it intends to acquire Songa Offshore for a total transaction value of $3.4 Billion. Please click here to read my article about the deal.
According to Steve Marshall from Upstreamonline,"Further rig players are on the radar screen for possible acquisition by predatory rivals after the Transocean-Songa offshore deal as the drilling market is perceived as having reached the bottom, according to an analyst." The consolidation phase is a sign of a drilling market bottoming out. As an investor, it is paramount to recognize this trend as early as possible and take advantage of the market by selectively accumulating stocks that are selling off now based on a short-term negative perception - using a debatable backward dynamic valuation - while the industry is about to turn around. Despite a difficult environment, the growing sentiment in the offshore drilling sector is that the market has stopped degrading, prompting oil producers to look ahead for new opportunities in order to increase their fast declining oil & gas reserves, at a very attractive cost per barrel never achieved before. There is always a silver lining in every dark cloud... And, it is the jackup segment rebounding recently. The contracting activity in the jackup segment has shown clearly a nascent recovery shaping up during the first half of 2017. It is slowly expanding to the floater class, and I was glad to report several welcomed contracts, such as the Seadrill Drillship West Saturn in Brazil, the Ensco three drillship contracts in West Africa or even the Maersk contract mentioned above. Granted, it is not an easy call, and oil prices are not really helping either. However, it is now a fact offshore drillers are announcing more and more contracts for jackups and floaters as well. We should listen to the players in the field, because they know what they are talking about. Recently, I covered the second quarter earnings results of numerous offshore drillers such as Ensco, Noble (NE), and Transocean, and I heard the same encouraging comments about a drilling market embarked on a gentle recovery mode. Ms Terry Bono said in the conference call: We also see multiple bidding opportunities globally where we have identified almost 60 floater programs that could begin within the next 18 months. We are participating in multiple bids and seeing more opportunities in other parts of the Latin America, including Trinidad, Colombia, Guyana and Suriname as a number of operators have programs that should begin in the next 12 to 18 months. In addition to the FID approval for ExxonMobil's Liza development offshore Guyana, Tullow recently signed a 10-year lease for the Orinduik Block in the Guyana-Suriname Basin. We are also excited about deepwater opportunities in Mexico, including the recent large discovery of the Zama field by the Talos JV. Who are the "players"? We will have to differentiate the companies who are "prime acquisition candidates" and the ones who are the "buyers" such as Ensco or Transocean. In some cases, the same company can be considered as both, such as Noble Corp. or Rowan.

Gaston Lagaffe 18 augustus 2017 11:21

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List of "Prime acquisition candidates" can be long and highly controversial.
Ocean Rig UDW (ORIG)
Pacific Drilling Inc. (PACD)
Odfjell Drilling Ltd. (ODL.OSE)
Noble Corp. Plc
Seadrill Ltd.
North Atlantic Drilling (NADL)
Seadrill Partners (SDLP)
Rowan Companies
Transocean according to Janne Kvernland from Nordea Markets.
Maersk Drilling as a spinoff of Maersk Group.
List of potential "Buyers" is not as long.
1 - Diamond Offshore (DO)
2 - Rowan Companies
3 - Noble Corp. Plc
4 - Transocean Ltd.
5 - Ensco Plc.
6 - Seadrill Ltd. (After the restructuring)
7 - Borr Drilling.
Note: I believe Noble Corp., Diamond Offshore, and Odfjell Drilling are the three companies most likely to announce a deal soon.

Conclusion:
This situation is not an easy one for investors, especially if you are already a shareholder of one or several companies indicated above. An acquisition is a delicate move for the company that acquires another one on future expectations, and generally, the market tends to punish the "buyer" for a little while, whereby boosting the "acquisition candidate" who enjoys a quick premium.
Transocean stock tumbled about 10% or more on the Songa acquisition in just two days, and the deal is so complex that I cannot decide whether it is a clever move or else. Songa traded up ~40% on the news.
This is what basically counts. Investors could not care less if the deal was a good one or a bad one, especially when you have an equal amount of so-called analysts telling you it is either a good deal or a total catastrophe.
However, you can profit either by buying the "acquisition candidate" before it happens, if you are clever enough to guess who is next. You can also buy the "sell off" after the deal is released, if you understand how the situation will play out the next few months. The name of the game is to profit, and I hope this article will help you. Ms Janne Kvernland from Nordea Markets said: There are more than 60 different contractors in the floating rig arena and 120 in jack-ups, of which 30 and 70 players in the respective segments have just one to three rigs. About 55% of the floaters are in the hands of the top 10 biggest contractors, while the corresponding figure for jack-ups is 40%. A key buying criterion for potential bidders is drilling capability and there is also a preference for contract backlog. She thinks, Odfjell drilling is the most suitable now because the company owns semi-submersibles secured on profitable charters with clients such as Statoil (NYSE:STO), BP (NYSE:BP), and Wintershall, with day rates higher than the barebone level of $200K/d or $150k/d we are now experiencing. I am not so convinced Odfjell drilling is really a candidate now, because of the size of the acquisition. By the way, Ms Kvernland commented on the recent Transocean-Songa deal and said that the deal "makes perfect sense" for Transocean as it safeguards the company's leading position in the North Sea after scrapping 33 floaters - including eight in the North Sea - while also "boosting its backlog to $14.3 billion and bolstering its relationship with Statoil." Additionally, Ms Kvernland said,It is a good price for shareholders in Songa and fair for Transocean given the backlog. On the other hand, DNB markets described the deal as "expensive", given it prices each of the Cat-D rigs at between $160 million to $210 million above Songa's own valuation. The analyst said that a day rate of around $450k/d would be required to justify such a price (Songa rigs are actually working at $470k/d under the Statoil contracts).Disclosure: I am/we are long RIG, ESV.

Gaston Lagaffe 18 augustus 2017 11:47

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Bovenstaand artikel (sterk ingekort en verdeeld over 2 postings ivm het maximale aantal van 8000 karakters) is gepubliceerd door Fun Trading op Seeking Alpha op 17 augustus 2017 en geeft een mooie inkijk in de offshore-drilling-wereld. Van belang is te weten dat Fun Trading een "believer" is (zie onderaan positie Long RIG en ESV) en dat er ook analisten zijn die minder positief (ronduit negatief) zijn. Ik zal proberen ook een mooie analyse hiervan te plaatsen (zit ook een hoop rommel tussen)

Gaston Lagaffe 18 augustus 2017 11:59

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quote:
TimCh schreef op 17 augustus 2017 15:49:
plukje gekocht op 7,56 dollar...

Mooie prijs ! Ik zit hier gemiddeld nog (fors) boven. Verwacht dat Transocean (RIG) nog wel iets verder kan dalen. Het is een zeer volatiel aandeel en of we de bodem van de cyclus gezien hebben weet niemand. Persoonlijk denk ik dat we ergens onderin zitten maar van enige verbetering is (ondanks enkele bemoedigende ontwikkelingen) eigenlijk nog geen sprake. Veel succes en realiseer je dat RIG een risicovolle en ultra-lange-termijn belegging is. (RIG = Ultra Deep Drilling = Ultra Lange Termijn belegging)

Let op Transocean (RIG) is totaal NIET vergelijkbaar met Ocean Rig UDW (ORIG) ! foutje is snel gemaakt (RIG <> ORIG).

Gaston Lagaffe 19 augustus 2017 11:57

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Transocean-Songa Offshore Acquisition Spells Great Things

Seeking Alpha : Aug. 17, 2017 About: Transocean Ltd. (RIG), Includes: SDRL

Transocean has had a difficult time since the start of the oil crash, with its stock price falling by almost 90%. Transocean recently acquired Songa Offshore for just over $3 billion. However, the acquisition adds more than $4 billion to Transocean's backlog.Transocean has the financials to handle a crash that lasts into 2020. This, combined with the new fleet, make it a strong company going forward.

Transocean (NYSE: RIG), based in Vernier, Switzerland, is one of the world's largest offshore drilling companies. The company has offices spread out across 20 countries and a market cap of more than $3.5 billion, despite its difficult time since the start of the oil crash. As we will see in this article, Transocean's recent Songa Offshore acquisition, combined with the company's fleet and financials, makes it a strong investment at the present time.

Transocean-Songa Offshore Acquisition
Transocean recently announced a substantial acquisition of Songa Offshore. This acquisition should cement Transocean's position in the offshore drilling markets.
Transocean Songa Offshore Acquisition - Transocean Investor Presentation
Transocean's acquisition of Songa offshore adds four contracted, high-specification harsh environment semisubmersibles. More importantly in the present environment, Transocean has acquired rigs that all have contracts -- meaning there is immediate profit generation for Transocean. The deal adds $4.1 billion to Transocean's backlog into 2024.

That deal cements Transocean's position in the North Sea, a profitable oil market, and cements the company's relationship with Statoil (NYSE:STO). Statoil dominates North Sea drilling, so a strong consumer relationship, along with the rigs capable of handling the job, means that Transocean will dominate the market here. On top of all of this, the acquisition provides $40 million in synergies annually.

Transocean Songa Offshore Transaction Summary - Transocean Investor Presentation
The acquisition is anticipated to close by the end of year and will be paid for with 50% equity, 50% debt, and a capped cash option. Overall, the deal will cost the company $3.4 billion for $4.1 billion in backlog and four pristine rigs. The deal is anticipated to close in the next few months with significant shareholder approval from both sides.

As an investor, this deal is one of my favorite kinds to see. The company waited until offshore markets have run into an incredibly difficult time and the prices of offshore drillers have collapsed. The company then made an immediately accretive deal that will provide it with significant cash flow. And it has managed to do this while only issuing $540 million in direct equity, or diluting its existing shareholders 15%.

Transocean Songa Offshore Acquisition Details - Transocean Investor Presentation

As part of the deal, Transocean has also issued $660 million in convertible debt at a reference price of $8.39 per share with a conversion price at a 22.5% premium. While this does mean another 16% or so dilution for existing shareholders, there are some important things to take into account here that keep the deal very accretive and rewarding for existing shareholders in the long run.First, the debt is non-callable for the life of the instrument, until year-end 2022. This means they won't present a cap on Transocean's stock price where every time the company's stock rises above the call price, there's a risk of dilution if shareholders sell. Second, the debt has a call price respectably above Transocean's present share price. This means that some recovery is planned in for the company. Lastly, as we saw above, the deal is immediately accretive to Transocean's revenue on the order of several hundred million dollars per year. That means by 2022, when the debt is called, Transocean will have already made more than $2.5 billion in revenue from the acquisition. And those profits should offset much of the expense of the dilution to the profits of existing shareholders.

Transocean Backlog Increase - Transocean Investor Presentation
Looking at the specifics, this is an acquisition made in a tough environment that will dilute existing shareholders by roughly 30% at its maximum. However, the acquisition increases Transocean's backlog by 40% during a time when every dollar counts. As you can see from the above graph, the acquisition meaningfully increases Transocean's backlog every year until 2023.

Afterward, as the rigs are re-contracted out, a likely event thanks to their highly technological nature, they will increase Transocean's backlog even further. This shows the highly accretive and strong nature of the deal that Transocean has made.

Vervolg zie onder

Gaston Lagaffe 19 augustus 2017 11:58

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Seeking Alpha : Aug. 17, 2017 About: Transocean Ltd. (RIG), Includes: SDRL

Transocean's Strong Fleet
As a result of this transaction, Transocean will complete its fleet changes and exit with a strong and modern fleet.

Transocean Fleet Transformation - Transocean Investor Presentation
Since the start of the oil crash, Transocean has been focused on transforming its fleet for a changing oil market. The company has recycled 33 floaters in total, recycling its older, less-capable assets and getting immediate scrap value from them. On top of that, most of these assets would have had to be stacked in the current crash using up precious Transocean cash to keep them functioning. As a result, Transocean now has 45 ultra-deepwater and high-efficiency rigs, and 10 other deepwater and midwater floaters that are likely on their way out at some point. Transocean wants to specialize in the market for complicated offshore drilling projects. These are projects where, in a high oil market, competitors can't simply walk in and make competing rigs. As we can see, Transocean is well on its way to accomplishing this goal.

Transocean Fleet Overview - Transocean Investor Presentation
Looking at Transocean's fleet compared to its peers, we can see that before the acquisition, Transocean already had by far the largest fleet. This acquisition continues that, with its fleet growing to 55 rigs -- almost twice its nearest competitor Seadrill (NYSE:SDRL), with 33 rigs. However, Transocean has this immense size without the debt load of Seadrill.

Another important thing to see is that this acquisition propels Transocean ahead of Seadrill in total harsh environment floaters, from seven to 11 floaters compared to Seadrill's eight. This means that Transocean now has the largest harsh environment floater fleet -- an important fact given that the company is trying to dominate this market. This large, harsh environment combined with the company's new relationship with Statoil should enable its fleet to dominate this sector of the market. As an investor, I am excited to see Transocean taking prudent steps to accomplish its goals.

Transocean's Strong Financials
Throughout the transformation of its fleet and the acquisition, Transocean has maintained strong financials that will help the company going forward to survive a crash.

Transocean Liquidity - Transocean Investor Presentation
Most significant to Transocean surviving an oil crash is the company's liquidity through year-end 2019. At the present time, the company has $2.2 billion in cash, and it plans to generate another $1 billion through year-end 2019 from its profitable operations. The company plans to spend $0.7 in capex throughout this time, as it works to modernize its fleet and the company also has $1.7 billion in debt due. This means that Transocean should enter 2020 with roughly $0.8 billion in liquidity.

Oil Market Demand / Supply Balance - Ask Ja Energy
The above image shows the supply and demand balance in the oil markets. Starting in late 2013 the oil surplus began, and by mid-2014 prices had begun to drop. They hit what was widely believed to be their low in early 2016 at less than $30 per barrel. That means that it took roughly nine quarters from the start of the surplus for prices to hit their bottom and begin their recovery.

Looking at the flip side of things, the surplus is anticipated to end and become a deficit sometime around now. Assuming that prices take roughly nine quarters to recover, that means that oil prices should have recovered significantly by late 2019 or early 2020. Given that by the time prices recover Transocean will still have $0.8 billion in liquidity, we can see what a strong position Transocean's financials put it in.

Transocean Debt Maturity Schedule - Transocean Investor Presentation
Looking at a longer-term picture of Transocean's debt maturity profile, we can see that the company currently has a $3.0 billion revolver available for it to draw from in 2019. The company has $3.1 billion in debt from 2020-22 and then an additional $1.8 billion from 2023-24, with no debt due from $2.6 billion onward. A significant portion of this debt load in the near term comes from Songa Offshore.

Personally, as an investor, I would like to see the company continue its acquisition spree. The company's $3.0 billion revolver would be enough to purchase some major assets and their backlog from Seadrill, the company's second-largest competitor, which is struggling for cash. While increasing its near-term debt might not be the best idea, the company should be able to buy some quality assets at firesale prices. This shows Transocean's strong financial picture, even when taking into account the acquisition of Songa Offshore.

Conclusion
Transocean has had a difficult time since the start of the oil crash, with the company's stock price dropping by almost 90%. Despite this, Transocean is an undervalued company at the present time and has been taking a number of steps to improve its market position as oil prices recover. The company recently acquired Songa Offshore in a multibillion-dollar acquisition.

The acquisition provides Transocean with significant backlog over the next eight years and a strong relationship with the oil company Statoil. At the same time, it enables the company to almost complete its fleet renewal plan as it builds itself the largest harsh-environment driller position of any offshore drillers. Transocean has managed to do this all while maintaining strong financials. As a result, Transocean is a strong investment at the present time, with the Songa Offshore Acquisition spelling great things.

Disclosure: I am/we are long RIG.

Gaston Lagaffe 19 augustus 2017 12:05

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Voor wie hem gemist heeft de ingekorte versie van een mooi artikel van IEX analist Paul Weeteling >> IEX : Paul Weeteling 17 aug 2017

Onlangs werd bekend dat Transocean (RIG) zijn Noorse sectorgenoot Songa Offshore overneemt voor 3,4 miljard dollar inclusief schuld (2,2 miljard dollar). De tweede grote overname in deze sector dit jaar. Ter vergelijking: de beurswaarde van Transocean is 3,1 miljard dollar.
Eerder dit jaar deed Ensco een overnamebod op Atwood Oceanics. Dit was een bod volledig in aandelen. De koers van Ensco is in de tussentijd bijna 30% gedaald, waardoor de waarde van het bod met hetzelfde percentage is afgenomen.
Verder is een grootaandeelhouder van Ensco opgestaan die het niet eens is met de deal. Desondanks lijkt het erop dat de overnamepoging wel zal slagen. In de markt wordt gesuggereerd dat grootaandeelhouders, met belangen in beide ondernemingen, de overname door willen drukken om hun verliezen op Atwood te beperken.

De deal heeft dan ook erg veel weg van een bail-out (redding) van Atwood, dat anders waarschijnlijk onder zijn schuldenlast zou bezwijken.
Vissen in de overnamevijver
Eén zwaluw maakt geen zomer, maar nu is er dus nog een tweede grote overname in de sector bijgekomen. Transocean biedt aandeelhouders van Songa Offshore een premie van 37% op de slotkoers van de laatste vijf dagen. Het bod is deels in cash of aandelen Transocean en deels in een convertible.

Transocean denkt de activiteiten van Songa Offshore op termijn toch weer winstgevend te kunnen krijgen. Voor de synergievoordelen van 40 miljoen dollar per jaar hoeft Transocean het namelijk niet te doen.
Het is op z’n minst opmerkelijk dat de grootste en bijkans meest ervaren speler uit de sector een dergelijke overname doet. Zeker in de wetenschap dat de overname van Songa ook nog eens een forse schuldenlast meebrengt.
Momentum om te gaan bodemvissen
De malaise in de oliesector duurt al een tijd voort en het is ondenkbaar dat Transocean dit plan één maand van tevoren heeft bedacht. Het bedrijf ziet nu toch momentum om een dergelijke stap te zetten.
Shell-bestuursvoorzitter Ben van Beurden zei eind vorig jaar in het FD: “Ik denk dat we als samenleving uiteindelijk niet zullen ontkomen aan Arctische olie. Blijkbaar denkt Transocean er net zo over en verzekert zich alvast van een specialist in boren naar olie onder ruige omstandigheden. Daarnaast is Songa Offshore strategisch gevestigd ten opzichte van het Arctisch gebied.
Ook SBM ziet een zeer geleidelijk herstel van de offshore markt: “Whilst final investment decisions are on the increase, clients remain cautious. The offshore services industry is gradually recovering, but with a structurally lower activity level". Oftewel: er is wat verbetering zichtbaar, maar men blijft voorzichtig en oude tijden komen (voorlopig) niet terug.
Langzaam druppelen er her en der orders binnen voor jack-up rigs (boorplatformen geschikt voor ondiep water) en ook enkele voor semi-submersible (voor diepere wateren). Het is op dit moment dan ook orders schrapen vanwege de forse overcapaciteit in de sector. Hierdoor staan ook de dagtarieven onder druk. Het is immers beter een platform break-even te verhuren dan het volledig werkloos aan de kant te leggen.

Waar blijft het herstel?
Samenvattend lijkt het ergste achter de rug voor de drillers, maar tegelijk rekent de sector ook niet op een snel herstel. De kleine overname van het Britse Gardline Group (rechtstreekse concurrent Fugro) door Boskalis past ook bij deze gedachte. Boskalis vermeldde daarbij voorlopig geen positieve bijdrage van de overname aan het bedrijfsresultaat te verwachten, maar wel goed gepositioneerd te zijn wanneer het marktherstel inzet.
Het is erg moeilijk te timen wanneer dit herstel wel inzet, maar ook een stabilisering van de markt kan al zorgen voor een flinke procentuele koerssprong. Een belegging in deze sector vergt het nodige lef en geduld, maar kan op lange termijn ruimschoots de moeite waard zijn.

Disclaimer: Paul Weeteling heeft een longpositie in Transocean (RIG), Noble Corporation (NE) en Ensco (ESV).
Paul Weeteling is beleggingsanalist bij IEX.nl. De informatie in deze column is niet bedoeld als professioneel beleggingsadvies of als aanbeveling tot het doen van bepaalde beleggingen.

Gaston Lagaffe 19 augustus 2017 12:10

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Transocean Should Not Have Overpaid For This Deal

Seeking Alpha >> Aug. 16, 2017| About: Transocean Ltd. (RIG), SGAZF, Includes: DO, ESV , door = Orthodox Investor

Summary

The deal has a rich premium in a struggling industry.

Transocean is paying more than 4x its own valuation.

Addition of debt will have a negative impact on credit metrics.

You can read my previous article about Transocean here.

Transocean (NYSE:RIG) is certainly overpaying for Songa Offshore (OTCMKTS:SGAZF). The valuation is too rich for my liking. The acquisition is undoubtedly a good strategic fit and it makes sense that Transocean is following the industry trend of consolidation. However, a premium of 37% in current market conditions is not a norm in this industry.

Transocean’s offer price values Songa at $3.4 billion in enterprise value. Based on last year’s EBITDA ($246 million) for Songa, EV/EBITDA multiple for the deal is just under 14x. Keep in mind that EV/EBITDA multiples in the sector are considerably lower. Transocean’s own multiple is just 3.8x while Ensco (NYSE:ESV) has an EV/EBITDA multiple of 2.56x. Diamond Offshore (NYSE:DO), however, has an abnormally high multiple due to the massive fall in EBITDA during the last year. It only generated $3 million in EBITDA in 2016, down from $206 million in 2015. Diamond Offshore has experienced consistent deterioration in EBITDA over the last three years, which has taken its multiple to abnormal heights. Looking at Transocean and Ensco multiples, we can see how expensive the Songa deal is for the company.

Another negative impact will be the addition of debt from Songa, which will be further increased by the notes issued to finance the deal. $660 million of the deal value will be raised through a convertible bond. This will have a negative impact on credit metrics. All the good work done by the sale of Jack-up business and the subsequent redemption of debt will be undone by this deal. Transocean had to redeem some of the debt due to the approaching maturities of notes (especially the 2.5% notes maturing in 2017). However, four other issues were put up for redemption and a total of $1.5 billion were earmarked for debt repayment. This whole exercise resulted in reducing the debt by more than $1.2 billion.

This deal will again increase the overall debt by more than $2.5 billion. Songa Offshore had over $1.9 billion as long-term debt on its books at the end of the last quarter. Addition to EBITDA will be around $400 million, even if we extrapolate the first quarter EBITDA for Songa and expected synergies from the acquisition. Overall effect on leverage will be negative. Post-acquisition leverage ratio will be around 5x (on adjusted basis), up from around 3x. If there is further deterioration in credit metrics then we might see a ratings downgrade from the rating agencies. Moody’s had already changed its ratings outlook to “negative”.

The positives from the deal are that the assets are a good strategic fit for Transocean’s harsh environment operations. Songa has a good order backlog which will take Tranocean’s total backlog to over $14 billion. Revenues will rise by 35% in 2018 and by 50% in 2019. Synergies will save around $40 million in annual operating costs. Due to the long-term contracts with Statoil, there will be reasonable surety about the cash flows. However, market analysts believe that day rates will need to almost double in order to justify the valuation paid by Transocean.

It is surprising that Transocean is paying such a rich premium for assets in an industry where the recovery is still erratic. Offshore drilling will probably see the slowest recovery rate in the oil and gas sector due to the cheaper on-shore options. U.S. shale production is on the rise which has resulted in again choking the recovery in oil prices. OPEC efforts are slowly rebalancing the market but the response to U.S. production data is extremely strong. Small fluctuations in U.S. oil production data cause big swings in oil prices. I believe Transocean is making a costly purchase in challenging market conditions. The company was not in a desperate need to make this acquisition. Transocean’s liquidity position was extremely strong. It has now weakened a little due to the debt repayment. The company will further use some of its cash for this acquisition. Furthermore, its credit facility will mature in 2019. The company did not need to put this stress on its financials. The acquisition might prove to be a good deal in the long-term. However, there are too many unknown variables at the moment. I still believe Transocean is a good pick in this sector but I do not like the valuation being paid for this deal.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Gaston Lagaffe 19 augustus 2017 12:15

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Reflecting Further On Transocean's Acquisition Of Songa Offshore

Seeking Aplha >>Aug. 16, 2017 About: Transocean Ltd. (RIG) door Henrik Alex

Summary

Changing my assessment of the transaction from "neutral" to "negative"

Deal effectively amounts to a poorly concealed, major capital raise at close to all time lows.

Acquisition of Songa offers no short- or medium-term strategic upside.

Excessive valuation of the CAT-D rigs on a contract free-basis.

Transaction removes much of the potential upside from Transocean's stock in case of an industry recovery.

Note:

I have covered Transocean (NYSE:RIG) previously, so investors should view this article as an update to my earlier publishings on the company.

Yesterday, I discussed the implications of Transocean's proposed acquisition of Norway-based Songa Offshore in detail and in conclusion took a neutral stance towards the transaction as positive and negative aspects seemed to be roughly in balance.

Photo: All four CAT-D rigs at the time of their construction at DSME shipyard in South Korea

After further digesting the details of the deal and management's statements on yesterday's conference call, I am changing my view to "negative".

My new assessment is based on the following issues:

the transaction is, in fact, a poorly concealed capital raise as Transocean is effectively purchasing future cash flows by the way of heavily diluting its current shareholders by up to 32% according to RBC Capital analyst Kurt Hallstead. If shareholders chose to fully exercise their cash option, I would expect dilution to come in around 29%.
the acquisition offers no short- to medium term strategic upside as the CAT-D rigs are on long-term contracts with Statoil (NYSE:STO) while Songa's remaining assets will most likely end up being scrapped.
after discounting the acquired cash flows, valuation of the CAT-D rigs on a contract free-basis looks excessive at around $315-$345 million per rig. Remember, these rigs are just midwater floaters, custom-built to the specifications of a single customer. In comparison, Ensco's (NYSE:ESV) proposed acquisition of Atwood Oceanics (NYSE:ATW) almost looks like a bargain when considering only the average price paid for the floaters on a contract free-basis ($222 million per rig). Moreover, Atwood's deepwater assets look far superior to the CAT-D rigs. That said, the Atwood acquisition remains a very risky gamble that substantially shortens Ensco's runway and might even push the company into debt restructuring towards the end of the decade. Investors looking for more color on the proposed transaction, should click here.
in case of a potential industry recovery, the transaction and resulting dilution takes a considerable amount of upside out of Transocean's stock
given Transocean's management's unconvincing performance on yesterday's conference call, the deal has obviously been hastily stitched together. For example, management admitted to not having done due diligence on Songa's idle floater fleet but I was particularly staggered by CEO Thigpen's confession of not having discussed the potentially far reaching implications of the transaction with Songa's sole customer, Norwegian NOC Statoil. As a reminder, the CAT-D rigs have been purpose-built for this particular customer and the upcoming change of control might very well entitle Statoil to alter some of the existing contract terms in its favor. With dayrates for the CAT-D rigs at roughly double the current level for a comparable harsh-environment floater, Statoil will use basically any chance to renegotiate the contract terms.
the operating performance of the CAT-D rigs since the first unit entered service in 2015 has actually been far from being "stellar" as claimed by Transocean's management. The rigs have encountered manifold issues over the past couple of quarters, from initial blowout preventer outages to a recent water ingress on the Songa Encourage resulting in very substantial off dayrate times. Moreover, Statoil has the contractual right to suspend the units from service at any time in return for paying a 75% standby dayrate as happened with the Songa Enabler in the most recent winter. Furthermore, Statoil has already made use of its contractual right to shorten the contract terms for two of the CAT-D rigs after construction delays. Moreover, Songa remains in an ongoing arbitration with the shipyard for roughly $330 million in cost overruns for the first two CAT-D rigs. The most recent decision has been in Songa's favor, but I would expect the shipyard to appeal.
the defensive nature of the transaction, again, contradicts Transocean management's ongoing narrative of an industry recovery being just around the corner
That said, the transaction's biggest risks obviously center around Statoil's attitude towards the deal. If the CAT-D contracts aren't as bullet proof to the upcoming change of control as asserted by Transocean's management, the acquisition will end up as an unmitigated disaster and undoubtedly cause the removal of Transocean's senior management, a move that has been overdue anyway for some time given that a less indecisive course of action over the course of the ongoing downturn would have already saved the company hundreds of millions of dollars.

With the sole reasoning for the deal centering around the future cash-flows of the CAT-D contracts, it seems almost mind-blowing that Transocean deliberately abstained from discussing its plans with Statoil in advance.

Consequently, Statoil won't be exactly thrilled by Transocean's almost reckless course of action. In fact, I would expect Statoil to undertake every effort to alter the contract terms in their favor as a result of the acquisition. Keep in mind, Statoil hasn't hesitated to take advantage of existing contract terms in the past.

Bottom line:

In sum, the deal looks like another bold example for Transocean management's limited credibility as well as its ongoing lack of financial and strategic vision.

Should the upcoming change of control and management's failure to discuss the implications of the proposed transaction with Songa's sole customer in advance, result in Statoil managing to alter the contract terms in its favor, the acquisition could end up as an unmitigated disaster for Transocean, hopefully leading to the long overdue removal of the company's senior management, particularly Transocean's CEO Jeremy Thigpen.

Lastly, the resulting dilution removes a good chunk from the stock's potential upside in case of an industry recovery.

Market's initial take of the transaction has been decidedly negative with Transocean's shares briefly touching new all time lows in yesterday's trading before recovering somewhat.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Gaston Lagaffe 19 augustus 2017 12:21

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Transocean extends losses after Songa deal; price paid for rigs "staggering"

Seeking Alpha >>> Aug. 16, 2017 About: Transocean Ltd. (RIG)|By: Carl Surran, SA News Editor

Transocean (RIG -4.1%) tumbles to a second straight day of new all-time lows following yesterday's $3.4B purchase of rival Norwegian driller Songa Offshore.

Tudor Pickering Holt calls the deal an "excellent strategic fit" that will add to RIG's EBITDA, operating cash flow and net debt/EBITDA given Songa's strong fleet quality, which includes four new, purpose-built floaters working under long-term contracts with Statoil and a $4.1B backlog.

Credit Suisse analysts call it a "good deal, not great," citing Songa's "good assets and backlog," $2.2B in debt with $1.8B of the amount tied to four 6G rigs; the firm says the price paid is "a bit high but given the backlog and debt to EBTIDA at ~4x it was not going to be sold on the cheap."

Seaport Global Securities, however, thinks the deal is a negative for RIG, saying that while it enhances RIG's already strong position in the harsh environment floater market in Norway, the implied deal value of $850M per working rig and $485M per total rig is "staggering," even for new generation rigs with a strong backlog position.

Gaston Lagaffe 21 augustus 2017 17:05

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Why Transocean Is A Mess

Seeking Alpha : Aug. 21, 2017 >> About: Transocean Ltd. (RIG) door Vladimir Zernov

Summary : Transocean decides to buy Songa, a sharp turn from the company's previous moves. The valuation of the deal is high and the move is defensive in nature. A look at the company's previous actions makes the deal look awkward strategically.

Much has already been written about Transocean’s (RIG) decision to acquire Songa Offshore. Analysts’ opinions were divided while the stock market took a definitively negative view, sending the company’s shares to new lows. In this article, I want to take a bigger picture point of view and look at the transaction through the prism of previous Transocean’s actions during this downturn. I believe that problems with finding the right strategy rather than the valuation of deals like the sale of the jack-up fleet to Borr Drilling or the Songa deal play a big role in the current Transocean downside and mitigate the positive impact of the company’s industry-leading backlog. Let’s take a look at what the company did during this downturn beginning from the second half of 2016.

July 8, 2016: Transocean announced pricing of $1.25 billion senior unsecured notes due 2023, which had an interest rate of 9.00%. The sale of these securities was problematic, the interest rate was very high and, generally, the timing of the sale was awful. While we now have the benefit of hindsight to judge the timing of the sale, further Transocean steps will also raise questions about timing and execution.
August 1, 2016: Transocean announced its decision to acquire Transocean Partners in an all-equity deal. The deal was poorly marketed and Transocean had to raise the consideration for Transocean Partners unitholders from 1.1427 Transocean shares to 1.20 shares. Finally, on December 6, 2016, Transocean received approval of the deal.
October 7, 2016: Transocean announced pricing of $600 million senior secured notes due 2024, which had an interest rate of 7.75% and were secured by a lien on Deepwater Thalassa. This was the first step in a series of financing transactions where Transocean used its newbuilds with ultra long-term contracts to get financing. Why Transocean did not start with such moves and issued highly expensive 9.00% notes is a mystery to me.
November 29, 2016: Transocean issued $625 million of 6.25% senior secured notes due 2024 secured by a lien on the Deepwater Proteus. The interest rate has improved materially due to better outlook for offshore drillers in the wake of OPEC meeting.
December 2016–January 2017: Transocean shares rallied along with shares of other offshore drillers. Transocean’s peers used this period as a window of opportunity to secure financing or issue equity. Transocean did nothing. At the height of the rally, the company’s shares traded above $16, now they trade below $8. The opportunity to issue equity is gone.
May 5, 2017: Transocean closed a private offering of $410 million of senior secured notes due 2022 which had an interest rate of 5.52%. Notes were secured by a lien on the Deepwater Conqueror.
May 31, 2017: Transocean completed the previously announced sale of its whole jack-up fleet segment to Borr Drilling. With this sale, Transocean effectively got rid of newbuild obligations, while the cash portion of the deal was relatively small at $320 million.
June 13, 2017: Transocean announced cash tender offers to purchase $1.5 billion of debt. No discount was captured.
August 15, 2017: Transocean announced its decision to buy Songa Offshore. The total transaction value is $3.4 billion, including $1.7 billion in assumed Songa debt, $660 million in Transocean convertible bond, $540 million in Transocean equity and $480 million in Transocean cash.
The company made many moves since July 2016, but what was the net effect? It was able to raise $2.885 billion of debt, merged with Transocean Partners (3 rigs), sold the whole jack-up fleet to Borr Drilling getting $320 million of cash and decided to acquire Songa for $3.4 billion. Songa has 4 Cat-D rigs on long-term Statoil (STO) contracts and 3 idle rigs which, in my view, are unlikely to see any work again. Effectively, we can see that all Transocean debt transactions plus the sale of the jack-up segment to Borr Drilling were used to buy 4 rigs (!!!) with its backlog from Songa. These rigs were tailor-made to suit Statoil needs, so they should hope to get follow-on work with the company or they may find themselves in the scrapyard.

From the commentary that I read about this transaction, the focus seems to be on debating whether $3.4 billion is fair to buy 4 rigs with $4.1 billion of high-margin backlog and potential options to continue work after initial contracts expire. However, I believe that management quality will play a decisive role during this downturn, so every action should be viewed as a continuation of previous moves. To me, Transocean’s moves look chaotic and non-opportunistic. Also, the moves often contradict the commentary that management gives the public during earnings calls.

For example, during the most recent earnings call, Transocean stated that it was seeing almost 60 floater programs in the near future. If one expects an improvement in floater market, it is reasonable to search for high-quality floater assets at bargain prices. Instead, Transocean buys the backlog (Songa rigs will stay on contract for years to come). This is a highly defensive move that shows that the company does not really believe that floater market improvement is just around the corner.

Also, Transocean was previously emphasizing the importance of prolongation of the credit facility. Now, this topic is likely postponed well into the next year as facility lenders will be “pleased” to study Songa’s maturity profile:

The Borr Drilling deal together with cash raised in a series of newbuild-related notes issues looked like a preparation for negotiations with creditors. The Songa deal improves all EBITDA-related covenants but does not help liquidity. The next slide from Transocean's presentation states that the company expects to have $0.6 billion-$1 billion of liquidity by the end of 2019:

However, the big block of debt comes right after 2019:

I’m not saying that Transocean will necessarily run into financial problems due to the Songa deal, but I don’t see how the deal contributes to upside. The price tag of the deal is high, the dilution that Transocean shareholders will have to endure to own 4 rigs with their backlog is big. The deal effectively caps potential upside should the offshore drilling market recover in the next several years. Transocean’s choice looks especially strange if we look at the past actions. Transocean was able to raise almost $3 billion of cash via debt to exchange this cash into… backlog! The same (and even better) results could have been achieved by just keeping the cash and waiting for distressed asset sale opportunities.

Gaston Lagaffe 21 augustus 2017 17:06

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Vervolg

From an industry point of view, the consolidation phase looks a bit strange. The Transocean–Songa deal comes after the Ensco (ESV)–Atwood (ATW) merger, which also received a high valuation from the acquirer. Perhaps, high valuations are a ray of hope for distressed players like Ocean Rig (ORIG) and Pacific Drilling (PACD). However, such deals decrease the financial stability of the acquirer at a time when robust offshore drilling market recovery is not a given. I expected that better deals will be reached at the initial stage of the consolidation phase and I applaud the conservatism of Rowan (RDC), which was able to get a deal with Saudi Aramco, and Diamond Offshore Drilling (DO), which did not hunt for assets at dubious prices.

As for Transocean, the tradition of strangely-timed, chaotic decisions continues. Besides high valuation and the dilutive effect, the Songa deal contradicts both the company’s previous narrative (recovery is around the corner) and the company’s actions (build liquidity to get new credit facility approved). Transocean will certainly have its fans due to high backlog, but sluggish execution and lack of general strategy will continue to put pressure on the company’s shares from time to time. At this point, I believe that the post-deal downside in the company’s shares was well deserved. At the same time, the company’s shares have fallen from $16 without any major pullback, a situation that may change in case oil prices stage another upside leg. Offshore drillers’ shares have mostly ignored the recent upside of oil which may bring at least short-term opportunities for a catch-up play.

Gaston Lagaffe 21 augustus 2017 17:27

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Zoals uit de diverse artikelen blijkt betreft het hier een offshore driller waar de meningen over kunnen verschillen. Dit past ook wel bij de forse problemen die er in de sector zijn. Je doet het niet snel goed. Persoonlijk ben ik niet zo kritisch over het management als sommige analisten. Belangrijk is dat, welke stap het management ook zet, het een bijdrage aan het voortbestaan van Transocean zal opleveren. De Songa deal zal zeker zijn nadelen kennen (verhoging aantal uitstaande aandelen) maar de 4 Cat_D riggs zijn Harsh Environment platformen (waar Transocean nu ook marktleider wordt) versterken de band met Statoil (waar ze specifiek voor gebouwd werden en een zeer solide opdrachtgever is) en leveren $ 4,1 miljard aan contracten op. De transactie laat wel zien dat Transocean niet verwacht dat de marktomstandigheden op korte termijn zullen verbeteren en dat men de financiele positie wil versterken. Het is een defensieve actie welke in strijd is met enkele uitlatingen die men eerder deed (men zag het aantal opdrachten die de sector kreeg toenemen hetgeen een verbetering van de marktomstandigheden zou aankondigen). Hoewel sommige analisten de voorkeur geven aan de aankoop van activa (boorschepen/platformen), bv van Ocean Rig (ORIG) is het, onder de huidige omstandigheden zeer lastig opdrachten hiervoor te krijgen. Persoonlijk zie ik op dit moment alleen perspectief voor de combinatie activa met solide contracten en deze zullen niet "voor niets" verkocht worden.

Vertraagd	30 jun 2019 17:30
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Verschil	+2,220 (+55,50%)
Hoog	0,000
Laag	0,000
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