Transocean (RIG) Solid Earnings
Submitted By Trader Mark
The same pattern we've seen in many oil service stocks played out in Transocean (RIG) yesterday. Solid earnings. Falling on deaf ears. Due to the mix of ships (they have a lot of shallow drillers who have much higher competition levels) I prefer some other names in the sector in the here and now, but for the long run RIG is bringing on the most supply of deep sea drillers which is where the real money is.
The chart is actually breaking out - unfortunately to the benefit of shorts, not longs. The 50 day moving average ($144) is quickly closing in on the 200 day ($136s) - the last thing you want to see is the 50 day to cross over and below the 200 day. This seems to be the fate unless things change quickly. For now, based on charts alone, this is a stock to be shorted/sold - not bought. In fact a very easy short with a nice stop loss over current resistance areas (I keep repeating that but many of these commodity charts look identical - i.e. broken) At $130 there is some support with March 2008 lows, but past that the next level down is $120 (January 2008 lows) and then it goes from there...
 Despite providing a service that will be in demand at oil $60, $80, $100, $120, or $140 Transocean, like all the deep sea drillers simply seems to be a hostage to oil prices. In "theory" oil services should have some separation from direct Energy & Production companies, but theory only works well in the classroom. We'll keep track of the fundamentals just to keep ourself educated; also some word that cash flow is such that the company is seeking ways to return cash to shareholders (i.e. special dividend?)
Another company who provides extremely detailed earning reports. Hard to do apples to apples year over year comparisons due to the acquisition of GlobalSantaFe (GSF) last year.
- Transocean Inc (RIG), the world's largest oil and gas drilling contractor, said second-quarter profit doubled, topping Wall Street estimates, on strong demand for its offshore rigs.
- Transocean has seen rates for certain deepwater rigs top $600,000 per day as high crude oil prices prompt demand from exploration and production companies. Tight rig supplies have also helped push contract awards higher. The average daily rate paid for Transocean's drilling fleet rose 18 percent from a year earlier to $238,600 as contracts were renewed at higher rates.
- Second-quarter profit rose to $1.1 billion, or $3.45 per share, from $549 million, or $2.63 per share, a year earlier. Analysts on average had expected a profit of $3.30 per share, according to Reuters Estimates.
- Revenue more than doubled, soaring to $3.1 billion.
- Day rates increased 4% sequentially and 18% year over year. Utilization rates across all rigs was 87% (down from 91% last quarter).
No position
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