Transocean, Inc. provides offshore contract drilling services for oil and gas wells. It contracts drilling rigs, related equipment, and work crews primarily on dayrate basis to drill oil and gas wells with a focus on deepwater and harsh environment drilling services. As of February 2, 2007, the company owned and operated 82 mobile offshore and barge drilling units, including 33 high-specification semisubmersibles and drillships, 20 floaters, 25 jackup rigs, and 4 other rigs. The company also provides other integrated services. Transocean primarily operates in the Far East, India, U.S. Gulf of Mexico, United Kingdom, Nigeria, the Mediterranean and Middle East, Brazil, Norway, other West African countries, Australia, Canada, the Caspian Sea, and Venezuela. The company was founded in 1953 and is based in Houston, Texas.

Energy Industry Analysis

WikiWealth.com Industry Description: The energy industry is a generic term for all of the industries involved in the production and sale of energy, including fuel extraction, manufacturing, refining and distribution. Modern society consumes large amounts of fuel, and the energy industry is a crucial part of the infrastructure and maintenance of society in almost all countries. In particular, the energy industry comprises of oil, gas, coal, nuclear, hydro, wind, solar, and firewood fuel sources…. Read More. Also see the Industry Analysis Home Page.

WikiWealth.com Industry Analysis: The energy industry tends to be very sensitive to economic changes. Demand for energy is inelastic, so it does not easily change with changes in price. Therefore, changes in supply have a large impact on the price of fuel. Some sectors of the energy industry require large investments over an extended period of time, which causes issues with adjusting energy supply with demand, so prices tend to be volatile. Energy industry stock prices tend to move in line with energy commodity prices. During economic recessions, consumers may decrease expenses slightly, but the majority of energy costs are not flexible, because they are needed for everyday living.

Since energy needs are inflexible, stock prices are less influenced by changed in the economy. However, commodity prices such as oil or natural gas have a direct impact on energy stock investments. Changes in commodity prices are a result of changes in supply and demand. Recently, oil prices increased, because of the demand for oil from emerging markets. Unfortunately, the global recession decreased growth estimates and demand until oil prices fell from 160 dollars a barrel to 35 dollars a barrel.

Part of oil prices changes are do to speculation. When speculators increase the price of oil, many alternative sources of fuel become profitable. When companies make investments in these alternative sources of fuel, supply increases until energy prices start to fall. If prices fall too far, then the alternative fuel sources become less profitable and shutdown, which decreases demand. Stock prices rise and fall with energy commodity prices.

¹ WikiWealth.com only uses the largest 30 companies in each industry for the basis of these financial measures. Each statistic is the market weighted average of the 30 companies.

² Investment potential (margin of safety) is a weighted average of the discounted cash flow analysis (DCF), the enterprise value (EV) market multiple analysis, and the Warren Buffett investment analysis. WikiWealth obtains 80% of their quantitative investment potential from fundamental investment analysis.

WikiWealth.com Profit Analysis: The best way to profit from energy stock investments is to find the most undervalued investments (Wall Street and Main Street buy ratings) during economic recessions. Those investments should be undervalued (see Wall Street Analysis on left side), and have high Main Street Common Sense investment ratings (see Main Street Analysis on right side). When an economic recovery occurs, energy stocks tend to outperform the general stock market, because general consumer demand increases.

Energy stocks are most sensitive to commodity prices, which are an indicator of future energy demand. Energy commodity speculators try to predict the demand and supply of commodities, but their generally set prices too high during economic expansions and too low during economic recessions. Therefore, the best time to make energy stock investments is during economic recessions. The best time to sell energy stocks is in the late stages of economic expansions, when energy stocks and commodity prices are above their fair prices. Expensive (overvalued) stocks with low Main Street Common Sense ratings should be sold at any time to invest in better stocks. Two buys ratings are the best and two sell ratings are the worst possible stock investments. For more information on stock research ratings click here.

Investment Moats

Investment Moats are fundamental investing theories developed by Warren Buffett and adapted to the SWOT analysis. Investment moats are general characteristics that separate great investments from average stock investments. The wider the investment moat the better. Read more: Investment Moats. For company-specific investment moats: SWOT Analysis.

SWOT Strengths Increase Investor Moats: Below is a list of relevant industry investment characteristics, if any exist

SWOT Weaknesses Decrease Investor Moats: Below is a list of relevant industry investment characteristics, if any exist

Stock Price Triggers

Triggers were developed by WikiWealth.com to predict changes in stock price direction, which depend on events outside of the control of the company. In general, if SWOT opportunities are greater than SWOT threats, the stock price should raise; the opposite is also true. For more precise measures, examine each SWOT opportunity and threat, then rank them according to importance and timing. The more important the investment characteristic, the greater the impact on stock direction. The sooner a investment trigger may occur, the more influence it will have on stock price direction. Read more: Stock Price Triggers. For company-specific stock price triggers: SWOT Analysis.

SWOT Opportunities are Positive Stock Price Triggers: Below is a list of relevant industry investment characteristics, if any exist.

SWOT Threats are Negative Stock Price Triggers: Below is a list of relevant industry investment characteristics, if any exist.

Long Company Description (help)

Transocean Inc. NYSE: RIG is the world's largest offshore drilling contractor. The company rents out floating, mobile drill rigs, along with the equipment and personnel needed for operations, to oil and gas companies at a daily rate that averaged $142,000 in 2006. Transocean's day rates currently extend as high as $650,000 for its deepwater drillships, which house dual activity derricks and are capable of drilling in ultra-deep ocean depths of 10,000 ft.

The company was spun-off from its parent, Birmingham, Alabama based Sonat Inc, in 1993 and was originally called Sonat Offshore Drilling, Inc. Sonat Offshore acquired the Norwegian group Transocean ASA in 1996 and adopted its name. In 2000 the company merged with Sedco Forex, and was renamed Transocean Sedco Forex. In 2001 the company bought Reading & Bates Falcon. The name of the company was simplified to Transocean in 2003.

Sedco Forex was originally part of Schlumberger until 2000 when it was spun off. Sedco Forex was originally formed from the merger of two drilling companies, the Southeast Drilling Company (Sedco) and French drilling company Forex.
Transocean employs approximately 21,000 people worldwide and has a fleet of 136 vessels and units as of August, 2008. It is incorporated in the Cayman Islands while the principal office is in Houston, Texas. The company has offices in 20 countries around the world, with major offices in Stavanger, Aberdeen, Perth, Brazil, and Indonesia.
On July 23, 2007, Transocean announced a merger with GlobalSantaFe Corporation. The merger was completed on November 27, 2007.

Oil and Gas Properties

Challenger Minerals Inc.
Challenger Minerals Inc. (CMI) is a focused and experienced screener of offshore oil and gas prospects worldwide, delivering risk-managed energy solutions for the benefit of its Joint Venture Participants (JV Participants) and to asset owners.
CMI was established in 1972 and is a wholly owned subsidiary of Transocean, the world's largest offshore drilling contractor. CMI is also affiliated with Applied Drilling Technology International (ADTI), the world's leading turnkey drilling company and also a subsidiary of Transocean. CMI has a successful track record of screening, facilitating and funding more than 250 projects worldwide under its current business model, initiated in 1995.

Frequently Asked Questions

1. What is your main business?
Transocean Inc. provides contract offshore drilling services for international, national and independent petroleum companies around the world. We have the largest fleet of mobile offshore drilling units, which includes drillships, semisubmersibles and jackups. Our deepwater and jackup fleets are the largest in the offshore drilling industry.

2. What is your main area of focus?
We focus on helping our customers construct all kinds of wells in water depths of the world's major offshore drilling markets, specializing in deepwater and harsh-environment drilling.

3. How do you rank against other offshore drillers and oilfield services companies in terms of market equity capitalization?
Transocean Inc. is the largest offshore drilling company by market equity capitalization.

4. Are you a member of the S&P 500?
Yes, the company was added to the S&P 500 in December 1999

5. How would you describe your business cycle and its impact on your operations?
The business cycle is driven mainly by the price of crude oil and our customers' level of spending on exploration and production efforts. Historically, these factors have caused large shifts in demand for mobile offshore drilling rigs, driving increased demand for our services.

6. What is your stock symbol, and where does your stock trade?
Transocean Inc. trades on the New York Stock Exchange under the symbol "RIG".

7. What are your CUSIP and ISIN numbers?
CUSIP: G90078 10 9
ISIN: KYG90078 10 90

8. How many shares of common stock are outstanding?
Approximately 318 million shares of common stock are outstanding.

9. How many employees does your company have?
Approximately 12,500.

10. Where is Transocean Inc. incorporated?
In the Cayman Islands.

11. Where are your principal offices?
4 Greenway Plaza, Houston, Texas

SWOT Analysis

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