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Transocean’s Backlog Offers a Picture of 2017 and 2018 Revenues

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Transocean’s backlog

As of February 2017, Transocean (RIG) had a backlog of $11.3 billion compared with $12.2 billion at the end of 3Q16. A company’s backlog helps you gauge how and where its future revenue may stand.

Transocean’s backlog-to-TTM (trailing-12-month) revenue ratio rose to 114% from 109% in the previous month. This ratio was 209% in the same month last year.

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Backlog for 2016–2017

The following breakdown shows Transocean’s revenue backlog for 2017–2018.

  • The company’s backlog for 2017 stands at $2.4 billion. This is just 57% of the company’s total revenue in 2015. So if the company isn’t able to secure new contracts, its revenue for 2016 will be only 57% of its revenue in 2016.
  • Its backlog for 2017 stands at $1.9 billion—45% of the total revenue from the past four quarters.
  • Transocean’s contracts extend to 2028.
  • The company’s contracts are with established clients such as Chevron, BP, Exxon Mobil, Husky Energy, ONGC, Petrobras, and Statoil

Contract updates

  • In December 2016, Transocean’s newbuild drillship the Deepwater Conqueror commenced operations on its five-year contract in the US Gulf of Mexico at a day rate of $589,000.
  • Transocean’s customer for its rig the Deepwater Asgard exercised its right to terminate the contract. The company will be compensated for early termination with a lump-sum payment of $79 million, based on the operating day rate minus the operating cost per day.
  • Transocean’s rig the Dhirubhai Deepwater was awarded a three-well contract.
  • The Transocean Spitsbergen’s customer exercised one well option.
  • The rig Paul B. Loyd was awarded contract extension of around 30 days.

Peers

Offshore drillers (OIH) have yet to release their earnings for the quarter ended December 31, 2016. To learn how Transocean’s backlog in the previous quarter compares with Seadrill’s (SDRL), Noble’s (NE), Ocean Rig’s (ORIG), Diamond Offshore’s (DO) and Atwood Oceanics’ (ATW), see Offshore Drilling Companies: A Comparative Analysis.

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