Jesup & Lamont Initiates Transocean (RIG) with a Buy
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Jesup & Lamont initiates coverage on Transocean (NYSE: RIG) with a Buy rating and a $231.88 price target.
The firm said, "Transocean is the world's largest offshore driller in the world. The current commodity environment should continue the current strong demand for the company's rigs and employees. With ten rigs coming online, the fleet size should continue to grow over the next few years and investors should benefit from the increased earnings stream. Investors should consider Transocean for their energy portfolios based on the current outlook for the company and the industry."
The company also highlighted that as of March 31, 2008, RIG had a backlog of over $32 billion for its contract drilling segment. Since then, numerous additional contracts have been announced. Jesup & Lamont believes that the merger with GlobalSantaFe "continues to add value as the two cultures are becoming one and the cost savings are beginning to be realized." The company plans to devote free cash flow for the next two years to debt reduction of the $15 Billion in debt created by the merger. Finally, the firm said, "steady contract announcements should indicate deepwater and jackup markets are currently strong."
Transocean Inc. is an international provider of offshore contract drilling services for oil and gas wells.
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