{
  "@context": "https://frontierpicks.com/schemas/dossier.v1.json",
  "ticker": "RIG",
  "name": "Transocean LTD.",
  "url": "https://frontierpicks.com/dossiers/RIG/",
  "json_url": "https://frontierpicks.com/dossiers/RIG.json",
  "status": "WATCHLIST",
  "current_conviction": "LOW",
  "archetype": {
    "code": "a2",
    "n": 2
  },
  "current_thesis": "Transocean's shares are more likely to lag the S&P 500: its roughly $8 billion offshore-rig backlog has not lifted earnings, and 2027 revenue is guided flat at $3.85–4.0 billion. The 24 November 2026 Valaris votes and the deal's targeted 1 December 2026 closing are the next tests.",
  "invalidation_trigger": "A daily close above $5.95, which would put the shares over both the 50-day and 200-day moving averages and above the 2026-11-03 post-report close, showing them leading again. A 2027 revenue outlook raised above the $4.0 billion top of the preliminary range would also prove the call wrong.",
  "catalyst_date": "2026-11-24",
  "portfolio": null,
  "pick": null,
  "themes": [
    "oil-energy-geopolitical",
    "m-and-a-special-situations"
  ],
  "tags": [],
  "sources": [],
  "caveats": [],
  "source_links": [
    {
      "title": "Transocean Ltd. - Form 8-K - FY2026",
      "url": "https://www.sec.gov/Archives/edgar/data/0001451505/000145150526000083/rig-ex99d1.htm",
      "date": "2026-11-02"
    },
    {
      "title": "Transocean posts breakeven miss as backlog surge and Valaris clearance shift focus to 2027",
      "url": "https://finviz.com/news/414590/transocean-posts-breakeven-miss-as-backlog-surge-and-valaris-clearance-shift-focus-to-2027",
      "date": null
    },
    {
      "title": "Transocean and Valaris merger secures all regulatory approvals ahead of December 1 closing",
      "url": "https://www.bairdmaritime.com/offshore/drilling-production/transocean-valaris-merger-regulatory-approvals",
      "date": null
    },
    {
      "title": "Transocean Ltd. - Form DEFM14A - FY2026",
      "url": "https://www.sec.gov/Archives/edgar/data/0001451505/000110465926115680/tm269762-10_defm14a.htm",
      "date": null
    }
  ],
  "evidence": [
    {
      "claim": "Q3 2026 contract drilling revenue $937 million, net income $26 million ($0.02 per diluted share), adjusted net income $1 million, adjusted EBITDA $313 million versus $312 million in Q2.",
      "source": "Transocean Q3 2026 earnings release, 8-K exhibit 99.1",
      "as_of": "2026-11-02"
    },
    {
      "claim": "Q3 adjusted EPS of $0.00 missed the $0.02 estimate; revenue of $937.0 million compared with a $937.2 million estimate.",
      "source": "Benzinga, 2026-11-02",
      "as_of": "2026-11-02"
    },
    {
      "claim": "Backlog about $8.0 billion; about $2.0 billion added from nine fixtures at a ~$423,000 weighted average dayrate; 2027 contract coverage about 95%.",
      "source": "Transocean Q3 2026 earnings release, 8-K exhibit 99.1",
      "as_of": "2026-11-02"
    },
    {
      "claim": "Debt principal $4,975 million at quarter end; $718 million repaid in the first nine months of 2026; total liquidity $1.3 billion.",
      "source": "Transocean Q3 2026 earnings release, 8-K exhibit 99.1",
      "as_of": "2026-09-30"
    },
    {
      "claim": "Guidance: Q4 2026 revenue $915–965 million; FY2026 $3,900–3,950 million; preliminary FY2027 $3,850–4,000 million with interest expense of $415 million.",
      "source": "Transocean Q3 2026 earnings release, 8-K exhibit 99.1",
      "as_of": "2026-11-02"
    },
    {
      "claim": "Ultra-deepwater floater utilization fell to 67.6% from 72.6%; net debt to EBITDA rose to 2.9x from 2.8x.",
      "source": "Earnings Whispers via Finviz, 2026-11-03",
      "as_of": "2026-11-03"
    },
    {
      "claim": "Morgan Stanley kept an Equal-Weight rating and cut its Transocean target to $6.50 from $7.00.",
      "source": "Benzinga, 2026-11-09",
      "as_of": "2026-11-09"
    },
    {
      "claim": "All regulatory approvals for the Valaris combination are received; closing is expected on 2026-12-01 with $200 million of identified annual synergies.",
      "source": "Transocean Q3 2026 earnings release, 8-K exhibit 99.1",
      "as_of": "2026-11-02"
    }
  ],
  "view_changes": [
    {
      "date": "2026-11-11",
      "at": "2026-11-11T23:16:00Z",
      "from": "MEDIUM",
      "to": "LOW",
      "kind": "invalidation_fired",
      "fact_date": "2026-11-03",
      "fact": "Transocean closed at $5.90 on 2026-11-03, below the published $6.00 kill line, after third-quarter adjusted earnings per share of $0.00 missed the $0.02 estimate."
    }
  ],
  "frame": null,
  "filed_numbers": {
    "as_of": "2026-11-13",
    "sector": "Energy",
    "financials": {
      "status": "ok",
      "reason": null,
      "close_date": "2026-11-13",
      "latest_quarter": "2026-09-30",
      "figures": {
        "revenue": {
          "status": "ok",
          "quarters": [
            {
              "end": "2026-09-30",
              "filed": "2026-11-03",
              "restated": null,
              "value_musd": 937,
              "yoy_pct": -8.9
            },
            {
              "end": "2026-06-30",
              "filed": "2026-08-07",
              "restated": null,
              "value_musd": 966,
              "yoy_pct": -2.2
            },
            {
              "end": "2026-03-31",
              "filed": "2026-05-05",
              "restated": null,
              "value_musd": 1081,
              "yoy_pct": 19.3
            },
            {
              "end": "2025-12-31",
              "filed": "2026-02-23",
              "restated": null,
              "value_musd": 1043,
              "yoy_pct": 9.6
            },
            {
              "end": "2025-09-30",
              "filed": "2025-10-30",
              "restated": null,
              "value_musd": 1028,
              "yoy_pct": 8.4
            },
            {
              "end": "2025-06-30",
              "filed": "2025-08-05",
              "restated": null,
              "value_musd": 988,
              "yoy_pct": 14.8
            }
          ]
        },
        "gross_margin": {
          "status": "ok",
          "quarters": [
            {
              "end": "2026-09-30",
              "filed": "2026-11-03",
              "restated": null,
              "pct": 37.1
            },
            {
              "end": "2026-06-30",
              "filed": "2026-08-07",
              "restated": null,
              "pct": 37.1
            },
            {
              "end": "2026-03-31",
              "filed": "2026-05-05",
              "restated": null,
              "pct": 43.9
            },
            {
              "end": "2025-12-31",
              "filed": "2026-02-23",
              "restated": null,
              "pct": 42
            },
            {
              "end": "2025-09-30",
              "filed": "2025-10-30",
              "restated": null,
              "pct": 43.2
            },
            {
              "end": "2025-06-30",
              "filed": "2025-08-05",
              "restated": null,
              "pct": 39.4
            }
          ]
        },
        "operating_margin": {
          "status": "ok",
          "quarters": [
            {
              "end": "2026-09-30",
              "filed": "2026-11-03",
              "restated": null,
              "pct": 15.3
            },
            {
              "end": "2026-06-30",
              "filed": "2026-08-07",
              "restated": null,
              "pct": 15.7
            },
            {
              "end": "2026-03-31",
              "filed": "2026-05-05",
              "restated": null,
              "pct": 26.5
            },
            {
              "end": "2025-12-31",
              "filed": "2026-02-23",
              "restated": null,
              "pct": 23
            },
            {
              "end": "2025-09-30",
              "filed": "2025-10-30",
              "restated": null,
              "pct": -163.1
            },
            {
              "end": "2025-06-30",
              "filed": "2025-08-05",
              "restated": null,
              "pct": -97.6
            }
          ]
        },
        "pretax_income": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-03",
          "value_musd": -75
        },
        "net_income": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-03",
          "four_quarters_end": "2026-09-30",
          "value_musd": 26,
          "four_quarters_musd": 292
        },
        "operating_cash_flow": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-03",
          "first_end": "2025-12-31",
          "value_musd": 923
        },
        "capital_spending": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-03",
          "first_end": "2025-12-31",
          "value_musd": 123
        },
        "free_cash_flow": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-03",
          "first_end": "2025-12-31",
          "value_musd": 800
        },
        "diluted_share_change": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-03",
          "base_end": "2025-09-30",
          "pct": 17.3
        },
        "cash": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-03",
          "value_musd": 499
        },
        "debt": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-03",
          "value_musd": 5018
        },
        "net_cash": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-03",
          "value_musd": -4519
        },
        "deferred_revenue": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-03",
          "value_musd": 185,
          "yoy_pct": -39.7
        },
        "backlog": {
          "status": "not reported"
        },
        "receivables": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-03",
          "value_musd": 645
        },
        "inventory": {
          "status": "not reported"
        },
        "equity": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-03",
          "value_musd": 8454
        },
        "market_value": {
          "status": "ok",
          "close_date": "2026-11-13",
          "basis_end": "2026-10-27",
          "basis_filed": "2026-11-03",
          "value_musd": 6187.7
        },
        "enterprise_value": {
          "status": "ok",
          "close_date": "2026-11-13",
          "basis_end": "2026-10-27",
          "basis_filed": "2026-11-03",
          "value_musd": 10706.7
        },
        "ev_sales": {
          "status": "ok",
          "close_date": "2026-11-13",
          "basis_end": "2026-10-27",
          "basis_filed": "2026-11-03",
          "multiple": 2.7
        },
        "ev_ebit": {
          "status": "ok",
          "close_date": "2026-11-13",
          "basis_end": "2026-10-27",
          "basis_filed": "2026-11-03",
          "multiple": 13
        },
        "pe": {
          "status": "ok",
          "close_date": "2026-11-13",
          "basis_end": "2026-10-27",
          "basis_filed": "2026-11-03",
          "multiple": 21.2
        },
        "pb": {
          "status": "ok",
          "close_date": "2026-11-13",
          "basis_end": "2026-10-27",
          "basis_filed": "2026-11-03",
          "multiple": 0.7
        },
        "fcf_yield": {
          "status": "ok",
          "close_date": "2026-11-13",
          "basis_end": "2026-10-27",
          "basis_filed": "2026-11-03",
          "pct": 12.9
        }
      }
    },
    "short_interest": {
      "status": "ok",
      "settlement": "2026-10-15",
      "published": "2026-10-26",
      "short_pct_of_outstanding": 27.99,
      "days_to_cover": 8.6,
      "change_pct": 4.6
    },
    "insiders": {
      "status": "ok",
      "as_of": "2026-11-15",
      "windows": [
        {
          "days": 90,
          "status": "ok",
          "from": "2026-08-18",
          "bought_usd": 0,
          "sold_usd": 0,
          "bought_unpriced": 0,
          "sold_unpriced": 0
        },
        {
          "days": 365,
          "status": "ok",
          "from": "2025-11-16",
          "bought_usd": 6203250,
          "sold_usd": 4836425.15,
          "bought_unpriced": 0,
          "sold_unpriced": 0
        }
      ]
    }
  },
  "body_markdown": "## Current Thesis\n\nTransocean's shares are more likely to lag the S&P 500 over the next three months. The offshore driller's backlog is near $8 billion, but its earnings are flat. Preliminary 2027 revenue guidance of $3,850–4,000 million is no higher than the $3,900–3,950 million guided for 2026 (company 8-K, 2026-11-02). The Valaris shareholder votes on 2026-11-24 and the targeted closing on or about 2026-12-01 are the next tests.\n\nThe $6.00 kill line was crossed on 2026-11-03, when the shares closed at $5.90 after the third-quarter report. That showed the earlier call, that contract wins would hold the October rally, was wrong. The shares closed at $5.31 on 2026-11-11, below both the 50-day and 200-day moving averages. The rating is Low because the report confirmed backlog growth but not earnings growth, and the main analyst action since then was a lower target.\n\nThe price reflects that gap. Morgan Stanley kept an Equal-Weight rating and cut its target to $6.50 from $7.00 on 2026-11-09 (Benzinga), so the market is valuing the shares on flat 2027 earnings rather than on the backlog figure.\n\n## Bull Case\n\n- **Backlog keeps rising.** Backlog was about $8.0 billion on 2026-11-02, up from roughly $6 billion at year-end 2025. Nine new fixtures since the August fleet status report added about $2.0 billion at a weighted average dayrate of about $423,000 (Q3 release).\n- **2027 is nearly sold out.** The company put 2027 contract coverage at about 95% on 2026-11-02 (Q3 release), and Earnings Whispers reported 2028 coverage of about 65%.\n- **Debt keeps falling.** Debt principal was $4,975 million at 2026-09-30, down from $5,107 million at 2026-06-30. The company repaid $718 million in the first nine months and redeemed the last $200 million of Deepwater Aquila notes early (Q3 release).\n- **Interest costs drop in 2027.** Interest expense is guided at $415 million for 2027, against $500 million for 2026 (Q3 release, 2026-11-02).\n- **The merger is cleared by regulators.** The Q3 release says all regulatory approvals for the Valaris deal are in hand, with closing expected on 2026-12-01 and $200 million of annual synergies identified. Earnings Whispers put pro forma backlog at about $12.7 billion.\n\n## Bear Case\n\n- **Third-quarter earnings missed.** Adjusted earnings per share were $0.00 against a $0.02 estimate, and revenue was $937 million against a $937.2 million estimate (Benzinga, 2026-11-02). Adjusted net income was $1 million (Q3 release).\n- **Earnings power has stalled.** Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $313 million in Q3, flat on Q2's $312 million and down from $440 million in Q1 (Q2 and Q3 releases).\n- **GAAP profit leaned on tax.** Net income of $26 million, or $0.02 per diluted share, included $93 million of discrete tax benefits and a $101 million pretax benefit-plan termination charge (Earnings Whispers, 2026-11-03).\n- **Deepwater fleet utilization fell.** Ultra-deepwater floater utilization dropped to 67.6% from 72.6%, and average daily revenue for those rigs fell to $442,100 from $455,500 (Earnings Whispers, 2026-11-03).\n- **Leverage edged up.** Net debt was 2.9 times EBITDA, up from 2.8 times, as trailing EBITDA declined. Earnings Whispers noted $763 million of 8.75% secured notes still to be addressed in 2027.\n- **A lower analyst target.** Morgan Stanley cut its target to $6.50 from $7.00 on 2026-11-09 and kept an Equal-Weight rating (Benzinga).\n\n## Setup & Price Structure\n\nThe shares closed at $6.94 on 2026-10-30, before the report. They closed at $5.90 on 2026-11-03, below the $6.00 kill line, then at $5.45 on 2026-11-04 and $5.10 on 2026-11-05. They recovered to $5.31 on 2026-11-11.\n\nThe 50-day moving average is $5.70 and the 200-day moving average is $5.89, both as of 2026-11-11. The shares sit below both. The three-month change is −7.2%, measured from a $5.72 close on 2026-08-13.\n\nThe 52-week intraday high is $7.66, set on 2026-05-19; the last close is 30.7% below it. The 52-week closing low is $3.84, from 2025-11-20. The $5.10 close of 2026-11-05 is the lowest close since the report. A move back over both moving averages would undo the post-report break.\n\n## Catalyst Calendar\n\n- **2026-11-24:** Transocean extraordinary general meeting and Valaris court-ordered scheme meeting. Both approvals are closing conditions; Valaris needs a majority in number of voting holders and 75% of the value voted, and Transocean holders vote on the new share issuance.\n- **2026-11-26:** Bermuda Supreme Court sanction hearing for the Valaris scheme. The final court step before closing; a delay would push back the combination and the synergy timeline.\n- **~2026-12-01 (est.):** Targeted closing of the Valaris combination. Closing ends deal-spread trading in the shares and starts the test of the $200 million annual synergy target against flat 2027 revenue guidance.\n\n## What Would Change Our Mind\n\nA daily close above $5.95, which would put the shares over both the 50-day and 200-day moving averages and above the 2026-11-03 post-report close, showing them leading again. A 2027 revenue outlook raised above the $4.0 billion top of the preliminary range would also prove the call wrong.\n\nThe line before it, a daily close below $6.00 set on 2026-11-02, was crossed on 2026-11-03: the shares closed at $5.90.\n\n## Correlation Notes\n\nTransocean trades most closely with Valaris (VAL), which it is set to acquire at 15.235 Transocean shares per Valaris share. Until closing, the two stocks move together on deal-spread news. In all-stock deals, merger arbitrage funds commonly short the acquirer's shares, which can weigh on Transocean until the deal closes. The shares also track crude oil and the offshore budgets of integrated majors such as Chevron (CVX) and Equinor, whose contracts make up much of the backlog. A broad move in oil prices would likely move the shares more than any single contract award.",
  "first_seen": "2026-11-10",
  "last_analyzed": "2026-11-11T23:16:10+00:00",
  "last_synthesized": "2026-11-11",
  "date_modified": "2026-11-11",
  "license": "Content © FrontierPicks. Cite the canonical URL."
}