No. of Recommendations: 2
Transocean reported Q4 2012 results a couple of days ago and they were generally good ( It came in a bit light on revenue, but beat on EPS estimates, bringing in $0.91 per share.

Icahn (who's the biggest shareholder at 5.6% of shares outstanding) convinced the board to reinstate the company's dividend, which it will (assuming a successful shareholder vote at the upcoming meeting). According to reports, it's not as high as Icahn wanted, but at $2.24 for the full year, that's 4.2% yield at last night's closing price.

For the year, rig utilization was generally up across the different classifications. Overall, utilization was at 78%, with UDW (ultradeep water) at 94%, DW at 61% and harsh environment at 87% (for overall high-spec floaters at 83%). However, for the quarter, it was a bit worse, with harsh environment down at 72%, dragging the high-spec floater utilization down a point to 82%. These are all the high revenue generators, so I'd really like to see these numbers climb. Overall fleet utilization was 79%, down a point YoY.

Management said that there will be a bit of hit to revenue efficiency this quarter thanks to having to replace some OEM bolts on several blowout preventers (this is an industry-wide issue, Atwood Oceanics said the same thing).

Good things happening:
     • Sold 38 shallow water jackups, as part of getting out of that type of low-spec drilling
     • Negotiating a contract for the newbuild UDW floater, Asgard. Currently, this is the only newbuild rig without a contract to begin upon delivery.
     • If negotiations work out, would start a newbuild UDW for delivery in 2015.
     • The settlements filed in January for civil and criminal charges from the US DOJ have been accepted by the court.

The market remains tight and dayrates are quite favorable.

I think RIG has turned the corner on most of its legal overhang and as that fades and the company gets more of its fleet consistently at work, share price should move up. We'll see.

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