Thesis
About one third of the world’s oil comes from fields far out at sea. Getting that oil means using very large, sophisticated drilling ships. Think of them like specialty cranes on water: there are only so many in the world, and you cannot build new ones overnight. Turning off “stacking” older ships and then turning them back on can take months and cost tens of millions of dollars.
Rates have nowhere to go but up
Because these high-tech ships are so rare, companies that need them are already paying as much as half a million dollars per day. Even if the overall demand for drilling does not grow much, the lack of spare rigs means those rates will stay high through 2026 and 2027.
The hidden boost in cash flow
Many people look at Transocean’s existing contracts, often called its “backlog”, and assume earnings will stay flat. Here is the catch: dozens of older contracts were signed when rates were lower. As those deals expire, the same ships will be put back to work at today’s much higher rates.
Why Transocean and not one of its other peers