Hot Clean Energy Stocks For 2017

Hot Clean Energy Stocks For 2017: Transocean Inc.(RIG)

Advisors' Opinion:

• [By Ben Levisohn]

  Transocean (RIG) beat earnings forecasts and probably has enough cash but Jefferies analyst Eduardo Royes and team still consider its stock to be a bigger risk when compared to its peers (I’m guessing they mean Diamond Offshore Drilling (DO), Noble (NE) and Ensco (ESV), among others). They explain why:

  Matthew Lloyd/Bloomberg News

  We tweak estimates and raise our PT on lower opex in normalized (as with peers). Liquidity doesn’t look to be an issue in the next few years, but the overhang forTransocean is unchangedwith 16 mostly older UDW floaters uncontracted today and our inability to see enough of an activity ramp to absorb re-entry of these rigs through 2018, downside risk is outsized versus peers. Normalized valuation feels reasonable, but it might give too much credit to UDW activity.

  Tough to see the market growing enough to absorb uncontracted rigs. We commendTransocean for figuring out how to materially lower its stacking costs on UDW rigs, and are willing to giveTransocean the benefit of the doubt that reactivation costs for some of these assets may not be significant today. That said, with the floater rigcount likely on pace to fall through YE16 (into the 150-160 range from 190 today), and given the seemingly low likelihood that floater activity in 2017 can do better than stabilize, oversupply conditions simply feel too great to allow for these rigs to come back for years to come (thus calling into question their longer-term economic viability). Although we do not believe there is a material technical disadvantage to Transocean’s older floaters, we suspect the first rigs to secure UDW work as (if) demand starts to emerge will be the currently committed 2013+ deliveries (“6th Gen V 2.0″ rigs), of which many roll off contract in 2017. What’s more, we suspect that more sister units to these 6G V 2.0 rigs will also co! me into contention for work as (1) better capitalized drillers will likely be w

• [By Ben Levisohn]

  Shares of Noble have dipped 0.4% to $5.72 at 2:37 p.m. today, a heck of a lot better than Transocean’s (RIG) 2.8% drop to$9.69, Ensco’s (ESV) 1.8% fall to$7.58, andAtwood Oceanics’ (ATW) 3.8% tumble to $7.87. Royal Dutch Shell has fallen 1.7% to$48.94.

• [By Shanthi Rexaline]

  Argus reaffirmed its Hold rating on the shares of Transocean LTD (NYSE: RIG), premising the action on its concerns that the company may be more exposed than peers to deteriorating conditions in the offshore drilling markets.

• [By Ben Levisohn]

  Fleet updates from Noble (NE) and Transocean (RIG) demonstrated that there is, indeed, work to be had at the right price.Raymond James analystPraveen Narra and team like what they saw in Transocean’s fleet update:

• [By Ben Levisohn]

  Oil stocks responded immediately to Opec–Murphy Oil (MUR) was our Hot Stock on Wednesday when the deal was reached, while Transocean (RIG) was our Hot Stock on Monday even before an announcement was made–Southwestern is only now catching a bid, a bid that pushed its market capitalization up to $6.5 billion.

source from Top Stocks For 2015:http://www.topstocksblog.com/hot-clean-energy-stocks-for-2017.html