Transocean Ltd. (RIG): A Bull Case Theory

We came across a bullish thesis on Transocean Ltd. on Value Degen’s Substack by  Unemployed Value Degen. In this article, we will summarize the bulls’ thesis on RIG. Transocean Ltd.'s share was trading at $4.8700 as of January 8th RIG’s forward P/E was 18.15 according to Yahoo Finance.

Transocean Ltd., together with its subsidiaries, provides offshore contract drilling services for oil and gas wells in Switzerland and internationally. RIG latest fleet status report reinforces the company’s unusually high earnings visibility, as investors can track in real time how many rigs are deployed and at what day rates, leaving little room for surprises during earnings calls.

Even the recent impairment charge related to scrapping three cold-stacked rigs failed to meaningfully impact the share price, underscoring how well-telegraphed operational developments have become. The key takeaway from the earnings call was management’s strong optimism on the trajectory of offshore day rates heading into 2026 and beyond, alongside expectations for multiple long-term contract awards before the end of 2025. With only a short window left in the year, this guidance stands out as both bold and potentially market-moving.

Management indicated that several contracts expected to be announced imminently could carry day rates in the mid-$500,000 range, materially above current market expectations that largely center on low-$400,000 rates for 2026. If such contracts are awarded and disclosed, the implications would likely extend beyond Transocean, triggering a broad rerating across offshore drilling equities as investors reassess the earnings power of the entire sector. Importantly, even companies not directly awarded these contracts could benefit from improved sentiment and higher forward rate assumptions.

While critics argue that Transocean’s management has been overly optimistic in the past, prior bullish guidance was grounded in offshore capital expenditure plans that were later curtailed, temporarily stalling the contracting cycle. Management now believes that this lull has passed and that accelerating demand will drive steadily improving day rates through 2027. If confirmed by near-term contract announcements, this inflection would mark a decisive shift in the offshore cycle, positioning Transocean as a key beneficiary of a tightening market and setting up a compelling bullish case for the stock.

Previously, we covered a bullish thesis on Transocean Ltd. (RIG) by Unemployed Value Degen in February 2025, which highlighted improving offshore fundamentals, rising EBITDA, backlog visibility, and persistent undervaluation. RIG’s stock price has appreciated by approximately 52.66% since our coverage due to improved earnings visibility and stronger offshore sentiment. Unemployed Value Degen shares a similar view but emphasizes imminent long-term contract awards and higher-than-expected day rates.

Transocean Ltd. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 55 hedge fund portfolios held RIG at the end of the third quarter which was 32 in the previous quarter. While we acknowledge the potential of RIG as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.