Opinions Gordon Reid
Transocean Inc.RIGDON'T BUYAug 20, 2014
Stock price when the opinion was issued
As of Jun 23, 2026. Market Open.
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High debt, which they are paying down from free cashflow. Rig counts are up, a big milestone. Super-duper, high beta name to own when oil's not falling 5% in a day. Be strategic when to add. 12-ish% free cashflow yield, but see his Top Picks for a more compelling name.
Eric NuttallGiven the high spot price of oil now, you need to go to a high-beta oil name to capture a return.
Joe Terranova
Pete Najarian
The whole energy complex is falling today. There are concerns that people priced in too much growth in some of the pro-growth policies Mr. Trump wants to push, which are going to come later and more diluted. However, this is a survivor in energy and is the go-to company when it comes to deep-water drilling. Energy prices are still too cheap, and over the long haul they are going to drift higher, and this company will be a beneficiary. You could use pullbacks like this to add to your position.
One issue with these companies is where does oil go? This was trading at some value below the value of their actual rigs out there. He believes oil will be higher over the longer-term and this is a good company. If you compare the volatility over the next little while, it will do well and you can see a reasonable rate of return on it. Probably worth buying at these levels.
Big in offshore drilling. You could make a case that the value of the rigs is worth more than the share price right now. Oil/gas business is in a difficult environment, especially on the offshore side where costs are much higher. Expects oil will go down a little bit more when you will have a better opportunity to buy it.
When looking at drillers, you have to ask about utilization rates. You also have to look at day rates, how much they’re getting for their rigs. The whole industry has been in a bit of a downward trend and he thinks it has gone too far. It is sort of built on the fact that it is very, very costly to do offshore drilling and we have greater and greater opportunities for energy recovery on land based facilities. There will be an opportunity for these companies. His favourite is Ensco (ESV-N), which has the youngest fleet. Also, they made a very strategic buy of Pride at the depths of the last cycle. Because they have the youngest fleet, the utilization rates tend to be higher because they are not in dry dock for repairs as often. Trades at about 10X. Pays a 5.9% dividend.