Goldman's Negative View On Rigs Continues

Goldman Sachs slashed its 2016 EPS estimate on Transocean LTD (NYSE: RIG) by 95 percent and the EBITDA view by 7 percent on lower-than-expected day rates on new contract awards and five idled rigs.

The offshore driller released its fleet status report, which showed its Actinia awarded a three-year off-shore India contract at a day rate of $101,000 (with $111 million in estimated contract backlog), Invictus awarded a three-month off-shore Trinidad contract at a day rate of $350,000 ($28 million estimated contract backlog) and Deepwater KG2 awarded a six-month India contract at an undisclosed date rate.

Related Link: Goldman Sachs Maintains Sell ON Transocean, Lowers PT TO $7.25

Vernier, Switzerland-based Transocean said its estimated 2016 out of service days increased by a net 56 days due primarily to contract preparation.

Analyst Waqar Syed maintained his Sell rating and cut the price target to $7.25 from $7.50, primarily due to "1) New contract awards at day rates below our expectations, 2) Five rigs idled and two rigs stacked in Mar/Apr."

Syed cut his 2016 EPS forecast to $0.01 from $0.20 and EBITDA estimate to $1.316 billion from $1.415 billion. The Street expects earnings of $0.32 a share for the full year.

Shares of Transocean were recently seen up around 6 percent at $11.13.