Transocean plans to acquire Valaris in an all-share deal expected to close in the second half of this year. The combined backlog is expected to rise to $10 billion, compared with Transocean\u2019s recently reported $6.1 billion, a 70% increase.<\/p>\n
Transocean\u2019s backlog has been falling for several quarters and was last near $10 billion in 2024, 2020 and 2017. The transaction is described as debt-free and is expected to reduce liabilities and raise liquidity.<\/p>\n
Transocean\u2019s net debt-to-EBITDA ratio is close to 3 and is expected to be 1.5 in two years\u2019 time. S&P Global lists Transocean\u2019s credit rating as CCC+.<\/p>\n
Long-term debt was close to $10 billion in 2019 and is now below $5 billion. Management cited retiring about $1.3 billion in debt and reducing annual interest expense by nearly $90 million.<\/p>\n
Transocean reported yearly adjusted EBITDA of $1.37 billion and free cash flow of $626 million. Cost reductions of $250 million in 2025\u20132026 are planned, with a further $200 million from the transaction, totalling $450 million.<\/p>\n
For 2025, operating income was reported as $705 million and other operating expenses as $854 million; adding $450 million would imply $1,155 million. Crude oil was stated as trading near $66 per barrel, and Transocean\u2019s share price was stated as $6.50.<\/p>\n
When we looked at this last year, the big story was Transocean’s planned acquisition of Valaris, which was set to close in the second half of 2025. That deal has since been completed, and the integration is underway. The latest fleet status report from February 2026 confirmed a combined backlog of $9.8 billion, which is very close to the $10 billion we anticipated and a significant increase from the standalone figures in early 2025.<\/p>\n
The external risk highlighted last year was the price of oil, which was hovering around a weak $66 per barrel. Today, with WTI crude holding steady near $82 per barrel, the environment for offshore projects has improved dramatically. This stronger pricing supports the “multiyear up cycle” thesis and gives Transocean’s clients more confidence to sanction new deepwater projects.<\/p>\n
We’ve also seen the balance sheet improvements play out as predicted, with the all-share deal helping to manage liabilities. The company’s most recent earnings call confirmed the net debt-to-EBITDA ratio is now approximately 2.2x, showing solid progress toward the 1.5x target mentioned in 2025. This continued de-risking of the company\u2019s financial profile is a key factor for us now.<\/p>\n
Last year’s analysis pointed out the stock was trading at just $6.50, despite fundamentals that were arguably stronger than in years when the price was over $14. With the stock now trading around $9.25, the market has begun to recognize this value, but implied volatility on options has started to ease as the merger uncertainty has passed. This suggests option premiums may be more reasonably priced than they were during the more speculative period of 2025.<\/p>\n
Considering this, selling out-of-the-money cash-secured puts could be an attractive strategy in the coming weeks. This approach allows us to collect a premium while expressing a bullish-to-neutral view on a company whose financial footing is clearly improving. Alternatively, for those with a more directly bullish outlook, buying call spreads would offer a defined-risk way to benefit from further upside ahead of the next quarterly earnings report.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Transocean to acquire Valaris in all-share deal, boosting backlog to $10B and cutting debt, costs.<\/p>\n","protected":false},"author":103,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-50458","post","type-post","status-publish","format-standard","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/50458","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/103"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=50458"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/50458\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=50458"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=50458"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=50458"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}