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Transocean Ltd – Drilling Oil and Gas Wells
Transocean is a leading international provider of offshore contract drilling services for oil and gas wells. Transocean specializes in technically demanding sectors of the global offshore drilling business with a particular focus on deepwater and harsh environment drilling services, and operates the highest specification floating offshore drilling fleet in the world. Transocean owns or has partial ownership interests in and operates a fleet of 37 mobile offshore drilling units consisting of 27 ultra-deepwater floaters and 10 harsh environment floaters. In addition, Transocean is constructing two ultra-deepwater drillships.
Analysis Results
Intrinsic Value $10.72
Latest Price $3.72
Relative Value 65% undervalued
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Cash Flow (Billions)
Analysis Parameters
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Analysis Details
Growth Rate Projection

An exponential growth model was fit to the past cash flow data, giving more weight to more recent years. This model determined a growth rate estimate of -10.0%.

Weighted Average Cost of Capital (WACC)

The calculated WACC is 6.9%. This value is used as the default discount rate.

Value of Future Flows

Assuming a growth rate of -10.0%, the cash flows for the next 5 years are projected.

The present value of each year's flow is adjusted to present value using the discount rate.

Year Future flow (billion) Present value (billion)
2022 0.62 0.58
2023 0.558 0.488
2024 0.502 0.411
2025 0.452 0.345
2026 0.406 0.291
Terminal Value

Assuming a growth rate after the projection years of 2.0%, the terminal value of the company would be 8.41 billion. This corresponds to a present value of 5.62 billion.

Intrinsic Value Per Share

The total present value of the projected cash flows is 2.11 billion. Adding in the terminal value gives a total present value of 7.74 billion.

There are presently 722.0 million outstanding shares, so the intrinsic value per share is 10.72.

Financial Statements

The following data was to determine the past cash flows.

Current Assets 2,444,000,000
Current Cash 976,000,000
Current Liabilities 1,303,000,000
Current Debt 553,000,000
Non-Cash Working Capital (NCWC) 718,000,000
Change in NCWC -24,000,000
EBIT -50,000,000
Tax Provision 121,000,000
Depreciation and Amortization 962,000,000
Capital Expenditure -208,000,000
Unlevered Free Cash Flow 680,000,000
Current Assets 2,740,000,000
Current Cash 1,154,000,000
Current Liabilities 1,386,000,000
Current Debt 542,000,000
Non-Cash Working Capital (NCWC) 742,000,000
Change in NCWC 13,000,000
EBIT 188,000,000
Tax Provision 27,000,000
Depreciation and Amortization 996,000,000
Capital Expenditure -265,000,000
Unlevered Free Cash Flow 932,000,000
Current Assets 3,640,000,000
Current Cash 1,790,000,000
Current Liabilities 1,724,000,000
Current Debt 603,000,000
Non-Cash Working Capital (NCWC) 729,000,000
Change in NCWC 26,000,000
EBIT -100,000,000
Tax Provision 59,000,000
Depreciation and Amortization 1,042,000,000
Capital Expenditure -387,000,000
Unlevered Free Cash Flow 581,000,000
Current Assets 3,948,000,000
Current Cash 2,160,000,000
Current Liabilities 1,458,000,000
Current Debt 373,000,000
Non-Cash Working Capital (NCWC) 703,000,000
Change in NCWC 185,000,000
EBIT 213,000,000
Tax Provision 228,000,000
Depreciation and Amortization 930,000,000
Capital Expenditure -184,000,000
Unlevered Free Cash Flow 1,144,000,000
Current Assets 4,606,000,000
Current Cash 2,969,000,000
Current Liabilities 1,369,000,000
Current Debt 250,000,000
Non-Cash Working Capital (NCWC) 518,000,000
Change in NCWC -267,000,000
EBIT 597,000,000
Tax Provision 94,000,000
Depreciation and Amortization 832,000,000
Capital Expenditure -497,000,000
Unlevered Free Cash Flow 665,000,000
Current Assets 5,098,000,000
Current Cash 3,052,000,000
Current Liabilities 1,985,000,000
Current Debt 724,000,000
Non-Cash Working Capital (NCWC) 785,000,000
Change in NCWC -85,000,000
EBIT 1,221,000,000
Tax Provision 107,000,000
Depreciation and Amortization 893,000,000
Capital Expenditure -1,344,000,000
Unlevered Free Cash Flow 545,120,985
Current Assets 4,785,000,000
Current Cash 2,339,000,000
Current Liabilities 2,669,000,000
Current Debt 1,093,000,000
Non-Cash Working Capital (NCWC) 870,000,000
Change in NCWC 241,000,000
EBIT 3,275,000,000
Tax Provision 206,000,000
Depreciation and Amortization 978,000,000
Capital Expenditure -2,001,000,000
Unlevered Free Cash Flow 1,838,000,000
Current Assets 6,001,000,000
Current Cash 2,635,000,000
Current Liabilities 3,770,000,000
Current Debt 1,033,000,000
Non-Cash Working Capital (NCWC) 629,000,000
Change in NCWC 331,000,000
EBIT 2,691,000,000
Tax Provision 146,000,000
Depreciation and Amortization 1,124,000,000
Capital Expenditure -2,165,000,000
Unlevered Free Cash Flow 1,981,000,000
Current Assets 6,772,000,000
Current Cash 3,243,000,000
Current Liabilities 3,554,000,000
Current Debt 323,000,000
Non-Cash Working Capital (NCWC) 298,000,000
Change in NCWC 881,000,000
EBIT 2,298,000,000
Tax Provision 258,000,000
Depreciation and Amortization 1,094,000,000
Capital Expenditure -2,238,000,000
Unlevered Free Cash Flow 1,678,699,519
Current Assets 8,647,000,000
Current Cash 5,134,000,000
Current Liabilities 5,463,000,000
Current Debt 1,367,000,000
Non-Cash Working Capital (NCWC) -583,000,000
Change in NCWC -856,000,000
EBIT 1,685,000,000
Tax Provision 50,000,000
Depreciation and Amortization 1,306,000,000
Capital Expenditure -1,409,000,000
Unlevered Free Cash Flow 628,713,625

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