Deepwater Update Q1 2025: Transocean $RIG, Valaris $VAL, and Noble $NE

We have just had quarterly earnings calls for the three major deepwater offshore drillship companies, Transocean (RIG), Noble (NE), and Valaris (VAL). While the market seems to be panicking over the price of oil, offshore is long cycle stuff, oil futures prices are still in the mid $60’s, and the futures prices are in contango. Offshore commitment is for years, and the breakevens are below shale, with almost 90% of projects having a breakeven below $50 a barrel vs $65 for shale, give or take.

The last two years of pain as a deepwater shareholder were caused by the oil supermajors delaying large capex programs due to uncertainty. But those programs have begun to be unleashed, with the first coming from Shell and Total Energies who booked two drillships from Noble each. With these contracts coming from European oil majors, it confirms what Transocean’s CEO announced, that the Europeans “unambiguously pivoted to embracing hydrocarbons.”