This article is part of our Rising Star Portfolios series.

Deepwater oil driller Transocean (NYSE: RIG) was the very first purchase I made in my Messed-Up Expectations portfolio. The thesis was pretty simple: Low expectations for growth were priced in because drilling in the Gulf of Mexico was uncertain after the major oil spill last year and Transocean, along with BP (NYSE: BP), was tagged in the public's mind as being responsible. Add in a tougher well certification process and uncertainty about financial liability from the spill, and things looked pretty bleak for Transocean.

Yet it has weathered the storm pretty well. First, during its last earnings conference call, management pointed out that all the blow-out preventers (BOPs -- a contributor to the Macondo well disaster) had been recertified on its ultra-deepwater rigs and that activity was picking up in the Gulf of Mexico.

Second, it is seeing increased utilization rates for its ultra-deepwater rigs, as shown in the table below.

Rig Type

Utilization / Avg. Daily Revenue, Sept. 30, 2010

Utilization / Avg. Daily Revenue, Dec. 31, 2010

Utilization / Avg. Daily Revenue, March 31, 2011

Utilization / Avg. Daily Revenue, June 30, 2011

Ultra-deepwater

77% / $422,800

76% / $435,900

77% / $467,700

80% / $516,600

Harsh environment

93% / $414,100

92% / $366,800

83% / $402,400

93% / $430,100

Midwater

73% / $328,400

68% / $298,500

60% / $313,000

54% / $333,000

High-specification jackups

61% / $138,100

38% / $162,600

40% / $106,200

56% / $110,300

Standard jackups

52% / $113,200

46% / $110,600

43% / $109,200

43% / $111,700

Total fleet

64% / $271,200

58% / $276,600

55% / $292,600

55% / $312,100

Source: Company 10-K and 10-Q filings for the 3-month periods ending on given dates.

As you can see, not all rig classes have improving utilization rates, such as the standard jackups, but management said in the call that the demand is picking up for these as well, leading to comments about reactivating some of the idled units.

More importantly, however, the average daily revenue for the various rig types and for the fleet as a whole is improving. With increased demand around the globe, that trend should continue.

Finally, demand for drilling rigs is also increasing, thanks to Petrobras' (NYSE: PBR) moves toward drilling in the fields off the coast of Brazil, increased activity off the coast of West Africa, and ExxonMobil's (NYSE: XOM) recent find of a new oil field in the Gulf of Mexico.

One last point in favor of Transocean: It has introduced a quarterly dividend that the board of directors believes is sustainable going forward. As of last night's price, the yield was 5.7%.

The risks with this company remain, particularly the one for financial liability from the oil spill last year. That, however, will take several years to work out. The price today is less than it was when I first purchased shares for the MUE port and the company's situation has arguably improved. Tomorrow, I'll increase the portfolio's position in Transocean.

After you add Transocean to My Watchlist, come discuss the decision on my Messed-Up Expectations discussion board, or follow me on Twitter.

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