What happened
Shares of Transocean (RIG +4.72%) nearly doubled over the first six months of 2021, rising 95.7%, according to data from S&P Global Market Intelligence, as market conditions and interest in ultra-deepwater projects continue to improve as the global economy emerges from the pandemic.
So what
The offshore drilling rig supplier recently had to delay delivery of two next-generation drillships because the energy industry's recovery is not linear. But climbing oil prices create a market conducive to Transocean's business.
Image source: Getty Images.
Brent oil prices, for example, remain north of $74 per barrel, even as there are some concerns that global economies that had roared to life following a year of decline due to the pandemic may be softening once more. New coronavirus variants have some worried that new lockdown orders are to come.
Now what
Transocean has a backlog of business worth $7.4 billion, indicating its customers are none too worried. And though alternative energy sources will continue to grow over the years, fossil fuels will be in high demand for decades.
The company reported revenue efficiency, or actual contract drilling revenue minus revenue lost from contract terminations or reimbursements, was an impressive 97.4% in the second quarter, indicating customer demand remains strong.
Oil and gas stocks just tumbled -- and Transocean was down nearly 8% -- because of a surprise drop in the latest U.S. gas demand weekly report from the Energy Information Administration, which showed a drop from 10.04 million barrels a day to 9.28 million barrels.
However, looking instead at the four-week average figures, gasoline demand was up nearly 10% to 9.49 million barrels, suggesting demand is as healthy as ever.
Insiders certainly don't seem to be overly concerned with Transocean's future. Last month director Frederik Mohn bought 9.9 million shares of Transocean stock on the open market worth over $40 million.
So with so-called "peak oil" not a thing many are worried about anymore, Transocean looks to have clear sailing for many years to come.
