How Will Transocean’s Revenue Change If Crude Oil Prices Average $50 Per Barrel In 2018?
Being a large oilfield service producer, Transocean’s revenue is highly correlated to commodity prices. The sharp fall in commodity prices over the last 20 months has resulted in a notable decline in the demand for exploration and drilling activity. As a result, the Swiss company had to retire and/or stack some of its existing rigs in order to survive the commodity downturn. This severely impacted the company, resulting in a drop of almost 20% in its revenue in 2015.
Based on a weak outlook for commodity prices in the near future, we expect crude oil prices to remain weak over the next couple of years, before gradually recovering to $70 per barrel by 2018. In this case, Transocean’s revenue is likely to fall further in 2016 and then improve steadily over the following two years. These numbers are presented in the table below under the base case calculations. If, however, the commodity markets grow slower-than-expected and crude oil prices average around $50 per barrel by 2018, Transocean’s revenue in 2018 will be 25% lower than estimated in our base case.
- How Will Transocean Weather The Lull In The Offshore Rig Market?
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- What To Watch As Transocean Reports Q4 Results
- What’s The Outlook Like For Transocean In 2019?
- What’s Transocean’s Outlook Like After Solid Q3?
Have more questions about Transocean (NYSE:RIG)? See the links below:
- How Will Transocean’s Revenue Move If Crude Oil Prices Rebound To $100 Per Barrel By 2018?
- How Has Transocean’s Revenue And EBITDA Changed Over The Last 5 Years?
- How Has Transocean’s Revenue And EBITDA Composition Changed Between 2010 And 2015?
- What Was Transocean’s Revenue And EBITDA Composition In 2015?
- Transocean’s Earnings Suffer Due To Weak Drilling Demand; Diminishing Backlog Likely To Cause Further Damage
- What To Expect From Transocean’s 2015 Financial Results?
Notes:
1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Transocean
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