How Is Transocean’s Contract Backlog Correlated To Crude Oil Prices?

Transocean’s contract backlog and crude oil prices are positively correlated, with a correlation of over 90%. As crude oil prices fall, the price realization of oil and gas producing companies decline, forcing them to pull back their production. This implies that they cut back their capital budget for exploration and production, leading to a sharp fall in the demand for exploration and drilling activities. As a result, the demand for drilling rigs goes down. In the table below, we show how the plummeting oil prices over the last few quarters has impacted Transocean’s contract backlog.

Have more questions about Transocean (NYSE:RIG)? See the links below:

• How Will Transocean’s Revenue Move If Crude Oil Prices Average At $50 Per Barrel In 2018?
• 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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