Barclays: Best Time in Two Decades to Buy Oil Service Stocks
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 2 days ago
0mins
Should l Buy RIG?
Source: CNBC
- Sector Upgrade: Barclays upgraded the U.S. energy service and technology sector from neutral to positive, raising ratings for oil service providers like Halliburton from equal weight to overweight, reflecting confidence in the sector's future performance.
- Oil Price Volatility: Although oil prices fell to $90.51 per barrel due to reports of a potential U.S.-Iran deal, nearly 20% down from early April's peak, Barclays analysts believe Middle Eastern events will lead to structurally higher oil prices, driving a multi-year upstream spending cycle.
- Positive Outlook for Halliburton: Barclays raised Halliburton's 12-month price target from $37 to $55, implying a 36% upside from Wednesday's close, indicating significant benefits for the company amid rising oil prices.
- Offshore Services Potential: Barclays also upgraded Patterson-UTI Energy and ProPetro Holding to overweight, forecasting an increase in active deepwater rigs from 122 to 131 by the end of 2027, which will provide a tailwind for offshore oil service companies.
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Analyst Views on RIG
Wall Street analysts forecast RIG stock price to fall
7 Analyst Rating
2 Buy
2 Hold
3 Sell
Hold
Current: 6.170
Low
3.00
Averages
5.38
High
10.00
Current: 6.170
Low
3.00
Averages
5.38
High
10.00
About RIG
Transocean Ltd. is an international provider of offshore contract drilling services for oil and gas wells. The Company's primary business is to contract its drilling rigs, related equipment and work crews on a dayrate basis to drill oil and gas wells. As of February 9, 2017, it owned or had partial ownership interests in and operated 56 mobile offshore drilling units. As of February 9, 2017, its fleet consisted of 30 floaters, seven harsh environment floaters, three deepwater floaters, six midwater floaters and 10 high-specification jackups. As February 9, 2017, it also had four ultra-deepwater drillships and five high-specification jackups under construction or under contract to be constructed. Its contract drilling services operations are spread across oil and gas exploration and development areas throughout the world. The Company's drilling fleet can be characterized as floaters, including drillships and semisubmersibles, and jackups.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Barclays: Best Time in Two Decades to Buy Oil Service Stocks
- Sector Upgrade: Barclays upgraded the U.S. energy service and technology sector from neutral to positive, raising ratings for oil service providers like Halliburton from equal weight to overweight, reflecting confidence in the sector's future performance.
- Oil Price Volatility: Although oil prices fell to $90.51 per barrel due to reports of a potential U.S.-Iran deal, nearly 20% down from early April's peak, Barclays analysts believe Middle Eastern events will lead to structurally higher oil prices, driving a multi-year upstream spending cycle.
- Positive Outlook for Halliburton: Barclays raised Halliburton's 12-month price target from $37 to $55, implying a 36% upside from Wednesday's close, indicating significant benefits for the company amid rising oil prices.
- Offshore Services Potential: Barclays also upgraded Patterson-UTI Energy and ProPetro Holding to overweight, forecasting an increase in active deepwater rigs from 122 to 131 by the end of 2027, which will provide a tailwind for offshore oil service companies.
See More
Transocean Q1 2026 Earnings Call Highlights
- Strong Operational Performance: Transocean achieved a 98% uptime in Q1 2026, with adjusted EBITDA of $440 million and a margin exceeding 40%, demonstrating the company's competitive edge and profitability in the market.
- Backlog Growth: The company announced approximately $1.6 billion in new backlog, raising total backlog to over $7 billion, including a three-year contract with Var Energi at a daily rate of $450,000, reflecting robust market demand.
- Debt Management Progress: By retiring $358 million in debt, Transocean continues its deleveraging strategy, expecting to retire at least $750 million in total debt by the end of 2026, highlighting its commitment to financial health.
- Outlook Adjustment: Although the company reduced the upper end of its 2026 revenue outlook by $50 million to $3.9 billion, it raised capital expenditure expectations by $20 million, partly for environmental upgrades in Norway, with anticipated cost recovery through contract provisions by year-end.
See More
Transocean Reports Surprise Q1 Loss Despite Revenue Beat
- Surprise Loss: Transocean reported an adjusted EPS loss of $0.03 in Q1, missing estimates by $0.11, although revenue increased by 19.3% year-over-year to $1.08 billion, exceeding expectations by $48.3 million, indicating strong revenue efficiency.
- Contract Revenue Guidance: The company guided second-quarter contract drilling revenue between $930 million and $970 million, closely aligning with market expectations of $967 million, reflecting stability and predictability in the current market environment.
- Robust Backlog: New and extended contracts across five rigs added $1.6 billion to the backlog, bringing the total backlog to $7.1 billion, highlighting significant growth potential in the coming years.
- Improved Financial Position: Transocean strengthened its balance sheet by retiring $358 million of debt tied to its Deepwater Titan notes, reducing future interest expenses and enhancing financial flexibility for the company.
See More
Transocean (RIG) Q1 2026 Earnings Transcript
See More
Transocean Returns to Profit in Q1 Driven by Higher Revenues
- Profitability Recovery: Transocean reported a net income of $71 million in Q1, a significant turnaround from a loss of $79 million in the same quarter last year, indicating strong performance amid market recovery.
- Operating Income Surge: The company's operating income rose to $287 million from $64 million year-over-year, reflecting robust growth in contract drilling revenues and effective cost management.
- Increase in Contract Drilling Revenues: Q1 contract drilling revenues reached $1.081 billion, up 19% from $906 million a year ago, demonstrating a rebound in market demand and business recovery.
- Optimistic Future Outlook: Transocean expects second-quarter contract drilling revenues to range between $930 million and $970 million, with full-year revenue projections between $3.8 billion and $3.9 billion, showcasing confidence in future market conditions.
See More
Transocean Q1 Earnings Beat Expectations Despite EPS Miss
- Earnings Performance: Transocean reported a Q1 non-GAAP EPS of -$0.03, missing expectations by $0.11, indicating challenges in profitability; however, revenue reached $1.08 billion, up 3.8% year-over-year, exceeding market expectations by $50 million, reflecting strong business momentum.
- 2026 Outlook: The company projects contract drilling revenues for Q2 2026 to be between $930 million and $970 million, with full-year expectations of $3.8 billion to $3.9 billion, demonstrating optimism about future market demand, with revenue efficiency expected to remain at 96.5%.
- Cost Management: Operating and maintenance expenses are anticipated to range from $630 million to $660 million in Q2, and from $2.25 billion to $2.375 billion for the full year, indicating proactive measures taken by the company to control costs and enhance overall profitability.
- Liquidity Position: Transocean's total liquidity is expected to be between $1.25 billion and $1.35 billion, showcasing the company's financial robustness and providing ample funding support for future investments and expansions.
See More
Barclays: Best Time in Two Decades to Buy Oil Service Stocks
- Sector Upgrade: Barclays upgraded the U.S. energy service and technology sector from neutral to positive, raising ratings for oil service providers like Halliburton from equal weight to overweight, reflecting confidence in the sector's future performance.
- Oil Price Volatility: Although oil prices fell to $90.51 per barrel due to reports of a potential U.S.-Iran deal, nearly 20% down from early April's peak, Barclays analysts believe Middle Eastern events will lead to structurally higher oil prices, driving a multi-year upstream spending cycle.
- Positive Outlook for Halliburton: Barclays raised Halliburton's 12-month price target from $37 to $55, implying a 36% upside from Wednesday's close, indicating significant benefits for the company amid rising oil prices.
- Offshore Services Potential: Barclays also upgraded Patterson-UTI Energy and ProPetro Holding to overweight, forecasting an increase in active deepwater rigs from 122 to 131 by the end of 2027, which will provide a tailwind for offshore oil service companies.
See More
Transocean Q1 2026 Earnings Call Highlights
- Strong Operational Performance: Transocean achieved a 98% uptime in Q1 2026, with adjusted EBITDA of $440 million and a margin exceeding 40%, demonstrating the company's competitive edge and profitability in the market.
- Backlog Growth: The company announced approximately $1.6 billion in new backlog, raising total backlog to over $7 billion, including a three-year contract with Var Energi at a daily rate of $450,000, reflecting robust market demand.
- Debt Management Progress: By retiring $358 million in debt, Transocean continues its deleveraging strategy, expecting to retire at least $750 million in total debt by the end of 2026, highlighting its commitment to financial health.
- Outlook Adjustment: Although the company reduced the upper end of its 2026 revenue outlook by $50 million to $3.9 billion, it raised capital expenditure expectations by $20 million, partly for environmental upgrades in Norway, with anticipated cost recovery through contract provisions by year-end.
See More
Transocean Reports Surprise Q1 Loss Despite Revenue Beat
- Surprise Loss: Transocean reported an adjusted EPS loss of $0.03 in Q1, missing estimates by $0.11, although revenue increased by 19.3% year-over-year to $1.08 billion, exceeding expectations by $48.3 million, indicating strong revenue efficiency.
- Contract Revenue Guidance: The company guided second-quarter contract drilling revenue between $930 million and $970 million, closely aligning with market expectations of $967 million, reflecting stability and predictability in the current market environment.
- Robust Backlog: New and extended contracts across five rigs added $1.6 billion to the backlog, bringing the total backlog to $7.1 billion, highlighting significant growth potential in the coming years.
- Improved Financial Position: Transocean strengthened its balance sheet by retiring $358 million of debt tied to its Deepwater Titan notes, reducing future interest expenses and enhancing financial flexibility for the company.
See More
Transocean (RIG) Q1 2026 Earnings Transcript
See More
Transocean Returns to Profit in Q1 Driven by Higher Revenues
- Profitability Recovery: Transocean reported a net income of $71 million in Q1, a significant turnaround from a loss of $79 million in the same quarter last year, indicating strong performance amid market recovery.
- Operating Income Surge: The company's operating income rose to $287 million from $64 million year-over-year, reflecting robust growth in contract drilling revenues and effective cost management.
- Increase in Contract Drilling Revenues: Q1 contract drilling revenues reached $1.081 billion, up 19% from $906 million a year ago, demonstrating a rebound in market demand and business recovery.
- Optimistic Future Outlook: Transocean expects second-quarter contract drilling revenues to range between $930 million and $970 million, with full-year revenue projections between $3.8 billion and $3.9 billion, showcasing confidence in future market conditions.
See More
Transocean Q1 Earnings Beat Expectations Despite EPS Miss
- Earnings Performance: Transocean reported a Q1 non-GAAP EPS of -$0.03, missing expectations by $0.11, indicating challenges in profitability; however, revenue reached $1.08 billion, up 3.8% year-over-year, exceeding market expectations by $50 million, reflecting strong business momentum.
- 2026 Outlook: The company projects contract drilling revenues for Q2 2026 to be between $930 million and $970 million, with full-year expectations of $3.8 billion to $3.9 billion, demonstrating optimism about future market demand, with revenue efficiency expected to remain at 96.5%.
- Cost Management: Operating and maintenance expenses are anticipated to range from $630 million to $660 million in Q2, and from $2.25 billion to $2.375 billion for the full year, indicating proactive measures taken by the company to control costs and enhance overall profitability.
- Liquidity Position: Transocean's total liquidity is expected to be between $1.25 billion and $1.35 billion, showcasing the company's financial robustness and providing ample funding support for future investments and expansions.
See More
