• 4 minutes Energy Armageddon
  • 6 minutes How Far Have We Really Gotten With Alternative Energy
  • 10 minutes Russia Says Europe Will Struggle To Replace Its Oil Products
  • 14 hours GREEN NEW DEAL = BLIZZARD OF LIES
  • 9 hours Reality catching up with EV forecasts
  • 2 days "Natural Gas Price Fundamental Daily Forecast – Grinding Toward Summer Highs Despite Huge Short Interest" by James Hyerczyk & REUTERS on NatGas
  • 12 days US Oil Independence is a myth and will always be a myth
  • 2 days A Somewhat Realistic View of the Near Future for Electric Vehicles Worldwide
  • 8 days The Federal Reserve and Money...Aspects which are not widely known
  • 16 days Natural gas price to spike when USA is out of the market
  • 12 days Oil Stocks, Market Direction, Bitcoin, Minerals, Gold, Silver - Technical Trading <--- Chris Vermeulen & Gareth Soloway weigh in
  • 15 days "Biden Is Running U.S. Energy Security Into The Ground" by Irina Slav
  • 16 days *****5 STARS - "The Markets are Rigged" by The Corbett Report

Icahn to Pressure Transocean Board to Resume Dividend Payments

Billionaire investor Carl Icahn has decided to take advantage of the fact that offshore drilling companies seem to be highly undervalued despite the strong demand for deepwater drill rigs. He currently owns a 3.26% stake of Transocean Ltd (NYSE: RIG), made up of equity and options, and is now looking to spend an extra $682.1 million to increase his ownership to 5%.

The equity research team at Citi believes that Icahn will push for a return of dividend payouts at Transocean, one of the only offshore drilling companies not to pay dividends to shareholders; the likes of Noble and Rowan pay around 1.4% in dividends, Diamond Offshore pays 4.9%, and Seadrill pays 9%.

ADVERTISEMENT

Icahn may face difficulties trying to get the board to agree on resuming dividends this year, as Transocean are still recovering from the Macondo oil spill, having recently paid out $1.4 billion in order to settle civil and criminal charges with the US Justice Department. The company will try to keep its cash levels high for the year so that it may deal with any other liabilities that may arise from the Macondo accident.

ADVERTISEMENT

Related Article: Clean Tech Investments Plunged in 2012

Citi stated that, “Icahn’s actions broadly affirm, in our view, the fact that offshore drilling company share prices are deeply undervalued, even taking into account the cyclicality of their earnings and the operational challenges that the offshore drillers have faced in the wake of the Macondo well blowout and oil spill.”

As traditional oil fields start to decline, producing less and less yield each year, oil companies are forced to look for crude oil in less conventional places, such as deepwater locations. This has strengthened demand for offshore drill rigs and created interesting opportunities for investors; an opportunity made even more attractive by the undervalued stock across the sector.

By. Charles Kennedy of Oilprice.com



Join the discussion | Back to homepage

ADVERTISEMENT


ADVERTISEMENT


Leave a comment

Leave a comment

EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News