IPO Report: Transocean Partners (RIGP)

Francis Gaskins |

Transocean Partners (RIGP) RIGP is a growth-oriented limited liability company recently formed by Transocean, one of the world’s largest offshore drilling contractors, to own, operate and acquire modern, technologically advanced offshore drilling rigs. It is headquartered in Aberdeen, United Kingdom.

Nineteen other companies are scheduled for the week of July 28, 2014. The full IPO calendar is available at IPOpremium.

The manager and co-managers are Morgan Stanley, Barclay, Citigroup, J.P. Morgan, Wells Fargo Securities.  The joint managers are Credit Suisse, Goldman Sachs, BofA Merrill Lynch, DNB Markets, Mitsubishi UFJ Securities, Credit Agricole CIB, Standard Chartered.

RIGP scheduled a $350 million IPO with a market capitalization of $827 million at a price range midpoint of $20 for Thursday, July 31, 2014 on the NYSE.  SEC filings

Overview

RIGP is a growth-oriented limited liability company recently formed by Transocean, one of the world’s largest offshore drilling contractors, to own, operate and acquire modern, technologically advanced offshore drilling rigs.

Valuation

Glossary

Valuation Ratios

Mrkt Cap (mm)

Price /Sls

Price /Erngs

Price /BkVlue

Price /TanBV

% offered in IPO

.

           

Transocean Partners (RIGP)

$828

n/a

n/a

n/a

1.5

42%

             

Conclusion

The rating is positive.

7.25% yield, carve-out.

100% to selling shareholder.

Business

RIGP is a growth-oriented limited liability company recently formed by Transocean, one of the world’s largest offshore drilling contractors, to own, operate and acquire modern, technologically advanced offshore drilling rigs.

RIGP’s initial assets consist of a 51 percent interest in three ultra-deepwater drilling rigs that are currently operating in the U.S. Gulf of Mexico. RIGP generates revenue through contract drilling services, which involves contracting its mobile offshore drilling fleet, related equipment and work crews on a dayrate basis to drill oil and gas wells.

The historical results discussed below, and the unaudited condensed combined financial statements and related notes and the audited combined financial statements and related notes of what RIGP refers to as “our Predecessor”, represent 100 percent of the combined results of operations of all three drilling rigs in its initial fleet.

Upon the completion of this offering, RIGP will own a 51 percent interest in each of the RigCos. RIGP will control each RigCo through its ownership of the majority of its shares or limited liability company interests.

The Transocean Member will own the remaining 49 percent noncontrolling interest in each of the RigCos.

The RigCos own the following three drilling rigs:

- The ultra-deepwater drillship Discoverer Inspiration, which commenced operations in 2010 and is currently under a contract with Chevron through April 2020;

- The ultra-deepwater drillship Discoverer Clear Leader, which commenced operations in 2009 and is currently under a contract with Chevron through September 2018; and

- Tthe ultra-deepwater semi-submersible drilling rig Development Driller III, which commenced operations in 2009 and is currently under a contract with BP through November 2016.

Competition

The offshore drilling market is highly competitive with numerous industry participants, none of which has a dominant market share.

Drilling contracts are generally awarded through competitive bidding processes, where RIGP’s customers and potential customers’ main considerations are price, quality and technical capability of services and equipment. Industry supply and demand economics play an important role in the contractual terms, including the dayrates,

RIGP and its customers ultimately agree to.

As a result of these economic forces, in general, and the increased number of newbuild units entering the drilling market, specifically, RIGP’s ability to obtain future drilling contracts, if at all, may be subject to increased competition and impact its dayrates and utilization rates.

Dividend

$1.45 per year, 7.25% per year at $20, the price range mid-point.

Use of proceeds

The common units being offered are solely for the account of the selling unitholder, the Transocean Member, including the common units offered if the underwriters exercise their option to purchase additional common units.

RIGP will not receive any proceeds from the sale of common units by the selling unit holder.

The Transocean Member will pay all offering expenses, underwriting discounts, the structuring fee, financial advisory fees, selling commissions and brokerage fees, if any, incurred in connection with this offering and any exercise by the underwriters of their option to purchase additional units.

 

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
RIGP Transocean Partners LLC Representing Limited Liabi 15.93 -0.04 -0.25 346,237
BBO.PR.A:CH Big Bank Big Oil Split Corp. Class A Preferred Sha n/a n/a n/a n/a

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