Transocean Stock Drops After Announcing Upsized Share Offering At A Discount

Shares of Transocean (RIG) tumbled in pre-market on Thursday after the company announced the pricing of an upsized share offering at a steep discount. 

Transocean plans to sell 125 million shares at $3.05 each, 16% lower than Wednesday’s close of $3.64, raising roughly $381 million before fees. The company increased the offering from 100 million shares, as initially proposed on Wednesday, and granted underwriters a 30-day option to purchase up to an additional 18.75 million shares. 

The company stated that the proceeds from the sale will be used to pare debt, including a portion of $655 million in 8% senior notes due in 2027. The offering is expected to close on Friday.

Transocean’s stock was down more than 15% at the time of writing. However, retail sentiment around the offshore drilling company jumped to ‘extremely bullish’ from ‘bullish’ territory and chatter rose to ‘extremely high’ from ‘high’ levels over the past day, according to Stocktwits data. 

Earlier this year, the company set a target to cut $700 million in debt by year-end. As of June 30, the company's long-term debt totaled $5.89 billion.

Transocean is among the many energy firms looking to trim costs amid persistent pressure on oil prices, with many forecasting crude to fall below $60 per barrel by year-end, including the U.S. Energy Information Administration (EIA). The prolonged slump is curbing investment in new projects, prompting major U.S. producers, including ConocoPhillips (COP) and Chevron (CVX), to implement job cuts as part of broader cost-cutting and consolidation efforts.

Read also: Starbucks Plans 900 Job Cuts, Store Closures With $1 Billion Restructuring Charges

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