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Topic: Energy Stocks

Energy stocks: Deepwater oil holds the key for this drilling firm

Energy stocks: Transocean - Barents

Pat McKeough responds to many personal questions on specific stocks and other investing topics from the members of his Inner Circle. Every week, his comments and recommendations on a selection of the most intriguing questions of the past week go out to all Inner Circle members. And every Friday, we offer you one of the highlights from these Q&A sessions.

One question this week concerned energy stocks, specifically one stock that expects to benefit as the search for new oil production increasingly leads to the deposits found deep in the world’s oceans.

Q: Hi Pat: I enjoy your articles very much. They are a great help for making some of my decisions. What do you think about Transocean? I would appreciate your comments and recommendations on the company.

A: Transocean Ltd., (symbol RIG on New York; www.deepwater.com), is the world’s largest offshore-drilling contractor. The company operates rigs in all of the major offshore-drilling regions, including the Gulf of Mexico, the North Sea, the Middle East and off the coasts of West Africa, the U.K., Norway, Brazil and Canada.

Transocean specializes in technically demanding projects in deep water and other harsh environments. Its fleet consists of 45 floating rigs (including 25 ultra-deepwater rigs), 26 mid-water floating rigs and 65 shallow-water rigs.

As a member of my Inner Circle, you will get individual answers to your personal investment questions. And you will see my answers to questions other investors like you are asking. In fact, you will get virtually all the investment advice I have to give. You will have access to all of our advisories – The Successful Investor, Wall Street Stock Forecaster, Stock Pickers Digest and Canadian Wealth Advisor – and full access to the members-only, password-protected Inner Circle section of The Successful Investor Network website.

Although my team carefully researches all the stocks that members ask about, I personally review each and every recommendation. To ensure this close personal attention, only a limited number of members can be admitted to our Inner Circle. Under the pressure of world events, even more investors are asking for my personal investment advice. We are nearing our membership limit already. Click here to secure your membership in the Inner Circle right away.

Energy stocks: Transocean aims to improve earnings with new acquisition

Transocean just bought Norway’s Aker Drilling for $2.2 billion. The deal adds two harsh-environment drill ships Transocean’s fleet. Both are on long-term contracts. Aker has two more of these ships under construction, to be delivered in 2013. The Aker takeover should add to Transocean’s earnings in the current year.

Transocean’s shares have fallen steadily from a high of $86 in March 2011. That’s because the company has been forced to take more equipment than it expected out of service for maintenance. Operating costs have also risen. Both these issues have weighed on Transocean’s earnings.

The stock trades at 19.5 times the $2.00 a share that Transocean is expected to earn this year.

In the Inner Circle Q&A, Pat considers the near-term outlook for Transocean. But he also looks at this energy stock’s longer-term prospects in light of the fact that major new oil production must come from offshore deposits. He sums up with his clear buy-hold-sell advice.

Inner Circle members see Pat’s analysis and recommendations on the stocks other members have asked about in each week’s Inner Circle Q&A. You can view it immediately when you become a member of this special investment group. You will get Pat McKeough’s answers to your personal investment questions, full access to our members-only Inner Circle website, and many other membership privileges. Click here to get started right away.

(Note: If you are a current member of the Inner Circle, please click here to view Pat’s recommendation. Be sure to log in first.)

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