The Zacks Analyst Blog Highlights: Transocean, Total, Eni SpA, Exelon and Ameren

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Aug 17, 2012, 09:30 ET

CHICAGO, Aug. 17, 2012 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Transocean Ltd. (NYSE:RIG), Total SA (NYSE:TOT), Eni SpA (NYSE:E), Exelon Corporation (NYSE:EXC) and Ameren Corporation (NYSE:AEE).

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Here are highlights from Thursday's Analyst Blog:

Transocean Gets Contract Extensions

Recently, offshore drilling giant – Transocean Ltd. (NYSE:RIG) issued a monthly 'Fleet Update Summary' covering the company's drilling rig status and contract information.

Per the report, the company's midwater floater Sedneth 701 won a one-year contract from Nigerian Petroleum Development Company Limited or NPDC to work in the offshore region of the country. The contract is executable from September 2012 at a revised dayrate of $311,000, against a prior dayrate of $275,000.

Transocean's Sedco 714 received a one-year contract extension from Total SA (NYSE:TOT) to operate in the U.K. sector of the North Sea. The rig is expected to work at a dayrate of $395,000, up from prior dayrate of $253,000.

Another drillship – Transocean John Shaw – also got a one-year extension from Abu Dhabi National Energy Company or TAQA to work in the North Sea waters at a dayrate of $360,000, higher than the previous dayrate of $318,000.

The contract for standard jackup – GSF Key Manhattan – was extended for two years at a lower dayrate of $134,000, versus prior one of $137,000. The rig was contracted by Eni SpA (NYSE:E) and will work on the offshore basin of Italy.

Transocean also received a three well contract extension for GSF Galaxy II drillship – working in the U.K. waters of North Sea – from French multinational company – GDF Suez. The dayrate for the first well is fixed at $210,000, while the remaining wells will operate at a dayrate of $220,000.

However, jackup Discoverer 534 has been put up for sale, and hence will no longer be a part of the company's fleet.

Since the last update on July 18, new contract and extensions totaled a backlog of about $600 million.

Transocean is the leading offshore drilling contractor and the provider of drilling management services worldwide. Its current contract drilling fleet comprises 128 mobile offshore drilling facilities, which again include 49 high-specification deepwater floaters, 25 midwater floaters, 10 high-specification jackups, 43 standard jackups and one swamp barge in support of offshore drilling activities across the globe.

We are maintaining our long-term Neutral recommendation on the stock. Transocean currently retains a Zacks #3 Rank, translating into a short-term Hold rating.

Exelon to Raise Funds

Baltimore Gas and Electric Company ("BGE"), an operational unit of Exelon Corporation (NYSE:EXC), is set to offer 10-year notes worth $250 million due on August 15, 2022. The senior notes are expected to yield 2.8% interest per year and the offer is slated to close on August 17, 2012.

Exelon's unit will use the proceeds from this sale to finance its debt obligations especially the ones which are short-term and for corporate purposes.

Exelon and its subsidiaries issues notes from time to time and accumulate funds for expansion projects or to repay debts. On June 18, 2012, the company's subsidiary, Exelon Generation Company, priced a total $775 million of senior notes in two tranches.

The first series consisted of $275 million senior notes yielding 4.25% interest per year and maturing on June 15, 2022, while the second series comprised $500 million senior notes yielding 5.60% interest per year and maturing on June 15, 2042. The net proceeds from the issue were used for general corporate purposes.

The long-term debt as of June 30, 2012 was $18.1 billion, up considerably from $12.2 billion at year-end 2011. Interest expenses in second quarter 2012 were $261 million, and we believe interest expenses will escalate with this fresh offering of senior notes.

Despite a higher debt level, the debt-to-capital ratio at the end of the second quarter of 2012 was 46.7% versus 48.2% at year-end 2011, due to issue of equities in the first half of 2012. However, with the issuance of notes, the debt-to-capital ratio is expected to increase marginally to 47.1%.

Exelon Corporation retained its full-year earnings guidance range of $2.55 to $2.85 per share and pegged operating earnings in the range of 65 cents to 75 cents per share for the third quarter of 2012. The company expects cash from operations in 2012 to be $5.37 billion and also forecasts the issue of new debts of $1.75 billion during 2012. It expects to shed $1.07 billion of debt during the year.

The Zacks Consensus Estimates for the third quarter and full-year 2012 are currently pegged at 73 cents per share and $2.75 per share, respectively.

Exelon's closest peer Ameren Corporation (NYSE:AEE) also recently announced the sale of senior notes worth $400 million with interest rate of 2.7% due in 2022. The company plans to utilize the net proceeds of this offering along with other surplus cash primarily to redeem its outstanding 9.75% and 6.25% senior secured notes worth $450 million due in 2018 and also $51.1 million 5.50% senior notes due in 2014.

Like Ameren, Exelon currently maintains a Zacks #3 Rank, implying a short-term Hold rating.

Based in Chicago, Illinois, the company engages in the generation of electricity in the United States. It generates electricity from nuclear, fossil, hydro and renewable energy sources.

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