Transocean CEO's Exit Unlikely to Swing Fortunes

Transocean Ltd's decision to replace its chief executive will do little to help the company cope with an aging fleet and lower demand for its rigs due to a steep fall in oil prices, analysts said.

 

Shares of the company, which also slashed its dividend by 80 percent to 60 cents per share, fell as much as 4 percent to $18.22 on the New York Stock Exchange.

 

Transocean said on Sunday Chairman Ian Strachan would serve as interim CEO until a replacement was found for departing CEO Steven Newman.

 

The company has lagged its rivals because it failed to invest quickly to build ultra-modern drillships. A 50 percent drop in oil prices since June has added to its troubles.

 

"The challenges that RIG faces today with a competitively disadvantaged fleet and balance sheet ... will not be readily cured via CEO replacement," said Simmons and Co analysts.

 

Transocean faces a funding gap of $1.5 billion to $2.5 billion because of upcoming debt maturities and its payments towards new rigs.

 

Deutsche Bank analysts said the dividend cut, however, would be viewed positively as it would free up about $800 million per year.