This year, the industry has witnessed 46 ultra-deepwater contracts being signed, the highest level since 2008.
Management estimates that 53 new ultra-deepwater ships will be commissioned globally over the next few years.
Transocean is focusing on deepwater and ultra-deepwater exploration to drive revenues growth in the future.
Mr. Dudley is bullish on oil exploration in the fracking age, the ultra-deepwater age, the oil-sands age.
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However, ultra-deepwater drilling is attractive to contractors like Transocean since it offers better day rates and profit margins.
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During the first three quarters of 2012, the industry witnessed a total of 46 ultra-deepwater contracts being executed, the highest number seen since 2008.
The company has exercised options to add three additional high specification jackup rigs to its construction backlog and a fourth ultra-deepwater drillship, Williams said.
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Transocean is well-positioned in this space with over 27 ultra-deepwater floaters.
Recent discoveries off the coasts of West Africa, Brazil and a resurrection of drilling activity in the US Gulf of Mexico have spurred demand for ultra-deepwater rigs.
Transocean is looking to navigate these challenges by concentrating on high specifications sectors such as ultra-deepwater and harsh environment drilling where the competitive intensity is considerably lower.
Among the various offshore drilling practices, ultra-deepwater drilling is the most expensive and technically challenging method since it involves drilling at water depths of over 5, 000 feet.
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Although the outlook for ultra-deepwater drilling demand remains strong, Transocean could see increasing competition going forward due to the addition of new ultra-deepwater drilling capacity in the industry.
We believe that if the company continues the trend of strengthening its deepwater and ultra-deepwater assets, its average daily revenues per rig and the gross margins of its contract drilling business will be positively impacted going forward.
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Drilling and infrastructure costs for this ultra-deep shelf activity are estimated to be less than one-fifth that of the deepwater.
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