According to Transocean’s (RIG) CEO, very safe.
Bloomberg Citigroup’s Robin Shoemaker and team hosted an investor meeting with Transocean’s CEO Steven Newman, where investors pondered the sustainability of the company’s dividend. They explain:
Newman also was questioned about the proposed $3.00 dividend and whether it is sustainable if the market downturn lasts longer that the company currently anticipates. His response was to describe the actions the company is taking to boost its performance and financial flexibility to fund its dividend and carry out its fleet renewal strategy simultaneously. Among these actions are the sale or spin-off of the company's non-core assets (mostly older floaters), the formation of an MLP-like vehicle that would include some of the company's best and newest rigs, and the
completion of a plan to boost margins by $500 million by the end of 2015 through a combination of higher revenue efficiency and operating cost reductions. He indicated that there are multiple levers the company could pull to maintain its growth and its dividend through the current challenging phase of the business cycle. Our impression is that he sees the $3.00 dividend as a strong commitment.
Shares of Transocean are unchanged at $40.47 today, while Ensco (ESV) has risen 0.7% to $52.43, Atwood Oceanics (ATW) is little changed at $49.47, Diamond Offshore (DO) has risen 0.4% to $47.02 and Seadrill (SDRL), whose strategy Transocean may be following, has ticked up 0.2% to $34.30.
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