We recently compiled a list of the 10 Worst Performing Energy Stocks in 2024. In this article, we are going to take a look at where Transocean Ltd. (NYSE:RIG) stands against other worst performing energy stocks in 2024.
U.S. Crude oil prices fell 2.56% on Tuesday, January 21, with U.S. crude closing at $76.89 per barrel. Global benchmark Brent crude also declined, settling at $79.29 per barrel, a decrease of 86 cents or 1.07%. The drop in oil prices came as President Donald Trump, following his inauguration on Monday, announced that his administration was considering imposing 25% tariffs on Canada and Mexico. These tariffs could potentially slow economic growth and, in turn, impact fuel demand.
In addition to the tariff considerations, President Trump signed a series of executive actions aimed at boosting domestic energy production. He declared a national energy emergency, sought to roll back restrictions on offshore drilling that were implemented during the Biden administration, and lifted the pause on new liquified natural gas (LNG) exports. These moves are expected to stimulate the U.S. energy sector by increasing domestic production and easing regulatory constraints.
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In an interview with Yahoo Finance on January 22, Andy Lipow, President at Lipow Oil Associates, discussed the implications of President Trump’s declaration of a national energy emergency and his push for increased oil and gas production in the United States.
Andy Lipow noted that while the Trump Administration’s policy of “drill baby drill” aims to boost domestic oil production, it does not necessarily translate into immediate or significant increases in exploration and production. The decision to invest in new drilling operations, especially in high-cost areas such as the offshore Gulf of Mexico and Alaska, depends on the financial viability and the current price of crude oil. Despite the easing of regulations and the availability of more acreage, oil companies will weigh the potential financial rewards of investing large sums of money to increase production.
Lipow acknowledged that the United States is already at peak oil production, outpacing both Russia and Saudi Arabia. This trend has developed over the past decade, and while the U.S. is expected to set another production record in 2025, the impact on global oil prices is not straightforward. The market is more influenced by the Administration’s policies overseas, such as sanctions on Russian oil exports and Iranian oil production. According to Lipow. the imposition of 25% tariffs on oil imports from Canada and Mexico could divert these supplies elsewhere, potentially raising the cost of gasoline and diesel for U.S. consumers. This is contrary to the Trump Administration’s goal of lowering energy costs. Lipow expressed that the combination of these factors, including sanctions on Russia, Iran, and Venezuela, coupled with slow global oil demand growth, is likely to result in higher prices throughout the year.
Lipow believes that the rollback of executive orders, such as lifting the freeze on new liquefied natural gas (LNG) permits, is seen as positive for U.S. energy production. The recent opening of new LNG export facilities in Louisiana and Corpus Christi, along with several more facilities coming online in the next couple of years, is expected to boost U.S. energy exports.
The Trump administration’s focus on supporting domestic energy production through regulatory rollbacks, increased access to resources, and incentives for new projects is expected to provide much-needed relief for companies currently facing challenges.
An aerial view of an oil rig with drillers in hard hats working on the platform.
Our Methodology
To compile our list of the 10 worst performing energy stocks in 2024, we used the Finviz and Yahoo stock screeners to find stocks that have experienced the most significant decline over the last year and have a market cap of more than $1 billion as of January 21. We then narrowed our choices to 10 stocks with the worst performance. We also included their market cap and hedge fund sentiment, which was taken from Insider Monkey’s Hedge Fund database of 900 elite hedge funds as of Q3 of 2024. The list is sorted in descending order of their performance as of January 21.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Transocean Ltd. (NYSE:RIG)
1-Year Performance as of January 21: -27.09%
Market Cap as of January 21: $3.44 Billion
Number of Hedge Fund Investors: 30
Transocean Ltd. (NYSE:RIG) is an offshore contract drilling company that provides services for oil and gas wells. The company owns and operates one of the largest fleets of ultra-deepwater and harsh-environment drilling rigs. Transocean Ltd.’s (NYSE:RIG) primary clients are oil majors and independent exploration companies seeking to develop resources in challenging environments.
Transocean Ltd.’s (NYSE:RIG) portfolio of assets, includes the only two eighth-generation ultra-deepwater drillships in the world, the Deepwater Atlas and the Deepwater Titan. These state-of-the-art rigs are equipped with cutting-edge technology, including 1,700 short-ton hoisting capability and 20,000-psi well control equipment, making them highly sought after by customers. By leveraging its high-specification fleet, Transocean Ltd. (NYSE:RIG) is well-positioned to capitalize on the growing demand for deepwater and ultra-deepwater drilling services.
Transocean Ltd. (NYSE:RIG) is engaged in active discussions with customers for projects commencing in 2026 and beyond. The company is seeing significant interest in its services, particularly in regions such as the Gulf of Mexico, Africa, and Brazil. In the Gulf of Mexico, Transocean Ltd. (NYSE:RIG) is expecting multiple programs to commence in 2026, with an average duration of around 12 months. Similarly, in Africa and the Mediterranean, the company is anticipating between 10 and 15 programs to start in 2026, driven by development projects in Nigeria, Angola, Ivory Coast, and Ghana. By securing long-term contracts and expanding its presence in these regions, Transocean Ltd. (NYSE:RIG) is confident of achieving sustained growth and increasing its market share. Transocean Ltd. (NYSE:RIG) is also focused on deleveraging its balance sheet and enhancing its financial stability. The company is committed to deploying excess cash to debt repayment, with the goal of reducing its net debt-to-EBITDA ratio to less than 3.5 times.
Overall RIG ranks 10th on our list of the worst performing energy stocks in 2024. While we acknowledge the potential of RIG as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than RIG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
