Stock Market Today, Feb. 17: Transocean Pares Gains After Soaring Over 100% in 6 Months

Transocean (RIG 6.12%), an offshore rig company, closed Tuesday at $6.14, down 6.12%. Today’s drop could be a result of profit-taking after last week’s 52-week high or a reassessment of its all-stock Valaris (VAL 7.15%) acquisition.

Trading volume reached 80.8 million shares, about 98% above its three-month average of 40.9 million shares. Transocean IPO’d in 1993 and has fallen 61% since going public.

How the markets moved today

The S&P 500 (^GSPC +0.10%) added 0.10% to finish Tuesday at 6,843, while the Nasdaq Composite (^IXIC +0.14%) also rose 0.14% to close at 22,578. Within oil and gas drilling, Noble (NE 5.15%) couldn’t sustain last week’s gains and closed at $43.47, down 5.13%. Helmerich & Payne (HP +0.33%) finished at $33.31, up 0,33% after mixed results at the beginning of the month.

What this means for investors

Transocean changed course today, after gaining 108% in the past six months. Its strong run has been driven by a string of positive announcements, most recently new contracts in Norway that add over $180 million in backlog.

The biggest news is its $5.8 billion acquisition of Valaris, which initially boosted the stock. Not only does the deal promise cost synergies, but it would also give the company over 70 rigs and an estimated $10 billion backlog, making it the world’s largest offshore drilling contractor.

However, today’s dip may reflect shareholder concern about stock dilution as well as potential legal questions. Investors will be watching the company’s Q4 earnings on Feb. 19 for more details on the Valaris deal, particularly how the numbers add up.