Paulson May Get Offshore Drilling Payday

Chidem Kurdas

There have been widespread reports of losses at John Paulson’s Paulson & Co., largely due to falls in gold, silver and oil. Another big Paulson investment, however, got a recent boost.

Paulson & Co. has a stake of almost $2 billion in Transocean Ltd., the world’s largest offshore oil driller. Other large hedge funds are also holding Transocean, among them AQR and Winton Capital—-though in smaller amounts.

A new analyst report puts Transocean’s target price at $86.  The stock was trading around $65 today. Offshore drillers face two headwinds. Drilling stopped in theGulf of Mexicobecause of the Macondo accident. More seriously, there is excess capacity in drilling.

But the report says there is growing demand for offshore drilling in other parts of the world. Offshore oil is expected to meet one-third of the global demand for oil by 2025.

Looks like quite a few investors believe in Transocean’s future. For Paulson, black gold from the oceans may do better than the glittery stuff.

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