Power Hedge
Macro, energy, alternative energy, contrarian

Seadrill Partners: T-16 Acquisition Will Increase Bottom Line But Dilution May Cancel Out Positive Effects

On Friday, October 11, 2013, Seadrill Partners (NYSE:SDLP) announced that it will be purchasing the T-16 tender rig from its corporate parent Seadrill (NYSE:SDRL) for $200 million less approximately $93 million of debt outstanding under the credit facility secured by the T-16 tender rig. This was a widely expected move that is unlikely to be a surprise to anybody that follows the company. The purchase of T-16 will significantly boost revenue, operating cash flow, EBITDA, and net income at Seadrill Partners beginning in the fourth quarter 2013. However, I believe that a more in-depth analysis is called for here.

T-16 is a brand-new, 2013-built tender barge utilizing the Seadrill Improved Super Class Self Erecting design. This...

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