Seadrill paints gloomy drilling market outlook, -4.9% premarket


Seadrill (SDRL) -4.9% premarket after posting a rise in Q4 earnings but warning of possible market challenges this year as some projects face delays.

Oil companies currently have limited opportunities to fund exploration activities, thanks to relatively high dividend payouts and increasing development costs to bring new production on stream, SDRL says, thus "2014 and 2015 may show slower growth in activity levels than earlier anticipated."

SDRL had been adding ultradeep drilling vessels in recent years, but now says it will focus on its existing fleet until it sees oil companies raise spending.

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Comments (28)
  • wigit5
    , contributor
    Comments (4365) | Send Message
     
    Sounds like they are going to be cautious for a while.
    25 Feb 2014, 09:00 AM Reply Like
  • Reit Investor
    , contributor
    Comments (729) | Send Message
     
    Still a steal at $36 range and a 10.40% dividend. Buying more on the dip!
    25 Feb 2014, 09:27 AM Reply Like
  • FlaYankee
    , contributor
    Comments (133) | Send Message
     
    They will also freeze their current dividend and use excess cash flow to fund share buybacks and pay down debt, both prudent and shareholder friendly as the sector goes through this current market weakness. They are quite confident in the sustainability of the new annual $3.92 dividend and are basically focusing on current assets and upcoming newbuilds while not planning any more orders for drillships until the market provides clarity for future activity. Long SDRL
    25 Feb 2014, 09:33 AM Reply Like
  • User 195396
    , contributor
    Comments (446) | Send Message
     
    Dividend increased from $0.95 to $0.98.
    25 Feb 2014, 01:43 PM Reply Like
  • sarahpalin
    , contributor
    Comments (8) | Send Message
     
    Never have seen such ambivalence about a stock
    25 Feb 2014, 09:35 AM Reply Like
  • DividendInvestorLA
    , contributor
    Comments (3677) | Send Message
     
    Again, they did not say they would "freeze the dividend", just that they won't raise it if the market stays the same. I realize you're saying the same thing I am, but there is a not-so-slight difference of emphasis between the words they used and the way you expressed it.

     

    You do make a great point that few people noticed in that they are not placing new orders (they have 20 new builts coming), which again was always part of their strategy to build a new fleet to take advantage of the demand for newer ships.
    25 Feb 2014, 11:16 PM Reply Like
  • DividendInvestorLA
    , contributor
    Comments (3677) | Send Message
     
    Whose ambivalence..? I'm not. ;)
    25 Feb 2014, 11:16 PM Reply Like
  • Davephd
    , contributor
    Comments (1168) | Send Message
     
    You should have seen what they did to the drilling stocks in the early 1990's!
    25 Feb 2014, 10:33 AM Reply Like
  • Elz4107
    , contributor
    Comments (504) | Send Message
     
    Long, but cautious, on SDRL. Question: who is "they"? And who cares if you're right?
    27 Feb 2014, 12:00 AM Reply Like
  • tennis44
    , contributor
    Comments (70) | Send Message
     
    Sdrl is a great buy at present prices, this is a well managed and high div paying jewel. Buy and buy.
    25 Feb 2014, 11:13 AM Reply Like
  • JAC92651
    , contributor
    Comments (78) | Send Message
     
    The Reuters posting here on seeking alpha left out the most important positive nugget.

     

    http://reut.rs/1pp1xfP

     

    "But it expects year-on-year profit growth above 20 percent in subsequent quarters, it added."

     

    20% growth with a 10% dividend - sounds like a buy to me.

     

    The conference call should provide insights. If this line is accurate I see an uptrend commencing.
    25 Feb 2014, 11:15 AM Reply Like
  • fleagle
    , contributor
    Comments (149) | Send Message
     
    Interesting. At 1200EST:

     

    SDRL down ~6%
    NADL up ~2%

     

    Go figure?

     

    Long SDRL and NADL
    25 Feb 2014, 12:11 PM Reply Like
  • A Prudent Investor
    , contributor
    Comments (1192) | Send Message
     
    There is a squeeze coming and management is no being forthright.
    25 Feb 2014, 01:25 PM Reply Like
  • wigit5
    , contributor
    Comments (4365) | Send Message
     
    a Squeeze? what isn't management being forthright about?
    25 Feb 2014, 01:26 PM Reply Like
  • The Rebel
    , contributor
    Comments (2735) | Send Message
     
    It's just the imprudent investor trolling again.
    25 Feb 2014, 07:38 PM Reply Like
  • DividendInvestorLA
    , contributor
    Comments (3677) | Send Message
     
    Please do not answer the nonsense coming out of this person. There is nothing to gain and only time to waste.
    25 Feb 2014, 11:18 PM Reply Like
  • zodiakleo
    , contributor
    Comment (1) | Send Message
     
    I think that Wall Street short-sightedness is retarded. The company is doing the right thing...sustaining the dividend, buying back stock and paying down debt...

     

    I read one article that Wall Street was expecting a raising of the dividend and was disappointed...Just last week I read several articles that they were afraid that SDRL couldn't afford the existing dividend that SDRL currently has...MAKE up your minds...

     

    I am LONG and will continue to hold this stock from a $35.25/sh cost as long as they maintain the dividend....
    25 Feb 2014, 07:52 PM Reply Like
  • DividendInvestorLA
    , contributor
    Comments (3677) | Send Message
     
    zodiakleo: SDRL did raise the dividend.

     

    i am still waiting for a single one of the people trying to scare us about a dividend cut to apologize or even admit they were dead wrong...
    25 Feb 2014, 11:19 PM Reply Like
  • debitmyaccount
    , contributor
    Comments (6) | Send Message
     
    do you think this stock will get back above $40 anytime soon?
    25 Feb 2014, 08:30 PM Reply Like
  • arthur_bishop1972
    , contributor
    Comments (4394) | Send Message
     
    No. Drillers-even this one with the sky high div-are out of favor at the moment. Their results-look at today's pps action-wasn't well received. LT minded investors would be wise to p/u some shares here, but there's no rush. They may trade even lower (~$33-34) before consolidating. SDRL isn't going to disappear anytime soon.
    25 Feb 2014, 08:41 PM Reply Like
  • wigit5
    , contributor
    Comments (4365) | Send Message
     
    The fact that they are maintaining their divi for the near future, focusing on either paying down debt or doing buybacks, and that their guidance is just tepid I'd say 40$ by years end with the divi maintained. Barring a catastrophic collapse of the markets circa 2008/2000
    25 Feb 2014, 09:02 PM Reply Like
  • DividendInvestorLA
    , contributor
    Comments (3677) | Send Message
     
    You are way more courageous than I am. I have never been able to fathom the short-term action on SDRL.

     

    I do agree that it's a great investment: 20% growth with 10% yield. I wish there more like it.
    25 Feb 2014, 11:20 PM Reply Like
  • DividendInvestorLA
    , contributor
    Comments (3677) | Send Message
     
    How is 20% growth "tepid"?

     

    My read of what they said is they see no point in paying out more than 10% and they won't increase the base dividend (they are well-known for having special dividends on top of the base dividend) until the stock has gone back up, and why should they? Isn't a 10% yield for a growing company good enough?!
    25 Feb 2014, 11:22 PM Reply Like
  • tennis44
    , contributor
    Comments (70) | Send Message
     
    What do you not like about an oil driller paying a 10 per dividend , this company is well managed and will be the 40 range by years end. Buy all you can
    25 Feb 2014, 10:47 PM Reply Like
  • DividendInvestorLA
    , contributor
    Comments (3677) | Send Message
     
    Congratulations! You are my nominee for Most Misleading Headline of the Year (yes, in February - I am confident you'll be hard to beat!)

     

    I did read the report and it did no such thing.

     

    I am amazed as to how you'd come to that conclusion...
    25 Feb 2014, 11:13 PM Reply Like
  • Jsuse
    , contributor
    Comments (42) | Send Message
     
    Agreed, I just listened to the webcast and that headline is as misleading as it get's.
    26 Feb 2014, 02:36 AM Reply Like
  • mitrado
    , contributor
    Comments (2033) | Send Message
     
    Hey, people, don't beat up the shorts too much. I'm still waiting to add more shares around $32.2. Who cares? The lower, the better!
    26 Feb 2014, 05:39 AM Reply Like
  • DividendInvestorLA
    , contributor
    Comments (3677) | Send Message
     
    It's true that a stock you like at $35, you'll positively love at $32. :)

     

    That said, I think there's really no excuse for journalists to be so misleading, especially when there's no reason to be except laziness.
    26 Feb 2014, 01:20 PM Reply Like
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