Seadrill CFO sees 2016 rig recovery as oil spending revives

|About: Seadrill Limited (SDRL)|By:, SA News Editor

Seadrill (SDRL +0.9%) sees offshore drilling rig rates to fall further before the drilling business recovers in 2016 as industry exploration revives, CFO Rune Lundetrae says.

Explorers have cut investment plans to protect cash flow as rising costs and stagnating energy prices erode profit, but Lundetrae believes they will need to increase it again once oil supplies dwindle and as oil prices rise from current levels.

While SDRL won’t order more new rigs for 2016 delivery, it doesn’t plan to shut any rigs, Lundetrae says, declining to estimate by how much rates could fall before recovering; the company can “live with” day rates falling by $50K, he says.