Analyst: Seadrill results show offshore drillers continue to muddle along

Investors and analysts alike are underwhelmed by Seadrill's (SDRL -0.6%) latest quarter; shares opened higher, perhaps due to the surprise dividend increase, but have lingered in the red through the afternoon.

Cowen’s J.B. Lowe sees a mostly positive quarter, as pro forma EBITDA and operating income of $788M and $574M beat his respective estimates of $738M and $530M.

Howard Weil's David Wilson is mostly negative: SDRL announced delivery delays on several newbuilds, some up to six months, and investors may interpret these delays as the company buying time in order to secure contracts before delivery; during Q1, 91% utilization declined from 94% in Q4.

In the fleet update, the West Tellus is scheduled to roll off its initial contract in June, but has no indication of follow-on work; Wilson notes that if the rig were to go idle, it would be the newest/youngest drillship to do so, which would hammer home the demand challenges facing the industry.

Other offshore drillers also are lower: DO -2.2%, RIG -1.4%, ESV -0.8%, ATW -1.7%, RDC -1.1%.

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Comments (18)
  • mapodga
    , contributor
    Comments (7705) | Send Message
    Delivery delays on several new-builds... And now analysts complains... And before that they complained that tomuch new-builds comming this year and there risk that there is no clients for them.


    However it is returned analysts don't like drillers and complains.
    28 May 2014, 03:32 PM Reply Like
  • KenNagle
    , contributor
    Comments (291) | Send Message
    The continuing problem with "analysts" is that few if any have ever managed a company and they follow a herd mentality. Most have a tendency to do their analysis by looking in the rear view mirror.
    28 May 2014, 03:42 PM Reply Like
  • Capt Jack Daniels
    , contributor
    Comments (1466) | Send Message
    The results speak for themselves, as to these analysts? who?
    never heard of them before.


    Nice try.


    The quarter was positive just like many of the other drillers who reported.


    The company increased the dividend.


    The Russians virtually bought everything in the NADL store and are asking for seconds and third helpings.


    The driving forward while looking entirely in the rear view mirror is the best way to describe these anals.
    28 May 2014, 03:53 PM Reply Like
  • hhmcdon
    , contributor
    Comments (324) | Send Message
    After doing my own analysis a few days back I added SDRL to my portfolio. I'm up almost 7% along w/ a 10% dividend, what's not to like??
    28 May 2014, 04:00 PM Reply Like
  • guyjones
    , contributor
    Comments (22) | Send Message
    And, that's the proper way to do it -- conduct your own research and take stock of the comments and viewpoints of people whom you respect, and who have interesting insights to share, but, exercise your own free will to make an ultimate decision.


    Speaking for myself, I looked at the numbers, decided that the market had punished the stock price to a degree that was completely unhinged from the fundamentals and from future industry prospects, and took some time to learn more about the company and the drilling industry in general. I decided that this was a worthy move. A large-cap company that is well-run; situated in a major industrial sector that produces an increasingly scarce and perpetually consumed natural resource; trading at a 25% discount off of yearly highs; paying an 11% dividend yield. Yes, there is risk -- there always is -- but, I like this position and will see where it leads. I buy for the long haul -- no more day trading shenanigans for me -- I learned the hard way that, for the individual investor, that isn't investing; it is gambling. The Rosneft deal that was recently inked is good news, and, holds some good tidings for the future.
    29 May 2014, 12:36 PM Reply Like
  • Capt Jack Daniels
    , contributor
    Comments (1466) | Send Message
    Prudent Investor?


    Or just the boy crying wolf over and over and over.
    28 May 2014, 04:17 PM Reply Like
  • You wouldnt guess
    , contributor
    Comments (34) | Send Message
    Illeterate and innumerate analysts holds the sheets upside down...


    "Results speak for themselves"
    28 May 2014, 04:23 PM Reply Like
  • Arthur Fisher
    , contributor
    Comments (362) | Send Message
    These analysts have their compasses set directly for Whipsaw City. Need we recall all the prattle about Apple going under 400, then not worth 430, then not worth 530, and most recently that it "will peak sometime soon"? Note that all the other drillers were down more than SDRL; that's the future. The hunt for oil is more or less forever. Seadrill took big risks to get ahead of the pack. They have proven their value to lenders and now to Rosneft. This never was a game about this quarter or next quarter. Don't forget what whores say: "Cheap service is not good, and good service is not cheap."
    28 May 2014, 04:46 PM Reply Like
  • rocket1963
    , contributor
    Comments (98) | Send Message
    Long on SDRL
    28 May 2014, 05:12 PM Reply Like
  • dclutz47
    , contributor
    Comments (19) | Send Message
    Prudent investor.


    Wrong adjective. Buy some SDRL and cure your illness.
    28 May 2014, 05:35 PM Reply Like
    , contributor
    Comments (95) | Send Message
    Did RIG not have a good report week or so ago???
    28 May 2014, 05:39 PM Reply Like
  • WhitneyB
    , contributor
    Comments (903) | Send Message
    Whether the stock is good or bad depends on how far out you peg your horizon. I think the drillers will continue to get beat up by the hedges and their puppet analysts until they are ready to go after some other sub-sector. It wasn't that long ago that the refiners were the whipping boys. The prices got beat down enough to create value plays, the bargains were then touted and bought up, and the attention was re-directed to the next victim. Long, via '16 LEAPs bull call spread.
    28 May 2014, 05:48 PM Reply Like
  • Stock Market Mike
    , contributor
    Comments (3789) | Send Message
    Long naked $30 strike calls, currently up over 100%.


    Also long SDRL/NADL shares, up about 16% and 25%.


    2 Jun 2014, 03:59 PM Reply Like
  • Jay S
    , contributor
    Comments (149) | Send Message
    Even if the analysts are correct that a slowdown is coming so what! Look at how far they have dropped and the p/e's are in the single digits. My point is that bad news is already fully priced in. The dividends are spectacular especially with SDRL. These are top quality companies in essential businesses. This is when you buy them not when they are hitting new highs.
    28 May 2014, 07:15 PM Reply Like
  • long_on_oil
    , contributor
    Comments (1368) | Send Message
    You are right Jay, the bad news has been priced into SDRL ever since RIG announced reduced utilization rates. Sea Drills utilization rate dropped about 3% and these analyst think the world is coming to an end. That 3% drop could have been attributed to one or two rigs taken out of service for maintenance. A 3% drop is nothing. If you make a simple spreadsheet and take the time to follow the fleet report, you will get a good idea of the future earnings. You can't do that with any other business that I am aware of. Rates and times are locked in with Sea Drill and the only thing that really effects it is down time and we even know when that happens.
    Guys like Power Hedge keep up with the fleet report, so follow him and you have done your homework.
    29 May 2014, 07:51 AM Reply Like
  • Chancer
    , contributor
    Comments (4771) | Send Message
    I guess the analysts did not read the news about the Rosneft deal which certainly caused share prices of SDRL and NADL to rise- not the small dividend increases for both.


    Analysts sing the blues when they go short, buy cheap, and then sing praises when they go long. They cannot be trusted as they are deliberately manipulating prices.


    My only concern is that Rosneft buys all of SDRL and NADL and spoils the party.
    28 May 2014, 08:23 PM Reply Like
  • njbother
    , contributor
    Comments (1121) | Send Message
    Hmmm! Great 1/4. Great cash flow. Dividend increase. Dividend reserve increase. Debt paid down.


    Oops we will not rent a premium property at dirt cheap rates.


    Bravo for management. Not to be snobbish, but would any of you investors rent out your luxury condo as Secrion 8 housing for next to nothing?


    SDRL will get their rate or idle. They can afford to do so.


    Their backlog easily supports operations and cash flows.


    Again wise management is why I have owned SDRL for so. Any years, and will continue to hold it for many more.


    At $4/year I can be very patient.


    So I ask all the naysayers to please drive the price way back down, so I can add more below $30 as I did last year.
    29 May 2014, 07:57 AM Reply Like
  • You wouldnt guess
    , contributor
    Comments (34) | Send Message
    I'd say Seadrill is heading to USD 55-60 levels within 24 months.


    Lucrative +50% upside created with bullshit analysts and talk.
    29 May 2014, 10:49 AM Reply Like
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