Seadrill -4% despite Q2 earnings beat, calls a halt to newbuilding orders

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

Seadrill (NYSE:SDRL) -4.1% premarket after beating Q2 earnings estimates, but it says it will refrain from ordering new rigs until the market became clearer to read.

SDRL already has 18 rigs under construction but John Fredriksen says the near-term market for ultra-deepwater drilling units remains challenging and is uncertain about how deepwater drilling rates will develop, driven by reduced exploration drilling that has led to a slower growth rate in overall upstream spending.

SDRL's Q2 earnings beat is largely due to a tax benefit; EBITDA came in at $641M, below forecasts of ~$663M and down from the $665M posted in the year-ago quarter.

Says it intends to prioritize returning cash to shareholders, and can maintain a quarterly dividend of $1/share well into 2016 even if the rig market fails to make a significant recovery.