- Seadrill (NYSE:SDRL) +4.3% premarket after Q2 earnings fell 31% Y/Y amid lower rig rates but beat analyst estimates thanks to $285M in cost cuts YTD en route to fulfilling its revised 2016 cost-cutting target to $390M.
- Q2 EBITDA fell 14% Y/Y to $557M from $651M but exceeded the $510M analyst consensus as well as the company's own guidance; SDRL expects EBITDA will drop to $380M in Q3 and total $1.8B for the full year, implying a further decline to $335M in Q4.
- Eight of SDRL's rigs are coming off contracts during Q3 or will be idle for a longer period than in Q2, and three of its rigs will be paid lower rates.
- However, the company senses "a growing belief that we are at or near the bottom of this downcycle. There is a growing realization that the current level of investment is not sustainable and increased capital expenditure will be required to slow decline curves and grow production at some point."
- SDRL reiterates that it expects to conclude the refinancing process of its $10M debt by year-end.