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Seadrill (SDRL) agrees to buy the ultradeepwater semisubmersible rig Songa Eclipse from Songa...

Seadrill (SDRL) agrees to buy the ultradeepwater semisubmersible rig Songa Eclipse from Songa Offshore for $590M, giving SDRL increased exposure to the ultradeepwater market. SDRL intends to take delivery of the rig in December and expects the acquisition to have an immediate impact on cash flow and financial results. SDRL -0.5% premarket.
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Comments (9)
  • elliot_mllr
    , contributor
    Comments (1335) | Send Message
     
    Note that no day rates are given and the extent to which the acquisition will have an "immediate impact on cash flow and financial results" (presumably positive) is not stated.
    16 Nov 2012, 08:20 AM Reply Like
  • saratogahawk
    , contributor
    Comments (2038) | Send Message
     
    elliot you can use $524,000 as an approximate day rate for the firm contract period.
    16 Nov 2012, 10:48 AM Reply Like
  • eppf2
    , contributor
    Comments (257) | Send Message
     
    The SONGA ECLIPSE is under contract with TOTAL, and is located off shore ANGOLA.
    The contract is thru 2013 with three, 1 - year options that could take it thru 2016.

     

    I have been unable to confirm the current day-rate.
    16 Nov 2012, 08:51 AM Reply Like
  • Nahodny Okoloiduci
    , contributor
    Comments (147) | Send Message
     
    Good for long term, bad for short term.
    16 Nov 2012, 08:57 AM Reply Like
  • wigit5
    , contributor
    Comments (4120) | Send Message
     
    which means if your interested buy after the dip, and hold on for the slow trend upwards while collecting the incredible dividend
    16 Nov 2012, 09:16 AM Reply Like
  • Nahodny Okoloiduci
    , contributor
    Comments (147) | Send Message
     
    I think this is the main question: sustainability of such high dividend payout in front of the mountain of debt.
    16 Nov 2012, 09:23 AM Reply Like
  • wigit5
    , contributor
    Comments (4120) | Send Message
     
    It's a good question and I'm not sure of the answer although from what I've read this industry always has a lot of upfront debt due to the nature of needing to buy massively expensive rigs to produce revenue.

     

    If they don't start to pay off some of the debt in the near future it would concern me.
    16 Nov 2012, 09:27 AM Reply Like
  • mikebboylan
    , contributor
    Comments (3) | Send Message
     
    mikebboylan@yahoo.com

     

    Seadrill's enormous gross income from rig rentals is partly tax-sheltered by the depreciation on its rigs, so while its dividend looks like, and is, a high percentage of net income, it's a more reasonable percentage of cash flow and therefore is probably sustainable for several years. When the depreciation on the rigs runs out (in about ten years), the picture changes, but things should be good until that time approaches.
    16 Nov 2012, 12:22 PM Reply Like
  • ikesrobby
    , contributor
    Comment (1) | Send Message
     
    It's like they always say; A man is only as good as the tools he has to work with
    16 Nov 2012, 03:06 PM Reply Like
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