Seadrill: When Is The Next Upcycle Coming?
Richard Zeits • 92 Comments
Richard Zeits • 92 Comments
Seadrill At Imminent Risk Of Bankruptcy... Really?
Power Hedge • 98 Comments
Power Hedge • 98 Comments
Tue, Sep. 27, 10:27 AM
- North American Drilling (NADL -4.1%) is sharply lower after Statoil (STO -2%) canceled its drilling contract for NADL's West Epsilon jack-up about two months before expiration; Seadrill (SDRL -2.2%), which owns ~70% of NADL, also is lower.
- NADL says it will receive an $11M lump sum payment because of the early termination.
- The rig's dayrate is $247K, so the cancellation means ~$14M in lost backlog; NADL's total backlog is now an estimated $370M.
Wed, Sep. 7, 5:36 PM
Thu, Sep. 1, 5:36 PM
Fri, Aug. 26, 5:05 PM
- Seadrill (NYSE:SDRL) is maintained with a Sell rating and a $2 stock price target at Evercore ISI, which issued a report today highlighting the company's massive amount of debt coming due during the next 12 months.
- The firm notes that Q2 results showed SDRL generated $303M in cash from operations and lowered capex to just $13M in Q2 from $37M in the prior quarter; the company built cash by $195M to $1.287B, and Evercore expects SDRL to continue to build cash as $2.388B of debt is due in the next 12 months, and believes additional debt-for-equity swaps and potential new equity issuances are likely.
- With ~20% of SDRL's floater fleet cold stacked and another 20% of the floater and jackup fleet idle, the firm thinks more cold stackings are likely, as well as deferral of five newbuild floaters and eight jackups through at least 2017.
Thu, Aug. 25, 8:19 AM
- 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.
Thu, Aug. 25, 5:46 AM
Mon, Aug. 22, 8:53 AM
- Seadrill (NYSE:SDRL) -2.2% premarket after saying it is reviewing its legal options after Mexico's Pemex cancels a two-year extension of the contract for the West Pegasus deepwater semi-submersible rig.
- SDRL says it had reduced dayrate payments for five of its jack-up rigs on the condition that Pemex would extend its deal for the West Pegasus by two years.
- SDRL says it is entitled to recover the dayrate discounts and the costs of demobilizing the rig.
Wed, Jul. 27, 5:57 PM
- Offshore drilling stocks were slammed today as crude oil prices fell to three month lows, but Atwood Oceanics (NYSE:ATW) took the worst beating, -8.6% following its latest fleet status update.
- The contract for the Atwood Osprey rig, which had been expected to start working for Woodside Energy until January 2017 at a $450K dayrate, was extended but at a new rate of $190K; also, no contracts were announced for two uncontracted, newbuild drillships despite talk of a potential Brazil agreement in the works.
- Also in today's trade: RIG -4.1%, DO -3.1%, RDC -4.6%, ESV -4.7%, SDRL -0.6%, NE -3%.
Fri, Jul. 22, 2:23 PM
- Transocean (RIG -5.5%) falls more than 5% after its latest fleet status report showed it stacked an additional six rigs, taking its total number of currently stacked rigs to 28, with reduced dayrates for others.
- RIG says it won a two-year contract for one of its semi-submersibles to operate off India for ONGC at a $127K dayrate, and a newbuild ultra-deepwater rig started operations on a 10-year contract in the Gulf of Mexico at a $498K dayrate.
- Following the report, RBC's Kurt Hallead says RIG shares have limited upside until the market gains more confidence in the supply and demand outlook for floating rigs in 2017-18. Currently, fundamentals continue to weaken for floating rigs, and it remains unclear where dayrates and utilization may bottom.
- Offshore drillers are broadly lower: RIGP -1%, DO -1.5%, ESV -4.2%, RDC -5%, SDRL -1.6%, NE -4.8%, ATW -3.6%, PACD -3.8%.
Mon, Jul. 11, 3:19 PM
- Transocean (RIG -2.4%) is sharply lower after Seaport Global downgraded its rating to Sell from Neutral with a $10 price target, as valuation "seems stretched... given that little has changed regarding the protracted oversupply of rigs in offshore markets."
- RIG also will have a higher annual cash interest expense burden due to last week's $1.25B unsecured note issuance, Seaport says.
- Offshore drillers are broadly lower as crude oil futures fell 1.4% to a two-month low $44.76/bbl: RIGP -2.2%, SDRL -1.1%, DO -0.3%, ESV -3%, NE -1.1%, RDC -0.4%, ATW -2.6%.
Wed, Jun. 29, 3:35 PM
- Transocean (RIG +5.1%) is upgraded to Hold from Sell with a $12 price target, raised from $11, at Evercore ISI, which says it is optimistic that the company has the management team to lead it out of the current downturn, and that earnings visibility and the balance sheet should improve shortly.
- The firm notes that RIG has enjoyed some success in securing new contracts, and some potential blend-and-extends are expected to be finalized shortly, but dayrates likely are at or near cash breakeven levels and RIG still needs to take additional steps to right-size its fleet.
- Evercore rates offshore drilling peers Ensco (ESV +3.3%), Noble Corp. (NE +2.4%) and Rowan (RDC +0.8%) at Buy, while Seadrill (SDRL +0.9%) and North Atlantic Drilling (NADL +0.7%) are rated Sell.
Tue, Jun. 28, 3:28 PM
- Ensco (ESV +5.9%) surges after Susquehanna upgrades shares to Neutral from Negative, citing recovering crude oil prices and the stock's valuation and relative underperformance; of course, rising crude prices today also are helping.
- The firm says higher crude prices has not sparked improved demand for offshore rigs, and it could take through 2018 before any material demand potentially arises, but ESV has underperformed other offshore drillers by a wide margin and now trades below the average for offshore drillers.
- But Evercore ISI remains cautious on offshore drillers, arguing that "not a single stock screens 'cheap,'" although it prefers ESV, Noble Corp. (NE +1.2%) and Rowan (RDC +3.5%) as relative Buys for their superior fleet quality, low operating cost basis, low capex and solid backlog, while Hold-rated Ocean Rig UDW (ORIG +3.6%) and Diamond Offshore (DO +1.8%) deserve "a degree of valuation differentiation due to its highly contracted fleet in the near term."
- Also higher today: RIG +3.9%, ATW +7.1%, SDRL +2.2%, SDLP +12.3%, PACD +2.7%.
Mon, Jun. 20, 9:16 AM
Tue, Jun. 14, 5:36 PM
Thu, Jun. 9, 2:02 PM
Thu, Jun. 9, 8:35 AM
- Seadrill (NYSE:SDRL) -4.1% premarket following news that it will make a second bond swap in a month to help trim its debt load.
- SDRL says it will issue 7.5M new common shares with par value of $2/share to some holders of its bonds due September 2017, in exchange for $50M of debt principal; SDRL completed a similar deal, worth $55M, last month.
- The new deal implies a bond price of $0.5475 on the dollar, a 3.8% premium to yesterday’s closing price, Nordea Bank says.
- SDRL has the equivalent of more than $3.7B of debt due for repayment by the end of 2017, according to Bloomberg.