Thu, Feb. 26, 3:57 PM
- Ensco (ESV -8.2%) has suffered a steady retreat throughout the session even though its Q4 earnings beat analyst estimates; ESV is badly lagging peers Seadrill (SDRL -2.4%) and Transocean (RIG -1.9%), who also released earnings during the past 24 hours.
- The difference appears to be ESV's unexpected decision to cut its dividend by a whopping 80% to $0.60 from $3, which equates to a 9% payout of 2015 operating cash flow; ESV is now yielding 2.3%.
- Credit Suisse says that while it was concerned about the dividend's long-term sustainability, it had thought a lower dividend would be an H2 2015 or H1 2016 event, also noting workforce cuts is "not the sign of a V shaped recovery."
- ESV reports Q4 utilization fell to 86% from 90% in the year-ago quarter, due mostly to increases in uncontracted rig days.
- CEO Carl Trowell said in today's earnings call that the company will shut down or cold stack a rig by mid 2015, costing ~$12M over the first two quarters, and could stack an additional rig if oil prices do not improve.
Thu, Feb. 26, 12:29 PM
- Seadrill (SDRL -0.8%) is modestly lower after Q4 earnings fell 32% Y/Y and saying the oil services sector is facing challenging times amid lower oil prices, spending cuts and an oversupply of rigs.
- SDRL's Q4 earnings from continuing operations of $0.78/share were ahead of the $0.60 consensus, but EBITDA of $672M was below estimates as operating costs came in ahead of expectations; the quarter was negatively impacted by a $232M non-cash impairment of goodwill relating to its jack-up rig segment.
- SDRL warns that stalled rig contracts worth a total $4.1B signed with Russia's Rosneft could be in danger, and says it received a contract cancellation from Talisman affecting $81M of backlog.
- Says spending cuts by oil companies amid lower oil prices "has severely curtailed drilling budgets for at least 2015," and that it expects requests to reduce rig rates or terminate contracts early and "may be willing to engage in discussions" to modify contracts.
Thu, Feb. 26, 3:31 AM
Wed, Feb. 25, 5:30 PM
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Nov. 26, 2014, 7:43 AM
- Seadrill (NYSE:SDRL) -9.9% premarket after announcing it will suspend dividend payments as Q3 profits were slashed nearly in half from the year-ago quarter.
- SDRL says it will pay no dividend after paying $0.95/share a year earlier because of "the significant deterioration in the broader offshore drilling and financing markets" over the past quarter; SDRL says it has the ability to sustain the dividend based on its existing order backlog, but the near-term offshore market was becoming increasingly challenging.
- SDRL expects the dividend pause to strengthen its capital position by $2B/year, which would be used to strengthen the balance sheet and invest in value-creating opportunities; the board authorizes a share buyback program of up to 10% of outstanding shares over the coming 12 months.
- SDRL's North Atlantic Drilling (NYSE:NADL) unit also -10%.
- Earlier: Seadrill could cut its dividend Wednesday, Morgan Stanley says
Nov. 26, 2014, 5:58 AM
Nov. 25, 2014, 5:30 PM
Nov. 5, 2014, 3:31 PM
- Rowan (RDC +4.4%) leads offshore drillers higher after easily beating Q3 earnings estimates and forecasting revenues to rise in 2015 despite its own predictions for a soft rig market next year; it certainly doesn't hurt that oil prices are higher today.
- FBR Capital says it likes RDC as both a near-term idea on a sentiment snap-back and as a longer-term investment opportunity for patient investors; the firm believes the risk in RDC is mitigated by the company's fully locked-up ultra-deepwater newbuild fleet, whose contract starts account for the entirety of net earnings growth it foresees from 2014 to 2016, as well as concentrated exposure to high-spec jackups, which make up 93% of 2015 jackup earnings and should see fundamentals hold up better than the other classes.
- Also: RIG +5.2%, SDRL +4.5%, ESV +3.6%, DO +5.7%, NE +5.4%, ATW +2%.
Oct. 23, 2014, 3:46 PM
- Diamond Offshore's (DO +5.5%) better than expected Q3 results is providing a lift across the offshore drilling sector today: RIG +3.8%, ESV +4.1%, RDC +2.6%, SDRL +1.9%, PKD +3.6%, HP +3.1%, ATW -0.5%.
- It was a trifecta of good news for DO: Its operating profit of $0.97/share easily topped Wall Street consensus for $0.79, it announced a special dividend of $0.75/share, and a positive fleet status update included two new rigs that had found work with Hess and Petrobras extending contracts on three rigs for three years.
- However, Cowen’s J.B. Lowe is cautious, noting that while that the $400K dayrates with Hess give DO a solid backlog though a soft time in the market, "they represent a new low in leading-edge newbuild ultra-deepwater floaters in this part of the cycle.”
Aug. 27, 2014, 8:33 AM
- 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.
Aug. 27, 2014, 5:57 AM
Aug. 26, 2014, 5:30 PM
Jul. 24, 2014, 12:34 PM
- Diamond Offshore (DO -5.9%) is sharply lower despite reporting better than expected Q2 earnings and revenues, as shares appear to be reacting more to the fleet status report that was released last night.
- DO's newbuild Ocean BlackRhino secured a contract, but only because it will take over the contract the Ocean Confidence was set to begin in April 2015, suggesting the BlackRhino could not secure its own contract in its delivery window; the customer has the option to extend the original $550K/day contract to a three-year contract at a $485K dayrate, a step down from recent three-year contracts in the $550K-$600K range - which Cowen analysts say is a reminder that the trend in ultra-deepwater dayrates remains firmly down.
- Other offshore drillers also are lower: SDRL -1.2%, RIG -2%, NE -1.9%, ESV -1.8%, ATW -1.6%, HERO -2.2%, RDC -0.8%.
May. 28, 2014, 3:28 PM
- 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%.
May. 28, 2014, 8:32 AM
- Seadrill (SDRL) +1.3% premarket after increasing dividends and forecasting earnings to show "meaningful improvement” in Q2 and increase further for the rest of the year as utilization rates rise (Q1 results).
- The dividend raise is a mere $0.02 (to an even $1.00) but SDRL had warned in February that it saw “limited value” in paying out more than $0.98 because of slowing growth in the rig market in 2014-15.
- SDRL says the market still "suffers from limited exploration drilling and delays in field developments,” bit it has seen "increased inquiries” in recent weeks.
- Q1 net income rose to $3.1B from $440M in the year-ago quarter on financial gains of $2.2B from the deconsolidation of Seadrill Partners; consolidated EBITDA was $788M, beating estimates of $740M.
May. 28, 2014, 6:06 AM
SDRL vs. ETF Alternatives
Seadrill Ltd provides drilling & well services to the offshore industry. It has a fleet of drilling units that is outfitted to operate in shallow water, mid-water and deepwater areas, in benign & harsh environments.
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