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
Today, 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.
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.
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.
Thu, May 26, 3:57 PM
- Seadrill (SDRL -7.6%) recent purchase of the Cerrado drillship for $65M - less than one tenth of its newbuild cost - still was “probably too much” for a rig that has not worked for a year, CEO Per Wullf says, in remarks that an analyst says “would suggest that Wullf thinks that his own stock is grotesquely overvalued."
- “He’s basically saying that the drilling units are worth about $50 million, or possibly nothing at all, if they haven’t been working recently,” Canaccord's Alex Brooks tells Bloomberg, adding that SDRL’s current share price implies that similar rigs controlled by the company should be valued at ~$175M each.
- The Cerrado sale will have no effect on SDRL’s current efforts to restructure nearly $10B in debt, Wullf says.
- Now read Seadrill sinks as financing plan "appears to be taking longer to materialize"
Thu, May 26, 12:44 PM
- Seadrill (SDRL -6.4%) surrenders strong premarket gains and shares now trade more than 6% lower, as Wells Fargo analysts say SDRL’s “financing plan announcement appears to be taking longer to materialize.”
- Wells says SDRL's recurring Q1 EPS of $0.26 came in below its expectations of $0.37 and consensus of $0.39, primarily driven by higher taxes; reported EPS of $0.15 included ~$0.11 of charges for impairments and derivatives.
- The firm views the Q1 report as neutral to modestly positive but notes a lack of additional near-term disclosure on SDRL's pending debt refinancing and restructuring plans, and thinks the originally expected late Q2 financing plan appears to be taking longer to materialize, with the company now expecting to finish and execute its plans by year end.
- Now read Seadrill: Q1 2016 results review in a nutshell
Thu, May 26, 9:18 AM| Thu, May 26, 9:18 AM | 1 Comment
Thu, May 26, 8:56 AM
- Seadrill (NYSE:SDRL) +5% premarket after its Q1 earnings report included plans to cut costs by $340M this year, with $305M considered sustainable savings and $35M deferred spending; SDRL previously had said it planned to cut costs by $260M.
- SDRL, whose Q1 revenues tumbled 28% Y/Y to $891M from $1.2B in the year-ago period, partly because of lower dayrates paid for some of its drilling rigs, says it had "record operational uptime" with 96% economic utilization.
- SDRL CEO Per Wullf thinks the rig market will rebalance eventually: "Within the next few years, we believe the continued scrapping of older rigs in combination with required exploration and development drilling will bring the market back to balance and subsequent improved day rates."
- Now read Seadrill: No upside, sorry
Mon, May 23, 7:51 AM
- Seadrill (NYSE:SDRL) -3.7% premarket on news that Statoil (NYSE:STO) cancelled its contract for SDRL's semi-submersible West Hercules because of the deferred start-up of a development off Norway.
- The rig had been operating offshore Newfoundland in Canada for the past 18 months, and was to relocate to the Aasta Hansteen field in the Norwegian Sea, but STO is postponing the field start-up by a year until H2 2018.
- The contract for West Hercules was originally due to expire on Jan. 31, 2017.
- Just last week, Exxon Mobil terminated its contract for SDRL's West Capella drillship.
- Now read Another termination for Seadrill and the semisubmersible West Hercules
Wed, May 18, 5:38 PM
Seadrill Ltd. is an offshore drilling contractor providing offshore drilling services to the oil and gas industry. Its primary business is the ownership and operation of drillships, semi-submersible rigs, jack-up rigs, tender rigs for operations in shallow, mid, deep, and ultra deep-water areas,... More
Sector: Basic Materials
Industry: Oil & Gas Drilling & Exploration
Country: United States