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Seadrill Partners, LLC (SDLP)

  • Mon, Apr. 27, 11:39 AM
    • Seadrill (SDRL +2.8%) moves higher even as shares are downgraded to Sell from Neutral with a 20%-plus downside at Citigroup, which sees SDRL breaching debt covenant levels in 2016 with risks in 2015 if contracts are renegotiated.
    • While a waiver likely will be renegotiated in the short term, the firm sees SDRL's financing picture becoming more difficult, especially in the context of financing new deliveries and refinancing of existing debt.
    • Despite a 40% drop in spot deepwater floater dayrates over the last 12 months, Citi sees a potential for another 30% fall before the cycle bottoms; for SDRL, at least 40% of the fleet is uncontracted in 2016, and Citi sees downside risks to both earnings as well as the market’s and lenders’ valuation of the fleet as more units become idled.
    • SDLP +2.8%.
  • Tue, Feb. 24, 2:22 PM
    • Offshore drillers are sinking again after Diamond Offshore (DO -8.3%) disclosed that it probably would lose some contracts; also, Transocean Partners (RIGP -7.5%), the MLP created by Transocean (RIG -1.9%), was downgraded to Underweight with a $16 price target, cut from $26, at Barclays.
    • RIGP, which is set to release Q4 results tomorrow after the close, is not at risk of cutting its dividend but faces uncertainty in light of lowered demand for offshore drilling rigs, Barclays says, but that RIGP likely would not be able to increase its distribution if the semi-submersible DDIII were to begin operating at recently observed market rates.
    • DO is reiterated at a Sell rating with a $23 price target at Deutsche Bank.
    • Also: SDRL -2.7%, SDLP -2.8%, ESV -6.5%, RDC -4.3%, NE -4.7%, ATW -5.8%, PACD -5.2%.
  • Nov. 28, 2014, 9:45 AM
    • The sector was wrecked on Wednesday as Seadrill suspended its dividend amid "significant deterioration" in the oil market, and its North Atlantic Drilling suspended its payout because of the same combined with the delay in its Rosneft deal.
    • The market "deteriorates" even further today with OPEC's decision yesterday not to cut production. WTI crude is "off the lows" as they say, but still down 5.8% at $69.43 per barrel.
    • Seadrill (SDLP), North Atlantic Drilling (NADL -8.3%), ENSCO (ESV -8.8%), Atwood (ATW -7.7%), Rowan (RDC -7.2%), Pacific Drilling (PACD -4.5%).
  • Nov. 26, 2014, 10:42 AM
    • Seadrill (SDRL -19.2%) shares are plunging after the drilling contractor suspended dividend payments due to "significant deterioration" in the broader markets, and North Atlantic Drilling (NADL -13.8%) suspends its dividend because of the delay of its agreement with Rosneft as well as the weaker market.
    • The move is slamming the entire sector, and Wells Fargo says that although SDRL is the first driller to cut its dividend, Diamond Offshore (DO -8.3%) and Transocean (RIG -4.7%) will "ultimately have to follow suit."
    • Also: SDLP -6.6%, ESV -4.8%, ATW -4.3%, RDC -3.3%, NE -3.2%, PACD -6.5%, ORIG -2.7%, HP -1.1%, RIGP -2.5%.
    • ETF: OIH
  • Nov. 4, 2014, 9:53 AM
    • Seadrill Partners (SDLP -3.1%) agrees to acquire from parent Seadrill (SDRL -6.6%) the West Vela for $900M, less $433M of debt outstanding under the existing facility financing the ultra-deepwater drillship.
    • Seadrill Capricorn Holdings, SDLP's 51% owned subsidiary, will acquire all ownership interests in the entities that own and operate the West Vela; its portion of the net purchase price after debt would be $238M.
    • Under the terms of the West Vela contract, BP is paying a daily rate of $565K plus ~$44K/day as a mobilization fee paid over the term of the contract.
  • Oct. 21, 2014, 3:42 PM
    • A 2015 deepwater market recovery is not the cards as oil companies head into budgeting season amid a shaky oil price outlook, with no reversal of negative news flow soon although it is already well appreciated by Wall Street, Morgan Stanley’s Ole Slorer and Jacob Ng say.
    • The firm views a group inflection boiling down to an improving oil price outlook, and recommends sticking with premium asset exposure via Seadrill (SDRL +6.1%) and Atwood Oceanics (ATW +4.1%) in the meantime.
    • The market already appears to be pricing in dividend cuts, with current yields now well above historical trading ranges, Stanley says while still seeing relative safety in yieldcos Transocean Partners (RIGP -0.5%) and Seadrill Partners (SDLP +4.1%), which should continue to offer strong distribution growth profiles driven by parent need for funding.
    • While retaining Equal Weight ratings on both Noble (NE +3.9%) and Ensco (ESV +3.1%), Stanley sees higher total return upside in NE (~25%) vs. ESV (~10%) over the next few months.
  • Sep. 23, 2014, 5:45 PM
    • Seadrill Partners (NYSE:SDLP) -1.6% AH after announcing a public offering of 8M common units.
    • SDLP says it plans to use the proceeds for general company purposes, which may include acquisitions, repayment of indebtedness and working capital purposes.
    • Seadrill (NYSE:SDRL), which owns slightly more than a third of SDLP, -1.4% AH.
  • Sep. 19, 2014, 2:09 PM
    • Seadrill (SDRL -6.4%) says Tor Olav Troeim, who until recently was considered John Fredriksen's right-hand man, is quitting its board, sending shares sharply lower.
    • SDRL says Troeim will focus his efforts on developing liquefied natural gas shipping firm Golar LNG (GLNG +1.7%); it had been known that Troim’s position was set to change, but he was expected to remain a significant player at SDRL.
    • Troeim recently owned ~2.6M SDRL shares, but it is not known whether he would sell his stake; Fredriksen reaffirms his commitment to SDRL, in which he is the biggest investor with a 24% stake.
    • NADL -12%, SDLP -0.7%.
  • Sep. 17, 2014, 3:25 PM
    • Offshore drilling stocks continue to slide after fleet status reports from Ensco (ESV -1%) and Diamond Offshore (DO -1.8%) confirm that the rig market still has its problems.
    • RBC reduces its EPS estimates for ESV based on the September update which featured negative datapoints for stacked floaters, newbuild delays and idle jackups, but the company was able to keep two of its 8500 series rigs working for the rest of the year.
    • Susquehanna notes that DO did not report any new notable contracts in its latest fleet status report, and the firm does not expect any new tenders for at least the rest of 2014 and possibly Q1 2015.
    • Also: SDRL -0.2%, RIG -1.2%, RDC -2.3%, NE -2.8%, ATW -0.2%, SDLP +0.9%, RIGP +0.4%.
  • Sep. 12, 2014, 3:23 PM
    • It's another down day for offshore drillers after rig owner Noble Corp. (NE -4.5%) signs a pair of new contracts for work in the Gulf of Mexico at substantially reduced dayrates.
    • NE's updated fleet status report highlighted a new contract for the Danny Adkins in the Gulf in a minimum 200-day program at $317K/day vs, its previous rate of $498K/day and analyst expectations for the high $300K; the less than rosy update prompts Johnson RIce to lower its 2014 and 2015 EPS estimates to $3.06 and $2.98 from $3.16 and $3.27 previously.
    • Seadrill (SDRL -5.4%) also is getting smacked after offering up its own pessimistic take on the offshore drilling industry, and its deal with Rosneft could be threatened by the latest sanctions imposed on Russia by the U.S. and EU.
    • Also: RIG -3.6%, ESV -3.6%, DO -3.7%, RDC -1.4%, PACD -2.9%, SDLP -4.1%.
  • Jun. 18, 2014, 4:46 PM
    • Seadrill Partners (SDLP) -4.5% AH on news it plans a public offering of 6.1M common units; also, Seadrill (SDRL) agrees to purchase directly from SDLP at least $100M of common units via a private placement concurrent with the public offering.
    • SDRL plans to use the proceeds for general corporate purposes, which may include acquisitions, repayment of indebtedness and working capital uses.
  • Apr. 7, 2014, 3:33 PM
    • Things could get worse before they get better for offshore drillers, and even market favorite Rowan (RDC -3.6%) could get hit, Morgan Stanley says as it cuts its rating on the stock to Underweight.
    • RDC has fallen less than companies with exposure to the floater market thanks to its greater exposure to jackups, but Stanley sees a surge in jackup orders, driven largely by speculative drillers at Chinese shipyards; the jackup orderbook now stands at a record 140 units, of which only ~20 have been contracted.
    • In the sector, the firm recommends yield plays such as Seadrill (SDRL), Seadrill Partners (SDLP) and North Atlantic Drilling (NADL), and prefers premium asset exposure through Atwood Oceanics (ATW), Ensco (ESV) and Pacific Drilling (PACD) over lower-end fleets via Diamond Offshore (DO), Noble (NE) and Transocean (RIG).
  • Mar. 11, 2014, 4:59 PM
    • Seadrill Partners (SDLP) agrees to acquire the West Auriga ultra-deepwater drillship from Seadrill (SDRL) for ~$797M.
    • The drillship is expected to carry out operations in the Gulf of Mexico until the end of its contract in Oct. 2020 at a dayrate of $565K/day.
    • SDLP will recommend an increase in cash distributions of $0.13-$0.15/unit, which would take effect in the June 2014 quarter.
    • SDLP plans a public offering of 10.4M common units to fund the transaction; SDRL has committed to purchase at least $50M worth of the units at the public offering price.
    • SDRL +0.9%, SDLP -2.4% AH.
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  • Feb. 12, 2014, 12:23 PM
    • Seadrill (SDRL -3.3%) may fail to secure the sales prices and external financing required to sustain its current dividend as equity and asset values are slipping, Wells Fargo worries as it downgrades shares to Underperform from Market Perform.
    • The firm says SDRL's aggressive dividend policy has never been funded solely by the operations of its high-quality fleet, but instead through the sale of equity and convertible debt, equity in sponsored entities such as North Atlantic Drilling (NADL -1.3%) and Seadrill Partners (SDLP -1.5%), and the outright sale of rigs.
    • The dividends of other drillers, including Ensco (ESV -0.9%), Noble (NE -0.2%), Transocean (RIG -0.2%) and Diamond Offshore (DO -0.2%), look safer for now, the firm says.
  • Dec. 2, 2013, 4:51 PM
    • Seadrill Partners (SDLP) -3.3% AH after announcing a public offering of 12.9M common units; also, in a private placement, Seadrill (SDRL) will purchase $50M in units at public offering price.
    • SDLP plans to use the net proceeds to fund its portion of the cash purchase price in connection with its acquisition of two semi-submersible drilling rigs.
  • Sep. 4, 2013, 10:48 AM
    • Oppenheimer restarts coverage of energy MLPs, bullish on the asset class as a whole; the firm shows a bias in favor of investing in higher distribution growth, even if the yields are lower, and for owning general partners due to their incentive distribution rights structure.
    • Started at Outperform: EQT Midstream (EQM +2.1%), Seadrill Partners (SDLP +0.7%), Tesoro Logistics (TLLP +1.6%), Memorial Production Partners (MEMP +2.4%), Western Gas Partners (WES +0.4%), Western Gas Equity Partners (WGP +0.7%).
    • Started at Market Perform: Williams Partners (WPZ), Crosstex Energy (XTEX), ONEOK Partners (OKS), Genesis Energy (GEL).
    • Also: New Source Energy (NSLP), Breitbrun Energy Partners (BBEP), LRR Energy (LRE), Mid-Con Energy Partners (MCEP).
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Company Description
Seadrill Partners LLC is engaged in owing, operating and acquiring offshore drilling units. Its drilling rigs are under long-term contracts with oil companies such as Chevron, Total, BP and ExxonMobil.