Seadrill - Part 1: Complete Fleet Status Analysis As Of February 28, 2017

| About: Seadrill Limited (SDRL)

Summary

SDRL released its new fleet status on February 28, 2017. It was a busy FSR with a significant "blend & Extend" deal inked with Pemex about 5 Jack-ups working Mexico.

However, the backlog is now $2.5 billion (for Seadrill only not Seadrill Group), down 17% since November 22, 2016.

Fleet Status is paramount to understand the 4Q'16 results. Part II about the balance sheet is following.

Source: Seadrill Ltd. (SDRL)

Seadrill and associated companies in 2017:

  1. Seadrill Partners (NYSE:SDLP): SDRL owns 42,819,100 shares or 46.6% (minority holder)
  2. North Atlantic Drilling (NYSE:NADL): SDRL owns 16.966 million shares or 70.36% (majority holder) - Reverse split 1:10 - 12/31/15.
  3. Sevan Drilling ASA (SEVDR.OL) (OTCPK:SDRNF), listed on the Oslo stock exchange: SDRL owns 50.11% (14.897 million shares) of the total company.
  4. Archer Ltd. (OTCPK:ARHVF), listed on Oslo stock exchange ARCHER.NOK: SDRL owns 23.11 million shares or about 16% of the company after the last deal on 3/1/2017. Reverse split 1:10 in late 2015.
  5. Asia Offshore Drilling: SDRL owns 66.23% of the outstanding shares (Private company).
  6. SeaMex Ltd.: A 50/50 joint venture for the five jackups in the Gulf of Mexico, with an investment fund called the Fintech Advisory (six-year contract with PEMEX)
  7. Ship Finance International Ltd. (NYSE:SFL): SFL 100% owns three rigs that it chartered on a bareboat basis to Seadrill with option to buy at a fixed rate price around 2023 -- West Taurus (chartered on a bareboat basis), West Hercules (SFL Hercules 2013), and West Linus (SFL acquired the rig from NADL in 2013 and leased to NADL)
  8. Small investment in 5 companies: Seabras Sapura Participacoes, Seabras Sapura Holdco, Itaunas Drilling, Camburi Drilling, Sahy drilling - Totaling a value of approximately $200 million as of 12/31/2015.

Seadrill indicated in its earnings results:

Seadrill Limited order backlog of approximately $2.5 billion.

To access SDRL Fleet status as of February 28, 2017, please [click here.]

Ultra-Deepwater Drillships

#

Drillships

Type/Year

Built

Shared with another assoc. company

Day rate

K $

Contract

End

Location
1

West Navigator

UDW-HE 2000

X

NADL

70.36%

Available Norway
2

West Polaris

UDW 2008

X

SDLP 46.6%

490 2/18 [Exxon Mobil] Angola
3

West Capella

UDW 2008

X

SDLP 46.6%

Available Spain
4

West Gemini

UDW2010

656 10/17 [Total] Angola
5

West Auriga

UDW 2013

X

SDLP 46.6%

562

Mobilization fee of $37.5 m paid over the contract

10/20

[BP]

USA

6

West Vela

UDW 2013

X

SDLP 46.6%

(Sold in Q3 2014)

564

Mobilization fee of $37.5 m paid over the contract

11/20

[BP]

USA

7

West Tellus

UDW 2013

324

10/19

[Petrobras] Brazil

8

West Neptune

UDW 2Q2014

573

Mobilization fee of $37.5 m paid over the contract

12/17

[LLOG]

USA

9

West Saturn

UDW 3Q2014

Available

155

3/17

5/17-6/17

[Ophir]

Cote d'Ivoire

10

West Jupiter

UDW 4Q2014

581

Reduced undisclosed? 400's?

12/19

[Total]

Nigeria

11

West Carina

UDW 1Q2015

481

6/18

[Petrobras] Brazil
12

West Draco

UDW 2017

Samsung Available -
13

West Dorado

UDW 2017

Samsung Available -
14

West Aquila

UDW 2018

DSME Available -
15

West Libra

UDW 2019

DSME Available -

Semi-Submersibles

#

Semi-Sub.

Type/Year

Built

Shared with another assoc. company Day Rate K $

Contract

End

Location
1

West Alpha

4th-HE 1986

X

NADL

70.36%

Available

Norway

2

West Venture

5th-HE 2000

X

NADL

70.36%

Available Norway
3

West Phoenix

6th-HE 2008

X

NADL

70.36%

Available

145

125?

-

5/17

5/17-9/17

[Total]

[Nexen]

UK

4

West Hercules

6th-HE 2008

X

Own by SFL

Available

Norway

5

West Sirius

5th-BE 2008

X

SDLP 46.6%

297

Payment from BP over the contract. Terminated

7/17

[BP]

USA

6

West Taurus

6th-BE 2008

X

Own by SFL

Available Spain
7

West Eminence

6th-HE 2009

Available

Spain

8

West Aquarius

6th-HE 2009

X

SDLP 46.6%

615

200

4/17

5/17-7/17

opt 5/17-9/17

[Hibernia]

[Statoil]

Canada

9

Sevan Driller

6th-BE 2009

X

Sevan 50.11%

Available Singapore
10

West Orion

6th-BE 2010

Available Namibia
11

West Pegasus

Available

Terminated

(Dispute)

Mexico

12

West Capricorn

6th-BE

2011

X

SDLP 46.6%

316

526

Mobilization fee of $30 m paid over the contract

11/17 Standby

11/17-7/19

Contract swapped with the West Sirius

[BP]

USA

13

West Eclipse

6th-BE 2011

340

Part to be paid to JV

6/18

[ExxonMobil]

Angola

14

West Leo

6th-HE 2012

X

SDLP 46.6%

605

Mobilization fee of $18 m paid over the contract

6/18

Dispute "force majeure"

[Tullow oil]

Spain

15

Sevan Brasil

6th-BE 2012

X

Sevan 50.11%

264 7/18 [Petrobras] Brazil
16

Sevan Louisiana

6th-BE 2013

X

Sevan 50.11%

350

Mobilization fee of $32.5 m paid upfront

5/17

[LLOG]

USA

17

Sevan Developer

6th-HE

Pushed Until 2017

Note: SDRL has only an option to buy with no penalty if canceled

X

Sevan 50.11%

Available

- Cosco
18

West Rigel

6th-HE

Delayed special deal with Shipyard.

X

NADL

70.36%

Available - Jurong

Jackups

#

Jackup

Type/year built

Shared with another assoc. company

Day Rate

K$

Contract

End

Location
1

West Epsilon

Heavy-duty-HE

X

NADL

70.36%
Available Norway
2

West Elara

Heavy-duty-HE

X

NADL

70.36%

318 (+$24 million taken to income - Mobilization)

138

3/17

3/17-6/17

+option 6/17-8/17

[Statoil] Norway

Norway

3

West Linus

Heavy-duty-HE

XX

NADL

70.36%

Own by SFL

326 (+12.43/d)

-

Mobilization fee of $24 m paid over the contract

5/19

5/19-5/21 Opt.

-

-

-

[Conoco Phillips] Norway
4

West Defender

BE

X SeaMex

50/50

116

155.5

8/18

9/18-1/23

[PEMEX]

Mexico

5

West Resolute

BE

Available Sharjah
6

West Prospero

BE

Available Malaysia
7

West Courageous

BE

X SeaMex

50/50

116

155.5

8/18

9/18-11/23

[Pemex] Mexico
8

West Triton

BE

Available

Sharjah
9

West Vigilant

BE

Available

Malaysia

10

West Intrepid

BE

X SeaMex

50/50

116

155.5

8/18

9/18-5/23

[Pemex] Mexico
11

West Ariel

BE

120

Non operating flotel mode.

2/18

[ENI]

Rep. of Congo

12

West Cressida

BE

64.5 4/17 [PTTEP] Thailand
13

West Freedom

BE

42.5

225

3/17

4/17-9/17

[Cardon IV] Venezuela

14

West Callisto

BE

120

Mobilization fee of $20 m paid over the contract

11/18

-

-

-

[Aramco] Saudi Arabia
15

West Leda

BE

Available

Malaysia

16

West Mischief

BE

85

Mobilization fee of $17m paid over the contract

12/17

early termination for convenience in January 2017

[NDC]

Abu Dhabi

17

AOD I

BE

X Asian Offshore

66.23%

102.9

6/19

[Aramco] Saudi Arabia
18

AOD II

BE 2013

X Asian Offshore

66.23%

102.9

6/19

[Aramco] Saudi Arabia
19

AOD III

BE 2013

X Asian Offshore

66.23%

102.9

12/19

[Aramco] Saudi Arabia
20

West Tucana

BE 2013

223

6/17

[Cabina Gulf] Angola

21

West Telesto

BE 2013

Available

Malaysia

22

West Castor

BE 2013

110

12/17

1/18-12/18 option

1/19-12/19 option

[ENI]

Mexico

23

West Oberon

BE

2013

X SeaMex

50/50

130

171.5

8/18

9/18-10/22

[Pemex] Mexico
24

West Titania

Ex-Prospector 3

BE

1Q2014

X SeaMex

50/50

130

171.5

8/18

9/18-10/21

[Pemex] Mexico
25

West Titan

BE

2017?

Available - -
26

West Proteus

BE

2017?

Available - -
27

West Rhea

BE

2017?

Available - -
28

West Tethys

BE

2017?

Available - -
29

West Hyperion

BE

2017?

Available - -
30

West Umbriel

BE

2017?

Available - -
31

West Dione

BE

2017?

Available - -
32

West Mimas

BE

2017?

Available - -

SDRL/SDLP also owns two barges and one semi-tender. There is no tender rig under construction now.

Tender Rigs and Semi-Tender Rigs

# Tender Rig Shared with another assoc. company

Type/Year

Built

Day Rate

K $

Contract

End

Location
1 T15

X

SDLP 46.6%

2013 110 7/19

[Chevron]

Thailand

2 T16

X

SDLP 46.6%

2013 110 8/19

[Chevron]

Thailand

3

West Vencedor

X

SDLP 46.6%

2010

-

115

3/17 Available

3/17 - 7/17

Singapore

[ConocoPhillips]

Indonesia

November Fleet status recent changes commentary:

  1. West Phoenix new contract (4 months) with Nexen in UK - 5/17-9/17 @125k?
  2. West Aquarius new contract (2 months plus option) with Statoil in Canada - 5/17-7/17 @200k/d
  3. West Saturn new contract (2 months) with Ophir in Ivory Coast - 5/17-6/17 @$155k/d
  4. West Jupiter day rate reduced with Total from $581k/d to Undisclosed ($455K/d?)
  5. West Elara new contract (3 months plus option) with Statoil - 3/17-6/17 @$138k/d
  6. Large "blend and extend" deal with PEMEX in Mexico including five JU - West Defender, West Courageous, West Intrepid, West Oberon, West Titania (see details below).
  7. West Cressida 3 months contract extension with PTTEP in Thailand @$65k/d.
  8. The West Mischief received notice of early termination for convenience in January 2017. NDC is required to provide 180 days notice period paid at full operating rate and a subsequent 30 days reimbursed at standby rate.
  9. AOD III was awarded an extension until 12/19 by Saudi Aramco. I commented on the deal on December 29, 2016, if you want to know more about this subject to access my article, click here.

Total Rigs for SDRL Group:

Idle Working Under-construction Total
Tender 1 2 0 3
JU 7 17 8 32
Floaters 11 16 6 33
Total 19 35 14 68

Commentary:

It was quite a busy February fleet status with a few small contracts limited to 2 to 4 months duration, one early termination, one long term extension with Saudi Aramco and one day rate reduction. More important, a new "blend and extend" with Pemex about five Jack-ups which represents over $560 million in additional backlog.

Blend and Extend deal with Pemex in a simple table:

Jack-up Initial Duration - end date New blend and extend Part I New blend and extend Part II

Total value before

$ million

Total value after

$ million

West Defender @155.5k/d 8/2020 @116k/d to 8/18 @155.5k/d from 9/18 to 1/2023 205 310
West Courageous @155.5k/d 6/2021 @116k/d to 8/18 @155.5k/d from 9/18 to 11/2023 243 357
West Intrepid @155.5k/d 12/2020 @116k/d to 8/18 @155.5k/d from 9/18 to 5/2023 215 329
West Oberon @171.5k/d 5/2020 @130k/d to 8/18 @171.5k/d from 9/18 to 10/2022 201 307
West Titania @171.5k/d 5/2019 @130k/d to 8/18 @171.5k/d from 9/18 to 10/2021 139 264
Backlog estimated as of 2/28/2017 1,003 1,567

Early estimate (fun trading) adds $564 million in additional backlog for the 50/50 JV Seamex.

However, the backlog is now down to $2.5 billion (for Seadrill only not Seadrill Group), down 17% since November 22, 2016.

Conclusion:

Here ends the part I of the SDRL 4Q'16 results. The fleet analysis which is essential to understand the SDRL financial situation will be followed soon by my Part II about the balance sheet.

Commenting today, Per Wullf, CEO and President of Seadrill Management Ltd., said:

We continue to see an improvement in the level of bidding activity following the increase and stabilization of oil prices. Improving dayrates will not be a feature of 2017, however, based on the expected level of scrapping and cold stacking activity we believe there is room for some optimism.

Our scale and young fleet position us well for the eventual recovery in the industry. Our key stakeholders have demonstrated a desire to be part of a solution to our restructuring requirements with the right structure and terms.

Per Wullf seems a little bit more optimistic about the level of bidding activity, but it translates to a very little improvement when we look at the backlog value. Nonetheless, the recent "blend and extend" deal with Pemex is a solid positive.

Important note: Do not forget to follow me on SDRL and other offshore drillers. Thank you for your support.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I am trading SDRL very frequently.

Editor's Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.

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