Seadrill To Acquire Former Subsidiary Aquadrill - Good Strategic Move At A Reasonable Price

Dec. 25, 2022 8:00 AM ETSeadrill Limited (SDRL)BORR, DO, NE, RIG, SFL, VAL, HLX, SMHI, TDW39 Comments
Henrik Alex profile picture
Henrik Alex


  • Company to acquire the remains of its former Seadrill Partners subsidiary in an all-stock deal valued at close to $1 billion.
  • Transaction will add important exposure to the U.S. Gulf of Mexico and significantly improve Seadrill's earnings and cash flow generation potential.
  • Addition of debt-free Aquadrill should move Seadrill into a net cash position.
  • With the majority of the legacy Seadrill rigs committed to long-term contracts at painfully low rates, the combined company's near-term earnings potential is likely to remain limited.
  • While it might take another couple of years for the company's full earnings and cash flow generation potential to unfold, investors should consider taking advantage of Seadrill's very low fundamental valuation by scaling into the shares on pullbacks.

Capsa cranes and Seadrill drilling platform in the port of Santa Cruz de Tenerife


It's been a busy fourth quarter for leading offshore driller Seadrill (NYSE:SDRL) so far, with the company returning to the Big Board in October following its emergence from bankruptcy earlier this year and subsequent

Recent Events

Company Presentation

Contracted Rigs

Aquadrill Fleet Status Report

Idle Rigs

Aquadrill Fleet Status Report

Purchase Price Allocation

Author's Estimates

Working Rigs

Seadrill Fleet Status Report

Cold-stacked rigs

Seadrill Fleet Status Report

Cash Flow Potential

Merger Presentation

Implied Steel Value

Valaris Investor Presentation

This article was written by

Henrik Alex profile picture
I am mostly a trader engaging in both long and short bets intraday and occasionally over the short- to medium term. My historical focus has been mostly on tech stocks but over the past couple of years I have also started broad coverage of the offshore drilling and supply industry as well as the shipping industry in general (tankers, containers, drybulk). In addition, I am having a close eye on the still nascent fuel cell industry.I am located in Germany and have worked quite some time as an auditor for PricewaterhouseCoopers before becoming a daytrader almost 20 years ago. During this time, I managed to successfully maneuver the burst of the dotcom bubble and the aftermath of the world trade center attacks as well as the subprime crisis.Despite not being a native speaker, I always try to deliver high quality research at no charge to followers and the entire Seeking Alpha community.

Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such 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.

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