Credit Suisse sees a Seadrill earnings miss but a safe dividend

|About: Seadrill Limited (SDRL)|By:, SA News Editor

Looking ahead to Seadrill’s (SDRL -1%) earnings report next month, Credit Suisse expects a miss but believes the dividend is safe.

The firm's revenue estimate for SDRL is a bit below consensus and it sees operating expense normalizing this quarter; it models for 97% floater efficiency vs. Wall Street's implied 100%, rigs undergoing yard work (not always fully disclosed), and floater operating expense/day of ~$200K vs. $219K/day in the prior quarter.

CS expects SDRL to maintain its dividend at a minimum, but says it would not be surprised to see another increase; it estimate an 86% payout of operating cash flow to fund the current dividend, leaving some wiggle room for another dividend increase.