Seadrill Partners to Offer 6.1 Million Units - Analyst Blog

Seadrill Partners LLC SDLP − an unit of offshore drilling firm SeaDrill Limited SDRL – recently declared a public offering of 6,100,000 common units that signify limited liability interest in the partnership. Moreover, in a private placement, SeaDrill Limited will simultaneously buy a minimum of $100.0 million worth common units, directly from Seadrill Partners.  

Seadrill Partners will likely utilize the net proceeds – from both the public offering and common unit offering to SeaDrill Limited – primarily for general activities like acquisitions and debt repayment as well as for working capital needs.

London−based Seadrill Partners was formed in 2012 by SeaDrill Limited. The partnership primarily involves in the acquisition and operation of offshore drilling rigs.

According to the U.S. Energy Information Administration EIA, natural gas inventory as of Jun 6, 2014 was 1,606 billion cubic feet (Bcf), which is below the year-ago store of 2,333 Bcf and the 5-year average of 2,483 Bcf. Moreover, with an uptick in electric power demand owing to summer, the demand for natural gas is increasing. Both these facts are reflected in the rising price of natural gas. The improved price in turn urges the natural gas exploration and production firms to join drilling firms like Seadrill Partners to ramp up upstream operations

Seadrill Partners currently carries a Zacks Rank #3 (Hold), which implies that it is expected to perform in line with the broader U.S. market in the next one to three months.

Meanwhile, one can look at better-ranked players in the oil and gas drilling sector like Pioneer Energy Services Corp. PES and Nabors Industries Ltd. NBR. Pioneer Energy sports a Zacks Rank #1 (Strong Buy) while Nabors Industries holds a Zacks Rank #2 (Buy).