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Seadrill: Still 'Muddling' Along?

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Seadrill: Still 'Muddling' Along?

  • Seadrill Ltd (NYSE: SDRL) has seen a 51.28 percent decline in its share price over the past six months, with the shares almost touching their 52-week low on September 28.
  • Gregory Lewis of Credit Suisse has maintained an Underperform rating on the company, with a price target of $5.
  • The company’s FSR has been “sparse,” apart from some rate adjustments; Lewis does not expect the situation to get better for the company any time soon.
  • Analyst Gregory Lewis mentioned Seadrill’s West Callistor jackup added back about $130 million in Saudi Arabia, “with a 4-month extension and an incremental contract at $123k/d<” representing a 9 percent decline from the current rate.

    The West Elara jackup “no longer has its two-year option for extension work in Norway and the rig is expected to roll off in March 2017,” Lewis added.

    Related Link: Anthony Grisanti Wants To Sell The Rally In Crude Oil

    The Drilling Space

    Although the drilling industry does not appear optimistic about 2016, Seadrill expects some recovery in 2017, following two years of high customer spending.

    Given that global floater utilization is estimated at 65 percent, Lewis believes customer rig spending would need to increase 30 percent from the expected spending levels for 2016 for the spending levels to return to the 2015 levels.

    Lewis also mentioned that while the company’s balance sheet was “ok today,” net debt to EBITDA was likely to rise through 2017.

    The EPS estimates for 2015 and 2016 have been reduced from $1.40 to $1.20 and from $2.30 to $2.15, respectively, “to account for updated downtime and utilization assumptions.”

    Image Credit: Public Domain

    Latest Ratings for SDRL

    DateFirmActionFromTo
    Aug 2019BTIG ResearchDowngradesBuyNeutral
    Oct 2018BTIG ResearchInitiates Coverage OnBuy
    Jul 2016Morgan StanleyDowngradesOverweightEqual-Weight

    View More Analyst Ratings for SDRL
    View the Latest Analyst Ratings

     

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