+ Watch SDRL
on My Watchlist
Growth and yield. (Vodica)
Growth and yield.
need oil and more of it
Bottoming here. 10.7% dividend puts solid floor underneath.
Longer term: New $1.8 billion 6 yr contract w/Pemex. Bullish Short term pps benefit 1 to 6 weeks. upcoming quarterly report, Conference call, and anticipating dividend increase and announcement.
Tasty dividend is hard to ignore. I think the main driver however is the underlying demand for oil. Yea, I know, they have the youngest fleet in the industry, yada yada yada, but I own this stock for the dividend and I am green thumbing it today as I think it near the bottom of it's range and due for a rebound.
A must have for any portfolio
Short term prospects still good
On February 10, 2014 at 9:52 PM, awallejr (80.98) wrote: Welcome! I will give you a few: BBEP, AINV, PSEC, ARCC, WPZ, MMLP, SDRL.
Time for me to jump back in methinks.
Seadrill was entered on my caps at a price of $39.96. I do not own this company. I prefer to buy businesses that are simpler to understand and that has financing that I understand. It isn't so easy with Seadrill. So why add it to Caps? It pays a $3.80 per year dividend, giving them a 9.5% yield. A dividend yield isn't a great reason alone to buy any stock, but I wanted to track this one because of the way they finance their drilling rigs.They had more rigs enter their fleet during the third quarter – The West Auriga, West Vela, and West Tellus. These new additions should help the fourth quarter. Year to date, they have taken delivery of 13 units including four floaters, seven jackups and two tender rigs. The general discussions across investment forums appear to be focused on the high debt issues. I like low debt companies too. I like companies that are simple to understand, so Seadrill is definitely outside my current comfort zone. Banks don’t seem to be overly worried about the company. Seadrill new loans are issued with better interest rates. Seadrill is rapidly investing in modern rigs, which make for better collateral for bank loans. They have high quality customers and a backlog of $20 billion. Their rigs have high utilization rates. The next two years look good for Seadrill. They will take delivery of 20 new rigs by the end of 2015. EBITDA should grow. The balance sheet has grown stronger, provided you include the value of the growing drilling assets. The Company has $2.11 billion in cash and investments, including equity investments. That was an improvement from last year when they had $1.562 billion in cash and investments. The Company carries a very high level of debt. Currently debt is $13.62 billion up from $11.827 billion. Net debt has grown to $11.51 billion up from $10.27 billion. But we have to keep in mind that they are buying rigs that carry a high value in the open market. They have drilling assets of $19.678 billion up from $14.776 billion.As long as they are utilizing their rigs at a high rate, the increase in drilling assets is a good thing. They have chosen a path to build organically, using debt to buy new rigs many that focus on deep-water exploration, rather than acquiring new companies or merging with companies to grow. They are building a fleet that is very modern and can perform more specialized drilling. The next few years should be good for Seadrill, provided oil prices remain at current levels. I will be watching for EBITDA to grow. I want net assets to grow. And it wouldn’t bother me if they could work down debt or stabilize debt. I still don’t have a good handle on valuing them. It would be easier if they had financial reports that went back several years, but with only about 3 years of data, I am still looking for clues. The next three years should give me all the data I need to value them. In the meantime, their backlog is high, EBITDA and net income is growing, and cash from operations is growing too.
The recent sell-off represents a solid buying opportunity. Seadrill reported solid results in the 3rd Quarter, with very strong utilization rates across the fleet. In the 3rd quarter, revenue was 4% ahead of consensus, and EBITDA matched expectations. The concern, of course, is that they take debt to build rigs before they have contracts for them. Seadrill confirmed that they are seeing signs of customers delaying contracts, but that is balanced by a backlog of $19.5 billion. With its modern fleet and a number of available rigs, Seadrill believes they will be able to book with high dayrates and high-cashflow contracts, in both the deepwater and jackup segments. The company showed its confidence by raising the dividened. With such strong earnings and interest rates on debt declining, I don’t see any danger of the debt being a problem, so this one is a buy.
The yield is so high for a reason.
Div. (Yield) $3.80 (9.1%)Current Yield 10.93
Seadrill specializes in manufacturing and deployent of ultra-deepwater and high-hazard oil drilling platforms. Fortune 50 client list. Billions in order backlogs. Youngest fleet among competitors ESV, DO, RIG to name a few. Excellent leadership in management and expert industry knowledge. Strong growth potential. The hefty and sustainable dividend is the kicker.
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