Since I know the moron shorts are incapable of doing any analysis, let's take a quick look at the potential impact of interest rate rises on SDRL.
Let's look at the future. SDRL's EBITDA is a running at an annualized rate of $2.65 B this year and cash flow from operations is projected around $2 B this year. The company projects an EBITDA of $4.5 B in 2016, which extrapolates to a cash flow from operations of around $3.4 B, or an increase of $1.4 B from this year.
Now, total debt stands at $12.7 B.
Q: How much would rates have to rise to consume half of the $1.4 B increase in 2016 cash flow?
A: Average Rates on SDRL's $12.7 B in debt would have to rise by 790 bpts to consume half of the increase in expected 2016 cash flow and that assumes all of SDRL's debt is floating, I assume most of SDRL's debt is not.
DOES ANY SHORT MORON REALLY BELIEVES THAT WILL HAPPEN?
FYI, most rate increase forecasts over the next two years are in the 1% to 1.5% range from the current 2.85% 10 year yield.
Now, does that $4.5 B in 2016 EBITDA make sense?
1. The Company has a $19.5 B backlog which is expected to grow, this gives investors good visibility.
2. Demand remains high with three out of the 21 rigs still under construction, having already entered into long-term contracts with customers prior to completion. This year, Seadrill has taken delivery and financed a total of 13 rigs and expects to take delivery of seven in 2014, 11 in 2015, and three in 2016. By the end of this four-year expansion, Seadrill would have roughly doubled the size of its fleet.
3. Mexico is opening up its Gulf Coast to development. This is the largest unexplored region in the world, aside from the North Pole.
Think about it Einstein!
Q: Why don't you provide us with an in depth discourse on SDRL' debt structure and its sensitivity to future rises in interest rates?
A; Because you are some SFB retail short who doesn't have a clue.
if the stock makes you vomit then why are you here?, never understood the obseesion of non stock holders to hang around message boards when they have no money to invest in the market.
Don't try logic or fundamentals on professional short traders, the only thing that matters is whether they have enough crooks to push the stock lower.
I presumed so after reading the other posts. Without shorts, we wouldn't have so many opportunities. They help us at times.
I believe the comment about being a short was made in jest, since none of the shorts have been able to provide a credible reason for a short.
lol..BP found a highly productive well using a drilling rig and that is a reason to short a drilling company? Good stuff.