Bears like come out when a stock is in free fall. They think it makes them look smarter. This is overshooting to the downside at the moment. Complete overreaction due to endless bearish articles. Most of the bearish arguments are temporary. If SDRL cuts the dividend the debt can be paid off easily.
$23B in order backlog, $12B in interest bearing debt. 76% contracted in 2015, 60% contracted in 2016. Industry wide no more orders. New floaters not coming online starting 2017. There will be a shortage of rigs 2017 forward, because UDW demand is not going away as most of the onshore oil is already produced
Same pundits will come back mid-2015 and say how undervalued SDRL is, because lower day rates from 2013-2014 reduced new rigs coming online in 2017+ and now there is a shortage of rigs going forward
Just read the Q2 earnings conference call script. There is no more new orders coming beyond 2016 from the industry, so just like CFO predicted the market will be roaring back in 2017.
Plus, SDRL has many financing options including the partnership. Most modern fleet in the industry, that's how you play instead of the older fleet owners.
With 15 Billion in debt, new builds with no contracts and lower day rates by about 20% it's over. SDRL got greedy and screwed up the entire drilling sector with their greed with overbuilds.... Don't forget the Russia issue also !
Sentiment: Strong Sell
Troeim also left FRO earlier this month. Another company JF owns. And a company on the verge of bankruptcy. And when he announced the stock dropped in half and it's still dropping. Someone knows something and it's not good.
I haven't given up, I'm just skimming off some cream and putting it to work elsewhere. I've always had the tendency to cling to my stocks and have to force myself to sell.
I suggest you go to the NADL board. Shareholders there are discussing it the way investors should discuss their investments. No secret conspiracies, paid basher accusations or psychic predictions ("the dividend will not be cut"). Much more of a realistic assessment of the situation, and comments by people who sound like they understand investing.
What do you mean that JF always bailed it out and drove the PPS up 500%? FRO was over $35 a share when the bottom fell out. Since the summer of 2012 it has not gone over $5 and is now trading at less than 2.50. It's current EPS is around a minus $2.50. The brokerage analysts had started waving red flags about 4 months before it fell. When did the 500% increase happen? Not after it collapsed,
Only the Dow Jones is going up. Advance/decline is not healthy and new lows growing and on top of it, this sector is very weak expecting decline in revenue and dividends looking more and more under a cloud. I saw many great companies' stock drop in single digits in March 2009. This stock is very risky at this time. Just an opinion.
I suspect this company is managed differently than U.S. companies, and unlike what shorties claim, is actually putting the shareholders first. Fredriksen makes his money off of the dividend, that is how he is paid. He will make sure it is sustainable. Perhaps SDRL is not a favorite of analysts *exactly* for this reason. You should never pay too much attention to what analysts say, do your own research to find out the real story.
Don't give up on NOK yet. The best is yet to come.
I'm not selling one share of NOK until after next earnings date.
If I was JF right now, I think my strategy would be to sell off shares in GLNG because they are fully priced. I would do this to raise the cash to throw into SDRL because it currently is available at bargain prices. On a negative note, he has an incentive to cut the dividend just before he begins accumulating these new shares. This would allow him to get both the quantity of shares and the attractive price that he would like.
Just look at the chart for yourself. This is a stock followed by large retail crowd who panics and sells at crazy low prices just to see their shares run all the way back. This was $37.3 on Sep3rd. Other Russian sanctions no new news. But all the chronic SDRL bears come out following the drop
And those sanctions will cost a fraction of that $4B, because those contracts start in 2015, 2016, and 2017, giving time to SDRL to find new customers
Don't tell me demand weakness for rigs. That talk has been running rampant since late 2013.
True, but I wouldn't jump to conclusions as of yet. It's not looking good right now, but I haven't given completely up. I'm still on the sidelines watching patiently. By the way, it's not just SDRL, it's the whole sector.
OK...FRO is not doing well to say the least.....but JF always bailed it out so far driving the pps up 500% pretty quickly. Given FRO was around $50.00 some years ago...... I know.... nothing is perfect........but as long as it lasts.......hey..... why not ride the gravy train on this one now...........??
FRO of course having the same CEO as SDRL. In many ways it looks like a replay. Boy, were the shareholders ever surprised when FRO crashed. If he cuts the dividend here you can be sure there will be no warning. It will come out of the blue, and it won't matter what was said before. Just BOOM! Game over. And the less knowledgeable investors in love with their dividends will finally understand what "total returns" means.