Enron cooked it's books. Comparing them is a scare tactic, nothing more. I don't pretend to understand corporate finance, but let's get the facts right. SDRL sold the firkin ship for $797mm, not $1.2 bill, at maybe 12-15% profit over cost. Hardly a humping of SDRLP shareholders. Next, if mlp's work fine on shore, why make a big issue about the offshore. Meanwhile, RIG is pursuing the same strategy. Remember, it's a short's job to create smoke and yell fire. Even when it's just nonsense. Long and watching. GLTA
Sentiment: Strong Buy
Someone is getting the shaft. Since it's not SDRL, it's SDLP shareholders. No one pays $1.2B for a ship that just cost $600M without someone getting a raw deal. Gordon939 is right. The corporate structures getting created all over the place are being used to disguise the fact that SDRL is repeatedly raking shareholders, its own and those of the newly-IPO'd subsidiaries/affiliates, over the coals through dilutive actions to finance dividend payments to Fredriksen.
Your comment makes no sense. Of course no other drilling rig company could have purchased at $1.24 billion because there is no other drilling MLP except for SDLP!! You do not understand MLP economics. You will see that the Transocean and Ocean Rig MLPs (to be spun out later this year) will buy assets from parent at the same price levels. $1.24 Billion is still only about 9.0x EBITDA, which is stll far below avg. MLP valuations for high-growth MLPs, despite that SDLP will outgrow nearly every publicly traded MLP in the next 5 years (save for maybe PSXP and MPLX, which btw trade at yields below the 10-yr. UST - remarkable). The MLP investor base is different from SDRL's investor base. The MLP corporate and operating structure is different from SDRL. The assets are not purchased at a premium to their market value by the MLP. The assets are purchased at their true intrinsic value. They simply are not valued correctly within SDRL. But don't take my word, take the word of the Top 3 institutional unitholders in SDLP who willingly fund the dropdowns (Oppenheimer; Neuberger; Goldman). Dumb money indeed. If these institutions had a problem with the terms, then SDLP would not have access to the capital markets. The international banking syndicate would not have issued $1.8 billion in non-amortizing term debt to the SDLP/SDRL entities to help fund the large dropdown from December. You throw out the term "related-party" as if it is the earmark of impropriety, yet you never stopped to think it is more the earmark of shareholder value creation. Fredriksen never sells any assets. He monetizes them, returns capital to shareholders and always retains a controlling or significant interest in the asset and its residual operating risk. The definition of stakeholder alignment.
Fasten You Seat Beltz & Diaper Pins,and get ready to drive all summer @ 2 bucks per gallon !!!! See The USA in a brand new Chevy............
Wow Debbie! You went from suggesting I was a short , to sounding like one yourself.
( laughing )
you are not blind...did you say? You must be blind, ALL the drillers are sinking to NEW 52 week lows. You think SDRL is immune?? SDRL is in a cyclical sector.
Wrong Diagnosis there "MicroVirgin", I have what is known as "Emotional Constipation",and don't give a feces about anything that happens to You,or Your tiny weiner.
Hey HeadGiver,if You had been studuing for examz,back in Oct / Nov,instead of rubbing Your Head with Your "Palm", You would be able to think coherently,but You,chose to revel in the moment of Mid-Fortys,rubbing Your head,dreaming about kissing some "Nifty - Fiftys.. You can go get some crazy glue,and affix some "Wolf Hairs" to Your palms................. Happy Hunting.................
Also, the hard assets of Enron (pipelines) weren't the cause of their problems. It was the paper assets and financial chicanery that sunk them.
Don't see any May or June options being offered yet. Keep crying "Wolf", stench.