Big surprise the supply vessels for deep oil rigs, Deep Sea Supply, announced NO divy for this qtr. If one reads their balance sheet carefully it turns out to be prudent as they need to conserve cash.
I suspect other JF companies which are highly leveraged will act in the same mmanner.
I believe JF is doing what is best for the companies he manages. Deep Sea needed to pay off a loan and money was cheap to do it. I miss the divvy as well. But would rather have a strong company and better future then my divvy today. I want companies that will be around when this mess is done with in 4-5 years.
Long in many JF companies and still a huge fan of his.
i will miss any dividend cuts (which I expect), but since JF owns about 1/3 of the stock of each of his companies, I expect him to make decisions based on the long-term benefit to the company, not just window-dressing for the most recent quarter.
Sale leaseback proceeds of $1.4b received. Cash on hand a couple hundred million higher than that. So how much will mgmt pay on newbuilds and how much will go to shareholders?
With at least $1.6b cash on hand they can easily pay an increased dividend and meet fixed schedule of newbuild payments. On the other hand, if they choose to pay same level of dividend and use remaining cash to pay ahead of schedule that's not a bad alternative. Dividend increase is likely within next two quarters as cash flow is increasing at fast pace. Cash flow in 2009 will be much higher than 2008.
"Since I am a believer in controlled leaks I would think that Sea Drill would be moving up right now if the news were as great as you all are suggesting. "
Agree. I also fear that no divvy will be declared and as such an investment into seadrill is dead money...from my point of view. No one knows how long this world wide recession will be but I'm sure it isn't going to turn around for a long time.
Before you all make predictions about divy you may want to read Hub's notes on Scorpion, PDE, & Supracrest. JF has been very aggressive in this area & may have gotten hammered.
Since I am a believer in controlled leaks I would think that Sea Drill would be moving up right now if the news were as great as you all are suggesting. I think an unpleasant surprise NO Divy on Monday, with possibility in the future.
If world economy stays like it is for next 12 months I think we will hear the "D" word instead of recession. Right now I have virtually all my $$$ in JF companies so I'm hoping that II Qtr 2009 things get better & I'll see divies again.
By the way, Hub is by far the most knowledgable person on these boards about JF companies!
my guess is about $3.50 per share for 2009 dividends. This coming dividend announcement could show a cut or possibly even a temporary dividend suspension, but the dividend should ramp up in 2009 as the quarters go by. The quarterly dividend should continue to increase beyond 2009, assuming that the credit crisis/general world recession has come to an end by then and worldwide growth resumes, which I think will happen.
Since we are both optimistic here's my forecast for divi's
$5 in 2009, $7 in 2010, $9 2010
Higher dividends are also supported by management's strategy of doing more sale leasebacks, once the credit markets free up. In addition, SDRL likely to do more investments in rigs once oil prices and markets firm back up.
I know that Sea Drill is under valued but I think you may get an unpleasant surprise about the divy! I think, if we get one, it will be slashed maybe $.20-.30! I think JF will conserve cash right now.
Now to oil...the U.S. generates only 4 million barrels of the 21 million we need. Mexico & Canada represent 70% of the shortfall. The other 3 million comes from the middle east. With the Dems in power there is no way we drill off shore or go after the trillion barrels in shale oil in Colorado. Therefore, we will continue to import.
T. Boone stated just the other day that oil will be back in the $100 range by end of 2009. I believe he is correct as the economy should be improving by then. China's growth along with India will again pressure the price. If one looks at the rate of discovery vs growth, situations like Mexico will continue to put pressure on prices. There continues to be speculation that the Saudis continue to overstate their reserves.
My guess right now is that Sea Drill will have a great qtr but will cut its divy! People will not be happy, stock price will drift but smart players will use this as a great opportunity to buy more. Unfortunately, I'm tapped out & so far I have not found a buyer for the wife & kids so I'll only be able to buy another 1000 shares or so.
I think Sea Drill pays $10/share by 2012.
In my opinion the forecast is supportive of a belief that the markets have oversold - 2009 will not see a further decline in oil, gas and other commodities. A great depression will not occur in worldwide demand. For example, coal demand is forecasted to increase 5.5% over 2008.
Oil prices to average $63, but this forecast basically discounts the possibility that any OPEC supply reduction will be effective in raising prices to the $90-100 OPEC target level. The forecast calls for oil demand to be minimally higher in 2009 compared to 2008.
Tankers have benefited in 2008 from increased ton miles and there is no reason to believe that ton miles in 2009 won't remain at the 2008 high levels. Ton miles matters much more than oil price. FRO dividends well supported in 2009, although I expect some reduction in dividends from this year.
For SDRL, the upcoming 3rd quarter report will be quite interesting. SDRL's drilling program will be yielding much higher cash flows now through next year as several rigs go into production and contract prices are higher than past. The $1.8b sale/leaseback of two recent built rigs provides them with the cash to cover all near term invenstment costs, and is supportive of high dividend.
A dividend increase for SDRL is probable within two quarters.
In addition, 2nd quarter report mentioned that the Board was evaluating listing SDRL on NYSE and a decision would be made within 6 months. For either dividend lovers or growth, this is the best of times. A very underated company.