Very doubtful. Arbitrage is more tempting with a 25% premium than less than 10%. At $30 SDRL is paying 9%+ , and the incentive to hold for a better price for what is a good stock would persuade many (or me, anyway, if I were making the decision). FWIW, IMO.
A likely reason for the decline in the last week is pretty simple. On April 7 they announced the terms of the convertible bond call. They convert at $27.40 per share for up to 27 million shares, with settlement May 14. Many bondholders do not want stock, so they're arbitraging the settlement. IMHO this presents a buying opportunity.
PS. Biker - the news recently (blah blah) states that anything related to "commodities" is selling off - just as oil et al is manipulated so too are these related areas (and again the recent all time high's in Arlp/ahgp and other coal stocks - unwarranted in my opinion - due to Nuclear mishap in Japan) now has the same players taking their profits.
There may be other reasons but I am only saying SDRL is not the only stock going down for now... I keep a watchlist (many) in different areas to get an overall view of markets and different sectors which for me helps.
Biker - it had a huge run up prior - stocks occasionally take breaks and either break up or down depending on future expectations - my two coal stocks (recently run up on Japanese news - ie big boys) are down significantly but still paying great dividends... I know coal is not going away anytime soon so holding for now (and I am still up on one 58% and 39% - trying to hold rather then trade in and out for now)
In other words many stocks are selling off along with majority of market. There are always many other forces affecting any single position besides the company fundamentals. Extend the chart out for a longer view point and it might help to wait out these "dips"...
(Biker were you on the old NFI board - sound familiar)
Seadrill has a Debt/EBITDA ratio of 4.4x based on total debt of $9.2 billion.
Relatively High Debt-to-Capital Ratio Detected in Shares of Seadrill in the Oil & Gas Drilling Industry (SDRL, VTG, HERO, NBR, PKD)
- Thursday, 14 Apr, 2011
Thursday, 14 Apr, 2011 () -- Relatively High Debt-to-Capital Ratio Detected in Shares of Seadrill in the Oil & Gas Drilling Industry (SDRL, VTG, HERO, NBR, PKD)
Apr 07, 2011 (SmarTrend(R) News Watch via COMTEX) -- Below are the five companies in the Oil & Gas Drilling industry with the highest Debt-to-Capital ratio. The debt-to-capital ratio is an important measure of how a company is financing its operations along with some insight into its financial strength, relative to other companies in its industry.
Seadrill ranks highest with Debt-to-Capital ratio of 60.67%; Vantage Drilling ranks next with Debt-to-Capital ratio of 59.08%; and Hercules Offshore ranks next highest with Debt-to-Capital ratio of 50.32%.