I have initiated a position in this attractive company, but a little new to the industry. I'd appreciate hearing from serious minded people on:
(1)Long Term growth prospects of the company; eg,I understand they are adding more ships..over what time base and how many?
(2) What does one ship contribute to revenues?
(3) Are there any negatives or bigs risks, other than the obvious one of a blow-out on the scale of BP?
(4) What are reasonable expectations for the stock pps going forward?
(5) Why is the div'd so large? Is it at risk?
If you want to get a handle on the industry as a whole, review RIG's history since they have been the leader in the industry for quite awhile. I got into RIG through a merger with GSF some years ago. Since then it has gone from $90's to $160 down to $50 up to $90, and this was all before the BP explosion. It is very difficult to project where SDRL or any other stock in this industry will be in any given year.
Most of the old-timers of JF's companies hang out on the Investor Village message board for Seadrill (and other boards too, including one just called John Fredericksen Companies). Serious investors only, spammers get kicked off really fast.
Bruce (aka bruc2y both here and at IV)
seriously, read the recent 2Q 11 earnings report
read some annual reports too
drillers do trade up or down with crude prices, but over time we need to drill more in deep water and harsh environment to find oil, and even in benign environment, the oil co's want the new high specification rigs. All if which SDRL owns, many not even delivered from yards yet. Result- SDRL rigs will be in high demand for many years
I agree sdrl trades with oil but their earnings are not tied to the actual oil price the same way a miner is tied to the price of gold.
SDRL rents equipment through longterm contractual arrangements and whether oil is $84.00 or $120.00 those contracts are fixed. Certainly the higher price for oil will bode well as more BP's e.t.c. attempt to bring oil to the market at higher prices.
I agree, BUT the land drillers are having a large impact in the US. the Bakken shale, ND is pumping 400,000 barrels per day increasing 1 million; likewise the Canadian oil sands.
The Marcellus shale NG is huge, they can get NG out for $1.50 per thousand Ft3. My investments in the wells is paying 16% even at these lousy prices.
The Bakken shale is hiring tens of thousands every month. Halliburton is hiring 11,000 this year. Yet idiot Obama hates oil companies-what an arse.
The overhang for SDRL is large debt. However they have the most modern drilling fleet.
Correcting the previous reply: IBM (which I own) pays $0.75 per quarter, 1.8% of the $165 stock price. SDRL pays 0.75 (recently increased from 0.70) for a return of 10%.
The question is the SDRL dividend sustainable.
I own RIG and DO, but SDRL is my largest drilling service holding, 6,000 shares.
The previous reply is correct, the stock is trading down like all stocks because of economic fear. But the Chinese are putting 50,000 more cars on the road every day and hundreds of millions worldwide have been pulled from poverty into the middle class.
Fear of the idiots in Washington is also part of the low stock price. Stupid moratorium on Gulf drilling putting tens of thousands out of work and onto unemployment; what's next from these fools?
If Rick Perry gets elected President this stock will double even though it's not a US company.
1) go to any chart like on Charles Schwab and go back several years and under events click on earnings. You will see steady growth--often phenomenal like the last qtr.
2) there are different rigs that command different rental fees. Some are daily at $450,000. Check the website for more info on their fleet and also see the article by Seeking Alpha in early August for more info.
3) Always negatives: big spill, Windfall tax from your Kenyan outsourced president, politics (democrats against drilling)
4) Right now the stock is not trading on fundamentals it's trading on the fear of a retracting economy which is irrelevent since their money is made through contracts. The price of oil causes this sector to trade hi/lo but oil does not directly correlate to their earnings like a company levered like Conoco or CVX e.t.c.
5) Div is big because the stock sold off. This dividend is the same as IBM's which yields 1.82% compared to the share price. It's all relative. THis is not a fluke REIT and it has a lot of positive press because it its a nargain.
6) I think a new buyer could get it at $28.20--thats where my buy order sits.
"3) Always negatives: big spill, Windfall tax from your Kenyan outsourced president, politics (democrats against drilling)"
WTF are you smoking? Windfall tax on what, exactly? And what do US politics have to do with a Norwegian driller that operates completely out of US waters? Only rig SDRL has in the US is the temp use in GOM for drilling the Macondo relief well.
And your "Kenyan outsourced president" comment is exactly the kind of crap contaminating most Yahoo boards the keeps me pretty much reading only the IV boards.