This stock has been one of my favorite holdings of the last 2 years, but I am now worried. You buy this stock for the dividend. Now, no one gets a dividend until June (sheesh) and the special payout pushed us way below our 200 day moving average. Were holding below our 200 day average and time is running out on the fiscal cliff. You now have "Dennis Gartman" running around saying the US is flush in Oil, that just needs infrustructure to get it to market, and as that happens oil should head to the $65 to $75 dollar range. On top of that, the Worlds Deep Sea fleet will double by the end of 2015. Everyone is building deep sea rigs! The same thing happened in the shipping fleet. Too many ships were built, and the prices collapsed. // I was going to buy more at these surpressed levels, but have absolutely decided to hold an wait (as I have no dividend to worry about missing) and I don't like the price action recently. I am not trying to slam this stock, as I have too much invested in it. But my list of worries has recently increased and I'm no longer convinced "accumulating" on dips is in my best interest. Dose anyone else feel this way? Am I looking at things in the wrong light? I am confused for the first time with SDRL and I don't like it.
It is not the US demand for oil alone that sets the price for oil. World oil demand is forecasted to continue to grow beyond supply due to developing nations.
Devaluation of the dollar from Fed's printing of money will also drive commodities prices higher including oil.
Besides, SDRL is growing the fleet, has long term contracts and would be fine at your so called projected $70 oil price. Many forecasters are predicting higher oil prices than $70. Given worldwide demand for oil price is likely to be flat to higher over long term, not lower.
The IEA themselves, in thier last report, indicate that demand will be up in 2013. But they also say, that supply is going to rise as well. There will be about 1.1 million barrels a day in excess supply. US drillers are also shifting away from Natural Gas and focusing on Oil. This is going to add even more supply to the market. If you don't believe me, go read the recent IEA report. It was just posted here on this message board. The author's title states, "Don't let these shorts scare you away" (something like that). The person who posted the IEA report, is advocating that it points towards a bullish case for Oil. But, unfortunately, it looks like they only read the first line of the report, which states that demand will be up, as China's economy rebounds. If you go on to read the report, the IEA is also indicating that supply is increasing as well. Supply is increasing to the point of a daily surplus. As oil drops, so do the dayrates. It's basic economics. The numbers don't lie.
I believe they will pay 42cents in April & then 42cents in July to avoid 6 month "drought.
On fundamentals, do not believe dividend is sustainable given given global dynamics (oil prices & too many rigs in 2 years. They will either have to lower dividend or raise equity or debt. In the latter you need to convince investors and lenders it's ok to give us more money to pay stockholders. Unlikely!!!
Your statement is absolutely wrong. America consumes more oil than any other nation! Were consuming much less Brent now that we have our own abundant resource. Therefor, we are importing less and less. Less Demand means lower prices. Therefor, Brent will come down too. The US will be the worlds largest Oil producer by 2016 (according to Goldman Sachs). Other International Agency are projecting 2020 as the year that US outproduces the almighty Oil rich Saudi Arabi.
SELL your shares if you are that worry. It was a smart move. If you don't know what going on with DIVI RATES GOING FORWARD you're a fool. You will be paying MORE TAXES for those divi in 2013 and forward.
You need to get your blood pressure checked before a fit of apoplexy takes you and makes any talk of what was a good idea, and any ramifications of future tax rates affecting your golden years retirement nest egg, for you anyway, becomes moot.
Fool? Really? Anyone who bought, just to receive this big ($1.70) dividend is the fool. The stock dropped by $1.70 on the Ex-dividend date. So you loose this value. You regain it, when they pay it. But now you owe 15% taxes on that money. It's like paying taxes on your own money. And now the stock is trending lower adding insult to injury. Who's the fool?
Agreed 100 percent, Plenty of shares are held in tax deferred accounts, so those individuals don't have to worry about higher tax rates. Also, the double-dividend dropped the market cap "big-time" at a bad time. Again, the strategy backfired.
I bought a large holding in SDRL last September. I was adding to it every month until recently because I share your same concerns. Taking away that 1st qtr dividend took away the incentive to buy and took away a floor for the stock. I will just hold and see what happens over the next month. Julia
I thought it was a bonehead idea as well, for the turmoil it caused in the share price.
If speculating that the neomarxists will raise tax rates on dividends was a good reason for paying two divis with one in advance then why not pay them up for the entire year? Or two? Or three? Or better yet, four, till the end of obumma's tenure?
I can certainly see the sense in making a single payment early, as OXY did, having gone ex in Dec with a scheduled payment in Jan and pushing that payment out early to 27 Dec to avoid the possibility when it's that close, but any tax increase particularly with this bank busting out of control sendaholic group now entrenched for another perhaps america ending four years is certain to be an end of term thing if it happens, so how is doubling up on one payment and the one time tax savings that'll result in worth the double whammy share price thrashing and aftershock... a thing which promises to have a longer term effect now that the time left till the next payout has been stretched out another quarter?
Julia I appreciate your honest response. It makes me feel more comfortable in my analysis, to know that other people feel the same way. It also explains the weak price action lately.