Come to think of it, Tor Olav's departure from MHG was part of the previous announcement he was going to focus on fewer areas, i.e. Golar and Seadrill. Looks to me like the whole thing is part of a larger plan in execution over several months.
BTW, since you have DSSPF you may not be interested in NAO, but NAO management sent a letter to shareholders last week (Nordic American management does that frequently) in which they had this to say about dividends (they already yield nearly 10%). They are talking about 4 new build vessels being delivered in 2015.....
"NAO is in an excellent position to grow accretively. After an acquisition of vessel(s) the company shall be able to pay a higher dividend per share and produce higher earnings per share than had such acquisition(s) not taken place. We are actively looking for acquisition opportunities that fit in with our high-specification fleet. I am hopeful that NAO will grow significantly in the coming years while generating strong total returns."
I don't own MHG. Maybe I should. Do you own it? The story behind the Tor/John falling out could be played out over the next several months. If so, it should be good reading. If MHG has Russian contracts, it could be Katie bar the door.
Here's a thought.... When Kinder Morgan took the hit from Hedgeye and Barrons, Sir Richard stepped up, twice, to buy several hundred thousand shares at market prices. Sure be nice to have John Fredriksen show the same confidence in his company. If not buy off the market, then issue some new SDRL shares to do some deal that would be accretive to earnings. NADL has a jackup, the West Elira under contract to Statoil into 2018 (I think). Big John could surely afford do such an acquisition by SDRL. NADL could monetize the value of the rig and the contract which should give them enough on the balance sheet to carry through the current. SFL might also have the wherewithal to buy it and lease back such as the deal for the West Linus they did last year. It might also qualify for dropdown to SDLP whose share price, BTW, is holding up.
Hope JF reads this.
I am also holding SDRL, at about half the level of my peak position. I will not consider buying more until the status of the Rosneft deal. If they cancel before the November deadline, I may buy in the aftermath, but with an earnings report in late November it might be best to wait for a clearer picture.
NADL? Sorry, I wouldn't touch it with a 10 foot pole. They have staked the future on Rosneft and now those prospects seem speculative at best and slim to none at worst. I don't see ice cream castles or feathered canyons. I see clouds....
... If the Rosneft deal is not maintained, they lose $4.1 billion of "visible" earnings past 2017.
... $454 million is due on the West Rigel delivery in Q4. No announcement how they intend to fund that.
... If they need to sell assets it's pretty slim pickins. There's a jackup contracted with Statoil longer term, but that's it. Everything else is short term or to be determined. Of course, they may get reasonable contracts or extensions on the Venture and the Phoenix which expire in July and Oct 2015, respectively, but that won't help now.
... Then there's this brilliant idea to buy 150 land drilling rigs scattered all over Russia. Those contracts are supposed to be for 5 years. Then what? And who the heck will manage these crews? I'd prefer most any drunken sailor to a drunk Russian. Did they figure in the bribes it will take to keep then running? Is that worth 30% ownership of NADL? Having that deal fall through would be a stoke of good luck, IMO. If the Rosneft deal holds, NADL management was expecting to receive a cash payment from Rosneft to make up the difference between the $9.25 negotiated price per share and the then much higher NADL price that was expected to be there at the time of close. That windfall seems to have evaporated. And since the NADL share price is in the tank (and heading for the bowl?) would NADL have to actually kick in cash to buy those Russian rigs? .
SFL has been unwinding its FRO charters for a couple of years now and is down to around 15 vessels(?). They continue to receive income from the renegotiated charters and a few million $$ from profit sharing iwll be credited to Q4 SFL revenue. As charters expire or are terminated the vessels may be rechartered or scrapped. If FRO early terminates charters, as they have been doing, SFL gets a cash payment and will sell the ship, usually to scrap. This is not so bad since the aggregate scrap value of the vessels chartered to FRO now exceeds the aggregate loan balance. SFL does have to work to continue to replace the lost FRO revenue. They have been doing that most recently by buying containerships from other companies that need to sell assets.
In the not too distant future, FRO will be restructured, absorbed or liquidated.
VLCCF is not for me. I am still leery of dry bulk and it has a pure 100% capesize fleet which is the more volatile sector of dry bulk and the vessel excess is considerable. On the bright side, to the extent that QE in China stimulates their economy, the coal and ore cargoes may tend to increase and the capesize rates may firm up. A far better choiced in dry bulk is NMM, an MLP and C-corp which is diversifying its fleet into non-dry bulk areas.
As usual, what I lack in facts I make up for with opinions.
Did you look at the latest BDC scorecard put out by Wells Fargo? 200+ pages of very heavy reading. Some interesting points, some of which I can understand in general way but I get lost about two lines into the discussion. I skipped a lot. They remain modestly bullish on the BDCs and the top quatrile is the same, although now that includes 6 stocks since they added another to their coverage. HTGC taking a big hit today. Downgrade maybe. Was #2 ranked bdc by Wells as of Sept. 11. ARCC got hit too. Both have a reasonably good dividend outlook.
I am looking for a chance to buy SFL. A secondary? Might still happen but I'm thinking it won't be put into any rig acquisition unless it has a decent contract with a credit worthy party... read anyone but Russian. SFL is under no obligation to come to NADL's aid... as far as I can see, which may not be very far.
SFL has been managed wisely. For the last year, their significant acquisitons have been containerships with charters. The West Linus is a good deal. They would have to be unconscious to have anything to do with any deal involving the Russians. They may have been counting on acquiring and leasing the West Rigel and may have already factored that into recent dividend increases. So, best hope, IMO, is that they will maintain the current .41 dividend for the foreseeable future.
I think you may regret touching NADL at this time. The RSI is irrelevant in this situation. How does NADL pay the last installment on the West Rigel, due to be delivered in the 4th qtr? Is SFL going to do a buy and lease back? And, lease back to whom? Is Rosneft still a possibility? Seems unlikely. In June 2013 SFL did their secondary and the purchase and leaseback of the West Linus was announced. That had a contract with Conoco to go with it. The West Rigel was to have a contract with Rosneft. How likely is that?
IMO, NADL will have to be rescued to avoid default. I have no doubt that Big John will come up with some scheme. He's great at cleaning up problems he has created. Reminds me of the Civil War... General George McClellen. He never should have gone in with the Russians. Like I said, the Exxons of the world can take a setback like this in stride. SDRL, and most certainly NADL, cannot.
The West Rigel may be very important. Delivery in Q4 and a final installment of $454 million yet to pay, is not that so? Seems to me NADL has a serious short term problem with
I have not problem with domestic oil producers. If I was younger I might buy several small to midcap companies and wait for them to be acquired. That doesn't seem like a predictable income strategy, however.
I am holding my SDRL and SDLP at a ratio of about 2 SDLP shares for each SDRL share. If SDRL has a big come back, I don't want to miss getting some of that action. If the dividend is cut I think the price drop could be modest, say 10-20%, and perhaps a good point to buy. I think any cut is likely to be short-lived.
Price difference between SDLP and SDRL is now over $3. This will increase each quarter as SDLP announces each successive distributio increase.
I see the year to year contracted percentages as standard stuff of the industry. Contracts are typically renewed with the same party, especially since they are modern to begin with, and often at higher rates. That is in contrast to the relatively ancient stock leased by AWLCF, one of which has a contract extension in place but at a lower day rate while the ssecond has an optional extension with it after contract expiration but nothing firm at this point. Russia remians the main concern for SDRL as a dividend cut may be in the future if the Russian deals fall through.
I wouldn't oppose all crude export, or at least the distilled version of the most recent approval. And with all the oil that will be coming out of Canada, one can afford to be flexible. But I do think it should be closely monitored and regulated by the government. You can't trust the free market to properly regulate anything. I still prefer to see the value added here in the USA and they fuels and products then exported.
Thanks. In fact, the September IEA report, released to the public on Sept 11, also speaks to the economic slowing of the European and Chinese economies and the effect on oil prices. As a result they lowered their projected increase in oil demand growth. But grow it will, as it declined from the norm (whatever that is) only during 2009 and increased the rest of the time.
I have a simple minded approach to investing, but I consider sector rotation and sector correction to be different phenomena. I heard a guy a year or two back (some Oppenheimer guy, I think) posit that while we had not seen the 10 or 20 % correction in the overall market that people look for, we nevertheless had had large moves or corrections in major sectors coming at different times and that that was essentially the equivalent of a single large market correction event. That seemed to compute with my personal investment experience.
On energy, I used to think of oil stocks as an inflation hedge, and they may well be, but since 2005, the primary determinant in my oil and gas investing has been the relative balance between global supply and demand for oil. Using the monthly IEA reports, one could actually see the coming of a serious under supply of oil and that led to $150 a barrel oil which foretold the arrival of the Great Recession. I was fortunate enough to be pretty much 100% invested in oil and gas from 2005 until 2008. I overstayed my welcome, but retained most of my profits and had good luck trading on core positions in the oil majors for another two years.
I'll continue to state the case for SDLP as a better play than SDRL. Future dropdowns must be quality assets with good contracts and highly visible future revenue. The benefits of an MLP with distributions taxed as regular dividends. 25% distribution growth forecast for 2015 by Wells Fargo analysts. The SDRL dividend is likely to be cut, IMO. It just doesn't make sense for SDRL shares to be priced for a 13% yield. The price gap between them is now over $2 and IMO it will continue to widen in SDLP's favor.
GLNG is a 12 course meal than comes out of the oven in 2015-16. The serving of the appetizers starts later this year. Investor gourmets have bought their tickets and are sitting at the table, waiting, drooling. There is more seating available but the prices will be higher.
How's that for an analogy?