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richardleeds 2558 posts  |  Last Activity: 2 hours 1 minute ago Member since: Apr 1, 1999
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  • richardleeds richardleeds 2 hours 1 minute ago Flag

    SDRL has hit $8 and $9 per share twice in the last six years. I would not add at $12 if I were you. I see no reason it does not reach its low seen in 2008 and 2010.

    SDRL has a debt of $13 billion and it still has to pay for more platforms being delivered in the next two years. I do not expect a dividend on SDRL during 2015 or 2016, so many more people still have to dump the shares that need dividend income during the next few years.

  • During the last six years Seadrill has twice dropped below $10 per share. So why not again???
    Who knows how long the dividend will be suspended. The company has $13 billion in debt now
    and more platform rigs that have to be paid for and delivery taken over the next two years.
    If the dividend is suspended for 1-2 years I would be surprised if the shares do not drop to the
    previous lows that were twice hit in the last six years, once in 2008 and again in 2010.

    At $8 or $9 per share the current price at $16 sure has a ways to fall to reach the recent lows hit
    twice before in recent years.

    What do investors think about where the floor is if there is no dividend distributions and the investors
    that need income abandon this investment during the next month???

  • richardleeds richardleeds Oct 10, 2014 6:37 PM Flag

    Look at the low of each driller for the last 5 year period and 10 year period. Take the two numbers and average them, get a feel for the low on the average down cycle by the drillers. That is all I did.
    Then I looked at the debt. SDRL debt is likely to increase 25-30% over current levels.
    ESV has the strongest financial position. Then Noble. 50% of the RIG fleet is old, that is a big negative.
    Guessing the price of oil is dangerous. All we know is that always falls more than people expect and to everyone's surprise, Saudi Arabia and Russia can do nothing about it. I have no clue if oil is going to $80 or $70 or $60 and it is expensive to turn a well off and shut it down and start it up again.
    SDRL and the rest of the sector is going to have a rough 2-3 years and if any company cuts the dividend many investors will dump the stock and prices will fall.
    I'm tempted to buy 1/2 a position in ESV and SDRL when they fall another 10%, then wait a quarter and see how oil prices and rig fleet utilization rates look, if week, hold off, come back and try an buy in the next quarter the rest of the position.
    More interesting than the drillers are the refiners CVRR and CLMT, let them fall another 10% and they look more interesting than SDRL and ESV. Would I buy some of all for with another 10-15% correction, sure.
    Good luck.

  • richardleeds richardleeds Oct 10, 2014 6:26 PM Flag

    head of the CDC said on national news last night the Ebola epidemic could rival the AIDS epidemic. By the way 40 million people died of AIDS.
    Forget what happens to the aviation sector if discretionary travel is cut back drastically? Doesn't aviation, military and commercial use up for fuel that any other transportation mode?
    Even if you think Ebola is not important and will not curtail people from using planes and other similar environments, the issue is climbing debt getting bigger each year for SDRL and the other drillers, fleet utilization at lower rates are also a concern.

  • Reply to

    Picken's Take

    by ryashlee Oct 10, 2014 6:22 AM
    richardleeds richardleeds Oct 10, 2014 4:02 PM Flag

    Boone is wrong as much as he is right in recent years. Hope you did not invest in his company 3-4-5 years ago as CLNE has fallen 75%.
    Linn is fully hedged on prices and the planes, cars, buses in the U.S. are not shrinking in numbers. For that matter the number of homes in the U.S. is expanding and in case you forgot, they use energy: electricity and natural gas. So, if all the numbers in the U.S. are going up and do not see the scare on the economies in Europe and China lasting for more than a few quarters.

    Our distribution is not going to be cut.

  • Debt is currently $13 billion and with deliveries of the rigs over the next 18 months,
    they will owe another $4 billion or more.
    Even with contracts, sector is going lower as world falls into recession over Ebola
    spreading and demand for commodities continues to fall.

  • Reply to

    I'm done....I'm out

    by eaco_investor Oct 7, 2014 2:40 PM
    richardleeds richardleeds Oct 8, 2014 2:37 AM Flag

    all fuel sales at retail level are low margins. I sold gas and diesel as a Shell operator and it is tough. There is a reason this company has never told shareholders when it will be profitable and if that day comes the margins are still going to be small.
    A year ago I said the shares would go lower and they have.
    As the company is unprofitable each quarter in 2015 it should go lower still.

  • Reply to

    Company TOTALLY unresponsive

    by generaltrius Oct 7, 2014 12:55 PM
    richardleeds richardleeds Oct 8, 2014 2:29 AM Flag

    The press release says the $100 million Montreal highrise is not performing but they do not say what the occupancy is. I imagine it is close to empty. What young people can afford an expensive building?
    So tell me, how will they handle the debt service on the building paying for the utilities in winter on a mostly empty building?

  • Reply to

    Just keeps going Down

    by gh0917 Oct 6, 2014 10:44 AM
    richardleeds richardleeds Oct 6, 2014 5:25 PM Flag

    You said this is a good company. Remember, 5 years ago the price was $21, today it is $21. Look at companies like EOG, XOM, CVX, COP, Hess, Google, Intel, Yahoo, Facebook, etc. Most "good companies" are up 100% or more over the last 5 years.
    I am holder of CHK and rather than doing a good job it has underperformed the market over the last 5 years.

  • Reply to

    FIVE years and NOTHING

    by natty_0ner Oct 6, 2014 12:00 PM
    richardleeds richardleeds Oct 6, 2014 1:51 PM Flag

    Do not kill the messenger especially when he has called it correctly.
    CHK shares could be bought 5 years ago for $21 and that is true now 5
    years later. Also, most of the stocks he mentioned have appreciated 100% plus
    over the last 4-5 years. As a long time shareholder of CHK he is correct as the shares
    have not accomplished anything for holders over that period.

  • Reply to

    Barrons

    by isemperfi1 Oct 4, 2014 8:21 AM
    richardleeds richardleeds Oct 6, 2014 2:38 AM Flag

    Ask yourself why Barron's is ignoring the fact that Line/Lnco is 90% hedged for the next several years. Lower oil or gas prices will not substantially change revenue/cash flow and forecasts. With lower prices in 2015 they can defer $100-200 million of capex until 2016 and drill when prices are going up again.

  • Reply to

    looking for an entry point

    by gunclub84 Sep 29, 2014 9:29 AM
    richardleeds richardleeds Oct 3, 2014 4:05 PM Flag

    SDRL is in a sector that is in free fall. Today an analyst said the chart on RIG is the worst he has ever seen. As all drillers will continue to fall 20%, SDRL will go along with them.
    As oil prices decline and gasoline prices decline and more rigs are delivered to the weaker hands, the sector will keep going lower. Wait for the weakest drillers to bottom and sit at the bottom for awhile, then buy.
    Unfortunately, that could be a year in the waiting, but it is not worth the dividend to ride this.

  • Reply to

    Market Cap $9B, Goodwill $3B

    by richardleeds Oct 1, 2014 6:16 PM
    richardleeds richardleeds Oct 2, 2014 1:20 AM Flag

    Actually no. They are down $4B in price because the FED has inflated the market for the last 5 years with a zero interest rate. The entire market has been inflated by cheap money.

    The cheap money (financing) has resulted in to many platforms as the world is flush in oil.
    The same cheap money has kept oil prices inflated and as those prices go through a decline
    which is only a normal cycle and the sector of drillers faces declining utilization and declining revenues, the sector will take all drillers down.

    The price decline is not over especially if commodities continue lower, demand for oil declines and the weak sisters in the sector keep falling (think RIG, etc.).

  • richardleeds by richardleeds Oct 1, 2014 6:16 PM Flag

    The $3B of assets called Goodwill is nothing. The productivity of
    that excess paid for assets is really worthless and if they were
    honest with investors they would write it off.
    Goodwill can not be sold, earns nothing, has no liquidity.
    Basically it is a phony number that is meaningless.
    If management was honest they would write the goodwill off
    and take a loss.

    Investors need to discount the market value by that phony item
    on the balance sheet, then you get to the real numbers.
    But management is not going to admit the games they are
    playing with the balance sheet. They want investors to think
    the assets are worth more than they are.

  • Reply to

    Why SDRL is going to $20

    by richardleeds Sep 30, 2014 2:02 PM
    richardleeds richardleeds Sep 30, 2014 9:17 PM Flag

    Look,
    SDRL has a nice backlog but that has not protected the equity price.
    Russia and Brazil are major users of the really deep rigs and both
    have major economic issues without more Western finance (lending).
    The addition of more rigs (all varieties) is causing a sector sell off
    along with the decline in energy pricing. Oil has fallen 10% in just
    the last three months, predictions are for gasoline next year to fall
    to $3.00+ per gallon.
    Brazil and Russia issues along with lower oil is going to play
    havoc with all drillers and that includes SDRL. Look at SDRL's
    price even with a great quarter. What does a good quarter do
    for SDRL with its big backlog? It's falling like it weaker sisters.

  • Reply to

    Why SDRL is going to $20

    by richardleeds Sep 30, 2014 2:02 PM
    richardleeds richardleeds Sep 30, 2014 9:11 PM Flag

    You are correct, it is going to drop significantly that is going
    to happen to the entire sector and this is going along with
    the sector.

  • richardleeds by richardleeds Sep 30, 2014 3:01 PM Flag

    Next stop as market continues down on commodities
    and over production and lower commodity prices.
    New investors might get a chance to invest around
    $3.50. Might be a great entry price.

  • Reply to

    Why SDRL is going to $20

    by richardleeds Sep 30, 2014 2:02 PM
    richardleeds richardleeds Sep 30, 2014 2:48 PM Flag

    139 new platforms came on line during the previous 5 years.
    50 more are coming on line in 2014-2016.
    Demand is slowing in Brazil, Russia (by sanctions), rest of the
    world as more oil is produced in Canada and the U.S., this is
    all depressing prices as everyone knows.
    The price could stay at $90 or lower for a year or two. Sure it
    is not permanent but it will have an impact just as the market
    will be impacted by the FED changing the course of interest
    rates.
    This company is not immune to world demand for oil nor the is
    it immune from the other 4-5 major drillers that are going to
    see utilization drop and revenue per platform drop.
    Just take a look at the SDRL price decline with no change in
    its utilization and rates. What will happen as other drillers
    feel the hurt of 50 new platforms in the next 36 months.

    Time to get out of drillers and sit on the sidelines for 12-24
    months and buy them after the sector corrects another 20%.

    Buying the drillers at bottoms of cycles always gives better
    return than riding them up and down. Buy LOW, sell HIGH.

  • richardleeds by richardleeds Sep 30, 2014 2:02 PM Flag

    Current debt is around $12 Billion.
    Deep water rig count from 2008 to 2013 grew from 103 to 239 platforms.
    From 2014-2016 this rig count is going to grow another 25%.
    SDRL is going to take on almost $6 billion more in debt as it
    pays for its platform deliveries in 2014, 2015, 2016.
    There is going to be tremendous price pressure and utilization that
    will effect all drilling companies with these platforms and the sector
    moves up or down together.
    Also, the FED is going to start raising interest rates over the next
    three years and a change in the FED course always impacts the
    entire stock market.
    The stock market has been on a 5 year bull market run, these runs
    always correct. When it does everything falls 10-20%, look at the
    market history on corrections.

  • Reply to

    The Disaster Scenario

    by winomaster Sep 29, 2014 10:28 PM
    richardleeds richardleeds Sep 30, 2014 1:49 AM Flag

    remember, the lowest interest rates in our lifetime have been during the last 5 years. The FED is going to change that in 12 months. Also, the largest number of new rigs manufactured in the last 15 years is going to hit the market in 2015. Both of these factors are going to impact the market, especially the interest rate reversal. Could the market take a hit of 10% or more when the FED changes course. Easy in my opinion.
    Could SDRL hit the same low of 2010, sure, that was $19.

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