Let's see. SeaDrill is turning a profit, not late on any payments, its bank in Norway states it will cut SeaDrill some slack if needed, and Fredricksen has access to several billion dollars he holds outside of SeaDrill if needed. A classic bankruptcy, thank you for bringing it to my attention.
I personally do not think SeaDrill is going to go bankrupt. However, for the sake of the discussion, let's assume there is a 50 percent chance of bankruptcy in 2015 or 2016 and a 50 percent chance that SeaDrill survives until drillers move back into an up cycle.
50 percent chance stock goes to zero and 50 percent chance it goes back to the 30's or 40's in two or three years equals a good bet at the current price of 10 dollars.
If, like me, you think bankruptcy is unlikely SeaDrill becomes a very good bet at 10 dollars.
Since John Fredricksen owns about 30 percent of SDRL's stock he controls the company. I have serious doubts about the prospects of him destroying the current shareholders which include himself so that the debt holders can become the owners of a debt free company. Looney Tunes thinking.
To me the biggest potential problem for SeaDrill during the current crisis is in the area of debt and liquidity. During Q4 cash went up 193 million to 831 million. During Q4 debt went down 980 million from 12,735 million to 11,755 million. Progress was made in the area of debt and liquidity. Analysis of the rest of the report I leave to sharper minds than mine although I expect headlines about an earnings miss.
I must admit that I only have 800 shares. I must also admit that I did not buy for 11.50 but rather paid just a wee bit more than that. I am not particularly proud that I own the shares, they are just a stock. Nowadays you do not even get a pretty certificate to look at. Though lacking in pride for my stock-picking prowess, I do have patience and will hold on until a dividend is restored and maybe a wee bit longer.