CEO of Ensco: From CC
So let me just back up a little bit on the big picture. I mean, it is absolutely clear that we're in the midst of a really significant downturn for the sector which is hitting the whole of the E&P sector but is exasperate for the offshore drillers because of the new capacity that's coming to the market. And the pace and aggressiveness with which customers have backed off programs and cut capex is quite unprecedented.
Every quarter, companies announce revenue backlog for their fleet and at the end of the first quarter Ensco's backlog stood at $8.4 billion. That sounds impressive but at the end of the fourth quarter backlog was $9.7 billion and at the end of the third quarter 2014 it was $11 billion.
Backlog has declined $2.6 billion while revenue totaled just $2.3 billion over the same time frame. Not only are they not replacing revenue with new backlog, companies are cancelling or renegotiating contracts, something we've seen across the industry.
Not only are oil and gas explorers cutting back on capital spending, they're signing shorter contracts when they do. That will reduce certainty for offshore drillers long term, even if dayrates don't decline significantly.
You are correct in the W double bottom, one would naturally look for SDRL to trade over that 14 and change recent high. The price action looks like covering shorts, looks like the bottom has been put in. Once again, I'm long NE, so I'm participating with my 10 % yield ( atleast for now ).
SDRL would be a trade to that 14 level, at which point I hold a tight stop 7 %. If it breaks out well ride it.
The next Q will show improvement , and the one after that. It was a no brainer under ten, its still a great buy right here.
Seadrill is not a value trap, but the timing of the entry is crucial. I believe the stock price will remain under pressure in the short/medium term due to the volatility in the oil prices. The E&P companies will likely not increase their capex until crude prices see some stability. However, Seadrill's leveraged position should result in a swift upward movement when that happens.
Seadrill is certainly cheap, and shareholders who have weathered the storm should hold on to their positions. However, those investors who are looking to initiate positions in this stock should wait for the upward movement to start, in my opinion. There is a lack of clear catalysts at the moment, and money might be better utilized elsewhere.
From Seeking Alpo; Exactly how to play it
Graduated from the " Edward J. Smith " School of investing " What Icebergs...we are full steam ahead to New York, those Nay Sayers.
On our base-case forecasts, Seadrill’s ND/EBITDA is set to breach the covenant level of 4.5x (we adjust for Seadrill Partners (SLDP) contribution etc.) in 2016, with risks in 2015 if contracts are renegotiated. And while we believe a waiver is likely to be renegotiated in the short term, we see the financing picture becoming more difficult, especially in the context of financing new deliveries and refinancing of existing debt.
Next Year, Next Year, SDRL the " CUBS " of Deep Sea Drillers
true, the saidis can go five years on their surplus they have built, so they wil loutlast all the weak producers.
no true, we can not supply all our needs, we import 8 to 11 million b.o.o. a day
Beaver their still pumping !......debt to eq...1.35 Oh my Lord !!!!!!!!!!!
Check their hedge positions, by the way the company has private financing now through BlackRock, so the can tell the bond market and the bankers to kiss their a"s