Seadrill (SDRL) Announces Sale of 3 Jack-up Rigs for $225M
International drilling contractor Seadrill Limited SDRL recently announced its decision to sell three of its jack-ups to Dubai-based Shelf Drilling Ltd. for a total consideration of $225 million. The three jack-ups being sold by Seadrill – West Mischief, West Resolute, and West Triton – have a total outstanding debt of $102 million.
Two of the jack-ups, West Resolute and West Triton, will become part of Shelf Drilling's portfolio by the end of this May. The third jack-up, West Mischief, will be delivered to Shelf Drilling during the third quarter of this year. The jack-up is presently serving in Abu Dhabi under a drilling contract with National Drilling Company.
The three jack-ups have a total carrying-value of $415 million. Hence, Seadrill incur a loss of $190 million in the first quarter of 2017 due to the disposition of the assets. However, we expect the transaction with Self Drilling to help the company lower its debt burden.
Shelf Drilling is one of the largest independent leg cantilever jack-up fleet contractor. The company currently has 36 jack-up rigs and one swamp barge. Shelf Drilling plans to finance the deal with its common shares' private placement. It will enable the company to provide its customers with a wide range of services.
About the Company
Seadrill is an international offshore drilling contractor that provides drilling and well services. Seadrill's versatile fleet includes harsh environment semi-submersibles, jack-ups, shallow and deep water tender rigs and deepwater drill ships. In addition, the company provides platform drilling, well intervention and engineering services. Seadrill is based in Hamilton, Bermuda.
Price Performance
In the last one month, Seadrill’s shares have mirrored the Zacks categorized Oil and Gas - Drilling industry. The company’s shares lost 12.65% while the industry witnessed a decrease of 15.76%.
Zacks Rank and Stocks to Consider
Seadrill presently has a Zacks Rank #3 (Hold). Some better-ranked stocks in oil and energy sector are Penn Virginia Corporation PVAC, Enerplus Corporation ERF and Bellatrix Exploration Ltd BXE. All these stocks flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Penn Virginia’s year-over-year sales growth for the current year is expected to increase 24.75%. The company recorded a positive earnings surprise of 36.67% in the last quarter of 2016.
Enerplus is expected to record 66.12% year-over-year growth in 2017 sales. The company had an average positive earnings surprise of 66.67% in the last four quarters.
Bellatrix is expected to record 18.6% year-over-year growth in 2017 sales. The company had an average positive earnings surprise of 58.54% in the last four quarters.
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