Earnings Highlights and Review: Seadrill's Q1 Results Beat Estimates

Research Desk Line-up: North Atlantic Drilling Post Earnings Coverage

LONDON, UK / ACCESSWIRE / June 16, 2017 / Pro-Trader Daily publishes post-earnings coverage on SeaDrill Ltd (NYSE: SDRL) following the Company's announcement of its financial results for the first quarter fiscal 2017 (Q1 FY17) on May 24, 2017. The Hamilton, Bermuda-based Company's underlying earnings per share fell on a year-over-year basis, however it outperformed market consensus estimates. Our daily stock reports are accessible for free, and with those to look forward today you also will be signing up for a complimentary member's account at:

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Get more of our free earnings reports coverage from other constituents of the Oil & Gas Drilling & Exploration industry. Pro-TD has currently selected North Atlantic Drilling Ltd. (NYSE: NADL) for due-diligence and potential coverage as the Company reported on May 24, 2017, its financial results for Q1 2017. Register for a free membership today, and be among the early birds that get access to our report on North Atlantic Drilling when we publish it.

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Earnings Reviewed

In Q1 FY17, Seadrill total operating revenues declined to $569 million from $891 million recorded at the end of Q1 FY16. Total revenue numbers for Q1 FY17 lagged behind market consensus estimates of $584 million. The Company's reported contract revenues of $510 million versus $808 million in the last year's comparable quarter. Reimbursable revenues were $13 million in the reported quarter compared to $18 million in Q1 FY16.

The offshore drilling contractor reported net income of $57 million, or $0.13 per diluted share, in Q1 FY17 compared to $149 million, or $0.27 per diluted share, in Q1 FY16. The company's Q1 FY17 net income excluding non-recurring items stood at $22 million, or $0.06 per diluted share, compared to $153 million, or $0.26 per diluted share, in Q1 FY16. Meanwhile, Wall Street had expected the Company to report net loss excluding non-recurring items of $0.05 per diluted share.

Operating Metrics

During the reported quarter, Seadrill's total operating expenses were $491 million compared to $568 million in the prior year's same period. In order to cut cost, the Company reduced its employee headcount from 6,995 at year-end 2015 to 5,196 at the end Q1 FY17. Operating income also declined to $83 million during the reported quarter from $328 million in Q1 FY16. Furthermore, the Company reported EBITDA of $291 million in Q1 FY17 versus $528 million in Q1 FY16.

The Company had a total of 38 rigs in Q1 FY17, out of which 17 rigs were idle. Meanwhile, in Q1 FY16 out of 38 rigs only 10 rigs were idle. Moreover, total operating rigs economic utilization during Q1 FY17 was 98% compared to 96% in Q1 FY16, respectively.

As of May 24, 2017, total order backlog at Seadrill was $3.4 billion, comprising of $1.4 billion for the floater fleet and $2.0 billion for the Jack-up fleet.

Segment Wise

Seadrill's total floaters revenues for Q1 FY17 came in at $369 million compared to $616 million reported in the year ago same quarter. In the floater's segment, depreciation and amortization expenses amounted to $153 million, up from $148 million in Q1 FY16. Additionally, the segment's operating income declined during Q1 FY17 to $49 million from $237 million in Q1 FY16.

In Q1 FY17, Jack-ups rigs revenues fell to $181 million from $246 million in Q1 FY16. Furthermore, the segment reported operating income of $33 million in Q1 FY17 compared to $86 million in the last year's same quarter.

The Company's other operating revenues were $19 million in Q1 FY17 compared to $29 million in Q1 FY16. The segment's operating income stood at $1 million for the reported quarter versus $5 million in the last year's comparable quarter.

Balance Sheet

In the quarter ended on March 31, 2017, Seadrill generated $155 million of cash from its operating activities compared to $294 million in the previous year's comparable quarter. As on March 31, 2017, the Company had cash and cash equivalents balance of $1.46 billion compared to $1.37 billion as on December 31, 2016. Furthermore, the Company reported long-term debt amounting to $6.40 billion as on March 31, 2017, compared to $6.54 billion as on December 31, 2016.

Earnings Outlook

In its guidance for Q2 FY17, the Company projects operating income of $40 million. EBITDA for the upcoming quarter is expected to be $240 million.

Stock Performance

At the close of trading session on Thursday, June 15, 2017, SeaDrill's stock price declined 2.41% to end the day at $0.42. A total volume of 4.69 million shares were exchanged during the session. At Thursday's closing price, the stock's net capitalization stands at $228.10 million.

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