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SeaDrill Sinks to New Depths Amid Bankruptcy Talks

Benjamin Rains

SeaDrill, an International offshore drilling company, saw its stock take a plunge Tuesday after the company mentioned the possibility of filing chapter 11.

SeaDrill SDRL stock closed Tuesday down 14.22% to $1.75 per share. This massive hit came despite SeaDrill posting better-than-expected fourth quarter earnings and revenue. 

The company posted earnings of $0.24 per share, which beat the Zacks Consensus Estimate of $0.13. SeaDrill’s fourth quarter revenue was $667 million, beating our estimate of $634 million. But those positive numbers were overshadowed by bankruptcy talks.

The following is part of a statement SeaDrill made earlier:

“As previously disclosed, we have been engaged in extensive discussions with our secured lenders and potential new money investors, including Hemen Holdings Ltd., regarding the terms of a comprehensive restructuring…

Given timing, however, it will be challenging for the Company to finalize a fully consensual agreement before 30 April 2017, which is the maturity date of the West Eminence [credit] facility and also a milestone under the bank facility amendments entered into in April 2016…

In the event a consensual restructuring agreement is not concluded or an agreement to an extension is not reached, we are also preparing various contingency plans, including potential schemes of arrangement or chapter 11 proceedings.”

SeaDrill must climb over some major debt hurdles before April 30, or investors could lose everything.

The Bermuda-incorporated and London-based offshore drilling company’s stock peaked at $46.42 per share in Sep. 2013. Since then, it has sunk to its current depths.

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