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Seadrill’s Revenue Falls 25% Year-over-Year

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Nov. 24 2016, Updated 3:04 p.m. ET

Seadrill’s top line

In 3Q16, Seadrill’s (SDRL) revenue was $743 million, nearly 14% lower than its revenue of $868 million in 2Q16 and 25% lower than its revenue of $985 million in 3Q15.

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Revenue sources

Seadrill earns its revenue through operations in northern Europe, the Gulf of Mexico, Mexico, South America, Canada, West Africa, the Middle East, Southeast Asia, and Australia. It has the following three operating segments:

  • floaters: semisubmersible rigs and drillships for harsh and gentle environments in mid-depth, deep, and ultra-deep water
  • jack-up rigs: used for operations in harsh and gentle water
  • others: mainly rig management services

What impacted revenue?

The fall in Seadrill’s revenue between 3Q16 and 2Q16 was mainly due to the following:

  • six additional idle units in 3Q16, along with day rate reductions
  • idling of Seadrill’s West Orion, West Alpha, West Pegasus, and Sevan Drilling rigs
  • full quarter of idle time for Seadrill’s West Hercules, West Castor, and West Prospero rigs

The reductions in the company’s revenue were partially offset by its agreement on a $17 million dewinterization payment for its West Alpha rig and the commencement of operations on its West Eclipse and West Vigilant rigs.

Peer revenues

Most offshore drilling (OIH) companies have already released their 3Q16 earnings. Diamond Offshore Drilling’s (DO) revenue of $349 million in 3Q16 was 10% lower than its revenue in 2Q16 and 43% lower than its revenue in 3Q15.

Transocean (RIG) recorded revenue of $903 million in 3Q16, 4% lower than in the previous quarter and 44% lower year-over-year. Noble’s (NE) 3Q16 revenue of $385 million was a steep fall from its 2Q16 revenue of $894 million and its 3Q15 revenue of $896 million.

Rowan Companies’ (RDC) 3Q16 revenue was 37% lower than its 2Q16 revenue.

In the next part of the series, we’ll break Seadrill’s revenue down by its operating segments and take a look at factors that will impact its revenue in 4Q16.

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