Why Is Seadrill So Volatile?


Dec. 4 2020, Updated 10:53 a.m. ET

OFS stocks with high implied volatilities

On January 31, 2017, Seadrill (SDRL) had the highest implied volatility among the OFS (oilfield equipment and services) companies that are part of the VanEck Vectors Oil Services ETF (OIH). Seadrill’s implied volatility was 128.2%, while its 15-day average implied volatility was 90.3%. Its volatility was ~41.9% above its 15-day average.

The rise in Seadrill’s current implied volatility compared to its 15-day average is the highest among the five OFS stocks with the highest implied volatilities. SDRL’s implied volatility rose 23% on January 31, 2017. On the same day, Seadrill stock fell 29.7% after it announced plans to raise $1 billion in capital because negotiations to restructure liabilities with creditors were taking longer than earlier expected. The company has seen its revenue fall over the last two years.

Below are the volatilities of other OFS stocks as of January 31:

  • Weatherford International (WFT): 72.3%, or 0.1% above its 15-day average
  • CARBO Ceramics (CRR): 65%, or 11.7% below its 15-day average
  • Noble (NE): 62%, or 2.2% below its 15-day average
  • Ensco (ESV): 55.8%, or 1.8% above its 15-day average
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OFS stocks with low implied volatilities

Now, let’s look at oilfield services stocks with low implied volatilities on January 31:

  • Schlumberger’s (SLB) implied volatility was 17.4%, 3.7% lower than its 15-day average.
  • Baker Hughes’s (BHI) implied volatility was 23.2%, 13.7% lower than its 15-day average.
  • Halliburton’s (HAL) implied volatility was 25.5%, 0.4% more than its 15-day average.
  • Core Laboratories’ (CLB) implied volatility was 27.2%, 15.5% lower than its 15-day average.
  • Tenaris’s (TS) implied volatility was 29.3%, 0.4% lower than its 15-day average.

Companies with stronger financial situations generally show lower implied volatility. But large movements in stocks can also cause their implied volatilities to rise. In the next part, we’ll look at these stocks’ returns.


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