Where Does Seadrill’s Backlog Stand amid the Current Downturn?



Seadrill’s backlog

A company’s backlog helps gauge its future revenue. On May 24, 2017, Seadrill (SDRL) had a backlog of $3.4 billion, which is higher than its backlog of $2.5 billion on February 28. Seadrill’s backlog has seen an uptick after nearly nine quarters. To be sure, an increase in backlog is a rare scenario in such a downturn.

Among other offshore drillers (OIH), Noble’s (NE) backlog has risen $3.5 billion from its $3.3 billion at the end of the previous quarter. Atwood Oceanics’ (ATW) backlog has fallen, however, to $400 million from $600 million. Rowan Companies’ (RDC) backlog has fallen to $1.46 billion from $1.7 billion.

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Seadrill’s backlog details

Seadrill’s backlog for the remaining three quarters of 2017 is ~$1.7 billion, which equals 85% of its last three quarters’ revenues. If the company isn’t able to secure new contracts, its revenues in 2017 will amount to around 71% of its 2016 revenue.

Seadrill’s backlog for 2018 is ~$650 million. Of its total backlog of $3.4 billion, the floater segment’s backlog is $1.4 billion, and its jack-up segment’s backlog is $2 billion. The increase in Seadrill’s backlog is mostly due to its jack-ups. Notably, the average contract duration is 13 months for floaters and 30 months for jack-ups.

Contract updates

There have been several developments from March 2017 to its 1Q17 earnings release, which increased the company’s backlog. The West Freedom secured a one-well contract in Columbia with Ecopetrol. The contract will start in 3Q17 and adds $5 million in backlog.

In April, Seadrill’s subsidiary NADL secured a contract extension for its West Elara and West Linus jack-ups with ConocoPhilips. The contracts are for ten years and add around ~$1.4 billion in backlog. However, as day rates are based on market rates, backlogs are always subject to changes.

In April, the contract on West Elara was extended by Statoil at a rate of $135,000 per day. The contract is now extended until September 2017. 

In May, Seadrill announced that it plans to sell three jack-ups. Notably, the West Cressida was awarded a 90-day contract with PCPPOC in Malaysia. The contract will start in June 2017 and adds ~$5 million in backlog.


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