Seadrill Partners

In the previous part of this series, we discussed that analysts expect Seadrill Partners’ (SDLP) 2Q17 revenue to fall 29% from the previous quarter. In this part, we’ll discuss what analysts expect from Seadrill Partners’ EBITDA.

Seadrill Partners’ 2Q17 EBITDA Is Expected to Fall 41%

EBITDA estimate

Analysts expect Seadrill Partners’ EBITDA (earnings before interest, tax, depreciation, and amortization) to fall 41% in 2Q17. Analysts estimate that its 2Q17 EBITDA will be $129 million—compared to $219 million in 1Q17. Analysts’ estimates are lower than the company’s guidance of $165 million.

A steep fall in Seadrill Partners’ 2Q17 EBITDA is expected because Seadrill Partners’ West Aquarius started a new contract on a lower day rate. Also, its revenue will be lower due to lower termination fees related to West Capella, which concludes in April. The decrease will be partially offset by full quarter operations for West Vencedor.

EBITDA margin

In 1Q17, Seadrill Partners’ EBITDA margin was 66.9%. Based on analysts’ revenue and EBITDA estimates, Seadrill Partners’ EBITDA margin is expected to fall to 55.8%.

Peer comparison

Most of the offshore drilling companies (IYE) already released their earnings for the quarter that ended on June 30, 2017:

  • Transocean’s (RIG) 1Q17 EBITDA was $349 million—lower than its EBITDA of $358 million in 1Q17.
  • Pacific Drilling’s (PACD) recorded a negative EBITDA of $18 million in 2Q17. It had a positive EBITDA of $22 million in the previous quarter.
  • Rowan Companies’ (RDC) 2Q17 EBITDA of $130 million was lower than $180 million the previous quarter.
  • Diamond Offshore Drilling’s (DO) 2Q17 EBITDA was $178 million—a rise from $144 million in 1Q17.

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