Revenue estimates

Wall Street analysts estimate that Seadrill Partners’ (SDLP) 2Q17 revenue will be $231 million—a 29% fall from revenue of $327 million in 4Q16 and a 44.8% fall year-over-year. It would be the sixth consecutive quarter that Seadrill’s revenue experiences a fall. Seadrill Partners earns its revenue by operating semi-submersibles, drill ships, tender rigs, and barges. It operates its rigs in the US, Canada, Ghana, Nigeria, Angola, Thailand, and Singapore.

Analysts Expect Seadrill Partners’ 2Q17 Revenue to Fall 44.8%

Why will revenues fall?

A steep fall in Seadrill Partners’ 2Q17 revenue from the previous quarter is expected because:

  • Seadrill Partners’ contract on West Aquarius will start on a lower day rate. The company will earn lower termination fees related to West Capella, which concludes in April. Seadrill Partners’ lower revenue will be partially offset by lower quarterly revenue for its West Vecendor operations.

Backlog

Seadrill Partners’ backlog has an average remaining contract term of only 1.5 years. Its backlog stood at $2.1 billion as of May 24, 2017—compared to $2.2 billion in February 2017. Seadrill Partners’ backlog for the next three quarters (2Q17 to 4Q17) is ~$550 million—52% of its revenue is in the last three quarters. If the company isn’t able to secure new contracts, its 2017 revenue will be 55% of its 2016 revenue.

Peers

Most of the offshore drillers (XLE) have already released their 2Q17 earnings results:

  • Diamond Offshore Drilling’s (DO) 2Q17 revenue was $399 million—6.6% higher quarter-over-quarter.
  • Noble’s (NE) 2Q17 contract drilling revenue was $278 million—23% lower quarter-over-quarter.
  • Rowan Companies’ (RDC) 2Q17 revenue was $320 million—14.4% lower quarter-over-quarter.
  • Ensco’s (ESV) 2Q17 revenue was $457 million—2.9% lower quarter-over-quarter.

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