Seadrill Partners (SDLP) is an MLP. It’s one of the first MLPs in the offshore drilling space. Its parent company is Seadrill (SDRL). Seadrill Partners is popular among investors due to its high dividend yield.
Seadrill Partners has paid dividends since its inception in 4Q12. Its dividends gradually increased from $0.29 per share in 4Q12 to $0.56 in 3Q15. With the onset of the offshore drilling downturn, Seadrill Partners’ dividends took a hit. Its 4Q15 dividend fell to $0.25. Most of the offshore drillers (IYE) have suspended dividends. Diamond Offshore Drilling (DO), Rowan Companies (RDC), and Atwood Oceanics (ATW) eliminated their dividends in 2016. In 2Q16, Seadrill Partners cut its quarterly dividends to $0.10 per share, which equals an annual distribution of $0.40. From 2Q16 until 4Q16, Seadrill Partners paid a similar dividend every quarter. In 1Q17, Seadrill Partners deferred its dividends.
Why were dividends deferred?
Seadrill is close to filing Chapter 11 bankruptcy. Seadrill Partners deferred its 1Q17 distribution until an agreement is reached with its lending banks to insulate the company from potential default events.
On August 17, 2017, Seadrill Partners announced that it completed amendments to three secured credit facilities which relate to its purchase of three rigs from Seadrill. The amendments will insulate the company from default events related to Seadrill’s filing of Chapter 11 to implement restructuring plans.
Seadrill Partners will resume its dividend payments. The company declared a quarterly cash dividend of $0.10 per share for the first and second quarter. The cash dividend will be paid on September 5, 2017, to all unitholders.