Why Seadrill Stock Rose and Pacific Drilling Stock Fell Last Week



Seadrill’s rise, Pacific Drilling’s fall

In the previous part, we saw that Seadrill (SDRL) stock rose 43.0% last week and Pacific Drilling (PACD) stock fell 12.0%. Now let’s look at the key reasons behind the rise and fall of these stocks.

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The reason Seadrill stock rose last week was mainly due to one thing, possibly a rumor. On Friday, September 1, 2017, the stock soared 48.0% on the New York Stock Exchange and 158.0% in Oslo trading following a Bloomberg report. It was the biggest intraday gain for Seadrill since 2005. Seadrill is working to restructure its heavy debt. The company has warned its shareholders that restructuring may involve filing for Chapter 11 and that shareholders will suffer heavy losses.

According to the Bloomberg report, China Merchants Group, a state-owned conglomerate, is exploring acquisitions of offshore drilling (XLE) companies, especially those struggling to recover from the downturn. The report stated that one of its potential targets for acquisition is Seadrill (SDRL). However, according to Bloomberg, China Merchants Group said in an e-mail that it “hasn’t considered buying offshore drilling operators such as Seadrill.” Seadrill’s representative did not comment on that.

Pacific Drilling

The fall in Pacific Drilling’s average closing price is less than $1 over 30 trading days. Also, the average market capitalization of the company is less than $15.0 million over a 30-day trading period. PACD has a market capitalization of $9.4 million. If the company’s market capitalization doesn’t increase, Pacific Drilling will be delisted on September 13, 2017. Below are the market capitalizations of its peers:

  • Transocean (RIG): $3.4 billion
  • Diamond Offshore Drilling (DO): $1.8 billion
  • Rowan Companies (RDC): $1.3 billion

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