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Seadrill: What Analysts Estimate for 3Q17 and Beyond

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Oct. 13 2017, Published 1:28 p.m. ET

Bankruptcy

Seadrill (SDRL) filed for Chapter 11 bankruptcy protection in September. The company had applied for a “first-day” motion, and on September 13, it got approval from the court.  This approval gives the company the authority to pay employee wages and benefits, pay its suppliers and vendors, and utilize its cash management system. The company’s day-to-day operations will continue. In this part of our series, we’ll look at analysts’ estimates for Seadrill’s 3Q17 earnings.

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Revenue estimates

The above chart shows Seadrill’s consensus revenue and EBITDA (earnings before interest, tax, depreciation, and amortization) estimates. According to data compiled by Reuters, analysts expect Seadrill to deliver revenue of $482 million in 3Q17—a fall of 35% year-over-year. The estimated revenue is also down from the previous quarter’s revenue of $577 million. Offshore drilling (IYE) companies are relying on previous contracts for their revenue. Securing new contracts has become difficult. Also, the new contracts are awarded at very low day rates, which tells us the downward trend in revenues is common among offshore drillers. Analysts expect Seadrill’s 4Q17 revenues to be $482 million. The company’s 2017 revenue is estimated to be $2,042 million—down 35.6% from $3,169 million in 2016.

EBITDA estimates

Wall Street analysts expect Seadrill’s 3Q17 EBITDA to be $186 million—down from $241 million in 2Q17 and $441 million in 3Q16. Seadrill’s EBITDA estimate for fiscal 2017 is $898 million—down from $1,772 million in 2016. Later in this series, we’ll see analyst estimates and recommendations for Transocean (RIG), Diamond Offshore (DO), Ensco (ESV), and Rowan Companies (RDC).

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