Seadrill Ltd

Offshore drilling (XLE) (IYE) is a capital-intensive industry requiring a large amount of money to keep rigs active and well-maintained.

Tidewater’s (TDW) short interest-to-equity float ratio is 40.1%—the highest among the OFS stocks that are part of the VanEck Vectors Oil Services ETF (OIH).

The offshore drilling industry made headlines last week, especially Seadrill (SDRL), which reached a 52-week high of $0.73.

In May, no drilling permits were issued in the shallow waters of the Gulf of Mexico. In the first five months of 2018, only two were issued.

The Market has given a consensus rating of “sell” to Transocean (RIG). Of the 37 analysts covering the stock, only 5% have given it a “buy” recommendation.

Offshore drilling stocks had mixed returns in Week 30, which ended July 27. The best performer was Seadrill (SDRL).

Most offshore drilling stocks traded in the green in the week ended July 13. The best performer during the week was Noble.

In 4Q17, Transocean’s (RIG) costs increased. With a fall in revenue, Transocean’s drilling-to-revenue ratio rose to 66% in 4Q17 from 46% in 3Q17.

Seadrill and Diamond Offshore have more than 20 floaters in their fleets. Ensco and Rowan Companies have more jack-ups in their fleets than peers have.

Currently, Diamond Offshore Drilling’s (DO) short interest-to-equity float ratio is 30.5%. It’s the highest among the OFS stocks that are part of OIH.

The marine oil spill in April 2010 was the worst environmental disaster in US history, causing millions of barrels of oil gushed into the Gulf.

The offshore drilling industry experienced many events in the first half of September 2017. Seadrill (SDRL) filed for Chapter 11 bankruptcy.

Of the 38 analysts covering Transocean, 5% have given it a “buy” recommendation, while 32% have given it a “hold,” and 63% have recommended a “sell.”

Offshore drilling companies are capital-intensive and have varying degrees of financial leverage. Thus, we use the EV-to-EBITDA multiple as a valuation.

As of July 25, 2017, Transocean (RIG) had a backlog of $10.2 billion—compared to $10.8 billion in April 2017.

Oil is one of the most important and most frequently traded commodities, and offshore drilling is an integral part of the oil industry.

Even after week 21’s fall in stock price, Seadrill still has a whopping 82.8% year-to-date return as of May 25.

Diamond Offshore’s short-interest-to-equity float ratio is currently 40.7%—the highest among the OFS constituents of the VanEck Vectors Oil Services ETF (OIH).

In 1Q16, Transocean (RIG) had cash flow from operations of $631 million, which was lower than the $960 million it had in 4Q15.

Majority recommends “sell” Currently, 28 analysts give recommendations on Seadrill (SDRL). Of these, none have given a “buy” recommendation on the stock. Six analysts have given a “hold” recommendation, and 22 have a “sell” recommendation. The consensus target price is $1.78, which implies a downside of 17%. Like Seadrill, Ocean Rig (ORIG) does not have […]

Diamond Offshore Drilling’s short-interest-to-equity float ratio is currently 30.5%—the highest among the OFS stocks that are part of OIH.

Analysts expect a fall in Rowan Companies’ (RDC) EBITDA (earnings before interest, tax, depreciation, and amortization).

On August 22, Seadrill reported that it received a contract termination notice for its contract with Pemex Exploration Servicios on the rig West Pegasus.

Summit Midstream Partners (SMLP), a midstream MLP mainly involved in natural gas gathering, processing, and compression, was the worst MLP performer last week.

Plains All American Pipeline (PAA) was the biggest MLP loser last week, which ended on January 19, 2018. The partnership ended the week 6.1% lower.

High short interest in stocks such as Carbo Ceramics, Seadrill, and Noble could explain why they also have high implied volatilities.

Teekay Offshore Partners (TOO) was the top MLP loser in the week ending February 2. The partnership fell 13.5% last week.

CARBO Ceramics’ (CRR) short interest-to-equity float ratio is 28.6%—the highest among the OFS (oilfield equipment and services) stocks that are part of OIH.

NuStar GP Holdings (NSH) and its limited partnership, NuStar Energy (NS), were the top two MLP losers in the week ending March 2, 2018.

Transocean’s drilling-to-revenue ratio fell to 64% in the first quarter from 66% in the previous quarter. In the first quarter of 2017, the ratio was also 46%.

The ONS stated on Tuesday, September 15, that the annual inflation rate fell back to zero in August. The lower fuel prices are one of the reasons behind it.

Transocean does not expect to see a recovery in rig activity before 2017 as customer budgets have been set for 2016 and are unlikely to improve soon.

In terms of relative valuation, Rowan Companies (RDC) is currently trading at a 5.12 forward EV-to-EBITDA multiple as compared to the median industry multiple of 5.88.

In 2Q16, almost 70% of Seadrill’s total revenue came from the floater segment.
This segment’s revenue for fiscal 2Q16 was $610 million.

Earnings estimates As we saw in the previous part, Wall Street analysts estimate Seadrill’s 3Q16 revenue will be 17% lower than the previous quarter’s revenue. However, analysts expect a 30% drop in its 3Q16 EBITDA (earnings before interest, tax, depreciation, and amortization). Analysts estimate Seadrill’s EBITDA will be $392 million in 3Q16, compared with $557 […]

In the first half of 2016, Ensco (ESV) had cash flow from operations of $800 million compared to $891 million in the same period last year.

I believe this stock could double over the next year from $20 to $40 as it’s rerated due to the lucrative MLP structure.

Like many of its competitors, Noble possesses a diversified fleet of rigs that are best suited to different situations and environments.

The US offshore rig count in Week 30, which ended July 27, was 16, one less than the previous week and eight less YoY (year-over-year).

As of June 30, Ensco (ESV) had a total contracted backlog of $2.3 billion—compared to $2.8 billion as of December 31, 2017.

Ensco’s second-quarter revenues were 2.45% higher than expected. The company’s EBITDA was 11.6% higher than the consensus estimates.

In Week 29, which ended on July 20, all offshore drilling stocks traded in the red. Seadrill (SDRL) fell the most.

Earlier in this series, we analyzed and compared the business fundamentals of different offshore drilling companies. Now we’ll look at the technical indicators for these offshore drillers (XLE).

Dividend yield indicates how much a company pays in dividends relative to its share price. It’s calculated as the dollar value of dividends as a percentage of the stock price.

In the last part of this series, we saw which offshore drillers had the highest and lowest falls in their backlogs. In this article, we’ll compare offshore drillers’ backlogs versus their revenues.

Toward the end of 2014, oil prices took a dip and the offshore drilling industry entered into a brutal downturn. Since then, offshore drilling companies have had a hard time securing contracts.

Seadrill (SDRL) stock fell to a 52-week low of $0.10 on July 2—a fall of 52.5% from the previous day’s closing price.

In May, the international offshore rig count was 198, up by four from 194 in April.

On June 22, three offshore drilling stocks traded at unusually high volumes, which led to prices rising.

In Week 4, which ended June 15, offshore drilling stocks fell along with oil prices ahead of OPEC ’s meeting scheduled for June 22.

Most of the offshore drilling stocks traded in the green in the week ended June 1, returning 3.0%–6.5%.

Last week, the US offshore rig count was at 19, the same as it was in the previous week.

In week 18, Ensco and Seadrill were the best performers among offshore drilling stocks. Diamond Offshore was the worst performer.

As of December 31, 2017, Rowan Companies has long-term debt of $2.5 billion. The company doesn’t have any debt maturities in 2018.

Rowan Companies had the worst YTD returns as of March 9, 2018. The stock has fallen 23.2% since the start of the year.

Ensco (ESV) has the highest number of jack-up rigs among its peers.

In 2017, Transocean added two ultra-deepwater newbuild drillships—Deepwater Pontus and Deepwater Poseidon—to its fleet.

Seadrill Partners’ (SDLP) vessel and rig operating expenses fell 3% to $94 million in 4Q17 compared to $96.9 million in 3Q17.

As of December 31, 2017, Diamond Offshore had long-term debt of $1.97 billion—compared to $1.98 billion in the previous year.

As of January 1, 2018, Diamond Offshore Drilling (DO) had a backlog of $2.4 billion—compared to $3.5 billion on January 1, 2017.

Diamond Offshore Drilling’s (DO) total revenue fell 5.4% in 4Q17 to $346 million—compared to $366 million in 3Q17.

Slumping oil prices have put offshore drillers (IYE) under financial pressure. The first victim of this pressure has been dividends.

Offshore drilling (IYE) companies are capital intensive, so looking at their financial leverages is very important.

Among the offshore drillers under our consideration in this series, Diamond Offshore Drilling (DO) has the highest credit rating by Moody’s at “Ba3.”

In this article, we’ll look at offshore drillers’ backlogs in comparison to their revenues.

Offshore drillers have seen mixed returns on a year-to-date basis. The worst performer has been Rowan Companies, and the best performer has been Ensco.

On January 18, 2018, Transocean announced that it concluded its shareholder meeting. Shareholders approved the acquisition of Songa Offshore.

In this article, we’ll take a look at RBC Capital’s revised target prices for three offshore drillers (IYE).

The US offshore rig count stood at 19 in the week ended December 22, 2017.

Southcross Energy Partners (SXE) was the top MLP loser in the week ending November 24. It fell 7.1% during the week. It has lost 11.6% in November.

In 3Q17, Diamond Offshore Drilling’s (DO) drilling expenses rose 1% from the previous quarter and 6% from the prior year.

CVR Partners (UAN), the MLP mainly involved in the production of nitrogen fertilizers, was the top MLP gainer last week. CVR Partners rose 7.7%.

Previously in this series, we saw that most analysts rate Diamond Offshore Drilling (DO) a “hold.” In this part of our series, we’ll see how analysts view Diamond Offshore Drilling’s 3Q17 revenues and EBITDA.

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.

Dominion Midstream Partners (DM) was the top MLP gainer in the week ending September 22, 2017. Dominion Midstream rose 12.1% during the week.

Seadrill (SDRL) stock closed at $0.28 on September 13, 2017. The stock rose more than 20% in a single day.

Teekay Offshore Partners (TOO) was the top MLP loser last week, which ended September 1, 2017. It fell 6.3%.

As the chart below shows, Seadrill’s (SDRL) vessel operating expenses fell $22 million from $243 million in 2Q16 to $226 million in 2Q17.

A company’s backlog helps gauge its future revenue. On August 24, 2017, Seadrill (SDRL) had a backlog of $3.1 billion.

On August 24, 2017, Seadrill’s stock price fell to a new 52-week low of $0.15. The stock is down 94.4% from the start of the year as of August 29, 2017.

Analysts expect Seadrill Partners’ EBITDA to fall 41% in 2Q17. Analysts estimate that its 2Q17 EBITDA will be $129 million—compared to $219 million in 1Q17.

In 2Q17, Transocean (RIG) successfully reduced its costs. Despite a fall in its revenue, Transocean’s drilling-to-revenue ratio rose to 47% in 2Q17.

In this article, we’ll look at the recent changes analysts have made to Diamond Offshore Drilling’s target prices and recommendations.

For the week ending June 23, 2017, oil prices fell below $45 per barrel. Oil prices touched $45 for the first time in 2017.

From 4Q16 and 1Q17, Seadrill’s (SDRL) vessel operating expenses fell $23 million to $211 million—a 10% fall.

On May 24, 2017, Seadrill (SDRL) had a backlog of $3.4 billion, which is higher than its backlog of $2.5 billion on February 28.

Wall Street analysts expect Seadrill’s (SDRL) 1Q17 EBITDA to be $272 million, down from $528 million in 1Q16 and $354 million in 4Q16. Seadrill’s EBITDA estimate for fiscal 2017 is $937 million.

In this part of the series, we’ll compare Wall Street analysts’ consensus ratings for the offshore drilling companies we’ve been analyzing.

Top MLP gainers of February 2017 Southcross Energy Partners (SXE), which is involved in natural gas gathering and processing, was the top MLP gainer in February 2017. SXE, which was close to filing bankruptcy in 2016, gained 52% in February. However, it is still trading far below the levels it was trading at before the […]

On November 20, 2016, Seadrill (SDRL) had a backlog of $3 billion compared to $3.6 billion in the previous quarter.

In 3Q16, Seadrill’s revenue was $743 million, nearly 14% lower than its revenue of $868 million in 2Q16 and 25% lower than its revenue of $985 million in 3Q15.

In this article, we’ll examine Seadrill’s (SDRL) 3Q16 conference call insights regarding the current developments in the offshore drilling (OIH) space.

For the first nine months of 2016, Diamond Offshore (DO) had a cash flow from operations of $491 million, compared to $466 million in the same period last year.

In its 3Q16 conference call, Ensco (ESV) gave its outlook on the offshore drilling market.

Wall Street analysts estimate revenue of just over $870 million in 3Q16 for Transocean (RIG). It would be a steep fall from revenue of $943 million in 2Q16.

The utilization rate is an important indicator to gauge demand and activity in the offshore drilling industry. A rising utilization rate hints at positive performance.

As of August 24, 2016, Seadrill (SDRL) had a backlog of $3.6 billion compared to $4.3 billion in the previous quarter.

In 2Q16, Transocean (RIG) had cash flow from operations of $207 million, which was lower than the $631 million it had been in the previous quarter.

In 2Q16, Noble Corporation (NE) had a cash flow from operations of $862 million, compared to $175 million in 1Q16 and $767 million in 2Q15.

Ensco’s (ESV) drilling expenses fell to $364 million in 1Q16 from $415 million in the previous quarter and $518 million recorded in 1Q15.