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No. of Recommendations: 5
SDRL announced results earlier today
- EBITDA of $612M
- Earnings impacted by interest rate swaps
- Dividend increase a penny, to 76c/sh
- Impressive contract coverage in general, but more impressive on the more expensive assets.
- More bank facilities.
Other good stuff.

http://www.seadrill.com/stream_file.asp?iEntityId=1320
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No. of Recommendations: 2
thanks a bunch HH
Love these guys--dividend up--woohoo!
what the frack is RIG doing? Find a way to screw things up and there they are these days. probably end up rescinding their dividend. Should have shorted them
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what the frack is RIG doing? Find a way to screw things up and there they are these days. probably end up rescinding their dividend. Should have shorted them

Not sure if you're referring to the operational side or the financing side? On the
operational side, the back-to-back incidents could
1. Just be really freaky coincidence that two bad events occurred in a short time-frame, or
2. A work-culture that has gotten lax on some standards.

As I mentioned in another thread, bad stuff with the leader in offshore drilling (RIG)
reflects on the whole sector. But the rest of the sector can also look at this as an opportunity.
For example, Exxon could have potentially solicited bids from companies for new work. Instead,
they retained the SDRL rig for 2 additional years, with an option for two more years.
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Maybe it would be good time to buy RIG on the assumption that this is simply a coincidence. In my opinion a very well run company, I have owned them in the past and somewhat follow them. However, take that with a grain of salt as I am no expert in oil services. Perhaps others have comments??
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Investopedia has an analysis of SDRL :

With a very modern fleet, aggressive leverage and a healthy dollop of devil-may-care operating philosophy, Seadrill (NYSE:SDRL) is ready for that turn. The question for investors, though, is whether they can handle the risk and valuation that comes with arguably the most aggressive player in a highly cyclical sector

Seadrill is not your normal offshore drilling company. Basically created by the same man who put together the struggling shipping company Frontline (NYSE:FRO), Seadrill is perhaps the hairy-chested lunatic of the field.

But for sheer upside leverage to a strong offshore market and investor sentiment momentum, it may be hard to surpass the potential of Seadrill


Read more: http://stocks.investopedia.com/stock-analysis/2011/Seadrill-...
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rnam, is this just an FYI?

When you first queried me on SDRL, I pointed out the same risks right at the onset
(paragraph 2). One of the slides from the investor presentation illustrated the incredible
EBITDA growth (phase I), and tempered growth (phase II). One doesn't get phase I type growth without
taking some chances that most folks would associate with risk.


If this is about risk, then obviously SDRL is not for you.
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rnam, is this just an FYI?

Yes, it was just to add another opinion for discussion on the thread.

Thanks for all the interesting info and links you posted.
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Another detailed analysis of SDRL's 3Q earnings. This author is certainly more bullish on SDRL thann the previous analyst I cited.

SeaDrill looks poised to continue to grow their earnings going forward as more rigs are completed and begin operating.

SeaDrill continued to improve their balance sheet during the third quarter. The company reduced its overall debt per unit, although both current and non-current liabilities increased during the quarter.

Most of this large decline in net income from the second quarter was caused by the company taking a $330 million unrealized loss on derivative instruments, most of which are interest-rate swaps. SeaDrill has suffered no actual cash outflow from this loss on their income statement

Another negative factor that caught my attention in the company’s report is the potential for share dilution.


http://seekingalpha.com/article/311524-seadrill-q3-results-c...
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Powerhedge has been more on the bullish side wrt SDRL.

That said, some of his arguments make little sense. Does he think treasury stock is dished
out by a treasury stock fairy during her annual visit? I wonder where he thinks treasury stock originates,
if not the market?

FWIW, Archer is one of those investment-type instances. SDRL had a subsidiary called
Seawell. In 2010, SDRL/Seawell acquired Allis-Chalmers Energy (have to add the 'Energy' else
JackCrow is chasing after me with an imaginary farm tool ;) ), then peeled off the
subsidiary, combined them with the acquisition, and created Archer (which then got a partial spin off).
Kept a sizable stake in the Archer entity to provide financial options down the road.
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hi soy

It might be a good time to start buying shares in the low $40s and if they keep screwing up, the high $30s

Here is a link to a good article that came out today. The author does a good job with oil services

http://news.morningstar.com/articlenet/article.aspx?id=44875...

<SNIPS>


Rig Downtime Challenges Persist for Transocean

The 2012 outlook for the offshore drilling firm appears very difficult.

By Stephen Ellis | 12-05-11 | 06:00 AM | E-mail Article

Although Transocean's (RIG) rig downtime issues and a difficult third quarter caused us to reduce our fair value estimate, we continue to view the stock as undervalued.

We still believe the long-term earnings power of its fleet is in the range of $6-$10 per share annually, a far cry from the estimated $1.51 a share that the firm will earn in 2011. However, this more normalized level of earnings is now further away than it was in early 2011. Furthermore, we believe Transocean's numerous short-term issues--which include managing its rig downtime, management's credibility after several poor quarterly performances, the all-cash payout for the Akers rigs amid Transocean's deteriorating financial condition, and the sustainability of the dividend--obscure the more attractive long-term picture. In our view, these issues will continue to weigh on the stock throughout 2012.
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Slightly related competition. Perhaps grist for Hohumm:

http://www.smartmoney.com/news/on/?story=on-20111206-000110&...

COPENHAGEN -(Dow Jones)- Maersk Tankers, a unit of Danish industrial conglomerate A.P. Moller-Maersk A/S (MAERSK-B.KO), said Tuesday it has agreed a deal with three peers to set up a joint pool of 50 vessels.

Maersk Tankers has signed a letter of intent with Mitui O.S.K. Lines Ltd., Samco Shipholding PTE. Ltd. and Ocean Tankers Ltd., Singapore, to set up the VLCC pool, which is expected to become operational from Feb. 1, 2012, with offices in Singapore, Copenhagen and New York.

By the end of 2012, the pool will operate a fleet of around 50 tankers with an average age of three years, Maersk said.


HP
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Slightly related competition. Perhaps grist for Hohumm: <= Who dat?

There's a whole lotta shakin' going on right now. FROhum might need a new FRO moniker,
something like FROhum2012. More in a new thread as the actual details are released.
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Slightly related competition. Perhaps grist for Hohumm: <= Who dat?

Don't change your name, even though I often add mmmmmmm's. I'm still missing that guy Stiglitz. I get SO confused!

Hoockeypoop
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Don't change your name, even though I often add mmmmmmm's. I'm still missing that guy Stiglitz. I get SO confused!

FROhum2012 was a FRO restructuring joke :)

FRO just released a high level view of the restructuring. Fredriksen has created a new entity
called "Frontline 2012" to purchase vessels from FRO, hence FROhum2012
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