Seadrill Misses on Q3 Earnings & Revenues

Zacks

Norwegian oilfield service firm, Seadrill Ltd (SDRL) reported lower-than-expected third-quarter 2013 results.

Earnings per share came in at 60 cents, failing to beat the Zacks Consensus Estimate of 67 cents. The miss can be attributed to significant higher operating cost.

However, earnings increased from the year-ago quarter result of 40 cents. Improved performances from the floaters and jack-up rigs aided the result.

Total operating revenue of $1,280.0 million was up 17.2% from third-quarter 2012 on higher sales from the Floaters and Jack-up Rigs business units. However, the figure missed the Zacks Consensus Estimate of $1,290.0 million.

Segmental Analysis

Floaters: This segment reported revenues of $867.0 million as against $675.0 in the year-ago quarter. Net operating income of $354.0 million was up from the year-ago figure of $282.0 million.

Jack-up Rigs: The unit registered revenues of $283.0 million compared with $203.0 million in the prior-year quarter. Net operating income of $99.0 million was up 110.6% from $47.0 million recorded in the third quarter of 2012.

Tender Rigs: The segment generated revenues of $38.0 million against $178 million in third-quarter 2012. Operating profit of $18.0 million was down 78.6% from the prior-year profit of $84.0 million.

Backlog

Seadrill currently has a total backlog of $19500 million. Order backlog is $16000 million for the floater fleet, $3000 million for the jackup fleet and $500 million for tender units.

Expenses

Seadrill incurred operating expenses of $809.0 million in the reported quarter, reflecting a 19.2% increase from the year-ago quarter.

Dividend

Seadrill declared third-quarter cash dividend of 95 cents, representing an increase of 4.4% from the dividend paid in the previous quarter. The dividend will be paid on Dec 20, 2013.

Capital Expenditure & Balance Sheet

As of Sep 30, 2013, Seadrill had cash and cash equivalents of $551.0 million and long-term debt of $12,732.0 million (including current portion). The debt-to-capitalization ratio was approximately 62.1%.

Zacks Rating

Seadrill currently retains a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.

Meanwhile, one can look at better-ranked energy players like Harvest Natural Resources Inc. (HNR), SM Energy Company (SM) and Abraxas Petroleum Corp. (AXAS) that offer value. All the stocks sport a Zacks Rank #1 (Strong Buy).
 

Read the Full Research Report on SM
Read the Full Research Report on SDRL
Read the Full Research Report on HNR
Read the Full Research Report on AXAS


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