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Norwegian oilfield service firm, Seadrill Ltd (SDRL - Free Report) completed the previously announced sale of the T-16 tender rig to Seadrill Partners LLC .

The total consideration stands at $200 million, of which $93 million would be used to settle the outstanding debt under the credit facility of T-16. Thus, in exchange for the tender rig company, Seadrill has received unregistered common units worth $107 million from the buyer.

The T-16 tender barge had started operating in Sep 2013. The rig has the potential to reach depths of 656 feet of water, which increases its preference over jackup rigs that can generally go only up to 400 feet. With an initial dayrate of $115,500, the rig had secured a five-year contract from Chevron (CVX - Free Report) to work in Thailand.

Seadrill had divested most of its tender rig division last November. However, the T-16 is a one of the three rigs that the company has retained. The retention was in line with the expectation that Seadrill Partners will purchase them. The T-16 should aid buyers’ cash flow generation from the next quarter.

Based in Hamilton, Bermuda, Seadrill renders services related to offshore drilling activities, which include exploration, completion and maintenance of offshore wells; production and well maintenance; and well services to customers worldwide.

The company posted second quarter results of 69 cents, surpassing the Zacks Consensus Estimate of 61 cents. However, the coming quarter may not be so lucrative for Seadrill. The debt burden has increased substantially and the growing interest rates add to the problem. Moreover, with declining U.S. oil consumption and increasing onshore production, the company’s offshore newbuilds may have a hard time securing contracts.
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 consider other oil and drilling contractors like Pioneer Energy Services Corp. (PES - Free Report) that offer better prospects. The stock sports a Zacks Rank #1 (Strong Buy).

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