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SeaDrill Shares Surge on Reports of Potential Refinancing


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According to a recent Bloomberg report, SeaDrill Limited’s(SDRL - Analyst Report) biggest shareholder, John Fredriksen, has agreed to invest $1.2 billion to restructure the company’s debt load. Following the release of the report, the company saw its share surge more than 25%.

Per sources, Fredriksen will fund the company through a loan and not fresh equity. The proposal will be reviewed by the company’s lenders and bondholders and a solution for restructuring Seadrill’s debt will be arrived at by the end of this year. The company, however, has not divulged any details.

Like other offshore drillers, Seadrill has been hit hard by the collapse in oil prices. Also, an oversupply of drilling rigs has led to a massive decline in rental rates, thereby add to the woes. As a result, the sector has been facing reduced drilling activities leading to liquidity issues in the absence of credit facilities and uncertainty in market.

At present, the company faces pressure of servicing a debt burden of about $9.1 billion, which is the biggest debt load in the offshore drilling industry. Per sources, SeaDrill urgently needs financing of around $1 billion.

Headquartered in London, SeaDrill is one of the leading offshore drilling contractors in the world. The company owns or has partial ownership interests in 68 mobile offshore drilling rigs comprising jackups, semi-submersibles, drillships, tender rigs and semi-tender rig.


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

Some better-ranked players in the broader energy sector include Evolution Petroleum Corp. (EPM - Snapshot Report) , Enviva Partners, LP (EVA - Snapshot Report) and CONE Midstream Partners LP (CNNX - Snapshot Report) . All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

In the last four quarters, Evolution Petroleum posted an average positive earnings surprise of 45.84%.

Enviva Partners, on the other hand, posted an average positive earnings surprise of 0.19% in the last four quarters.

In the last four quarters, CONE Midstream Partners posted an average positive earnings surprise of 19.38%.

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