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SeaDrill (SDRL) Q3 Earnings and Revenues Beat Estimates
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Offshore contract driller SeaDrill Limited (SDRL - Free Report) reported strong third-quarter 2016 earnings owing to a decrease in operating expenses.
Earnings per share – excluding one-time items − came in at 28 cents. The bottom line beat the Zacks Consensus Estimate of 20 cents per share and also increased from the year-ago adjusted figure of 21 cents.
Total operating revenue of $743 million was down 24.6% from $985 million in third-quarter 2015. The top line, however, beat the Zacks Consensus Estimate of $700 million.
Segmental Analysis
Floaters:This segment reported revenues of $528 million compared with $647 million in the year-ago quarter. Net operating income was $182 million compared favorably with the prior-year quarter loss of $410 million.
Jack-up Rigs: The segment registered revenues of $199 million as against $306 million in the prior-year quarter. Net operating income of $62 million plummeted from the third-quarter 2015 figure of $114 million.
Other:Revenues of $16 million were lower than $32 million in the prior-year quarter. Operating profit of $3 million also decreased from the prior-year profit of $5 million.
As of Nov 22, 2016, total order backlog of SeaDrill was $3 billion.
Expenses
SeaDrill incurred operating expenses of $501 million in the reported quarter. This reflects a significant decline from the year-ago quarter figure of $1,213 million.
Like other offshore contract drillers, SeaDrill too has decided to focus on controlling costs amid plummeting crude prices. As part of the initiative, SeaDrill has trimmed its headcount by 23% since the end of 2015 to 5,500.
Capital Expenditure & Balance Sheet
As of Sep 30, 2016, SeaDrill had cash and cash equivalents of $1,250 million and long-term debt of $9,864 million (including current portion). The debt-to-capitalization ratio was approximately 50.2%.
Guidance
The company projects fourth-quarter operating income of approximately $146 million. This is substantially lower than the third-quarter level of $247 million.
Zacks Rank and Key Picks
Headquartered in London, SeaDrill is one of the leading offshore drilling contractors in the world. The company has one of the youngest drilling fleet among the offshore drilling contractors and is capable of operating in challenging environments.
The company 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 from the broader energy sector include Braskem S.A. (BAK - Free Report) , Ultra Petroleum Corp. and McDermott International Inc. . 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, Braskem posted an average positive earnings surprise of 105.5%.
Ultra Petroleum, on the other hand, posted an average positive earnings surprise of 65.91% in the last four quarters.
In the last four quarters, McDermott posted an average positive earnings surprise of 250.00%.
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SeaDrill (SDRL) Q3 Earnings and Revenues Beat Estimates
Offshore contract driller SeaDrill Limited (SDRL - Free Report) reported strong third-quarter 2016 earnings owing to a decrease in operating expenses.
Earnings per share – excluding one-time items − came in at 28 cents. The bottom line beat the Zacks Consensus Estimate of 20 cents per share and also increased from the year-ago adjusted figure of 21 cents.
Total operating revenue of $743 million was down 24.6% from $985 million in third-quarter 2015. The top line, however, beat the Zacks Consensus Estimate of $700 million.
Segmental Analysis
Floaters:This segment reported revenues of $528 million compared with $647 million in the year-ago quarter. Net operating income was $182 million compared favorably with the prior-year quarter loss of $410 million.
Jack-up Rigs: The segment registered revenues of $199 million as against $306 million in the prior-year quarter. Net operating income of $62 million plummeted from the third-quarter 2015 figure of $114 million.
Other:Revenues of $16 million were lower than $32 million in the prior-year quarter. Operating profit of $3 million also decreased from the prior-year profit of $5 million.
SEADRILL LTD Price, Consensus and EPS Surprise
SEADRILL LTD Price, Consensus and EPS Surprise | SEADRILL LTD Quote
Backlog
As of Nov 22, 2016, total order backlog of SeaDrill was $3 billion.
Expenses
SeaDrill incurred operating expenses of $501 million in the reported quarter. This reflects a significant decline from the year-ago quarter figure of $1,213 million.
Like other offshore contract drillers, SeaDrill too has decided to focus on controlling costs amid plummeting crude prices. As part of the initiative, SeaDrill has trimmed its headcount by 23% since the end of 2015 to 5,500.
Capital Expenditure & Balance Sheet
As of Sep 30, 2016, SeaDrill had cash and cash equivalents of $1,250 million and long-term debt of $9,864 million (including current portion). The debt-to-capitalization ratio was approximately 50.2%.
Guidance
The company projects fourth-quarter operating income of approximately $146 million. This is substantially lower than the third-quarter level of $247 million.
Zacks Rank and Key Picks
Headquartered in London, SeaDrill is one of the leading offshore drilling contractors in the world. The company has one of the youngest drilling fleet among the offshore drilling contractors and is capable of operating in challenging environments.
The company 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 from the broader energy sector include Braskem S.A. (BAK - Free Report) , Ultra Petroleum Corp. and McDermott International Inc. . 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, Braskem posted an average positive earnings surprise of 105.5%.
Ultra Petroleum, on the other hand, posted an average positive earnings surprise of 65.91% in the last four quarters.
In the last four quarters, McDermott posted an average positive earnings surprise of 250.00%.
Confidential from Zacks
Beyond this Tale of the Tape, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>