Seadrill climbs after reporting Q2 results, progress with financing plans
Shares of offshore driller SeaDrill (SDRL) are advancing after the company reported second quarter profit that beat analysts' consensus estimates. WHAT'S NEW: SeaDrill reported Q2 earnings per share of 52c on revenue of $868M. Analysts were expecting EPS of 42c on revenue of $884.15M. Q2 revenues of $868M were down primarily due to the West Castor and West Prospero contracts ending and dayrate reductions on a number of units. Earnings before interest, taxes, depreciation and amortization, or EBITDA, fell to $557M in Q2 from $651M a year earlier. CEO and President of SeaDrill Management, Per Wullf said, "There continues to be a significant supply overhang and the market conditions remain challenging, however, there is some volume returning to the spot market, although primarily for short term work. Our priorities for the remainder of the year continue to be delivering safe and efficient operations for our customers whilst concluding on our financing plans." WHAT'S NOTABLE: In its Q2 earnings release, the company noted that oil prices have stabilized in the $40-$50 range and that there is "a growing belief that we are at or near the bottom of this downcycle." Furthermore, the company reduced headcount by 8% since the end of 2015. The company anticipates full year cash savings of $390M. "During Q2 2016 we have improved on the record uptime we achieved in Q1, reaching 98% economic utilization, whilst continuing to see our costs reduce quarter over quarter, said Per Wullf. FINANCING UPDATE: During the second quarter, SeaDrill said it extended its three nearest maturing borrowing facilities and amended certain covenants across all of its secured credit facilities, as the first part of a broader plan to refinance and recapitalize the business. By deferring its imminent maturities and resetting a number of covenants the company has established a more stable platform to pursue and conclude negotiations with its stakeholders regarding a long term solution that will bridge it to a recovery in the industry, the company said. In its earnings release, SeaDrill said it has met its milestone obligations as they have become due and will remain in constructive discussions with its banks regarding its overall recapitalization plan. SeaDrill continues to expect this process will conclude by the year end. PRICE ACTION: SeaDrill is up 2.77%, or 7c, to $2.60 per share in afternoon trading.