Ed’s Daily Notes for August 27th   2 comments

SeaDrill

Yahoo Finance: Rig company Seadrill hit by profit miss and cautious outlook

Seadrill, the world’s biggest offshore driller by market capitalisation, reported second-quarter earnings below forecasts on Wednesday and offered a cautious outlook for the rig market, sending its shares lower.

Seadrill, the crown jewel in shipping tycoon John Fredriksen’s business empire, has been hit like other rig firms by oil companies reining in spending to counter rising costs.

Seadrill’s earnings before interest, tax, depreciation and amortisation (EBITDA) for the quarter came in at $641 million, below forecasts of $663 million in a Reuters poll of analysts and down from the $665 million it posted a year ago.

“The near-term market for ultra-deepwater drilling units continues to be challenging, partly driven by a reduction in exploration drilling that has led to a slower growth rate in overall upstream spending,” the company said in a statement.

…The company intends to prioritise returning cash to shareholders, it said, adding that it can maintain a quarterly dividend of 1 dollar per share well into 2016, even if the rig market fails to make a significant recovery.

While I have not had time to look over their latest financials, the last point is key, since the dividend is one of the top reasons I own SeaDrill shares. The other reason? They were dirt cheap when I bought them. If they drop back down to where I bought them, I might have to add some more. I will take a “wait and see” approach to it.

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Posted August 27, 2014 by edmcgon in News, Stocks, Strategy, Uncategorized

2 responses to “Ed’s Daily Notes for August 27th

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  1. Ed, I bought for the dividend and from what I can find out it would be a surprise to see a reduction in dividend anytime soon. Have a full position and currently it is up 4.8%. This is a long term hold for me: at least a year and most likely will hold until the dividend at my buy price falls below 10%.

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