EBIT $173,6 million(+80%)
EPS $0.18(+125%)
Total assets $11 667,4 million(+46%)
Total liabilities $8314,8 million(+80%)
Some quotes from the report
"The remaining installments to be paid for the newbuilds amount to US$3,564 million
split on approximately US$1,420 million, US$830 million, US$1,000 million and US$314 million in 2008, 2009, 2010 and 2011, respectively."
"the deepwater floater market and tender rig market remain sound based on the long-term horizon for projects that require the services provided by such units. For jack-ups, the market outlook for the next one to two years is more uncertain."
"The Board has after a long discussion decided not to pay an additional dividend in the third quarter except for theUS$0.30 already paid"
"The operating cash flow in 2009 is expected to be more than twice the
projected capital expenditure. No dedicated financing has yet been arranged for the four jackups to be delivered in 2010. Due to the fact that these units have been ordered by Special Purpose Companies (SPC) various options are being considered to conclude the way forward for these newbuilding projects. So far the SPCs have invested approximately US$150 million in equity. Seadrill Limited has not given corporate guarantees for these projects. The major construction work on these units has not yet started and constructive dialog with the yards has started in order to find mutually acceptable arrangements."
"Seadrill has as of November 21, invested US$1,009 million in forward contracts and shares in Scorpion, Pride and Sapura Crest. In addition, the Company has a total return swap agreements exposure of 4.5 million shares in Seadrill. If Seadrill takes delivery of all the underlying shares and forward contracts, Seadrill’s total investment would be approximately US$1,045 million. As of September 30, the value of the same underlying shares would be approximately US$956 million, while the same value as of November 21 would be US$349 million."
No real surprises in the report. It's likely that some or all of the four jack-up orders will be cancelled. The heavy debt load isn't a problem (yet) considering the 12 billion dollar backlog and acquisition prices of Seadrills rigs(significantly below current market prices). I don't expect any dividends to paid for at least a year.
One problem with the investments made in Pride, Scorpion & Sapura Crest is that these companies don't provide SDRL with any cashflow as they do not pay dividends. Scorpion and SC are growing companies so it's understandable that they use their cashflow to develop the respective companies, but Pride could and should direct a portion of its profits to its owners, however as Pride's board sees Seadrill as a hostile shareholder it's unlikely that Pride's current dividend policy will be changed any time soon.
The Report(.pdf)
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