With one fell swoop, SeaDrill
No company has made as big a bet on ultra-deepwater drilling as SeaDrill. Sure, everyone is adding ultra-deepwater rigs, but SeaDrill is has become primarily an ultra-deepwater company, giving it an advantage on the market over rivals. Transocean
SeaDrill has a lot of debt on its balance sheet, but it has amassed that debt by building a fleet of ultra-deepwater ships that are in high demand today. The deal also expands ultra-deepwater drilling in the Gulf of Mexico, an area of extreme interest for drillers right now. The easy wells have mostly been tapped in the Gulf, and rigs are moving further and further offshore to find oil.
The company will soon report second-quarter earnings, and investors are expecting earnings per share to rise to $0.78 this quarter from $0.70 a year ago. For the next year, the stock is trading at a P/E of 11 and has an 8.4% dividend, which is one of the reasons I like the current price. Deals like this one just show how much growth and earnings potential the company has going forward.