Drilling Down Into Seadrill Ltd.'s Recent Wheeling and Dealing

West Auriga ultra-deepwater drillship which was partially dropped down to Seadrill Partners. Source: Seadrill. 

Seadrill (NYSE: SDRL  ) had a busy first quarter. Not only did the company surprise analysts and investors with a strong first quarter and dividend boost, but the company also recently secured several key deals. Because of that it can be hard to keep up with all the maneuvering Seadrill and its affiliates Seadrill Partners (NYSE: SDLP  ) and North Atlantic Drilling (NYSE: NADL  ) have undergone over the past few months.

Since the start of the year, Seadrill has undertaken five transactions of strategic importance. From its initial public offering of North Atlantic Drilling to a drop down deal with Seadrill Partners, each move has been part of a greater strategy to position Seadrill for future growth.

In order to help investors better understand Seadrill's recent moves, I've created the following slideshow, which drills down into each move to help explain what Seadrill did and how it will impact investors in Seadrill as well as its affiliates, Seadrill Partners and North Atlantic Drilling. 

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Read/Post Comments (5) | Recommend This Article (5)

Comments from our Foolish Readers

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  • Report this Comment On June 01, 2014, at 6:09 PM, MarioCarbone wrote:

    What to say, after all this words aroun about SDRL.

    Maybe we look at him really to much in details and then we found in every company glithches.

    However ee look to SDRL it has better with 7 E/P then 90% of the listed companies on NYSE and it gives better dividend with yield 10,5 % then 90% others either.

    The industry in which it work is risky as any other and market is not given to anybody forever.

    If you want to grow and modernize you have to invest and to have debt, however with debt/EBITDA around 3 company can repay its assets that has depreciation period 30and more years.

    SDRL primary power comes from capability that can serve custumer and regions that others can't (ultradeep, arctic) in which there are some most perspective reserves on the world. With price that is lower of the price of onshore drilling.

  • Report this Comment On June 03, 2014, at 8:56 PM, srockaz wrote:

    Hi Matt,

    This was very informative! This seems like a lot of business activity (a.k.a. wheeling and dealing) coming about in a short period of time (I imagine they were working on it before the downturn?). Is this normal? Do other companies in the drilling space do this too? Or is SDRL Management exceptionally forward looking?

    Then there's the question of what's the best way to play this? SDRL vs SDLP vs NADL vs ....

    Thanks, srockaz

  • Report this Comment On June 04, 2014, at 12:28 PM, TMFmd19 wrote:

    Seadrill's rather unique in how it operates compared to its peers. It has a lot of related party transactions like selling assets to another public company it controls. In one regard its forward looking and in another it leaves room for uncertainty (ex. its selling assets to itself at a profit to boost profits at another entity).

    Overall, in situations like there where there is a parent company that controls a lot of other entities I like to own the parent. Basically, Seadrill created these other companies so it can profit from maneuvering assets around.

    Matt

  • Report this Comment On June 04, 2014, at 2:16 PM, kal347 wrote:

    What do others think about SDRL as a long-term income buy?

  • Report this Comment On June 22, 2014, at 12:23 PM, Heidikitty wrote:

    In todays troubling times I am sticking with what the Motley Fool owns and they own shares of SDRL plus I like SDRL management,their aggressive decision making, and the fact that the guy behind the scenes is the 78th richest person in the world.

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