Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

SDRL Chart

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What: Shares of offshore driller Seadrill (NYSE:SDRL) are down more than 20% as of this writing.

First, the company reported its financial results for the third quarter this morning, and reported that it missed projected earnings per share by more than 50%, as the offshore drilling market remains in a bad place. Oil prices have fallen steadily since June, and now global demand growth is weakening as economic woes in Asia and Europe continue. 

Second -- and probably the big one -- the company announced it was suspending its dividend, which was yielding more than 19% at recent prices and had clearly become unsustainable in the current market. Management said that by suspending the dividend it would be able to focus on reducing debt and on "value creation opportunities." The board also approved a share buyback plan of up to 10% of current shares outstanding. 

Looks like it could be getting a discount after today.

So what: Frankly, I'm not sure that this should really come as a total surprise. The offshore drilling industry has been ugly for a year, and most expectations have been that it will remain that way through at least 2015. 

By suspending the dividend program, the company will free up roughly $2 billion per year in cash flows -- a significant amount of money that can be used to buy down debt. With current debt over $12 billion, and another $5.5 billion in future obligations for newbuilds, management clearly saw this as a necessary step for the long-term health of the business. 

Now what: If you're an investor who needs dividend income, I'm hoping you didn't learn a hard lesson about putting too many eggs in one basket. Either way, management should provide more color on the conference call at noon ET on Nov. 26. It's probably worth at least waiting until management comments on its plans for the dividend before selling your shares. 

However, it's very likely that the dividend will be suspended through all of 2015, but there's little to be certain about in the current offshore market. 

If you're a long-term shareholder with a timeline farther out, I'm not sure that selling right now makes sense. While it's clear that the market hates the move, management is making some hard decisions that are probably in the best interest of the business for the long term. 

The stock could go lower, but this might be a great buying opportunity. Seadrill is still the clear leader in the industry with the most capable and newest fleet. There's a lot of short-term uncertainty in its industry, but there's also a lot of long-term upside, and Seadrill is probably a less risky investment, going forward, with these moves.