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What: Offshore oil driller Seadrill, Ltd. (NYSE:SDRL) stock was all over the place in September, but after a bit of a rally mid-month, it finished down nearly 23%. This is the continuation of an ugly two-plus years for investors in the company, Seadrill stock is down more than 85% since September 2013:

So what: There were two big culprits behind September's sell-off, by my estimation. 

The first was a big run-up in the company's share price in the week following its third-quarter earnings release. The company beat most estimates, and that sent the stock up more than 22% from Aug. 27 to the 30th. But once the calendar changed to September, it appears a lot of investors realized the short-term results were good, but the longer-term outlook wasn't really improved at all. 

SDRL Chart

SDRL data by YCharts

The stock shot up again in mid-September, when Seadrill announced it had cancelled the construction contract for one of its newbuild vessels, which probably saved the company close to $500 million in new debt to pay for it. Frankly, it should be a pretty clear indicator of how ugly offshore is when the market applauds a company's decision to cancel an order for new equipment -- especially one of the few newbuilds Seadrill had on order with a contract lined up...

Now what: Oil prices have stayed generally low, and there are still too many rigs operating offshore, based on the shrinking amount of drilling activity oil and gas producers are contracting for. And until that situation begins to turn around -- and that's almost certainly not going to happen before sometime in 2016 -- there's little reason to seriously consider investing new money in Seadrill shares. 

After all, the company has one of the largest debt burdens in the industry, and despite multiple steps to reduce and delay newbuilds, it's still is on the hook to pay for a lot of new ships over the next year and a half. That's only going to exacerbate the problem for the market and compound the pressure on Seadrill to produce enough free cash to cover its costs. 

Plain and simple: As it stands right now, Seadrill is more value trap than value. Until offshore rebounds and Seadrill's backlog starts growing again, there are a lot of better long-term opportunities, with much lower risk, that would make for better places to invest today. The potential returns just aren't worth the risk right now. 

Jason Hall owns shares of Seadrill. The Motley Fool recommends Seadrill. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.