• 5 minutes 'No - Deal Brexit' vs 'Operation Fear' Globalist Pushback ... Impact to World Economies and Oil
  • 8 minutes China has *Already* Lost the Trade War. Meantime, the U.S. Might Sanction China’s Largest Oil Company
  • 12 minutes Will Uncle Sam Step Up and Cut Production
  • 4 hours OPEC will consider all options. What options do they have ?
  • 4 hours Danish Royal Palace ‘Surprised’ By Trump Canceling Trip
  • 53 mins Trump vs. Xi Trade Battle, Running Commentary from Conservative Tree House
  • 7 hours What to tell my students
  • 5 hours NATGAS, LNG, Technology, benefits etc , cleaner global energy fuel
  • 4 hours A legitimate Request: France Wants Progress In Ukraine Before Russia Returns To G7
  • 11 hours Recession Jitters Are Rising. Is There Reason To Worry?
  • 5 hours China Threatens to Withhold Rare Earth Metals
  • 7 hours With Global Warming Greenland is Prime Real Estate
  • 20 hours TRUMP'S FORMER 'CHRISTIAN LIAISON' SAYS DEEPWATER HORIZON DISASTER WAS GOD'S PUNISHMENT FOR OBAMA ISRAEL DIVISION
  • 19 hours Maybe 8 to 10 "good" years left in oil industry * UAE model for Economic Deversification * Others spent oil billions on funding terrorism, wars, suppressing dissidents, building nukes * Too late now
  • 16 hours CLIMATE PANIC! ELEVENTY!!! "250,000 people die a year due to the climate crisis"
  • 21 hours Flaring is at Record Highs in Texas
Shale Bleeds Cash Despite Best Quarter In Years

Shale Bleeds Cash Despite Best Quarter In Years

The second quarter earnings results…

Seadrill Set for Record Profits as Gamble on Drill Ships Pays Off

Seadrill Ltd is set to reap record profits after ordering more drill ships based on billionaire owner John Fredriksen’s belief that ever greater demand for crude oil will cause an increase in offshore wells.

Within two years another six new drill ships will be added to the current fleet of four. The vessels will help oil companies drill for oil that is locked in reserves up to seven miles beneath the waves, and according to RS Platou Markets AS, an investment bank in Oslo, will earn an average of $625,000 a day. Shares in Seadrill are expected to increase by 22 percent over the next 12 months.

Unlike other, more cautious competitors, Seadrill ordered the new vessels before finding new clients to use them, allowing the company to expand faster than others in the market. Fredriksen’s gamble looks as though it will pay off as Petroleo Brasileiro SA (Petrobras), the owner of the Western Hemisphere’s largest oil discovery in three decades, has declared its intentions to hire 20 rigs with a plan to drill 32 new wells this year.

Alf Christian Thorkildsen, chief executive officer of the management unit at Seadrill, said that by placing orders before there is the demand means that they can take advantage of lower prices, and get first slots in the shipyards.

James West, an analyst at Barclays Plc, believes that “the industry is pushing further into deeper waters, and drillships are the most versatile assets in the fleet. Seadrill is by far the most aggressive builder, and they’ll be in a great position to supply those ships to the market.”

However, Steven Newman, CEO of Transocean Ltd, the biggest owner of drill ships, has said that speculative building isn’t good for the market as it could lead to over capacity, and therefore lower prices and profits. His company has not placed any new orders since 2010.

The new drill ships will cost an estimated $600 million to build, but they will earn this back within four years. Seadrill’s net income is expected to increase by 8.2 percent to a record $1.54 billion this year, and continue to increase for the next couple of years.

Company shares are trading up 1.2 percent to 202.4 kroner in Oslo this year, and are forecast by analysts to reach 246.34 kroner in 12 months.

By Charles Kennedy of Oilprice.com



Join the discussion | Back to homepage

Leave a comment

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play