SeaDrill Q3 Profit Falls, Suspends Dividends - Update

(RTTNews) - SeaDrill Ltd (SDRL), an offshore drilling contractor, Wednesday reported a sharp decline in the third-quarter profit, reflecting higher expenses, despite marginal rise in revenues that topped analysts' estimates.

The board has also decided to suspend dividend distributions for the time being, as the near term offshore market is becoming increasingly challenging. The shares fell about 12 percent in Oslo trading, and the stock is down more than 12 percent in the pre-market trading on the NYSE.

Chairman John Fredriksen said, "The decision to suspend the dividend has been a difficult decision for the Board. However, taking into consideration the significant deterioration in the broader offshore drilling and financing markets over the past quarter, the Board believes this is the right course of action for the Company."

Seadrill stated that it will refrain for the time being from ordering additional rigs until a clearer direction can be seen in the offshore rig market.

For the quarter, net income attributable to the parent fell to $149 million or $0.31 per share from $286 million or $0.60 per share in the prior year.

On average, 24 analysts polled by Thomson Reuters expected earnings of $0.67 per share for the quarter. Analysts' estimates typically exclude special items.

Total operating revenues edged up to $1.29 billion from $1.28 billion last year. Analysts expected revenues of $1.23 billion.

Total operating expenses advanced to $832 million from $809 million a year earlier. During the quarter, the firm recorded a loss on derivative financial instruments totaling $80 million, and net loss on debt extinguishment of $76 million.

Seadrill Group maintained its orderbacklog on a consolidated basis at about $20 billion.

The company said it is suspending dividend distributions and focusing on debt reduction and value creating opportunities due to significant deterioration in the broader markets.

Looking ahead, fourth-quarter EBITDA is expected to be higher than the third quarter results for the Seadrill Group on a consolidated basis. The Group said it is on track to earn around $10 million in EBITDA per day by the end of the year.

On the NYSE, SeaDrill closed Tuesday's trading at $20.71, down 0.14 percent. In the pre-market activity on Wednesday, the shares are down 11.78 percent.

The shares fell 11.91 percent in Oslo on Wednesday to trade at 125 Norwegian Kroner.