Norwegian oilfield service firm,
) completed the previously announced sale of the T-16 tender rig
Seadrill Partners LLC
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The total consideration stands at $200 million, of which $93
million would be used to settle the outstanding debt under the
credit facility of T-16. Thus, in exchange for the tender rig
company, Seadrill has received unregistered common units worth
$107 million from the buyer.
The T-16 tender barge had started operating in Sep 2013. The rig
has the potential to reach depths of 656 feet of water, which
increases its preference over jackup rigs that can generally go
only up to 400 feet. With an initial dayrate of $115,500, the rig
had secured a five-year contract from
) to work in Thailand.
Seadrill had divested most of its tender rig division last
November. However, the T-16 is a one of the three rigs that the
company has retained. The retention was in line with the
expectation that Seadrill Partners will purchase them. The T-16
should aid buyers' cash flow generation from the next quarter.
Based in Hamilton, Bermuda, Seadrill renders services related to
offshore drilling activities, which include exploration,
completion and maintenance of offshore wells; production and well
maintenance; and well services to customers worldwide.
The company posted second quarter results of 69 cents, surpassing
the Zacks Consensus Estimate of 61 cents. However, the coming
quarter may not be so lucrative for Seadrill. The debt burden has
increased substantially and the growing interest rates add to the
problem. Moreover, with declining U.S. oil consumption and
increasing onshore production, the company's offshore newbuilds
may have a hard time securing contracts.
Seadrill currently retains a Zacks Rank #3 (Hold), implying that
it is expected to perform in line with the broader U.S. equity
market over the next one to three months.
Meanwhile, one can consider other oil and drilling contractors
Pioneer Energy Services Corp.
) that offer better prospects. The stock sports a Zacks Rank #1