SeaDrill Limited Reveals Refinancing of 3 High-Spec Rigs - Analyst Blog


Norwegian oilfield service firm, SeaDrill Limited ( SDRL ) announced that has refinanced its three high specification ultra-deepwater rigs − West Pegasus, West Gemini, and West Orion. Seventeen banks committed the company a $1.35 billion credit facility, which has a 10-year amortization profile and five-year term.

SeaDrill Limited said the credit facility was initially $900.0 million and was collateralized by two ultra-deepwater rigs. Later on, the loan was upsized to $1.35 billion. The increased facility is now backed by three rigs as one more unit is included in the collateral group. The company added that the new facility is expected to be priced at Libor plus 2.0%.  Moreover, SeaDrill Limited will have $350.0 million additional cash owing to the upsizing of the previous credit facility.

SeaDrill Limited is also expected to refinance one ultra-deepwater and four jack-up rigs by 2015. Again, by 2016, the company will likely refinance one ultra-deepwater and four jack-up units.

Management revealed that the company has diversified its source of financing which helps to significantly lower its risk of refinancing.

Hamilton, Bermuda-based SeaDrill Limited involved mainly in worldwide offshore drilling services. Currently, the company is operating a fleet of 69 rigs which includes jack-ups, drillships, tender units and semi-submersibles rigs.

SeaDrill Limited currently carries a Zacks Rank #3 (Hold), which implies that it is expected to perform in line with the broader U.S. market over the next one to three months.

Meanwhile, one can look at better-ranked players in the oil and gas drilling sector like Nabors Industries Ltd. ( NBR ), North Atlantic Drilling Limited ( NADL ) and Ocean Rig UDW Inc. ( ORIG ). All these stocks carry a Zacks Rank #2 (Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: NBR , SDRL , ORIG , NADL

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