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Started By
Message
Seadrill et al - big risk, anyone thinking of taking it
Posted on 3/10/17 at 10:14 am
Posted on 3/10/17 at 10:14 am
Seadrill hovering around $1.25 a share. Hoping it'll drop down to $1 again at some point.
They have a BIG debt payment coming due in less month which they don't have the cash for - they could convert debt to equity and essentially really dilute the shares. Or maybe work out a deal. Chapter 11 also a very very high possibility.
But....if (and when )oil gets rocking again, they could go back up to mid $30s a share with $4.00 annual divdend per share (unless shares get diluted by converting debt to equity.)
So a $1,000 investment in 1,000 shares could net you a $35,000 market value and annual dividends of $4,000 (during the good years). That's a very good return on the risk. Even if shares are diluted, you could still get a nice return out of it.
Anyone else thinking of rolling the dice?
FYI - I know plenty of people who bought into this stock in the $20-$33 per share range that are telling me to stay away.
ETA - I don't know enough about their peers to possibly buy them, but know that several of them are in similar positions of low stock price, possible chapter 11, etc. But none of them had the dividends that seadrill had, etc. but I would be happy to hear any opinions about those as well.
They have a BIG debt payment coming due in less month which they don't have the cash for - they could convert debt to equity and essentially really dilute the shares. Or maybe work out a deal. Chapter 11 also a very very high possibility.
But....if (and when )oil gets rocking again, they could go back up to mid $30s a share with $4.00 annual divdend per share (unless shares get diluted by converting debt to equity.)
So a $1,000 investment in 1,000 shares could net you a $35,000 market value and annual dividends of $4,000 (during the good years). That's a very good return on the risk. Even if shares are diluted, you could still get a nice return out of it.
Anyone else thinking of rolling the dice?
FYI - I know plenty of people who bought into this stock in the $20-$33 per share range that are telling me to stay away.
ETA - I don't know enough about their peers to possibly buy them, but know that several of them are in similar positions of low stock price, possible chapter 11, etc. But none of them had the dividends that seadrill had, etc. but I would be happy to hear any opinions about those as well.
This post was edited on 3/10/17 at 10:16 am
13
Posted on 3/10/17 at 10:18 am to Tigerstark
For any of these drilling companies, it's all risk reward. If SeaDrill files chapter 11, your shares are history . That's the gamble here.
Posted on 3/10/17 at 10:26 am to crazycubes
McDermott went from $0.60 per share to $60 when oil and the economy took off in 2007-2008. I think this is going to be the same gamble play here.
Posted on 3/10/17 at 10:51 am to Tigerstark
Raises hand. I added shares of SDRL recently and yes I am aware of their debt problems. I agree that this is a gamble but I've been fortunate enough to buy a few others when they were depressed. The most current examples are RDSB and WFC. Hope I get lucky again.
Posted on 3/10/17 at 11:18 am to Tigerstark
Why not wait until they dilute to buy? I bet this thing can be had for under .50 soon.
I might 100 shares and that'll be the extent of my risk.
100 x 10 = $1000
I might 100 shares and that'll be the extent of my risk.
100 x 10 = $1000
Posted on 3/10/17 at 11:22 am to bayoubengals88
SDRL is a zero
Posted on 3/10/17 at 11:23 am to Tigerstark
quote:
But....if (and when )oil gets rocking again
Oil is going to run down in the short term (or longer, who knows). Also, where the price is now (or was), in the $50s is not economic for offshore deep water anyway. I'd put money on Seadrill going into bankruptcy.
Posted on 3/10/17 at 11:28 am to Tigerstark
Why SDRL when NE's seems better?
Posted on 3/10/17 at 11:29 am to Tigerstark
I'm in at 3.83 , fml
Posted on 3/10/17 at 11:56 am to PlanoPrivateer
quote:
Raises hand. I added shares of SDRL recently and yes I am aware of their debt problems. I agree that this is a gamble but I've been fortunate enough to buy a few others when they were depressed. The most current examples are RDSB and WFC. Hope I get lucky again.
LOL @ comparing seadrill to Wells Fargo or Shell.
Posted on 3/10/17 at 12:40 pm to crazycubes
quote:
McDermott went from $0.60 per share to $60 when oil and the economy took off in 2007-2008. I think this is going to be the same gamble play here.
Yea but I don't think we are anywhere near a recovery for offshore. This downturn could last for a decade.
ETA: People I work with that lived through the 80's say this looks and feels significantly worse for offshore.
This post was edited on 3/10/17 at 12:42 pm
Posted on 3/10/17 at 12:43 pm to WavinWilly
Buy the $4 call options at .15, and extend them out until January 2018
Posted on 3/10/17 at 1:23 pm to 632627
That would be funny.
Posted on 3/10/17 at 2:12 pm to Tigerstark
You think they would bring back that obnoxious dividend if they got out of this hole?
If I bought in now, and it got to like $2 I would probably just dump the shares instead of hoping it gets to $30
If I bought in now, and it got to like $2 I would probably just dump the shares instead of hoping it gets to $30
Posted on 3/10/17 at 3:03 pm to Tigerstark
bought 100 shares at 1.32 at opening
Posted on 3/10/17 at 3:10 pm to Tigerstark
Its closer to $0 than making a profit
Posted on 3/10/17 at 5:22 pm to Tigerstark
All of your argument is predicated on oil turning around in the near future. There are almost zero signs pointing toward that happening.
Fact is, we have such a huge production capacity with the advent of fracking that unless entire segments of production suddenly became inaccessible (due to something like war/trade embargoes) supply/demand won't drive it up much more than it is now.
It's really not that novel of a thing, for a new technological advancement to send a commodity into price doldrums for long periods.
ETA: I wouldn't touch Seadrill or any other offshore drillers. They've all been operating on longer timelines than the land companies with their projects, so it was no big deal for them that oil was down for a while. Those timelines are finally starting to catch up, though. It wouldn't surprise me at all to see a rash of bankruptcies among these guys in the coming years.
Fact is, we have such a huge production capacity with the advent of fracking that unless entire segments of production suddenly became inaccessible (due to something like war/trade embargoes) supply/demand won't drive it up much more than it is now.
It's really not that novel of a thing, for a new technological advancement to send a commodity into price doldrums for long periods.
ETA: I wouldn't touch Seadrill or any other offshore drillers. They've all been operating on longer timelines than the land companies with their projects, so it was no big deal for them that oil was down for a while. Those timelines are finally starting to catch up, though. It wouldn't surprise me at all to see a rash of bankruptcies among these guys in the coming years.
This post was edited on 3/10/17 at 5:28 pm
Posted on 3/13/17 at 2:32 pm to Tigerstark
SDRL just got 170 million dollar settlement today...
Posted on 3/14/17 at 11:26 am to Navajo61490
And oil is dropping like a rock. Good luck seadrill.
Posted on 3/14/17 at 5:37 pm to Navajo61490
quote:Unfortunately that is a drop (ok 2 drops) in the bucket.
SDRL just got 170 million dollar settlement today...
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