Sea Drill (SDRL) Drops on Q3 Earnings Despite Impressive Revenue Growth

Michael Teague  |

Sea Drill Ltd. (SDRL) , the $21 billion oil & gas driller and explorer by market-share, reported mixed earnings for its recently-ended quarter on Monday that saw shares trading almost 6 percent lower throughout the session.

For the third quarter of 2013, the Bermuda-based company reported net income of $215 million, or $0.61 per share on revenue of $1.28 billion. While this represented a substantial year-over-year improvement, especially in terms of the 17 percent increase in revenue from Q3 of 2012, the company missed on consensus earnings estimates by $0.03, even though it beat estimates that had revenue of $1.25 billion.

Sea Drill also announced a substantial increase in its quarterly dividend from $0.04 per share up to $0.95 per share, and furthermore has an order backlog of almost $20 million.

The principal culprit for the market reaction to the news appears to have to do with greater operating expenses associated with the drilling of new rigs, as well as its recent purchase of a majority interest in another company, Sevan Drilling. It  is expected that the costs from these events will continue to affect Sea Drill’s balance sheet in potentially unpredictable ways throughout 2014.

That said, the company’s revenue growth has been impressive. While the overall industry has seen revenue growth of just shy of 10 percent, Sea Drill has seen gross income increase about 13 percent. Furthermore, the stock has been performing incredibly well in 2013, adding about 28 percent in share price since January 1.

Ahead of the closing bell, shares for Sea Drill were trading at $42.61 each, still not far from a 52-week high of $48.10.

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