Seadrill Q3 core earnings beat forecast, shares up

Rig firm Seadrill (SDRL) :

 

* Q3 revenues $743 million (Reuters poll $722 million) vs $985 mln a year ago

 

* Q3 EBITDA $441 million (Reuters poll $395 million) vs $546 mln a year ago

 

* Shares up 3.1 percent at 0913 GMT, making it the third-strongest performer on the Oslo benchmark index

 

* "It is impressive to see how much control Seadrill has over its costs... Underlying costs are down 30 percent from the peak. Seadrill is doing what it can, where it can," SEB analyst Harald Hornes Oeyen told Reuters

 

* Seadrill says has reduced operating costs for floater rigs and jack-up rigs by 28 percent and 29 percent, respectively, year-on-year

 

* Its cash and cash equivalents were $1.3 billion as of Sept. 30, up from $1.2 billion year-on-year

 

* Still "it does not change our view that the share will be weighed by balance sheet challenges. It is going to be an interesting period until April next year," said the analyst, in reference to Seadrill's debt restructuring

 

* On Nov. 16, Seadrill postponed deadline on its $9 billion debt restructuring to the end of April next year

 

* Q3 net loss $656 million, diluted loss per share of $1.29, reflecting an $882 million non-cash impairment to investments primarily relating to Seadrill partners

 

* Regarding the market outlook, Seadrill says: "offshore drilling market continues to be challenging however we are seeing an improvement in level of bidding activity"

 

* "Most of new work is for short-term contracts at or near cash flow breakeven levels, and 2017 is expected to remain challenging"

 

* We expect market to gradually improve as costs have been reset across value chain and more drilling activity will be needed to avoid accelerated production declines."

 

* Order backlog of approximately $3.0 billion

 

* Ebitda will be lower for Q4, at around $340 million. This is based on fourth quarter expected operating income of $146 million.

 

* Operationally, performance in the fourth quarter is strong with 98 pct utilization quarter to date. Further company coverage:


(Reporting by Terje Solsvik and Ole Petter Skonnord, editing by Gwladys Fouche)