Dallas, Texas 10/28/2013 (Financialstrend) – Bermuda registered SeaDrill Limited (NYSE:SDRL) has a market cap of $22 billion. It is into oil and gas exploration and drilling. On October 16, rating agency BMO Capital downgraded the rating of the firm from market perform to underperform. The downgrade has been ascribed to expected continuation of low to zero earnings increase over the next few quarters due to the uncertain global economic macro sentiments. Another key reason for the downgrade is the company’s announcement that their 3Q results would be impacted negatively due to a settlement it has reached with its employees to pay wages even for a 37 day period when no work was conducted due to up scaling of West Aquarius rig to meet Canadian regulatory norms.
In spite of the downgrade, the stock has seen its market value appreciate by 2% in the past one month and by 0.2% in the last one week. As of close of business on October 25, the share price of the stock had stabilized at $46.93 per share which is a 0.73% increase over its previous day close.
The oil rig major is also attempting to offset the loss by opening negotiations with the Canadian government for a lease extension. It wants the lease to be extended till April 2017 and expects an additional $0.33 billion in revenue which can be ascribed to the term extension. In spite of the short term issues which have pulled back the company operations, the analyst are very gung ho about the potential of this oil drilling firm. The consensus analyst target price for the stock is $47.2.
The stock has posted gains of 27% in the past one year and is trading at price points which are just 2.4% away from its 52 week high valuations. In the past one year the company has maintained a average dividend yield of 5.82%.