Out Fox The $treet

Summary Transocean dividend cut proves that Seadrill appropriately paused the dividend three months ago. The aggressive dividend cut by Seadrill provides more opportunity for management to allocate capital for long-term benefits. The disconnect between earnings cuts and stock losses in the sector provide a great buying opportunity for Seadrill. The weekend news that the CEO of Transocean (NYSE: RIG ) was stepping down and the company is asking shareholders for a major dividend cut is another sign that Seadrill (NYSE: SDRL ) is leading the sector. The offshore drillers remain in a grueling market downturn with plenty potential upside for the driller that pulls out of the downturn with the best positioned rigs and management teams. Read the full article at Seeking Alpha. Disclosure: Long SDRL. Please review the disclaimer page for more details. 

Summary Jack-up market fears overblown. Consistent dividend increases provide for stable income. Seadrill investors should sit back and enjoy the large dividend while waiting on capital gains. For a market driven by assets that last over 30 years, the offshore drilling segment of the stock market is sometimes extremely focused on the short-term. Instead of focusing on the day-to-day operations and day rate cycle, investors should focus on the age of the fleet and the ability of management to adapt. Read the full article at Seeking Alpha. Disclosure: Long AAPL. Please review the disclaimer page for more details. 

In a previous article , I explored the bifurcation in the deepwater drilling sector with a focus on the legacy stocks having older rigs not suited for modern exploration demand. This article will focus on the group of modern rig operators not facing the issue of rigs over 20 years old. Analysts are negative on the whole sector, though the modern drillers – Seadrill Limited ( NYSE: SDRL     ) , Ocean Rig UDW ( NASDAQ: ORIG     ) , and Pacific Drilling SA ( NYSE: PACD     ) – are in the attractive position of having modern drillships replacing older rigs operated by the legacy drillers. Read the full article here . Disclosure: Long SDRL. Please review the disclaimer page for more details. 

While Seadrill ( NYSE: SDRL     ) confirmed that exploration and production firms had recently cut back on capital spending budgets for 2014 due to escalating costs, the company actually sees a very positive scenario on the future outlook. Other deepwater drillers have speculated that the pause to drilling growth is needed for crews and suppliers to catch up with demand in order to refresh the market. Seadrill actually predicts the pause is greater undersupply of rigs by 2016. Seadrill is a leading deepwater driller with a focus on aggressively building out new rigs for what it forecasts as a major undersupply in rigs by 2020. Ironically, fellow deepwater driller Transocean ( NYSE: RIG     ) expects a weak market yet recently ordered two ultra-deepwater drillships. Read the full article here. Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

With Noble Corporation ( NYSE: NE     ) reporting a pause in deepwater drilling demand and an influential analyst predicting plunging demand in the sector, it's a good time to review the long-term case in the sector. Last week, SeaDrill ( NYSE: SDRL     ) attended the SEB Nordic Seminar and reiterated a very bullish long-term case for offshore rigs. With the company's stock down over 20% in a few months, investors should consider the stock if one believes in the bull case. SeaDrill is a leader in the deepwater drilling segment focused on building out a high specification fleet and returning large amounts of capital to investors. The company's stock currently yields over 10%. Read the full article here . Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

Seadrill Limited ( NYSE: SDRL     ) plunged over 6% when the company announced a quarterly dividend hike by $0.04 to $0.95, or 4.3%. Typically a dividend hike is greeted with positive stock returns, but in this case investors appear more concerned by other issues in the sector. Seadrill is a global leader in offshore drilling with a fleet of modern, high-specification rigs. The company is a serial deal maker with a 77.5% ownership of Seadrill Partners ( NYSE: SDLP     ) and a recent deal to acquire the majority of Sevan Drilling. The addition of Sevan during the quarter added operating costs that reduced the bottom line. Read the full article here . Disclosure: Long ATW. Please review the disclaimer page for more details. 

Whether directly or indirectly, the aggressive newbuild program at Seadrill ( SDRL ) could benefit the most from the potential opening up of Mexico to international oil service firms. While still too early to get overly excited, Merrill Lynch suggests the potential is for Mexico to add 50 onshore rigs and 20 floaters in the next two years to pull the struggling industry out of decline. Seadrill is a leading offshore deepwater drilling expert with a fleet of drillships, jack-up rigs and semi-submersible rigs operating in Northern Europe, U.S. Gulf of Mexico, Mexico, South America, West Africa, Middle East and Southeast Asia. The company owns positions in numerous other drilling oil services firms including 75.7% of Seadrill Partners ( SDLP ) that alone is worth nearly $1 billion. Read the full article on Seeking Alpha. Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

Anybody following the offshore drilling market knows that CEO Fredrik Halvorsen of Seadrill Limited ( SDRL ) is an aggressive operator. Not only does the company pay substantial dividends unlike the competition, but it also continuously wheels and deals rigs, divisions, and subsidiaries. The company is a leading offshore deepwater drilling expert with a fleet of drillships, jack-up rigs, and semi-submersible rigs operating in Northern Europe, U.S. Gulf of Mexico, Mexico, South America, West Africa, Middle East, and Southeast Asia. The company owns positions in numerous other drilling oil services firms including 75.7% of Seadrill Partners ( SDLP ) that alone is worth nearly $1 billion. Read the full article at Seeking Alpha. Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

On Monday, Seadrill (SDRL) highlighted on the Q2 earnings call that deepwater drilling remains a very hot sector with limited available rigs for the next couple of years. This was a theme highlighted at the beginning of the year as drilling in the Gulf of Mexico had picked back up. The company provides offshore drilling services to the oil and gas industry worldwide. Its services include drilling, completion, and maintenance of offshore wells; production drilling and well maintenance; and well services. The company owns a fleet of offshore rigs and has 18 new builds under construction. While the adjusted earnings slightly missed estimates, Seadrill continues to see huge demand for its rigs and tightness in the market for the next few years. The company has one of the youngest fleets in the industry and continues to benefit from an aggressive new build program. Read the full article at Seeking Alpha. Disclosure: Long ATW. Please review the disclaimer page for more details.