Re: Seadrill Limited (SDRL) - Fourth quarter 2013 results
From their 4th Quarter Report (pg-9-)
Quarterly Cash Dividend
The Board has in connection with the disclosure of fourth quarter results evaluated the current dividend level and prospects and has resolved to increase the regular quarterly dividend by 3 cents to US$0.98 per share. The dividend increase reflects the improvement in operational results, solid orderbacklog and strong support received from the financing markets. The Board is highly confident that the dividend is sustainable in the coming years. As future units are introduced into the fleet operating results are likely to show strong growth. This combined with a more efficient debt structure as achieved by the term loan B financing create opportunities for future dividend growth.
The Board, as an indicative guideline, has decided to create an additional dividend capacity fund by preserving approximately 20% of any net proceeds from MLP dropdowns. The remaining 80% will be used for reduction of existing debt and future growth. The target will be to return these funds to shareholders over the twelve months following release of such funds. Seadrill is currently trading at a yield of 10.4% based on an annual future dividend of US$3.92 per share. In the current market, the Board sees limited value in increasing the current quarterly distribution beyond US$0.98 per share. Therefore, the Board for the time being will reserve these funds for later distribution, buyback of shares, or dividend in kind to the directbenefit the shareholders.
The ex-dividend date has been set to March 5, 2014, record date is March 7, 2014 and payment date is on or about March 20, 2014.
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Therefore, the company plans to "put on reserve" 20% of the proceeds from their drop downs for later distribution. As a result, I decided to add to my SDRL position and pass on starting a position in SDLP.
EKS |
