Seadrill Ltd., the offshore drilling company controlled by billionaire John Fredriksen, climbed to a nine-month high in Oslo as strong demand from oil and gas producers boosts the outlook for earnings and dividend growth.
Shares in Hamilton, Bermuda-based Seadrill, gained as much 1.6 percent to 245 kroner, the highest intraday level since Aug. 21, and traded 1.2 percent higher as of 11:01 a.m. That makes it the only gainer today in the Bloomberg EMEA Oil & Gas Index.
Seadrill, which is expanding its fleet in anticipation of rising demand from the energy industry, yesterday reported first-quarter earnings ahead of consensus and a dividend that beat estimates amid stronger rates and better-than-expected uptime for its floating units.
“We expect continued earnings per share and dividend growth in combination with new contract announcements leading to further solid share-price development,” Pareto Securities ASA said in an e-mailed note today. The broker has a buy rating on the stock with a 275 kroner price target.
Seadrill, which has 19 rigs under construction and a contract backlog of $19.1 billion, reported earnings before interest, tax, depreciation and amortization of $652 million, up from $574 million a year earlier and beating the $609 million average of 19 analyst estimates compiled by Bloomberg. The driller also announced a dividend of $0.88 per share, ahead of the $0.86 that was expected, according to Bloomberg dividend forecasts.
“Seadrill offers ample market leverage through four available ultra-deep-water newbuilds, combined with an attractive dividend policy,” RS Platou Markets AS analyst Anders Bergland said in an e-mail. “With accretive corporate changes likely in the pipeline, we remain positive to the stock and reiterate our buy recommendation.”
The broker has increased its 2013 and 2014 earnings per share estimates by 6 percent and 2 percent respectively, Bergland wrote.