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Transocean LTD (RIG), Noble Corporation (NE): Could Seadrill Ltd (SDRL) Earnings Growth Finally Slow?

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Seadrill Ltd (NYSE:SDRL) will release its quarterly report on Wednesday, and in somewhat of a departure from the general trend the stock has taken, analysts expect Seadrill Ltd (NYSE:SDRL) earnings to fall from year-ago levels. Yet with the stock very close to all-time highs, most investors clearly believe that any weakness in Seadrill will be temporary and that the world’s thirst for oil and gas will continue to drive profit growth higher in the future.

Seadrill Ltd (NYSE:SDRL)

Even as shale plays like the Bakken have gained notoriety in the energy business, one of the new frontiers for oil and gas production has come from increased attention on ultra-deepwater plays. Seadrill Ltd (NYSE:SDRL) was fortunate to get in on the trend toward offshore drilling early, and its fleet of drillships have reaped huge day rates from strong demand among production companies. Yet will the good times last well into the future, even as newly built ships start to come online throughout the industry? Let’s take an early look at what’s been happening with Seadrill Ltd (NYSE:SDRL) over the past quarter and what we’re likely to see in its report.

Stats on Seadrill

Analyst EPS Estimate $0.61
Change From Year-Ago EPS (16.4%)
Revenue Estimate $1.15 billion
Change From Year-Ago Revenue 2.3%
Earnings Beats in Past 4 Quarters 1

Source: Yahoo! Finance.

How low will Seadrill earnings go?
In recent months, analysts have had somewhat mixed views on Seadrill Ltd (NYSE:SDRL) earnings. They’ve added a penny per share to their June-quarter estimates and $0.08 to their full-year 2013 projections, but they’ve reduced their 2014 consensus by that same $0.08 per share figure. The stock hasn’t felt any hesitation, though, rising more than 12% since late May.

Much of the good news for Seadrill came when the company reported its first-quarter earnings results back in May. A 20% jump in revenue came in part due to higher utilization figures for its fleet of floating vessels, although rising fixed jack-up demand finally started making a positive contribution to the company’s bottom line. By contrast, some of Seadrill Ltd (NYSE:SDRL)’s competitors struggled early in the year, as the necessity to replace bolts on blowout preventers was a factor in relatively low utilization rates for Transocean LTD (NYSE:RIG) and Noble Corporation (NYSE:NE), both of which were in the low- to mid-80s during the first quarter compared to Seadrill’s 92%.

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