Why I’m Not Buying Seadrill Ltd (SDRL)… Yet

Page 2 of 2

The ultra-deepwater Gulf is an important market for Seadrill, as overall oil production in the Gulf is projected to more than double by 2020. Some of the more recent finds have been in water depths of more than a mile. For example, earlier this year ConocoPhillips (NYSE:COP) and its partners announced two major finds, both in water depths of more than 5,800 feet, with the wells being drilled to total depths of more than 31,000 feet. Oil producers continue to be forced to drill in deeper water in order to find oil. This trend bodes well for Seadrill which has the ships capable of finding this oil.

While those are all reasons to be bullish, I’m still a cheapskate when it comes to buying stocks. Because Seadrill does move with the price of crude, I think I can get shares cheaper on a dip in the price of oil. Lately, globally benchmarked Brent Crude oil has been rising due to the unrest in Egypt, which has sent it up about 8% over the past three months. If Egypt and the global oil markets calm down, it could put some pressure on Seadrill Ltd (NYSE:SDRL) stock, making for a better entry price.

The article Why I’m Not Buying Seadrill… Yet originally appeared on Fool.com and is written by Matt DiLallo.

Fool contributor Matt DiLallo owns shares of ConocoPhillips. The Motley Fool recommends Petroleo Brasileiro (NYSE:PBR) S.A. (ADR) and Seadrill. The Motley Fool owns shares of Seadrill.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Page 2 of 2