Rowan Companies PLC (RDC), ENSCO PLC (ESV), Seadrill Ltd (SDRL): Rising Debt and Uncovered Dividend Payouts, Is This Company Worth It?

Furthermore, if we compare the fleet additions for each company that are currently on order, we can see that Seadrill’s heavy spending is going to lead to a rapid rise in revenue over the next few years. In particular, Seadrill’s rigs and drill ships on order, currently amount to 50% of its existing fleet; so the company is likely to see a 50% rise in revenue as this new equipment comes online during the next few years.

On the other hand, Ensco’s current fleet expansion is limited to only 11% (eight new builds on 70 existing rigs ) of its existing fleet and Rowan’s fleet is set to expand a similar 12% (four new builds on 35 existing rigs ).

Foolish Summary

All in all, at first glance, Seadrill may look to have an unsustainable dividend with rapidly rising debts. However, in comparison to its peers, Seadrill is actually outperforming the group, and its debts (as well as their interest costs) look to be easily manageable.

The article Rising Debt and Uncovered Dividend Payouts, Is This Company Worth It? originally appeared on Fool.com and is written by Rupert Hargreaves.

Fool contributor Rupert Hargreaves has no position in any stocks mentioned. The Motley Fool recommends Seadrill. The Motley Fool owns shares of Seadrill. 

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