Seadrill Limited (NYSE: SDRL) Runs Aground with Debt Restructuring Fiasco

Attorney Advising Disclaimer

Touted by investment firms such as Wells Fargo and Morgan Stanley to their clients, Seadrill Limited (ticker symbol SDRL) reached its lowest price in 2017 after warning shareholders and bond owners of impending losses as the result of a debt restructuring process the company had already extended due to several billion dollars-worth of outstanding loans and other debt, admitting that the deal was likely to feature "schemes of arrangement or Chapter 11 proceedings" and that investors could expect "minimal recovery for their existing shares."

Seadrill is a deepwater drilling contractor that operates in the oil-and-gas industry, which recently did file for Chapter 11 bankruptcy protection, prompting analysts to brace for heavily diluted shares and Seadrill itself to admit, "Holders of Seadrill common stock will receive approximately 2% of the post-restructured equity."

In 2012, subsidiary Seadrill Partners, LLC sought investments in an IPO under NYSE symbol SDLP, adding Citigroup, Morgan Stanley, Wells Fargo Securities, Credit Suisse, and Deutsche Bank Securities as underwriters, also taking on an extraordinary debt-load, heaviest in the oil-rig industry, at $8.9 billion by the end of 2016.

To illustrate Seadrill's drastic collapse, Seadrill Ltd topped out at over $47 per share in its 2013 heyday, while slipping to $34 in August 2014 before the offshore driller's bottom completely gave out in 2017; as of Thanksgiving 2017, SDRL is valued at 35 cents, which represents a loss of over 99% in value from 2013 to 2017.

Seadrill Partners (SDLP) similarly lost a majority of its value, from a high of over $34-per-share in July 2014 to a low of $1.81 in February 2016, and present-day value in the $3-per-share range.

Seadrill, as well as any firm that transacts securities, is required to disclose certain risks via prospectus documentation, private placement memoranda, and other yearly or quarterly filings with the SEC.

For example, Seadrill in 2012 filed an annual report Form 20-F with the Securities and Exchange Commission, disclosing risk factors, including the risk that Seadrill and common stock SDRL "may be materially and adversely affected by a decline in the offshore oil and gas industry," including volatile oil and gas prices.

The form also stated, "we had $10 billion in principal amount of debt," and disclosed potential conflicts of interest related to President John Fredriksen's association with Hemen Holding Ltd., Frontline Ltd (NYSE: FRO), and Ship Finance International Limited (NYSE: SFL).

A broker or investment firm is obliged to disclose these risks to investors before transacting such securities. If a broker, representative, or a financial adviser has recommended or solicited investments in Seadrill Partners (SDRL), Seadrill Limited (SDRL), or another energy sector product or limited partnership that has proven harmful to your investments or interests due to its unsuitability or the broker's failure to adequately disclose its risks, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.

Related Posts
  • After $13 Million in Penalties for 'Widespread Failure,' Oppenheimer Fined $500,000 for Supervisory and Suitability Gaps Read More
  • FINRA barred former Independent Financial Group (IFG) broker Brett Arthur Hartvigson of San Diego, California for refusing to cooperate with its investigation into allegations that were part of a complaint. In 2021, while associated with IFG, Brett Harvgi Read More
  • Stifel Nicolaus Failed to Detect Unsuitable Recommendations Despite Risk Policy, Says FINRA Read More