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Seadrill suspends dividend payments on deteriorating offshore and financial markets

Seadrill suspends dividend payments on deteriorating offshore and financial markets
Despite reporting a $190m net profit in Q3 John Fredricksen’s Seadrill is suspending dividend payments due to “significant deterioration in broader markets”.

The rig owner reported a $190m net profit in Q3 on revenues of $1.29bn for the quarter.

Although representing a healthy margin Seadrill, which has 16 rigs under construction, flagged up concerns about market.

“The near term outlook for ultra-deepwater drilling units has become increasingly challenging in light of the macro developments over the course of the last quarter. While there are not yet clear indications that the oil price declines will alter oil companies’ spending plans in 2015, some rig owners are already acting as if it will,” Seadrill said in its third quarter earnings statement.

“This is especially true of those rig contractors that are concerned about the viability of their older units and the costs associated with keeping those assets in service. With approximately 25% of the ultra-deepwater fleet available in 2015, certain rig owners seem willing to work at or close to cash flow breakeven rates and we expect this type of activity to continue in the short term.”

With this uncertain outlook Seadrill is suspending dividend payments to shareholders.

Seadrill chairman John Fredriksen said: "The decision to suspend the dividend has been a difficult decision for the board. However, taking into consideration the significant deterioration in the broader offshore drilling and financing markets confident that Seadrill will emerge from this downturn even stronger and that we will resume our distributions in the future."