Summary
The nomination of Rex Tillerson as US Secretary of State could be a win for SDRL.
XOM, SDRL and the Russian oil company, Rosneft, have history.
SDRL, the most hated driller over the last two years, may get some love.
If news accounts are correct, Seadrill (NYSE:SDRL) is poised to be one of the potential beneficiaries of the Trump administration. Today (Sunday, December 11) Bloomberg, the Washington Post, the Wall Street Journal and others reported Exxon Mobil (NYSE:XOM) Chairmen Rex Tillerson may be tapped to be the US Secretary of State. Mr. Tillerson is being favored by Mr. Trump because, among other reasons, " He does massive deals in Russia." SDRL has XOM's partner-in-crime in developing the Kara Sea project in 2014. However, the project was halted due to sanctions against Russia by the European Union and the US as punishment for annexing Crimea (to read more, see my 2014 article, " When Elephants Fight, Ants Perish- Exxon Mobile, Seadrill And EU/USA Sanctions").
Those who have been following SDRL for some time will recall, North Atlantic Drilling (NYSE:NADL), SDRL's 70.4% owned subsidiary, entered into a whirlwind of agreements with Russian driller Rosneft in the second and third quarters of 2014 (In August of 2014, the companies anticipated Rosneft would own 30% of NADL). NADL's expertise is offshore harsh environment drilling (e.g. Kara Sea). These agreements fell apart following the aforementioned sanctions.
As the following chart notes, 40 wells were to be drilled through 2018. Ultimately, XOM had to follow US/EU rules and stop the project (and the actual and anticipated use of SDRL/NADL rigs such as the West Alpha, West Navigator and West Rigel).
The implications of Rex Tillerson as US Secretary of State are the softening or elimination of sanctions against Russia (admittedly, the US intelligence community's assertions that Russia tampered with US elections is a contra-force to this argument) and, combined with higher oil prices, a better environment for Mr. Tillerson's (then) prior firm and SDRL revisiting their agreement to drill in the Kara Sea.
seekingalpha.com/article/4029783-seadrills-luck-may-turning