NEW YORK (TheStreet) -- Shares of Seadrill Ltd. (SDRL) - Get Report closed down by 3.11% to $9.35 on Tuesday afternoon, as some stocks within the energy sector were pushed into the red today due to the slump in oil prices.
The commodity was falling today as a result of the Iranian nuclear program discussions taking place in Switzerland between the Middle Eastern country and six world powers.
If a deal is reached it could result in Iran increasing its oil exports.
Crude oil (WTI) fell by 1.68% to $47.86 per barrel and Brent crude slipped by 1.67% to $55.35 per barrel this afternoon, according to the CNBC.com index.
Iran, the U.S., China, Britain, Russia, Germany, and France began talks on Monday, giving themselves until the end of day on Tuesday to frame line an agreement. This afternoon the State Department announced that the meeting will continue into tomorrow.
"We've made enough progress in the last days to merit staying until Wednesday. There are several difficult issues still remaining," State Department spokesperson Marie Harf said, CNN reports.
The rate at which Western sanctions are being lifted on Iran is a hurdle that could scrap a deal, Reuters reported earlier today.
"If the flood gates to Iranian crude open, (prices) will probably test this year's lows again," Phillip Futures analyst Daniel Ang told Reuters.
If sanctions are lifted Iran could increase oil production by close to 500,000 barrels per day within six months and by another 700,000 bpd within another year, Reuters said.
Shares of Seadrill are up by 0.32% to $9.38 in after-hours trading today.
Separately, TheStreet Ratings team rates SEADRILL LTD as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate SEADRILL LTD (SDRL) a HOLD. The primary factors that have impacted our rating are mixed-some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its notable return on equity, attractive valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, weak operating cash flow and a generally disappointing performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Energy Equipment & Services industry and the overall market, SEADRILL LTD's return on equity significantly exceeds that of both the industry average and the S&P 500.
- SDRL, with its decline in revenue, underperformed when compared the industry average of 14.7%. Since the same quarter one year prior, revenues fell by 14.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The debt-to-equity ratio of 1.35 is relatively high when compared with the industry average, suggesting a need for better debt level management. To add to this, SDRL has a quick ratio of 0.66, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
- Net operating cash flow has decreased to $287.00 million or 41.66% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- You can view the full analysis from the report here: SDRL Ratings Report