NEW YORK (TheStreet) -- Shares of Seadrill (SDRL) - Get Report are dropping by 8.5% to $3.12 late Monday morning, after the company reported weaker-than-expected results for the 2016 first quarter.

Before today's opening bell, the offshore drilling contractor posted earnings of 26 cents per diluted share, missing analysts' expectations of 38 cents per share.

Revenue fell to $891 million from $1.24 billion last year and was below Wall Street's estimates of $893.5 million.

"Our key priorities for the year are cost reduction, managing newbuild deferments and concluding our financing plans, while ensuring that we continue to maintain safe and efficient operations," CEO Per Wullf said in a statement.

Seadrill said it plans to reduce costs by $340 million this year, $305 million of which is sustainable savings and $35 million is deferred spending.

The company also said oil majors have more rig capacity under contract than needed as activity continues to decline. This is impacting new demand and leading to contract renegotiations and the terminations of current contracts, MarketWatch noted.

A rally in rig demand would hinge on a sustained period of higher and more stable oil prices, Seadrill said.

Separately, TheStreet Ratings Team has a "Sell" rating with a score of D on the stock.

The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk, disappointing return on equity and generally disappointing historical performance in the stock itself.

Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.

You can view the full analysis from the report here: SDRL

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