Over the weekend, the Saudi energy minister Ali al-Naimi said that the Persian Gulf nation will maintain its oil production and may even increase it if a new client emerges. The comment is the latest signal that the largest oil producer is unlikely to cut production in response to a massive drop in prices, MarketWatch said.
On the New York Mercantile Exchange, West Texas Intermediate for February delivery slid 1.28% a barrel to $56.40 at 9:19 a.m. in New York. February Brent crude declined by 1.22% to $60.63.
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Separately, the Bermuda-based driller already cut its dividend and Goldman Sachs analysts believe there is still significant balance sheet risk due to high financing requirements for 2015/16 and beyond, as well as limited refinancing channels with the possibility of a higher cost of debt due to the challenging environment.
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 revenue growth, notable return on equity and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, generally higher debt management risk and weak operating cash flow."