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In the sector, the firm recommends yield plays such as Seadrill (SDRL), Seadrill Partners (SDLP) and North Atlantic Drilling (NADL), and prefers premium asset exposure through Atwood Oceanics (ATW), Ensco (ESV) and Pacific Drilling (PACD]) over lower end fleets via Diamond Offshore (DO), Noble (NE) and Transocean (RIG). Seadrill seals $319M in jack up deals Seadrill (SDRL +1.4%) says it secured new contracts for jack up units West Tucana, West Telesto, West Ariel and West Prospero, and a contract for the West Mischief is extended by four months; the total revenue potential for the four new contracts and one extension is $319M. The West Tucana will be headed to offshore Angola for work with Chevron's (CVX) wholly owned operating unit in the country; total revenue potential for the 24 month primary contract term is $168M. SDRL now has 92% of its jack up capacity contracted for 2014 and 64% for 2015, with total order backlog for the jack up fleet at $4.4B. Transocean +1.4% as Citigroup calls a bottom for shares, rig market Shares of offshore drillers have been sinking, but Citigroup is calling a bottom, at least for Transocean (RIG +1.4%), which the firm upgrades to Neutral from Sell. The firm believes the fall in deepwater rig rates amid a softening of rig demand in 2014 will transition to stability and eventual recovery over the next 12 months; against a backdrop of strong oil prices and improving economic conditions, along with the large inventory of deepwater oil discoveries awaiting development, the firm thinks the current pain in the rig market will be short lived. Seadrill Partners to acquire ultra deepwater drillship, offers 10.4M units Seadrill Partners (SDLP) agrees to acquire the West Auriga ultra deepwater drillship from Seadrill (SDRL) for $797M. The drillship is expected to carry out operations in the Gulf of Mexico until the end of its contract in Oct. 2020 at a dayrate of $565K/day. ETFs and mutual funds was lower than in previous months." This line jibes with earlier reports of the lack of correlation among stocks and outflows from the SPY in favor of active strategies. Among those being purchased were energy related names trading at multi month lows: Chevron (CVX +0.2%), Kinder Morgan (KMP 0.7%), and Sea Drill (SDRL 0.2%). Seadrill CFO sees 2016 rig recovery as oil spending revives Seadrill (SDRL +0.9%) sees offshore drilling rig rates to fall further before the drilling business recovers in 2016 as industry exploration revives, CFO Rune Lundetrae says. Explorers have cut investment plans to protect cash flow as rising costs and stagnating energy prices erode profit, but Lundetrae believes they will need to increase it again once oil supplies dwindle and as oil prices rise from current levels. While SDRL won order more new rigs for 2016 delivery, it doesn plan to shut any rigs, Lundetrae says, declining to estimate by how much rates could fall before recovering; the company can with day rates falling by $50K, he says. Transocean 2% as speculative builds hint at move toward Seadrill model The biggest story from Transocean's (RIG 2%) Q4 results might be the big shift in the offshore driller's business strategy that makes its model look more like Seadrill's (SDRL) and investors today don seem too thrilled. Seadrill's muted outlook prompts Nomura downgrade, but Barclays sees dividend as "rock solid" Seadrill (SDRL +1.8%), more than other offshore drillers, depends largely on its big dividend for investor support, which has sparked consternation over speculation of a dividend cut, but the safety of the dividend isn't the reason Nomura is downgrading SDRL shares to Neutral from Buy. Seadrill dividend danger overrated, Morgan Stanley says Speculation over a potential dividend cut has helped send Seadrill (SDRL +2.6%) shares down 20% during the past three months, but Morgan Stanley analysts say there's little reason for so much worry.