Seadrill Limited (“Seadrill” or the “Company”) (NYSE: SDRL)
today announced its third quarter 2024 results and revised 2024
guidance.
Quarterly Highlights
- Delivered operating profit of $47 million and Adjusted
EBITDA(1) of $93 million, achieving $350 million of Adjusted
EBITDA(1) year-to-date
- Increased midpoint for full-year 2024 Adjusted EBITDA(1)
guidance by 13% from $340 million to $385 million
- Repurchased 4.0 million shares during the third quarter for
$183 million, bringing year-to-date repurchases to $427
million
Financial Highlights
Figures in USD million, unless otherwise
indicated
Three months ended
September 30, 2024
Three months ended June 30,
2024
Total Operating Revenues
354
375
Contract Revenues
263
267
Operating Profit
47
288
Adjusted EBITDA(1)
93
133
Adjusted EBITDA Margin(1)
26.3
%
35.5
%
Diluted Earnings Per Share ($)
0.49
3.49
“Seadrill’s third quarter results exceeded expectations, leading
us to raise our full-year guidance. We secured additional drilling
work for the Sevan Louisiana and mobilized the West Auriga and West
Polaris to Brazil, where they are undergoing customer and
regulatory acceptance,” said President and Chief Executive Officer,
Simon Johnson. “In the absence of an immediate market opportunity
for the West Phoenix, we stacked the rig and released the crews,
refusing to contribute to our own white space, waiting on the
market to change.”
“We will continue to be disciplined stewards of shareholder
capital, remaining focused on maximizing cash flow per rig as we
seek to contract uncommitted capacity in 2025 and into 2026.
Despite the near-term imbalance between available rigs and
opportunities, we remain resolute in our belief in the strength and
durability of the offshore drilling industry and Seadrill’s
position within it. Operating a concentrated fleet of premium
floaters supported by a strong balance sheet positions us well to
withstand market movements and generate improving returns through
the cycle.”
Financial and Operational Results
Third quarter 2024 operating revenues totaled $354 million,
compared to $375 million in the second quarter, a decrease of 6%.
Contract revenues were $263 million, similar to prior quarter
results, as sequential improvements in the average dayrate and
economic efficiency earned across the Company's rig fleet were
offset by fewer operating days, following scheduled contract
completions. Management contract revenues were $62 million in the
third quarter, down $3 million from the second quarter, when the
Company recognized retroactive adjustments to the management fee
earned from its Sonadrill joint venture. Leasing revenues were $9
million, compared to $26 million in the second quarter, as
retroactive bareboat charter (BBC) income for the West Gemini and
approximately $10 million of BBC income earned by the Qatar jack-up
rigs sold by Seadrill in June 2024 did not repeat. Reimbursable
revenues were $20 million during the quarter.
Third quarter 2024 operating expenses increased by 6% to $307
million, compared to $290 million in the second quarter. Vessel and
rig operating expenses increased $7 million, or 4%, to $172
million, and management contract expense increased $4 million, or
10%, to $45 million. The timing of repairs and maintenance drove
higher operating expenses across the Company's rig fleet. The
relative rise in management contract expense reflects higher
personnel costs. Reimbursable expenses of $19 million offset
reimbursable revenues. Selling, general, and administrative
expenses were $27 million.
Net income for the third quarter was $32 million. Adjusted
EBITDA(1) was $93 million, compared to $133 million in the prior
quarter. Second quarter results included $21 million in retroactive
adjustments related to management fees and BBC income related to
Sonadrill and BBC income earned by jack-up rigs sold in June 2024.
Third quarter Adjusted EBITDA Margin(1), excluding reimbursables,
was 27.5%.
Balance Sheet and Cash Flow
At quarter-end, Seadrill had gross principal debt of $625
million and $592 million in cash and cash equivalents, including
$26 million of restricted cash, for a net debt position of $33
million. Net cash used in operating activities during the third
quarter of 2024 was $27 million. Capital expenditures were $131
million, including $78 million of payments for long-term
maintenance captured in operating cash flows and $53 million in
capital upgrades captured in investing cash flows. Free Cash
Flow(1) was $(80) million and was impacted by Brazil contract
preparation for the West Auriga and West Polaris.
During the third quarter, Seadrill repurchased a total of 4.0
million shares for $183 million, under its current $500 million
share repurchase authorization. Since initiating its repurchase
programs in September 2023, the Company has returned a total of
$692 million to shareholders through the end of the third quarter,
repurchasing approximately 15.3 million shares and reducing its
issued share count by 19%.
Operational and Commercial Activity
The Sevan Louisiana continued its existing contract with an
independent operator in the U.S. Gulf of Mexico, securing the rig’s
services into November 2024. As of November 12, 2024, Seadrill’s
Order Backlog(2) was approximately $2.3 billion. For 2025, the
Company has 70% of available rig days contracted across its
marketed and managed rig fleet. The Company today provided an
updated fleet status report on the Investor Relations section of
its website, www.seadrill.com.
Outlook
Based on third quarter results, Seadrill revised its full-year
2024 guidance. The Company now expects total operating revenues
between $1,390 million and $1,410 million; Adjusted EBITDA(1) of
$375 million and $395 million; and long-term maintenance and
capital expenditures between $420 million and $440 million.
Guidance includes $63 million of reimbursable revenue and
expenses.
Conference Call Information
The Company will host a conference call to discuss its results
on Wednesday, November 13 at 08:00 CT / 15:00 CET. Interested
participants may join the call by dialing +1 (800) 715-9871
(Conference ID: 5348977) at least 15 minutes prior to the scheduled
start time. The Company will webcast the call live on the Investor
Relations section of its website, where a replay will be available
afterwards.
(1) These are non-GAAP measures. For a definition and a
reconciliation to the most comparable GAAP measure, see Appendices.
(2) Order Backlog includes all firm contracts at the contractual
operating dayrate multiplied by the number of days remaining in the
firm contract period. It includes management contract revenues and
lease revenues from bareboat charter arrangements and excludes
revenues for mobilization, demobilization, contract preparation,
and other incentive provisions and backlog relating to
non-consolidated entities.
About Seadrill
Seadrill is setting the standard in deepwater oil and gas
drilling. With its modern fleet, experienced crews, and advanced
technologies, Seadrill safely, efficiently, and responsibly unlocks
oil and gas resources for national, integrated, and independent oil
companies. For further information, visit www.seadrill.com.
Forward-Looking Statements
This news release includes forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended.
All statements other than statements of historical facts included
in this news release, including, without limitation, those
regarding the Company’s outlook and guidance, plans, strategies,
business prospects, rig activity, share repurchases and changes and
trends in its business and the markets in which it operates, are
forward-looking statements. These statements may include words such
as "assumes", "projects", "forecasts", "estimates", "expects",
"anticipates", "believes", "plans", "intends", "may", "might",
"will", "would", "can", "could", "should" or, in each case, their
negative, or other variations or comparable terminology in
connection with any discussion of the timing or nature of future
operating or financial performance or other events. These
statements are based on management’s current plans, expectations,
assumptions and beliefs concerning future events impacting the
Company and therefore involve a number of risks, uncertainties and
assumptions that could cause actual results to differ materially
from those expressed or implied in the forward-looking statements.
Important factors that could cause actual results to differ
materially from those in the forward-looking statements include,
but are not limited to: those described under Item 3D, “Risk
Factors” in the Company’s Annual Report on Form 20-F for the year
ended December 31, 2023, filed with the U.S. Securities and
Exchange Commission (the “SEC”) on March 27, 2024, offshore
drilling market conditions including supply and demand, day rates,
customer drilling programs and effects of new or reactivated rigs
on the market, contract awards and rig mobilizations, contract
backlog, dry-docking and other costs of maintenance, special
periodic surveys, upgrades and regulatory work for the drilling
rigs in the Company’s fleet, the cost and timing of shipyard and
other capital projects, the performance of the drilling rigs in the
Company’s fleet, delay in payment or disputes with customers,
Seadrill’s ability to successfully employ its drilling units,
procure or have access to financing, ability to comply with loan
covenants, fluctuations in the international price of oil,
international financial market conditions, inflation, changes in
governmental regulations that affect the Company or the operations
of the Company’s fleet, increased competition in the offshore
drilling industry, the review of competition authorities, the
impact of global economic conditions and global health threats,
pandemics and epidemics, our ability to maintain relationships with
suppliers, customers, employees and other third parties, our
ability to maintain adequate financing to support our business
plans, our ability to successfully complete and realize the
intended benefits of any mergers, acquisitions and divestitures,
and the impact of other strategic transactions, our liquidity and
the adequacy of cash flows to satisfy our obligations, future
activity under and in respect of the Company’s share repurchase
program, our ability to satisfy (or timely cure any noncompliance
with) the continued listing requirements of the New York Stock
Exchange, or other exchanges where our shares may be listed, the
cancellation of drilling contracts currently included in reported
contract backlog, losses on impairment of long-lived fixed assets,
shipyard, construction and other delays, the results of meetings of
our shareholders, political and other uncertainties, including
those related to the conflicts in Ukraine and the Middle East, and
any related sanctions, the effect and results of litigation,
regulatory matters, settlements, audits, assessments and
contingencies, including any litigation related to acquisitions or
dispositions, our ability to successfully integrate with Aquadrill
LLC following its merger with the Company, the concentration of our
revenues in certain geographical jurisdictions, limitations on
insurance coverage, our ability to attract and retain skilled
personnel on commercially reasonable terms, the level of expected
capital expenditures, our expected financing of such capital
expenditures and the timing and cost of completion of capital
projects, fluctuations in interest rates or exchange rates and
currency devaluations relating to foreign or U.S. monetary policy,
tax matters, changes in tax laws, treaties and regulations, tax
assessments and liabilities for tax issues, legal and regulatory
matters in the jurisdictions in which we operate, customs and
environmental matters, the potential impacts on our business
resulting from decarbonization and emissions legislation and
regulations, the impact on our business from climate-change
generally, the occurrence of cybersecurity incidents, attacks or
other breaches to our information technology systems, including our
rig operating systems, and other important factors described from
time to time in the reports filed or furnished by us with the
SEC.
The foregoing risks and uncertainties are beyond our ability to
control, and in many cases, we cannot predict the risks and
uncertainties that could cause our actual results to differ
materially from those indicated by the forward-looking statements.
Should one or more of these risks or uncertainties materialize, or
should underlying assumptions prove incorrect, actual results may
vary materially from those indicated. All subsequent written and
oral forward-looking statements attributable to us or to persons
acting on our behalf are expressly qualified in their entirety by
reference to these risks and uncertainties. You should not place
undue reliance on forward-looking statements. Each forward-looking
statement speaks only as of the date of the particular statement.
We expressly disclaim any obligations or undertaking to release
publicly any updates or revisions to any forward-looking statement
to reflect any change in our expectations or beliefs with regard to
the statement or any change in events, conditions or circumstances
on which any forward-looking statement is based, except as required
by law.
Investors should note that we announce material financial
information in SEC filings, press releases and public conference
calls. Based on guidance from the SEC, we may use the Investors
section of our website (www.seadrill.com) to communicate with
investors. It is possible that the financial and other information
posted there could be deemed to be material information. The
information on our website is not part of, and is not incorporated
into, this news release.
Seadrill Limited
UNAUDITED CONSOLIDATED
STATEMENTS OF OPERATIONS
Three months ended September
30,
Nine months ended September
30,
(In $ millions, except per share data)
2024
2023
2024
2023
Operating revenues
Contract revenues
263
324
805
839
Reimbursable revenues (1)
20
16
55
39
Management contract revenues (1)
62
63
185
185
Leasing revenues (1)
9
8
46
22
Other revenues (1)
—
3
5
9
Total operating revenues
354
414
1,096
1,094
Operating expenses
Vessel and rig operating expenses
(172
)
(184
)
(517
)
(485
)
Reimbursable expenses
(19
)
(14
)
(53
)
(36
)
Depreciation and amortization
(42
)
(39
)
(123
)
(112
)
Management contract expense
(45
)
(45
)
(124
)
(129
)
Selling, general and administrative
expenses
(27
)
(20
)
(76
)
(48
)
Merger and integration related
expenses
(2
)
(2
)
(7
)
(21
)
Total operating expenses
(307
)
(304
)
(900
)
(831
)
Other operating items
Gain on disposals
—
7
203
14
Other operating income
—
—
16
—
Total other operating items
—
7
219
14
Operating profit
47
117
415
277
Financial and other non-operating
items
Interest income
6
10
20
22
Interest expense
(15
)
(15
)
(46
)
(44
)
Share in results from associated companies
(net of tax)
(2
)
13
(13
)
27
Other financial items
3
(13
)
(11
)
(19
)
Total financial and other non-operating
items, net
(8
)
(5
)
(50
)
(14
)
Profit before income taxes
39
112
365
263
Income tax expense
(7
)
(22
)
(20
)
(36
)
Net income
32
90
345
227
Basic EPS ($)
0.49
1.13
4.97
3.24
Diluted EPS ($)
0.49
1.10
4.82
3.16
(1) Includes revenue received from related
parties of $74 million and $246 million, for the three and nine
months ended September 30, 2024, respectively, and $73 million and
$219 million for the three and nine, months ended September 30,
2023, respectively.
Seadrill Limited
UNAUDITED CONSOLIDATED BALANCE
SHEETS
(In $ millions, except share data)
September 30,
2024
December 31,
2023
ASSETS
Current assets
Cash and cash equivalents
566
697
Restricted cash
26
31
Accounts receivables, net
181
222
Amounts due from related parties, net
9
9
Other current assets
255
199
Total current assets
1,037
1,158
Non-current assets
Investment in associated companies
64
90
Drilling units
2,877
2,858
Deferred tax assets
56
46
Equipment
6
10
Other non-current assets
112
56
Total non-current assets
3,115
3,060
Total assets
4,152
4,218
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities
Trade accounts payable
108
53
Other current liabilities
302
336
Total current liabilities
410
389
Non-current liabilities
Long-term debt
610
608
Deferred tax liabilities
10
9
Other non-current liabilities
209
229
Total non-current liabilities
829
846
Commitments and contingencies
SHAREHOLDERS' EQUITY
Common shares of par value $0.01 per
share: 375,000,000 shares authorized at September 30, 2024
(December 31, 2023: 375,000,000) and 64,655,325 issued at September
30, 2024 (December 31, 2023: 74,048,962)
1
1
Additional paid in capital
2,065
2,480
Accumulated other comprehensive income
1
1
Retained earnings
846
501
Total shareholders' equity
2,913
2,983
Total liabilities and shareholders'
equity
4,152
4,218
Seadrill Limited
UNAUDITED CONSOLIDATED
STATEMENTS OF CASH FLOWS
Nine months ended September
30,
(In $ millions)
2024
2023
Cash Flows from Operating
Activities
Net income
345
227
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
123
112
Gain on disposal of assets
(203
)
(14
)
Share in results from associated companies
(net of tax)
13
(27
)
Deferred tax (benefit)/expense
(7
)
9
Unrealized loss/(gain) on foreign
exchange
5
(2
)
Amortization of debt issue costs
3
—
Share based compensation expense
12
—
Loss on debt extinguishments
—
10
Other cash movements in operating
activities
Payments for long-term maintenance
(167
)
(66
)
Changes in operating assets and
liabilities, net of effect of acquisitions and disposals
Trade accounts receivable
41
(27
)
Trade accounts payable
55
(32
)
Prepaid expenses/accrued revenue
(27
)
(8
)
Deferred revenue
19
6
Deferred mobilization costs
(62
)
14
Related party receivables
—
1
Other assets
(19
)
(26
)
Other liabilities
(50
)
(30
)
Net cash flows provided by operating
activities
81
147
Cash Flows from Investing
Activities
Additions to drilling units and
equipment
(119
)
(53
)
Proceeds from disposal of assets
338
14
Net proceeds from disposal of business
—
31
Acquisition of subsidiary
—
24
Proceeds from sales of tender-assist
units
—
84
Net cash flows provided by investing
activities
219
100
Cash Flows from Financing
Activities
Shares repurchased
(431
)
(46
)
Proceeds from debt
—
576
Repayments of secured credit
facilities
—
(478
)
Share issuance costs
—
(4
)
Bond and RCF issuance costs
—
(28
)
Net cash (used in)/provided by
financing activities
(431
)
20
Effect of exchange rate changes on
cash
(5
)
4
Net (decrease)/increase in cash and
cash equivalents, including restricted cash
(136
)
271
Cash and cash equivalents, including
restricted cash, at beginning of the period
728
598
Cash and cash equivalents, including
restricted cash, at the end of period
592
869
Appendix I - Reconciliation of Operating Profit to Adjusted
EBITDA (Unaudited)
Adjusted EBITDA represents operating profit before depreciation,
amortization and similar non-cash charges. Additionally, in any
given period, the Company may have significant, unusual or
non-recurring items which may be excluded from Adjusted EBITDA for
that period. When applicable, these items are fully disclosed and
incorporated into the reconciliation provided below. Adjusted
EBITDA Margin represents Adjusted EBITDA as a percentage of Total
operating revenues. Adjusted EBITDA excluding Reimbursables,
represents Adjusted EBITDA, excluding Reimbursable revenues and
Reimbursable expenses. Adjusted EBITDA Margin excluding
Reimbursables represents Adjusted EBITDA excluding Reimbursables as
a percentage of Total operating revenues excluding Reimbursable
revenues.
Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted EBITDA
excluding Reimbursables and Adjusted EBITDA Margin excluding
Reimbursables are non-GAAP financial measures. The Company believes
that the aforementioned non-GAAP financial measures assist
investors by excluding the potentially disparate effects between
periods of interest, other financial items, taxes and depreciation
and amortization, which are affected by various and possibly
changing financing methods, capital structure and historical cost
basis and which may significantly affect operating profit between
periods.
Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted EBITDA
excluding Reimbursables and Adjusted EBITDA Margin excluding
Reimbursables should not be considered as alternatives to operating
profit or any other indicator of Seadrill Limited’s performance
calculated in accordance with US GAAP.
The tables below reconcile operating profit to Adjusted EBITDA,
Adjusted EBITDA Margin, Adjusted EBITDA excluding Reimbursables and
Adjusted EBITDA Margin excluding Reimbursables.
Figures in USD million, unless otherwise
indicated
Three months ended September
30, 2024
Three months ended June 30,
2024
Nine months ended September
30, 2024
Operating profit
47
288
415
Depreciation and amortization
42
43
123
Merger and integration related
expenses
2
3
7
Gain on disposal
—
(203
)
(203
)
Other adjustments (1)
2
2
8
Adjusted EBITDA (a)
93
133
350
Total operating revenues (b)
354
375
1,096
Adjusted EBITDA margin (a)/(b)
26.3
%
35.5
%
31.9
%
Figures in USD million, unless otherwise
indicated
Three months ended September
30, 2024
Three months ended June 30,
2024
Adjusted EBITDA (a)
93
133
Reimbursable revenues
(20
)
(15
)
Reimbursable expenses
19
14
Adjusted EBITDA excluding Reimbursables
(c)
92
132
Total operating revenues (b)
354
375
Reimbursable revenues
(20
)
(15
)
Total operating revenues excluding
Reimbursable revenues (d)
334
360
Adjusted EBITDA margin excluding
Reimbursables (c)/(d)
27.5
%
36.7
%
The table below reconciles operating profit to Adjusted EBITDA
for the 2024 guidance numbers presented in the "Outlook"
section:
2024 Guidance
Figures in USD million, unless otherwise
indicated
Low end of the range
High end of the range
Operating profit
385
405
Depreciation and amortization
171
171
Merger and integration related
expenses
14
14
Gain on sale of assets
(203
)
(203
)
Other adjustments (1)
8
8
Adjusted EBITDA (a)
375
395
Total operating revenues (b)
1,390
1,410
Adjusted EBITDA margin (a)/(b)
27.0
%
28.0
%
(1) Primarily related to costs associated
with the closure of the Company's London office, announced in
2023.
Appendix II - Contract Revenues Supporting Information
(Unaudited)
Contract Revenues Supporting Information(1) Three months
endedSeptember 30, 2024 Three months endedJune 30, 2024
Average number of rigs on contract(2)
10
10
Average contractual dayrates(3) (in $ thousands)
304
289
Economic utilization(4)
95.30
%
93.90
%
(1) Excludes three drillships managed on
behalf of Sonadrill (West Gemini, Sonangol Quenguela, Sonangol
Libongos); and excludes rigs bareboat chartered to Sonadrill (West
Gemini) and Gulfdrill, before disposal in June 2024 (West Telesto,
West Castor, West Tucana).
(2) The average number of rigs on contract
is calculated by dividing the aggregate days the Company's rigs
were on contract during the reporting period by the number of days
in that reporting period.
(3) The average contractual dayrate is
calculated by dividing the aggregate contractual dayrates during a
reporting period by the aggregate number of days for the reporting
period.
(4) Economic utilization is defined as
dayrate revenue earned during the period, excluding bonuses,
divided by the contractual operating dayrate, multiplied by the
number of days on contract in the period. If a drilling unit earns
its full operating dayrate throughout a reporting period, its
economic utilization would be 100%. However, there are many
situations that give rise to a dayrate being earned that is less
than the contractual operating rate, such as planned downtime for
maintenance. In such situations, economic utilization reduces below
100%.
Appendix III - Reconciliation of Net cash flows (used
in)/provided by operating activities to Free Cash Flow
(Unaudited)
The Company also presents Free Cash Flow as a non-GAAP liquidity
measure. Free Cash Flow is calculated as Net cash (used
in)/provided by operating activities less additions to drilling
units and equipment. The table below reconciles Net cash flows
(used in)/provided by operating activities to Free Cash Flow for
the three months ended September 30, 2024 and June 30, 2024.
Figures in USD million
Three months endedSeptember 30, 2024
Three months endedJune 30, 2024 Net cash flows (used
in)/provided by operating activities
(27
)
79
Additions to drilling units and equipment
(53
)
(43
)
Free Cash Flow
(80
)
36
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241112957659/en/
Lydia Brantley Mabry Director of Investor Relations
ir@seadrill.com
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