Seadrill Limited (“Seadrill” or the “Company”) (NYSE: SDRL)
today announced its fourth quarter and full year 2024 results.
Highlights
- Delivered net income of $446 million and Adjusted EBITDA(1) of
$378 million in 2024
- Secured long-term contracts for West Jupiter and West Tellus,
adding $1 billion in backlog
- Exited benign jack-up market through divestment of West
Prospero for $45 million in cash proceeds
- Finished the quarter with a cash balance of $505 million
- Repurchased $100 million of shares during the fourth quarter,
increasing total share repurchases to $792 million, or 22%, of
issued share count since initiating repurchase programs in
September 2023
Financial Highlights
Figures in USD million, unless otherwise
indicated
Three months ended December
31, 2024
Three months ended September
30, 2024
Total Operating Revenues
289
354
Contract Revenues
204
263
Net income
101
32
Adjusted EBITDA(1)
28
93
Adjusted EBITDA Margin(1)
9.7
%
26.3
%
Diluted Earnings Per Share ($)
1.54
0.49
“During the fourth quarter, we secured long-term contracts for
West Jupiter and West Tellus, adding $1 billion in backlog; sold
the cold-stacked West Prospero at a favorable valuation compared to
recent sales by our peers; and repurchased $100 million of shares
under our share repurchase program,” said President and Chief
Executive Officer, Simon Johnson. “With a strong balance sheet, and
durable backlog that extends meaningfully into 2029, we are
well-positioned to navigate any market volatility.”
Financial and Operational Results
Fourth quarter 2024 operating revenues totaled $289 million,
compared to $354 million in the prior quarter, a decrease of 18%,
primarily due to lower contract revenues. Contract revenues were
$204 million, a sequential decrease of 22%, due to fewer operating
days following scheduled contract completions for the West Phoenix
and West Capella and planned out-of-service time for the West
Neptune. Management contract revenues were $62 million in the
fourth quarter, consistent with the prior quarter. Leasing revenues
were also in line, with the fourth quarter at $8 million, compared
to $9 million in the third quarter. Reimbursable revenues were $15
million for the quarter.
Fourth quarter 2024 total operating expenses increased by 5% to
$323 million, compared to $307 million in the third quarter. The
impact of reduced vessel and rig operating expenses was offset by
increases in merger and integration related expenses, management
contract expenses and selling, general and administrative expenses.
Vessel and rig operating expenses decreased $8 million, or 5%, to
$164 million due to fewer operating days. Merger and integration
related expenses, an adjusting item to Adjusted EBITDA(1),
increased $15 million, to $17 million due to additional costs
following the handover of the final Aquadrill drillships in the
fourth quarter. Management contract expenses increased $6 million,
or 13%, to $51 million due to the timing of planned repair and
maintenance projects. Reimbursable expenses of $15 million offset
reimbursable revenues. Selling, general, and administrative
expenses increased $4 million, to $31 million, primarily due to
adjustments to year-end accruals and severance costs following
steps taken in the fourth quarter to reduce the Company's cost
base.
Income tax benefit was $133 million for the fourth quarter,
compared to income tax expense of $7 million in the prior quarter.
Favorable resolution of uncertain tax positions and the partial
release of valuation allowances drove the benefit in the fourth
quarter.
Net income for the fourth quarter was $101 million. Adjusted
EBITDA(1) was $28 million, compared to $93 million in the prior
quarter.
Balance Sheet and Cash Flow
At quarter-end, Seadrill had gross principal debt of $625
million and $505 million in cash and cash equivalents, including
$27 million of restricted cash, for a net debt position of $120
million. Net cash provided by operating activities during the
fourth quarter of 2024 was $7 million. Capital expenditures were
$132 million, mostly related to contract preparation for West
Auriga and West Polaris, in addition to the planned survey and
upgrades for West Neptune. Payments for long-term maintenance,
reported in operating cash flows were $94 million, with $38 million
in capital upgrades captured in investing cash flows. Free Cash
Flow(1) was negative $31 million. In addition, the cold-stacked
benign jack-up West Prospero was sold in December 2024 for cash
proceeds of $45 million.
During the fourth quarter, Seadrill repurchased a total of
approximately 2.5 million shares for $100 million under its current
$500 million share repurchase authorization. Since initiating its
repurchase programs in September 2023, the Company has returned a
total of approximately $792 million to shareholders, repurchasing a
total of approximately 17.8 million shares, reducing issued share
count by approximately 22%.
Commercial Activity
- In December 2024, the West Jupiter and the West Tellus secured
long-term contracts with Petrobras in Brazil. The 1,095 day
contracts, scheduled to commence in the first and second quarter of
2026 respectively, add $1 billion in backlog, securing the rigs'
utilization into 2029.
- The West Vela drilled its most recent well ahead of schedule.
Following exceptional operational performance, the rig secured 40
days of additional work and added approximately $20 million in
backlog, which is expected to keep the rig working into September
2025.
- The Sevan Louisiana continued its existing contract with an
independent operator in the U.S. Gulf, securing the rig’s services
into June 2025.
As of February 26, 2025, Seadrill’s Order Backlog(2) was
approximately $3.0 billion. For 2025, the Company has approximately
75% 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.
Operational Updates
- The West Auriga and West Polaris commenced their contracts with
Petrobras on December 20, 2024 and February 18, 2025, respectively.
The West Polaris commencement was impacted by the commissioning and
testing of upgraded equipment.
- The West Tellus incurred 50 days of downtime during the first
quarter of 2025 responding to regulatory matters in Brazil.
- The West Neptune recommenced drilling activities on February
16, 2025, following the completion of the planned survey and
upgrades. The timeline was affected by vendor issues and adverse
weather.
Conference Call Information
The Company will host a conference call to discuss its results
on Thursday, February 27 at 09:00 CT / 16:00 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.
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.
(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.
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, financial performance, operations, rig
activity, share repurchases and changes and trends in its business
and the markets in which it operates, are forward-looking
statements. These forward-looking statements can often, but not
necessarily, be identified by the use of forward-looking
terminology, including the terms "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. 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, dayrates, 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 performance of
the drilling rigs in the Company’s fleet, delay in payment or
disputes with customers, the Company'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, 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, 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 inherently subject to
significant business, economic, competitive, regulatory and other
risks and uncertainties, many of which are difficult to predict and
beyond our control. 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 any
person(s) 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
(In $ millions, except per share
data)
Three months ended December
31,
Year ended December
31,
2024
2023
2024
2023
Operating revenues
Contract revenues
204
315
1,009
1,154
Reimbursable revenues (1)
15
19
70
58
Management contract revenues (1)
62
60
247
245
Leasing revenues (1)
8
11
54
33
Other revenues (1)
—
3
5
12
Total operating revenues
289
408
1,385
1,502
Operating expenses
Vessel and rig operating expenses
(164
)
(220
)
(681
)
(705
)
Reimbursable expenses
(15
)
(18
)
(68
)
(55
)
Depreciation and amortization
(45
)
(44
)
(168
)
(155
)
Management contract expense
(51
)
(45
)
(175
)
(174
)
Merger and integration related
expenses
(17
)
(3
)
(24
)
(24
)
Selling, general and administrative
expenses
(31
)
(26
)
(107
)
(74
)
Total operating expenses
(323
)
(356
)
(1,223
)
(1,187
)
Other operating items
Gain on disposals
31
—
234
14
Other operating income
—
—
16
—
Total other operating items
31
—
250
14
Operating (loss)/profit
(3
)
52
412
329
Financial and other non-operating
items
Interest income
5
13
25
35
Interest expense
(15
)
(15
)
(61
)
(59
)
Share in results from associated companies
(net of tax)
4
10
(9
)
37
Other financial items
(23
)
(6
)
(34
)
(25
)
Total financial and other non-operating
items, net
(29
)
2
(79
)
(12
)
Profit before income taxes
(32
)
54
333
317
Income tax benefit/(expense)
133
19
113
(17
)
Net income
101
73
446
300
Basic EPS ($)
1.58
0.97
6.56
4.23
Diluted EPS ($)
1.54
0.95
6.37
4.12
(1) Includes revenue received from related parties of $73
million and $319 million, for the three months and year ended
December 31, 2024, respectively, and $79 million and $298 million
for the three months and year ended December 31, 2023,
respectively.
Seadrill Limited
UNAUDITED CONSOLIDATED BALANCE
SHEETS
(In $ millions, except share
data)
December 31,
2024
December 31,
2023
ASSETS
Current assets
Cash and cash equivalents
478
697
Restricted cash
27
31
Accounts receivables, net
193
222
Amounts due from related parties, net
—
9
Other current assets
230
199
Total current assets
928
1,158
Non-current assets
Investment in associated companies
68
90
Drilling units
2,946
2,858
Deferred tax assets
63
46
Equipment
5
10
Other non-current assets
146
56
Total non-current assets
3,228
3,060
Total assets
4,156
4,218
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities
Trade accounts payable
118
53
Other current liabilities
383
336
Total current liabilities
501
389
Non-current liabilities
Long-term debt
610
608
Deferred tax liabilities
11
9
Other non-current liabilities
116
229
Total non-current liabilities
737
846
Commitments and contingencies
SHAREHOLDERS' EQUITY
Common shares of par value US$0.01 per
share: 375,000,000 shares authorized at December 31, 2024 (December
31, 2023: 375,000,000) and 62,154,422 issued at December 31, 2024
(December 31, 2023: 74,048,962)
1
1
Additional paid in capital
1,969
2,480
Accumulated other comprehensive income
1
1
Retained earnings
947
501
Total shareholders' equity
2,918
2,983
Total liabilities and shareholders'
equity
4,156
4,218
Seadrill Limited
UNAUDITED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In $ millions)
Year ended December
31,
2024
2023
Cash Flows from Operating
Activities
Net income
446
300
Adjustments to reconcile net income to net
cash provided by operating activities:
Change in allowance for credit losses
—
(1
)
Depreciation and amortization
168
155
Gain on disposal of assets
(234
)
(14
)
Amortization of debt issue costs
4
2
Share in results from associated companies
(net of tax)
9
(37
)
Deferred tax benefit
(13
)
(13
)
Share based compensation expense
17
8
Other
5
1
Other cash movements in operating
activities
Payments for long-term maintenance
(261
)
(108
)
Changes in operating assets and
liabilities, net of effect of acquisitions and disposals
Trade accounts receivable
29
(25
)
Trade accounts payable
65
(34
)
Prepaid expenses/accrued revenue
(24
)
(1
)
Deferred revenue
22
1
Deferred mobilization costs
(92
)
25
Related party receivables
9
19
Other assets
2
(22
)
Other liabilities
(64
)
31
Net cash flows provided by operating
activities
88
287
Cash Flows from Investing
Activities
Additions to drilling units and
equipment
(157
)
(101
)
Proceeds from disposal of assets
383
14
Net proceeds from disposal of business
—
21
Acquisition of subsidiary
—
24
Proceeds from sales of tender-assist
units
—
84
Net cash flows provided by investing
activities
226
42
Cash Flows from Financing
Activities
Shares repurchased
(532
)
(263
)
Proceeds from debt
—
576
Repayments of secured credit
facilities
—
(478
)
Share issuance costs
—
(4
)
Debt issuance costs
—
(31
)
Net cash used in by financing
activities
(532
)
(200
)
Effect of exchange rate changes on
cash
(5
)
1
Net (decrease)/increase in cash and
cash equivalents, including restricted cash
(223
)
130
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
505
728
Supplementary disclosure of cash flow
information
Interest paid
(54
)
(36
)
Net taxes paid
(17
)
(24
)
Appendix I - Reconciliation of Net income to Adjusted EBITDA
(Unaudited)
Adjusted EBITDA represents Net income before depreciation and
amortization, taxes, total financial items and other income 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 depreciation and amortization, income tax
benefit/expense, total financial items and other income, merger and
integration related expenses, gain on disposals and other
adjustments specified, which are affected by various and possibly
changing financing methods, capital structure and historical cost
basis and which may significantly affect Net income between
periods.
Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted EBITDA
excluding Reimbursables and Adjusted EBITDA Margin excluding
Reimbursables should not be considered as alternatives to Net
income or any other indicator of Seadrill Limited’s performance
calculated in accordance with GAAP. Because the definitions of
Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted EBITDA excluding
Reimbursables and Adjusted EBITDA Margin excluding Reimbursables
(or similar measures) may vary among companies and industries, they
may not be comparable to other similarly titled measures used by
other companies.
The tables below reconcile Net income, the most directly
comparable GAAP measure, 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 December
31, 2024
Three months ended September
30, 2024
Year ended December 31,
2024
Net income (a)
101
32
446
Depreciation and amortization
45
42
168
Income tax (benefit)/expense
(133
)
7
(113
)
Total financial items and other income
29
8
79
Merger and integration related
expenses
17
2
24
Gain on disposals
(31
)
—
(234
)
Other adjustments (1)
—
2
8
Adjusted EBITDA (b)
28
93
378
Total operating revenues (c)
289
354
1,385
Net income margin (a)/(c)
34.9
%
9.0
%
32.2
%
Adjusted EBITDA margin (b)/(c)
9.7
%
26.3
%
27.3
%
Figures in USD million, unless otherwise
indicated
Three months ended December
31, 2024
Three months ended September
30, 2024
Adjusted EBITDA (b)
28
93
Reimbursable revenues
(15
)
(20
)
Reimbursable expenses
15
19
Adjusted EBITDA excluding Reimbursables
(d)
28
92
Total operating revenues (c)
289
354
Reimbursable revenues
(15
)
(20
)
Total operating revenues excluding
Reimbursable revenues (e)
274
334
Adjusted EBITDA margin excluding
Reimbursables (d)/(e)
10.2
%
27.5
%
(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 ended December
31, 2024
Three months ended September
30, 2024
Average number of rigs on contract(2)
8
10
Average contractual dayrates(3) (in $
thousands)
289
304
Economic utilization(4)
93.0
%
95.3
%
(1) Excludes three drillships managed on behalf of Sonadrill
(West Gemini, Sonangol Quenguela, Sonangol Libongos); and excludes
rig bareboat chartered to Sonadrill (West Gemini). (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 provided
by/(used in) 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 provided by/(used
in) operating activities less additions to drilling units and
equipment. The Company believes Free Cash Flow is useful to
investors, as it allows greater transparency of the generation or
utilization of cash by the business. Because the definition of Free
Cash Flow may vary among companies and industries, it may not be
comparable to other similarly titled measures used by other
companies. The table below reconciles Net cash flows provided
by/(used in) operating activities, the most directly comparable
GAAP measure, to Free Cash Flow for the three months ended December
31, 2024 and September 30, 2024.
Figures in USD million
Three months ended December
31, 2024
Three months ended September
30, 2024
Net cash flows provided by/(used in)
operating activities
7
(27
)
Additions to drilling units and
equipment
(38
)
(53
)
Free Cash Flow
(31
)
(80
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20250226579036/en/
Kevin Smith Vice President of Corporate Finance and Investor
Relations ir@seadrill.com
Seadrill (NYSE:SDRL)
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