Seadrill Limited reported its second quarter 2024 results.

Quarterly Highlights

Delivered Operating Profit of $288 million and Adjusted EBITDA(1) of $133 million on $375 million of Total Operating Revenues for an Adjusted EBITDA Margin(1) of 35.5%
Completed sale of three jack-up rigs and associated interest in the Gulfdrill joint venture, supporting fleet refinement and capital return program
Repurchased total of $566 million of shares, or more than 15% of its issued share count, since initiating repurchase program in September 2023
Financial Highlights

“Seadrill delivered a strong second quarter and generated a combined $257 million in Adjusted EBITDA(1) during the first half of year. Strong supply-side fundamentals underpin our faith in a long and enduring upcycle. However, we continue to see volatility that can affect financial outcomes,” Johnson continued. “Now, as ever, through-cycle resiliency matters. As a company, we continue to benefit from a highly standardized fleet strategically positioned in advantaged geographies, a strong balance sheet, a disciplined management team, and a pursuit of operational excellence that allows us to deliver on our promise of safe, efficient operations for the benefit of all our stakeholders.”

Financial and Operational Results

Second quarter 2024 operating revenues totaled $375 million, a sequential increase of $8 million. Contract revenues were $267 million, a decrease of $8 million, primarily due to fewer operating days on the West Auriga and the West Polaris and lower utilization, partially offset by increased days on the Sevan Louisiana. Management contract revenues were $65 million, a $7 million sequential improvement reflecting an increased management fee received on the three drillships Seadrill operates through Sonadrill, its 50:50 joint venture with Sonangol, applied retroactively to January 1. Leasing revenues were $26 million, compared to $11 million the prior quarter. The increase is attributable to a new bareboat charter rate, applied retroactively to January 1, for the West Gemini, which Seadrill charters to Sonadrill, as the joint venture partners began receiving additional income proportional to their rig contributions.

Second quarter 2024 operating expenses totaled $290 million, a sequential decrease of $13 million. Vessel and rig operating expenses were $165 million, a decrease of $15 million, primarily due to lower operating expenses on the West Auriga and West Polaris as the rigs underwent preparation for upcoming Brazil contracts for the duration of the quarter. Management contract expense was $41 million, a $3 million increase, reflecting the timing of repair and maintenance expenses on the Sonadrill rigs. Selling, general, and administrative expenses were $24 million and included $2 million of non-recurring costs associated with the consolidation of the Company’s corporate offices to Houston. Other operating items included a gain on sale of $203 million, associated with the Company’s sale of three jack-up rigs and associated interest in its Gulfdrill joint venture, which closed on June 25, 2024, for cash proceeds of $338 million.

Adjusted EBITDA(1) was $133 million, compared to $124 million the prior quarter. Adjusted EBITDA Margin(1) was 35.5%.

Cash Flow and Balance Sheet

Cash flow from operations during the second quarter of 2024 was $79 million, including $60 million of long-term maintenance costs. Capital upgrades captured in investing cash flows were $43 million. Resulting Free Cash Flow(1) was $36 million.

In the second quarter of 2024, Seadrill made $125 million of share repurchases. On June 25, 2024, the Company initiated the first $200 million tranche of its second $500 million share repurchase authorization. Since initiating its repurchase program in September 2023, the Company has returned a total of of $566 million to shareholders and repurchased a total of 12.3 million shares, or 15% of issued share count.

At quarter-end, Seadrill had gross principal debt of $625 million and $862 million in cash and cash equivalents, including $27 million in restricted cash, for a net cash position of $237 million.

Operational and Commercial Activity

As of August 5, 2024, Seadrill’s Order Backlog(2) was approximately $2.5 billion. During the quarter, the Sevan Louisiana secured a one-well contract with an independent operator in the U.S. Gulf of Mexico, that began in direct continuation of its previous contract and secured the rig into August. The Company today provided an updated fleet status report on the Investor Relations section of its website, www.seadrill.com.

Outlook

Seadrill revised full year 2024 guidance based on the completion of the Gulfdrill sale; current expectations for contract start dates for the West Auriga and West Polaris that delay EBITDA recognition into future periods; and near-term outlook for uncommitted capacity on the Sevan Louisiana and the West Phoenix. After adjusting for the $30 million of bareboat charter income the Company expected the Gulfdrill assets to earn in the second half of the year, the mid-point outlook for the previously-disclosed EBITDA range would be $395 million. The Company now expects full year 2024 revenues between $1,355 million and $1,405 million; Adjusted EBITDA of $315 million and $365 million; and capital expenditures and long-term maintenance between $400 million and $450 million. Guidance includes $75 million of reimbursable revenue and expenses.

“Though a combination of supply chain, weather, and scope have shifted West Auriga and West Polaris start dates, both rigs will soon set sail for Brazil and should begin their contracts by year-end, contributing meaningfully to Seadrill earnings and cash flow in 2025,” said Johnson. “Any additional work the Sevan Louisiana secures this year would represent upside opportunities to the mid-point of our guidance.”

Other Corporate Items

As previously disclosed, Seadrill will delist from the Oslo Stock Exchange on September 10, 2024 and maintain a single listing on the New York Stock Exchange, consistent with efforts to simplify the business. The Company will also begin reporting as a domestic issuer under United States securities laws and regulations beginning January 1, 2025.

Conference Call Information

The Company will host a conference call to discuss its results on Tuesday, August 6 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.

(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.

Source: Seadrill