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
“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.
