We also offer income-focused picks for those who prefer lower-risk firms with steady dividend payouts. Our 10-year track record proves the ability of our analyst team to outperform across all market conditions.Value Investor's Edge provides the world's best energy, shipping, and offshore market research. Over the past decade, we have achieved an annualized return of almost 40% with a long-only model portfolio return of over 23x.Seadrill Limited or "Seadrill" ( SDRL ) has been covered by me previously, so in ...

We also offer income-focused picks for those who prefer lower-risk firms with steady dividend payouts. Our 10-year track record proves the ability of our analyst team to outperform across all market conditions.Value Investor's Edge provides the world's best energy, shipping, and offshore market research. Over the past decade, we have achieved an annualized return of almost 40% with a long-only model portfolio return of over 23x.Seadrill Limited or "Seadrill" ( SDRL ) has been covered by me previously, so in ...

The share price of Seadrill Limited (NYSE:SDRL) fell by 10.58% between November 3 and November 10, 2025, putting it among the Energy Stocks that Lost the Most This Week. Seadrill (SDRL) Fell This Week. Here is Why Seadrill Limited (NYSE:SDRL) provides offshore contract drilling services to the oil and gas industry worldwide. Seadrill Limited (NYSE:SDRL) reported mixed results for its Q3 2025 on November 5, with the company’s adjusted EPS of -$0.14 falling below forecasts by a significant $0.48. However, ...

Financial Data and Key Metrics Changes - Total operating revenues for Q3 2025 were $363 million, a sequential decrease of $14 million [21] - Contract drilling revenues declined by $8 million to $280 million due to fewer operating days for West Vela and Savannah, Louisiana [21] - Adjusted EBITDA was $86 million, a sequential decrease of $20 million from the prior quarter [22] - Total cash increased by $9 million to $428 million, including $26 million of restricted cash [22] Business Line Data and Key Metrics Changes - The management contract revenues decreased by $2 million to $63 million, influenced by a prior quarter catch-up for inflationary increases [21] - Reimbursable revenues decreased by $5 million to $11 million, offset by a corresponding decrease in reimbursable expenses [21] - The West Vela and Savannah, Louisiana secured new contracts, adding a combined firm term of 195 days [7][16] Market Data and Key Metrics Changes - The company added over $300 million to its backlog, bringing the total contracted backlog to approximately $2.5 billion [14] - The U.S. Gulf market showed resilience with new contracts secured, while there are expectations of potential weakness in West Africa and Brazil [27][29] - The International Energy Agency reported that nearly 90% of upstream investment since 2019 has gone towards offsetting production declines rather than adding new capacity [17] Company Strategy and Development Direction - The company aims to build backlog coverage through 2026 and minimize exposure to contract gaps [24] - A collaborative approach with customers and operational excellence are key strategies to maintain competitive edge [5] - The company is strategically positioned to capture value from the renewed focus on offshore resources amid a decade of underinvestment [20] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about a market recovery, with signs of increased contracting momentum and global tendering activity [17] - The company highlighted the need for renewed investment in offshore drilling to meet future energy demand [12] - Management noted that the offshore industry is at an inflection point, with a shift in capital allocation towards offshore drilling [20] Other Important Information - The company has maintained a robust balance sheet with total liquidity of approximately $600 million [22] - The West Gemini is expected to commence a well-based contract in the next few months after completing its special periodic survey [6] Q&A Session Summary Question: What are the leading-edge day rates in the Golden Triangle? - Management indicated that day rates in the U.S. Gulf are resilient, while there may be some weakness in West Africa and Brazil [27][29] Question: What is the medium to long-term outlook for Asia? - Management highlighted optimism in India, Malaysia, and Indonesia, with various operators showing interest [31] Question: What are the current thoughts on potential downtime for the Capella and Carina rigs? - Management expressed confidence in minimizing exposure to downtime, with ongoing efforts to secure contracts [37][39] Question: How are conversations with Petrobras regarding cost reductions progressing? - Management noted early discussions with Petrobras, focusing on mutual benefits and potential blend and extend contracts [51][52] Question: How is economic utilization trending? - Management acknowledged a slip in economic utilization but emphasized that most rigs performed well, with a technical uptime of 97.6% excluding one incident [53][54]

Active Rig Count by Location 3 6 1 3 Rig Name Location West Capella S.E. Asia West Carina Brazil Sevan Louisiana U.S. Gulf Sonangol Quenguela2 Angola West Neptune U.S. Gulf West Vela U.S. Gulf West Gemini Angola West Saturn Brazil Sonangol Libongos2 Angola West Auriga Brazil West Polaris Brazil West Elara Norway West Jupiter Brazil West Tellus Brazil 2025 2026 2027 2028 2029 O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J Out-of-service time1 Contract preparation Fi ...

Financial Performance - Operating revenues for the three months ended September 30, 2025, were $363 million, a 3% increase from $354 million in the same period of 2024[97]. - The net loss for the three months ended September 30, 2025, was $11 million, compared to a net income of $32 million in the same period of 2024, marking a 134% decline[97]. - Operating revenues for the nine months ended September 30, 2025, decreased by $21 million, or 2%, to $1,075 million compared to $1,096 million in the same period of 2024[130]. - Contract revenues increased by $11 million, or 1%, to $816 million for the nine months ended September 30, 2025, driven by higher average contractual dayrates[131][135]. Contract and Backlog Information - As of September 30, 2025, the total contract backlog was $2,511 million, down from $3,180 million as of December 31, 2024, representing a decrease of approximately 21%[87]. - Contract revenues for the three months ended September 30, 2025, included $280 million from drilling contracts, an increase of $17 million from $263 million in Q3 2024[99]. - The contract backlog is expected to be realized over the following periods: $335 million in 2025, $1,013 million in 2026, $707 million in 2027, and $456 million thereafter[88]. Operational Metrics - The average contractual dayrate increased to $330 thousand in Q3 2025 from $304 thousand in Q3 2024, contributing to a $22 million increase in contract revenues[105]. - Economic utilization for rigs on contract was 91% for Q3 2025, down from 95% in Q3 2024, resulting in an $11 million decrease in contract revenues[108]. - The average Brent oil price was $70 per barrel for the nine months ended September 30, 2025, down from $80 per barrel in 2024, reflecting downward pressure on prices due to increased production and slower demand growth[90][92]. Expenses and Costs - Total operating expenses increased by $30 million, or 10%, to $337 million for the three months ended September 30, 2025, compared to $307 million in the same period of 2024[116]. - Vessel and rig operating expenses rose by $19 million, or 11%, to $191 million for the three months ended September 30, 2025, primarily due to increased activity in Brazil[116][118]. - Depreciation and amortization increased by $16 million, or 38%, to $58 million for the three months ended September 30, 2025, mainly due to capital projects related to the West Auriga and West Polaris[116][119]. - Total operating expenses for the nine months ended September 30, 2025, increased by $125 million, or 14%, to $1,025 million compared to $900 million in the same period of 2024[144]. - Management contract expenses rose by $63 million, or 51%, to $187 million for the nine months ended September 30, 2025, primarily due to higher management fees[144]. Debt and Liquidity - As of September 30, 2025, available liquidity was $587 million, consisting of $402 million in unrestricted cash and $185 million in available borrowings[169]. - Total debt as of September 30, 2025, was $625 million, including a $575 million secured bond and a $50 million unsecured senior convertible bond[177]. - The Company entered into a $225 million, 5-year Senior Secured Revolving Credit Agreement, secured by first priority liens on substantially all of its rigs and related assets[178]. - As of September 30, 2025, the available borrowings under the Revolving Credit Facility were reduced to $185 million due to a NOK403 million guarantee issued[179]. Compliance and Financial Covenants - The Credit Agreement requires an Interest Coverage Ratio of not less than 2.50 to 1.00 and a Consolidated Total Net Leverage Ratio of not greater than 3.00 to 1.00 as of the last day of each fiscal quarter[187]. - As of September 30, 2025, the Company was in compliance with all financial covenants outlined in the Credit Agreement[183]. Market Outlook - The company anticipates a market recovery in 2027, despite a projected decrease in utilization and increased competition in 2025[93]. Accounting and Risk Management - The Company has made critical accounting estimates that may affect reported amounts of assets, liabilities, revenues, and expenses[184]. - The Company is exposed to market risks, including foreign exchange risk and interest rate risk, and employs strategies to mitigate these risks[186]. - There have been no material changes to the judgments, assumptions, and estimates upon which the Company's critical accounting policies are based as of September 30, 2025[185].

Core Insights - Seadrill reported a quarterly loss of $0.17 per share, missing the Zacks Consensus Estimate of $0.26, and a significant decline from earnings of $0.49 per share a year ago, resulting in an earnings surprise of -165.38% [1] - The company generated revenues of $363 million for the quarter ended September 2025, exceeding the Zacks Consensus Estimate by 10.33% and showing a year-over-year increase from $354 million [2] - Seadrill shares have declined approximately 20.6% year-to-date, contrasting with the S&P 500's gain of 15.1% [3] Financial Performance - Over the last four quarters, Seadrill has surpassed consensus EPS estimates only once [2] - The current consensus EPS estimate for the upcoming quarter is $0.01 on revenues of $308 million, while for the current fiscal year, it is projected at -$0.63 on revenues of $1.35 billion [7] Industry Outlook - The Oil and Gas - Drilling industry, to which Seadrill belongs, is currently ranked in the bottom 10% of over 250 Zacks industries, indicating a challenging environment [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact Seadrill's stock performance [5][6]

Financial Performance - Total operating revenues for Q3 2025 were $363 million, a decrease of $14 million from $377 million in Q2 2025[4] - Contract revenues for Q3 2025 were $280 million, compared to $288 million in the previous quarter[3] - Net loss for Q3 2025 was $11 million, an improvement from a net loss of $42 million in Q2 2025[3] - Adjusted EBITDA for Q3 2025 was $86 million, down from $106 million in the prior quarter, with an adjusted EBITDA margin of 24.4%[3][4] - Net loss for the nine months ended September 30, 2025, was $67 million, compared to a net income of $345 million for the same period in 2024[22] - Adjusted EBITDA for the three months ended September 30, 2025, was $86 million, with an Adjusted EBITDA margin of 23.7%[27] Cash Flow and Debt - Free cash flow for Q3 2025 was reported at $9 million[6] - Free Cash Flow for the three months ended September 30, 2025, was $9 million, a recovery from a negative $12 million in the previous quarter[30] - At the end of Q3 2025, Seadrill had gross principal debt of $625 million and cash and cash equivalents of $428 million, resulting in a net debt position of $197 million[6] - Cash and cash equivalents, including restricted cash, decreased from $592 million at the end of September 2024 to $428 million at the end of September 2025, a decline of approximately 27.7%[22] - Long-term debt remained relatively stable, increasing slightly from $610 million as of December 31, 2024, to $612 million as of September 30, 2025[19] Guidance and Future Outlook - Full year 2025 guidance for total operating revenue is narrowed to a range of $1,360 million to $1,390 million, and adjusted EBITDA is narrowed to $330 million to $360 million[5] - Capital expenditures and long-term maintenance guidance is narrowed to $280 million to $300 million for 2025[5] - The company continues to focus on building backlog coverage through 2025 and 2026 to minimize exposure to contract gaps[3] Operational Metrics - Average contractual dayrates for rigs remained stable at approximately $330,000 for the three months ended September 30, 2025, compared to $331,000 in the previous quarter[28] - Economic utilization decreased to 91.1% for the three months ended September 30, 2025, down from 93.4% in the previous quarter[28] Balance Sheet - Total assets decreased from $4,156 million as of December 31, 2024, to $4,067 million as of September 30, 2025, representing a decline of approximately 2.1%[19] - Total current liabilities decreased from $501 million as of December 31, 2024, to $439 million as of September 30, 2025, a reduction of approximately 12.4%[19] - Retained earnings decreased from $947 million as of December 31, 2024, to $880 million as of September 30, 2025, reflecting a decline of approximately 7.1%[20] Contract and Backlog - The company secured over $300 million in new contracts across five rigs, contributing to an order backlog of approximately $2.5 billion as of November 5, 2025[5][8]

Core Viewpoint - Seadrill Limited reported a net loss of $11 million for the third quarter of 2025, a significant improvement from a net loss of $42 million in the previous quarter, while total operating revenues decreased to $363 million from $377 million [3][4][6]. Financial Highlights - Total operating revenues for Q3 2025 were $363 million, down from $377 million in Q2 2025, primarily due to lower economic utilization and fewer rig operating days [4][6]. - Contract revenues amounted to $280 million, compared to $288 million in the prior quarter [3][19]. - Adjusted EBITDA was reported at $86 million, down from $106 million in the previous quarter, with an adjusted EBITDA margin of 24.4% [3][6][27]. - The diluted loss per share improved to $0.17 from $0.68 in the prior quarter [3][19]. Operational Results - The company secured over $300 million in new contracts across five rigs, enhancing its order backlog [5][6]. - Economic utilization for the quarter was reported at 91.1%, down from 93.4% in the previous quarter [29][31]. - Total operating expenses decreased by $34 million to $337 million, with a notable reduction in management contract expenses [6][19]. Balance Sheet and Cash Flow - As of September 30, 2025, Seadrill had gross principal debt of $625 million and cash and cash equivalents of $428 million, resulting in a net debt position of $197 million [7][21]. - Net cash provided by operating activities during Q3 2025 was $28 million, with free cash flow reported at $9 million [7][32][33]. Order Backlog - Seadrill's order backlog as of November 5, 2025, was approximately $2.5 billion, reflecting the company's strong position in securing contracts [9][11].

Group 1: Company Overview - Seadrill Limited (SDRL) is positioned as a prime acquisition candidate in the consolidating offshore drilling industry, with its CEO indicating openness to a deal [2] - The company owns 16 deepwater drillships, which could significantly influence industry leadership depending on the acquirer [2] - Seadrill trades at just 17% of replacement cost, with an enterprise value (EV) of $2.23 billion, indicating substantial upside potential if rigs are effectively utilized [3] Group 2: Potential Acquirers - Transocean (RIG) is viewed as the most likely acquirer, with management suggesting they could absorb SDRL's assets at minimal incremental cost, potentially creating at least $150 million in annual synergies [2] - Valaris (VAL) is another potential contender, having halted buybacks to preserve cash, which may lead to significant dilution for warrant holders if they pursue Seadrill [3] - Noble is considered an unlikely buyer following its acquisition of Diamond Offshore [3] Group 3: Market Dynamics - The offshore drilling sector is experiencing tight oil supply and a lack of new rig builds, positioning drillers for outsized cash flows [4] - Transocean is currently trading at a 30% premium to peers, reflecting its market leadership and higher-spec assets [4] - Investors face a complex trade-off among Seadrill's acquisition potential, Valaris's dilution risk, Noble's reliable dividends, and Transocean's leverage in the market [4] Group 4: Industry Sentiment - The offshore drilling consolidation story is gaining attention, with a bullish outlook on Seadrill reflecting broader trends in the oilfield services space [5] - The stock price of Precision Drilling Corporation (PDS) has appreciated approximately 33.61% since previous coverage, indicating positive sentiment in the sector [5]