Financial Performance - Fourth quarter 2024 total operating revenues were $289 million, a decrease of 18% from $354 million in the prior quarter[4]. - Contract revenues for the fourth quarter were $204 million, down 22% sequentially due to fewer operating days[4]. - Net income for the fourth quarter was $101 million, compared to $32 million in the prior quarter, reflecting a significant increase[8]. - Adjusted EBITDA for the fourth quarter was $28 million, down from $93 million in the previous quarter, resulting in an adjusted EBITDA margin of 9.7%[3][8]. - Net income for the year ended December 31, 2024, increased to $446 million, up from $300 million in 2023, representing a 48.7% growth[27]. - Net cash flows provided by operating activities for the year ended December 31, 2024, were $88 million, down from $287 million in 2023, a decrease of 69.3%[27]. Cash Flow and Debt - The company finished 2024 with a cash balance of $505 million and gross principal debt of $625 million, resulting in a net debt position of $120 million[9]. - Free Cash Flow for the fourth quarter was negative $31 million, with capital expenditures of $132 million primarily for contract preparations[9]. - Free Cash Flow for Q4 2024 was negative $31 million, compared to negative $80 million in Q3 2024, an improvement of 61.3%[35]. - Cash and cash equivalents, including restricted cash, at the end of the period were $505 million, down from $728 million in 2023, a decrease of 30.7%[26]. Operational Metrics - Average number of rigs on contract decreased to 8 in Q4 2024 from 10 in Q3 2024, a reduction of 20%[33]. - Average contractual dayrates decreased to $289,000 in Q4 2024 from $304,000 in Q3 2024, a decline of 4.9%[33]. - Economic utilization for Q4 2024 was 93.0%, down from 95.3% in Q3 2024, a decrease of 2.4%[33]. Shareholder Actions - The company repurchased $100 million of shares in the fourth quarter, totaling approximately $792 million or 22% of the issued share count since September 2023[10]. Backlog and Contracts - The company secured long-term contracts for West Jupiter and West Tellus, adding $1 billion to the backlog, extending utilization into 2029[6][14]. - As of February 26, 2025, Seadrill's Order Backlog was approximately $3.0 billion, with 75% of available rig days contracted for 2025[12]. Assets and Liabilities - Total current assets decreased to $928 million in 2024 from $1,158 million in 2023, a decline of 19.8%[24]. - Total liabilities decreased to $1,238 million in 2024 from $1,235 million in 2023, a slight increase of 0.2%[24]. - Total shareholders' equity decreased to $2,918 million in 2024 from $2,983 million in 2023, a decline of 2.2%[24].

Core Insights - Seadrill Limited (SDRL) has sold its non-core asset, the West Prospero jack-up rig, for $45 million, which aligns with its strategy to optimize its rig fleet and improve financial position [2][6]. Company Overview - Seadrill is a U.S.-based offshore drilling contractor with a total backlog of $2.3 billion as of November 2024 [3]. - The West Prospero rig, constructed in 2007, has been non-operational for eight years and was previously used in offshore operations in Northeast Africa and Southeast Asia [6][7]. Industry Context - TechnipFMC plc, Oceaneering International, and Nine Energy Service are highlighted as better-ranked stocks in the energy sector, with TechnipFMC holding a Zacks Rank 1 (Strong Buy) and the other two holding a Zacks Rank 2 (Buy) [4]. - TechnipFMC's total backlog reached $14.7 million in Q3 2024, reflecting an 11.1% increase year-over-year, indicating strong revenue growth potential [9]. - Nine Energy Service operates in key U.S. basins and is expected to benefit from sustained demand for oil and gas, positioning the company for long-term growth [10].

Seadrill Limited (SDRL) Contracts and Market Position - Seadrill Limited secured a contract from Petrobras for its West Tellus drillship to work on the Sépia and Atapu fields in the Santos Basin, Brazil [1] - The West Tellus contract has a duration of 1,095 days and is expected to contribute approximately $498 million to the company's order backlog, excluding a $41 million mobilization fee [8] - Seadrill also secured a contract for its West Jupiter drillship with Petrobras, valued at $493 million over 1,095 days, excluding a $31.5 million mobilization fee [9] - The new contracts add approximately $1 billion to Seadrill's order backlog, potentially boosting earnings and free cash flow in 2026 [5] - Seadrill operates six drillships in Brazil, positioning the company strongly in the deepwater market with long-term contracts ensuring steady earnings [10] Energy Sector and Competitors - TechnipFMC plc (FTI) and Oceaneering International (OII) hold a Zacks Rank 1 (Strong Buy), while Nine Energy Service (NINE) holds a Zacks Rank 2 (Buy) [6] - Nine Energy Service provides onshore completion and production services across key basins in the US and Canada, with anticipated growth due to sustained demand for oil and gas [7] - Oceaneering International delivers integrated technology solutions for the offshore oilfield lifecycle, supporting steady revenue growth through client retention and new business opportunities [11] - TechnipFMC's total backlog reached $14.7 million in Q3 2024, an 11.1% increase year-over-year, indicating strong revenue growth prospects [12] Industry Outlook - The offshore drilling market remains resilient, with Seadrill's contracts highlighting the continued demand for deepwater drilling services [1][5][10] - Companies like Nine Energy Service and Oceaneering International are well-positioned to benefit from the ongoing demand for oil and gas services [7][11]

Group 1: Company Overview - Seadrill Ltd. (SDRL) is preparing for an assignment with Petrobras offshore Brazil, set to begin in Q4 2024, with the West Auriga and West Polaris drillships rejoining the fleet for final preparations [1] - The West Auriga is a seventh-generation ultra-deepwater drillship capable of drilling up to 37,500 feet in water depths of 12,000 feet, while the West Polaris is a sixth-generation drillship with the same maximum drilling depth but operates at a depth of 10,000 feet [2] Group 2: Contract Details - Petrobras awarded a fixed-term contract of 1,064 days to each drillship in December 2023, valued at $1.1 billion, which includes mobilization fees and additional services [3] - The drillships are currently undergoing the client acceptance process before commencing the project with Petrobras [3] Group 3: Operational Readiness - The drillships are utilizing their downtime for final preparations to ensure optimal performance, including recent painting to protect against corrosion and extend service lifespan [4]

Financial Data and Key Metrics Changes - In Q3 2024, Seadrill reported total operating revenues of $354 million, a decrease from $375 million in the prior quarter [25] - Adjusted EBITDA for the quarter was $93 million, with an adjusted EBITDA margin of 27.5% [28] - The company increased its full-year adjusted EBITDA guidance to a range of $375 million to $395 million, with a midpoint of $385 million, reflecting a 13% increase from previous guidance [7][30] Business Line Data and Key Metrics Changes - Contract drilling revenues remained flat at $263 million, supported by the Sevan Louisiana's full quarter contribution at a higher average rate [25] - Management contract revenues declined to $62 million, while leasing revenues were $9 million, reflecting adjustments from previous quarters [26] - Total operating expenses rose to $307 million from $290 million, driven by increased vessel operating expenses and management contract expenses [27] Market Data and Key Metrics Changes - Drillship marketed utilization has slipped below 90%, currently hovering in the high 80s, indicating a softening market [19] - Seadrill has secured 70% contract utilization for its fleet in 2025, with expectations for improvement as customer discussions convert to contracts [13] Company Strategy and Development Direction - The company aims to operate a floater-focused fleet with strong contract coverage while maintaining a solid balance sheet [11] - Seadrill is focused on optimizing operations and reducing bureaucracy to enhance efficiency and empower senior leaders [15] - The strategy includes refining the fleet and pursuing share repurchase programs, having reduced the issued share count by 19% since September 2023 [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the underlying industry fundamentals despite temporary market imbalances [11] - The company is cautious about the competitive landscape in 2025, anticipating increased competition and downward pressure on rates [20] - Management highlighted the importance of cash flow generation over headline day rates when bidding for contracts [45] Other Important Information - Seadrill has integrated Aquadrill drillships into its fleet and successfully navigated complex rig management agreements [10] - The company has maintained a healthy balance sheet and continued its share repurchase program, returning $692 million to shareholders by the end of Q3 2024 [29] Q&A Session Summary Question: Outlook for drillships in Brazil - Management emphasized Brazil as a resilient market and expressed optimism about recontracting rigs, noting recent recognition from Petrobras [38] Question: Potential for sixth to seventh gen upgrades - Management indicated that while upgrades are considered, they will only proceed if a return on investment is evident [40][41] Question: Market dynamics and cash margins - Management stated that cash flow generation is prioritized over headline day rates, with a focus on maximizing cash margins [45] Question: Share repurchase plans for 2025 - Management noted that future buybacks will depend on the outlook for contracts and overall financial health [48] Question: Opportunities in Southeast Asia - Management is currently focused on securing work in the region where the Capella is operating, with potential for future relocation [52] Question: Impact of oil prices on customer negotiations - Management highlighted that uncertainty in commodity prices and capital allocation decisions are causing clients to defer contract decisions [60] Question: Plans for operational optimization in 2025 - Management plans to adjust costs and capital programs in real-time to reflect market conditions, emphasizing agility and lean operations [65]

Core Viewpoint - Seadrill reported quarterly earnings of $0.49 per share, significantly exceeding the Zacks Consensus Estimate of $0.05 per share, but down from $1.10 per share a year ago, indicating an earnings surprise of 880% [1][2] Financial Performance - The company achieved revenues of $354 million for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 5.05%, although this is a decrease from $414 million in the same quarter last year [2] - Over the last four quarters, Seadrill has consistently surpassed consensus EPS and revenue estimates [2] Stock Performance and Outlook - Seadrill shares have declined approximately 15.5% since the beginning of the year, contrasting with the S&P 500's gain of 25.8% [3] - The company's current Zacks Rank is 5 (Strong Sell), indicating expectations of underperformance in the near future [6] Earnings Estimates - The consensus EPS estimate for the upcoming quarter is -$0.57 on revenues of $270 million, while the estimate for the current fiscal year is $1.26 on revenues of $1.35 billion [7] Industry Context - The Oil and Gas - Drilling industry is currently ranked in the bottom 8% of over 250 Zacks industries, suggesting a challenging environment for stocks in this sector [8]

Wall Street expects a year-over-year decline in earnings on lower revenues when Seadrill (SDRL) reports results for the quarter ended September 2024. While this widely-known consensus outlook is important in gauging the company's earnings picture, a powerful factor that could impact its near-term stock price is how the actual results compare to these estimates.The earnings report, which is expected to be released on November 12, 2024, might help the stock move higher if these key numbers are better than exp ...

Core Viewpoint - The article emphasizes the importance of understanding the current market dynamics and the potential implications for investment strategies in the financial sector [1]. Group 1: Market Analysis - The financial market is experiencing significant volatility, influenced by macroeconomic factors such as interest rates and inflation [1]. - Analysts suggest that companies with strong fundamentals may present better investment opportunities during uncertain times [1]. Group 2: Company Insights - Companies that have adapted to changing consumer behaviors and technological advancements are likely to outperform their peers [1]. - The article highlights specific sectors, such as technology and healthcare, as having robust growth potential due to ongoing innovation and demand [1].

Michael Saint Maur Sheil/DigitalVision via Getty Images The core idea of our thesis on Seadrill (NYSE:SDRL), as we recently wrote in this article, is as follows: 1. Growing oil demand and electric vehicle hiccups will support oil prices, which will drive exploration and production ("E&P") 2. Peaking Permian Basin output will increase demand for offshore projects 3. Supply-constrained offshore rig market, exacerbated by high newbuilding prices and reactivation costs Following the 2Q24 earnings release, h ...

Financial Data and Key Metrics Changes - Seadrill reported EBITDA of $133 million on total operating revenues of $375 million for Q2 2024, resulting in an EBITDA margin of 35.5% [6][23] - The company lowered its second half EBITDA expectations due to revised estimates for contract start dates and uncommitted near-term availability on other rigs [6][26] - Full year EBITDA guidance was adjusted to a range of $315 million to $365 million, reflecting risks and opportunities [26] Business Line Data and Key Metrics Changes - Contract drilling revenues for Q2 2024 were $267 million, down $8 million from Q1 2024, with no contributions from the Polaris and Auriga during the quarter [20] - Leasing revenues were $26 million, including two quarters of bareboat charter income [21] - Vessel and rig operating expenses decreased to $165 million from $180 million in the prior quarter, primarily due to the Polaris and Auriga undergoing contract preparation [22] Market Data and Key Metrics Changes - Brazil remains the most important deepwater market, with expectations of flat floating rig numbers around 30 [15] - The U.S. Gulf of Mexico is active with high specification thresholds driving day rate development, but contract awards vary significantly [16] - West Africa is expected to see incremental demand in 2026 and beyond, particularly in Namibia and Nigeria [17] Company Strategy and Development Direction - Seadrill aims to achieve through-cycle resiliency by focusing on scale, balance sheet strength, management discipline, and safe operations [8][12] - The company is transitioning to a domestic issuer and simplifying its business by ending its secondary listing on the Oslo Stock Exchange [19] - Seadrill continues to prioritize capital return programs, having completed a $500 million buyback facility and announced another $500 million program [24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term position of the deepwater drilling industry despite short-term visibility challenges [10][12] - The company noted that demand delays, rather than destruction, are occurring due to E&P customers prioritizing capital returns over new contracts [11][12] - Management acknowledged the importance of maintaining a strong balance sheet and operational discipline to navigate market volatility [12][26] Other Important Information - The company achieved a $203 million gain on the sale of the Gulfdrill joint venture and Qatar jack-ups, contributing positively to its financials [22] - Seadrill's cash flow from operations was $79 million for the quarter, with free cash flow of $36 million [25] Q&A Session Summary Question: Thoughts on sixth gen rates and their impact - Management believes sixth gen rates can be maintained through strategic placement of rigs in favorable markets [30] Question: Competitive landscape changes due to consolidation - Management maintains that their posture remains unchanged despite recent competitor exits, focusing on growth opportunities while being a potential acquisition target [35] Question: Delays in Auriga and Polaris contracts - Delays are attributed to supply chain issues and uncertainties in the customer acceptance process [36][38] Question: Guidance implications for 2025 - Reduced guidance for 2024 primarily affects timing, with expectations that it will not impact 2025 significantly [40][41] Question: Reactivation costs and strategy for cold-stacked rigs - Management is focused on ensuring a material contribution to reactivation costs before proceeding with any cold-stacked units [47] Question: Impact of capital discipline on operator partnerships - Some clients are looking to farm down their exposure, which complicates securing contracts [61] Question: Factors influencing contracting activity - Management noted that project timing, equipment availability, and capital discipline are key factors affecting contracting [66][68]