Seadrill(US:SDRL)2025-11-06 13:31Financial 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].