Seadrill(US:SDRL)2023-08-14 16:00Company Overview - As of June 30, 2023, Seadrill owned a total of 22 drilling rigs, with 17 operating and 5 cold stacked[9]. - Seadrill's operating units include eleven floaters, two harsh environment units, three jackups, and one tender-assist unit[9]. - The company manages seven rigs owned by third parties, including five owned by SeaMex Holdings Ltd.[116]. Acquisitions and Disposals - Seadrill completed the acquisition of Aquadrill on April 3, 2023, acquiring four drillships, one semi-submersible, and three tender-assist units[14]. - The three tender-assist units acquired from Aquadrill were classified as held for sale, with the disposal completed on July 28, 2023[9]. - The company disposed of its 35% shareholding in Paratus Energy Services for total consideration of $44 million, closing the sale on February 24, 2023[12]. - Following the disposal of Paratus Energy Services Ltd. on March 14, 2023, the Master Services Agreement with Seadrill Management Ltd. was terminated on July 12, 2023, with no material impact on financial results anticipated[116]. Financial Performance - Seadrill reported operating revenues of $414 million for the three months ended June 30, 2023, compared to $253 million for the same period in 2022, representing a 63.7% increase[33]. - Total operating revenues for the three months ended June 30, 2023, were $414 million, compared to $253 million for the same period in 2022, representing a 63.5% increase[102]. - Contract revenues for the six months ended June 30, 2023, reached $515 million, up from $248 million in the same period of 2022, indicating a 107.3% growth[102]. - Operating profit for the three months ended June 30, 2023, was $109 million, significantly higher than the $25 million reported in the same period of 2022[102]. - Net profit for the six months ended June 30, 2023, was $137 million, compared to a loss of $32 million in the same period of 2022[105]. - Basic EPS for continuing operations was $1.18 for the three months ended June 30, 2023, compared to a loss of $0.72 in the same period of 2022[102]. Debt and Financing - During the six months ended June 30, 2023, Seadrill made total prepayments of $163 million under its secured second lien debt facility, including $155 million in debt principal[13]. - Seadrill issued $500 million in Senior Secured Second Lien Notes at 8.375% due 2030, followed by an additional $75 million issuance in August 2023[16]. - The company aims to maintain a net leverage target of not more than 1.0x and a minimum cash-on-hand of $250 million to ensure liquidity[17]. - The company incurred $167 million in cash used in financing activities for the six months ended June 30, 2023[69]. - Cash used in financing activities for the six months ended June 30, 2023, was $167 million, primarily due to debt principal payments of $154 million and exit fees of $8 million[72]. Market Conditions - Seadrill's management emphasizes the importance of monitoring market conditions, including oil and gas price volatility, in assessing future performance[5]. - The average Brent oil price for June 2023 was $80 per barrel, reflecting a recovery in the industry post-pandemic[22]. - Marketed utilization for harsh environment floaters improved to 93% in June 2023, up from 82% in December 2022[23]. Cash Flow and Liquidity - The company reported available liquidity of $664 million as of June 30, 2023, consisting of $539 million in cash and cash equivalents and $125 million in undrawn revolving credit[66]. - Cash flows provided by operating activities amounted to $35 million for the six months ended June 30, 2023, driven by customer revenues and receipts from Sonadrill[70]. - Cash flows provided by investing activities were $66 million for the six months ended June 30, 2023, primarily due to net proceeds from the disposal of PES and cash received from the Aquadrill acquisition[71]. Assets and Liabilities - Total assets increased to $4,037 million as of June 30, 2023, up from $2,801 million at December 31, 2022, representing a 44% growth[108]. - Long-term debt reduced to $345 million from $496 million, a decrease of 30%[108]. - Total current liabilities decreased to $354 million from $404 million, a reduction of 12%[108]. - The carrying amount of drilling units as of June 30, 2023, was $2.7 billion, representing 91% of non-current assets[84]. Tax and Regulatory Matters - The company is contesting tax assessments from various jurisdictions, including Brazil, Norway, Nigeria, Kuwait, Mexico, and Ghana, totaling approximately $427 million[197]. - Seadrill's uncertain tax positions are estimated and presented within other current liabilities, with significant judgment required in determining tax liabilities across various jurisdictions[90]. Accounting and Reporting - Seadrill's financial statements are prepared in accordance with US GAAP and presented in US Dollars[8]. - The company confirmed that the financial statements for the period ended June 30, 2023, were prepared in accordance with US GAAP and provide a true and fair view of its financial position[97]. - Fresh Start accounting was adopted, resulting in a new entity for financial reporting purposes with no beginning retained earnings as of the Effective Date[145].