Seadrill(US:SDRL)2024-05-14 21:15Fleet and Operations - As of March 31, 2024, Seadrill owned a total of 19 drilling rigs, with 13 currently operating, including three leased to Gulfdrill LLC and one to Sonadrill[12]. - As of March 31, 2024, two rigs were undergoing contract preparations for upcoming contracts expected to commence at the end of 2024[12]. - Average number of rigs on contract increased to 10 in Q1 2024 from 9 in Q1 2023, driven by the Aquadrill acquisition[28]. - The company is focused on optimizing rig-based spending and improving revenue efficiency amid fluctuating market conditions[5]. Financial Performance - Operating revenues for Q1 2024 were $367 million, a 38% increase from $266 million in Q1 2023[24]. - Contract revenues rose to $275 million in Q1 2024, up 48% from $186 million in Q1 2023[26]. - Net income for Q1 2024 was $60 million, compared to $43 million in Q1 2023, marking a 40% increase[24]. - Operating profit rose to $80 million in Q1 2024, a 57% increase from $51 million in Q1 2023[76]. - Basic EPS for the three months ended March 31, 2024, was $0.83, slightly down from $0.86 in the prior year[76]. Contract Backlog and Projections - The total contract backlog as of March 31, 2024, was $2.822 billion, down from $3.020 billion as of December 31, 2023, representing a decrease of approximately 6.5%[17]. - The drilling contracts backlog was $2.481 billion as of March 31, 2024, compared to $2.612 billion at the end of 2023, indicating a decline of about 5%[17]. - The projected realization of the contract backlog includes $741 million in 2024, $895 million in 2025, and $494 million in 2026[18]. Shareholder Returns and Capital Allocation - Seadrill's capital allocation framework aims to return at least 50% of free cash flow to shareholders through dividends and share repurchases[5]. - The company authorized a share repurchase program of up to $500 million, with $192 million of common shares repurchased as of May 10, 2024[53]. - For the period from January 1, 2024, to May 10, 2024, Seadrill repurchased approximately 3.8 million shares at a weighted average price of $46.95[13]. Liquidity and Debt - As of March 31, 2024, Seadrill had available liquidity of $809 million, consisting of $612 million in cash and cash equivalents and $225 million in undrawn revolving credit[54]. - Total debt as of March 31, 2024, was $625 million, including a $575 million secured bond and a $50 million senior convertible bond[61]. - Seadrill's net leverage target is less than 1.0x under current market conditions, with a maximum through-cycle target of less than 2.0x[52]. Market Conditions and Utilization - The average oil price for the three months ended March 31, 2024, is a key factor influencing the offshore drilling market conditions[18]. - Economic utilization for rigs on contract improved to 97% in Q1 2024 compared to 95% in Q1 2023[30]. - Marketed utilization for harsh environment floaters was 91% in Q1 2024, down from 93% in Q1 2023, indicating slight market challenges[21]. Legal and Tax Matters - The company is involved in ongoing legal proceedings, including a claim from SFL Hercules Ltd. for approximately $51 million related to the rig West Hercules[143]. - Seadrill is facing a tax audit in Brazil with an assessed amount of approximately $66 million plus $10 million in interest, stemming from years 2009 and 2010[146]. Acquisitions and Mergers - The company completed the acquisition of Aquadrill LLC on April 3, 2023, adding four drillships and one semi-submersible to its fleet[89]. - Seadrill completed the acquisition of Aquadrill, exchanging 29.9 million common shares, $30 million in tax withholding, and $1 million in cash[157]. - The total assets acquired in the merger amounted to $1,436 million, while total liabilities assumed were $162 million, resulting in net assets acquired of $1,274 million[159]. Other Financial Metrics - Total operating expenses increased to $303 million in Q1 2024 from $219 million in Q1 2023, primarily due to higher vessel and rig operating expenses[34]. - Cash flows provided by operating activities increased to $29 million for the three months ended March 31, 2024, compared to $15 million in the same period of 2023[56]. - Total current liabilities decreased to $355 million as of March 31, 2024, from $389 million at December 31, 2023[79].