Seadrill(US:SDRL)2025-08-07 14:00Financial Data and Key Metrics Changes - Seadrill reported adjusted EBITDA of $106 million for Q2 2025, with an adjusted EBITDA margin of 29% [6][29] - Total operating revenues for Q2 were $377 million, a sequential increase of $42 million, primarily driven by higher contract drilling revenues [27] - Economic utilization improved to 93%, up from 84% in the previous quarter [28] Business Line Data and Key Metrics Changes - The West Vallor secured a two-well contract with TELUS Energy, while the Savan, Louisiana commenced a well intervention contract with Murphy Oil [7] - Management contract revenues increased to CAD 65 million, reflecting an inflationary increase for the daily management fee [28] Market Data and Key Metrics Changes - The market is expected to recover in late 2026, driven by increased exploration activities and significant investments in offshore projects [11][14] - Wood Mackenzie forecasts a substantial increase in FIDs from $91 billion in 2025 to $164 billion in 2026 [14] - Recent legislation mandates at least two lease sales annually from 2026, increasing exploration drilling and rig demand [13] Company Strategy and Development Direction - Seadrill is focused on maximizing profitability and minimizing gaps between contracts, with a disciplined approach to contracting [32] - The company is actively pursuing opportunities to fill its order book for 2025 while also securing contracts for 2026 and 2027 [20] - The establishment of the West Minerva real-time operations center aims to enhance operational efficiency and decision-making [9] Management's Comments on Operating Environment and Future Outlook - Management views the current market conditions as a trough, with expectations of recovery starting in late 2026 [21][22] - There is a tightening supply of rigs, and operators are increasingly moving towards offshore investments [21] - The company remains optimistic about securing contracts in Angola and Brazil, despite some political and administrative delays [39][40] Other Important Information - Seadrill maintains a robust balance sheet with gross principal debt of $625 million and cash holdings of $419 million [30] - The company is in active dialogue with multiple customers for work starting in 2026 [25] Q&A Session Summary Question: Contracting opportunities and future work - Management expressed optimism about recontracting in Angola despite political unrest, with advanced dialogues on three assets [39] - The company has secured near-term work for the Westfella and is actively marketing rigs globally [40] Question: Capital investment in idle rigs - Management confirmed reluctance to invest in idle rigs without strong visibility for future work, particularly regarding the Gemini rig [50] Question: Market dynamics and operator behavior - Management acknowledged that operators are locking in multiyear contracts due to anticipated demand in late 2026 and 2027 [56] Question: Well intervention market outlook - Management sees potential for well intervention work to grow, particularly with the Savant Louisiana rig, which has unique capabilities [76] Question: Share buyback strategy - Management indicated that stability in the economy and a favorable oil price outlook are key factors for considering share buybacks [102]