Seadrill(US:SDRL)2023-11-28 17:14Financial Data and Key Metrics Changes - Seadrill reported adjusted EBITDA of $151 million on revenues of $414 million, resulting in a margin of 36.5% [6][20] - Full year 2023 guidance for adjusted EBITDA has been increased to a range of $485 million to $505 million [6][22] - Net income for Q3 was $90 million, or $1.10 per diluted share [20] Business Line Data and Key Metrics Changes - Contract drilling revenues decreased sequentially by $5 million to $324 million due to planned service days [18] - Economic utilization for Q3 was reported at 93% [18] - Additional revenues from management contracts totaled $68 million, primarily from the Sonadrill joint venture [18] Market Data and Key Metrics Changes - The order backlog currently stands at $2.2 billion as of November 27, 2023 [14] - Drillship market utilization remains in the 90s, with leading-edge day rates recently exceeding $500,000 per day [15] - Average lead times to secure drillships have improved to 319 days, a nearly 60% improvement compared to 2020 [16] Company Strategy and Development Direction - The company is focused on exiting non-core asset categories and simplifying its value proposition [7] - Seadrill plans to close its London office and consolidate its corporate headquarters in Houston, Texas, to improve collaboration and cost efficiencies [8][9] - The company is optimistic about the long-term outlook for the offshore drilling market, particularly in South America [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of market fundamentals and the potential for improved demand [30] - The company anticipates a significant uptick in earnings as legacy contracts roll off and are replaced with higher day rates [10] - Management acknowledged inflationary pressures on labor costs but aims for 100% pass-through of these costs to clients [46] Other Important Information - Seadrill initiated a $250 million share buyback program, executing 85% of it at an average price of $42.76 per share [6][26] - The Board of Directors has increased the share repurchase authorization to a total of $500 million [6][27] Q&A Session Summary Question: Broader market outlook and idle time between contracts - Management noted that while there may be short-term fluctuations, the fundamentals remain strong and day rates are approaching pre-downturn levels [30][31] Question: Opportunities for the Sevan Louisiana rig - Management indicated that the rig is being marketed globally and they aim to maximize value, potentially relocating it if necessary [33][34] Question: Preliminary thoughts on 2024 EBITDA estimates - Management refrained from providing specific guidance for 2024, citing the need for more clarity on revenue and cost items [37] Question: Clarification on the $45 million contract backlog - Management confirmed that the contract is well-based, but specifics on the day rate were not disclosed [38][39] Question: Update on jack-up fleet sale discussions - Management stated that there has been strong interest in the jack-up market, but they are not in a rush to sell and are waiting for favorable pricing [42][43] Question: Cost pressures and pass-through mechanisms - Management acknowledged inflationary pressures on labor costs and expressed a goal of achieving full pass-through of these costs to clients [45][46] Question: Update on the West Phoenix rig - Management confirmed that the rig is being actively marketed for opportunities in Norway and other markets [53]