Seadrill Limited (SDRL) - First Quarter 2023
Hamilton, Bermuda, May 23, 2023 - Seadrill Limited (“Seadrill” or the "Company") (NYSE & OSE: SDRL), a leader in offshore drilling, provides financial results for the three months ended March 31, 2023.
Q1 2023 Highlights
- Seadrill added approximately $39 million of Order Backlog during the quarter, bringing the total as of March 31, 2023, to approximately $2.2 billion. The addition related to the West Neptune drillship securing a three-month extension with LLOG Exploration Offshore, L.L.C (“LLOG”) in the U.S. Gulf of Mexico in direct continuation of the existing term.
- Total Adjusted EBITDA was $85 million in Q1 2023, a significant increase compared to Q4 2022 primarily due to higher operating days overall across the fleet, including notably with respect to our four drillships operating offshore Brazil, and the West Neptune working at a higher dayrate with LLOG.
- Total Operating Revenues increased by 17% to $266 million in Q1 2023.
- Strong operational performance in Q1 2023 with technical utilization of 96%.
- On February 10, 2023, Seadrill made a voluntary payment of $118 million (inclusive of principal, accrued interest and exit fee) under its secured second lien debt facility (the "Second Lien Facility"). On March 15, 2023, Seadrill made a further voluntary payment of $44 million (inclusive of principal, accrued interest and exit fee) with respect to the Second Lien Facility.
- On February 24, 2023, Seadrill completed the sale of its 35% shareholding in Paratus Energy Services Ltd. (“PES”) (formerly Seadrill New Finance Ltd.) and certain other interests for total consideration of $44 million (the “PES Sale”). PES is the entity which holds investments in SeaMex Holdings Ltd. (“SeaMex”), Seabras Sapura and Archer Ltd. In connection with the PES Sale, on March 14, 2023, Seadrill issued each of PES and SeaMex with a termination notice in respect of the master service agreements under which Seadrill provides management services. The terminations will take effect from July 12, 2023, and September 10, 2023, respectively.
- On January 25, 2023, Seadrill announced the appointment of Ana Zambelli as a new member of the Board of Directors.
- On April 3, 2023, Seadrill completed the all-stock acquisition of Aquadrill LLC (“Aquadrill”), at which point Aquadrill became a wholly-owned subsidiary of Seadrill (the "Aquadrill Acquisition"). As a result of the Aquadrill Acquisition, Seadrill added $470 million in Order Backlog on April 3, 2023. The operating results and assets and liabilities of Aquadrill will be consolidated from April 3, 2023. As such, Seadrill's Q1 2023 interim financial statements do not include the effects of the Aquadrill Acquisition. Conversely, Seadrill's market guidance for its 2023 financial year contained in this Q1 2023 earnings release includes the consolidation of Aquadrill from April 3, 2023.
- In connection with the Aquadrill Acquisition, Harry Quarls and Jonathan Swinney were appointed to serve on Seadrill’s Board of Directors on April 3, 2023.
- Gulfdrill LLC (“Gulfdrill”), a 50:50 joint venture between Seadrill and Gulf Drilling International, was awarded contract extensions by a leading operator for three jackup rigs working in Qatar. The West Castor jackup rig, which is bareboat chartered to Gulfdrill by Seadrill, received a contract extension, together with the two jackup rigs that are bareboat chartered to Gulfdrill by a third-party shipyard. The total contract value of the three contract extensions is approximately $343 million and extends these contracts until 2026. The bareboat charter rates payable in connection with the associated extension periods represent a significant increase relative to the existing rates. Seadrill’s Order Backlog as of May 23, 2023, is $2.6 billion.
|Figures in USD million, unless otherwise indicated||1Q23||4Q22||%|
|Total Operating Revenues||266||228||17 %|
|Adjusted EBITDA2||85||39||118 %|
|Adjusted EBITDA Margin 2||32.0 %||17.1 %||87 %|
|Total Adjusted EBITDA2 - continuing and discontinued operations||85||41||107 %|
|Operating Profit/(Loss)||51||(7)||829 %|
Simon Johnson, President & CEO, commented:
“Seadrill has started 2023 strongly, with a near-fully utilized fleet and the closing of our Aquadrill acquisition in April. We are pleased with our operational and financial performance as we move through the year, with our technical utilization at 96% and our operating revenues and adjusted EBITDA substantially increasing quarter-on-quarter. We benefited from our four drillships offshore Brazil operating for the full quarter and the West Neptune drillship working at a higher dayrate in the U.S. Gulf of Mexico. Furthermore, during the quarter we were delighted to announce that LLOG had extended its contract for the West Neptune, furthering Seadrill and LLOG’s long-term association.
We have a confident posture and remain constructive about this developing upcycle. Seadrill has an enhanced fleet following our acquisition of Aquadrill, which cemented our position as a key player in the offshore drilling sector, and we are highly focused on maximizing the value that it can generate for our shareholders.”
This news release includes forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. All statements other than statements of historical facts included in this communication, including those regarding future guidance, including total revenue, Adjusted EBITDA, Total Adjusted EBITDA and capital expenditures and long-term maintenance, and statements about the Company’s plans, strategies, business prospects, changes and trends in its business and the markets in which it operates are forward-looking statements. These forward-looking statements can often, but not necessarily, be identified by the use of forward-looking terminology, including the terms "assumes", "projects", "forecasts", "estimates", "expects", "anticipates", "believes", "plans", "intends", "may", "might", "will", "would", "can", "could", "should" or, in each case, their negative, or other variations or comparable terminology. These statements are based on management’s current plans, expectations, assumptions and beliefs concerning future events impacting the Company and therefore involve a number of risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed or implied in the forward-looking statements, which speak only as of the date of this news release. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to offshore drilling market conditions including supply and demand, day rates, customer drilling programs and effects of new rigs on the market, contract awards and rig mobilizations, contract backlog, dry-docking and other costs of maintenance of the drilling rigs in the Company’s fleet, the cost and timing of shipyard and other capital projects, the performance of the drilling rigs in the Company’s fleet, delay in payment or disputes with customers, Seadrill's ability to successfully employ its drilling units, procure or have access to financing, ability to comply with loan covenants, liquidity and adequacy of cash flow from operations, fluctuations in the international price of oil, international financial market conditions, inflation, changes in governmental regulations that affect the Company or the operations of the Company’s fleet, increased competition in the offshore drilling industry, the impact of global economic conditions and global health threats, pandemics and epidemics, our ability to maintain relationships with suppliers, customers, employees and other third parties and our ability to maintain adequate financing to support our business plans, our ability to successfully complete any acquisitions, divestitures and mergers, our liquidity and the adequacy of cash flows for our obligations, our liquidity and the adequacy of cash flows for our obligations, our ability to satisfy the continued listing requirements of the New York Stock Exchange (“NYSE”) and the Oslo Stock Exchange (“OSE”), or other exchanges where our common shares may be listed, or to cure any continued listing standard deficiency with respect thereto, the cancellation of drilling contracts currently included in reported contract backlog, losses on impairment of long-lived fixed assets, shipyard, construction and other delays, the results of meetings of our shareholders, political and other uncertainties, including those related to the conflict in Ukraine, the effect and results of litigation, regulatory matters, settlements, audit, assessments and contingencies, including any litigation related to the Merger of the Company (“Merger”) with Aquadrill LLC (“Aquadrill”), our ability to successfully integrate with Aquadrill following the Merger, the concentration of our revenues in certain geographical jurisdictions, limitations on insurance coverage, our ability to attract and retain skilled personnel on commercially reasonable terms, the level of expected capital expenditures, our expected financing of such capital expenditures, and the timing and cost of completion of capital projects, fluctuations in interest rates or exchange rates and currency devaluations relating to foreign or U.S. monetary policy, tax matters, changes in tax laws, treaties and regulations, tax assessments and liabilities for tax issues, legal and regulatory matters in the jurisdictions in which we operate, customs and environmental matters, the potential impacts on our business resulting from decarbonization and emissions legislation and regulations, the impact on our business from climate-change generally, the occurrence of cybersecurity incidents, attacks or other breaches to our information technology systems, including our rig operating systems and other important factors described from time to time in the reports filed or furnished by us with the SEC . Consequently, no forward-looking statement can be guaranteed. When considering these forward-looking statements, you should also keep in mind the risks described from time to time in the Company’s filings with the SEC, including its Annual Report on Form 20-F for the year ended December 31, 2022, filed with the SEC on April 19, 2023 (File No. 001-39327) and subsequent reports on Form 6-K.
The Company undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for us to predict all of these factors. Further, the Company cannot assess the impact of each such factors on its business or the extent to which any factor, or combination of factors, may cause actual results to be materially different from those contained in any forward-looking statement.
May 23, 2023
The Board of Directors
Questions should be directed to Seadrill Management Ltd. represented by:
Simon Johnson President and Chief Executive Officer
Analyst and investor questions should be directed to:
Benjamin Wiseman Investor Relations +44 786 713 9312
Media questions should be directed to:
Sara Dunne Director of Communications +1 281 630 7064
For a definition of Order Backlog, please see "Commercial Review" section.
Adjusted EBITDA, Total Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP financial measures. For a definition of each such measure and a reconciliation to the most comparable GAAP financial measure, please see the Appendices.