Seadrill Announces Second Quarter 2024 Results
Quarterly Highlights
-
Delivered Operating Profit of
$288 million and Adjusted EBITDA(1) of$133 million on$375 million of Total Operating Revenues for an Adjusted EBITDA Margin(1) of 35.5%
- Completed sale of three jack-up rigs and associated interest in the Gulfdrill joint venture, supporting fleet refinement and capital return program
-
Repurchased total of
$566 million of shares, or more than 15% of its issued share count, since initiating repurchase program inSeptember 2023
Financial Highlights
|
Three months ended |
|||
Figures in USD million, unless otherwise indicated |
|
|
||
Total Operating Revenues |
375 |
|
367 |
|
Contract Revenues |
267 |
|
275 |
|
Operating Profit |
288 |
|
80 |
|
Adjusted EBITDA (1) |
133 |
|
124 |
|
Adjusted EBITDA Margin (1) |
35.5 |
% |
33.8 |
% |
Diluted Earnings Per Share ($) |
3.49 |
|
0.81 |
|
“Seadrill delivered a strong second quarter and generated a combined
Financial and Operational Results
Second quarter 2024 operating revenues totaled
Second quarter 2024 operating expenses totaled
Adjusted EBITDA(1) was
Cash Flow and Balance Sheet
Cash flow from operations during the second quarter of 2024 was
In the second quarter of 2024,
At quarter-end,
Operational and Commercial Activity
As of
Outlook
“Though a combination of supply chain, weather, and scope have shifted West Auriga and West Polaris start dates, both rigs will soon set sail for
Other Corporate Items
As previously disclosed,
Conference Call Information
The Company will host a conference call to discuss its results on
(1) These are non-GAAP measures. For a definition and a reconciliation to the most comparable GAAP measure, see Appendices.
(2) Order Backlog includes all firm contracts at the contractual operating dayrate multiplied by the number of days remaining in the firm contract period. It includes management contract revenues and lease revenues from bareboat charter arrangements and excludes revenues for mobilization, demobilization, contract preparation, and other incentive provisions and backlog relating to non-consolidated entities.
About
Forward-Looking Statements
This news release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts included in this news release, including, without limitation, those regarding the Company’s outlook and guidance, plans, strategies, business prospects, rig activity, share repurchases and changes and trends in its business and the markets in which it operates, are forward-looking statements. These statements may include words such as "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 in connection with any discussion of the timing or nature of future operating or financial performance or other events. 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. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to: those described under Item 3D, “Risk Factors” in the Company’s Annual Report on Form 20-F for the year ended
The foregoing risks and uncertainties are beyond our ability to control, and in many cases, we cannot predict the risks and uncertainties that could cause our actual results to differ materially from those indicated by the forward-looking statements. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated. All subsequent written and oral forward-looking statements attributable to us or to persons acting on our behalf are expressly qualified in their entirety by reference to these risks and uncertainties. You should not place undue reliance on forward-looking statements. Each forward-looking statement speaks only as of the date of the particular statement. We expressly disclaim any obligations or undertaking to release publicly any updates or revisions to any forward-looking statement to reflect any change in our expectations or beliefs with regard to the statement or any change in events, conditions or circumstances on which any forward-looking statement is based, except as required by law.
Investors should note that we announce material financial information in
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
Three months ended |
|
Six months ended |
||||||||
(In $ millions, except per share data) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
Operating revenues |
|
|
|
|
|
|
|
|
||||
Contract revenues |
|
267 |
|
|
329 |
|
|
542 |
|
|
515 |
|
Reimbursable revenues (1) |
|
15 |
|
|
14 |
|
|
35 |
|
|
23 |
|
Management contract revenues (1) |
|
65 |
|
|
61 |
|
|
123 |
|
|
122 |
|
Leasing revenues (1) |
|
26 |
|
|
7 |
|
|
37 |
|
|
14 |
|
Other revenues (1) |
|
2 |
|
|
3 |
|
|
5 |
|
|
6 |
|
Total operating revenues |
|
375 |
|
|
414 |
|
|
742 |
|
|
680 |
|
Operating expenses |
|
|
|
|
|
|
|
|
||||
Vessel and rig operating expenses |
|
(165 |
) |
|
(186 |
) |
|
(345 |
) |
|
(301 |
) |
Reimbursable expenses |
|
(14 |
) |
|
(13 |
) |
|
(34 |
) |
|
(22 |
) |
Depreciation and amortization |
|
(43 |
) |
|
(37 |
) |
|
(81 |
) |
|
(73 |
) |
Management contract expense |
|
(41 |
) |
|
(42 |
) |
|
(79 |
) |
|
(84 |
) |
Selling, general and administrative expenses |
|
(24 |
) |
|
(14 |
) |
|
(49 |
) |
|
(28 |
) |
Merger and integration related expenses |
|
(3 |
) |
|
(16 |
) |
|
(5 |
) |
|
(19 |
) |
Total operating expenses |
|
(290 |
) |
|
(308 |
) |
|
(593 |
) |
|
(527 |
) |
Other operating items |
|
|
|
|
|
|
|
|
||||
Gain on disposals |
|
203 |
|
|
3 |
|
|
203 |
|
|
7 |
|
Other operating income |
|
— |
|
|
— |
|
|
16 |
|
|
— |
|
Total other operating items |
|
203 |
|
|
3 |
|
|
219 |
|
|
7 |
|
Operating profit |
|
288 |
|
|
109 |
|
|
368 |
|
|
160 |
|
Financial and other non-operating items |
|
|
|
|
|
|
|
|
||||
Interest income |
|
7 |
|
|
5 |
|
|
14 |
|
|
12 |
|
Interest expense |
|
(16 |
) |
|
(13 |
) |
|
(31 |
) |
|
(29 |
) |
Share in results from associated companies (net of tax) |
|
(15 |
) |
|
11 |
|
|
(11 |
) |
|
14 |
|
Other financial items |
|
(8 |
) |
|
(5 |
) |
|
(14 |
) |
|
(6 |
) |
Total financial and other non-operating items, net |
|
(32 |
) |
|
(2 |
) |
|
(42 |
) |
|
(9 |
) |
Profit before income taxes |
|
256 |
|
|
107 |
|
|
326 |
|
|
151 |
|
Income tax expense |
|
(3 |
) |
|
(13 |
) |
|
(13 |
) |
|
(14 |
) |
Net income |
|
253 |
|
|
94 |
|
|
313 |
|
|
137 |
|
Basic EPS ($) |
|
3.61 |
|
|
1.18 |
|
|
4.41 |
|
|
2.11 |
|
Diluted EPS ($) |
|
3.49 |
|
|
1.16 |
|
|
4.27 |
|
|
2.07 |
|
(1) Includes revenue received from related parties of
UNAUDITED CONSOLIDATED BALANCE SHEETS
(In $ millions, except per share data) |
|
|
|
|
ASSETS |
|
|
|
|
Current assets |
|
|
|
|
Cash and cash equivalents |
|
835 |
|
697 |
Restricted cash |
|
27 |
|
31 |
Accounts receivable, net |
|
185 |
|
222 |
Amounts due from related parties, net |
|
31 |
|
9 |
Other current assets |
|
210 |
|
199 |
Total current assets |
|
1,288 |
|
1,158 |
Non-current assets |
|
|
|
|
Investments in associated companies |
|
66 |
|
90 |
Drilling units |
|
2,792 |
|
2,858 |
Deferred tax assets |
|
55 |
|
46 |
Equipment |
|
8 |
|
10 |
Other non-current assets |
|
88 |
|
56 |
Total non-current assets |
|
3,009 |
|
3,060 |
Total assets |
|
4,297 |
|
4,218 |
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
Current liabilities |
|
|
|
|
Trade accounts payable |
|
80 |
|
53 |
Other current liabilities |
|
324 |
|
336 |
Total current liabilities |
|
404 |
|
389 |
Non-current liabilities |
|
|
|
|
Long-term debt |
|
609 |
|
608 |
Deferred tax liabilities |
|
9 |
|
9 |
Other non-current liabilities |
|
216 |
|
229 |
Total non-current liabilities |
|
834 |
|
846 |
Commitments and contingencies |
|
|
|
|
SHAREHOLDERS' EQUITY |
|
|
|
|
Common shares of par value |
|
1 |
|
1 |
Additional paid-in capital |
|
2,243 |
|
2,480 |
Accumulated other comprehensive income |
|
1 |
|
1 |
Retained earnings |
|
814 |
|
501 |
Total shareholders' equity |
|
3,059 |
|
2,983 |
Total liabilities and shareholders' equity |
|
4,297 |
|
4,218 |
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
Six months ended |
||||
(In $ millions) |
|
2024 |
|
|
2023 |
|
Cash Flows from Operating Activities |
|
|
|
|
||
Net income |
|
313 |
|
|
137 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
||
Depreciation and amortization |
|
81 |
|
|
73 |
|
Gain on disposal of assets |
|
(203 |
) |
|
(7 |
) |
Share in results from associated companies (net of tax) |
|
11 |
|
|
(14 |
) |
Deferred tax (benefit)/expense |
|
(7 |
) |
|
4 |
|
Unrealized loss/(gain) on foreign exchange |
|
5 |
|
|
(5 |
) |
Amortization of discount on debt |
|
2 |
|
|
— |
|
Share based incentive compensation |
|
7 |
|
|
— |
|
Other cash movements in operating activities |
|
|
|
|
||
Payments for long-term maintenance |
|
(89 |
) |
|
(33 |
) |
Changes in operating assets and liabilities, net of effect of acquisitions and disposals |
|
|
|
|
||
Trade accounts receivable |
|
37 |
|
|
(20 |
) |
Trade accounts payable |
|
27 |
|
|
(38 |
) |
Prepaid expenses/accrued revenue |
|
(12 |
) |
|
(3 |
) |
Deferred revenue |
|
21 |
|
|
7 |
|
Deferred mobilization costs |
|
(23 |
) |
|
5 |
|
Related party receivables |
|
(22 |
) |
|
20 |
|
Other assets |
|
(3 |
) |
|
(10 |
) |
Other liabilities |
|
(37 |
) |
|
(81 |
) |
Net cash flows provided by operating activities |
|
108 |
|
|
35 |
|
Cash Flows from Investing Activities |
|
|
|
|
||
Additions to drilling units and equipment |
|
(66 |
) |
|
(25 |
) |
Proceeds from disposal of assets |
|
338 |
|
|
7 |
|
Sale of investment in PES |
|
— |
|
|
43 |
|
Acquisition of subsidiary |
|
— |
|
|
24 |
|
Deposit received on Tender-Assist Units sale |
|
— |
|
|
17 |
|
Net cash flows provided by investing activities |
|
272 |
|
|
66 |
|
Cash Flows from Financing Activities |
|
|
|
|
||
Share repurchases |
|
(241 |
) |
|
— |
|
Repayments of secured credit facilities |
|
— |
|
|
(163 |
) |
Share issuance costs |
|
— |
|
|
(4 |
) |
Net cash used in financing activities |
|
(241 |
) |
|
(167 |
) |
Effect of exchange rate changes on cash |
|
(5 |
) |
|
7 |
|
Net increase/(decrease) in cash and cash equivalents, including restricted cash |
|
134 |
|
|
(59 |
) |
Cash and cash equivalents, including restricted cash, at beginning of the period |
|
728 |
|
|
598 |
|
Cash and cash equivalents, including restricted cash, at the end of period |
862 |
|
|
539 |
Appendix I - Reconciliation of Operating Profit to Adjusted EBITDA (Unaudited)
Adjusted EBITDA represents operating profit before depreciation, amortization and similar non-cash charges. Additionally, in any given period, the Company may have significant, unusual or non-recurring items which may be excluded from Adjusted EBITDA for that period. When applicable, these items are fully disclosed and incorporated into the reconciliation provided below. Adjusted EBITDA Margin represents Adjusted EBITDA as a percentage of Total operating revenues. Adjusted EBITDA excluding Reimbursables, represents Adjusted EBITDA, excluding Reimbursable revenues and Reimbursable expenses. Adjusted EBITDA Margin excluding Reimbursables represents Adjusted EBITDA excluding Reimbursables as a percentage of Total operating revenues excluding Reimbursable revenues.
Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted EBITDA excluding Reimbursables and Adjusted EBITDA Margin excluding Reimbursables are non-GAAP financial measures. The Company believes that the aforementioned non-GAAP financial measures assist investors by excluding the potentially disparate effects between periods of interest, other financial items, taxes and depreciation and amortization, which are affected by various and possibly changing financing methods, capital structure and historical cost basis and which may significantly affect operating profit between periods.
Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted EBITDA excluding Reimbursables and Adjusted EBITDA Margin excluding Reimbursables should not be considered as alternatives to operating profit or any other indicator of Seadrill Limited’s performance calculated in accordance with US GAAP.
The tables below reconcile operating profit to Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted EBITDA excluding Reimbursables and Adjusted EBITDA Margin excluding Reimbursables.
Figures in USD million, unless otherwise indicated |
Three months ended |
|
Three months ended |
||
Operating profit |
288 |
|
|
80 |
|
Depreciation and amortization |
43 |
|
|
38 |
|
Merger and integration related expenses |
3 |
|
|
2 |
|
Gain on disposal |
(203 |
) |
|
— |
|
Other adjustments (1) |
2 |
|
|
4 |
|
Adjusted EBITDA (a) |
133 |
|
|
124 |
|
Total operating revenues (b) |
375 |
|
|
367 |
|
Adjusted EBITDA margin (a)/(b) |
35.5 |
% |
|
33.8 |
% |
Figures in USD million, unless otherwise indicated |
Three months ended |
|
Three months ended |
||
Adjusted EBITDA (a) |
133 |
|
|
124 |
|
Reimbursable revenues |
(15 |
) |
|
(20 |
) |
Reimbursable expenses |
14 |
|
|
20 |
|
Adjusted EBITDA excluding Reimbursables (c) |
132 |
|
|
124 |
|
Total operating revenues (b) |
375 |
|
|
367 |
|
Reimbursable revenues |
(15 |
) |
|
(20 |
) |
Total operating revenues excluding Reimbursable revenues (d) |
360 |
|
|
347 |
|
Adjusted EBITDA margin excluding Reimbursables (c)/(d) |
36.7 |
% |
|
35.7 |
% |
The table below reconciles operating profit to Adjusted EBITDA for the 2024 guidance numbers presented in the "Outlook"section:
|
2024 Guidance |
||||
Figures in USD million, unless otherwise indicated |
Low end of the range |
|
High end of the range |
||
Operating profit |
322 |
|
|
372 |
|
Depreciation and amortization |
173 |
|
|
173 |
|
Merger and integration related expenses |
15 |
|
|
15 |
|
Gain on sale of assets |
(203 |
) |
|
(203 |
) |
Other adjustments (1) |
8 |
|
|
8 |
|
Adjusted EBITDA (a) |
315 |
|
|
365 |
|
Total operating revenues (b) |
1,355 |
|
|
1,405 |
|
Adjusted EBITDA margin (a)/(b) |
23.2 |
% |
|
26.0 |
% |
(1) Primarily related to costs associated with the closure of the Company's
Appendix II - Contract Revenues Supporting Information (Unaudited)
Contract Revenues Supporting Information(1) |
Three months ended |
|
Three months ended |
|||
Average number of rigs on contract(2) |
10 |
|
|
10 |
|
|
Average contractual dayrates(3) (in $ thousands) |
289 |
|
|
300 |
|
|
Economic utilization(4) |
93.9 |
% |
|
97.1 |
% |
(1) Excludes three drillships managed on behalf of Sonadrill (West Gemini, Sonangol Quenguela, Sonangol Libongos); and excludes rigs bareboat chartered to Sonadrill (West Gemini) and Gulfdrill, before disposal in
(2) The average number of rigs on contract is calculated by dividing the aggregate days the Company's rigs were on contract during the reporting period by the number of days in that reporting period.
(3) The average contractual dayrate is calculated by dividing the aggregate contractual dayrates during a reporting period by the aggregate number of days for the reporting period.
(4) Economic utilization is defined as dayrate revenue earned during the period, excluding bonuses, divided by the contractual operating dayrate, multiplied by the number of days on contract in the period. If a drilling unit earns its full operating dayrate throughout a reporting period, its economic utilization would be 100%. However, there are many situations that give rise to a dayrate being earned that is less than the contractual operating rate, such as planned downtime for maintenance. In such situations, economic utilization reduces below 100%.
Appendix III - Reconciliation of Net cash flows provided by operating activities to Free Cash Flow (Unaudited)
The Company also presents Free Cash Flow as a non-GAAP liquidity measure. Free Cash Flow is calculated as Net cash provided by operating activities less cash paid for additions to drilling units and equipment. The table below reconciles Net cash flows provided by operating activities to Free Cash Flow for the three months ended
Figures in USD million |
Three months ended |
|
Three months ended |
|||
Net cash flows provided by operating activities |
79 |
|
|
29 |
|
|
Additions to drilling units and equipment |
(43 |
) |
|
(23 |
) |
|
Free Cash Flow |
36 |
|
|
6 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20240805943310/en/
Director of Investor Relations
ir@seadrill.com
Source: