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Results and Additional $250 Million Share Repurchase Authorization
· Successfully refinanced its secured debt, issuing $575 million of 8.375%
senior secured second lien notes and establishing a new $225 million revolving
credit facility with an accordion feature of up to an additional $100 million.
· Initiated $250 million shareholder return program and completed share
repurchases totaling $213 million as of November 24, 2023.
· Increased share repurchase authorization by an additional $250 million,
taking aggregate authorization to $500 million.
· Updated full year 2023 market guidance, with Adjusted EBITDA range now $485
million to $505 million.
· Secured contracts for the West Neptune and West Vela in the U.S. Gulf of
Mexico, with the West Vela transitioning to Seadrill from the current third
-party manager before undertaking the new contract.
Hamilton, Bermuda, November 27, 2023 - Seadrill Limited (“Seadrill” or the
“Company”) (NYSE & OSE: SDRL) today reported its third quarter 2023 results,
which reflect strong performance across the fleet as the Company continues to
deliver safe and efficient drilling operations around the globe.
[][]
Financial Highlights Three months ended
Figures in USD million, September 30, 2023 June 30, 2023
unless otherwise
indicated
Total Operating Revenues
414 414
Contract Revenues
324 329
Operating Profit
117 109
Adjusted EBITDA [(1)]
151 159
Adjusted EBITDA Margin 36.5 % 38.4 %
[(1)]
Diluted Earnings Per
Share ($) 1.10 1.16
President and Chief Executive Officer, Simon Johnson, commented, "We delivered
another strong quarter for our stakeholders, and today we announce an increase
in our full year 2023 Adjusted EBITDA guidance. We have secured an extension for
the West Neptune with LLOG and been awarded a short-term campaign by
QuarterNorth Energy for the West Vela. This will mark the return to Seadrill of
the second of four drillships that we acquired earlier this year. We remain on
track with synergy capture arising from the Aquadrill transaction.
“In September, we initiated our $250 million share repurchase program and have
made excellent progress to date. In our view, the price level at which we have
executed the buyback is highly accretive. Market fundamentals remain robust and
our positive view on the length and durability of this upcycle is unchanged.
With this in mind and considering our strong financial position, Seadrill’s
board of directors has authorized a further $250 million in share repurchases,
taking the aggregate to $500 million. This enables us to continue to return
capital to our shareholders that cannot be allocated more efficiently within the
business.”
Financial and Operational Results
The Company generated $414 million in total operating revenues in the third
quarter of 2023, consistent with the prior quarter. During the quarter, the
Company operated an average of 12 rigs[(2)] at an economic utilization of 93%,
compared to an average of 13 rigs, working at an economic utilization of 93% in
the second quarter of 2023. This activity translated into contract revenues of
$324 million, a decrease of $5 million, or 2%, from the prior quarter, primarily
due to planned out-of-service days on the West Phoenix and the Sevan Louisiana.
In addition, the Company generated $68 million in management contract revenues,
largely related to the rigs managed under its 50:50 joint venture with Sonangol
E.P., and $22 million in reimbursable and other revenues.
The Company incurred $304 million in operating expenses, a decrease of $4
million, or 1%, from the prior quarter, primarily due to one-time merger and
integration-related expenses in the prior quarter.
Adjusted EBITDA was $151 million for the third quarter, a decrease of $8
million, or 5%, from the prior quarter. Adjusted EBITDA Margin was 36.5% for the
third quarter.
Net cash provided by operating activities totaled $112 million in the third
quarter of 2023, compared to $20 million in the prior quarter which was
adversely impacted by one-off working capital movements. Long-term maintenance
costs of $33 million, included within operating activities, and $28 million of
capital upgrades resulted in total capital expenditures of $61 million, as the
Company incurred expenditures for upcoming special periodic surveys, including
on associated long-lead items.
Share Repurchases
On September 12, 2023, the Company initiated a share repurchase program for the
repurchase of up to $250 million of the Company’s common shares in the open
market on the Oslo Stock Exchange and the New York Stock Exchange. As of
November 24, 2023, the Company had repurchased 5 million of its own shares at an
average price of $42.76 per share, equating to $213 million.
Furthermore, Seadrill’s Board of Directors has increased the Company’s aggregate
share repurchase authorization, allowing the Company to repurchase up to an
additional $250 million of its outstanding common shares. Such increase takes
the aggregate authorization to $500 million. The additional $250 million
authorization does not have a fixed expiration, and may be modified, suspended,
or discontinued at any time. The Company is under no obligation to purchase any
shares in respect of the additional repurchase authorization. Shares may be
repurchased at any time and from time to time in respect of the authorization in
open market purchases, privately negotiated purchases, block trades, tender
offers, accelerated share repurchase transactions or other derivative
transactions, through the purchase of call options or the sale of put options,
or otherwise, or by any combination of the foregoing. The manner, timing,
pricing and amount of any repurchases will be subject to the discretion of the
Company and may be based upon a number of factors, including market conditions,
the Company’s financial position and capital requirements, financial conditions,
competing uses for cash, the restrictions in the Company’s credit agreements and
other factors.
Balance Sheet and Debt Refinancing
During the quarter, the Company refinanced its secured debt, issuing $575
million in aggregate principal amount of 8.375% senior secured second lien notes
due 2030 (the “Notes”) and establishing a $225 million senior secured five-year
revolving credit facility with an accordion feature of up to an additional $100
million. The refinancing reduces the Company’s cost of capital and removes
certain restrictive covenants, allowing the Company greater flexibility to act
on accretive opportunities that maximize shareholder value. As of September 30,
2023, the Company had gross principal debt of $625 million, comprising (i) the
Notes and (ii) $50 million in senior unsecured convertible notes. Cash and cash
equivalents was $869 million, including $32 million in restricted cash.
Operational and Commercial Activity
As of September 30, 2023, Seadrill’s Order Backlog[(3)] stood at $2.3 billion,
including approximately $76 million of contract additions on the West Neptune in
the U.S. Gulf of Mexico during the quarter. Following the quarter-end, the
Company secured a short-term campaign for the West Vela in the U.S. Gulf of
Mexico with QuarterNorth Energy. This contract is expected to commence after the
rig finishes with Beacon Offshore in the first half of 2024 and transitions to
Seadrill from the current third-party manager. As of November 27, 2023, the
Company’s Order Backlog stands at $2.2 billion.
In July, the Company completed the sale of its three tender-assist units to
certain affiliates of Energy Drilling Pte. Ltd. for aggregate cash proceeds of
$84 million.
Outlook
Full year 2023 guidance for total revenues is expected in the range of $1,495
million to $1,515 million and Adjusted EBITDA within the range of $485 million
to $505 million. The revised guidance range for total revenues and Adjusted
EBITDA is above the range previously communicated for full year 2023. Refer to
Appendix II for a reconciliation of Adjusted EBITDA to Operating Profit. Capital
expenditures and long-term maintenance is expected to be within the range of
$185 million to $205 million. The revised guidance range for capital
expenditures is below the range previously communicated for full year 2023.
Conference Call Information
The Company will hold a conference call to discuss its results on Tuesday,
November 28 at 9:00 CST / 15:00 GMT / 16:00 CET. Interested participants may
join the call by dialing +1 (888) 660-6819 (Passcode: 7310670) at least 15
minutes prior to the scheduled start time. The Company will also webcast the
call live on its website, www.seadrill.com/investors, where a replay will be
available afterwards.
[(1)] Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP measures. For a
definition and a reconciliation to the most comparable GAAP measure, see
Appendices.
[(2)] The number of rigs contributing to contract revenue includes fleet
additions from the Aquadrill transaction (West Capella, West Vela, West Auriga,
West Polaris); excludes rigs managed on behalf of Sonadrill (West Gemini,
Sonangol Quenguela, Sonangol Libongos); and excludes rigs bareboat chartered to
Gulfdrill (West Telesto, West Castor, West Tucana).
[(3)] 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.
Seadrill Contact Information
Benjamin Wiseman
Corporate Finance Manager & Investor Relations
T: +44 786 713 9312
E: benjamin.wiseman@seadrill.com
About Seadrill
Seadrill is a leading offshore drilling contractor utilizing advanced technology
to unlock oil and gas resources for clients across harsh and benign locations
around the globe. Seadrill’s high-quality, technologically-advanced fleet spans
all asset classes allowing its experienced crews to conduct operations across
geographies, from shallow to ultra-deepwater environments.
Forward-Looking Statements
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 the Company’s outlook and guidance,
plans, strategies, business prospects, rig activity, share repurchases, 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.
Kilde
