Seadrill Limited reported its first quarter 2024 results.
Quarterly highlights
- Delivered operating profit of $80 million and Adjusted EBITDA(1) of $124 million on $367 million of revenue, resulting in an Adjusted EBITDA Margin(1) of 33.8%
- Secured highest dayrate in the current cycle with a clean dayrate of $545,000 for a one-well contract
- Repurchased 9.9 million shares, or 12.4% of issued share count, since initiating its share repurchase program in September 2023
- Reaffirmed full-year guidance of $1.47 to $1.52 billion in revenue, $400 to $450 million in Adjusted EBITDA(1), and $400 to $450 million in capital expenditures
Financial highlights
| Three months ended | ||||
| Figures in USD million, unless otherwise indicated | March 31, 2024 | December 31, 2023 | ||
| Total Operating Revenues | 367 | 408 | ||
| Contract Revenues | 275 | 315 | ||
| Operating Profit | 80 | 52 | ||
| Adjusted EBITDA (1) | 124 | 100 | ||
| Adjusted EBITDA Margin (1) | 33.8 | % | 24.5 | % |
| Diluted Earnings Per Share ($) | 0.81 | 0.95 | ||
“Seadrill has had a strong start to the year, delivering safe, efficient operations to our customers, securing a cycle-high dayrate that offers an encouraging indication of market potential, and returning capital to shareholders,” remarked President and Chief Executive Officer, Simon Johnson. “As the cycle progresses, we believe Seadrill’s competitive fleet, focused market positioning, and balance sheet strength will support durable earnings and capital returns. We remain focused on executing according to plan and maintain our previously disclosed full-year 2024 guidance as the year progresses in line with expectation.”
Financial results
First quarter 2024 operating revenues totaled $367 million, compared to $408 million the prior quarter, a $41 million sequential decrease. Contract revenues were $275 million, compared to $315 million the prior quarter, primarily related to fewer operating days for the Sevan Louisiana, West Polaris, and West Auriga, partially offset by improved economic utilization. After completing its drilling contract in December 2023, the Sevan Louisiana undertook a special periodic survey and related maintenance during the first quarter of 2024. The West Polaris and West Auriga finished their contracts in January and February, respectively; were reintegrated into the Company’s rig fleet following the termination of third-party management agreements; and began preparing for contracts in Brazil, scheduled to begin in the fourth quarter of this year.
Operating expenses were $303 million, compared to $356 million the prior quarter, a decrease of $53 million. Rig operating expenses were $180 million, a decrease of $40 million, primarily attributable to the timing of certain repair and maintenance spending and $15 million of non-cash accruals that negatively impacted fourth quarter 2023 results. Selling, general, and administrative (SG&A) expenses were $25 million, a decrease of $1 million from the prior quarter, and included $4 million of non-recurring costs associated with the closure of the Company’s London office and consolidation of its corporate offices in Houston, compared to $2 million in the fourth quarter of 2023. Other operating income for the first quarter of 2024 also included a $16 million benefit related to the recovery of historical import duties in the form of tax credits.
Adjusted EBITDA(1) was $124 million for the first quarter of 2024, an increase of $24 million from the prior quarter. Adjusted EBITDA Margin was 33.8%.
Cash flow and balance sheet
Cash flow from operations during the first quarter of 2024 was $29 million, after deducting $29 million of long-term maintenance capital expenditures, compared to $140 million in the prior quarter. Capital upgrades captured in investing cash flows were $23 million. Resulting Free Cash Flow(1) was $6 million.
In the first quarter of 2024, Seadrill made $119 million of share repurchases. As of May 10, 2024, the Company has returned a total of $442 million to shareholders and has $58 million remaining under its current repurchase authorization. Since initiating its repurchase program in September 2023, the Company has repurchased a total of 9.9 million shares, or 12.4% of issued share count.
As of March 31, 2024, Seadrill had gross principal debt of $625 million; $612 million in cash and cash equivalents, including $28 million in restricted cash; and an additional $225 million in available borrowings under its undrawn senior secured revolving credit facility.
Operational and commercial activity
As of May 14, 2024, Seadrill’s Order Backlog(2) stood at approximately $2.8 billion, including approximately $108 million in contract additions since February 28, 2024.
- As previously disclosed, the West Capella secured a one-well contract in South Korea, with an estimated duration of 40 days, valued at approximately $32 million, including a mobilization fee of approximately $10 million and excluding fees for additional services. The contract is expected to commence in December 2024.
- As previously disclosed, the West Neptune secured a six-month contract extension with an independent operator in the U.S. Gulf of Mexico, with an estimated contract value of approximately $86 million, excluding fees for additional services. The contract is expected to commence in the third quarter of 2025 in direct continuation of its current contract.
Additionally, in mid-April, the Sevan Louisiana commenced a contract for well intervention work with an independent operator in the U.S. Gulf of Mexico. The contract has an estimated duration of 45 days.