Seadrill stock gains 4% as earnings, guidance top estimates

HAMILTON, Bermuda – Seadrill Limited (NYSE:SDRL), an offshore drilling contractor, reported a robust first quarter of 2024, with earnings surpassing analyst expectations and the company providing an optimistic revenue forecast for the full year.

The company’s shares surged 4.6% following the announcement.

Seadrill posted adjusted earnings per share (EPS) of $0.81 for the first quarter, which was $0.15 higher than the analyst consensus of $0.66. Revenue for the quarter was $367 million, aligning closely with the consensus estimate of $367.97 million. When compared to the same quarter last year, the company’s revenue showed a significant increase from $266 million, marking a YoY growth.

The company’s operational efficiency was highlighted by securing the highest dayrate in the current cycle at $545,000 for a one-well contract, demonstrating the market’s potential and Seadrill’s competitive positioning. Additionally, the company continued its share repurchase program, buying back 9.9 million shares or 12.4% of the issued share count since September 2023.

For the full year 2024, Seadrill reaffirmed its guidance, projecting revenues between $1.47 billion and $1.52 billion. This forecast is slightly above the analyst consensus of $1.48 billion, contributing to the positive market sentiment. The company’s President and CEO, Simon Johnson, expressed confidence in Seadrill’s fleet and market positioning, expecting durable earnings and capital returns.

The first quarter’s operating profit was $80 million, with an adjusted EBITDA of $124 million, resulting in an adjusted EBITDA margin of 33.8%. This performance was attributed to a combination of factors, including fewer operating days for certain rigs and a decrease in operating expenses. The company also benefited from a $16 million recovery of historical import duties in the form of tax credits.

Seadrill’s strong balance sheet was evident with gross principal debt at $625 million and cash and cash equivalents at $612 million, including $28 million in restricted cash. The company has an additional $225 million in available borrowings under its undrawn senior secured revolving credit facility.

In terms of operational and commercial activity, Seadrill’s order backlog stood at approximately $2.8 billion as of May 14, 2024. Notable contract additions included a one-well contract in South Korea and a six-month contract extension in the U.S. Gulf of Mexico.

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