Founder, BWS Financial Inc

Hamed Khorsand

Founder

Independent Stock Specific Research

BWS Financial Inc

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Equity Bottom-Up

<ul>
<li>SDRL enters the second quarter with drill ships undergoing special surveys and day rates slowly creeping higher. </li>
<li>The drill ship market has experienced an increase in day rates on the expectation stacked ships eventually become available. We do not believe this will ever be the case</li>
<li>We are leaving our 2024 earnings model unchanged and raising our 2025 adjusted EBITDA outlook to $677 million from $615 million</li>
</ul>


SDRL enters the second quarter with drill ships undergoing special surveys and day rates slowly creeping higher. 
The drill ship market has experienced an increase in day rates on the expectation stacked ships eventually become available. We do not believe this will ever be the case
We are leaving our 2024 earnings model unchanged and raising our 2025 adjusted EBITDA outlook to $677 million from $615 million


<ul>
<li>SDRL ended 2023 with in line results as the Company readies for a year filled with maintenance. The commentary surrounding market conditions has not changed greatly since third quarter results.</li>
<li>There is still a lack of new supply but being able to match available supply to operators’ demand calendar has become challenging</li>
<li>SDRL reported fourth quarter 2023 revenue of $408 million and operating income of $52 million, which were both in line with our estimate.</li>
</ul>


SDRL ended 2023 with in line results as the Company readies for a year filled with maintenance. The commentary surrounding market conditions has not changed greatly since third quarter results.
There is still a lack of new supply but being able to match available supply to operators’ demand calendar has become challenging
SDRL reported fourth quarter 2023 revenue of $408 million and operating income of $52 million, which were both in line with our estimate.


<ul>
<li>The contract environment is proving advantageous for Seadrill (SDRL) with the Company announcing two more contracts</li>
<li>We estimate one of the contracts has a day rate of $500,000 and should result in other bidding activity to reach and eventually exceed this level in 2024</li>
<li>The day rates SDRL has announced for the latest contracts, along with the two contracts in December 2023, demonstrate there is demand to pay the higher day rates </li>
</ul>


The contract environment is proving advantageous for Seadrill (SDRL) with the Company announcing two more contracts
We estimate one of the contracts has a day rate of $500,000 and should result in other bidding activity to reach and eventually exceed this level in 2024
The day rates SDRL has announced for the latest contracts, along with the two contracts in December 2023, demonstrate there is demand to pay the higher day rates 


<ul>
<li>SDRL ended 2023 with a contract that is poised to set the course for day rates moving higher in 2024. Prior to Christmas, SDRL announced two new contracts with PBR</li>
<li>We estimate one of the contracts has a day rate of $500,000 and should result in other bidding activity to reach and eventually exceed this level in 2024</li>
<li>We are not making changes to our earnings model and believe there is now greater potential for our estimates having to be revised higher</li>
</ul>


SDRL ended 2023 with a contract that is poised to set the course for day rates moving higher in 2024. Prior to Christmas, SDRL announced two new contracts with PBR
We estimate one of the contracts has a day rate of $500,000 and should result in other bidding activity to reach and eventually exceed this level in 2024
We are not making changes to our earnings model and believe there is now greater potential for our estimates having to be revised higher


SDRL: New Contracts Set Catalyst for 2024

<ul>
<li>SDRL reported third quarter results exceeding expectations and announcing slight extensions to when near-term contracts would expire.</li>
<li>There had been minimal news from SDRL to expect contract extensions. SDRL’s peers had been reporting a slowing in contract activity.</li>
<li>The free cash flow SDRL is generating is being used for stock buy backs with the authorization doubled to a total of $500 million.</li>
</ul>


SDRL reported third quarter results exceeding expectations and announcing slight extensions to when near-term contracts would expire.
There had been minimal news from SDRL to expect contract extensions. SDRL’s peers had been reporting a slowing in contract activity.
The free cash flow SDRL is generating is being used for stock buy backs with the authorization doubled to a total of $500 million.


United States

Seadrill Limited operates as an oil and gas field service company. The Company offers drilling contracting services to unlock oil and gas resources for clients across harsh and benign locations. Seadrill serves customers worldwide.

Seadrill (SDRL US)

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SDRL has several vessels undergoing maintenance this year before their next contracts eroding the possibility of adjusted EBITDA growth. We do not...

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SDRL: Drilling into the Calendar

The new contracts provide further certainty there is demand in the market with higher day rates than SDRL had previously booked. However, 2024 is...

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SDRL: New Contracts Set Catalyst for 2024

SDRL won two contacts from PBR just before Christmas. The day rate of the contracts sets up the possibility of more contract activity at higher day...

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SDRL continues to exceed our expectations on profitability and free cash flow. SDRL announced contract extensions for several vessels, including...

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