Founder, BWS Financial Inc

Hamed Khorsand

Founder

Independent Stock Specific Research

BWS Financial Inc

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Equity Bottom-Up

<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.


<ul>
<li>There has been little change in day rates since Seadrill (SDRL) reported second quarter results with the Company having two vessels with contracts expiring next month</li>
<li>The only news flow since SDRL reported second quarter results has been about the Company regularly buying back stock</li>
<li>The two vessels with contracts expiring are currently in different geographies</li>
</ul>


There has been little change in day rates since Seadrill (SDRL) reported second quarter results with the Company having two vessels with contracts expiring next month
The only news flow since SDRL reported second quarter results has been about the Company regularly buying back stock
The two vessels with contracts expiring are currently in different geographies


<ul>
<li>SDRL reporting second quarter results provided greater insight on the contribution of Aquadrill to SDRL’s financials and sets the course for how the business could benefit from current day rates</li>
<li>SDRL has two drill ships set for contract expiration at year end and another two more vessels expected off contract by end of 2024, not including those with contract options</li>
<li>Our new price target of $62 from $50 values SDRL in line with its peers even though SDRL is not levered</li>
</ul>


SDRL reporting second quarter results provided greater insight on the contribution of Aquadrill to SDRL’s financials and sets the course for how the business could benefit from current day rates
SDRL has two drill ships set for contract expiration at year end and another two more vessels expected off contract by end of 2024, not including those with contract options
Our new price target of $62 from $50 values SDRL in line with its peers even though SDRL is not levered


<ul>
<li>SDRL reported Q1 results affirming the positive attributes of the business after repositioning assets in the fourth quarter. The first quarter included economic utilization of 95% resulting in cost absorption</li>
<li>Day rates continue to trend higher putting SDRL in an advantageous spot as a portion of its fleet becomes available late in 2023 and early 2024</li>
<li>Subsequent to the first quarter, SDRL closed the acquisition of Aquadrill and has now provided full year guidance incorporating the business</li>
</ul>


SDRL reported Q1 results affirming the positive attributes of the business after repositioning assets in the fourth quarter. The first quarter included economic utilization of 95% resulting in cost absorption
Day rates continue to trend higher putting SDRL in an advantageous spot as a portion of its fleet becomes available late in 2023 and early 2024
Subsequent to the first quarter, SDRL closed the acquisition of Aquadrill and has now provided full year guidance incorporating the business


<ul>
<li>SDRL is scheduled to report first quarter results on May 23, 2023, before the market open and has provided a glimpse to the profitability Aquadrill is operating at</li>
<li>The Aquadrill fourth quarter results affirm our investment thesis of the profitability the business is operating at with the day rates Aquadrill has secured</li>
<li>SDRL is the last company of the major drill ship owners to report first quarter results. Peers have shed a positive outlook on the industry and day rate trend</li>
</ul>


SDRL is scheduled to report first quarter results on May 23, 2023, before the market open and has provided a glimpse to the profitability Aquadrill is operating at
The Aquadrill fourth quarter results affirm our investment thesis of the profitability the business is operating at with the day rates Aquadrill has secured
SDRL is the last company of the major drill ship owners to report first quarter results. Peers have shed a positive outlook on the industry and day rate trend


SDRL: Aquadrill Numbers Ahead of Q1 Results

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.

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Seadrill (SDRL US)

SDRL: Course for Free Cash Flow

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

BWS Financial Inc

SDRL: The Calm Ahead of News Flow

We are anticipating contract news as third quarter results are announced in November coinciding with the two vessels coming off contracts

BWS Financial Inc

SDRL: Attractive Value, PT to $62

Day rates continue to support our investment thesis for adjusted EBITDA rising in 2024 and more so in 2025. SDRL has an unlevered balance sheet...

BWS Financial Inc

SDRL: Early Arrival of Free Cash Flow

SDRL generated free cash flow in Q1 and is guiding for full year free cash flow also, which is one year earlier than we expected. Tight supply...

BWS Financial Inc

SDRL: Aquadrill Numbers Ahead of Q1 Results

SDRL released Aquadrill's fourth quarter numbers showing how profitable the business had turned ahead of SDRL completing the transaction

BWS Financial Inc

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