Seadrill Ltd. Q3 FY2024 earnings call

• Third quarter results exceeded expectations with $93 million in adjusted EBITDA, and EBITDA guidance midpoint increased by 13% to $385 million. - The Sevan Louisiana continued its existing contract in the U.S. Gulf of Mexico. The West Auriga and West Polaris in Brazil are in country and on track to start new contracts in December. - The West Phoenix was stacked to reduce operating capital expense, and the four Aquadrill drillships were reintegrated into the fleet. - The company's market outlook emphasizes underlying industry fundamentals with a focus on the Golden Triangle region (Gulf of Mexico, South America, West Africa). It has 70% contract utilization for 2025 fleet. - Strategy includes optimizing operations in 2025, reducing bureaucracy, empowering offshore leaders, and focusing on capital allocation.

In the third quarter, Seadrill had total operating revenues of $354 million, down from $375 million in the prior quarter. Contract drilling revenues were flat at $263 million. Adjusted EBITDA was $93 million. For the full year, the company expects adjusted EBITDA to range from $375 million to $395 million on revenues of roughly $1.4 billion, and has narrowed the full year CapEx guidance to $420 million to $440 million. The Sevan Louisiana's continued contract in the U.S. Gulf of Mexico and progress on Brazil projects are key drivers of the performance.

• Increased 2024 adjusted EBITDA guidance midpoint to $385 million, with the range $375 million to $395 million on revenues of approximately $1.4 billion. - Narrowed full year CapEx guidance to $420 million to $440 million. - 2025 guidance is not provided yet as contract discussions for uncommitted capacity are ongoing and will materially affect the financial outlook.

• Market volatility, including the temporary imbalance between drillship supply and demand. - Uncertainty in contract signings due to market uncertainties and capital restraint. - Competitive market realities requiring the company to remain agile to stay competitive.

Q: David Smith asked about the outlook for drillships in Brazil specifically the Jupiter, Carina and Tellus.

A: Simon and Samir mentioned positive progress in recontracting, Brazil is a key market with stable demand, but no specific contract announcements were made yet.

Q: Kurt Hallead asked about 2025 market dynamics, cash margins, and stock buybacks.

A: Samir stated the focus on cash generation, Simon mentioned economies of scale and dynamic cost adjustment, and Grant said buyback depends on the financial policy framework.

Q: Fredrik Stene asked about asset placement in Southeast Asia and fleet composition.

A: Simon and Samir said they are chasing opportunities in the current region with a plan to cluster the rig into existing or new regions.

Q: Hamed Khorsand asked about customer negotiation process and special surveys.

A: Samir said uncertainty exists due to commodity price, supply chains, and client portfolio reallocation; Simon mentioned the SPS on West Neptune may drift into 2025.

Q: Josh Jayne asked about 2025 operations optimization and Gulf of Mexico market.

A: Simon said focusing on agile operations and cost management, Samir said market fundamentals drive offshore activity regardless of administration.

Q: Noel Parks asked about exploration and client capital discipline.

A: Simon and Samir said there is a shift in client investment to offshore, and clients are deprioritizing exploration due to short-term outlook and capital preservation.