Seadrill Limited Q3 FY2025 earnings call

• Simon Johnson highlighted that Seadrill added over $300 million to backlog, secured new contracts across 5 rigs, with Sonadrill joint venture rigs in Angola having strong performances and securing new work. In the US Gulf, West Vela and Sevan Louisiana secured new contracts, and there was a partnership with Trendsetter for well intervention activities. - Samir Ali recapped backlog additions, contract details in Angola (Sonadrill rigs extended) and US Gulf (West Vela and Sevan Louisiana contracts), and noted constructive contracting momentum and global tendering activity supporting market recovery. - Grant Creed reviewed third quarter financial results and provided updated guidance for 2025, narrowing adjusted EBITDA range and capital expenditure guidance.

In the third quarter, total operating revenues were $363 million, a sequential decrease of $14 million. Contract drilling revenues declined $8 million to $280 million due to fewer operating days for West Vela and Sevan Louisiana and lower economic utilization. Management contract revenues decreased $2 million to $63 million, and reimbursable revenues decreased $5 million to $11 million. Total operating expenses were $337 million, down 9% from the prior quarter. Adjusted EBITDA was $86 million, a sequential decrease of $20 million. Total contracted backlog was approximately $2.5 billion after adding over $300 million in the quarter.

• Narrowed adjusted EBITDA range for remainder of 2025 to $330 million to $360 million, based on operating revenues range of $1.36 billion to $1.39 billion (excluding $50 million of reimbursable revenues). - Full year capital expenditure guidance range narrowed to $280 million to $300 million, and expects capital expenditure and long-term maintenance to trend lower in 2026.

• Forward-looking statements involve risks and uncertainty. - Fluctuating demand in the market. - Competitive market conditions. - Potential operational incidents and resulting downtime for rigs.

Q: Just wanted to ask about what you're seeing in terms of leading-edge day rates within the Golden Triangle, including expectations of softness in West Africa and Brazil but resilience in the U.S. Gulf.

A: Samir Ali said it depends on the market; U.S. Gulf pricing is resilient, near-term potential weakness in other parts of the Golden Triangle but not dramatic.

Q: Congratulations on the new contracts. I wanted to touch specifically on the Capella and the Carina, and current thoughts about potential downtime for those 2 rigs.

A: Simon Johnson and Samir Ali discussed that the team has been adding term, with some concern about first half 2026 exposure but expecting market tightening in second half, and Samir Ali noted flexibility with Carina in terms of potential work in Brazil or other regions.

Q: Just curious kind of how the cost deceleration on the Capella has gone over the past few quarters and what reactivation cost would look like for that rig.

A: Grant Creed said cost details are tied to active tenders, reactivation costs vary case by case.

Q: Curious how you would characterize your conversations with Petrobras about reducing costs and potential for blend and extend contracts.

A: Simon Johnson said early in conversations, open to win-win solutions, and Petrobras is an important customer with robust future demand.

Q: Economic utilization did slip sequentially in the third quarter. Just any rigs or regions to call out and how economic utilization trends going forward.

A: Simon Johnson mentioned a rig in Brazil had a downtime event due to design-related equipment failure, excluding that rig, others had good technical uptime, and it's a one-off.

Q: First one was just on the Louisiana upgrades you talked about. I assume you wouldn't do those without line of sight into something further. So maybe you could just talk about those upgrades a bit more and how they change the outlook for the rig.

A: Simon Johnson and Samir Ali talked about modifications for plug and abandonment and well intervention, positioning the rig in the market.

Q: On the Sonadrill rigs, could you speak to the further outlook of those rigs and when they do get long-term contracts, any thought on the term that they're ultimately looking for.

A: Samir Ali and Simon Johnson said focused on keeping rigs working in Angola, with confidence in long-term contracting opportunities for Sonadrill rigs.

Q: As I think about the last few months, is it just as simple as companies have gotten decisions on their budgets, kept deepwater activity as a high priority, and if Brent with a 6 handle than a 7 handle made them feel like time to go back into the deepwater.

A: Simon Johnson said fog is lifting, tone of customer conversations improving, FIDs progressing, and Samir Ali mentioned reserve replacement ratios and exploration being a focus.