• Delivered $151 million of Adjusted EBITDA⁽¹⁾ on $414 million of revenue, resulting in an Adjusted EBITDA Margin⁽¹⁾ of 36.5%, and net income of $90 million, or $1.10 per diluted share.

• Successfully refinanced its secured debt, issuing $575 million of 8.375% senior secured second lien notes and establishing a new $225 million revolving credit facility with an accordion feature of up to an additional $100 million.

• Initiated $250 million shareholder return program and completed share repurchases totaling $213 million as of November 24, 2023.

• Increased share repurchase authorization by an additional $250 million, taking aggregate authorization to $500 million.

• Updated full year 2023 market guidance, with Adjusted EBITDA range now $485 million to $505 million.

• Secured contracts for the West Neptune and West Vela in the U.S. Gulf of Mexico, with the West Vela transitioning to Seadrill from the current third-party manager before undertaking the new contract.

November 27, 2023 -- Seadrill Limited (“Seadrill” or the "Company") (NYSE & OSE: SDRL) today reported its third quarter 2023 results, which reflect strong performance across the fleet as the Company continues to deliver safe and efficient drilling operations around the globe.

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President and Chief Executive Officer, Simon Johnson, commented, "We delivered another strong quarter for our stakeholders, and today we announce an increase in our full year 2023 Adjusted EBITDA guidance. We have secured an extension for the West Neptune with LLOG and been awarded a short-term campaign by QuarterNorth Energy for the West Vela. This will mark the return to Seadrill of the second of four drillships that we acquired earlier this year. We remain on track with synergy capture arising from the Aquadrill transaction.

“In September, we initiated our $250 million share repurchase program and have made excellent progress to date. In our view, the price level at which we have executed the buyback is highly accretive. Market fundamentals remain robust and our positive view on the length and durability of this upcycle is unchanged. With this in mind and considering our strong financial position, Seadrill’s board of directors has authorized a further $250 million in share repurchases, taking the aggregate to $500 million. This enables us to continue to return capital to our shareholders that cannot be allocated more efficiently within the business.”

Financial and Operational Results

The Company generated $414 million in total operating revenues in the third quarter of 2023, consistent with the prior quarter. During the quarter, the Company operated an average of 12 rigs⁽²⁾ at an economic utilization of 93%, compared to an average of 13 rigs, working at an economic utilization of 93% in the second quarter of 2023. This activity translated into contract revenues of $324 million, a decrease of $5 million, or 2%, from the prior quarter, primarily due to planned out-of-service days on the West Phoenix and the Sevan Louisiana. In addition, the Company generated $68 million in management contract revenues, largely related to the rigs managed under its 50:50 joint venture with Sonangol E.P., and $22 million in reimbursable and other revenues.

The Company incurred $304 million in operating expenses, a decrease of $4 million, or 1%, from the prior quarter, primarily due to one-time merger and integration-related expenses in the prior quarter.

Adjusted EBITDA was $151 million for the third quarter, a decrease of $8 million, or 5%, from the prior quarter. Adjusted EBITDA Margin was 36.5% for the third quarter.

Net cash provided by operating activities totaled $112 million in the third quarter of 2023, compared to $20 million in the prior quarter which was adversely impacted by one-off working capital movements. Long-term maintenance costs of $33 million, included within operating activities, and $28 million of capital upgrades resulted in total capital expenditures of $61 million, as the Company incurred expenditures for upcoming special periodic surveys, including on associated long-lead items.

Share Repurchases

On September 12, 2023, the Company initiated a share repurchase program for the repurchase of up to $250 million of the Company’s common shares in the open market on the Oslo Stock Exchange and the New York Stock Exchange. As of November 24, 2023, the Company had repurchased 5 million of its own shares at an average price of $42.76 per share, equating to $213 million.

Furthermore, Seadrill’s Board of Directors has increased the Company’s aggregate share repurchase authorization, allowing the Company to repurchase up to an additional $250 million of its outstanding common shares. Such increase takes the aggregate authorization to $500 million. The additional $250 million authorization does not have a fixed expiration, and may be modified, suspended, or discontinued at any time. The Company is under no obligation to purchase any shares in respect of the additional repurchase authorization. Shares may be repurchased at any time and from time to time in respect of the authorization in open market purchases, privately negotiated purchases, block trades, tender offers, accelerated share repurchase transactions or other derivative transactions, through the purchase of call options or the sale of put options, or otherwise, or by any combination of the foregoing. The manner, timing, pricing and amount of any repurchases will be subject to the discretion of the Company and may be based upon a number of factors, including market conditions, the Company’s financial position and capital requirements, financial conditions, competing uses for cash, the restrictions in the Company’s credit agreements and other factors.

Balance Sheet and Debt Refinancing

During the quarter, the Company refinanced its secured debt, issuing $575 million in aggregate principal amount of 8.375% senior secured second lien notes due 2030 (the “Notes") and establishing a $225 million senior secured five-year revolving credit facility with an accordion feature of up to an additional $100 million. The refinancing reduces the Company's cost of capital and removes certain restrictive covenants, allowing the Company greater flexibility to act on accretive opportunities that maximize shareholder value. As of September 30, 2023, the Company had gross principal debt of $625 million, comprising (i) the Notes and (ii) $50 million in senior unsecured convertible notes. Cash and cash equivalents was $869 million, including $32 million in restricted cash.

Operational and Commercial Activity

As of September 30, 2023, Seadrill's Order Backlog⁽³⁾ stood at $2.3 billion, including approximately $76 million of contract additions on the West Neptune in the U.S. Gulf of Mexico during the quarter. Following the quarter-end, the Company secured a short-term campaign for the West Vela in the U.S. Gulf of Mexico with QuarterNorth Energy. This contract is expected to commence after the rig finishes with Beacon Offshore in the first half of 2024 and transitions to Seadrill from the current third-party manager. As of November 27, 2023, the Company's Order Backlog stands at $2.2 billion.

In July, the Company completed the sale of its three tender-assist units to certain affiliates of Energy Drilling Pte. Ltd. for aggregate cash proceeds of $84 million.

Outlook

Full year 2023 guidance for total revenues is expected in the range of $1,495 million to $1,515 million and Adjusted EBITDA within the range of $485 million to $505 million. The revised guidance range for total revenues and Adjusted EBITDA is above the range previously communicated for full year 2023. Refer to Appendix II for a reconciliation of Adjusted EBITDA to Operating Profit. Capital expenditures and long-term maintenance is expected to be within the range of $185 million to $205 million. The revised guidance range for capital expenditures is below the range previously communicated for full year 2023.

Conference Call Information

The Company will hold a conference call to discuss its results on Tuesday, November 28 at 9:00 CST / 15:00 GMT / 16:00 CET. Interested participants may join the call by dialing +1 (888) 660-6819 (Passcode: 7310670) at least 15 minutes prior to the scheduled start time. The Company will also webcast the call live on its website, www.seadrill.com/investors, where a replay will be available afterwards.

⁽¹⁾ Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP measures. For a definition and a reconciliation to the most comparable GAAP measure, see Appendices.

⁽²⁾ The number of rigs contributing to contract revenue includes fleet additions from the Aquadrill transaction (West Capella, West Vela, West Auriga, West Polaris); excludes rigs managed on behalf of Sonadrill (West Gemini, Sonangol Quenguela, Sonangol Libongos); and excludes rigs bareboat chartered to Gulfdrill (West Telesto, West Castor, West Tucana).

⁽³⁾ Order Backlog includes all firm contracts at the contractual operating dayrate multiplied by the number of days remaining in the firm contract period. It includes management contract revenues and lease revenues from bareboat charter arrangements and excludes revenues for mobilization, demobilization, contract preparation, and other incentive provisions and backlog relating to non-consolidated entities.

About Seadrill

Seadrill is a leading offshore drilling contractor utilizing advanced technology to unlock oil and gas resources for clients across harsh and benign locations around the globe. Seadrill’s high-quality, technologically-advanced fleet spans all asset classes allowing its experienced crews to conduct operations across geographies, from shallow to ultra-deepwater environments.

Forward-Looking Statements

This news release includes forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. All statements other than statements of historical facts included in this communication, including those regarding the Company’s outlook and guidance, plans, strategies, business prospects, rig activity, share repurchases, changes and trends in its business and the markets in which it operates are forward-looking statements. These forward-looking statements can often, but not necessarily, be identified by the use of forward-looking terminology, including the terms "assumes", "projects", "forecasts", "estimates", "expects", "anticipates", "believes", "plans", "intends", "may", "might", "will", "would", "can", "could", "should" or, in each case, their negative, or other variations or comparable terminology. These statements are based on management’s current plans, expectations, assumptions and beliefs concerning future events impacting the Company and therefore involve a number of risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed or implied in the forward-looking statements, which speak only as of the date of this news release. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to offshore drilling market conditions including supply and demand, day rates, customer drilling programs and effects of new rigs on the market, contract awards and rig mobilizations, contract backlog, dry-docking and other costs of maintenance of the drilling rigs in the Company’s fleet, the cost and timing of shipyard and other capital projects, the performance of the drilling rigs in the Company’s fleet, delay in payment or disputes with customers, Seadrill's ability to successfully employ its drilling units, procure or have access to financing, ability to comply with loan covenants, liquidity and adequacy of cash flow from operations, fluctuations in the international price of oil, international financial market conditions, inflation, changes in governmental regulations that affect the Company or the operations of the Company’s fleet, increased competition in the offshore drilling industry, the impact of global economic conditions and global health threats, pandemics and epidemics, our ability to maintain relationships with suppliers, customers, employees and other third parties and our ability to maintain adequate financing to support our business plans, our ability to successfully complete any acquisitions, divestitures and mergers, our liquidity and the adequacy of cash flows for our obligations, our liquidity and the adequacy of cash flows for our obligations, our ability to satisfy the continued listing requirements of the New York Stock Exchange (“NYSE”) and the Oslo Stock Exchange (“OSE”), or other exchanges where our common shares may be listed, or to cure any continued listing standard deficiency with respect thereto, the cancellation of drilling contracts currently included in reported contract backlog, losses on impairment of long-lived fixed assets, shipyard, construction and other delays, the results of meetings of our shareholders, political and other uncertainties, including those related to the conflict in Ukraine, the effect and results of litigation, regulatory matters, settlements, audit, assessments and contingencies, including any litigation related to the Merger of the Company (“Merger”) with Aquadrill LLC (“Aquadrill”), our ability to successfully integrate with Aquadrill following the Merger, the concentration of our revenues in certain geographical jurisdictions, limitations on insurance coverage, our ability to attract and retain skilled personnel on commercially reasonable terms, the level of expected capital expenditures, our expected financing of such capital expenditures, and the timing and cost of completion of capital projects, fluctuations in interest rates or exchange rates and currency devaluations relating to foreign or U.S. monetary policy, tax matters, changes in tax laws, treaties and regulations, tax assessments and liabilities for tax issues, legal and regulatory matters in the jurisdictions in which we operate, customs and environmental matters, the potential impacts on our business resulting from decarbonization and emissions legislation and regulations, the impact on our business from climate-change generally, the occurrence of cybersecurity incidents, attacks or other breaches to our information technology systems, including our rig operating systems and other important factors described from time to time in the reports filed or furnished by us with the SEC . Consequently, no forward-looking statement can be guaranteed. When considering these forward-looking statements, you should also keep in mind the risks described from time to time in the Company’s filings with the SEC, including its Annual Report on Form 20-F for the year ended December 31, 2022, filed with the SEC on April 19, 2023 (File No. 001-39327), and subsequent reports on Form 6-K.

The Company undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for us to predict all of these factors. Further, the Company cannot assess the impact of each such factors on its business or the extent to which any factor, or combination of factors, may cause actual results to be materially different from those contained in any forward-looking statement.

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