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Seadrill Limited (SDRL) - First Quarter 2020 Results

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Material impairments on assets and investments and a focus on restructuring

Highlights

  • Revenue down 19% at $321 million with lower proportion of reimbursable revenues

  • Technical utilization of 95% and economic utilization of 93%

  • Operating Loss of $1,284 million after making material asset impairments

  • Adjusted EBITDA of $55 million, representing 17.1% margin

  • Net loss attributable to shareholder of $1,564 million equivalent to net loss per share of $15.59

  • During the quarter we added $77 million in backlog, maintaining a total backlog figure of $2.5 billion

  • Closing cash of $1.2 billion

 

Subsequent Events

  • Significant market challenges arising from the sharp decline in the oil price

  • Additional operational and logistic challenges arising through COVID-19 pandemic restrictions 

  • Financial and legal advisors appointed to evaluate comprehensive restructuring alternatives to reduce debt service costs and overall indebtedness

  • Announced on June 1, 2020, decision to delist from NYSE and maintain a single listing on the Oslo Stock Exchange

 

Anton Dibowitz, President and CEO, commented:

"First and foremost, we need to recognize the way in which the whole Seadrill community has risen to the operational and logistical challenges arising because of COVID-19. We have continued our record of strong operational delivery in the quarter, working across 28 locations with over 4,000 employees from 57 different countries. Whilst our onshore personnel get used to a new mode of working, we have many offshore personnel whose continuous time working to maintain safe operations for our customers is now measured in terms of months rather than weeks. I continue to be humbled by the dedication of our people who deliver safe and efficient operations during this trying time, including some of whom will be leaving us as we maintain our focus on our cost competitiveness and adjust staffing levels to account for lower activity levels.

"This industry has two fundamental challenges which are emphasized by recent events - there are too many rigs carrying too much debt. In the quarter we took an impairment of $1.2 billion as we recognize, along with others in the sector, that a number of our assets are increasingly unlikely to return to the market and need to be scrapped. Assets across the industry also carry debt levels which are unlikely to be sustainable and consequently we should expect to see substantial indebtedness being converted to equity. Only when the industry addresses both of these issues will we be in a position where the balance of market supply and demand can deliver reasonable investment returns to stakeholders."

 

This information is subject to the disclosure requirements pursuant to Section 5-12 the Norwegian Securities Trading Act. 
 

seadrill@hawthornadvisors.com

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