Seadrill (NYSE:SDRL) raised its full-year 2026 revenue and adjusted EBITDA guidance for the third consecutive quarter after reporting $179 million in third-quarter free cash flow and adding approximately $800 million in contract value since its August earnings call.
The offshore driller reported $428 million in operating revenue and $121 million in adjusted EBITDA for the quarter, with economic utilization of 95%. Revenue fell $21 million from the prior quarter, primarily because of fewer operating days, partly offset by a higher average day rate, Executive Vice President and Chief Financial Officer Grant Creed said.
President and CEO Samir Ali said more than 85% of the company’s available drillship days were booked for 2027, providing visibility into expected earnings growth and free cash flow. Vice President of Commercial Jacob Taylor said available drillship days for next year had fallen from 30% to less than 15% since the previous call.
Guidance Rises as Cash Flow Improves
Seadrill now expects full-year operating revenue of $1.56 billion to $1.58 billion, excluding $90 million of reimbursable revenue. It raised its adjusted EBITDA forecast to $440 million to $460 million and narrowed its capital expenditure and long-term maintenance guidance to $210 million to $230 million.
Creed said the revised outlook primarily reflects the timing of repair and maintenance expenses, including preparation of the West Carina for its next contract, and a range of potential fleet-wide utilization outcomes. He said maintenance spending typically increases in the fourth quarter and that West Carina will undergo additional routine work while it is off contract.
The company ended the third quarter with $506 million in cash, $750 million in gross principal debt and net leverage of 0.6 times. Creed said the cash balance benefited from collection of a $41 million West Tellus mobilization fee and a release of working capital.
Seadrill repurchased $22 million of shares during the quarter, bringing year-to-date repurchases to $42 million. Creed said the company would continue to assess buybacks opportunistically but did not make a commitment to further purchases.
While Seadrill has not provided 2027 capital spending guidance, Creed said a level similar to this year’s could be an indicator, with relatively little spending expected on special periodic surveys.
New Contracts Add Coverage
Recent awards and extensions included a roughly three-year extension for the Sonangol Libongos in Angola, keeping it contracted into 2030, and approximately eight additional months for the West Capella in Malaysia through February 2028. Taylor said half of the West Capella extension came from previously unpriced options exercised at a daily rate in the mid-$400,000s, excluding additional services.
In Indonesia, the West Carina is scheduled to begin a two-and-a-half-year firm assignment in the first half of 2027, with options for another two and a half years. The contract includes an $85 million mobilization fee.
Ali declined to provide mobilization costs but said the fee includes a significant margin and that contract-required capital spending is minimal. Taylor said the company would invoice the fee at contract commencement; Ali said payment was expected close to commencement or shortly afterward.
In the U.S. Gulf, contracts with Kosmos and LLOG provide work for the Sevan Louisiana in direct continuation from November through January 2027. Taylor cautioned that visibility further into 2027 remains limited and that the company expects near-term gaps in the rig’s schedule. The West Neptune and West Vela are contracted into late 2027 and mid-2028, respectively.
Market Outlook and Fleet Opportunities
Taylor said the U.S. Gulf is oversupplied by a few drillships but that demand in West Africa and Asia could draw excess capacity from the region in 2027. During the question-and-answer session, he said the Gulf could become tight in 2028 if a rebalancing materializes.
Ali said international oil companies remain disciplined and generally contract rigs for specific programs, including multi-year development projects. He said Seadrill seeks to balance longer contract terms with some exposure to the spot market.
In Angola, the West Gemini’s current well-based contract is expected to run through January 2027. Taylor said Seadrill is marketing the rig in Angola and more broadly across West Africa and Asia. Ali said the company would welcome a fourth rig in its joint venture with Sonangol if it found the right program; Taylor added that such an opportunity could be elsewhere in West Africa.
Seadrill is also marketing the stacked West Aquarius and West Phoenix in Norway. Ali said the company sees a path to reactivate both rigs but prefers that customers fund the substantial reactivation costs. Any deal, he said, would need to demonstrate that it could generate free cash flow.
About Seadrill (NYSE:SDRL)
Seadrill Limited (NYSE: SDRL) is an offshore drilling contractor that provides drilling services to oil and gas companies. The company operates a fleet of mobile offshore drilling units, including ultra-deepwater drillships and semisubmersible rigs, which are used to explore for and develop hydrocarbon resources beneath the seabed.
Seadrill’s services include contract drilling, rig operations, well construction support and related offshore services. Its modern, high-specification fleet is designed to work in challenging deepwater and harsh-environment locations.
