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01/10 05:53
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals mixed signals: a reduction in EBITDA and operating revenue, increased expenses, and uncertainties from regulatory changes and claims. However, positive aspects include a substantial share repurchase program, a strong contracted backlog, and optimistic future projections. The Q&A section highlighted uncertainties but also potential for exploration activity. The market cap suggests moderate reactions, leading to a neutral prediction for stock price movement.
Adjusted EBITDA $378 million, down from $X million in 2023, due to a reduction in operating days and planned out of service time.
Total Operating Revenue $1.4 billion, down from $X billion in 2023, primarily due to fewer operating days attributable to the West Neptune and cold stacking of the West Phoenix.
Total Operating Expenses $323 million, up from $307 million in the prior quarter, largely due to increased merger and integration expenses.
Cash Flow from Operations $7 million for the fourth quarter, which includes $94 million of outflows for long-term maintenance CapEx.
Gross Principal Debt $625 million, with a net debt position of $120 million after holding $505 million in cash.
Share Repurchase $792 million returned to shareholders through the end of the year, with $100 million repurchased in the fourth quarter.
Capital Expenditures $418 million for the full year 2024, with guidance for 2025 between $250 million and $300 million.
Cash Proceeds from Asset Sale $45 million from the sale of the West Prospero.
Contracted Backlog $3 billion, with a $700 million net increase from previously reported numbers.
Operating Days Reduced due to planned out of service time and fewer revenue days from certain rigs.
Next-Generation Managed Pressure Drilling System: Delivered the first next-generation managed pressure drilling system to Petrobras, enhancing key elements of NPD.
Long-Term Contract Awards: Announced two long-term contract awards in Brazil, commencing in 2026, adding $1 billion in backlog.
Market Outlook: Demand deferral is leading to a softening market in 2025, with some trade rivals offering lower day rates.
Contracting Activity: Secured approximately 65% of the backlog awarded to the four largest publicly traded drillers.
Operational Efficiency: Reduced issued share count by 22% since the commencement of the share repurchase program in September 2023.
Rig Performance: The West Vela secured additional work due to exceptional operational performance, adding $20 million in backlog.
Divestment of Non-Core Assets: Divested non-core assets for cash proceeds of approximately $400 million, including the sale of the West Prospero for $45 million.
Strategic Shift: Completed exit from the benign jack-up market, focusing on being a pure-play floater company.
Market Softening: Demand deferral is leading to a softening market in 2025, with some competitors offering lower day rates.
Regulatory Delays: The West Tellus incurred 50 days of downtime due to regulatory matters, marking the sixth regulatory delay for a drilling rig in Brazil in the last six months.
Legal Penalties: Seadrill faces potential penalties from Petrobras amounting to approximately $213 million related to delayed penalties from contracts dating back to 2012.
Vendor Issues: The West Neptune's timeline was impacted by vendor issues and adverse weather, affecting operational efficiency.
Supply Chain Constraints: The company is experiencing a slow pace of contracting in 2025 tied to capital discipline and supply chain constraints.
Market Utilization: Drillship marketed utilization is trending lower, currently hovering in the mid-80s, down from high 90s in 2023.
Legal Disputes: A Norwegian court awarded $48 million against Seadrill related to the redelivery of the Hercules rig, which the company intends to appeal.
Share Repurchase Program: Returned a total of $792 million to shareholders through the end of the year, with $100 million repurchased in Q4 2024.
Contract Awards: Announced two long-term contract awards in Brazil commencing in 2026, adding $1 billion in backlog.
Divestment of Non-Core Assets: Divested non-core assets for cash proceeds of approximately $400 million, including the sale of jack-up rig West Prospero for $45 million.
Operational Innovations: Delivered the first next-generation managed pressure drilling system to Petrobras, enhancing operational efficiency.
Market Positioning: Secured approximately 65% of the global backlog awarded to the four largest publicly traded drillers.
2025 Revenue Guidance: Anticipate total operating revenues between $1.3 billion and $1.36 billion.
2025 EBITDA Guidance: Expect adjusted EBITDA in the range of $320 million to $380 million.
2025 Capital Expenditures Guidance: Forecast capital expenditures in the range of $250 million to $300 million.
Contracted Backlog: Midpoint of 2025 revenue guidance includes $1.2 billion or approximately 90% of contracted backlog.
Future Earnings Outlook: Recent contract awards will benefit earnings and cash flows beginning in 2026.
Total Capital Returned to Shareholders: $500 million in 2024.
Share Repurchase Program Total: $792 million returned to shareholders through the end of 2024.
Fourth Quarter Share Repurchase: $100 million of shares repurchased.
Reduction in Issued Share Count: 22% reduction since the commencement of the share repurchase program in September 2023.
Share Repurchase Program Authorization: Current authorization is $500 million.
The earnings call reveals mixed signals: while basic financial performance shows a decline in EBITDA, liquidity remains strong. Product development and business updates highlight potential growth in Africa and Asia, but concerns about downtime and market competition persist. Market strategy indicates optimism for deepwater activity, yet financial health is strained by increased operating expenses. The Q&A reveals uncertainty in specific areas, such as rig reactivation costs and day rate inflection points. Overall, the sentiment is neutral, with no significant catalysts for a strong stock price movement.
The earnings call presents a mixed picture. Financial performance and backlog are stable, but political unrest in Angola poses risks. The Q&A reveals optimism for market recovery by 2026, but immediate guidance is weak, and there's reluctance to invest without firm contracts. Management's evasiveness on specifics adds uncertainty. The market cap suggests moderate reaction potential, leading to a neutral stock price prediction.
Despite strong earnings and optimistic guidance, regulatory and market volatility issues pose risks. The Q&A revealed management's reluctance to provide specifics on cost and guidance, raising concerns. However, the company's share repurchase program, long-term contracts, and improved financial metrics provide a stabilizing effect. Given the market cap of $3.5 billion, the stock is likely to remain neutral, with a potential slight positive bias due to strong contracts and shareholder returns.
The earnings call reveals mixed signals: a reduction in EBITDA and operating revenue, increased expenses, and uncertainties from regulatory changes and claims. However, positive aspects include a substantial share repurchase program, a strong contracted backlog, and optimistic future projections. The Q&A section highlighted uncertainties but also potential for exploration activity. The market cap suggests moderate reactions, leading to a neutral prediction for stock price movement.
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