HAMILTON, Bermuda - Seadrill Limited (NYSE: OL:SDRL), an offshore drilling contractor with a market capitalization of $2.46 billion and current trading price of $37.31, has announced a significant contract win with Brazilian oil giant Petrobras for its ultra-deepwater drillship, West Tellus. The deal, which emerged from a competitive tender process, involves operations in the Santos Basin's Sépia and Atapu fields, offshore Brazil. According to InvestingPro data, Seadrill maintains a strong financial health score of "GOOD" with robust operational metrics.
The contract spans 1,095 days, which is approximately three years, and is slated to commence in the first quarter of 2026. It is expected to contribute around $498 million to Seadrill's order backlog, adding to its current annual revenue of $1.47 billion. This figure excludes a mobilization fee of $41 million but includes additional services. Furthermore, the agreement includes an option for extending the contract by up to 305 days. InvestingPro analysis indicates that SDRL is currently trading below its Fair Value, suggesting potential upside for investors.
Petrobras, a semi-public multinational corporation in the petroleum industry, will utilize the West Tellus in two of its shared fields, where it holds a 65.7% stake in Atapu and a 55.3% stake in Sépia, acting as the operator for both.
Seadrill's President and Chief Executive Officer, Simon Johnson, remarked on the significance of the contract, stating that it deepens the company's relationship with a key customer and signifies a substantial addition to their backlog, with expectations of a positive impact on earnings and free cash flow beginning in 2026.
This news release contains forward-looking statements regarding the company’s future operations and financial performance. These statements are subject to risks and uncertainties, and actual results may differ materially. Factors that could affect outcomes include market conditions, oil prices, regulatory changes, and global economic and political events.
Investors are advised that this information is based on a press release statement from Seadrill Limited and should consider the inherent risks detailed in the company's filings and public disclosures.
In other recent news, Seadrill, a prominent offshore drilling contractor, has reported encouraging financial results for the third quarter of 2024. The company exceeded EBITDA expectations, reaching an adjusted figure of $93 million, and subsequently raised its full-year EBITDA projection by 13% to a midpoint of $385 million. Despite a decrease in operating revenues to $354 million due to completed contracts, Seadrill demonstrated a strong financial performance.
The company also continued its share repurchase program, returning $692 million to shareholders since September 2023. Seadrill's management has expressed a strategy focused on cash flow generation. However, they also noted potential challenges in re-contracting efforts for early to mid-2025.
In other developments, Seadrill plans to optimize operations in 2025, with a focus on maintaining strong contract coverage. The company has also made significant progress on Brazil projects with the West Auriga and West Polaris (NYSE:PII) rigs set to begin contracts, underscoring Seadrill's confidence in the long-term viability of the offshore sector. These are among the recent developments for Seadrill.
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